5th October 2018
THE US AND THE RUSAL AND DERIPASKA SANCTIONS
On 4th October the Carnegie Center published a fascinating commentary on the story of the imposition of CAATSA Russian sanctions on Oleg Deripaska, the problems this caused, and why the US had to defer the imposition. It also says as the effects on Rusal showed, better management of the sanctions process is needed by the US authorities – and provides a handful of suggestions on how to do this.
MEN FINED $1 MILLION FOR TRAFFICKING $17 MILLION WORTH OF SQUISHY SEA CUCUMBERS
Live Science on 4th October reported that in San Diego 2 men who smuggled $17 million worth of sea cucumbers from Mexico to Asia have been sentenced to 2 years’ probation and fines totalling over $1 million. It says that the father-and-son team reportedly own and operate the seafood company Blessings Inc. in Tucson. They allegedly bribed Mexican officials, used fake bank accounts and falsified federal documents to illegally remove over 110 tons of sea cucumbers from Mexican waters. Sea cucumbers are marine invertebrates that look kind of like giant, fat garden slugs and come in a wide variety of colours and patterns and are related to sea urchins.
GUYANA BUSTS MODIFIED FISHING BOAT WITH 80,000 LITRES OF SMUGGLED DIESEL
Starbroek News on 4th October reported the the discovery of more than 80,000 litres of diesel aboard a fishing vessel, which was converted to transport fuel, the Guyana Revenue Authority (GRA) said.
ANGUILLA HOTELIER CONVICTED FOR HUMAN SMUGGLING IN THE BVI
St Lucia News on 4th October reported that Kirk Hughes, a hotelier from Anguilla, was sentenced to 5 months in prison and ordered to pay over US$50,000. Hughes was reportedly named as an accomplice in smuggling 6 Hispanic migrants into the BVI between August and September of this year. He was also found to have more than US$45,000 cash, spread across 3 rental properties and inside of his vehicle.
ARGENTINE COURT ACQUITS FORMER PRESIDENT CARLOS MENEM OF SMUGGLING ARMS SHIPMENTS
On 5th October, Devdiscourse and other media reported that Argentina’s highest criminal court has acquitted former President Carlos Menem of smuggling arms shipments to Ecuador and Croatia in the 1990s when both countries were involved in armed conflicts, overturning a 2013 conviction. Menem, 88, had been sentenced by a lower court to 7 years in prison for “aggravated smuggling” for involvement in shipments of more than 6,000 tons of military weapons, which he authorised to go to Venezuela and Panama but ended up in Ecuador and Croatia. Argentina was barred from supplying Ecuador with weapons since it had a peacekeeping role after Ecuador and Peru fought a brief war in 1995, and Croatia was under a UN arms embargo as war ravaged the former Yugoslavia.
FRANCE SET TO ENACT REGULATORY FRAMEWORK FOR CRYPTO-ASSET INTERMEDIARIES
On 4th October Kramer Levin published an article saying that France is contemplating the introduction of a regulatory framework for crypto-asset intermediaries that would solidify its leadership in blockchain and crypto-asset regulation. If adopted, an amendment would add a new category of investment services providers to the French Monetary and Financial Code (MFC), referred to as crypto-asset services providers, which would be subject to either mandatory or optional requirements. It says that the definition of “crypto-assets” encompasses not only tokens issued through ICO but all crypto-assets, including cryptocurrencies, and that this broad definition is similar, but not identical, to the one introduced in 2016, the purpose of which was to subject crypto-asset intermediaries to AML/CFT requirements.
UK FASHION BOSSES ASKED TO REVEAL ENVIRONMENTAL RECORD
The House of Commons Library on 5th October reported that the Chair of the Environmental Audit Committee has written to the chief executives of the UK’s 10 leading fashion retailers to find out what steps they are taking to reduce the environmental and social impact of the clothes and shoes they sell. The request for evidence will inform the Committee’s inquiry into the sustainability of the fashion industry, which is investigating how the UK’s fashion industry – that is worth £28 billion a year to the UK economy – can reduce its environmental footprint. Replies are required by 12th October. The Committee has also published submissions of written evidence it has already received in the inquiry from experts, campaigners, and sustainable fashion innovators.
