4th August 2018
WHY DANSKE BANK ESTONIA APPEARS IN SO MANY MONEY LAUNDERING SCANDALS
Transparency International on 1st August published an article attempting to show why the bank was implicated in repeated scandals, as Danske Bank Estonia or its former name of Sampo Bank – despite Danske Bank itself being Denmark’s leading bank. Last year, OCCRP reported on the so-called Azerbaijan Laundromat – a network of illicit financial payments that used reputable banks and secret companies to funnel payments from a $2.9 billion slush fund to buy political influence and launder Azerbaijan’s international image. In this scheme, most of the funds were deposited into bank accounts that 4 UK-registered shell companies held in Danske Bank Estonia. It was also at the centre of a previous “Russian Laundromat” investigation and (as Sampo Bank) reportedly implicated in the case of fraud and corruption in Russia uncovered by the late Sergei Magnitsky. New data revealed by a Danish newspaper now appears to shows that an additional $4.3 billion of suspicious cash has passed through Danske Bank, increasing the value of possibly laundered money by the Estonian branch to at least $8.3 billion. The article says that the branch operated a significant non-resident portfolio, which made a considerable volume of payments through the branch – in 2012, 35% of profits were generated by Russian customers, who made up only 8% of the customer base. Inspections in Estonia in 2014 found shortcomings in AML practices, but it took a year and a half before the branch closed the non-resident accounts as requested, and 4 years before a formal criminal investigation was launched in Estonia.
RETURNING NIGERIA’S STOLEN MILLIONS
Another article from Transparency International, on 3rd August, is concerned with how the $322 million stolen by former military rule, Sani Abacha, can be safely returned to Nigeria and distributed, without some (or all) of it being stolen once more. The money from Switzerland is a small proportion of the estimated S$3 to $5 billion in public money Abacha is suspected of stealing. The article says that previously $723 million illicitly acquired by Abacha’s family was returned to Nigeria from Switzerland and a significant amount of these funds remains unaccounted for. – which has led Switzerland to insist that the World Bank will monitor the distribution of the new funds, whereby around 300,000 poor families in just over half the 36 states in Nigeria will each receive approximately $14 per month through the Nigeria National Social Safety Net Programme.
BLOW TO FIGHT AGAINST POACHING AS MOMBASA COURT RELEASES IVORY SMUGGLING SUSPECT DESPITE 20-YEAR SENTENCE
Hivisasa reported that the High Court in Mombasa, Kenya has set aside a 20-year jail term handed to businessman Feisal Mohammed, a Mombasa businessman who had been convicted over possession of ivory. An appeal judge said the sentence was unconstitutional and severe; and that the prosecution failed to prove by providing sufficient evidence that showed Mohammed owned the ivory or was engaged in trafficking it. He was arrested in Dar es Salaam, Tanzania, in December 2014. The magistrate had acquitted the other accused persons, saying they had been caught up in Feisal’s dealings unknowingly.
US COLLECTOR RETURNS 12 ANCIENT TREASURES TO THAILAND AS PART OF CRACKDOWN ON LOOTED ARTEFACTS
Artnet News on 3rd August reported that an American antiquities collector has returned a dozen looted ancient artefacts, including decorated pottery and bronze jewellery, to Thailand, which has been campaigning in recent years for the return of smuggled treasures. The objects are believed to be between 1,800 and 4,300 years old and made by an ancient civilization in Ban Chiang, a UNESCO World Heritage Site in north-east Thailand. It says that it remains unclear how the collector, Katherine Ayers-Mannix, obtained the antiquities, which she turned over to the Thai Embassy. In 2014, the US returned 554 artefacts from Ban Chiang to Thailand that were discovered in a raid on the Bowers Museum in Santa Ana, California in 2008, believed to have been part of a larger SE Asian smuggling network. The Thai government is currently investigating objects at several US museums.
