3rd August 2018
TRADE SECRET THIEF HID FILES IN DIGITAL PHOTO OF SUNSET
IP Watch reported that an alleged thief caught stealing trade secrets from General Electric in New York hid the electronic files inside an innocent-looking digital picture of a sunset using steganography, according to the DoJ. Xiaoqing Zheng allegedly buried files containing information on GE’s turbine technologies in the picture and then emailed it to himself.
AMERICAN COLLECTOR RETURNS PREHISTORIC POTTERY PIECES TO THAILAND
The Nation in Thailand on 2nd August reported that American collector Katherine Ayers-Mannix has returned her private collection of 12 prehistoric Baan Chiang pottery pieces to the Thai government. It is also reported that Thailand could potentially see two additional smuggled stone lintels brought home from a US museum. It says that, in the US, the DoJ is investigating an item in a museum in San Francisco, and that a 13th Century Buddha sculpture was smuggled from Thailand and now resides in London University’s prominent School of Oriental and African Studies (SOAS).
ROMANIA, FIFTH IN EUROPE FOR CIGARETTE SMUGGLING
Romania Insider on 2nd August reported that smuggling networks sold over 4.15 million cigarettes in Romania, in 2017, about 10% of the total volume smuggled in the EU, Switzerland and Norway, according to a report by KPMG. Higher cigarette smuggling volumes were only recorded in Germany, Poland, UK and France, where the population is also higher. It says that Romania is attractive for smugglers due to its 2,000 km of borders with non-EU states, where cigarettes trade at a third of the price in Romania, according to representatives of BAT Romania.
VIRGINIA BUSINESS OWNER ORDERED TO FORFEIT $14.3 MILLION FOR INTERSTATE CIGARETTE SMUGGLING
The Herald Mail on 1st August reported that a business owner, Charanjit Singh (aka Tony Chawla), 61, was sentenced to 2½ years in federal prison and ordered to forfeit $14.2 million for unlawful cigarette smuggling. The cigarettes were acquired in Virginia, where the tax rate for cigarettes is one of the lowest in the nation, and sold in other states, including New York, which has one of the nation’s highest tax rates, according to the government.
CFATF “GIVES ANTIGUA & BARBUDA ONE OF THE BEST REGIONAL REPORTS”
The Office of National Drug and Money Laundering Control and Policy (ONDCP) in Antigua & Barbuda reported on 23rd July that the Caribbean Financial Action Task Force (CFATF) has given Antigua and Barbuda one of the best reports of regional countries so far in its 4th round evaluations. The 2018 Mutual Evaluation Report, published by the CFATF, gives an overall positive assessment of the country’s efforts to combat money laundering and terrorist financing. Examiners looked at both technical compliance with the FATF 40 recommendations and the effectiveness of the implementation of the AML/CFT system. Areas for improvement included identification of vulnerable NPO; lack of full awareness by lawyers of their AML/CFT obligations; and the need for implementation of the recently enacted requirement for annual reports on beneficial ownership of entities. The country was described as timely in its mutual legal assistance and extradition to other countries, though greater prioritisation was needed.
The report can be found at –
THE TOP 20 WAYS FOR A US CRYPTO EXCHANGE TO AVOID UNWANTED FEDERAL SCRUTINY
ACFCS on 2nd August carried an article which says that virtual currency exchangers have been at the heart of some of the most high-profile criminal cases, with some used as a doorway for darknet hackers to monetise their activities, others criticised by examiners for lax AML programmes or getting on the radar of government authorities due to getting defrauded themselves. The article suggests a collection of 20 ways to help ensure “compliance authority harmony”. These include such things as – don’t appoint the most junior person in the room as your AML Compliance Officer (AMLCO); Make sure you have an independent AML audit done by a competent, qualified person who is not only widely considered an expert, but also independent; Have a real AML programme, not one that is half…baked. Don’t say you have an AML programme because you just check the OFAC sanctions list; As part of your AML programme, conduct a comprehensive risk assessment of your operations, products, services, and geographies and update periodically and as business risk profile changes; Offer services that convert cryptocurrencies only into US dollars (fiat currency) and only from US-based Exchangers.
