19th September 2018
US HOUSE OF REPRESENTATIVES VOTES TO ESTABLISH COUNTERING WEAPONS OF MASS DESTRUCTION OFFICE AT DHS
On 14th September, Homeland Security Today reported that te House of Representatives unanimously passed by voice vote a bill to replace the Domestic Nuclear Detection Office at the Department of Homeland Security with the Countering Weapons of Mass Destruction Office. The new office, if approved by the Senate and sent to President Trump for his signature, would be led by an assistant secretary for the Countering Weapons of Mass Destruction Office appointed by the president. The Office shall be responsible for coordinating with other Federal efforts and developing departmental strategy and policy to plan for, detect, and protect against the importation, possession, storage, transportation, development, or use of unauthorized chemical, biological, radiological, or nuclear materials, devices, or agents in the US and to protect against an attack using such materials, devices, or agents against the people, territory, or interests of the US.
NEW DOUBTS EMERGE ABOUT US-LED SANCTIONS ON NORTH KOREA
The Wall Street Journal on 16th September reported that fresh doubts are emerging about the potency of a US-led sanctions campaign aimed at crippling North Korea’s economy and forcing the country to end its nuclear weapons programmes, as denuclearisation talks have stalled. A confidential new UN report, reviewed by The Wall Street Journal, says North Korea, often with help from people in Russia and China, has been able to circumvent restrictions, rendering “the latest U.N. sanctions ineffective”.
IS RUSSIA SMUGGLING FUEL TO NORTH KOREA?
Oilprice.com on 18th September posed this question and said that the US at the UN had alleged that Russia has been helping North Korea to procure fuel via overseas transfers and had failed to expel a North Korean blacklisted by the council last year. Officials claimed to have collected proof of 148 cases just this year of oil tankers delivering fuel to North Korea, in direct violation of UN sanctions.
“LAWFUL INTERCEPT” PEGASUS SPYWARE FOUND DEPLOYED IN 45 COUNTRIES
On 18th September ZD Net and others reported that at least 10 operators of Pegasus (or Trident) spyware, created by Israeli cyber-security company NSO Group, have deployed the malware outside their country’s border. Researchers have found evidence that a piece of malware marketed as “lawful intercept” software to government agencies has been deployed against victims located in 45 countries, including the UK, a number that far outweighs the number of known operators, meaning that some of them are conducting illegal cross-border surveillance. It can hide on Apple or Google devices, spying via the camera, listening in on conversations through the microphone, stealing documents and siphoning off once-private messages, amongst other surreptitious activities, and has been mostly spotted in campaigns targeting iPhone users primarily. On infected devices, The company has been caught up in spying scandals in Mexico and the UAE, where civil rights organisations said it had had targeted activists, journalists and lawyers, among others who appeared entirely innocent of any crimes. NSO Group said it worked in full compliance with all countries’ applicable laws, including export control regulations.
BAHAMAS TO ‘FARE WELL’ IN FINANCIAL CRIME ASSESSMENT
Tribune 242 reported that the Bahamas Government is confident the country will “fare well” in the latest assessment of its anti-financial crime defences following corrective action. This is according to the Deputy Prime Minister, speaking at an AML conference in Nassau. The July 2017 Mutual Evaluation Report (MER) had identified numerous legal and practical deficiencies in the Bahamas AML/CFT regime. The Bahamas’ was found to have “low” effectiveness in six out of 11 categories, prompting the Government to enact several pieces of legislation to address these concerns ahead of another review this year.
BRAZIL’S ANTI-TRUST AGENCY LAUNCHES PROBE INTO MAJOR BANKS REGARDING CRYPTO TRADE
Reuters on 19th September reported that Brazil’s anti-trust regulator is reportedly inspecting 6 major national banks for alleged monopolistic practices in cryptocurrency. According to Reuters, the investigation by the CADE was initiated on the request of the Brazilian Blockchain and Cryptocurrency Association (ABCB) following several complaints.
DANSKE BANK CEO RESIGNS IN RUSSIA SCANDAL
EU Observer on 19th September reported that Thomas Borgen, the Norwegian CEO of Danske Bank, Denmark’s biggest lender, has resigned over allegations it laundered billions of illicit Russian money.
