The Globe & Mail in Canada on 24th September reported that the US Treasury has distributed a list of suspected shell companies that they believe senior Venezuelan officials have used across the globe to siphon off millions of dollars from food import contracts amid widespread starvation in the oil-rich nation. It is said that Mexico, Panama and Colombia traced transactions by companies believed to be controlled by a government-connected businessman. As long ago as 2016, a story published by revealed how senior Venezuelan officials and members of the military were enriching themselves by diverting money from food contracts. The article claims that among those under scrutiny by the coalition of countries is an obscure Colombian businessman called Alex Saab who reportedly struck gold selling to Maduro’s government. Investigators say Saab entered the food business through a Hong Kong-based company, Group Grand Ltd. Saab’s Miami-based lawyer has rejected allegations of any wrongdoing.
Out-Law published an article on 24th September that says that foreign companies with a presence in Turkey have been advised to renegotiate the price of their contracts with local organisations into the Turkish Lira as soon as possible. The move is to protect the vulnerable Turkish economy and currency. On 13th September, Turkey tightened restrictions on local organisations making transactions using foreign currencies. An “adaptation period” of 30 days began on 13th September. Businesses that do not comply with the new laws will be prohibited from continuing with their transactions and will face fines.
24th September 2018
AUSTRALIA: WINE EXPORTS COPYRIGHT CONSULTATION PAPER LAUNCHED
The Shout in Australia on 24th September reported that Australia’s wine industry is looking at a proposal to develop a new Wine Export Label Directory, after the Winemakers Federation of Australia (WFA) has worked with the Australian Government looking at options to strengthen the country’s wine export regulatory system to deal with potential intellectual property infringements. This followed a notable case of counterfeit wine bearing a leading Australian label being found in China.
PHILIPPINES: CRIMINAL CASES AGAINST IMPORTERS AND CUSTOMS BROKERS
GMA in the Philippines reported on 24th September that the Bureau of Customs (BOC) had filed 5 criminal cases against importers and customs brokers who were supposedly involved in smuggled shipments, including officers of Malaya Multi-Purpose Cooperative for large-scale agricultural smuggling of 4 containers of onions, and others importing counterfeit cigarettes and assorted beauty products, smuggling plush toys, importing foodstuff, air fresheners, shampoo, and other commodities without the appropriate permits, and fireworks and firecrackers that were misdeclared as footwear.
SNIFFER DOG FINDS £450 MILLION WORTH OF DRUGS AT GATWICK AIRPORT IN A YEAR
On 24th September, The Metro carried an article about Honey, a Labrador sniffer dog in use at Gatwick Airport which helped detect 4,500 kg of cocaine worth more than £450 million last year.
AUSTRAC WARNS ABOUT NEW MONEY LAUNDERING THREATS
ABC News in Australia on 24th September reported that superannuation, stored value travel cards and cryptocurrencies are increasingly being used for money laundering by sophisticated criminals, Australia’s financial intelligence agency has warned. The Deputy Chief of AUSTRAC told the media that with both retail and industry superannuation funds potential targets of money launderers constantly seeking loopholes to exploit. This comes as AUSTRAC hosts a summit of The Egmont Group, the multinational group comprising 350 financial intelligence experts from 150 FIU units meeting in Sydney.
MEXICO: MONEY LAUNDERING INVESTIGATED AFTER PEMEX EMPLOYEE ASSASSINATED
Mexico News Daily on 22nd September reported that money laundering at the state oil company Pemex is being investigated in connection with the murder of a company engineer. It says that Gabriel Alejandro Aguilar Mancera worked in the refinery’s department of public works and acquisitions, a position from which he allegedly could have facilitated the laundering of illicitly-gained funds from organised crime groups through the awarding of Pemex contracts.
GROWING PILOT SHORTAGE COMPLICATES SALE OF PRIVATE JETS
Blue Sky has published an article saying that owners face growing risk of not being able to use their aircraft because they can’t secure crew. It is said that this problem will get worse as airlines are retiring current pilots and recruiting from the private jet sector, and growing markets in Asia, the Middle East and elsewhere are attracting more European pilots.
