1st August 2018
US FEDERAL JUDGE BLOCKS PUBLICATION OF 3D-PRINTED GUN BLUEPRINTS
The Inquirer and many other sources on 31st July reported that a federal judge in Washington State issued a restraining order that effectively blocked the Texas group that planned to publicly post files that would enable people to make 3D-printable guns. The Washington decision applies to all files, and all computers nationwide, by blocking the federal settlement that permitted Defense Distributed to disseminate the “blueprints” for the 3D-printable guns in the first place.
ISRAEL SOLD DUTERTE GUNS FOR DRUG WAR
I24 News in Israel on 31st July reported that an Israeli weapons manufacturer sold hundreds of assault rifles to anti-drug police in the Philippines just months after President Rodrigo Duterte compared himself to Hitler and said he would be “happy to slaughter” 3 million drug addicts. The sale is said to be just one of several by Israel Weapons Industries to frontline forces in Duterte’s deadly crackdown on illicit drugs. IWI last year won a tender to supply the Philippines Drug Enforcement Agency (PDEA) with 560 of its Galil basic assault rifles and also won 2 tenders to supply 1,920 pistols and 313 assault rifles to the Philippines National Police (PNP) in the midst of Duterte’s crackdown. The Israeli government gave the deals a green-light through its defence export control system, despite what the Defence Ministry saying that it “attaches great importance to the human rights aspect of the destination countries for defence exports”.
AUSTRALIA: BASS GUITARIST FROM 1980s POP BAND FACES NEW CHARGE IN ALLEGED $245 MILLION CATAMARAN COCAINE SMUGGLING PLOT
The Daily Mail in Australia on 1st August reported the story of Ken Jackson, 63, described as a well-known bass player for new wave pop band The Eighty Eights that was most known in the 1980s. 700 kg of cocaine was allegedly found on Mr Jackson’s catamaran while it was moored in Toronto, NSW.
UKRAINE’S FISCAL SERVICE BOASTS $112 MILLION RECOVERED IN COUNTER-SMUGGLING EFFORT
UNIAN on 31st July reported that State Fiscal Service of Ukraine (SFS) says over $112 million in additional income was transferred to the national budget in July 2018 from the implementation of measures to combat smuggling at Ukraine’s customs. Also, Ukraine’s Cabinet on June 20th approved a plan to combat smuggling, which provides for the co-ordination of all law enforcement agencies and the State Fiscal Service. In particular, the government granted the right to officers of the National Police to operate at customs checkpoints around the clock to reveal violations.
GHANA TACKLES PORT DIVERSION SMUGGLING TO LANDLOCKED NEIGHBOURS
Port Strategy on 31st July reported that Ghana’s government plans to implement a new measure to tackle smuggling in Ghana’s ports arising from diverted transit goods allegedly meant for landlocked countries including Burkina Faso, Mali and Niger. Customs officials of the landlocked nations will be stationed at Ghana’s ports, and the importer will be directed to the appropriate country desk to pay, if the transit item(s) in question is genuine.
ENHANCEMENTS TO THE BAHAMAS’ AML REGIME
McKinney, Bancroft & Hughes has published a briefing on changes being made by the Financial Transactions Reporting Act 2018 to the AML law of the Bahamas after a July 2017 Mutual Evaluation Report of from the Caribbean Financial Action Task Force identified substantial gaps in Bahamas’ legal and regulatory regime relating to AML/CFT. The new Act contains new and enhanced provisions regarding financial institutions’ risk assessment and internal control obligations; oversight of foreign branches and subsidiaries; prohibition of conducting business with shell banks (i.e. banks which have no physical presence in the jurisdiction in which they are incorporated and licensed); establishment of anonymous facilities; establishment of correspondent relationships; and sanctions and offences for non-compliance with the provisions of the existing 2000 Act as amended.
