30th April 2018
US CHAMBER OF COMMERCE URGES REGULATORS TO REGULATE ICO AND PRODUCTS, NOT UNDERLYING TECHNOLOGY
The Chamber is demanding clear regulations for cryptocurrencies and any activities related to them, including Initial Coin Offerings (ICO), moves that would have direct import on related AML programmes to counter fraud and other financial crimes.
ANALYSIS SHOWS MONEY LAUNDERING VULNERABILITIES IN BRITISH COLUMBIA REAL ESTATE
The Vancouver Sun on 29th July reported that, after its casinos, the second phase of BC’s battle against dirty money is expected to target real estate. It reports that Canada’s financial intelligence watchdog found “significant” and “very significant” deficiencies in the AML controls at 88% of real estate entities they examined in BC over the last 2 years. Between 2015 and 2017, Financial Transactions and Reports Analysis Centre of Canada (Fintrac), conducted 343 examinations in the real estate sector across Canada, 130 of which were in BC, with 87 of those in Vancouver and the Lower Mainland.
CLAIMS OF LINKS BETWEEN AUSTRALIAN BANKS AND RUSSIAN CRIMINALS
On 30th July the New Zealand Herald and others reported that Australian TV programme, “Sunday Night” about the use of Australian banks to launder stolen Russian money from tax crime and that Hermitage Capital has filed a crime report with the Australian Federal Police and AUSTRAC, Australia’s money-laundering authority, requesting that a series of suspicious transactions involving Australian banks and companies be investigated. It is said that all of Australia’s major banks, including ANZ, Commonwealth, Westpac, NAB and HSBC received funds.
ON SPAIN’S SMARTEST STREETS, A PROPERTY BOOM MADE IN VENEZUELA
On 29th July, the New York Times carried an article claiming that a property boom in Spain is being fuelled by money fleeing Venezuela, via Miami.
STANDARD CHARTERED BANK HOPES TO SHAKE OFF US REGULATORY SHACKLES
On 24th July, IFR reported that deferred prosecution agreements (DPA) imposed by the US DoJ and New York regulators were due to expire on July 28th, after twice being extended following their original implementation in 2012. The bank was fined $667 million in 2012 by US authorities for breaking sanctions on Iran, Libya and other countries between 2001 to 2007. In December 2014 the DPA were extended by 3 years as Standard Chartered was considered to have fallen short in some areas, and the monitor was retained. The DPA were last extended in November 2017, because the bank had not improved compliance standards to the satisfaction of US authorities. Extra scrutiny from a DPA and having monitors installed can require a bank to have scores more compliance staff and add several hundred million dollars of annual costs.
However, on 30th July KYC 360 reported that Standard Chartered has agreed to a further extension of its DPA until 31st December.
MALTA’S ATTEMPTS TO BECOME “BLOCKCHAIN ISLAND”
Dixcart briefing IN542 comments on the passage, at the end of June, through the Maltese Parliament of 3 Bills:
- The Virtual Financial Assets Bill;
- The Technology Arrangements and Services Bill; and
- The Digital Innovation Authority Bill,
each of these establishes the regulatory framework for the blockchain sector.
DIXCART BRIEFING: KEY FEATURES OF DOUBLE TAX AGREEMENTS – UK/GUERNSEY, UK-ISLE OF MAN
Dixcart briefing IN541 says that, at the start of July 2018, 3 new, and identical, Double Tax Agreements (DTA) were announced between the UK and the Crown Dependencies (Guernsey, Isle of Man, and Jersey).
DISGRACED EX-SOLICITOR TO SURRENDER £700,000 TO FRAUD VICTIMS
The Law Society Gazette on 30th July reported that a fraudster who turned to tax consultancy after being banned as a solicitor has had his assets seized and sold. David Vaughan Jones had made £1.86 million from numerous theft and fraud crimes and has assets of £704,000 available. The judge ordered Jones to sell his shareholding in a local business or face a further 42 months in prison should be fail to achieve an acceptable value for the shares. The assets made available will be distributed among his 14 victims pro-rata to take account of their individual losses.
PENALTY FOR ONE-MAN CRYPTOCURRENCY BOILER ROOM IN NEW YORK MAY EXCEED $11.2 MILLION
Finance Feeds on 30th July reported that the US Commodity Futures Trading Commission (CFTC) has reported on the fraudulent virtual currency scheme, operated by Patrick McDonnell from his dusty and grimy home basement – CabbageTech was run by McDonnell alone. In a court case in New York, CFTC argues that restitution in the amount of $457,393.54 is appropriate, as indicated by the amount of funds misappropriated, and the court should impose a Civil Monetary Penalty equal to triple the monetary gain – and therefore seeks a civil monetary penalty of $1.3 million, plus post-judgment interest. However, it says, the penalty may be much higher.
UK REPORT: THE ECONOMIC AND SOCIAL COSTS OF MODERN SLAVERY
On 30th July, the Home Office published a report the aim of which is to estimate the cost of modern slavery in the UK. The report estimates the total cost of modern slavery in the UK in the year ending March 2017 to be between £3.3 and £4.3 billion. The physical and emotional harms to victims represent by far the biggest component of the cost. It uses the definition of modern slavery as an umbrella term that encompasses the offences of human trafficking and slavery, servitude, forced or compulsory labour.
