24th July 2018
WIRE TRANSFER CLOSING DAY SCAMS
In May 2018, the Nevada Bankers Association issued an article warning of closing day wire transfer scams targeting the transfer of proceeds of the purchase of a property or business. It says that hackers are targeting financial institutions, professionals and individuals participating in financial transactions seeking to steal wire transfers used to fund the deals and that, according to the FBI, between October 2013 and May 2016, thieves diverted or attempted to divert wire transactions valued in excess of $3 Billion. It says that a frequent scam is for hackers to target email accounts of realtors, title companies, business brokers, banks and law firms. They may even search press releases or social media looking for upcoming transactions and new targets. Once they hack into an email system, they use software to search for key words like “closing” and “wire transfer”. The hackers then monitor email traffic to identify the date of a transaction, the parties involved in the transaction and wire transfer instructions. On closing day, the hacker will try to take over the targeted email account or mimic the sender’s email by creating a new fake email domain that looks like the sender’s email account. Then the hacker forwards the original wire transfer instruction email string substituting “updated wire instructions” for the targeted proceeds. The article provides some tips on how to avoid the scam, such as not using the “reply” button to reply to emails, but using the “forward” button and typing in, or selecting, the email address known to be the right one. It also says to train staff to be suspicious of requests to act urgently.
RUSSIA DETAINS TRADERS ALLEGEDLY SMUGGLING ARMS FROM EU
Sputnik and TASS on 23rd July claimed that the FSB security service had found a criminal group consisting of people from different regions of Russia has organised illegal arms deliveries to the country from the EU. They are said to have seized a wide range of weaponry and closed down 2 workshops that produce and repair weapons, arresting the arms traders, who had been conducting their activities in Moscow, Saint-Petersburg, and Yaroslavl.
2 CHINESE FLIGHT ATTENDANTS ORDERED OUT OF US FOR TURTLE SMUGGLING
VOA on 23rd July reported that 2 Chinese flight attendants who work for China Eastern Airlines have been ordered to pay large fines and leave the US after pleading guilty to trying to smuggle protected box and spotted turtles out of the country. Agents arrested them in May as they attempted to smuggle 45 turtles in their luggage.
VIETNAM: CIGARETTE SMUGGLING REMAINS UNABATED
Vietnam Plus on 24th July reported that cigarette smuggling has caused a loss of thousands of billions of Vietnamese dong each year for the State, according to figures released by the Vietnam Tobacco Association at a symposium held on July 23rd. The production and trading of cigarettes in the country is strictly managed by law but cigarette smuggling has increased. Cigarettes are subject to a range of taxes, including 70% special consumption tax, 10% VAT, and 135% import tax – though the Government plans to increase the special consumption tax for cigarettes to 75%. Smugglers of cigarettes are said to be mainly jobless residents living on the border, mostly with Cambodia, who know the area well and understand the language of the bordering country.
G20 SETS OCTOBER AS CRYPTO AML STANDARD DEADLINE
Investing News on 23rd July reported that G20 countries issued a statement on 22nd July calling for AML standards in relation to cryptocurrency assets and called on FATF for additional clarification on how standards apply to crypto-assets by October 2018. In June it was reported that FATF began discussions on binding rules governing cryptocurrency exchanges as a result of a request from the G20 and that FATF would consider how those rules could apply to new exchanges and how to best work with countries that have banned digital currency trading.
LEGAL CHALLENGES AGAINST HMRC UP BY A THIRD
The ICAEW on 23rd July reported that the number of judicial challenges brought against HMRC by taxpayers rose by 36% last year. HMRC faced 122 judicial reviews in 2017, compared to 90 in 2016. The most common reasons for a judicial challenge where when HMRC issued information request notices to taxpayers who were not within its jurisdiction.
MIGRANT CHARITY FILES MANSLAUGHTER COMPLAINT AGAINST LIBYA AND CARGO VESSEL
Defence Web on 23rd July reported that Charity Proactiva Open Arms has filed a complaint, including involuntary manslaughter, with the Spanish police against a cargo ship (Triades, which flies a Panamanian flag) for failing to help migrants adrift on a destroyed dinghy in the Mediterranean. The captain of the charity’s rescue boat plans to file a separate suit against the Libyan lifeguard.
