17th September 2018
WHY EU BANKS HAVE BECOME A MONEY LAUNDERER’S DREAM
The Financial Times on 17th September carried an opinion piece which sought to explain why its author thought EU banks seem so vulnerable to money laundering, citing the recent Danske Bank and ING cases as examples. The reasons given include “patchy” implementation of changing AML rules, variable implementation and enforcement across Member states – with only 5% follow-up of SAR in some states, poor co-ordination between national authorities, and no central EU database. However, another reason seems the most compelling – that some places have built their wealth and success on dodgy funds, such as former the former Soviet Union.
INDIA: STATE MINISTER GRANTED BAIL IN MONEY LAUNDERING CASE
New Kerala reported on 16th September that Karnataka Water Resources Minister, DK Shivakumar, and 3 others had been granted bail in a case involving tax and money laundering charges.
6 KEY MARITIME ISSUES TO UNDERSTAND BEFORE DOING BUSINESS IN INDONESIA
On 14th September, HFW published a briefing saying that, with the growing importance of Indonesia to the shipping industry and the disproportionate number of losses taking place in the region, it is imperative for stakeholders to understand the nuances of Indonesia’s legal and regulatory regime in order to avoid potential pitfalls. HFW has therefore outlined 6 key jurisdiction-specific challenges relating to maritime casualties and claims; noting that Indonesian law can be very localised, with several commonly used international regulations not in use.
GUATEMALA’S TOP COURT ORDERS RETURN OF UN ANTI-CORRUPTION CHIEF
Deutsche Welle on 17th September reported that Guatemala’s highest court has delivered a strong rebuke to President Jimmy Morales and allowed for the return of a UN-backed anti-graft chief, whom Morales had banned from the country. The government has 48 hours to challenge the ruling before a final decision is reached. The head of the UN International Commission against Impunity in Guatemala (CICIG), Ivan Velasquez, had been under attack since leading a graft investigation on his 2015 presidential campaign.
USING BENFORD’S LAW TO DETECT TAX FRAUD IN INTERNATIONAL TRADE
An article on 17th September from VOX, the policy portal of the Centre for Economic Policy Research (CEPR) in the EU starts by saying that smuggling, along with other forms of border tax evasion, is a substantial problem around the world. It then uses Benford’s Law, which holds that the leading digits in various types of numerical data are not uniformly distributed, to identify suspicious import flows. Results using Turkish data suggest that deviations from Benford’s Law are consistent with higher rates of tax evasion. The article claims that the approach could be employed by authorities to identify shipments that merit greater scrutiny.
AIRCRAFT PURCHASE, OWNERSHIP AND OPERATION
Bradley Arant Boult Cummings LLP in the US is producing a series of blog posts addressing various issues related to the purchase, ownership and operation of private aircraft by family business owners. In doing so, it provides a handy overview of those issues and procedures involved, in the US at least.
EU/US SANCTIONS VERSUS RUSSIAN ANTI-TRUST LAWS
Noerr LLP published an article on 12th September saying that foreign sanctions, including secondary US sanctions that are aimed at non-US companies doing business with Russia, are forcing many international companies to carefully evaluate and restructure their contractual relationships with Russian counterparties. In this process Russian anti-trust law provides obstacles that may be difficult to overcome sometimes. It discusses these Russian laws and how they may be relevant in certain sanctions-related scenarios, liability risks and the attitude of the Russian authorities; although it does say that the initiative to introduce criminal liability for compliance with the sanctions seems to have lost support, with President Putin having stated that Russia will not punish foreign partners for complying with anti-Russia sanctions.
4 LUXURY BRANDS CAUGHT UP IN THE CHINESE ACTRESS’ FALL FROM GRACE
The South China Morning Post on 17th September carried an article about the actress, Fan Bingbing, one of China’s highest-earning entertainers, who has not been seen in public since the July tax evasion scandal. Her disappearance poses some difficult questions for the luxury brands she endorses.
BUSINESS LOSSES FROM MANDATE FRAUD DOUBLE TO £77 MILLION
London Loves Business on 17th September reported that businesses are being urged to alert staff to the dangers of mandate fraud after new figures show that losses more than doubled in the last year to reach £77 million. Mandate fraud is where an employee is tricked into changing a regular payment mandate such as a direct debit, standing order or bank transfer and redirecting it into a fraudster’s account, the fraudster having contacted the business, usually by email, to advise of a change in process.
LEBANON: SHIP CARRYING INFECTED CATTLE BARRED ENTRY
The Daily Star on 17th September reported that a livestock carrier that had been rumoured to be carrying anthrax-infected cattle will not be allowed to dock in Lebanon, a senior source at Lebanese Customs said. Turkish news website Sozcu identified the ship as the Rahmeh, which flies the flag of Panama and left the Turkish port of Bandirma.
CONVEYANCERS LIABLE FOR REGISTRATION ERROR DESPITE MORTGAGE FRAUD
Legal Futures on 14th September reported that the Court of Appeal has ruled that there is “no public interest” in allowing a negligent conveyancer to avoid liability when they did not know that their client was actually engaged in mortgage fraud, and making the situation otherwise, might make solicitors less diligent in detecting fraud.
FEARED ALBANIAN MAFIA MUSCLING IN ON DRUGS TRADE IN BIRMINGHAM
Birmingham Live on 17th September reported on Albanian mafia links seen or suspected in drugs and vice crime in Birmingham, and saying that in 2017 West Midlands Police made 140 arrests of Albanian nationals, with 51 drug offences representing the largest specified category. On the other hand, it mentioned that, by contrast, the force arrested 1,467 Romanian citizens, which included 620 cases of theft and 35 drugs offences. The NCA has said it will relentlessly pursue organised crime groups and it has broken up Albanian drugs, document-forging and people-smuggling operations across the UK this year, but says that say the gangs have ‘established a high-profile influence within UK organised crime’.