MONEY LAUNDERING VIOLATIONS NET $890,000 IN PENALTIES IN CHINA
The Asia Times on 3rd August reported that the Chinese Central Bank had issued fines to Bank of Communications, Shanghai Pudong Development Bank, Ping An Bank, Galaxy Securities and China Life Insurance as the People’s Bank of China is stepping up monitoring of money laundering activity with increased investigation and punishment.
NIRAV MODI EXTRADITION SOUGHT FROM UK
The Times of India reported on 3rd August that the Indian government has sent a request to the UK for extraditing Nirav Modi, who is wanted in connection with the Punjab National Bank (PNB) scandal. Nirav Modi along with his uncle, Mehul Choksi, of the Gitanjali group are being probed in the fraud scam by the CBI and ED in India.
TRADE AND REMITTANCES WITHIN AFRICA
A new study from the IMF on 1st August says that, contrary to popular belief, countries in sub-Saharan Africa are more closely tied than ever, thanks to rising trade with one another and remittances — the money people send home when working in another country. Integration between the economies of sub-Saharan Africa has increased most substantially through trade. In 1980, regional exports were equal to only 6% of total exports, but by 2016 they had risen to 20%. Integration within the region has also increased thanks to the wages sent home by workers living in another country. In 2015, these amounted to about $11.5 billion. Total remittances to sub-Saharan Africa have been broadly stable in percent of GDP over the last 10 years, but their composition has changed. By 2015, intra-regional remittance flows accounted for one third of total remittances. As with trade, intra-regional remittance flows are large by global standards, about 0.6% of GDP, and greater than those in emerging and developing Asia, Europe, and the Americas, which are all less than 0.3% of GDP. Developments in financial technology — notably mobile banking — continuously reduce the cost of sending remittances. Even though remittance costs are less affected by distance than trade costs, remittance flows mostly take place within the sub-region.
NEW PRESIDENT’S PLANS RAISE FRESH SECURITY CONCERNS IN COLOMBIA
Eurasia Live on 26th June carried an article saying that President-elect Ivan Duque’s promises to toughen the terms of the historic 2016 deal that ended a 50-year insurgency carry risks for the country’s fragile security environment. The conservative politician tapped into dissatisfaction with the peace accord, the state of the economy, and corruption to win the election.
NEW ZEALAND: LAWYER AND BANKER JAILED OVER $54 MILLION PROPERTY FRAUD SCHEME
Newshub on 3rd August reported that the scheme involved obtaining residential home loans for the property development group LV Park through deception and bribery payments to bank employees. Suspended lawyer Gang (Richard) Chen and former bank employee Zongliang (Charly) Jiang were sentenced to imprisonment at the High Court in Auckland. Chen acted as a solicitor in the sale and purchase agreements and facilitated bribery payments to a bank employee. Jiang is a former BNZ bank employee who facilitated the loans in return for bribes.
300 KG OF BANNED KHAT LEAVES, LABELLED AS GREEN TEA, SEIZED IN INDIA
DNA on 3rd August reported that officials have seized a major consignment of Khat leaves recently, as part of an ongoing investigation into an international drug cartel involved in smuggling the psychoactive leaves. The agency seized 300 kg of Khat shipped from Ethiopia to the Foreign Post Office. Officials have so far seized over 470 kg of Khat leaves in a month. The leaves and tops are chewed or, less frequently, dried and consumed as tea, to achieve a state of euphoria and stimulation. Suppliers of Khat leaves prefer India as a transit route because it is convenient for traffickers to peddle drugs to the western countries from here, the source said – the article saying that costs are lower and that Persian Gulf countries, the US and UK do not accept parcels and courier packages shipped from Ethiopia.