BANK TO ISSUE REPORT ON RUSSIA, EX-SOVIET MONEY LAUNDERING
RFerl on 19th September reported that Danske Bank is to release a major report on how billions of euros in possibly laundered money from Russia and other former Soviet states flowed through the bank’s affiliate in Estonia.
EU PROPOSES TO SANCTION COUNTRIES BREACHING WTO RULES
EurActiv on 18th September reported that the European Commission has proposed sanctions on countries that commit “wilful and repeated” obfuscation of their trade policies, as part of an effort to modernise the World Trade Organisation. The Commissioner for Trade said that the WTO “must adapt or it will be in serious trouble”. The sanctions would not include economic penalties. The Commission suggests limiting certain rights related to the participation in WTO proceedings, such as the ability to chair WTO bodies, seeking replies from other countries or taking the floor during committee meetings.
EU PUBLISHED REGULATION ESTABLISHING EUROPEAN TRAVEL INFORMATION AND AUTHORISATION SYSTEM (ETIAS)
On 18th September, the EU published EU Regulation 2018/1240/EU establishing ETIAS, which applies to to third-country nationals who are exempt from the visa requirement, and to third-country nationals who are exempt from the visa requirement who are family members of certain EU citizens. For more information on ETIAS see –
INDIA: UAE COURT ORDERS EXTRADITION OF BRIT TO INDIA IN BRIBERY CASE
Scroll in India on 19th September reported that a UAE court has ordered the extradition of alleged middleman in AgustaWestland scam to India. Christian Michel, a British national, is wanted by Indian investigative agencies for allegedly organising the payment of bribes to Indian defence officials connected to the purchase of 12 luxury helicopters under a 2007 deal. He was arrested in the UAE in June.
MEXICO’S NEW AML CZAR VOWS ACTION AFTER ‘SHAMEFUL’ ODEBRECHT
Reuters on 19th September reported that Mexico’s incoming financial intelligence chief said it was “shameful” how little had been done about bribes that Brazilian construction firm Odebrecht executives said were paid to secure Mexican public works contracts, and vowed to re-examine the case once in office.
FAKE ID DOCS SOLD ON WEBSITES TARGETED BY US FEDERAL AGENCY
PYMNTS.com on 18th September reported on recent Federal Trade Commission action where it had it shut down websites where consumers could buy fake financial and other documents – such as pay stubs, income tax forms, and medical statements – which can be used to facilitate identity theft, tax fraud, and other crimes. It refers to a case involving a company, Innovative Paycheck Solutions and its website FakePayStubOnline.com through which a customer could buy a fake stub for as little as $40 or a fake tax return for $150 or more. Visitors could also customise their documents and to edit real bank statements. Another company named is Integrated Flight Solutions and its website NoveltyExcuses.com, as well as websites run by George Jiri Strnad II, such as iVerifyMe.
“I CAN FIX A TOP ALGERIAN FOOTBALL MATCH FOR $68,000”
On 19th September, the BBC published a video report in which whistleblowers explain how bribery has impacted on all levels of football in Algeria. The BBC says that, over 3 years, BBC Arabic spoke to referees, players, club chairmen and two match fixers, known as “intermediaries”, about how it works day-to-day.
UK LATEST TAX DEFAULTERS LIST
On 19th September, HMRC published its latest list of serious tax defaulters where penalties involve tax of over £25,000. Note that the law requires that HMRC does not publish any information about the person for more than 12 months from the date it is first published, and the lists of deliberate tax defaulters will not be captured for the National Archives.
CANADA’S CORPORATE REGISTRY RIFE WITH FAULTY INFORMATION
Customs Today on 19th September reported that the public registry of federal corporations is riddled with thousands of errors and omissions because too many business owners are failing to keep the federal government in the loop about basic corporate information, says an audit by Corporations Canada for 2017-18. When the federal agency confronted the delinquent corporations with those problems, fewer than half fixed them. Critics have long complained the Corporations Canada registry is of little value in helping police track down money-launderers because there’s no legal requirement for federal corporations to identify their real owners, known as “beneficial ownership” information.
