26th September 2018
NORTH KOREA ‘INCREASINGLY’ USES CRYPTO TO AVOID US SANCTIONS, EXPERTS CLAIM
Coin Telegraph on 26th September reported that North Korea is “increasingly” using cryptocurrencies to evade sanctions imposed by the US, according to two Washington-based experts quoted by news site Asia Times. Both experts have claimed that the country is successfully trading existing cryptocurrencies, and is attempting to create one of its own, despite current restrictions imposed on fiat assets.
SAM WYLY’S COLORADO RANCH SELLS FOR OVER 75% DISCOUNT
The Wall Street Journal on 21st September reported that a sprawling Colorado property owned by trusts controlled by Sam Wyly, the one-time billionaire who was embroiled in a tax fraud scandal, has sold at auction for just over $14 million — a fraction of its nearly $60 million original asking price. The SEC sued Sam Wyly and his brother Charles Wyly in 2010, alleging they earned $553 million in undisclosed profits by trading in 4 companies they controlled using trusts in the Isle of Man. There were also separate IRS taxation allegations involving claims of $1.11 billion in back taxes, interest and penalties. Sam Wyly had appeared on Forbes magazine’s list of the 400 richest Americans in 2010 with a net worth of $1 billion.
See its photo at –
TURKEY INTRODUCES RULES REQUIRING EXPORT PROCEEDS TO BE REPATRIATED WITHIN CERTAIN TIMEFRAMES
On 20th September, Moroğlu Arseven in Turkey published an article saying that Turkey has introduced new rules to protect the value of its currency, aimed at ensuring profits from export transactions between 4th September 2018 and 4th March 2019 are returned to Turkey. Accordingly, value received from export transactions made by Turkish residents must be repatriated within certain time limits – within 180 days from the date of actual export.
NEW ZEALAND: INFORMATION SHARING TO TARGET ORGANISED CRIME
On 26th September, Scoop reported a news release from the New Zealand Government about the consultation on a proposal to extend the 2016 information-sharing agreement between the police and Inland Revenue, where they have reasonable grounds to suspect a serious offence is being committed, to include the customs service and SFO. Under the proposal, the one-way flow of information from Inland Revenue would be extended to the SFO and Customs. Information could be requested from IRD or proactively provided if there are reasonable grounds to suspect a serious offence may be or has been committed. The consultation runs to 30th October.
IMF: FIGHTING CRIME IN TRINIDAD AND TOBAGO
On 25th September, the IMF published a Country Report on selected issues concerning Trinidad & Tobago. This included a chapter on fighting crime, saying that spending in Trinidad and Tobago, like in many other Caribbean countries, is concentrated more on law enforcement and correction than prevention. It also represents a large share in percent of government expenditure compared to other Caribbean countries. The report also says that the government is putting crime reduction and increasing detection rate as its top priority. The authorities are adopting a preventative approach to tackling crimes. This plan includes collaboration among national security agencies, especially in the areas of transitional crimes, money laundering, cybercrime, and human trafficking. The government has also acquired new naval vessels for maritime enforcement, and with US assistance will establish a border control system to better monitor international travellers.
THE TRUE STORY OF HOW THE CITY OF LONDON INVENTED OFFSHORE BANKING – AND SET THE RICH FREE
On 7th September, the Guardian published a “Long Read” article (also available as a podcast) providing a useful and fascinating history lesson, and telling the story of Siegmund Warburg inventor of the “Eurodollar” bonds, formally issued at Schipol Airport, to avoid fees, and to be paid in Luxembourg, to avoid tax, but managed to get the LSE to list the bearer bonds. The method was used by tax evaders, the ultra-wealthy, corrupt dictators etc. The article is adapted from Moneyland: Why Thieves & Crooks Now Rule The World & How to Take it Back by Oliver Bullough, published by Profile Books
OVER 50% OF FRAUD REPORTS IN UK ARE ASSESSED SOLELY BY AUTOMATED SYSTEMS
Finance Feeds on 26th September reported that during the financial year 2017/2018 there were a total 294,984 reports, of which 181,496 were assessed solely by an automated system.
