5th September 2018
CAMBODIAN COURT CONVICTS FRAUDSTER IN MULTI-MILLION TIMBER EXPORT SCAM
The Khmer Times on 5th September reported that Phnom Penh Municipal Court had convicted Oeu Oeun, a 59-year-old businessman of fraud, sentencing him to 9 months in prison on top of an 18-month sentence he is already serving. He is said to have committed the fraud between 2013 and 2015 and was arrested in September 2016. Hok Cheavin, 45, a luxury timber businessman from Phnom Penh is said to have paid him $3,522,480 for help in obtaining timber export permits because he knew many high-ranking officials – but no licences or other documents were forthcoming. Oue Oeun was also ordered to pay a total of $3,522,480 in damages and another $50,000 in compensation to Hok Cheavin.
MAURITIUS COMMITTED TO IMPLEMENT RECOMMENDATIONS OF FATF
Devdiscourse on 4th September reported that Mauritius has said that it is fully committed to implementing recommendations of FATF, amid calls in India for tighter rules for foreign investors coming from non-FATF countries. Mauritius is a leading route for investment into India. Mauritius is a member of the Eastern and Southern African Anti Money Laundering Group (ESAAMLG), which was launched in 1999, and ESAAMLG has also been an associate member of the FATF since 2010.
THE INTERSECTION BETWEEN FINANCIAL AND FOREST CRIME
Valuewalk on 4th September published an article which is said to be for submission as evidence to a US Senate briefing: Private Investment as a Driver of Deforestation: Senate Briefing on Exposure of US Investment to Deforestation, Corruption, and Governance Risks. It starts by saying that “forest crime” is big business. Interpol estimates that illegal logging and related forest and financial crimes siphon off between $51 and $152 billion dollars from the global economy each year; and that forest crime also rarely occurs by itself – it is typically accompanied by corruption, theft, human rights abuses and other criminal acts. Interpol announced in June 2017 that it would lead a global effort to treat forest crime like other white collar crime. It examines the impact of US criminal laws – the FCPA, Global Magnitsky Act, and AML, mail and wire fraud laws.
NEW BILL HELPS SWEDEN FIGHT MONEY LAUNDERING AND TERRORIST FINANCING
Xinhua on 4th September reported on a new Bill proposed in Sweden intended to improve law enforcement authorities’ access to information of financial companies, their account events and transactions. The aim of the proposed Bill is to specify in the law that the information should be disclosed without delay and in electronic form. The intended date for the Bill to come into effect is 1st September 2019.
DANSKE BANK HIT BY FRESH MONEY LAUNDERING CLAIMS
France 24 on 4th September reported that shares in Danske Bank plunged on the Copenhagen Stock Exchange, hit by fresh allegations of money laundering involving Russia through its Estonian subsidiary: coming after the Financial Times reported that up to $30 billion from Russia had flowed through Danske’s Estonian subsidiary in 2013 alone.
MIGHT YOU BE BETTER OFF NOT ATTENDING YOUR TRIAL?
A blog post on 4th September from 6KBW College Hill chambers is concerned with a recent case where a defendant opted not to attend is trial where both defence solicitors and counsel were as surprised by this development as anyone else. Before the defendant absconded, he had provided instructions and they did not feel compelled, as frequently happens, to withdraw. The prosecution applied to proceed. The posting asks if it is right that an absent defendant can escape the drawing of an adverse inference if a jury are told not to speculate as to why he is not there, when the defendant who attends cannot, as was the case here. The author says that it is difficult to justify the distinction but, as the law stands, unless the absent defendant decides to do as Jack Shepherd did, and remain in touch with his lawyers and thereby in a position to receive advice as to the trial process, the defendant who gives sufficient instructions to allow his case to be put but then absconds places himself in a better position than the defendant who attends throughout never intending to give evidence.
EUROPEAN PUBLIC PROSECUTOR’S OFFICE TO TAKE UP ITS DUTIES BY THE END OF 2020
Herbert Smith Freehills reported on 3rd September that, following a build-up phase of 3 years, the EPPO is due to take up its duties by the end of 2020. The EPPO will be an independent and decentralised prosecution office at EU level targeting crimes provided for in the co-called 2017 PIF Directive on the fight against fraud to the EU financial interests by means of criminal law. The EPPO will be able to act quickly across borders without the need for lengthy judicial co-operation proceedings.