FEW COUNTRIES ARE PRICING CARBON HIGH ENOUGH TO MEET CLIMATE TARGETS
The OECD on 18th September reported that governments need to raise carbon prices much faster if they are to meet their commitments on cutting emissions and slowing the pace of climate change under the Paris Agreement, according to a new OECD report. The report presents new data on taxes and tradeable permits for carbon emissions in 42 OECD and G20 countries accounting for around 80% of global emissions. It finds that today’s carbon prices – while slowly rising – are still too low to have a significant impact on curbing climate change.
US CONVICTS WOMAN INVOLVED IN JAMAICAN LOTTERY SCAM
OCCRP on 18th September reported that the DoJ has announced that a court has convicted a Rhode Island woman for her participation in a Jamaican lottery fraud scheme, which has affected about 100 identified victims with reported losses totalling more than $6.7 million. She was convicted on conspiracy and substantive mail fraud and wire fraud charges, as well as one count of money laundering conspiracy. She was the last of dozens of defendants in a case that the authorities have been investigating and trying for 6 years. The others either pleaded guilty or were convicted earlier. The number of Jamaican Lottery Fraud victims is in the millions, with some estimates of annual losses in excess of $1 billion.
JERSEY LLC LAW STRENGTHENS ITS OFFER TO US CLIENTS
On 18th September, Ogier published a briefing Jersey’s new LLC law that it says strengthens the Island’s offering to US managers to build on the £169 billion of US assets and funds already administered. The Island’s legislature gave final approval to the new LLC structure, which largely mirrors the existing Delaware model.
SOUTH AFRICA: TOP COURT DECRIMINALISES PERSONAL USE OF MARIJUANA
On 18th September, Jurist reported that South Africa’s Constitutional Court has decriminalised personal consumption of marijuana (known as “dagga” in South Africa). There is now up to 24 months to change the Drugs Act. The new provisions would only allow citizens to possess fewer than 100 grams.
DHL TAKES THE COMPLEXITY OUT OF CUSTOMS WITH CUSTOMS CONNECTION IN US
The American Journal of Transportation on 18th September reported that DHL Global Forwarding, the air and ocean freight specialist within Deutsche Post DHL Group, announced the launch of its new Customs Connection platform in the US. Customs Connection replaces the previous DHL platform and acts as a one-stop shop for all customs processes backed by a sophisticated technological architecture.
HIGH COURT REJECTS PRIVILEGE CLAIM IN REGULATOR REQUEST FOR DOCUMENTS
Out-Law on 17th September reported that documents sought by the Financial Reporting Council (FRC) from Sports Direct in connection with an FRC investigation into Sports Direct’s auditor must be handed over. Sports Direct had claimed that the documents need not be handed over as they were protected by legal professional privilege (LPP). However, the High Court has now ruled that the production of documents to a regulator solely for the purposes of a confidential investigation by the regulator into conduct of a regulated person does not infringe privilege.
UK PROSECUTORS TO SENIOR PROCUREMENT OFFICER FROM CONOCO PHILLIPS AS A KEY WITNESS IN CORRUPTION TRIAL
On 18th September, the Wall Street Journal reported that the SFO will call a senior procurement officer from ConocoPhillips as a key witness in the London trial of 4 individuals charged with bribery to secure business related to the Jasmine gas field in the North Sea – for allegedly making or accepting illegal payments to ensure that logistics and freight operations company F.H. Bertling won contracts 2010-13. This is the second corruption case the SFO has brought against F.H. Bertling, which closed its UK operations in 2017 following the first prosecution. In 2016 the SFO charged the company, along with 7 current and former directors, with one count each of making corrupt payments to an agent of the Angolan state oil company, Sonangol. 3 were found guilty, 3 pleaded guilty and 1 was acquitted. The company itself pleaded guilty.
FORMER MALAYSIAN LEADER NAJIB ARRESTED AND FACES NEW CHARGES IN 1MDB SCANDAL
The Wall Street Journal on 19th September reported that former Malaysian Prime Minister Najib Razak had been arrested in connection with the 1MDB financial scandal over his alleged receipt of more than $600 million into his personal bank account.