SWITZERLAND’S FINANCIAL REGULATORY WATCHDOG ISSUES WARNING ON ALLIANCE CAPITAL
BTC Manager on 26th September reported that Switzerland’s Financial Market Supervisory Authority has warned cryptocurrency investors to be wary of Alliance Capital, a firm claiming to offer clients cryptocurrency trading services, binary options, and other financial products, has been added to the scam watch list of FINMA.
CHARTERED INSTITUTE OF TAXATION COMMENTS ON PROPOSALS TO EXTEND HMRC CIVIL INFORMATION POWERS
On 25th September, CIOT issued its response to a HMRC consultation document on the effectiveness and efficiency of powers under Schedule 36 to the Finance Act 2008, and proposals for an extension to the powers, including the creation of a new “financial institution notice” – for issue to such as banks and deposit-takers. The other main proposals is the removing the requirement to obtain Tribunal approval in all cases where an information notice for third parties is to be issued. On the whole, the CIOT does not support the options as currently formulated.
The consultation closes on 2nd October, and the consultation document can be accessed at –
EU COULD BAN 37 CARGO AIRLINES FROM EUROPE AS A CONSEQUENCE OF BREXIT
Loadstar on 26th September reported that 37 airlines, as well as aviation-related companies, will not be allowed to carry or handle cargo going to the EU after 29th March, if the EU fails to create a new security clearance designator mechanism – these being those provided by the UK, but that will expire once the UK ceases to be a Member State under a ‘no deal’ scenario.
HEALTH MANAGEMENT ASSOCIATES TO PAY $260 MILLION OVER FALSE INVOICING CLAIMS
Law 360 on 25th September that the company would to pay the penalty to settle allegations that it wrongly pressured physicians to admit more patients to its hospitals’ emergency services departments.
‘STARK’ BREXIT WARNING ON CHEMICALS REGULATION ISSUED
Out-Law on 25th September published an article saying that a stark warning on the implications of a ‘no deal’ Brexit for the chemicals industry has been issued by the UK government, a legal expert has said. It is concerned with REACH, the legislative regime for chemicals that requires EU companies to register chemicals before placing them on the EU market. The UK has warned that a ‘no deal’ scenario would restrict UK-based chemical companies’ access to the EU market.
NEW ZEALAND: NEW POWERS TO COMBAT DRUG SMUGGLING AT SEA
Scoop on 26th September reported that the Maritime Powers Extension Bill amends the Misuse of Drugs Act 1975 to make drug smuggling in international waters an offence under New Zealand law. It also amends the Customs and Excise Act 2018 to allow Customs to board and search ships and take action against individuals suspected of committing these offences, meaning that Customs can enforce its powers into the 200-mile Exclusive Economic Zone and the high seas beyond.
MIDDLE EAST A MAJOR HUB FOR WILDLIFE TRAFFICKING
Nature Middle East on 26th September reported that major airports in the Arab region are among the main wildlife trafficking transit hubs in the world, according to a new report. One quote is that amount of wildlife trafficking destined for UAE seems to pale in comparison with the sheer volume of wildlife trafficking moving through it. The report: ‘In Plane Sight: Wildlife Trafficking in the Air Transport Sector’, the report was produced by the C4ADS. It analysed global airport seizures of wildlife and wildlife products from 2009 to 2017, finding examples of trafficking in at least 136 countries worldwide.
The C4DS report is available at –
UNION CUSTOMS CODE (UCC) REVIEW
On 26th September, the European parliamentary Research Service produced an assessment which examines the current state of play as regards the implementation of the UCC. It examines in particular whether the Code is being properly implemented for the benefit of European consumers, businesses and the EU budget. It also analyses the governance structure and makes recommendations on how to improve its transparency. The UCC entered into force in 2016, and is accompanied by 2 delegated and 4 implementing acts, which refer to each other. The assessment considers various aspects, including the use of transitional rules and the shortcomings identified.
MEXICAN AUTHORITIES DISARM ACAPULCO POLICE AMID CORRUPTION INQUIRY
The New York Times and Reuters on 26th September reported that heavily-armed Mexican marines and soldiers have acted against the police force of violent port city Acapulco on suspicions of ties to organised crime, arresting 2 officers accused of homicide and seizing weapons and equipment.