PODCAST – ENGLISH GOVERNING LAW AND JURISDICTION CLAUSES AFTER BREXIT
An 18-minute podcast from Herbert Smith Freehills released on 4th September discuss what businesses need to know about the impact of Brexit on their continued use of English governing law clauses and English jurisdiction clauses in their contracts after Brexit. As businesses will be entering into new contracts which remain in force after Brexit, looking at the effectiveness of these clauses in the future will be an important part of any new contract negotiation.
LATVIA: WHEN THE US SCOLDED THE ‘SWITZERLAND OF THE BALTICS’
In the second part of its report on Latvia, EurActiv France examines the case where Latvian bank Rietumu was hit with a fine of €80 million by French judges for having laundered hundreds of millions of euros, and saying that despite early warnings, the European Central Bank (ECB) only looked into the Latvian finance sector after the US blocked trade with Latvia’s third-largest bank. It points out that the assets of non-residents in Latvian banks, which the government wants to reduce to 5% of the total, have represented up to 40% of total capital. It also remarks on the VAT fraud case from 2008, involving CO2 emission credits and involving the second largest bank in Latvia, Rietumu, which had laundered millions of euros from the fraud between Riga and Paris.
PAKISTAN: SUPREME COURT ORDERS FORMATION OF INVESTIGATION TEAM TO PROBE MONEY LAUNDERING CASE
Pakistan Today on 5th September reported that the Court had ordered the formation of a Joint Investigation Team (JIT) to probe into the ongoing money laundering case involving to a fraud of Rs35 billion (around $220 million), following a raid conducted at the Omni Group’s office in Karachi. Documents related to Kam Crown International Trading House Company in Dubai were found in a raid conducted in Dubai as well. It was said that evidence was found of money being sent from Dubai to England and France. The FIA is said to be investigating 32 people in relation to money laundering from fictitious accounts linked to former President Zadari, and that that warrants have been issued for a number of absconding suspects. The article says that over 20 ‘benami’ accounts at some private banks were opened in 2013, 2014 and 2015 from where transactions worth billions of rupees were made, according to reports. The amount, according to reports, is said to be black money gathered from various kickbacks, commissions and bribes. A “benami account” is one “without name” or with “no name”, and the term generally applies to a transaction or account in which the real beneficiary is not the one in whose name appears.
THAILAND: $24 MILLION BITCOIN FRAUD: DEFRAUDED FINN WITHDRAWS COMPLAINT AGAINST 2 SUSPECTS
CCN.com on 5th September reports that the 22-year-old Finnish investor who was defrauded of 5,564 bitcoins in Thailand has agreed to withdraw his complaint against 2 key suspects. This means that the 2 businessmen will no longer face any charges in relation to the bitcoin fraud case as Thai law allows settlements with regards to fraud. However, there is no information on how much changed hands in order to reach the settlement. The Finn had filed a complaint in January after losing bitcoins worth approximately $24 million to a group led by the alleged mastermind of the scheme, Prinya Jaravijit – who fled to the US but has now indicated that he is ready to surrender.
OECD: ARMENIA SHOULD TAKE MORE VIGOROUS MEASURES AGAINST ENTRENCH CORRUPTION
On 5th September, Public Radio Armenia reported that a new OECD report said that Armenia should take vigorous measures to tackle entrenched corruption and widespread conflict of interest – although it has continued to reform its anti-corruption legislation and institutions over the past 4 years. A lack of enforcement of anti-corruption laws, together with a monopolised economy, remains a serious concern, according to the report. The report is published under the Istanbul Anti-Corruption Action Plan, an initiative launched in 2003 under the Anti-Corruption Network for Eastern Europe and Central Asia (ACN), which is a part of the OECD Working Group on Bribery’s outreach work; and it makes various recommendations, and the full report can be found at –
MONEY LAUNDERING: TI, EU, OTHERS, TO TRACK ILLICIT FINANCIAL FLOW IN NIGERIA
This Day Live on 5th September reported that, in a move to end money laundering in the country, Transparency International (TI), in partnership with the EU and Civil Society Legislative Advocacy (CISLAC) have announced the development of a tracking platform to monitor illicit financial flow (IFF) and money laundering in the country saying that the federal government loses over $50 billion to IFF annually. In the TI Corruption Index, Nigeria is ranked 148 out of 180 countries, with a 27% score.
JERSEY: LUMIERE WEALTH, “I NEVER BELIEVED IT WAS A FRAUD HAPPENING UNDER OUR NOSES”
The Bailiwick Express on 5th September reported on the ongoing Lumiere Wealth case in Jersey where Christopher Paul Byrne, 50, who ran Lumiere Wealth Limited, stands accused of losing £2.7million of money from clients by knowingly getting them to invest in a high-risk company, and has denied mis-selling the investments, or concealing facts from his clients.