FORMER VANCOUVER REALTOR WHO LEASED LUXURY PROPERTIES TO GANGSTERS HAS PLEADED GUILTY IN THE US TO MONEY LAUNDERING
The Times Colonist on 31st July reported that Omid Mashinchi, 35, signed a plea deal with the US Attorney on June 28th and will be sentenced in November. He admitted that he wired hundreds of thousands of dollars in drug money over several months last year to banks in Massachusetts through one of his company’s accounts. Mashinchi was linked to the “Wolf Pack” gang coalition and leased a number of high-end condos to gang members. Mashinchi had started at least 3 companies in British Columbia since 2006, all related to the real estate industry and while operating the companies, he regularly associated with gangsters, including leasing them condos that were used both as stash houses and as residences. One of his companies, called Mashinchi Investments, and also known as the Residence Club, leased the condo where a man was murdered in December.
$22.5 MILLION PAYROLL SCAM IN TRINIDAD
On 1st August, the Guardian newspaper in Trinidad & Tobago reported that 10 people accused of defrauding the San Juan/Laventille Regional Corporation (SJLRC) of almost $22.5 million in a payroll scam have been granted a total of $21 million in bail. The charges allegedly arose from an internal audit. One of the accused, described as a “checker” with the SJLRC, faces 100 additional charges for allegedly falsifying his employer’s payroll system to facilitate the scam, and all except one of the accused face various charges for money laundering.
FORMER IMF HEAD DENIES MONEY LAUNDERING CHARGES IN SPAIN
The Free Press Journal on 1st August reported that former head of the IMF and an ex-deputy Prime Minister in Spain’s government is under investigation for alleged involvement in money laundering. Rodrigo Rato was also been Spain’s Economy Minister for 8 years until 2004 and left his post at the IMF to become President of Bankia, a Spanish lender whose losses following the 2008 financial crisis saw it nationalised and bailed out for $24 billion.
PORK BARREL SCAM – 6 FILIPINO FAMILY MEMBERS CHARGED IN THE US FOR INTERNATIONAL MONEY LAUNDERING, BRIBERY AND FRAUD
CNN in the Philippines on 1st August reported that a US federal grand jury indicted alleged pork barrel queen Janet Lim Napoles and 5 of her relations for conspiring to funnel in and out of the US around $20 million in Philippine public funds believed obtained through a bribery and fraud scheme (known as the “pork barrel scam”. She was arrested in 2013. Various lawmakers in the Philippines were implicated in “ghost projects” in exchange for kickbacks allegedly masterminded by Napoles.
BREXIT: UK LODGES ITS SCHEDULE OF GOODS AT THE WTO
International trade law is about to become a whole lot more relevant to UK businesses, as the UK is going ahead in fledgling its independent trade policy, as on 24th July, an important milestone was reached when the UK submitted its draft schedule of commitments for goods for certification to the WTO. The article cautions that this is far from the end of the story – and a long, complex and difficult path lies ahead.
The WTO announcement is at –
CAYMAN ISLANDS TAX HAVEN THIRD-LARGEST FOREIGN INVESTOR IN ISRAEL
On 30th July, Newsweek carried an article saying that the Cayman Islands is the third-largest foreign investor in Israel, according to government data on an Israeli news site. It found that $6 billion went to Israel via the Cayman Islands in 2016, totalling 6.6% of all foreign investment. The only larger sources of investment were the US, at 16.8%, and the Netherlands, at 12%.
AGREEMENT BETWEEN EU AND NORWAY ON ADMINISTRATIVE CO-OPERATION, COMBATING FRAUD AND RECOVERY OF CLAIMS FOR VAT
Following the EU Council Decision of 22nd June, the Official Journal published on 1st August includes the Agreement between the EU and Norway on co-operation in VAT matters.
MALTA COMPANY ACCUSED OF FRAUD IN €35 MILLION BITCOIN THEFT
Malta Today on 1st August reported that a court has upholded a €35.5 million garnishee order filed by a UK Bitcoin dealer against a Malta-registered payment processor. Dooga Limited had filed the precautionary warrant against Pay Secure Online Ltd (PaySec), claiming that 3 clients had transferred money to Dooga to buy Bitcoins which were later stolen in an alleged hacking incident. Dooga alleged that the 3 Chinese clients – who it said, know each other – had colluded to acquire the Bitcoins by apparently transferring money through PaySec and China Union Pay – a Shanghai-based payment service provider.
