17th August 2018
BVI COURT HALTS CROSS-BORDER REQUESTS WITHOUT CONSIDERATION
A blog from the Harneys law firm on 10th August reported that the BVI Court again stepped in to ensure that proper thought and process was applied to requests made by foreign governmental bodies. The Court carefully considered requests made by the Russian Federation to gather evidence into alleged criminal conduct. The is the first case of its kind to successfully challenge the exercise of the Attorney General’s powers under the Criminal Justice (International Cooperation) Act and means that the AG is required to do ‘more’ than merely ‘rubber stamping’ the requests received. The Russian Federation requested that the AG obtain evidence to assist their alleged criminal investigations. The request was made for the production of confidential information held by the registered agent. It was claimed that the AG did not consider the representations of the claimant that the Russian move was only the latest of series intended to put pressure on it. The Court ordered the AG to reconsider his decision to transmit the documentation to Russia, this time taking into account the representations and evidence provided by the claimant.
US CHARGES 22 CHINESE IMPORTERS WITH SMUGGLING NEARLY $500 MILLION WORTH OF COUNTERFEIT GOODS INTO US
VoA on 16th August reported that a federal court in New York has charged 22 Chinese importers with smuggling nearly half-a-billion dollars in counterfeit goods into the US from China. The fake products include such popular luxury items as Louis Vuitton bags, Michael Kors wallets, and Chanel perfume. They allegedly smuggled the China-made goods in large shipping containers disguised as legitimate products and brought them into ports in New York and New Jersey. Fashion Law says that the case dated back to 2012 after US Customs uncovered a string of irregularities in certain importers’ shipping documentation and embarked upon a 6-year-long investigation, and that the accused used a number of legitimate companies and falsified the descriptions of the shipping containers’ contents on official import documents in order to avoid detection.
MAN CHARGED WITH SMUGGLING SCORPIONS, MILLIPEDES THOUGH THE US MAIL
NJ.com on 17th August reported that Wlodzimie Lapkiewicz, 29, is accused of smuggling several species of wildlife into the country, including some that are endangered. Lapkiewicz shipped multiple species of insects and bugs from places like Tanzania to New Jersey and falsely labelled packages to avoid detection between July 2015 and July 2018, and was twice warned about his actions. authorities allege.
7 CUSTOMS EMPLOYEES SACKED IN PHILIPPINES FOR SMUGGLING SUGAR FROM THAILAND
Manila Times on 16th August reported that 7 employees of the Bureau of Customs (BOC) assigned at the Manila International Container Port (MICP) collection district – the examiner, appraiser, the person who signed for the district collector, and 4 others – were sacked for allegedly conniving with sugar smugglers. They were responsible for submitting a false report and recommending the lifting of an alert order issued to 10 containers of sugar from Thailand.
THE WHITE WOLF OF TAIWAN
The SupChina website on 16th August reported that Taipei District Prosecutors’ Office in Taiwan has told AP that investigators had searched the headquarters of the Chinese Unity Promotion Party (CUPP) along with the residences of its leaders to determine whether the party was receiving money from mainland China. It says that the Party is pro-Beijing and pro-unification, and has often been accused of being a paid agent of Beijing influence, and a front for organised crime. The article focusses on the founder of the CUPP, Chang An-lo, aka the “White Wolf”, claiming that was a leader of the Bamboo Union, the largest triad in Taiwan. He is said to have returned to Taiwan from the US (where he is said to have been accused of criminal activity) but in 1996 fled criminal charges again, and found refuge in China, where he remained until 2013, being arrested on his return to Taiwan. The article then republishes a piece from the Washington Post in 2000 about the Bamboo Union and Chang An-Lo.
PAKISTAN AML/CFT REVIEW
The International News in Pakistan on 17th August said that the visiting evaluation team had given Pakistani authorities a 150-page questionnaire to complete on technical aspects of its AML/CFT regime by 31st August, and said to be mainly related to extradition treaties signed with different countries and possibility of revision with inclusion of offences of money laundering and terror financing. The delegation will again visit Pakistan from October 8th to 20th to analyse the given replies in details and evaluate commitments made to bring changes in legislation, administrative and operational improvements.