SFO: PRIORITIES, POWERS AND PREDICTIONS POST-ENRC
On 3rd October, Burges Salmon published an article which explores the impact on the SFO of the Court of Appeal’s recent decision on legal privilege, summarises its priorities, recaps its powers and offer predictions on future enforcement. It predicts that the SFO will continue the assertive enforcement approach developed under its previous head; will continue to require self-reporting and fulsome co-operation if a corporate wishes to avoid prosecution and trial; will favour the continued use of DPA as an enforcement tool, so long as the required co-operation is demonstrated; will pursue further and deeper co-operation with overseas counterparts; and will employ continued and increased use of AI technology in investigations.
LEGAL PROFESSIONAL PRIVILEGE (LPP): THE NEW STATUS QUO
On 2nd October, Bracewell LLP published an update following a number of important English court decisions concerning the scope of LPP, culminating in the recent Court of Appeal landmark judgment in the ENRC case. It starts by explaining that LPP can be either legal advice privilege – which applies to confidential communications passing between a client and its lawyers, which have come into existence for the dominant purpose of giving or receiving legal advice; and litigation privilege – which applies to confidential communications between a client and its lawyer, or between either of them and a third party. It also applies to documents created by or on behalf of the client or its lawyer. To attract litigation privilege, such communications and documents must be made for the dominant purpose of pending or reasonably contemplated litigation or adversarial proceedings. It then goes on to look at the implications of 3 recent cases, poses questions over their implications and asks what is next.
SPANISH VESSEL NABBED FOR SHARK FISHING OFF GABON
Defence Web on 2nd October reported that the crew of a Spanish tuna fishing vessel were arrested off the coast of Gabon for illegally catching sharks without the proper licence and stripping them of their fins. The Senegalese-flagged vessel Vema, with a license to fish only for tuna, was found to be carrying about 2 tons of sharks and shark fins, mostly blue sharks – a species classified as “near-threatened” by the International Union for Conservation of Nature. It was carrying no tuna. While there is no global ban on shark finning, international law under CITES bans trade in some species whose populations have fallen to crisis levels due to increased Chinese demand.
INTERPOL LEADING THE FIGHT AGAINST TRANSNATIONAL FISHERIES CRIME – EXAMPLE OF CASE FROM INDONESIA
On 5th October, Interpol published a news release saying that a recent case involving the conviction of the captain of an illegal fishing vessel in Indonesia highlights the challenges of tackling fisheries crime and the role of INTERPOL in providing a coordinated international response. Its Global Fisheries Enforcement initiative, launched in 2013 under the name Project Scale, supports enforcement agencies in the Organisation’s 192 member countries in identifying, deterring and disrupting transnational fisheries crime. In August, a court in Indonesia ruled that the vessel STS-50 – which was detained the previous month in Indonesian waters – was engaged in illegal fishing activities and the captain, a Russian national, was ordered to pay a fine of approximately €12,000.
ISRAELI POLICE QUESTION NETANYAHU FOR 12TH TIME IN CORRUPTION CASES
Israel Hayom on 5th October reported that Netanyahu was last questioned in August regarding a case in which he is alleged to have traded benefits to Bezeq telecom giant for positive coverage in Bezeq-owned media outlet.
SOUTH KOREA: EX-PRESIDENT LEE MYUNG-BAK JAILED FOR GRAFT
The Week on 5th October reported the jailing of a second former president who has been convicted and sentenced today to 15 years in jail on a series of corruption charges. He was accused of embezzling about £16.7 million from a company he secretly owned, and of accepting bribes. In addition to the custodial sentence, the court fined Lee £8.8 million. His conviction comes 6 months after his successor as president, Park Geun-hye, was sentenced to 24 years in prison on bribery and coercion charges.
PAKISTAN: ASSET RECOVERY UNIT RECEIVES DETAILS OF 10,000 PROPERTIES IN UK AND DUBAI
Associated Press of Pakistan on 5th October reported that the Asset Recovery Unit had started work with full pace and dedication, as during its 20 days of working, it procured details of over 10,000 properties belonging to Pakistani nationals in Dubai and UK. It says that the government has prepared a list of top 895 properties to carry further investigation while notices to around 300 people have also been issued and were summoned by the unit to clarify their stance.