BRITISH COLUMBIA COMPANY ORDERED TO FORFEIT MILLIONS IN DRUG MISLABELLING SCHEME
Trib Live on 31st July reported that a British Columbia company was fined $150,000 and ordered to forfeit millions of dollars, and 3 Canadian men were fined and sentenced to probation for misbranding prescription drugs and money laundering conspiracy in the US. The company is Quantum Solutions, SRL, and the Canadians are Tony Lee, 41, Billy Lee, 43, and Tarnjeet Uppal, 37.
1.5 MILLION PEOPLE HAVE ALREADY FLED VENEZUELA TO ESCAPE VIOLENCE AND POVERTY
Deutsche Welle on 31st July published an article and video saying that every day Venezuelans cross the border into Colombia to flee poverty and starvation. Most leave with nothing – rampant inflation has rendered their savings worthless.
CIGARETTE SCANDAL SHIFTS ATTENTION TO INSTITUTIONALISED CORRUPTION IN JORDAN
The Al-Monitor on 31st July said that Jordanians were shocked to hear about a major corruption scandal involving officials who have allegedly helped businessmen run several unlicensed cigarette plants.
MAFIA MURDERS SHOCK SERBIA AND REVEAL WEB OF CORRUPTION
On 31st July, Deutsche Welle reported that a prominent lawyer who defended war criminal Slobodan Milosevic was murdered on a Serbian street, the 19th such killing this year, and the crime has cast suspicion on the region’s nefarious web of corruption at high levels. It says that those who know the Belgrade criminal world claim that the murder is part of a larger feud between 2 rival drug gangs. The rival clans dominating Serbia’s illicit drug trade originally hail from the towns of Skaljari und Kavac in neighbouring Montenegro — but their feuds often play out on the streets of Belgrade, which has long since become a mafia hotbed. It says that many observers suspect that the political class, the police and even the judiciary are tied up with these mafia killings; and of 124 murder cases registered by Serbia’s Crime and Corruption Reporting Network (KRIK) since 2012, only 9 have been solved.
TRUMP’S TRADE WAR SANK A $2 BILLION INVESTMENT FOR A TOP RUSSIAN STEELMAKER IN TURKEY
Customs Today on 30th July reported that one of Russia’s largest steel producers, has postponed the launch of a lucrative project in Turkey due to uncertainty created by global trade wars. The project was the re-launch of hot-rolled steel production at its Turkish site and was expected to add between $90 million and $100 million to the company’s core earnings.
EXPORTS OF EAR-REGULATED GOODS TO 44 CHINESE ENTITIES RESTRICTED BY USA
On 1st August, Sandler Travis Rosenberg reported that the US Bureau of Industry and Security has issued a final rule that adds 44 entities in China to the Entity List, which lists entities restricted from receiving US exports of goods controlled under the Export Administration Regulations. The 8 entities and 36 of their subordinate institutions for acting contrary to US national security or foreign policy interests. 17 entities are involved in the illicit procurement of commodities and technologies for unauthorized military end-use in China while 27 entities present an unacceptable risk of use in, or diversion of US-origin items to, military end-use activities in China.
GUERNSEY CHARITIES COULD BE REGULATED
Guernsey Press on 1st August reported that Policy & Resources will be asked to look at the regulation of charities in Guernsey following the release of a House of Commons’ sexual exploitation and abuse report.
NEW RULES ON MEDIA ACCESS TO INFORMATION IN COURT RECORDS THANKS TO GDPR
On 30th July, McCann Fitzgerald published an article saying that on 1st August, new court rules will come into operation in England and Wales in both the civil and criminal courts to facilitate fair and accurate reporting of court hearings by formalising the media’s access to information. The article says that this is a significant development in formally facilitating media access to court records, which has been a point of contention for the media and for parties to litigation. As regards the scope of the new rules, it is to be hoped that clear guidance will be given on when information will be deemed to have been opened and we await the promised guidelines with interest.