THE STATUS AND DECLASSIFICATION OF POLITICALLY EXPOSED PERSONS (PEP) AFTER EXITING OFFICE
On 15th August, Cliffe Dekker Hofmeyer, a South African law firm, published a briefing which starts by explaining what a PEP is, and the FATF requirements for enhanced due diligence etc. It then says that, according to the Wolfsberg Group, there is no agreed or accepted method for determining the period to declassify a PEP once the individual has exited the office which gave rise to the initial classification. A South African court recently considered this issue, along with the question of whether continued listing as a PEP is defamatory. The case concerned an application made by someone who is listed as a PEP in the World-Check database. |The claimant argued that his continued listing as a PEP, long after his exit from the office which gave rise to the initial classification, is defamatory, and that, accordingly, his name should be removed from the listing. The court held that there is no presumption whatsoever that merely listing a person as a PEP renders them suspect and that listing a person as a PEP neither anticipates nor implies the outcome of the EDD procedures that are to be undertaken. The article says that this in line with AML principles that mere classification as a PEP does not suggest wrongdoing or involvement in corruption and that institutions should not stigmatise PEP on that basis.
JAPANESE REGIONAL BANKS TO SET UP AML INFORMATION-SHARING NETWORK
Regulation Asia on 16th August reported that an information-sharing network between 64 regional banks aimed at AML/CFT efforts is part of a larger legal and regulatory push in the country against money laundering in preparation for an FATF inspection.
WHEN TIME RUNS OUT IN THE US ON WHITE COLLAR CRIMINAL CONDUCT
On 16th August, Greenberg Traurig published an article detailing and comparing the time limits on prosecuting white collar crime in the US and UK. In the UK it says, the position is simple: there is no statute of limitations in the UK on historic criminal conduct. However, the US does apply a statute of limitations to the SEC and DoJ prosecution of criminal conduct. SEC actions seeking to disgorge ill-gotten gains are subject to a 5-year statute of limitations on civil fines, penalties, or forfeitures, as the imposition of disgorgement constitutes a penalty. The statute of limitations runs from when a defendant engages in the alleged misconduct. However, for the DoJ action can be delayed for 3 years while awaiting evidence that reasonably appears to be located in foreign country. To overcome time bar issues, the SEC and DOJ often use so-called ‘tolling agreements’ where the parties agree to toll the statute of limitations applicable to specified matters that are the subject of investigation.
FORMER US VIRGIN ISLANDS SENATOR CONVICTED OF WIRE FRAUD AND THEFT OF FEDERAL PROGRAMME FUNDS
A DoJ news release on 16th August reported that Wayne A.G. James, 56, a former senator has been convicted for wire fraud and theft of federal programme funds for taking money ostensibly being used to fund a historical research project but by 2010 he had fabricated entire invoices and simply stole the money. James was indicted in October 2015. From January 2009 through January 2011, he served as a senator for the US Virgin Islands.
THAI POLICE SUSPECT RUSSIAN EX-PAT OF ORGANISING $20 MILLION CRYPTO FRAUD
Russian news site Sputnik reported on 17th August that Thai police are looking for a Russian ex-pat living in Phuket, who is suspected of masterminding an online foreign-currency exchange trading scheme that has lured 1.4 million people to invest at least $22 million. Police have already arrested 19 suspects involved in the fraud scheme. The Russian national was identified as Alexey Chikalov, 37, from St. Petersburg.
INDIA – CORRUPTION IN JAMMU AND KASHMIR BECOMING A NATIONAL SECURITY THREAT
Eurasia Review on 17th August carried an analysis of the threat, citing as an example the recent “fake arms licences case”, involving almost 6 States across India and revealed after the arrest of 3 arms dealers. The operation resulted in the recovery of 100 fake arms licences and a huge cache of weapons during raids at 12 locations in 5 states. The article says that, despite repeated attempts, the national Anti-Terror Squad been denied access to official records by the state government, which, by itself, too, has failed to take any action against those involved and the investigation has been repeatedly stalled by the officials in the state government under such excuses. The article says that the scandal has thus once again highlighted strong institutional linkages and police-bureaucracy-criminal nexus when it comes to corruption and nepotism in the state.