JAPAN ASKS ASEAN TO STEADILY IMPLEMENT UN SANCTIONS ON NORTH KOREA
Japan Today on 3rd August reported that, during a meeting in Singapore, Japan’s Foreign Minister has urged ASEAN member states to continue to steadily implement UN sanctions against North Korea, amid concern that some other countries have effectively relaxed them. He also called for ASEAN members’ co-operation to resolve the issue of the abduction of Japanese nationals by North Korea in the 1970s and 1980s. ASEAN comprises Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
CRITICAL SHORTAGE OF CROSS-BORDER TRUCK PERMITS IF UK DOES NOT REACH BREXIT DEAL
Commercial Motor on 3rd August carries a warning from RHA chief executive Richard Burnett, if no Brexit deal on the table and a maximum of 1,224 cross-border truck permits up for grabs. It points out that here are only 2 recognised forms of permit for international haulage: a community licence, which is free of charge to holders of international O-licences, and European Conference of Ministers of Transport (ECMT) multilateral permit, and when the UK leaves the customs union, community licences will become obsolete – and the maximum number of ECMT licences would be 1,224. According to the RHA, this is less than 5% of the number of community licences in use.
LONDON COURT RULES THAT DJIBOUTI ACTED ILLEGALLY IN SEIZING CONTAINER TERMINAL
Loadstar on 2nd August reported that the London Court of International Arbitration has found for Dubai-based port operator DP World in its dispute with the government of Djibouti over the right to run the country’s Doraleh container terminal. The Djibouti government has passed a new law allowing it to seize control of the facility, which DP World had built after winning a concession in 2006.
IRELAND: WIDE-REACHING IMPLICATIONS OF THE CRIMINAL JUSTICE (CORRUPTION OFFENCES) ACT 2018 FOR CORPORATES
Law firm Matheson on 2nd August published an article which says the Act which was signed into law by the President on 5th June, overhauls existing anti-corruption laws and introduces a number of new offences. It says that one of the most important developments is the new corporate liability offence which allows for a corporate body to be held liable for the corrupt actions committed for its benefit by any director, manager, secretary, employee, agent or subsidiary. The single defence available to corporates for this offence is demonstrating that the company took “all reasonable steps and exercised all due diligence” to avoid the offence being committed, though there is no guidance yet on what is reasonable. The article sets out to provide some basic advice.
FOREIGN DIRECT INVESTMENT SCREENING: GERMANY IS GETTING TOUGHER WITH NON-EUROPEAN INVESTORS
Allen & Overy published an article on 2nd August saying that the German government is prepared to use its powers to block foreign direct investments. It refers to the proposed acquisition of the German mechanical engineering company Leifeld, saying that it is a landmark case in which, for the first time ever, Germany has prohibited a foreign investor from acquiring a German business. Even after it was announced that the Chinese acquirer dropped the proposed acquisition, the German government reportedly issued a precautionary blocking decision.
VIRTUAL CURRENCIES IN LUXEMBOURG
On 2nd August, Field Fisher published an article saying that Luxembourg tax authorities published on 26th July, a circular in relation to the tax treatment of income realised by means of virtual currencies, notably in the framework of their alienation or creation – and provides details of the key takeaways.
ARIZONA BITCOIN TRADER GETS JAIL SENTENCE FOR MONEY LAUNDERING
Baker McKenzie reports on 2nd August that a federal jury convicted Thomas Mario Costanzo on 5 charges of money laundering and sentence will credit time already served since his arrest in April 2017. Costanzo had laundered $164,700 over 2 years through bitcoin transactions – money he took from an undercover federal agent, who told him the funds were from heroin and cocaine traffickers.
JAIL FOR SOLICITOR CONNED BY “MILLIONAIRE”
Legal Futures on 3rd August reported that Rose Egarr, 60, a lawyer who lost her firm, career and home after she stole client money to fund a penniless conman who falsely claimed to be a multi-millionaire has been jailed for 30 months. She plundered £200,000 from her firm to give money to Michael Milner.
