3rd October 2018
IS ISIS BUYING VALUABLE “MILITARY” EQUIPMENT IN WESTERN EUROPE?
An article in C4ISR.net on 29th September is linked to the purchase in a model shop in Denmark of a drone that was apparently intended for service as either an insurgent scout or weapon, but never made it, because on 26th September police arrested 2 people on suspicion of buying drones bound for the Islamic State. The article says, whilst little is known about this case, considerably more is known about the flow of drones from Europe to ISIS, however, thanks to diligent work by arms investigators and trackers. CTC in July released a report on the supply of drones to ISIS and a string of IT and web service companies run by a pair of Bangladeshi brothers named Siful Haque Sujan and Ataul Haque Sujan and active in the UK, Bangladesh, Spain, Australia, the United States and Denmark. The article says this was not the other supply channel, and that in February OFAC sanctioned the Turkish company Profesyoneller Elektronik for supplying drone components to ISIS, and that other investigations found drone parts, like gyroscopes, traced back to online Turkish distributors for hobby supplies. The article says that commercial off-the-shelf drones may also be the most valuable military equipment that can be easily acquired in Western Europe for ISIS.
UKRAINE ADOPTS UNIFIED LIST OF DUAL-USE GOODS MEETING EU STANDARDS IN STATE EXPORT CONTROL SYSTEM
Interfax Ukraine reported on 2nd October that on 19th October Ukraine is switching to the unified national list of dual-use goods that are subject to export control, meeting EU standards.
https://en.interfax.com.ua/news/economic/535282.html
FENTANYL SMUGGLED OUT OF INDIA VIA POSTAL ROUTE, SAY OFFICIALS
The Hindustan Times on 2nd October reported on the arrest of 2 Indians and a Mexican national who were allegedly caught by Directorate of Revenue Intelligence (DRI) with 10.91 kg of fentanyl hydrochloride destined for Mexico. The DRI is trying to find out the source of the raw material used to manufacture the fentanyl hydrochloride. The article explains that fentanyl hydrochloride is the salt form of fentanyl, a synthetic opioid with pain-relieving and anaesthetic properties, but is also made illegally and used as a recreational drug, often mixed with heroin or cocaine. It is a potent narcotic analgesic, abuse of which leads to habituation or addiction.
CAYMAN ISLANDS: AML OFFICER AND RELATED DEADLINES PUSHED BACK
The Cayman Compass on 2nd October reported that the Cayman Islands Monetary Authority has announced that regulated funds have until 31st December to notify the regulator of the appointment of AML officers, and unregulated funds have until the same date to make their AML officer appointments. The original deadline was 30th September. Unregulated funds also now have 3 more months to hire the required compliance officer, but these are not required to notify the regulator.
CRYPTO EXCHANGE SHAPESHIFT REFUTES WALL STREET JOURNAL CLAIMS THAT THE EXCHANGE WAS USED BY CRIMINALS TO LAUNDER MONEY
Block Tribune and others on 2nd October reported that the Wall Street Journal WSJ published an article, titled “How Dirty Money Disappears Into the Black Hole of Cryptocurrency,” alleging that some $88.6 million have been laundered through 46 cryptocurrency exchanges. According to the article, $9 million of the fraudulently obtained funds went through crypto exchange ShapeShift. In response, ShapeShift CEO Erik Voorhees has said that the article contains factual inaccuracies, omits significant details about how his company operates, and reflects a fundamental misunderstanding of how blockchain transactions work.
NETHERLANDS: MIGRANT RESCUE SHIPS NO LONGER ALLOWED TO BENEFIT FROM PLEASURE CRAFT LEGISLATION
In the latest move against migrant rescue vessels in the Mediterranean, on 1st October Van Steenderen MainportLawyers published an article saying that on 26th September the Dutch Ministry of Infrastructure issued a letter to the Dutch House of Parliament informing that the Ministry would with immediate effect change the rules allowing registration of sea-going vessels in the Dutch Ship Registry as a pleasure craft. New registrations will have to comply with the relevant SOLAS safety and crew legislation and the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers (STCW).
https://www.lexology.com/library/document.ashx?g=35ea400e-1ae4-4503-a9bf-2a61090c2ebb
FDA BANS PHARMACEUTICAL INGREDIENT IMPORTS FROM CHINESE SUPPLIER – ADDS TO “RED LIST” REQUIRING DWPE
On 2nd October, HKTDC reported that Zhejiang Huahai Pharmaceutical, located in Linhai in Zhejiang province had been added to the Food & Drug Administration’s “red list” and thereby requiring DWPE (detention without physical examination). The grounds for such listing are that imports are from producers which have not meet good manufacturing practices for their drugs, and follows recent discoveries of problems regarding impurities in the company’s manufacturing process. The article explains that producers and products on the “green list” are not subject to DWPE. Some import alerts include a “yellow list” of firms, products and/or countries subject to intensified surveillance because the nature of the violations may warrant further field examinations of individual entries and/or additional analyses. In addition, it says that, depending on the specific import alert, shipments of products subject to DWPE may still be imported into the US if the importer has demonstrated that the shipment complies with requirements.