CHINA VACCINE SCANDAL: FORGED DATA PERVADES THE SYSTEM
Asia News from Italy on 30th July carried an article that says that, according to experts, the scandal that hit the Changsheng Bio-tech is just the tip of the iceberg of a system that is based on forged data and corruption. It reports that China’s State Drug Administration (SDA) says that Changsheng Bio-tech forged data on the effectiveness of its rabies vaccines and sold substandard DPT (diphtheria, whooping cough and tetanus) shots for children as young as 3-months old. The vaccination programme is state-sponsored and delivered through the country’s 3,000 or so local disease control centres for free. The head of one disease control centre for about half a million people is quoted as saying that problems with the quality of vaccines had existed for a long time and “everyone inside the loop knows it”.
KENYA LOSES $340 MILLION ANNUALLY TO ADULTERATED FUEL
The East African on 30th July reported claims that the Kenyan government loses $340 million annually to unscrupulous business people, who sell petrol and diesel mixed with kerosene. It is estimated that about 5 million of the 33 million litres of kerosene consumed monthly in Kenya is utilised for lighting and cooking while balance is used for adulterating either diesel or petrol. Tanzania and Uganda also face a local illicit trade of adulterated fuel in the market.
EU CALLS MOLDOVAN TAX AMNESTY ‘HASTY AND NON-TRANSPARENT’
Emerging Europe.com on 30th July reported that EU’s head of mission in Moldova has said that the country should not apply a proposed tax reform and capital amnesty Bill, which, he claims, is “hasty and non-transparent”. The legislation allows for an amnesty of all undeclared income and wealth on payment of a 3% tax. The Council of Europe has also distanced itself from the legislation, following media reports in Moldova which appeared to wrongly suggest that the law had been analysed and approved by an expert Moneyval.
US INVESTIGATORS: MADURO TOOK PART IN PDVSA MONEY LAUNDERING SCHEME
Oil Price.com on 30th July reported a Miami Herald story saying that a US probe into the laundering of $1 billion from Venezuela’s state-owned oil company, PDVSA, has spread to the country’s president, Nicolas Maduro.
MONEY FROM “MAGNITSKY CASE” PASSED THROUGH UKRAINE
OCCRP on 30th July reported that 2 Ukrainian banks took part in a tax fraud scheme involving Russian government officials that defrauded Russian taxpayers of $230 million, laundered them through various banks and fake companies and transferred them to the West.
Q&A: DJIBOUTI’S INTERNATIONAL FREE TRADE ZONE
Port Technology on 30th July published a Q&A on the DIFTZ – intended to be the biggest free trade zone in Africa and to turn Djibouti’s port into a trading and logistics hub, and a vital link in China’s Belt and Road Initiative (BRI), as well as Djibouti’s ‘Vision 2035,’ a government scheme aiming to triple the country’s per capita income by 2035.
INTENSIFYING DISPUTES OVER RIGHTS TO ISSUE CONTRACTS, SELL LIBYAN OIL AND FIGHTING AROUND ENERGY SITES LIKELY
Janes.com on 30th July highlighted the risks connected with an attempt by the National Oil Company (NOC) of Libya in Benghazi to issue its own contracts for the sale of oil. This, it says, would raise the likelihood of legal disputes over Libyan energy contracts and associated payments and receipts, and would likely pave the way for future litigation over authority to sell Libyan oil. NOC in Benghazi, which competes with the internationally-recognised NOC in Tripoli for legitimacy. It is said it would increase the incentive of Tripoli-based militias and their allies to capture and control the Gulf of Sirte. Janes reports that NOC in Benghazi will try to assert its authority and undermine the Tripoli-based NOC’s control of oil-sector production and sales, by offering formal contracts as part of the NOC annual bidding on oil sales in October 2018.
UK CHARITY DISQUALIFICATION RULES EXTENDED
Accountancy Daily on 30th July reported that senior managers working in the charity sector will be forced to resign if they would be disqualified from acting as a trustee due to criminal convictions or bankruptcy. The new law from 1st August extend the scope of people who will be disqualified from working for charities, bringing CEO and chief financial officers within the scope.
FCA TO CONSULT ON TIGHTER RULES FOR CROWD-FUNDED LOANS
Accountancy Daily on 30th July reported that the FCA is launching a consultation into rules for loan-based crowdfunding platforms amid concerns that some business models are too complex and do not offer adequate protection for lenders. The FCA says that, since the it last reviewed the sector in December 2016, some loan-based crowdfunding business model have become increasingly complex. The consultation will run to 27th October.
RIBA INVESTIGATED BY FRAUD SQUAD
BD Online on 30th July reported that a complaint has been made against the Royal Institute of British Architects (RIBA) by one of the people hoping to be its next president. Elsie Owusu accused the institute of mislaying £1.1 million of members’ funds. Her complaint relates to a loan taken out in 2013 to lease and refurbish 76 Portland Place as offices for its staff. The City of London Police confirmed the complaint was now being assessed by its National Fraud Intelligence Bureau.