REPORT: CRYPTOCURRENCY EXCHANGES ARE VULNERABLE TO MANIPULATION
The Wall Street Journal on 18th September reported that the New York Attorney General has published a report saying that a number of cryptocurrency exchanges lack basic consumer protections and are vulnerable to exploitation by market manipulators. A study found that online platforms where virtual currencies such as bitcoin can be bought and sold by individuals operate with lower safeguards than traditional financial markets, are vulnerable to market manipulation and put customer funds at risk. The AG has asked authorities to consider if 3 exchanges located in the state are operating lawfully.
the report is available at –
RUSSIAN OLIGARCH VITALY ORLOV LOSES BID TO KEEP FREEZING ORDER SECRET
On 19th September, the Law Society Gazette reported that the High Court in London has rejected an attempt to keep secret a worldwide freezing order worth $350 million in the latest twist in a dispute over the ownership of a fisheries company. The freezing order was obtained by Alexander Tugushev, a former business partner of Orlov, amid a long-running legal dispute to secure his one third interest in the Norebo Group. Orlov’s legal team had argued that Tugushev should not able to notify relevant third parties of the freezing order without Orlov’s consent or the permission of the court, saying this would amount to self-incrimination, because of a money laundering investigation in Russia.
CLAIMS IN UK COURTS AGAINST MULTINATIONAL COMPANIES FOR THEIR OVERSEAS SUBSIDIARIES’ ENVIRONMENTAL AND HUMAN RIGHTS ABUSES
On 19th September, Bryan Cave Leighton Paisner published a briefing saying that 4 large multi-claimant environmental/human rights claims in the courts of England and Wales have received a lot of press coverage recently. It points out the claimants involved live overseas, the alleged injury and damage took place overseas, and the entity alleged to be most directly connected to the injury and damage is a foreign-registered entity. The briefing reviews the background, saying that the claimants in the cases are taking advantage of a rule that the courts will hear a claim against a foreign-registered company where it is a necessary and proper party to a claim against another company over which the court will take jurisdiction, as long as it is satisfied that there is a “real issue” to be tried against that other company. It contains advice for multinationals that might be at risk.
CIVIL RECOVERY AN ESSENTIAL TOOL FOR BUSINESSES IN FIGHT AGAINST BRIBERY
Out-Law on 19th September published an article saying that businesses which are victims of bribery and fraud, can find that civil remedies can be a quicker and more effective means of obtaining redress than awaiting the outcome of a criminal investigation and prosecution. It starts by saying that is estimated that fraud costs the UK economy £190 billion a year (according to The Annual Fraud Indicator 2017), while a report by PwC found that the number of UK businesses which had experienced bribery and corruption in the last 2 years had jumped to 23% from just 6% in 2016. However, the article says that for criminal cases Obtaining admissible evidence from overseas is challenging, and building a criminal case investigation can take years of work and significant funding. The article says that use of civil law remedies would increase the number of culpable individuals who are held to account – and the number of victims who obtain a form of redress.
EU COURT UPHOLDS SANCTIONS AGAINST RUSSIA
On 19th September, Out-Law reported that sanctions adopted in 2014 against Russian banks and energy companies by the European Council in response to Russian action in Ukraine have been upheld by EU’s General Court. Gazprom and the other challengers in this case had argued that the EU’s original sanctions programme lacked an appropriate legal basis, breached the EU legal principle of proportionality and infringed the 1997 EU-Russia Partnership agreement. They also claimed that the EU had failed to provide sufficient reasons for its decision. The judgment said that the it was not necessary for the European Council to provide specific reasons for targeting certain sectors of the economy, or for prohibiting the export of certain goods and services considered ‘sensitive’, and that the Council had broad discretion.
LATVIA: 3 CUSTOMS OFFICIALS DETAINED FOR ABETTING IN CONTRABAND ACTIVITIES
The state broadcaster in Latvia, LSM, on 19th September reported that 3 customs officials have been detained at the Paternieki border crossing with Belarus on suspicion of abetting in contraband activities following the seizure of a cargo of approximately 10 million illegal cigarettes. 2 Belarus nationals were also arrested.