ESTABLISHING A FRAMEWORK FOR VERIFYING NORTH KOREAN DISARMAMENT
On 31st July, NTI published a report following an event where the Center for Strategic and International Studies (CSIS) invited experts to answer the question, “Verifying North Korean Denuclearization: Where Do We Go From Here?”.
NEW SANA BRIEFING PAPER ANALYSES ALGERIA’S FOREIGN POLICY TOWARDS LIBYA IN A POST-QADDAFI ERA
The Small Arms Survey published on 1st August a briefing paper that explores Algeria’s response to events in Libya and offers insight into future prospects.
COMPLIANCE IN MEXICO’S RAPIDLY TRANSFORMING ENERGY SECTOR
On 25th July, Control Risks published a report that says that Mexico’s compliance environment has undergone a transformation – culminating in the establishment of the National Anticorruption System (SNA) in July 2016. As foreign investment pours into Mexico’s recently opened oil and gas sector, legal entities are now criminally liable for any offenses or irregularities committed in their name, making the case for a robust compliance strategy that includes due diligence investigations into possible business partners. However, it notes that The SNA is still in its early stages; a Specialised Prosecutor’s Office in Combating Corruption has yet to be properly established, and the Mexican Congress has yet to elect the Anti-corruption Prosecutor. But despite the lack of distinct progress, parts of the legal reforms introduced to create the SNA already have far-reaching implications. A June 2016 reform to the Federal Criminal Code — among other related legislation — introduced a major change: legal entities are now criminally liable for any offence done in their name, benefit or representation, including by employees and/or third parties. Companies now have to install due controls, risk assessments of third parties, codes of ethics, training programmes, and risk management and compliance programmes, among other measures.
US: RUSSIAN HACKER GIVEN 6 YEARS FOR BOGUS DEBIT CARD SCHEME
Baker McKenzie on 31st July reported that a Russian national, Mikhail Konstantinov Malykhin, 36, an illegal alien, was sentenced in Los Angeles to nearly 6 years in federal prison for hacking into the accounts of 2 companies and issuing unauthorised debit cards associated with dependent care accounts to conspirators around the world, leading to losses of more than $4 million.
HOW CAN WE STOP IRAN’S SPACE PROGRAMME THREATENING THE WEST?
The International Institute for Strategic Studies published an article on 31st July saying that with the Iran nuclear accord currently on life support, it is not too late to pursue diplomatic measures that address the growing challenge posed by Iran’s ballistic missiles. The report outlines 8 technical constraints that would be needed to limit the risks of Tehran’s space programme being used to develop intercontinental ballistic missiles.
TRACE PODCAST: HARMONIZING GLOBAL SETTLEMENTS
In the latest TRACE podcast, Tina Søreide discusses her work, through the International Bar Association (IBA), to bring consistency and predictability to bribery settlements worldwide.
For background, see also –
Negotiated settlements are a core issue in anti–corruption compliance. This is a critical area of global and industry concern because negotiated settlements directly impact on the role of corporations in the fight against corruption and how individuals are treated. By rewarding corporate policies that discourage the offering of bribes to attain business, negotiated settlements can have a significant effect on a corporations’ compliance with anti-corruption regulations. Negotiated settlements have become the most common enforcement outcome for allegations of corruption involving corporations, particularly with the differing models currently available in the US and the UK.
FUGITIVE FLORIDA LAWYER TAUGHT ENGLISH WHILE HIDING IN MEXICO
Daily Business Review from Law.com on 1st August reported on the latest twist in the story of Michael R. Casey, once at the top of South Florida’s legal profession, having worked from 2001 to 2007 for Greenberg Traurig – one of the largest law firms in the world – and for other firms, and he was also chairman of the Broward County Bar Association’s Corporation, Banking and Business Law Section. Casey, 71, had returned to the US after 4 years as a fugitive in Mexico, He fled Florida in 2014 after pleading not guilty to charges of mail and wire fraud, as well as conspiracy to commit both. He had served as president of a financial services company called Commodities Online which promised financiers anywhere from a 3% to 33% return on investments in tradable goods, such as minerals, sugar and fish.