SWISS COURT ALLOWS EGYPT TO TRACK SMUGGLED STATUE
Egypt Independent on 3rd August reported that a storage company in Geneva has been obliged to hand Egypt the identity documents of a secretly-smuggled statue of King Dfedre, according to a ruling of the Swiss Federal Criminal Court. The article says that ultimately the documents will help the Egyptian authorities pursue judicial proceedings that could lead to the restoration of the statue in its site near the Great Sphinx.
IRAQI STOLEN TREASURES RETURNING HOME
On 3rd August, the AINA news agency reported that 5,500 artefacts from Iraq were intentionally mislabelled as clay tiles and smuggled through the UAE and Israel to the US, to their eventual recipients — the arts and crafts chain Hobby Lobby, and its owners, the Green family, who hoped to spotlight the ancient valuables in their pet project, the Museum of the Bible. Hobby Lobby agreed to a fine of $3 million for smuggling, and in August 2017, Israeli authorities detained 5 antiquities dealers in Jerusalem, after a tip from US investigators looking into the case. In discussing the looting problem, the article points out that the challenge remains massive, with historians trying to recover 8,000 of the 15,000 objects still missing from a 36-hour stealing spree that occurred as US forces entered Baghdad in April 2003 — and that was just at the Iraq Museum. An exhibition at the British will include presentations on the Iraq Emergency Heritage Management Training Scheme, a pilot project for the UK Cultural Protection Fund that will train 50 Iraqi heritage employees in retrieval techniques.
PAKISTAN: TASKFORCE BRAINSTORMS PLAN TO STEM TERROR FINANCING
The Express Tribune on 4th August reported that the National Counter Terrorism Authority (Nacta) and the Federal Investigation Agency (FIA) have decided to pool their resources to prepare the National Risk Assessment (NRA) report for FATF. This decision was taken during the 10th monthly meeting of the National Task Force on Combating Financing of Terrorism (CFT). The day-long meeting remained focused on the implementation of the action plan of the FATF, which last month formally placed Pakistan on its “grey list”. A team from the Asia Pacific Group (APG) is arriving on August 13th on a pre-assessment mission. The APG is an FATF-style regional body and reports to the FATF on the compliance of its member countries.
GERMANY: BUNDESBANK “FALLS INTO LINE WITH US IRAN SANCTIONS”
Handelsblatt on 3rd August reported that Germany’s central bank has changed its terms and conditions so that it can more tightly control withdrawals. The move is seen as bowing to US pressure over trade with Iran. Last month, the US ambassador to Germany criticised plans by the European-Iranian Trade Bank to withdraw €300 million from the Bundesbank and send it in cash to Tehran. The European-Iranian Trade Bank is registered in Hamburg, but is majority owned by the Iranian government and it badly needs cash reserves to shore up its feeble currency,
ARRON BANKS, MONEY FOR MINES AND THE “LOAN SCENARIO”
An article from Financial Times’ Alphaville is concerned with a business dispute between Brexit-backer, Arron Banks and Chris Kimber, a former business partner in his South African mining operations, which the article says has kept Brexit-watchers gasping in recent weeks. The article says that documents unearthed by Channel 4 TV have laid bare explosive allegations against the British insurance entrepreneur. Allegations made in a civil lawsuit, which Banks “fully disputes”, include that he sought investment for his mines from a Russian state-owned company, that he redirected money raised for the mines to the Brexit campaign, and offered “mercenary support” for an African politician, if needed. The article says that the documents seen raise questions about the structure and flows of cash between his interlocking companies, some of which link his political and business interests.
CANADA: HALIFAX MAN CHARGED WITH VIOLATING SYRIA SANCTIONS CONTINUES TO CONDUCT BUSINESS IN WAR-TORN COUNTRY
CBC in Canada on 3rd August carried a report saying that Nader Kalai, a Syrian national from Halifax, Nova Scotia, who has permanent residency in Canada, was charged with violating Canada’s economic sanctions against Syria after near-2-year probe is back in Damascus doing business there. He is said to be known to be a close associate of Syrian President Bashar al-Assad and his loyalists and is said to be well-connected. Canada Revenue Agency is also reported to be investigating Kalai for tax evasion and failure to report hundreds of thousands of dollars in income. He owns and operates ongoing businesses in Syria, including running and renovating the 5-star, government-owned Ebla Hotel in Damascus, for which he is reported to have won the contract to manage just over a year ago. He runs a telecommunications consulting company, called Telefocus Consultants Inc in Halifax. The article also links others with links to Canada and targeted by the Syria sanctions.