TRACE PODCAST: THE ALARMING WORLD OF INSURANCE FRAUD
In the TRACE podcast, Alexandra Wrage explores the world of financial crime – corruption, fraud, money laundering and sanctions. Through interviews with investigative reporters, business people and prosecutors, she examines different angles of financial crime and explores what motivates people to break the law, how wrongdoers cover their tracks and what can be done to put a stop to the looting. In this latest edition, Jim Quiggle, of the Coalition Against Insurance Fraud, joins her to discuss the many grisly shapes that insurance fraud takes including, astonishingly, parachute sabotage.
REPORT TO US CONGRESS ON IRAN’S FOREIGN AND DEFENCE POLICY
On 19th September, USNI published a 11th September report from the Congressional Research Service report: “Iran’s Foreign and Defense Policies”. It starts by saying that Iran’s national security policy is the product of many overlapping and sometimes competing factors such as the ideology of Iran’s Islamic revolution; perception of threats to the regime and to the country; long-standing Iranian national interests; and the interaction of the Iranian regime’s factions and constituencies. Amongst other things, it says Iran’s leadership has sought to use the sanctions relief provided by the July 2015 multilateral nuclear agreement JCPOA to emerge as a regional energy and trade hub and to negotiate future weapons buys. US officials assert that sanctions easing has provided Iran with additional financial resources to further its regional interventions. It also examines Iran’s policies in the Persian Gulf, Yemen, Iraq and Syria and elsewhere; and its relationship with Hamas, Hezbollah and other organisations.
3 CHARGED IN $364 MILLION PONZI SCHEME THAT ENTRAPPED HUNDREDS OF VICTIMS
Trib Live and others on 19th September reported that federal prosecutors in Maryland say 3 men are facing charges in a $364 million investment scheme that entrapped more than 400 victims nationwide. The indictment alleges that the suspects invited people to buy consumer debt portfolios and falsely represented that they’d profit from debt payments and flipping portfolios.
THIRD BELGRAVIA FRAUD SUSPECT EXTRADITED FROM PHILIPPINES TO JERSEY TO FACE CHARGES
International Adviser on 19th September reported that Simon Bailey is accused of 6 offences linked to the Belgravia Financial services affair, including the fraudulent sale of a former fund management company. The former Jersey resident’s return follows a lengthy process that involved collaboration including Interpol, NCA, Jersey FSC and the Philippine Authorities. A spokesperson for the FCU said that Bailey had been in the Philippines when the extradition proceedings were issued against him.
ITALY COURT FINDS SAIPEM OIL SERVICES GROUP GUILTY IN ALGERIA GRAFT CASE BUT ACQUITS ENI
Reuters on 19th September reported that an Italian court Saipem and a former CEO guilty of corruption in a long-running trial over bribes in Algeria but acquitted oil major Eni. Pietro Tali was sentenced to 4 years and 9 months in prison and seized €197.9 million from the company. Saipem was also fined €400,000.
DEUTSCHE BANK EXECUTIVE LINKED TO MALAYSIA FUND SCANDAL
Handelsblatt in Germany on 19th September reported that investigators in Singapore are probing the role of a Deutsche Bank manager in the multibillion-dollar 1MDB Malaysian state fund corruption scandal. She was Asia Pacific head of Deutsche Bank’s Financial Institutions Group until August.
HMRC RAIDS FORECOURTS IN £11 MILLION FUEL FRAUD INVESTIGATION
Forecourt trader on 19th September reported that 3 men have been arrested and a suspected fuel laundering plant dismantled in Northern Ireland as part of a HMRC investigation into a suspected multimillion-pound fuel fraud. There were searches of 9 business and four residential addresses in Stoke, Crewe, Manchester, Surrey, Gloucestershire, Devon and Northern Ireland. A suspected fuel laundering plant was dismantled, and it is believed it had the capacity to produce 20 million litres of illicit fuel a year, potentially evading £11 million in revenue.