MALAYSIA’S ANTI-GRAFT AGENCY ARRESTS WIFE OF FORMER PRIME MINISTER
On 3rd October, Reuters reported that Malaysia’s anti-graft agency had arrested former first lady Rosmah Mansor and expects to charge her with money laundering, among other infringements.
MISSING CHINESE SUPERSTAR RESURFACES, FACES $97 MILLION FINE FOR TAX EVASION – EVIDENCE OF WIDESPREAD TAX EVASION IN CHINESE FILM INDUSTRY
The Brisbane Times and others on 3rd October reported that China’s most famous actress, Fan Bingbing, has re-emerged – after a mystery disappearance from Hollywood. She will have to pay a $97 million fine to tax authorities, but will avoid a criminal investigation and possible jail if she does so. It says that staff at her film company had been caught concealing and deliberately destroying documents to impede the investigation, and 1 person had been taken into custody. The Chinese tax authority is said to have uncovered widespread fraud in the film and television industry, and actors and their agents had until December 31st to pay their full tax to avoid punishments and fines.
GLENCORE SEEKS INJUNCTION AGAINST AUSTRALIAN TAX COMMISSIONER TO PREVENT USE OF PARADISE PAPERS
The Guardian on 3rd October reported that Swiss-based Glencore, the world’s biggest mining company has sought an injunction against Australia’s tax commissioner to force him to return documents it claims were obtained illegally in last year’s Paradise Papers leak.
NORTH KOREAN DETAINED BY VLADIVOSTOK CUSTOMS FOR “LARGE SCALE” CASH SMUGGLING
Customs Today on 3rd October reported that a Russian customs post had detained a North Korean citizen for bringing $180,000 in undeclared cash into Russia – this being more than 15 times the legal limit. A spokesperson for Vladivostok customs is said to have told NK News that the man had served as captain of a ship called the “Tu Ru Bong 2” – and a DPRK-flagged general cargo ship called the Tu Ru Bong was previously a regular visitor to China.
MAN WHO ‘USED IRISH BACKPACKERS TO SMUGGLE COCAINE INTO NEW ZEALAND AND AUSTRALIA’ HAS €50,000 SEIZED
Customs Today on 3rd October reported that police in New Zealand have frozen the bank account of a Dublin man with links to the Kinahan cartel from Ireland. A court heard that he arranged for Irish mules to “bodypack” cocaine and fly into New Zealand and Australia.
CHANGES FOR OVERSEAS OWNERS OF UK REAL ESTATE
CMS Law on 2nd October published a briefing which looks at 3 proposed changes for overseas owners of UK real estate including holding entities and funds. The first is a tax charge on capital gains on disposals and the others are AML proposals. These include the registration of overseas legal entities and some trusts holding UK real estate with details of their owners. The briefing includes details of the draft Registration of Overseas Entities Bill is aimed at creating transparency and combating money laundering. The register is intended to be operational in 2021.
WHO HAS ACCESS TO COURT DOCUMENTS? – THE RULES ON NON-PARTY ACCESS
Allen & Overy on 1st October issued a briefing in the light of a court order under which Cape Intermediate Holdings (CIH), which was ordered to hand over a vast number of documents to a pressure group, the Asbestos Victims Support Group (AVSG). The documents had been used in mesothelioma litigation which CIH had settled previously and to which the AVSG had not been a party – though the Court of Appeal significantly reduced the pool of documents to which the AVSG was entitled. The article reminds one of the basic rules that non-parties to proceedings may obtain copies of the following documents from the court – a statement of case, but not any documents filed with or attached to the statement of case, or intended by the party whose statement it is to be served with it; a judgment or order given or made in public (whether made at a hearing or without a hearing); and from the “records of the court”, a copy of any other document filed by a party, or communication between the court and a party or another person. The article includes a discussion of what constitutes “record of the court”.
MANDATORY ELECTRONIC INVOICING IN ITALY FROM 1ST JANUARY
Field Fisher on 3rd October published a brief reporting that Italy will introduce mandatory electronic invoicing (e-invoicing) for private businesses with effect from 1st January. The obligation applies to all transactions performed between subjects resident or established in Italy, with the sole exceptions of those eligible for a special scheme for small enterprises – irrespective of whether the supply is B2B or B2C. The obligation does not affect transactions involving subjects not resident or established in Italy.
US CUSTOMS VIDEO WITH TIPS FOR PEOPLE PLANNING TO VISIT THE COUNTRY
US Customs and Border protection has issued a video on You Tube designed to ensure that you have a smooth trip with tips to “Know Before You Visit” (including on meeting a “friendly” officer…)
https://www.youtube.com/watch?v=_E8vkdz-8pI&feature=youtu.be
AML SUPERVISION – A STRONGER ROLE FOR THE EBA?
McCann Fitzgerald on 28th September published an article posing this question. It says that, among other things, the EU Commission has proposals that would empower the European Banking Authority to request national supervisors to investigate suspected breaches of AML requirements and, in some circumstances, to require financial sector operators to comply with their AML obligations. The article reflects on the background to the proposals and the new role planned for the EBA.