JAPAN: COURT’S DECISION ON YAKUZA BOSS A BLOW TO UNDERWORLD FUNDRAISING
On 24th July, the Business Times in Singapore reported that a recent court decision should serve as the first step to break down the “bottom-to-top money payment system” that has been exploited by underworld groups in Japan as their financial sources. The “bottom-to-top money payment scheme” is a money collection system peculiar to gang groups, it says. The head of a gang group collects money taken in by its members in protection rackets against drinking and eating establishments and corporate entities and pays the collected money to a higher-ranking group. A huge amount of money thus collected eventually goes into the purse of the supreme leader of a yakuza group. The ruling has great significance in determining that the money collected under such a scheme is the income of the top leader of the gang group.
ARRON BANKS DENIES ALLEGATION OF BRIBERY OVER MINING INTEREST
On 23rd July, Channel 4 News reported on part 2 of its investigation into Arron Banks’ mining interests in Southern Africa and details the transfer of thousands of pounds to a Lesotho cabinet minister and the subsequent issuing of a mining licence. The minister admits he received the money, but both he and Banks strenuously deny that this was for the licence or a bribe.
UK GOVERNMENT UPGRADES NATIONAL SECURITY INVESTMENT POWERS
On 24th July, a news release from the Department of Business, Energy and Industrial Strategy reported new powers to upgrade UK national security rules and strengthened powers will upgrade UK national security merger rules whilst maintaining openness to international investment. The National Security and Investment White Paper sets out how the government will upgrade its powers to scrutinise investments and address the risks that can arise from hostile parties acquiring ownership of, or control over, businesses or other entities and assets that have national security implications. Under the White Paper proposals, the government will encourage businesses and investors to notify it ahead of transactions that might give rise to national security risks. The majority of transactions raise no national security concerns and the government expects to quickly rule out national security risks in most cases, allowing parties to proceed with certainty. The White Paper proposes how the government would be able to “call in” transactions that may give rise to national security risks to assess them more fully. In June 2018, Parliament enacted secondary legislation to amend the thresholds in the Enterprise Act 2002 for 3 specific areas of the economy, military/dual-use, computing hardware and quantum technology, enabling the government to intervene in more mergers that may raise national security concerns.
INFORMATION ABOUT THE UK DORMANT ACCOUNTS SCHEME
On 23rd July, the Department for Digital, Culture, Media and Sport published information about this Scheme. Banks and building societies can only transfer funds to good causes from accounts which have remained untouched for 15 or more years and when the customer is no longer contactable. In February, the Government received recommendations about expanding the Scheme and the Government is minded to implement them.
OIL DEALER JAILED OVER LAUNDERED FUEL PLANT
The Commercial Motor on 23rd July reported that a West Yorkshire oil dealer, Anthony Knight, has been sent to prison for 3½ years for selling potentially harmful illegally laundered fuel to unknowing customers. A HMRC investigation found that he operated an illegal fuel-laundering plant capable of evading £1.6 million in excise duty a year. The fraud was discovered when officers visited his business, Manor Oil Company in Oldham in August 2016, and found the laundering plant in an outbuilding.
BAHAMAS POSTPONES WEB SHOP GAMBLING DEPOSITS TAX CHANGES
Calvin Ayre on 23rd July reported that the government implementing its controversial new taxes due to technical issues. It had announced tax increases on web shop operators’ revenue, while their customers faced a 5% tax on all deposits and purchases of lottery products. The revenue tax kicked in as scheduled on July 1st but the punters’ taxes have been delayed until the end of August. There are approximately 260 web shops in the Bahamas, which offer online casino and lottery games to customers via computer terminals in retail shops.
SOUTH AFRICA GOES AHEAD WITH CLAMPDOWN ON ILLEGAL ONLINE GAMBLING
Calvin Ayre on 23rd July reported that South Africa is pressing forward with its plans to clamp down even harder on unauthorised internationally licensed online gambling operators and has issued a notice of intention to introduce the National Gambling Amendment Act 2018 into parliament during the legislature’s second term of 2018. Among the new restrictions are explicit warnings to financial institutions that they “must not process payment transactions for any gambling activities that are not licensed” under the country’s existing gambling rules. The amendments also plan to regulate electronic bingo, require gambling venues located in public spaces (shopping malls, arcades, etc) to ensure that their entrances are “separate” and “hidden,” and ban the installation of ATM in or around gambling venues.
RUSSIAN CUSTOMS RETURN STOLEN LAMBORGHINI TO GERMAN RESIDENT
Customs Today on 23rd July reported that the Federal Customs Service returned a Lamborghini Aventador worth $362,000 – one of the most expensive cars in the world, which had been stolen and taken to Russia – to its owner, a resident of Germany. The car was confiscated by customs officers from a Russian who imported it without paying the necessary duties of $102,407.