RUSSIAN PORT SERVICES FIRM BLACKLISTED FOR SANCTIONS-BUSTING
Maritime executive on 16th August carried an article on the designation by OFAC of Profinet Pte, a port services firm in the Russian Far East, for “facilitating illicit shipments on behalf of North Korea”. US entities are now prohibited from doing business with Profinet, and any of the firm’s assets within the US are now frozen. Profinet’s director, Russian national Vasili Aleksandrovich Kolchanov, is also designated.
CONSULTANT AND FORMER TAX OFFICIAL JAILED FOR £6.9 MILLION CONSTRUCTION TAX FRAUD
Construction Manager on 16th August reported that the ringleader of a payroll fraud scheme that saw £6.9 million stolen from construction workers’ pay packets through fraudulent payroll schemes before splitting the proceeds with his co-conspirators has been jailed for 9½ years. David Michael Hughes, aka Mike Hughes, 52, worked for the Inland Revenue in the 1980s before setting up as a tax consultant in Kent.
SWISS TO SCRAP SCRAP VAT EXEMPTION ON FOREIGN E-COMMERCE 2019
VAT Live reported on 16th August that Switzerland’s Federal Council has confirmed that it will scrap the low-value VAT exemption on imports of goods bought from foreign e-commerce providers with effect from 1st January. The EU is proposing a similar removal of its low-value consignment stock relief threshold for 2021. The threshold in the EU Member States averages €20 per consignment.
FORMER PROFESSIONAL POKER PLAYER GETS 9 YEARS IN AUSTRALIA FOR FRAUD
Bill Jordanou, a former professional poker player who made a better living as a scam artist, will spend at least 9 years behind bars for his role in a scheme that defrauded individuals of just over $53 million. He had been involved in a scheme with Robert Zaia.
UK GOVERNMENT AGREES TO IMPROVE THE ENFORCEMENT OF FINANCIAL ORDERS, IN RESPONSE TO A LAW COMMISSION REPORT
The Law Commission on 16th August reported that courts can make these orders, which mean that one spouse or civil partner must pay money or transfer property to the other after a relationship breaks down. However, a 2016 report by the Law Commission found that the law in this area was too complicated, sometimes ineffective, and that orders fairly awarded by the courts were not always complied with as a result. Failure to recover money awarded can lead to significant hardship both for former spouses and their children.
ILLEGAL GAMBLING: RAIDS AND ARRESTS ACROSS ASIA IN INTERPOL OPERATION
An Interpol news release on 17th August reported that thousands of raids have been undertaken and suspects arrested in an INTERPOL-led operation against illegal gambling conducted throughout Asia during the 2018 FIFA World Cup. Operation SOGA VII saw more than 14,900 raids at illegal gambling dens across China – including Hong Kong and Macao – Malaysia, Thailand and Singapore, which were estimated to have handled some $1.6 billion worth of bets.
NEW SCOTTISH LAND INTERESTS REGISTER NEEDS LONGER TRANSITIONAL PERIOD
Out-Law on 16th August published an article saying that complex, brand new registration requirements for those with controlling interests in land and buildings in Scotland require a longer transitional period before strict criminal penalties take effect.
THE ITALIAN GOVERNMENT BANNED GAMBLING ADVERTISING, WHAT DOES THE LAW SAY?
Osborne Clarke on 15th August published an article details the new Italian law and which warns that the new law may also affect e-sports tournaments, which their operators certainly would not perceive as “gambling” in a traditional sense.