FATF REJECTS SAUDI MEMBERSHIP
Law 360 reported on 2nd October that FATF had rejected full membership for Saudi, citing lack of action against illicit funding.
IRAN AIR UNABLE TO REFUEL AT HEATHROW
Andrea Berger has retweeted a report that Iran Air flights from London to Tehran have returned to the sanctions-era practice of being forced to stop at an airport en route in order to refuel because sanctions prohibit aircraft refuelling at Heathrow.
COMPLIANCE OFFICER BULLETIN – FCA AND PRA ENFORCEMENT: A YEAR IN REVIEW
The September issue of the Compliance Officer Bulletin from Thomson Reuters, which provides commentary and analysis on how FCA and PRA regulations impact on compliance officers and their business, involves a review of enforcement action by both the FCA and PRA in the UK, including criminal enforcement actions.
https://www.traverssmith.com/assets/pdf/Articles/COBZ_2018_159_FINAL.pdf
UN COURT ORDERS USA TO LIFT SANCTIONS AFFECTING IRAN AIR SAFETY
Flight Global on 3rd October reported that UN’s International Court of Justice (ICJ), in a preliminary ruling on an application from Iran re the withdrawal of the US from the JCPOA and how this impacts a 1955 treaty between the countries, had said that the US government must lift sanctions against Iran which pose a threat to civil aviation safety. The ICJ held that some rights – such as those relating to import of humanitarian goods, or services to ensure civil aviation safety – are not connected to US national security concerns and should not be impacted. Rferl comments that the ICJ rules on disputes between UN member states. Its decisions are binding and cannot be appealed, but it has no mechanism to enforce them.
SFO v ENRC: PRACTICAL IMPLICATIONS FOR LAW FIRM INVESTIGATIONS
On 2nd October, Clyde & Co produced another briefing on the implications of the ENRC decision in the Court of Appeal regarding the attachment of legal privilege to internal investigation documents. It says that the decision restores the orthodoxy on litigation privilege and undoubtedly improves the prospects of documents generated as part of an initial fact-finding exercise being the subject of a successful claim to such privilege – but cautions that there is still to need to take care.
TRACE PODCAST: CHINESE CRIMINAL GANGS
In the latest episode of “Bribe, Swindle and Steal”, John Langdale, a professor at Macquarie University in Sydney, discusses his research into Chinese criminal gangs, their method of attaching to legitimate business and trade routes, and some implications for Belt and Road projects.
https://www.traceinternational.org/bribe_swindle_or_steal
RUSSIAN TYCOON SUES SOTHEBY’S FOR $380 MILLION OVER ART DEALS
Reuters on 3rd October reported that Dmitry Rybolovlev, a Russian billionaire and owner of Monaco soccer club, has sued Sotheby’s for at least $380 million, alleging the auction house helped his former art adviser to defraud him. The allegations deepen a long dispute between Rybolovlev and Swiss art dealer, Yves Bouvier. Rybolovlev claims he was overcharged by Bouvier for a collection of paintings. Bouvier denies any wrongdoing.
ESTONIA SAYS OVER $1 TRILLION FLOWED THROUGH THE COUNTRY IN 2008-2017
Reuters on 3rd October reported that banks doing business in Estonia, which has been at the centre of a money-laundering scandal involving Danske Bank, handled more than $1 trillion in cross-border flows between 2008 and 2017, according to the country’s central bank. The central bank did not say whether it considered any of the flows suspicious. It quotes a Bloomberg report saying that the central bank has also said that the figure does not relate specifically to non-resident transactions but to all flows in and out of the country, including imports and exports and routine financial transactions such as securities purchases.
INDIA: NORTH KOREAN HACKERS LINKED TO COSMOS BANK HEIST
The Economic Times in India reported on 3rd October that security researchers in California have indicated that the Cosmos Bank cyber heist in August this year may have been perpetrated by a financial crime syndicate backed by North Korea. The bank suffered one of the largest banking heists in the country through withdrawals from more than 14,849 ATM transactions in a 2¼-hour period
PAKISTAN COURT ORDERS SEIZURE OF ASSETS OF FORMER FINANCE MINISTER, ISHAQ DAR
OCCRP on 3rd October reported that an Islamabad court has allowed the National Accountability Bureau (NAB), the country’s anti-graft watchdog, to seize the bank accounts, control the properties, and auction the assets of a former finance minister who fled the country after a corruption investigation was launched against him. The 4-time finance minister fled to London last October to receive for a heart condition.
PROPOSED NEW UK NATIONAL SECURITY AND INVESTMENT REGIME – IMPLICATIONS FOR LOANS AND RELATED COLLATERAL
Clifford Chance on 3rd October published a briefing saying that under the proposed national security and investment regime announced by the UK Government in a July 2018 White Paper, loans are capable of being notifiable investments and of being called in by the Government for national security screening if they give rise to or may give rise to national security risks. The briefing summarises how the Government intends to bring certain loan transactions under the national security screening regime and explores some of the issues arising out of this proposal.
https://www.cliffordchance.com/briefings/2018/10/proposed_new_uk_nationalsecurityandinvestmen.html
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