CONTAINER SHIPPING LINES THAT WITHDRAW SERVICES FROM IRAN COULD FALL FOUL OF EU LEGISLATION
Loadstar on 23rd July reported that major container shipping lines that withdraw services from Iran, following the re-imposition of US sanctions from August, could inadvertently fall foul of EU legislation designed to protect European companies from being sanctioned by US regulators, and non-compliance with which may be a criminal offence in at least some EU states. It says that a briefing from law firm has also warned that a multinational which pulls out of the Iran project because of the US sanctions and voids the contract with the service provider latter could face a claim for damages by the service provider under the EU regulation.
BEER SMUGGLING IN NORWAY HAS DOUBLED IN PAST 16 YEARS
Customs Today on 24th July reported that it has reached new and worrying heights, with several major seizures in 2017, according to a consultant with the customs department.
UK: LAND REGISTRATION ACT REVISION COULD BUILD ON FRAUD FIGHTING EFFORTS AND MAKE CONVEYANCING BETTER FOR EVERYONE
On 24th July, the Law Commission issued a news release saying that property fraudsters could be stopped in their tracks by technical fixes of the law. HM Land Registry has had to fork out close to £60 million in indemnity payments because of fraud over the past decade. The Commission is recommending anti-fraud measures in registered land, alongside wider technical changes to the law which will make conveyancing “faster, easier and cheaper for everyone”. Recommendations that tackle fraud include:
- enabling HM Land Registry to set the reasonable steps that conveyancers must undertake to verify the identity of their clients, to help route out fraudsters;
- imposing a duty of care on conveyancers with respect to identity checks, based on the directions issued by HM Land Registry; and
- if a conveyancer fails to meet his or her duty with respect to identity checks, ensuring that HM Land Registry has a right of recourse against the conveyancer to recover the amount HM Land Registry paid for the loss caused by the fraud. Conveyancers who follow the required steps won’t be responsible if fraud still happens
ARREST OF SUSPECTED JIHADISTS UNLIKELY TO REDUCE TERRORISM RISK TO MINING OPERATIONS IN NORTHERN BURKINA FASO
Janes.com on 23rd July reported that the arrest of 60 suspects in northern Burkina Faso during counter-terrorism operations, which began earlier in the month. The army said associated support networks and infrastructure had been dismantled, explosives seized, and 100 suspects questioned, 40 of whom were later released. The operation was conducted along the border with Mali where jihadist groups established themselves.
REPORT OUTLINES BIOLOGICAL AND CHEMICAL DANGERS TO THE US
Homeland Preparedness News on 23rd July reported on the “Invisible Scourge: The Danger of Chemical or Biological Attack on America is Growing Fast”, a 15-page document recently released by the Lexington Institute, a non-profit think tank. The document says that recent advances in the life sciences enable researchers and layman to fashion lethal pathogens in- and outside of laboratories; and open-access scientific publications have published blueprints on to how to synthesize a virus like smallpox for anyone to read. One quote is that: unlimited access to genetic engineering technology is like unlimited access to guns. Among the findings in the document are that the precursors of lethal chemical weapons such as nerve agents are manufactured at thousands of sites around the world, and have been weaponised by countries such as Syria and North Korea; the federal government spends little on preparing for chemical or biological attacks against the US homeland, even though the risk of such attacks is rising; skills to inexpensively synthesize pathogens are identical to those used in other areas of biological research, and have become increasingly available to extremists through global commerce; and that the US government should strengthen homeland defences against chemical and biological threats, including the accidental release of pathogens from laboratories — a process that requires relatively little additional money but more leadership.
The document itself is available at –
RUSSIA SANCTIONS AND RUSSIAN COUNTERMEASURES
On 23rd July, MME Legal Tax Compliance published a briefing saying that a Russian Bill on countersanctions is soon to become a law and its ambiguity may cause difficulties in assessing possible risks. 2 other Bills on administrative and criminal liability for compliance with western sanctions are still in discussion. The briefing advises companies with ties to Russia to consider a risk assessment to understand possible consequences. It then provides an overview of potential risks and implications.