FIRST ALL-BRITISH RADAR SATELLITE USES INCLUDE TARGETING ILLEGAL LOGGING AND RACKING SUSPICIOUS SHIPPING ACTIVITY
MSN on 16th September reported on the launch in India of the NovaSar satellite. The satellite can take images night or day, even through the cover of heavy clouds. It is said to be ideal for spotting illegal logging in high cloud-covered forests, such as the Amazon, and functions will also include monitoring for oil spills and floods, as well as tracking suspicious shipping activity such as smuggling.
2 MORE PLEAD GUILTY IN US PROBE OF PDVSA
The Wall Street Journal on 14th September reported that the US has secured 2 more guilty pleas in an ongoing corruption probe of Venezuela’s state-run energy company, Petroleos de Venezuela SA. A Texas man pleaded guilty in Houston federal court to a foreign-bribery conspiracy charge. The federal judge also unsealed a July 2017 guilty plea of a Florida man to money-laundering conspiracy charges. Both men are scheduled to be sentenced in February 2019.
THE EU BLOCKING REGULATION – ISSUES AND CONSIDERATIONS FOR THE FINANCIAL SERVICES SECTOR
In July, UK Finance – a trade association representing 300 of the leading firms providing finance, banking and payments-related services in or from the UK – produced a briefing paper explaining the EU Regulation designed to mitigate the effect of re-imposed US sanctions on Iran.
FIRST CONTAINERSHIP GOES NORTH OF RUSSIA FROM ASIA TO EUROPE
On 17th September, EU Observer reported that Venta Maersk, a brand-new ice-strengthened containership is first containership to use the still ice-plagued North East passage north of Russia from Asia to Europe. It belongs to Seago Line, a shipping company owned by A.P. Moller Maersk A/S, the world’s largest container-shipping agency.
ZIMBABWE SUGAR SALES (ZSS) LTD CAUGHT UP IN A $45 MILLION TAX EVASION STORM
On 17th September, All Africa reported that Zimbabwe Sugar Sales (ZSS) Ltd, a company that sells and distributes sugar on behalf of Hippo Valley Estates and Triangle Limited, has been caught up in a $45 million tax evasion storm spanning 2009 to March 2015. The figure could rise even higher if ZSS’s activities from April 2015 to date are factored in.
LEGAL REQUESTS FOR COMPANY DATA BY SFO HAVE DOUBLED
FS Tech on 17th September reported that law firm Pinsent Masons says that 1,032 ‘Section 2’ notices have been issued by the SFO in 2017-18 without the government agency needing to seek approval for the orders through the courts. This number is up more than 123% on the 463 notices issued in 2013-2014. Section 2 notices compel businesses to hand over documents or electronic data to assist with SFO investigations, without the need for judicial oversight to impose the order. Failure to comply is a criminal offence, which can attract up to 6 months in prison. It points out that search warrants require the SFO to explain to a judge why their proposed search parameters are appropriate, whereas Section 2 powers requires no such oversight.
SEC ENFORCEMENT ACTIONS SIGNAL RAMP-UP AGAINST CRYPTOCURRENCY
A briefing from Alston & Bird on 17th September on the SEC’s first enforcement actions against cryptocurrency companies. This, it points out, followed the issue of the DAO Report in 2017 which confirmed that those who offer and sell digital currency could be subject to the federal securities laws. The briefing provides details of recent enforcement actions.
REGULATORS AIR CONCERNS OVER SKINS GAMBLING AND LOOT BOXES – SIGN AGREEMENT TO ADDRESS RISKS
Intergame Online on 17th September reported that 15 gambling regulators from across Europe, as well as Washington State Gambling Commission, have signed an agreement to work together to address the risks created by the blurring of lines between gaming and gambling. It says that tackling unlicensed third-party websites offering illegal gambling linked to popular video games is a priority.
WELCOME TO E-ESTONIA: WHERE VIRTUAL RESIDENTS OUTNUMBER NEWBORNS
On 14th September, the IMF Blog had a new posting that included a podcast with Siim Sikkut, Estonia’s Chief Information Officer.
THE LINK BETWEEN GROWING CHINESE ARMS EXPORTS TO THE REGION AND A WAY OF SECURING GREATER GEOPOLITICAL INFLUENCE
The Interpreter on 17th September published an article which says that the fall in export of Russian made weapons to Africa corresponded with the rise in Chinese exports – though Russia remains the largest supplier of major weapons to Africa (39% of the region’s imports), but China sells to more countries than Russia. Whilst the Belt and Road Initiative (BRI), announced in 2013, is one significant example where the economic expansion via the land (belt) and sea (silk road) challenges the strategic interests of many states, China’s growing arms industry and arms exports means that weapon sales could have become a new foreign policy tool for China in Africa. Development of the Chinese arms industry has enabled it to become a major arms exporter, with a 38% increase in total arms exports that was second only to Israel.
UK’S LACK OF PLAN TO PREVENT CHILD TRAFFICKING ‘FAILS THOUSANDS’
Ekklesia on 17th September reported that the UK Anti-Trafficking Monitoring Group (ATMG) has said in its new report that the UK Government is failing to protect thousands of children from exploitation by lacking a plan to prevent child trafficking. There were 2,118 suspected child trafficking victims reported to the UK authorities in 2017, comprising 41% of the total number of potential victims and constituting a concerning 66% increase from the year before.