NORWAY INTRODUCES AML RULES FOR VIRTUAL CURRENCY EXCHANGES
Finance Feeds on 5th October reported that virtual currency exchange providers will have to comply with the provisions of the Money Laundering Act and to register with the Financial Supervisory Authority. The Ministry of Finance has established new money laundering regulations that come into force on October 15th. A transitional period has been granted for registering with the Authority – this period lasts until January 15th.
FORMER SIBERIAN POLICE OFFICIAL SENTENCED TO 7 YEARS IN PRISON FOR CORRUPTION
Russian news agency RAPSI on 5th October reported that a court in Russia has sentenced ex-chief of the financial service centre for the Omsk Regional directorate of the Interior Ministry, Irina Starikova, to 7 years in a penal colony for taking over $420,400 in bribes.
DRC COBALT: A POTENTIAL ACHILLES HEEL OF ELECTRIC VEHICLES
Global Risk Insights on 5th October published an article saying that cobalt’s essential role in lithium-ion batteries has and will continue to make it increasingly important for the global consumer economy. Cobalt serves as a key component in battery-based devices by allowing them to operate over longer periods without overheating. With the global transition to electric vehicles (EV), corporations are increasingly forced to rely on cobalt from the Democratic Republic of the Congo (DRC), where a culture of corruption, unscrupulous mining practices, and political instability threaten supply security. After reviewing the situation, including alternative sources (including recycled batteries), amongst other things it concludes that the scale and pace of the global transition to EV will be largely dependent on the supply and demand dynamics of cobalt. If EV adoption is aggressive and there is a slowdown in bringing new cobalt supply sources online, there could be a shortage by 2022. Furthermore, increased DRC resource nationalism and a continued lack of transparency could add supply risks in this scenario.
FILIPINO AUTHORITIES DEPORT ALLEGED BITCOIN FRAUDSTER TO SOUTH KOREA
Crypto Globe on 5th October reported that the Filipino Bureau of Immigration (BI) has deported Go Yongsung, a Korean citizen who was accused of playing a part in a Bitcoin fraud scheme in which he allegedly worked with 5 other people to steal more than $33 million from Korean citizens. The fraudsters allegedly ran a pyramid scheme where they enticed people to buy non-existent Bitcoins.
BRITISH MAN JAILED FOR TRYING TO SMUGGLE £1.5 MILLION TO DUBAI
On 5th October, NCA reported that a British man has been jailed for money laundering after he was caught trying to board a flight to Dubai with almost £1.5 million pounds in cash in his suitcases. Mohamed Imran Khan Sathar Khan, 35, was arrested by Border Force officers on 29th August at Stansted Airport. He was prevented from boarding his flight after the 4 bags he had checked in were found to be filled with £10 and £20 notes, each weighing around 20 kg.
9 MONTHS JAIL TERM FOR HAULAGE COMPANY OWNER IN £194,000 VAT FRAUD
Commercial Motor on 5th October reported that Mark Lyons, 48, the boss of County Tyrone-based Lyons Haulage has been sent to prison for his role in a £194,000 VAT fraud, following an HMRC investigation into his company. He ran the company with his wife, Janet, and between November 2011 and September 2014 they charged customers £194,063.61 in VAT but kept the money.
3 NORWEGIANS ARRESTED IN SPAIN FOR ATTEMPTED DRUGS SMUGGLING TO NORWAY
On 4th October, Customs Today reported that Spanish police arrested 3 Norwegians and a Spaniard in Malaga. They are suspected of attempting to smuggle around 10 kg of cannabis and marijuana to Norway hidden in PVC pipes.