PARCELFORCE WORLDWIDE TRIALS SELF-SERVICE KIOSKS
Postal Technology on 4th September reported that Parcelforce Worldwide is trialling self-serve kiosks in its London Central, Newcastle and Milton Keynes depots. Throughout the trial, customers at these depots can pay for a parcel shipment at the self-serve kiosk, or pay for a parcel shipment online, and use a mobile QR code to print labels on-site at the depot before handing the parcel to counter staff.
LEBANON REJECTS REPORT THAT IRANIAN AIRLINE SUPPLIED HEZBOLLAH WITH ARMS AND MISSILES
On 5th September, the Daily Star in Lebanon reported that the Directorate-General of Civil Aviation said it “completely rejects” a Fox News report claiming Hezbollah and Iran smuggled arms and components for constructing arms into Lebanon on two flights operated by Iran’s Qeshm Fars Air in July, when a Boeing 747 left Tehran and took an “uncharacteristic flight path,” stopping in Damascus before continuing on to Beirut.
The story from Israeli media, Ynet News, is here –
JERSEY DEMERGER REGIME
In July, Carey Olsen published a briefing paper saying that, on 10th July, the States of Jersey enacted regulations to permit the demerger of Jersey companies, which came into force on 1st September; with a new process permits the demerger of a Jersey company into 2 or more Jersey companies (which may or may not include the demerging company).
DISRUPTING ILLEGAL WILDLIFE TRAFFICKING THROUGH THE AIR TRANSPORT SECTOR: THE ROUTES PARTNERSHIP
The Reducing Opportunities for Unlawful Transport of Endangered Species (ROUTES) Partnership brings together government agencies, transportation and logistics industry companies and representatives, international conservation, development and law enforcement organisations and donors in order to disrupt wildlife trafficking activities, and forms a key element of the concerted international response to addressing wildlife poaching and associated criminal activities worldwide. Training modules for the air transport industry are available online.
SPAIN CANCELS BOMBS SALE TO SAUDI ARABIA AMID YEMEN CONCERNS
The Washington Post reported on 4th September that Spain said it has cancelled the delivery of 400 laser-guided bombs purchased by Saudi Arabia, amid fears that the weapons could be used against Iran-aligned Houthi rebels in Yemen. The arms deal was originally signed in 2015.
PODCAST: ANTITRUST: PRICE-FIXING AND COLLUSION
In the latest TRACE podcast, Lisa Phelan, who until very recently was responsible for criminal enforcement of US anti-trust laws and is now a partner with Morrison & Foerster, explains the world of anti-trust (competition) violations.
FRENCH PHARMACEUTICAL COMPANY SANOFI PAYS $25 MILLION TO SETTLE BRIBERY CHARGES
Wall Street Journal on 5th September reported that Sanofi SA agreed to pay $25.2 million to resolve US SEC allegations that its subsidiaries paid bribes to win business. The company neither admits or denies the SEC’s allegations.
US DECLINES TO PROSECUTE UK DRILLING FIRM ENSCO FOR BRIBERY ALLEGATIONS
On 5th September, the Wall Street Journal reported that US authorities won’t prosecute UK oil-rig drilling operator Ensco PLC, which was being investigated for possible foreign-bribery violations, the company said. The company it received letters late from the SEC and the DoJ saying they each concluded investigations without filing charges. Ensco said it had previously disclosed an internal investigation into alleged irregularities over a 2008 drilling-services contract between an acquired subsidiary, Pride International LLC, and Brazil’s state-oil firm Petrobras, but no evidence of wrongdoing had been found.
UK COURT BLOCKS DJIBOUTI BID TO TERMINATE JOINT VENTURE WITH DP WORLD
On 5th September, Loadstar reported that this follows the London Court of International Arbitration’s ruling in favour of DP World after Djibouti’s government seized control of the Doraleh Container Terminal. PDSA has been prohibited from removing DP World-appointed directors of the DCT joint-venture.
EUROPE MOVES TOWARDS A COMMON APPROACH TO REGULATE CRYPTOASSETS
EurActiv on 5th September reported that European decision-makers and regulators are progressing towards an EU approach for dealing with cryptoassets, digital assets that use cryptography such as Bitcoin and represent a booming market still viewed with concern by financial supervisors.