7 YEARS ON: THE EFFECTS OF THE UK BRIBERY ACT ON THE MIDDLE EAST
Clyde & Co on 22nd July published an article which looks at how the Act has affected businesses in the Middle East and how we expect it to continue, as Dubai and the wider region look to be seen as a key business hub by the rest of the world. It says that section 7 of the Act applies to UK companies wherever they operate, as well as to foreign companies with a demonstrable presence in the UK. It assumes that a company has sufficient control of its overseas operations to be aware of any illegal activity and to stamp it out, making the organisation liable, irrespective of its degree of knowledge. It is common practice in the Middle East to employ local agents or to rely on local sponsorship in the course of business and exercising sufficient control over the actions of such agents can be difficult, but it is crucial in the context of the Act. The article says that it would appear that the Act has encouraged businesses in the Middle East to adopt anti-bribery policies and procedures, but it remains important for businesses in the Middle East to regularly review their anti-bribery policies.
CHAIRWOMAN OF CHINESE PHARMACEUTICAL COMPANY IN FAULTY VACCINES CASE IS DETAINED
On 24th July, the Wall Street Journal, citing the FT.com. reported that Chinese police had detained Gao Junfang, the chairwoman of a pharmaceutical company, Changsheng Bio-tech, which is said to have distributed hundreds of thousands of faulty vaccines to medical centres. She was detained along with 5 other company executives.
HMRC MONEY LAUNDERING SUPERVISION: PENALTIES AND APPEALS
On 24th July, HMRC issued updated guidance on how to appeal against an HMRC decision and what the penalties are if you do not follow the rules.
G20 COMMITMENT TO IMPLEMENT FATF STANDARDS AND SUPPORT FOR WORK ON CRYPTO ASSETS
On 24th July, FATF said that G20 Finance Ministers and Central Bank Governors at their meeting in Buenos Aires have recognised the real and growing money laundering and terrorist financing risks from crypto-assets and the urgency of action to address these risks; they reiterated their determination to fight money laundering and terrorist financing, and they called on the FATF to take further action to counter proliferation financing. FATF recognises the urgent need to clarify how the FATF standards apply to virtual currency providers and related businesses, including for customer due diligence, fund transfers, supervision, and enforcement; and will update the G20 on this in October 2018.
HEZBOLLAH’S CORRUPTION CRISIS RUNS DEEP
An article from the Washington Institute on 20th July says that Hezbollah’s involvement in human trafficking and other criminal activities is far more extensive than its leader cares to admit, going beyond anything his anti-corruption committee is likely to address. It says that Hezbollah is also suffering from a crisis of confidence based on the realisation that the group has become implicated in corruption, with recruits from poor areas its wealthy supporters are profiting from the war. It says that some prominent figures in Hezbollah are involved in “horrific” criminal enterprises, including trafficking in sex and human beings. As an example the article mentions that, in 2016, Lebanese authorities uncovered a large prostitution network, mainly employing Syrian women and press reports linked the prostitution network to Ali Hussein Zeaiter, a Hezbollah official responsible for procurement and criminal financing. The article says that Hezbollah is open about the corruption crisis facing all Lebanese parties, including Hezbollah itself, but the group closes its ranks and hides its dirty laundry when it comes to senior officials.
EGYPT ARRESTS SUSPECTS IN $11 MILLION FOREX MONEY LAUNDERING CASE
The Middle East Monitor on 24th July reported that 25 suspects – held on suspicion of counterfeiting Egyptian currency, bribery, corruption and embezzlement -have been arrested in Egypt as officials clamp down on those thought to be money laundering or trading in foreign currency outside the official channels. 8 others have been arrested for illicit foreign exchange trade through money transfers.
TURKEY TELLS US DELEGATION IT ‘WILL NOT IMPLEMENT IRAN SANCTIONS’
Hurriyet on 24th July reported that Turkey’s foreign minister has reiterated that Turkey will not implement the US unilateral sanctions on Iran, noting that Turkey has also conveyed this message to a recent US Treasury delegation.
UK OPEN EXPORT LICENCES UPDATED
Notice to Exporters 2018/18 from the Department for International Trade released on 24th July reported that 12 Open General Export Licences (OGEL) had been updated to clarify security provisions. They have been amended to confirm that, where applicable, the requirement for a written letter of clearance to comply with the security conditions and requirements of the OGEL can be fulfilled by holding an approved F1686. The F1686 procedure itself and actions required to obtain one have not changed.
The F1686 procedure is the means by which exporters can obtain clearance to sub-contract or collaborate classified aspects on projects with overseas companies.
2 MEN ARRESTED AFTER 10 KG HEROIN FOUND IN BOOT OF CAR AT HEATHROW
On 24th July, a NCA news release advised that 2 men from the West Midlands have been charged following the discovery of 10 kg of heroin stashed in a suitcase in the boot of a car. As part of an operation led by officers from the joint NCA and Metropolitan Police Organised Crime Partnership (OCP), the 2 men were stopped at a Heathrow Airport Car Park on 22nd July.