THE CASE AGAINST PRODUCT EXCLUSIONS IN TRADE AGREEMENTS
ECIPE has published an article saying that there have been calls to exclude certain products from trade agreements because they cause damages to public health or the environment. The paper argues that product exclusions are neither legally feasible nor desirable. Measures to exclude products would run foul of the rules and market-access commitments that countries have agreed in the WTO, and that serve as a basis also for other trade deals, like bilateral Free Trade Agreements. Trade policy concerns trade, and the instruments and agreements that exist for the pursuit of better and less-discriminatory trade conditions simply cannot be used for sundry regulatory proposals, however relevant they may be.
EU THREATENS SWITZERLAND ON STOCK TRADING
EU Observer on 24th September reported that the EU will end cross-border stock trading with Switzerland at the end of this year unless there is progress on a new bilateral treaty covering a broad swathe of relations.
ZIMBABWE “TALKING WITH TRUMP ON SANCTIONS”
On 24th September, the Zimbabwe Mail and others reported that Zimbabwe is engaging the Trump administration over economic sanctions Washington imposed on the country nearly 2 decades ago.
MARSHALL ISLANDS AUDITOR’S OFFICE SWAMPED WITH FRAUD REPORTS
Radio New Zealand on 24th September reported that the Auditor General in the Marshall Islands says his office is being swamped with reports of government fraud, with a significant increase at local and national levels as well as at the country’s overseas missions. However, it is said that the office did not have enough staff to investigate the rise in reported criminal activity and has asked for funding to create 4 new positions in its Investigation Division.
SRI LANKA HANDS OVER HAMBANTOTA PORT TO CHINA TO PAY OFF LOANS
Customs Today on 22nd September reported claims that Hambantota port was signed over to Beijing on a 99-year lease because Sri Lanka cannot repay Chinese loans it took out to build the port. Chinese businesses now hold a 70% stake in Hambantota port. The $1.3 billion port was built with loans from a Chinese state-owned bank and opened in 2010.
BLOCKCHAIN IS ‘NOT READY YET’ TO FULLY SUPPORT THE GLOBAL SUPPLY CHAIN
CNBC on 19th September reported that blockchain technology is not yet mature enough to fully support the global supply chain, according to Christian Lanng, CEO and co-founder of Tradeshift, digital invoicing start-up. Blockchain is a great technology to manage that kind of flow and be sure of the integrity, he is quoted as saying, the problem is just it’s not a high-performance technology”, adding that it is also expensive.
IRELAND: THE INTERNATIONAL COMPARATIVE LEGAL GUIDE TO BUSINESS CRIME 2019
Law firm Matheson has published the Irish chapter from this guide – the 9th edition of The International Comparative Legal Guide to: Business Crime 2019; published by Global Legal Group Ltd, London.
COUNTRY SPOTLIGHT: LITHUANIA, BLOCKCHAIN NATION
On 24th September, Banking Tech published an article saying that the small Baltic nation of Lithuania set out its ambitions to be the region’s fintech hub and gateway to Europe at this year’s #Switch event “dedicated to the blockchain technology revolution”.
GROSS HUMAN RIGHTS ABUSES: THE LEGAL AND ILLEGAL GUN TRADE TO MEXICO
The Mexican Commission for the Defense of Human Rights and the Stop US Arms to Mexico Project of Global Exchange have produced a report which presents new data and analysis as well as policy recommendations for US policy-makers and the incoming government in Mexico. In 2017 and the first half of 2018 gun homicide rates were the highest in Mexico’s modern history. Based on an analysis of responses to public document requests by the Mexican military and other agencies, as well as other official reports, this report provides further evidence of the linkage between the increased firearms trade from the US to Mexico and the dramatic increase in gun homicides and violence in Mexico.
RCMP’S ABILITY TO POLICE DIGITAL REALM ‘RAPIDLY DECLINING,’ COMMISSIONER WARNED
CBC in Canada on 24th September reported that organised crime is moving online and the Royal Canadian Mounted Police is struggling to keep up, according to a briefing note prepared for RCMP Commissioner Brenda Lucki when she took over the top job earlier this year. The article says that in 2016 nearly 24,000 cybercrime-related cases were reported to Canadian police, up 58% over 2014. The report’s authors note that cybercrime tends to be under-reported.
UKRAINIAN, BOSNIAN AMONG CREW MEMBERS KIDNAPPED OFF NIGERIA
Rferl on 23rd September reported that pirates off the coast of Nigeria have kidnapped 12 crew members of a Swiss vessel, including workers from Philippines, Slovenia, Ukraine, Romania, Croatia, and Bosnia-Herzegovina. The crew members were abducted on September 22nd from the vessel that was traveling between the cities of Lagos and Port Harcourt. Massoel Shipping said the MV Glarus was attacked while transporting wheat from Lniagos to Port Harcourt when it was attacked 45 nautical miles from Bonny Island in the Niger Delta, with12 of its 19 crew taken hostage, according to the BBC.