LOOT BOX UPDATE
Osborne Clarke on 16th August published an update for the UK and certain other EU states. It refers to a consumable virtual item which can be redeemed to receive a selection of further virtual items, such as options for a player’s avatar or character, and is typically a way to monetise the game, with players either buying the boxes directly or receiving the boxes during play and later buying “keys” with which to redeem them.
NIGERIAN CUSTOMS SEIZE ANOTHER CONTAINER LOAD OF MILITARY CAMOUFLAGE
The Nation on 16th August reported that barely 3 weeks after the Nigerian Customs Service, (NCS) intercepted container-load of over 4,000 items of fake military clothing in Rivers state, it has made seizure of another container-load of the same camouflage, and in the same state – about 620 sets of military uniforms and 10,100 military T-shirts were seized.
MAN CHARGED OVER €252,000 DRUG, TOBACCO AND CASH SEIZURE AS PART OF CLAMP DOWN ON LIMERICK GANGS
The Journal in Ireland on 16th August reported that the gardai has charged a man in his 50s in relation to ongoing operations targeting organised criminal gangs in Limerick.
ATLANTA CORRUPTION PROBE COULD YIELD MORE INDICTMENTS
Baker McKenzie on 16th August reported that, after a top aide to former Atlanta mayor Kasim Reed pleaded guilty to a bribery charge, the top federal prosecutor in Atlanta said he’s expanding a corruption investigation that’s already charged several high-ranking officials from Reed’s administration, and he expects more indictments in the future.
BLOCKCHAIN AND THE NOTARIES: THE SERVICES WON’T BE REPLACED BUT TRANSFORMED
On 15th August, FinTech published an interesting article about the application of blockchain technology, saying that it is a widespread mistake to think that blockchain is the panacea for all kinds of problems. The article sets out to consider what the notaries do, figure out what blockchain’s capable of, and conclude how it may actually transform the notarial services (the fact is that it actually can and very probably will).
AMBUSH INDICATES GROWING TERRORISM RISK TO MINING COMPANIES IN EASTERN BURKINA FASO
Janes.com on 16th August reported that 6 people were killed in Burkina Faso’s Est province when a police-escorted convoy returning from the Boungou gold mine was ambushed on 11th August. Whilst those responsible were not identified, Jihadist attacks in Burkina Faso have largely been concentrated in the northern Soum province, bordering Mali, where the homegrown group Ansarul Islam operates, and in the capital and claimed by the Mali-based Al-Qaeda affiliate Jamaat Nusrat al-Islam wal Muslimin (JNIM).
REVISED RIPA CODES AND NEW INVESTIGATORY POWERS PROVISIONS
PNLD on 16th August reported that Article 2 of the Investigatory Powers (Codes of Practice and Miscellaneous Amendments) Order 2018 (SI 2018/905) brings into force 3 revised codes of practice issued under the Regulation of Investigatory Powers Act 2000 (RIPA). These codes replace existing versions and come into force on 15th August.
Also, on 22nd August, the following provisions come into force –
- provisions for the issue, modification and cancellation of warrants for the acquisition of communications data in bulk under Chapter 2 of Part 6 of the Investigatory Powers Act (IPA); and class and specific warrants for the retention or examination of bulk personal datasets under Part 7 of the IPA; and
- offences of breaching safeguards relating to examination of data obtained under a bulk acquisition warrant; and breaching safeguards relating to examination of material obtained under a warrant under Part 7 of the IPA.
The Code of Practice on “Bulk Acquisition of Communications Data” applies to the intelligence services (the Security Service, the Secret Intelligence Service, GCHQ) and telecommunications operators who have been issued with a warrant.
FCA LAUNCHES MONEY LAUNDERING INVESTIGATION INTO CAPITAL MARKET FIRMS
KYC 360 reported on 17th August that the FCA has opened a number of investigations into market firms over misconduct issues that could lead to prosecutions under the Money Laundering Regulations. It reminds one that the UK considers capital markets to be exposed to high risks of money laundering due to the risks around correspondent banking, risks of large sums being laundered and the relative lack of controls, according to its 2017 National Risk Assessment of Money Laundering and Terrorist Financing (NRA).
