Month: August 2018
FCA FOCUSED ON AML IN FIGHT AGAINST FINANCIAL CRIME
Out-Law on 31st August published an analysis which says that recent sanctions imposed by the Financial Conduct Authority (FCA) on Canara Bank show the regulator’s increasing focus on AML systems and controls. The UK branch of the Indian bank was fined £896,100 by the FCA in June 2018 for breaching Principle 3 (taking reasonable steps to organise its affairs responsibly and effectively, with adequate risk management systems) of the FCA’s Principles for Businesses. It was also banned from accepting deposits from new customers for 147 days. The bank failed to maintain adequate AML systems and failed to take sufficient steps to remedy weaknesses in its AML systems and controls once notified by the FCA. The article says that the FCA has increasingly been using non-financial penalties in addition to imposing fines. The FCA has also shown that it will hold the relevant persons responsible for the failure to report AML system weaknesses to the FCA, or to implement the relevant requirements. Recent FCA notices found “systemic” weaknesses or failures in the banks’ AML systems and controls, and repeatedly noted that these failings were at “all levels” of the business and management; and there are repeated references to a “culture” of AML risk or failure to instil responsibility for compliance within the banks.
https://www.out-law.com/en/articles/2018/august/fca-anti-money-laundering-financial-crime/
FRAUD EXPERTS WARN OVER COMPROMISE OF PASSPORT DATA IN AIR CANADA BREACH
Silicon on 31st August reported that hackers may have accessed detailed passport information on Air Canada customers after the airline’s app was hacked, and which is integrated with its Aeroplan frequent flyer programme.
CITIBANK REACHES SETTLEMENT WITH US AGENCY OVER BREACH OF ANTI-BOYCOTT RULES
World ECR reports that Citibank has agreed to pay $60,000 in a settlement agreement with the US Department of Commerce’s Bureau of Industry and Security for breaches of the Export Administration Regulations concerning anti-boycott rules. It was accused of violations in supplying information about business relationships with boycotted countries or blacklisted individuals and complying with a foreign country’s boycott or embargo that the US does not recognise or permit its nationals to comply with.
See the settlement at –
https://efoia.bis.doc.gov/index.php/documents/antiboycott/1195-a758/file
US: THE SCOURGE OF HONEY FRAUD
The Economist on 30th August carried an article saying that according to the National Honey Board, per person consumption of the regurgitated nectar has doubled in America since the 1990s, and as demand has increased, prices have followed, but domestic production has not. This has given honey-sellers an incentive to dilute it with cheaper things like corn, rice and beet syrup. According to the US Pharmacopeia’s Food Fraud Database, honey is now the third-favourite food target for adulteration, behind milk and olive oil. Much comes from Asia, but high tariffs on Chinese honey also leads to diversion and misdescription to avoid these.
https://www.economist.com/united-states/2018/09/01/the-scourge-of-honey-fraud
IRAN SANCTIONS: STEERING A COURSE THROUGH DIFFICULT WATERS
On 29th August, law firm HFW issued a briefing outlining the position of the re-imposed US sanctions on Iran and the effect of the EU Blocking regulation, which sets out to mitigate the effects of the re-imposed sanctions. It details the US sanctions being re-imposed w.e.f. from 6th August and 4th November. It examines the 4 key aspects of the Blocking Regulation. The article makes several recommendations for those who might be affected, including maintaining careful records to document the reasons for any decision to stop work or cease business operations in Iran on the basis of the EU operator’s own assessment of the economic situation, as opposed to the US extraterritorial sanctions which are the target of the EU Blocking Regulation.
http://www.hfw.com/Iran-Sanctions-Steering-a-course-through-difficult-waters-August-2018
US COMPANIES FIRMS CONTINUE TO FACE INDIRECT LIABILITY FOR TERRORIST ATTACKS UNDER THE ANTI-TERRORISM ACT (ATA)
On 29th August, Cadwalader Wickersham & Taft LLP published an article about recent examples of victims (or their dependants) filing actions in the US courts against US companies that they said were guilty of providing support for terrorist organisations. The examples it quotes are where –
- military veterans and the relatives of troops killed in Iraq filed a lawsuit against several large international pharmaceuticals, accusing them of aiding and abetting terrorism by selling products to Iraq’s Ministry of Health which were used to finance operations by the notorious Mahdi Army; and
- a woman injured in the 2015 Paris attacks by ISIL sued Facebook, Twitter, and Google, alleging that the social media platforms assisted terrorists by allowing them to recruit members, distribute propaganda, and co-ordinate activities.
The argument being advanced is that financial services, social media, life sciences, and other companies have become targets of ATA actions on the theory that, by processing financial transactions and engaging in other commercial activities with terrorist groups, they are complicit in terrorist attacks. The article examines the background and the history of the 1987 Act, the standard for liability under the Act and provides advice for US companies which may be at risk. It says that financial institutions and public companies with global operations should be wary of potential exposure under the ATA, and should implement defensive measures to avoid inadvertently doing business with individuals or organisations associated with terrorism. Lawsuits under the ATA are a growing area of liability, the article contends, against which financial institutions and public companies should protect themselves, and recent moves are to make the Act more expansive.
SUSPICION, TERRORIST FUNDING AND MONEY LAUNDERING
On 22nd August, Bright Line Law published an article saying that on 11th July, the UK Supreme Court handed down a decision in an appeal of a pre-trial ruling on the test for ‘suspicion’ in the context of terrorist financing. The article sets out to distil the key findings from the decision and explores the implications for ‘suspicion’ in the context of the principal and secondary money laundering offences in Part 7 of the Proceeds of Crime Act 2002. It says that the decision puts to rest any doubt that the offence of being concerned in terrorist funding is focused on an objective suspicion of terrorist financing as opposed to one subjectively held – where the information known to a person, examined objectively, gives reasonable cause to suspect that property will be used for terrorist purposes even if the person did not actually hold any such suspicion. However, due to what it calls discernible differences between POCA and the Terrorism Act 2000, the extent to which the decision informs the interpretation of the money laundering offence provisions in Part 7 POCA is limited.
https://www.brightlinelaw.co.uk/bll-bulletin/suspicion-terrorist-funding-and-money-laundering.html
UN SECURITY COUNCIL RENEWS SANCTIONS ON MALI
On 30th August, a news release from the UN advised that the Security Council has renewed for 1 year sanctions imposed by UN SCR 2374 (2017) concerning Mali – the travel ban and assets freeze being extended until 31st August 2019 on individuals and entities designated by the Committee. It also extended until 30th September 2019 the mandate of the expert panel established to monitor their implementation.
DEMONETISATION DRIVE IN INDIA FAILS TO UNCOVER ‘BLACK MONEY’
Baker McKenzie on 30th August reported that more than 99% of the currency that India declared void in a surprise announcement in 2016 was returned to the country’s banks in subsequent weeks, according to a Reserve Bank of India (RBI) report. It says that the figures suggest the demonetisation policy, which likely wiped 1% from the Indian GDP failed to wipe significant hordes of unaccounted wealth from the Indian economy.
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