BULGARIAN PROSECUTORS RAID SPIRITS COMPANY IN TAX EVASION PROBE
Sofia Globe on 5th September reported that the offices of spirits maker Vinprom Karnobat, its parent company SIS Industries and flour manufacturer Topaz Mel were raided as part of a pre-trial investigation into alleged tax evasion and money laundering. inprom Karnobat owner Minyu Staikov was one of 10 people arrested. The alleged tax evasion and money laundering was carried out between 2009 and 2018, using invoices to fake companies to evade paying VAT. Prosecutors were also investigating charges that goods subject to excise duties were being stored without the requisite excise stamps.
GERMANY STILL INVESTIGATING IRANIAN CASH REQUEST
The Seattle Times reported on 5th September that even though Iran has rescinded a request to repatriate €300 million it has in a Hamburg-based bank, German authorities say financial regulators are still examining the proposed transaction.
VENEZUELAN FOREX SCHEME LEADS TO US MONEY LAUNDERING CHARGES, FORFEITURE ACTIONS, GUILTY PLEA
MLex on 5th September reported that a US case involving an international ring accused of laundering money embezzled from the Venezuelan government through bribery and fraud began when a banker reported extremely suspicious banking activity. So far, there has already been a guilty plea in the case, a politically connected Venezuelan TV tycoon has been implicated, and there has been a forfeiture action against a condominium unit in the high-profile Porsche Design Tower near Miami. The charges revolve around the defendants’ alleged attempts to launder the money into Miami through the services of an unidentified banker. Ultimately, $1.2 billion was embezzled in the conspiracy, the DoJ said. The complaint alleges that Venezuelan officials accepted bribes in the form of kickbacks for giving the defendants access to the more favourable official exchange rate after they had obtained bolivars at the much cheaper market rate.
ASIAN DEVELOPMENT BANK DEBUTS TRADE FINANCE TOOL
PYMNTS.com on 5th September reported that ADB, which recently estimated the world’s trade finance gap at $1 trillion, is launching a new trade finance tool aimed at combatting money laundering. Trade Finance Scorecard is a solution to help interpret, implement and manage compliance with AML regulations and other financial regulations without curbing access to trade finance.
COMPANY HIT WITH LARGEST-EVER ANTI-TRUST FINE IN ISRAEL
The Times of Israel on 5th September reported that the Tnuva dairy company fined over efforts to raise prices and undercut competition at supermarkets. 2 former senior executives are to pay penalties of $25,000 each.
IRISH AUTHORITIES RECOVER €12 MILLION IN CRACKDOWN ON FOREIGN CRIME GANGS
Thepaypers.com on 5th September reported that over €12 million in cash have been recovered by Gardai probing foreign crime gangs targeting Irish companies. The type of fraud involved, “invoice redirect fraud”, also known as CEO fraud, is carried out by organised crime gangs disguising the emails of legitimate companies and convincing them to change their supplier’s bank details. Once sent, the scammers then ask the clients to send cash to the different account.
US: NATIONAL SECURITY CONCERNS IN REAL ESTATE TRANSACTIONS LINKED TO WIND FARM PROJECTS
Haynsworth Sinkler Boyd on 5th September published an article saying that, in late 2012, a US company, Ralls Corporation, with 2 Chinese ultimate owners, purchased certain wind farm projects in Oregon, including associated real estate. What began as a routine cross-border transaction sparked a 3-year lawsuit between Ralls Corporation and the Committee on Foreign Investment in the United States (CFIUS). The article poses the question: why did the purchase of some wind farm projects in Oregon cause CFIUS heartburn and implicate national security concerns? The CFIUS review was triggered, at least in part, by the fact that one of the project sites was within US Navy restricted airspace and 3 other sites were within 7 miles of restricted airspace. After reviewing the case, the article advises that, considering the now expanded scope of CFIUS review, a proactive versus reactive stance is likely to best serve all stakeholders in covered real estate transactions.
MONEYVAL EVALUATION FOLLOW-UP IN ISLE OF MAN
On 4th September, Appleby published a briefing concerned with the Anti-Money Laundering and Other Financial Crime (Miscellaneous Amendments) Act 2018, saying that the Act addresses several recommendations made within the MONEYVAL Mutual Evaluation Report, as well as addressing other matters identified by various authorities in relation to anti-money laundering and the effective prosecution of financial crime. It came into operation on 21st June. It amended a number of existing Acts, including the Anti-Terrorism and Crime Act 2003, the Proceeds of Crime Act 2008, the Terrorism and Other Crime (Financial Restrictions) Act 2014 and the Financial Intelligence Unit Act 2016.