EX-CEO OF CHILEAN MINING FIRM SETTLES SEC BRIBERY PROBE
The Wall Street Journal on 25th September reported that Patricio Contesse, the former CEO of Sociedad Química y Minera de Chile SA, or SQM, a Chilean chemical and mining company has settled a foreign bribery case with SEC. He was reportedly responsible for nearly $15 million in payments to Chilean politicians, political candidates and people and entities associated with them, supported by fake documentation that he submitted to the company. The company itself paid $30 million in January 2017 to settle with the DoJ and SEC. Contesse worked for the company for more than 25 years, nearly all of it as its CEO, but was sacked in 2015 after the scandal broke.
TRACE PODCAST: A YEAR IN PRISON FOR INSIDER TRADING
In the latest TRACE podcast, Roomy Khan, “Tipper A” in the Galleon Group insider trading case, discusses the many small decisions that lead to catastrophic consequences in the world of financial crime. The Galleon Group was one of the largest hedge fund management firms in the world, managing over $7 billion, before closing in October 2009. The firm was the centre of a 2009 insider trading scandal.
ISLE OF MAN AMENDS ITS LIBYAN SANCTIONS LISTS
On 26th September, the Isle of Man issued a news release advising of amendment of 5 entries on the Libyan sanctions list.
COURT HAS SEIZED THE ASSETS OF THE FORMER ECONOMY MINISTER OF BULGARIA, TRAICHO TRAIKOV
Novinite in Bulgaria on 26th September reported that Sofia City Court has imposed security on movable and immovable assets of the former Bulgarian Minister of Economy and Energy. From 2009 to 2012, he was Minister of Economy and Energy in the first cabinet of Boyko Borisov but resigned. It reports that the proceedings against Traikov began in connection with the accusations against him in relation to the EVN case, where the accused are the former Deputy Prime Minister Simeon Dyankov, the co-founder of Capital and Dnevnik Ivo Prokopiev and others.
ANGOLA: THE FALL OF THE DOS SANTOS CLAN
On 26th September, Deutsche Welle carried a feature saying that 1 year ago, the dos Santos family handed the Angolan presidency over to Joao Lourenco. The new president promised to tackle corruption which crippled the oil-rich nation. Now the ex-president’s son has been arrested. For almost 4 decades, the dos Santos family determined the political and economic destinies of Angola. They have what is described a s business empire, and the eldest daughter of the former president, Isabel dos Santos, was able to build a huge corporate empire in just a few short years and rose up the ranks to become the “richest woman in Africa”, according to Forbes. She is said to have interests in hundreds of companies in various sectors, including telecommunications, the diamond trade, tourism, real estate — in Angola, Portugal and a number of other countries.
CYPRUS: POLITICALLY EXPOSED PERSONS LINKED TO €146 MILLION IN CO-OP BAD LOANS
The Cyprus Mail on 26th September reported that over 1,100 PEP had accounts in the former Co-op Bank and 623 of these are connected to non-performing loans, the probe into the collapse of the bank heard.
ISRAEL AND CHINA FIRMS BRIBE KENYAN OFFICIALS
The Daily Nation in Kenya on 25th September carried an article saying that Chinese and Israeli companies are among international contractors who regularly bribe Kenyan officials to win lucrative public infrastructure contracts, a new report by Transparency International (TI) says. TI says bribery of Kenyan officials has over the years continued unabated, partly because foreign governments are not enforcing the existing anti-bribery laws. However, Kenya last year enacted a law criminalising bribery and with severe penalties.
FRANCE’S BLACKLIST OF FRAUDULENT CRYPTOCURRENCY ENTITIES CONTINUES TO GROW
Finance Feeds on 26th September reported that AMF, the French financial markets regulator, adds more entries to its blacklist of fraudulent cryptocurrency platforms. The 21 names added to its blacklist are mostly entities offering activities related to cryptocurrencies – ICO, trading and mining.
TAIWAN AUTHORITIES CLAMP DOWN ON MONEY LAUNDERING
The Taiwan News on 26th September reported that Taiwan police have been instructed to sweep illegal money exchanges in preparation for international audit by the Asia Pacific Group on Money Laundering. Police have mobilised hundreds of officers, interviewing dozens of suspects and associates across Taiwan. The report says that Taiwan will have its 3rd field assessment by the Asia Pacific Group on Money Laundering in November, where Taiwan will hope to maintain its “low risk” grade from the regional body.