LOOPHOLES IN UK COMPANY REGISTER SHOW CRIME CAN STILL FLOURISH, STUDY FINDS
A report from the ICIJ on 2nd August on the recent Global Witness study, using advanced data techniques and tools, that found that although most companies comply with the new transparency rules, thousands have no obvious owner or submitted paperwork that raised red flags for potential wrongdoing.
MIDDLE-CLASS COCAINE USERS HELPING DRUG GANGS DESTROY SOCIETY, SAYS METROPOLITAN POLICE CHIEF
The Telegraph on 31st July carried an article saying that the UK’s most senior police officer has attacked “middle class” cocaine users who worry about “global warming and organic food” but fail to see the harm in illegal drugs, and the demand from well-off users for the class A drug was helping to fuel the surge in violent gang crime.
US SENATORS OUTLINE FEDERAL EFFORTS TO AVERT FINANCIAL CHAOS FROM POTENTIAL BIO ATTACK
Homeland Preparedness on 2nd August reported on a meeting to discuss the impacts of large-scale biological events on the American economy, and said that the global spread of a deadly disease outbreak during a biological attack would impact far more than US government financial resources, former federal lawmakers say, and could crash the coffers of local and state budgets just as severely. Members of the Blue Ribbon Study Panel on Biodefense, established in 2014 to assess gaps and provide recommendations to improve biodefense, have consistently reported that the US is underprepared for biothreats and doesn’t afford them the same level of attention as it does to other threats.
KREMLIN PLAYBOOK SPOTLIGHT: MOLDOVA
On 19th July, the Center for Strategic and International Studites published a profile of Moldova. It explains that it is the poorest country in Europe, wedged between Romania and Ukraine. Moldova was part of the Russian Empire in the 19th Century and most of it became part of Romania after the First World War before being incorporated as a republic of the Soviet Union in 1940. After declaring independent in 1991 after the failed August coup against Soviet President Gorbachev, tensions with pro-Russian separatist movements in Transnistria led to a brief conflict in 1992, which has remained frozen since a July 1992 ceasefire.
TERRORIST VIOLENCE DECREASES WORLDWIDE IN 2017, BUT REMAINS HISTORICALLY HIGH
The National Consortium for the Study of Terrorism and responses to terrorism (START) on 1st August released its report on terrorism in 2017, saying that ISIL remains deadliest group but responsible for fewer attacks, deaths than last year. Contrary to what might seem to be the case, with 10,900 terrorist attacks killing more than 26,400 people in 2017, the numbers of terrorist attacks and deaths worldwide have declined for the third consecutive year. However, despite recent decreases in terrorist violence, the number of attacks in 2017 is 28 percent higher than in 2012, and deaths 71% higher. Terrorist violence peaked in 2014 at nearly 17,000 attacks and more than 45,000 total deaths. More than half of all attacks took place in 4 countries: Iraq (23%), Afghanistan (13%), India (9%) and Pakistan (7%); and more than half of all deaths took place in 3 countries: Iraq (24%), Afghanistan (23%) and Syria (8%).
NEW DATA AND ANALYSIS: SOCIAL MEDIA USE BY US EXTREMISTS
In its July newsletter, START says that online social media platforms are playing an increasingly important role in the radicalisation process and lone actors are particularly active on social media, according to a new START report providing a thorough analysis of newly collected data on the social media activities of US extremists.
SHIP ARRESTS IN THE UK – CAN AN ARRESTING PARTY BE REQUIRED TO GIVE CROSS-UNDERTAKINGS IN DAMAGES?
Reed Smith on 2nd August published a briefing which says that under English law on the arrest of ships, in essence, a party’s ability to arrest a ship in the UK occurs as of right. Therefore, a shipowner will be unable to recover any compensation at all for wrongful arrest unless the arrest was obtained by bad faith or malice or gross negligence. The briefing poses the question of whether a vessel owner is entitled to request that the arresting party provide a cross-undertaking in damages in the same form as that typically required in applications for freezing orders in the Commercial Court. The article (and the recent case it refers to) confirm that such undertakings are not applicable in vessel arrests.