REGULATION OF VIRTUAL CURRENCIES AND ICO IN THE PHILIPPINES
On 24th July, Jurist hosted an article which discusses the emerging regulatory framework in the Philippines; and following a recent warning from the Philippine Securities and Exchange Commission to those conducting initial coin offerings (ICO) within the country: register your ICO as a security or be prepared to face penalties.
THAI CUSTOMS TO BAR ENTRY OF 12,000 TONNES OF IMPORTED E-WASTE
On 24th July, the Bangkok Post reported that the Customs Department plans to redirect at least 12,000 tonnes of plastic scrap and electronic-waste after importers failed to process customs clearance procedures on time. There are 2,185 cargo containers loaded with plastic scrap and e-waste being held by the Customs Department – 2,100 carrying plastic waste and 85 loaded with e-waste.
CHINESE CUSTOMS SEIZED 7.1 MILLION GOODS OVER IP INFRINGEMENT IN FIRST HALF OF 2018
Xinhua on 24th July said that of all the items, about 6.9 million were seized due to involvement in trademark infringement, which protects more than 2,200 trademark rights of domestic and foreign enterprises. It also says that Chinese customs worked with its Russian counterpart between March and June against IP infringement of the 2018 FIFA World Cup, during which more than 500,000 items were seized by the 2 authorities.
NICARAGUA POLITICAL CRISIS
A video report from Control Risks on 24th July says that Nicaragua is currently embroiled in a political crisis with no apparent end in sight. Gavin Strong, Director for Global Risk Analysis, discusses some of the scenarios that may come to pass.
YEMEN UPDATE: MARITIME SECURITY THREATS IN THE RED SEA AND PORT OF HODEIDA
Another video report from Control Risks on 24th July, on new Maritime security threats in the Red Sea and port of Hodeida, due to activity by the rebel Houthi movement.
REACH AND THE CHEMICALS REGIME IN THE UK AFTER BREXIT
Clifford Chance on 24th July published a briefing that considers 10 questions about the UK chemicals regime post-Brexit focusing on the EU REACH regime, as well as providing a basic overview of the REACH system – which affects imports and export of chemicals, products using or containing them and the manufacturers, suppliers and usesr.
SEC CHARGES IN $27 MILLION FRAUD CASE INVOLVING “ONCE-IN-A-LIFETIME” MUSIC FESTIVAL IN THE BAHAMAS
An item from the SEC on Mondo Visione on 24th July announced that the SEC had reached agreed charges with New York entrepreneur, William Z. (Billy) McFarland, 2 companies he founded, a former senior executive, and a former contractor in a case arising out of an extensive, multi-year offering fraud that raised at least $27.4 million from over 100 investors; where he fraudulently induced investments into his companies, Fyre Media, Inc., Fyre Festival LLC, and Magnises, Inc, including in connection with McFarland’s failed venture to host a “once-in-a-lifetime” music festival in the Bahamas.
MALAYSIA LAUNCHES CRACKDOWN ON ISIS AFTER THREATS TO KILL KING AND PRIME MINISTER
Homeland Security Today on 21st July reported that police in Malaysia have arrested 7 suspected ISIS militants, including one man who allegedly made threats against the king and the prime minister. It is the most extensive crackdown on Islamic State (ISIS) in Malaysia since 2016. The country has been on high alert since multiple ISIS attacks were carried out in neighbouring Indonesia.
INSIDE THE FINANCIAL SYSTEM THAT FUELS AL-SHABAAB’S OPERATIONS
Homeland Security Today on 22nd July carried a report saying that a new paper from the Hiraal Institute in Mogadishu discusses Al-Shabaab’s financial system and estimates the amount collected by the group. It is said to have 2 main departments that collect taxes from the public: the Zakawaat Office and the Finance Office. The former is tasked with collecting non-monetary taxes such as livestock and farm produce, while the latter collects all monetary taxes. The organisation is said to be financially self-sufficient, though its expenses are affected by recurring payments to hundreds of officials and local influencers, many nominally in charge of areas not controlled by the group. The group has however managed to raise emergency funds to keep itself afloat and has never failed to pay its fighters and administrators.
The paper is available at –
NEW ZEALND: SFO RAID ON MĀORI KING’S OFFICE FOCUSED ON ALLEGED FINANCIAL MISAPPROPRIATION
The New Zealand Herald in its 25th July edition carried a report saying that the raid by the SFO of the office of the Māori King is understood to focus on claims of financial misappropriation concerning one of the King’s close advisers.