The briefing also mentions the Gambling (Anti-Money Laundering and Countering the Financing of Terrorism) Civil Penalties Order 2018 (SD 2018/0135), which provides that the Gambling Supervision Commission must not impose a penalty under section 22 of the Act until the expiry of 28 days beginning on the day on which the operator is given notice that the GSC is imposing a penalty and provides that an operator may respond to a notice by providing details of mitigating factors within 14 days in accordance with any relevant GSC Guidance.
Unrelated to Moneyval requirements, the Proceeds of Crime (Amendment of Schedule 4) Order 2018 (SD 2018/0113) adds the operation of totalisators and the provision of betting facilities on a racecourse, but removes businesses selling or supplying controlled gambling machines, as being businesses that are businesses in the regulated sector.
CONSIDERATIONS FOR SUPPLY CONTRACTS DURING TRADE TENSIONS
Baker McKenzie, in its International Trade Compliance Update on 5th September published a briefing saying that China and the US are not the only countries imposing increased tariffs as well as non-tariff barriers to trade. Other countries that have a history of higher tariffs and non-tariff barriers to trade, may also be looking to make trade policy adjustments in order to adapt to the changing trade landscape. The briefing provides advice on coping with or mitigating the effects of such “adjustments”. It concludes by saying that supply chain contract considerations are just one of many tools to consider in responding to increases in tariffs, and businesses should also consider revisiting classification of its products and utilisation of existing and the expected new free trade agreements.
CONTROLS ON CASH ENTERING OR LEAVING THE EU
On 5th September, the EU Parliament Research Service provided an updated briefing paper with a vote on the revised text of a new Regulation which is due to be considered at a Parliamentary plenary meeting in September.
EU: COUNTERING MONEY LAUNDERING WITH CRIMINAL LAW
On 5th September, the EU Parliament Research Service provided an updated briefing paper on the proposal from the Commission, and during its September plenary session, the European Parliament is expected to vote on a proposal for a new Directive which aims to harmonise rules and penalties in the EU, and to facilitate cross-border co-operation in order to combat money laundering and terrorist financing. The Commission proposes to establish a list of predicate offences (underlying criminal activities generating the proceeds which are then laundered), and to add cybercrime to the list and by criminalising self-laundering (when the person laundering the proceeds of crime is also the perpetrator of the predicate offence).
MALAYSIA ORDERS PROMOTER OF LAVIDACOIN TO CEASE ALL PROMOTIONAL ACTIVITIES
On 5th September, Mondo Visione carried a release from the Securities Commission Malaysia (SC) has issued a notice directing the promoter of Lavidacoin to cease all promotional activities in relation to Lavidacoin with immediate effect, pending further review by the SC into the matter. DSV Crypto Club, LUX Galaxies and VI Profit Galaxy, who were found to be promoting Lavidacoin, were also added to the SC’s Investor Alert List, and the SC reminded investors to be cautious and exercise due diligence before participating in any investment schemes, in particular those involving cryptocurrencies and digital tokens.
UK MODERN SLAVERY HELPLINE QUARTERLY REPORT: Q2 2018
MALAYSIA NEEDS NEW ANTI-SMUGGLING TASK FORCE TO PREVENT MASSIVE TAX LOSSES
Illicit Trade on 5th September reported that the Malaysian government must form a specialist multi-agency task force to tackle the widespread trade in contraband that costs its economy $1.9 billion in tax receipts, the country’s International Chamber of Commerce and Industry (MICCI) has said.
AMAZON’S PROBLEM WITH FAKE GOODS
Axios on 29th August reported that tens of thousands of sham products have appeared on Amazon over the last 2 years. It says that Amazon, Alibaba and other retailers have failed to keep up with the soaring business in counterfeit brand makeup, skin care and other goods, which is to balloon to $1.8 trillion by 2020.
PREMIER LEAGUE PRESENTS SEOUL CUSTOMS WITH AWARD FOR SEIZING OVER 400,000 FAKE ITEMS ARRIVING ON A SHIPMENT FROM CHINA
FC Business reported that the Premier League has presented Seoul Customs with its inaugural International Enforcement Agency of the Year award for seizing over 400,000 fake items, with a street value of £4.6 million, arriving on a shipment from China. The haul included contained counterfeit Premier League badges along with fake kits and badges from various Premier League clubs.
PRIME MINISTER PROVIDES UPDATE ON SALISBURY INCIDENT
In case you missed it, or want to have the original statement, here is the relevant link –