EUROPEAN INSURANCE AND OCCUPATIONAL PENSIONS AUTHORITY (EIOPA) PUBLISHED REPORT “UNDERSTANDING CYBER INSURANCE – A STRUCTURED DIALOGUE WITH INSURANCE COMPANIES”
On 3rd August, EIOPA published this report and says that cyber risk is a growing concern for institutions, individuals, and financial markets. In less than 5 years, it has surged to the top positions in the list of global risks for business. One of the key findings of the report confirms this fact, namely the need for a deeper understanding of cyber risk, which is a core challenge for the European insurance industry. This report is based on a survey with responses to a set of 14 qualitative questions answered by 13 (re)insurance groups located in Switzerland, France, Italy, Germany and the UK.
SOUTH AFRICA: SOLDIERS ON BORDER DUTY SEIZE AND RECOVER GOODS VALUED AT 60+ MILLION RAND
On 3rd August, Defence Web reported that soldiers from both the full-time and Reserve Force components of the SA Army continue patrolling South Africa’s landward borders – with Botswana, Lesotho, Mozambique, Swaziland (eSwatini), Zimbabwe – preventing undocumented people from entering the country and confiscating contraband and narcotics. The seizures are made up from illegal substances and narcotics, contraband, 113 recovered vehicles, livestock and 22 unlicensed firearms, including 3 rifles. Border protection outside official points of entry, currently the responsibility of the national defence force, will remain in place with the Department of Home Affairs.
CYPRUS: FORMER DEPUTY ATTORNEY GENERAL RELEASED FROM JAIL
The Cyprus Mail on 3rd August reported that disgraced former AG, Rikkos Erotokritou, has been released from jail where he was sent in March 2017 for 3½ years after he was found guilty of corruption. A lawyer called Panayiotis Neocleous was also jailed for 2½ years in the same case and has already been released. They had colluded to arrange for Erotokritou to launch the prosecution of 5 Russian individuals and 1 company at the behest of and for the benefit of the Neocleous law firm, which had long been battling them in Cypriot and Russian courts over ownership and control of Providencia, a trust-fund worth hundreds of millions.
SOUTH AFRICA: MORE VBS EXECUTIVES PROVISIONALLY SEQUESTRATED IN FRAUD CASE
On 3rd August, Fin24 reported that 2 more VBS Mutual Bank executives have been provisionally sequestrated, bringing to 5 the total number of managers at the institution whose assets are frozen. Vele Investments, VBS’s main shareholder which allegedly also benefited from the alleged fraud carried out by bank executives, has been liquidated.
For more on the VBS case, see –
DEUTSCHE BANK STRUGGLING TO CLEAN UP MONEY LAUNDERING PROBLEMS
The Irish Times on 3rd August carried an article about the bank’s continuing problems with fully identifying clients and their source of wealth – more than a year after it was fined nearly $700 million for allowing money laundering. 2 confidential reviews detailed the results of tests on a sample of investment bank customer files in several countries, including Ireland and Russia. Both found gaps in the screening process, which aims to meet global KYC requirements.
CHINA ASKS SWEDEN TO EXTRADITE MAN WANTED ON EMBEZZLEMENT CHARGES
Reuters on 3rd August reported that China has asked Sweden to extradite Qiao Jianjun (aka Feng Li) allegedly suspected of breach of trust and fraud relating to the embezzlement of the equivalent of around £8.6 million. Swedish law prevents the authorities from extraditing someone to a country where they would face the death penalty.
CAN ANGOLA’S NEW PRESIDENT GET RID OF CORRUPTION AND REVIVE HIS PARTY’S REPUTATION?
The Washington Post on 3rd August published an article about Angola’s President João Lourenço, asking is Angola a model of electoral democracy? Hardly. It says, Lourenço helms a government with a record of political repression and electoral fraudulence. Transparency International ranks Angola among the world’s most corrupt governments, and a 2017 survey found that 91% of more than 9,000 respondents believed the MPLA leadership “acts in its own interest, and not in the best interest of the state or the people at large”.