OFAC: REMINDER FOR THE ANNUAL REPORT OF BLOCKED PROPERTY
On 24th September, OFAC issued a reminder that persons holding property blocked pursuant to OFAC sanctions regulations to provide OFAC with a comprehensive report on all blocked property held as of June 30th of the current year by September 30th.
TRACE PODCAST: SPOTLIGHT ON PANAMA
David Mizrachi of Panamanian law firm MDU Legal discusses recent AML enforcement in Panama and living under the cloud of the “Panama Papers”
BREXIT AND CHEMICALS REGULATION (REACH)
On 24th September, the House of Commons Library published a briefing paper discussing the EU REACH regulation for chemicals and the potential impacts of Brexit including in relation to a no deal scenario.
MALDIVES PRESIDENT DEFEATED AFTER CORRUPTION REVELATIONS
OCCRP and others reported on 24th September that Yameen Abdul Gayoom, the autocratic leader of the Maldives involved in dubious handouts of 50 of the country’s islands, has been defeated in a landslide election that elevated opposition lawmaker Ibrahim Mohamed Solih to power after 5 years of deepening autocracy.
FINLAND ARRESTS SUSPECTS OF INTERNATIONAL MONEY LAUNDERING – CLAIMED RUSSIAN/MALTA LINK
On 24th September, OCCRP reported that Finnish authorities have detained 3 money laundering and tax fraud suspects and raided the premises of a Finnish company owned by a foreigner. Among the detained is a Russian national with Maltese citizenship. Finland’s national broadcaster YLE cited eyewitnesses claiming the premises of Airiston Helmi real estate company were raided. Airiston Helmi was founded in 2007. A Russian man with citizenship of Malta was named chairman of the board.
Kenneth Rijock in his blog soon latched on to the news that the Russian involved appeared to have a Maltese CBI passport.
GERMAN WATCHDOG ORDERS DEUTSCHE BANK TO DO MORE TO PREVENT MONEY LAUNDERING
The Globe & Mail of Canada reported on 24th September that Germany’s financial watchdog has ordered Deutsche Bank to do more to prevent money laundering and “terrorist financing,” and has appointed a third party to assess progress. BaFin said that this was the first time it had made such an appointment at a bank related to money laundering. European regulators are stepping up their scrutiny of banks’ dealings with their customers following a series of scandals, such at Danske Bank.
SHOPKEEPER IN NEWCASTLE HIT WITH £1 MILLION TAX BILL OVER ILLEGAL CIGARETTES
On 24th September, the Northern Echo reported that the owner of a mini-market had been given a £1 million tax bill as part of a new approach to target the black market in tobacco. Investigations showed he had made £2,500 a day over a 5-year period. Investigators are now estimating the revenue loss over a lengthy period, rather than concentrating on the relatively small amounts found and seized.
ICAEW REPRESENTATION ON PROPOSALS ON TIME LIMIT AND ASSESSMENTS IN FINANCE BILL
Accountancy Daily on 24th September reported that the Institute of Chartered Accountants in England and Wales (ICAEW) has published its response to Finance Bill 2018-19 draft legislation to increase assessment time limits; saying that it does not think it is right that the distinction between innocent and careless errors is being removed by the new legislation and the 12-year time limit.
REVERSE CHARGE VAT: WHAT THE CONSTRUCTION SECTOR NEEDS TO KNOW
The Construction Index on 24th September published an article about changes to the way VAT is collected in construction that could affect up to 150,000 organisations and will cause cash-flow problems in an already squeezed sector – these changes due to come in during 2019. The move is designed to deal with a particular type of crime known as ‘missing trader fraud’. The scam has migrated across several industries, and is now taking root in construction supply chains, and involves fraudsters exploit weaknesses in the labyrinthine VAT system to steal government money.
CYPRUS: PUBLIC OPINION FEELS GOVERNMENT IS LOSING GRIP ON CORRUPTION; WORLD BANK RATING SLIPS
The Financial Mirror in Cyprus on 24th September reported that a World Bank report on governance indicators sees Cyprus losing ground on five out of six categories verifying a feeling among Cypriots that there is institutional corrosion.