CAYMAN ISLANDS: GOVERNMENT PLANS PUBLIC CONSULTATION ON ‘ECONOMIC SUBSTANCE’ CHANGES
The Cayman Compass on 3rd August reported that last year the Cayman Islands avoided being placed on an EU tax blacklist by committing to remedy, before the end of 2018, what the EU called a lack of economic substance of Cayman-based entities, but now, with only 5 months left, little has changed. The Cayman Islands were also Cayman told to “abolish or amend legal mechanisms that enable the granting of advantages only to non-residents or in respect of transactions carried out with non-residents”. The Ministry for Financial Services is quoted as saying that it has formed several local private sector working groups to review the EU’s guidance paper and provide feedback to the Ministry, which will be used to determine legislative proposals regarding economic substance for relevant Cayman Islands businesses. The Ministry also said that it plans to consult the general public on these matters in due course. The article suggests that one reason for delay on the topic is that EU states have not agreed a definition of economic substance standards, and that the Netherlands is currently the only EU country that has defined criteria for economic substance for tax purposes. The Chamber of Commerce is said to be working very closely with the Ministry to assist in striking the right balance in relation to both the local and international business sectors in Cayman.
WHY THIRD GENERATION CRYPTOCURRENCIES ARE GAME-CHANGERS FOR VENEZUELA
This article, published on Medium on 31st July, is fascinating introduction to so-called “third generation” cryptocurrencies, in the context of their potential for use in and by Venezuela. The aim of the article is said to be to showcase just how beneficial the “coins” (especially “third generation” ones) can be for people living in emerging countries. It starts with a brief overview of the 3 generations of cryptocurrencies – first-generation cryptocurrencies were made to specifically store and transfer value (the most famous examples are Bitcoin, Litecoin, Monero and Bitcoin Cash); second-generation cryptocurrencies are mostly platforms, dedicated for decentralised applications (examples are Ethereum, Neo, QTUM, Lisk); and third-generation do not yet have an agreed formal definition, but are designed to try to overcome some of the shortcomings of the earlier types. The article goes on to look at Venezuela (where the inflation rate in June reach 40,000%), and the use of NANO, a third-generation cryptocurrency there, and Banano used for very small transactions (like groceries) which is distributed via an online game where you have to catch bananas(!).
INDONESIA TO HAND OVER YACHT LINKED TO 1MDB TO MALAYSIA
Reuters on 4th August reported The Cayman Islands-flagged Equanimity was seized in February at the request of US authorities as part of a multibillion dollar corruption investigation launched by the DoJ related to 1Malaysia Development Berhad (1MDB). A source told Reuters that the decision to hand the yacht to Malaysia was reached following a personal request made by new Malaysian Prime Minister.
US AMENDS EXPORT LAW TO RECOGNISE AND IMPLEMENT INDIA’S MEMBERSHIP IN THE WASSENAAR ARRANGEMENT
On 3rd August, Baker McKenzie reported in an article that the US had amended its Export Administration Regulations (EAR) to formally recognise and implement India’s membership in the Wassenaar Arrangement (WA). This action befits India’s status as a Major Defense Partner and recognizes the country’s membership in 3 of the 4 export control regimes: Missile Technology Control Regime (MTCR), WA and Australia Group (AG). This rule is another in the series of rules that implement reforms to which the US and India mutually agreed to promote global non-proliferation, expand high technology co-operation and trade, and ultimately facilitate India’s full membership in all 4 of the multilateral export control regimes (Nuclear Suppliers Group, MTCR, WA, and AG).