POLICE RAID ILLEGAL CIGARETTE MANUFACTURING FACILITIES NEAR ATHENS
Customs Today on 2nd October reported that Greek police have seized 70 tonnes of smuggled tobacco and 8.8 million cigarette packets at 2 illegal tobacco manufacturing facilities west of Athens, with a total of 40 people are thought to be involved in the sophisticated and highly profitable racket. Police believe that they imported tobacco from Italy and materials for the preparation and packaging of tobacco products from Bulgaria, with specialist equipment to produce cigarettes, put them in counterfeit packets of well-known brands, and then transport them to other storage facilities before distributing them to the market – even exported the cigarettes to other EU countries.
US: BILL TO REQUIRE ADVANCE DATA ON ALL INTERNATIONAL MAIL BY 2020 GOES TO PRESIDENT FOR SIGNATURE
On 4th October, Baker McKenzie reported that on October 3rd, the US Senate and House of Representatives having approved a legislative change that would require advance data on all international mail by 2020 to assist US Customs and Border Protection and the US Postal Service interdict small fentanyl and carfentanil shipments, that are shipped through international mail channels, particularly from China.
INDIA SIGNS DEAL FOR S-400 MISSILE SYSTEMS DESPITE THREAT OF US SANCTIONS
Janes.com on 5th October reported that India has signed a $5.5 billion deal with Russia to acquire 5 Almaz-Antei S-400 Triumf self-propelled surface-to-air missile (SAM) systems for the Indian Air Force; despite the deal threatening to invoke US sanctions under CAATSA.
UK: ORGANISED CRIME GANG JAILED OVER HUMAN TRAFFICKING
The Telegraph & Argus on 5th October reported that members of an Organised Crime Group – including 6 people from Bradford – who trafficked victims from Slovakia into Leeds have been sentenced to a total of more than 24 years. They would often target single and vulnerable men in extreme poverty and promise them a better life or use threats to bring them to the UK, and they also trafficked families with young children into the UK. Once the victims were in the UK the group would exploit them – housing them in nearby, often sub-standard accommodation (controlled by them) and arranging the victims’ housing benefits to be paid directly to the group.
US: DHS CONDUCTING RESEARCH ON THREAT DETECTION OF HOMEMADE EXPLOSIVES
Homeland Preparedness News on 4th October reported that the Department of Homeland is researching the detection and prevention of homemade explosives at various labs and test facilities across the country. DHS reports that there are approximately 3,000 improvised explosive device (IED) incidents in the US in 2017, killing 10 people and wounding dozens. These homemade explosives are said to pose a continued threat as enemies adapt to stealthier tactics.
MONEY LAUNDERING IN NIGERIA: HSBC AND STANDARD CHARTERED NAMED AND SHAMED OVER “MURKY PAST”
KYC 360 reported on 5th October HSBC has found itself in political hot water in Nigeria, after President Muhammahdu Buhari launched an extraordinary public attack on the bank. In a recently released statement to Nigerian media, the President’s office accused HSBC of helping to launder over $100 million on behalf of Nigeria’s former President, General Sani Abacha.
STATEMENT ON NEW US NATIONAL STRATEGY FOR COUNTER-TERRORISM
On 5th October, the US Treasury published a news release containing a statement by the Treasury Secretary saying that, “President Trump’s new National Strategy for Counterterrorism will harden the US financial system against terrorist threats and promote collaboration with allies to counter international terror financing networks. Treasury employs a broad array of tools to help disrupt terrorist attacks without putting our troops in harm’s way, and this Administration has accelerated efforts to shut down networks that terrorists use to finance their operations. Treasury will continue to apply sustained pressure on ISIS, Al-Qaeda, Hizballah and other Iran-sponsored proxies, Lashkar-E Tayyiba, and other terrorist organisations”.
The Strategy itself can be found at –
COMMERCIAL FISHING BANNED ACROSS MUCH OF THE ARCTIC
The Guardian on 3rd October reported that commercial fishing will be banned across much of the Arctic under a new agreement signed in Greenland, closing down access to a vast area of sea that is newly opening up under climate change. The moratorium on Arctic fishing will safeguard an area about the size of the Mediterranean for at least the next 16 years, as warming temperatures allow summer navigation across what was previously ice. No fishing takes place there currently, but large cargo ships are starting to explore the area. 9 nations – the US, Russia, Canada, Norway, Denmark, Iceland, Japan, South Korea and China – plus the EU signed the Central Arctic Ocean agreement at a ceremony in Greenland.