IP CRIME AND ENFORCEMENT FOR BUSINESSES IN THE UK
On 3rd August, the Intellectual Property Office published updated guidance including how intellectual property crime and infringement occurs and how it impacts on businesses, what to do if you are accused of infringing someone’s IP rights, options available to address IP infringement including private prosecutions and how to report IP crime.
WALES: 10 JAILED FOR MORE THAN 28 YEARS AFTER FAKE IMMIGRATION DOCUMENTS SCAM
ITV News on 3rd August reported that 10 people have been jailed for a total of more than 28 years after supplying false employment documents, such as annual salary statements and wage slips, to help unlawful immigration. The individuals, who were based in Cardiff and Newport, were under investigation for their fraudulent activity for more than 2 years.
PASSPORTS RETURNED TO SUPERYACHT CREW CAUGHT UP IN DIVORCE DISPUTE
Superyacht News on 3rd August reported that crew working on 115-metre “Luna” had their passports seized by authorities in Dubai when the vessel was impounded in Dubai earlier this year whilst a London court dealt with a dispute between Russian owner Farkhad Akhmedov and his ex-spouse. The article says that, working with the yacht’s Marshall Islands flag state, maritime union Nautilus International has been providing advice and assistance to its members on board, many of whom were cautious about speaking to the union because of non-disclosure agreements.
GAMBLING LICENCES TO BE TIED TO UK ADVERTISING AND PRIVACY RULES
Out-Law on 3rd August reported that gambling providers in Britain could lose the right to operate if they fail to comply with UK advertising rules, privacy regulations or consumer protection law under new licensing requirements set to apply from later this year – referring to the Gambling Commission’s Licence Conditions and Codes of Practice that comes into effect on 31st October.
The Licence Conditions and Codes of Practice document can be accessed at –
MARYLAND BUSINESSMAN CONVICTED IN $50 MILLION BANK FRAUD AND MONEY LAUNDERING SCHEME
Baker McKenzie on 3rd August reported that Mark Ian Gaver, 56, has been found guilty of 8 counts of bank fraud and two counts of money laundering related to an alleged scheme to obtain $50 million in financing from Santander Bank for his company, Gaver Technologies, using false and fraudulent financial information 2008-16.
INCIDENTS INVOLVING 3D-PRINTED FIREARMS
Following the furore over the Defense Distributed case and the planned publishing of files that enable the printing of 3D firearms, which could soon make plans for 3D-printed guns freely available on the Internet, the Violence Policy Center in the US has produced a factsheet on past incidents involving such weapons.
LABOUR EXPLOITATION – SPOT THE SIGNS
In the UK, the Gangmasters and Labour Abuse Authority has produced a booklet to assist anyone who comes into contact with individuals who may have been trafficked and/or are being exploited by people who wish to control their movements and actions to exploit them for their labour.
IRISH CUSTOMS SEIZES €100,000 AT DUBLIN AIRPORT
On 3rd August, the Revenue Commissioners reported that, on 2nd August, Revenue Officers from Dublin Airport were granted a 3-month cash detention order by a judge following the seizure of €100,000 on 1st August when, during an intelligence-led operation, officers at Dublin Airport stopped and searched a man in his forties and a woman in her thirties travelling to Budapest via Dusseldorf. The cash was found hidden in hand luggage. Revenue officers seized the cash suspecting it to be the proceeds of, or intended for use in, criminal activity.
COUNTERING THE FINANCIAL NETWORKS OF WEAPONS OF PROLIFERATION – EVIDENCE FROM RUSI AT A HEARING OF THE US HOUSE COMMITTEE ON FINANCIAL SERVICES
The Royal United Services Institute has published the testimony given by the Director of RUSI’s Centre for Financial Crime before the Committee. The hearing was to examine strategies to disrupt both the financing and procurement of WMD, how financial institutions can identify the financing of proliferation activities, and the scope and effectiveness of law enforcement agencies.
A video of the hearing is also available at –