INDIAN AUTHORITIES ATTACH $60 MILLION OF ASSETS IN BITCOIN PONZI CASE
Atoz Markets reported on 24th September that Indian authorities have attached $60 million worth of assets in connection with its probe against Amit Bhardwaj, in the alleged Bitcoin Ponzi fraud of $5.26 billion, according to the CCN news portal. 6 offices in Dubai, immovable properties of the owner of GainBitcoin.com, in addition to the residential apartments and bank balances of 2 of his associates have been “attached” under India’s AML Act 9A SORT OF TEMPORARY RESTRAINT ACTION). It is said that Bhardwaj used Variabletech Pvt Ltd, Singapore to induce 8,000 people to invest in his Bitcoin-trading scheme. The alleged conspirator, Gainbitcoin.com, is said to have held marketing events at pricey hotels across India, where his associates attracted attendees towards the Bitcoin mining investment schemes.
US CONTRACTOR PLEADS GUILTY TO $350 MILLION FRAUD
Global Construction Review on 24th September reported that a US businessman has pleaded guilty in a case involving the fraudulent winning of federal government construction contracts intended for companies run by women, ethnic minorities, former servicemen and disabled people. Thomas Brock, 51, of South Carolina, admitted that he misrepresented his businesses to win work. The government is also prosecuting Brock’s wife, Tory, as well as 4 business associates and a former lover.
FUGITIVE BUSINESSMAN USED 3 INDIAN PASSPORTS, FLOATED 37 FIRMS IN US WITH BROTHER
First Post in India on 24th September reported that fugitive economic offender Nitin Sandesara, wanted in India, may be using multiple Indian passports. It says that sources said Nitin and his brother, Chetan, had floated 37 companies in the US, which were involved in real estate and port development. Some of these companies, sources claimed, were also involved in funnelling money to Nigeria where he had acquired 2 oil exploration projects.
CEO OF CHINA-BASED BOYAA INTERACTIVE GAMBLING COMPANY JAILED ON BRIBERY CHARGES
On 24th September, Calvin Ayre reported that Boyaa Interactive has had a rough year, saying that the China-based gaming company has seen its revenue fall steeply after regulators began prohibiting a large number of social games. Now, the chairman and CEO of the company, Zhang Wei, has been sentenced to spend some time behind bars and the company has been scrambling to find a suitable replacement.
FRANCE MULLS PLANS TO TAX FOREIGN-REGISTERED HGV
Lloyds Loading List on 24th September reported that the scheme may be based on existing Swiss model, where truck drivers purchase an annual tax disc giving them access to operate on the country’s roads.
HUNGARY: ORBAN’S FRIENDS ENJOY LUXURY YACHT, PRIVATE JET
On 24th September, OCCRP reported that Atlatszo, an OCCRP partner organisation in Hungary, has found links between members of the Hungarian elite, including Prime Minister Viktor Orban, and a luxury yacht (Lady Mrd) and private jet, both registered abroad. Lady Mrd is owned by a Maltese company called L&L Charter Ltd., which in turn is owned by PKF Fiduciaries International Ltd, another Maltese company. PKF Fiduciaries is reported to be a proxy for other companies, managing more than 200 offshore firms. The jet, a brand-new Bombardier Global 6000 valued at $62.38 million, is registered in Austria under the code OE-LEM. Its owner is unknown, but it is operated by an Austrian business jet company.
HAITIAN ANTI-GRAFT PROTESTERS DEMAND PROBE INTO OIL FUND SCANDAL
Baker McKenzie on 24th September reported on demands for an investigation into the alleged misuse of funds marked for a cheap oil programme run by Venezuela. Founded in 2005, the PetroCaribe program allowed several Latin American and Caribbean countries to acquire petroleum products at a low cost, and to pay their bills over 25 years at a 1% interest rate. There have been 2 Haitian Senate investigations in 2016 and 2017 into the misuse of nearly $2 billion set aside for the fund.
ANOTHER FORMER RITE AID EXECUTIVE CHARGED IN $5.7 MILLION KICKBACK SCHEME
Baker McKenzie on 24th September reported another trial connected to the scamming of the drug store giant in a $5.7 million kick-back scheme that lasted 22 years. James W. Pilsner, 60, of Harrisburg, Rite Aid’s ex-vice president for advertising, has entered a plea agreement. Also accused are 2 Georgia businessmen, Larry Nuckols, 69, and Vance Taylor, 71, owners of Nuvision Inc. of Atlanta, who are said to have ran the con against Rite aid from 1995 until last year.