WORLDWIDE REGULATORS ISSUE $26 BILLION OF FINES SINCE 2008
FS Tech on 26th September reported that the fines and penalties for non-compliance with sanctions, AML rules and KYC in the past 10 years, according to a new study which ranks the FCA as the toughest regulator in Europe with the FCA accounting for the majority of fines issued by European regulators, who issued a collective $1.7 billion of penalties over the past decade.
BRITISH MAN JAILED IN FRANCE FOR HEADING CRIMINAL NETWORK THAT SMUGGLED HUNDREDS OF MIGRANTS INTO THE UK
The NCA on 26th September reported that Rekawt Kayani, 36, was arrested by NCA officers at his home address in Derby in May 2016, as part of a joint operation being run with the French police. He was involved in numerous smuggling runs including one in June 2015 when 68 migrants from Afghanistan, China and Vietnam were found inside four lorries at the Harwich International Port. Investigators also found Kayani orchestrated runs from Dieppe to Newhaven.
SFO INCREASINGLY USING POWER TO DEMAND INFORMATION WITHOUT COURT APPROVAL
Out-Law on 26th September published an article which said that the SFO is increasingly using its powers to demand information from large businesses without the need to ask for court approval, new data has shown. It reports that the number of ‘section 2’ notices issued by the SFO more than doubled in the last 5 years, from 463 in the year ending 31st March 2014 to 1,032 in 2017/18. They allow the SFO to compel the production of documents, electronic data and information from any individual or business without the need for court approval.
NEW REPORT FINDS NUCLEAR WEAPONS AND RELATED SYSTEMS INCREASINGLY VULNERABLE TO CYBERATTACK
Nuclear Threat Initiative (NTI) on 26th September said that its new report showed that nuclear weapons and related systems are increasingly vulnerable to sophisticated cyberattacks, and nuclear-armed states must co-operate and accelerate efforts to prevent an attack that could have catastrophic consequences.
STEPS TOWARDS A DEFINITIVE EU VAT SYSTEM
On 26th September, the EU Parliament Research Service provided a briefing in preparation for the October Plenary of the Parliament which says that harmonisation of domestic provisions on VAT dates back to 1967 because of the potential distorting effect of this consumption tax on the Single Market. The transitional VAT arrangements, departing from the intended destination-based principle, have applied for more than 2 decades. Since 2016, the VAT framework is being reviewed and updated, moving to a destination-based framework that also includes a revision of the VAT-rate provisions. Parliament is due to vote on 2 Commission proposals on VAT during its October 1st plenary session.
EU AGENCY FOR CRIMINAL JUSTICE COOPERATION (EUROJUST)
On 26th September, the EU Parliament Research Service provided a briefing in preparation for the October Plenary of the Parliament explaining the role and background of Eurojust. Since its creation in 2002, it has become a central player in judicial co-operation in criminal matters. During its October plenary session, the EU Parliament is expected to vote on a proposal for a Regulation that aims to modernise its legal framework and streamline its functioning and structure.
HOW THE US TREASURY IS USING THE FULL RANGE OF ITS AUTHORITIES AND TOOLS TO ADDRESS 3 UNIQUE, YET RELATED, CHALLENGES IN IRAN, RUSSIA, AND NORTH KOREA
On 26th September, the US Treasury issued a news release containing the statement of Assistant Secretary Marshall Billingslea before the US House of Representatives’ Financial Services Sub-Committee on Monetary Policy and Trade. He outlined how the US was using sanctions, described as “active and complex”, and other tools, providing a brief overview of the steps the US Treasury has taken to counter each challenge. The other multiple other tools and authorities that are used in conjunction with sanctions actions by OFAC are said to include reporting and analysis of financial intelligence provided by US financial institutions to the FinCEN, and FinCEN’s authorities under the Bank Secrecy Act and USA PATRIOT Act, extensive private sector engagement both at home and abroad, and financial diplomacy conducted globally by our international financial attachés and the Office of Terrorist Financing and Financial Crimes. On a daily basis, he said the US Treasury works bilaterally and multilaterally to strengthen the AML/CFT regimes worldwide, including with those countries exposed to Iranian, Russian, and North Korean illicit financial flows.