ASTRAZENECA DISCLOSES PROBE BY DoJ OVER ALLEGED BRIBES TO TERRORISTS IN IRAQ
Corporate Counsel from Law.com on 30th July reported that the British drug company said in an SEC filing that the investigation is tied to allegations made against the company in a private lawsuit filed last year by US veterans and their survivors. That lawsuit The suit claims bribe money from medical companies in effect helped to fund a terrorist militia, allegedly trained by the terrorist group Hezbollah, that killed hundreds of American soldiers and wounded thousands more after the 2003 US-led invasion of Iraq.
MALI ON THE BRINK
A new report from NGO Peace Direct says that Mali is facing an escalating violent conflict that has spread from the peripheral Sahel regions in the far northwest to the centre of the country. In 2018, the country is faced with a situation where violence is more intense and widespread than during the widely publicised 2012–2013 crisis. It says that Mali is not experiencing a civil war in the conventional sense but a complex, multidimensional security crisis of interlinked micro-conflicts. Communities are fragmenting into competing armed factions and mass atrocities are becoming commonplace.
ISLE OF MAN PREPARES FOR POSSIBLE MALDIVES SANCTIONS
On 1st August, a news release advised that the European Union (Maldives Sanctions) Order 2018 and Maldives Sanctions Regulations 2018 have implemented in the Island the EU sanctions regime created under EU Regulation 2018/1001/EU on 16th July, with effect from 1st August – though, to date, no person or entity has been designated.
ISLE OF MAN AMENDS ITS LEBANON SANCTIONS REGIME
On 1st August, the Isle of Man advised that it had replaced the UK Order-in-Council made under the United Nations Act 1946 (of Parliament), which had formerly applied relevant UN sanctions, with a new order made under wholly domestic legislation that applies the relevant EU Regulation 305/2006/EC, and the Lebanon Sanctions Regulations 2018, which provides for penalties and offences in breach of the EU Regulation, and the issue of licences by the Treasury, with effect from 1st August. This is a technical change and a tidying up of the necessary legal framework to ensure that the Island can effectively maintain its sanctions controls in line with those of the UK and EU.
EUROPEAN PUBLIC PROSECUTOR’S OFFICE: FAQ
On 1st August, the EU published a FAQ factsheet on the European Public Prosecutor’s Office, created under an EU Regulation that came into effect on 20th November 2017. It will be an independent and decentralised prosecution office of the EU with competence for investigating, prosecuting and bringing to justice crimes against the EU budget, such as fraud, corruption or cross-border VAT fraud above €10 million and is intended to combine European and national law-enforcement efforts in a unified, seamless and efficient approach. The Netherlands has just become the 21st Member State to join the Office.
UKRAINE’S PRIVATBANK WAS INVOLVED IN FRAUD, LONDON COURT HEARS
Reuters on 1st August reported that lawyers representing 2 former owners of Ukraine’s biggest lender, PrivatBank, told a hearing in London they did not dispute that the bank had made some fraudulent loans but contested their amount. It reminds one that the Ukrainian authorities took PrivatBank into state hands in December 2016 and have spent nearly $6 billion so far to plug a hole in its balance sheet, caused by what the government alleges were fraudulent lending practices and money laundering.
WEALTH MANAGEMENT DIRECTOR JAILED OVER £14.5 MILLION PONZI SCHEME
Financial Reporter on 1st August reported that Freddy David, the MD of a wealth management firm, HBFS Financial Services Limited, has been sentenced to 6 years in prison after pleading guilty to running a Ponzi scheme 2005-17, in which 55 victims were defrauded out of over £14.5 million. The case was referred to the City of London Police by the FCA after it became suspicious of the HBFS bank accounts.
UK: PLANS TO TACKLE ‘MONSTER’ DISCLOSURE LEVELS IN CIVIL LITIGATION APPROVED
The Law Society Gazette on 1st August reported that reforms that could limit the quantity of material disclosed in civil litigation could help ensure the Business and Property Courts remain competitive internationally, solicitors have claimed as a pilot of the new scheme was given the green light, and will replace ‘standard disclosure’ with between ‘basic’ and ’extended’ disclosure. A 2-year limited pilot will run from 1st January. Under the new rules, basic disclosure will be the standard. Extended disclosure will be granted on an issue-by-issue basis.