VOLVO HALTS IRAN TRUCK ASSEMBLY DUE TO US SANCTIONS
KYC 360 on 24th September reported that Swedish truckmaker AB Volvo has stopped assembling trucks in Iran because US sanctions are preventing it from being paid, a spokesman for the company said.
FACEBOOK HOSTING HUNDREDS OF ILLICIT WILDLIFE SALES LISTINGS IN THAILAND
Illicit Trade on 11th September reported that researchers at an international wildlife trafficking monitor have discovered more than 1,500 listings for the sale of live animals on Facebook in Thailand. Traffic found a total of 1,521 animals for sale on 12 Facebook groups in the SE Asian country in less than a month of monitoring in 2016. Many of the species listed were under international protection, while some were not native to Thailand. Additional research carried out in July of this year revealed that at least 9 of the groups were still active, and that their combined membership numbers had risen from 106,111 to 203,445 over the past 2 years.
POTENTIAL CFIUS INTEREST IN TESLA PRIVATISATION?
On 22nd September, a posting from Bass, Berry & Sims raised the possibility that Saudi investment in Tesla could prompt scrutiny from the Committee on Foreign Investment in the United States (CFIUS) – which you would have thought was aimed at preventing access/control of national security assets by the Chinese, Russians etc. the posting points one to a fuller article published by Bloomberg on 15th August. It seems that the big question is whether this technology is really sensitive enough and whether if acquired by a non-US company it could have some kind of negative impact on US national security.
The big question is whether this technology is really sensitive enough and whether if acquired by a non-U.S. company it could have some kind of negative impact on U.S. national security.
NEW OBSERV INSTITUTE TO HELP FIGHT CORRUPTION IN LATIN AMERICA
Corporate Counsel from Law.com reported on 24th September that the Observ Institute is an independent, non-profit group that plans to create a public database for bids on government contracts and use that data to identify corruption-related issues in the bidding process. It is described as a group of institutions that includes the Brazilian construction company Odebrecht, joined together to develop a digital platform supported by a network of blockchain.
On 24th September, the European Sanctions Blog provided a useful update on developments re certain CAATSA-related sanctions with respect to the Russian Federation. The Secretary of State has added 33 additional persons to the section 231(d) CAATSA list of those “being a part of, or operating for or on behalf of, the defense or intelligence sectors of the [Russian government]” – there now being 72 names on the list, 39 having been listed in October 2017. Being listed does not itself impose sanctions, but any person who knowingly engages in a “significant transaction” with any of the identified persons will be subject to mandatory sanctions, the blog says.
The list of 72 names can be found at –
On 24th September, the Home Office issued a news release providing confirmation that the Common Travel Area arrangements and the associated rights and privileges of British and Irish citizens are protected if the UK leaves the EU with no deal. This does not mean goods (or even, perhaps, “duty-frees”?) but only the citizens, and not foreigners…
On 24th September, FATF released a mutual evaluation report on Saudi Arabia saying that it is achieving good results in fighting terrorist financing, but needs to focus more on pursuing larger scale money launderers and confiscating their assets.
Field Fisher Waterhouse on 23rd September published an article which examines some of the more common legal and practical issues faced by businesses in the cryptocurrency and payment platform sectors and discuss the latest thinking on how to overcome these obstacles. It says that KYC and AML feature prominently at the top of most of the lists of concerns for regulated companies looking to participate in or use cryptocurrencies. It asks how can AML/KYC be controlled on secondary markets? It says that, technically, it is relatively straight-forward to KYC and AML-screen cryptocurrency investors at the point of investment. But when crypto assets enter a secondary market and become tradeable on an exchange or off exchange in the over the counter (OTC) market, it becomes much more difficult for an issuer to keep a register of where these assets have gone. It suggests the use of the WeChat system used in China as a model. The article also looks at the question for initial coin offerings (ICO) – a method of fundraising using cryptocurrencies – whether a cryptocurrency is a fund or a security. The article concludes that there is still a long way to go before crypto services become mainstream, trusted financial mechanisms, and regulatory challenges related to ICO remain among the murkiest in the cryptocurrency sector. As for AML and KYC challenges, these are perhaps more easily solved than some of the other issues facing the crypto sector, it says, as they are essentially educational, rather than technical challenges.