THE RISE AND FALL (AND RISE) OF CHEMICAL WEAPONS
On 17th August, ETH Zurich published an article which describes how chemical weapons have been used in almost every decade since German troops first released chlorine gas in an attack at Ypres, Belgium, in 1915. It also highlights how after a few decades of relative non-use, chemical weapon attacks have again exploded on to the scene and why their occurrence will likely continue unabated.
LONDON COURT WITHDRAWS ARREST WARRANT IN AFRICAN CORRUPTION CASE
On 17th August, the FT reported that a London court has withdrawn an arrest warrant for mining executive Benedikt Sobotka, a month after it was issued as part of a criminal investigation into alleged corruption in sub-Saharan Africa. UK authorities now are summoning him to appear “on a date to be determined”. Mr. Sobotka isn’t a suspect in the probe and has said he’d co-operate, but he had failed to appear for questioning. He is CEO of Eurasian Resources Group, whose unit ENRC is at the centre of an investigation into fraud, bribery and corruption on an acquisition of some mineral assets.
UK MODERN SLAVERY ACT 2015 REVIEW
On 17th August, the Home Office published a news release that explains what the Independent Review of the Modern Slavery Act 2015 aims to do and also includes the background, structure and scope of the review.
UK REGULATOR ISSUES ALERT OVER INSIDER FRAUD AT CHARITIES
Civil Society on 17th August reported that the Charity Commission is calling on charities to be alert to the threat posed by insider fraudsters and cyber criminals, after concerns were raised by the National Fraud Intelligence Bureau (NFIB).
MONEY LAUNDERING – LINKS BETWEEN ROMANCE SCAMS TO CORPORATE CYBERATTACKS
Forbes on 17th August reported that recent DoJ enforcement action and published research reports have illuminated the connection: romance scam victims are turned into money mules – conduits for funds stolen from corporations and other victims. It says that scamming people online is relatively easy. The harder part is getting money out of the US and back to Nigeria, where many of the scammers are based. It says that the romance scam victim, who has an established history of transferring money to Nigeria, is the “consulting company” receiving the funds and transferring them onward, because they remain under the scammer’s spell and are willing to do whatever they are asked to do. In other cases, they have become financially desperate or they are being blackmailed to force their ongoing co-operation.
ARREST WARRANT ISSUED FOR FORMER PAKISTAN PRESIDENT ASIF ALI ZARDARI IN MONEY LAUNDERING CASE
The International Business Times on 17th August reported that a banking court has issued a non-bailable arrest warrant against former President and PPP co-chairman Asif Zardari in a multi-billion money laundering scam.
HEMP-DERIVED CBD (CANNABIDIOL) IN FOOD PRODUCTS IN US
Wilson Elser on 17th August published an article which says that CBD, or cannabidiol, is one of more than 100 cannabinoids in the cannabis plant. Unlike tetrahydrocannabinol (THC), CBD is not psychoactive and won’t get the user “high”. Based on growing demand, the CBD market is predicted to be valued at more than $2 billion by 2020. The article addresses the relevant legal landscape and relevant federal agencies.
US FLAG NOW AVAILABLE FOR SUPERYACHTS
Superyacht News on 17th August reported that it is now possible for yachts over 300gt to fly the US flag. This new legislation replaces laws passed in 1920. Until now, US law had defined yachts as vessels with a maximum volume of 300gt. That law, however, had been written in 1920 and never updated until now.
THE FATE OF MADAGASCAR’S ENDANGERED ROSEWOODS
On 17th August, OCCRP published an article on how rosewood traders make millions smuggling the rare bleeding timber to China.
KIDNAP RISK INCREASES IN CAMEROON
Control Risks on 17th August published a podcast on the situation in Cameroon. Secessionist groups in the anglophone regions of Cameroon have conducted a growing number of attacks on security forces since the last quarter of 2017. The emergence of kidnapping as a secessionist tactic should be of concern to foreign businesses.