MALTA: NEARLY 10 MILLION CONTRABAND CIGARETTES SEIZED BY CUSTOMS IN FIRST 6 MONTHS
The Times of Malta on 1st August reported that a total 9,933,986 contraband cigarettes and 78.2 kg of tobacco were among the hauls made by the Customs Department in the first 6 months of the year. Amongst other statistics reported are that Customs carried out 2,422 cash control searches.
THIEVES STEAL SWEDISH ROYAL JEWELS AND ESCAPE BY SPEEDBOAT
KYC 360 on 1st August reported that thieves in Sweden walked into a small town’s medieval cathedral in broad daylight and made off with priceless crown jewels dating back to the early 1600s before escaping by speedboat. The thieves snatched 2 gold crowns and an orb made for King Karl IX and Queen Kristina in the daring robbery. One of the crowns is encrusted with precious stones. The stolen items were on display at an exhibition in the cathedral, and visitors were inside at the time. Police are quoted as saying that the stolen items are “impossible to sell” because of their uniqueness and high visibility.
FCA CONSULTS ON RULES AND GUIDANCE TO IMPROVE CONDUCT STANDARDS AND COMMUNICATIONS IN THE PAYMENT SERVICES AND E-MONEY SECTORS
A news release from the FCA on Mondo Visione on 1st August says that the consultation from the FCA proposes to extend the application of the Principles for Businesses and certain specific rules about promotions and communications so that they cover wider categories of businesses that it currently regulates (including businesses authorised or registered under the Payment Services Regulations or the Electronic Money Regulations). This includes broader types of activities (including the provision of payment services and the issuing of electronic money where they are not connected to an activity regulated under the Financial Services and Markets Act (FSMA)). The consultation runs to 1st November.
On 1st August, OFAC said it was targeting Turkey’s Minister of Justice, Abdulhamit Gul, and Minister of Interior, Suleyman Soylu. These officials serve as leaders of Turkish government organisations are are designated under the Executive Order concerned with human rights abuses. Any property, or interest in property of either within US jurisdiction is blocked, and US persons are generally prohibited from engaging in transactions with them.
Bloomberg on 1st August reported that the US has prepared a list of Turkish entities and individuals to target should it decide to impose sanctions on Recep Tayyip Erdogan’s government for imprisoning US citizens and employees of its diplomatic mission. Meanwhile, negotiations to release one of the people, evangelical Pastor Andrew Brunson, are ongoing.
STOP PRESS – SEE SUBSEQUENT POST ABOUT OFAC DESIGNATING 2 LEADING TURKISH OFFICIALS OVER THE BRUNSON AFFAIR
Rferl on 1st August reported that the US Treasury says that it has extended the deadline for investors to divest holdings in the sanctioned Russian companies En+, GAZ Group, and Rusal from August 5th to October 23rd. Oleg Deripaska has held a controlling interest in En+, which in turn controls Rusal, the world’s largest aluminium producer outside of China. Automaker GAZ is also part of his business empire. The sanctions against Rusal initially disrupted the global supply chain for aluminium and sent prices soaring, raising fears that the company would be unable to finance its operations and stay in business.
On 31st July, a news release on Mondo Visione from the DoJ reported that it had agreed an addendum to the NPA from December 2015 – the DoJ had entered into NPA with 80 banks between March 2015 and January 2016 under the Swiss Bank program. Now Lombard Odier has acknowledged that there were certain additional US-related accounts that it knew about, or should have known about, but that were not disclosed to the DoJ at the time of the signing of the NPA. Lombard Odier will pay to the DoJ an additional $5,300,000, and will provide to the DoJ supplemental information regarding its US-related account population, which now includes 88 additional accounts.
The Coin Telegraph on 1st August that South Korean authorities are investigating a possible crypto investment scam involving the Seoul-based Shinil Group as the key figure. In July it announced it had found the Dmitrii Donskoi, a Russian armoured cruiser that sank 113 years ago and was loaded with $131 billion worth of gold.