FATF PUBLISHES MUTUAL EVALUATION REVIEW REPORT OF MADAGASCAR
On 5th October, FATF published the report produced by the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) containing an assessment of Madagascar’s AML/CFT system.
UK DRUGS PRECURSOR CHEMICALS WALLCHARTS FOR DOMESTIC LICENSING AND IMPORT/EXPORT
On 5th October, the Home Office published updated versions of its wallcharts which contains information on –
- the domestic licensing and registration requirements for 3 categories of chemical substances capable of being used to produce illegal or controlled drugs. It also provides information on domestic licensing requirements when using them in the UK or trading them within the EU and beyond; and
- the authorisation requirements for importing chemicals into the UK and the requirements for exporting them to different countries across the world.
HOW 4 MEN’S $41 MILLION CRIMES THREATENED NEW ZEALAND’S GLOBAL FINANCIAL REPUTATION
In its 6th October edition, the New Zealand Herald reported that in 2008 a company director, property developer, financial consultant and lawyer all came together to defraud the ANZ bank of more than $41 million to develop a 4-star Auckland hotel. The article explains how they did it, and how the white-collar criminals were caught and how it all came crashing down because of a “disgruntled creditor”.
UK PUBLIC ACCOUNTS COMMITTEE CHAIR FLAGS ONLINE VAT FRAUD CONCERNS
Public Finance on 5th October reported that the chair of the Parliamentary Public Accounts Committee has written to the chief executive of HMRC concerned only a “fraction” of online fraud VAT was being clawed back.
IRELAND: CARBON TAX INCREASE ‘WILL ENCOURAGE SMUGGLING’ OF SMOKY COAL
On 5th October, the Irish Times reported that smuggling of coal from Northern Ireland will increase significantly after extra carbon taxes are imposed by the Minister for Finance in the budget, fuel suppliers have warned. The price of a bag of coal is set to rise by more than €1 if the Minister goes ahead from €20 to €30 per ton. Coal is already being brought in from the North, often originating in Scotland the article says. This coal often has a high sulphur content of up to 7% and would not be allowed to be sold here, one senior industry figure said.
NEW STUDY PUSHES FOR A CLOSER LOOK AT LOOT BOXES, THE IN-GAME REWARDS POPULAR IN ONLINE GAMING
On 5th October, Manatt published an article which explains that loot boxes typically contain something of value specific to the game — such as a new skill, accessory or weapon for a character — and can be either won or purchased. Over the years, it explains, games have become dependent on loot boxes as a source of revenue, and a black market has developed for loot boxes due to their value. The new study has raised concerns about the impact of loot boxes on gamers and suggested that oversight and even regulation may be necessary. The article reminds one that a group of 15 gambling authorities — including regulators in France, Norway, Portugal, UK and the Washington State Gambling Commission — recently published a declaration of their intent to evaluate loot boxes, among other gaming issues.
US PROSECUTORS CHARGE PATRICK HO CHI-PING WITH VIOLATING IRAN SANCTIONS
The European Sanctions Blog on 5th October reported that the former Home Secretary of Hong Kong, arrested in New York for (amongst other things) attempting to bribe officials in Chad and Uganda for the benefit of CEFC China Energy is now accused by prosecutors in New York of new, sanctions-related offences. They alleges he utilised CEFC China Energy to broker arms transactions and business with Iran, in violation of US sanctions, and that he engaged in discussions regarding the supply of arms to Chad, Libya, South Sudan and Qatar.
REPORT ON THE FURTHER DEVELOPMENT OF THE EU COMMON POSITION ON ARMS EXPORTS
The Stockholm International Peace Research Institute on 4th October published a new paper on the further development of the EU Common Position on arms exports, prepared by SIPRI experts for the European Parliament Sub-Committee on Security and Defence (SEDE). At a workshop in June, SIPRI experts highlighted the divergences in Member States’ export policies which have emerged in the last decade and provided a number of options that could be taken into consideration during the 2018 review. This included adjustments to the language of the criteria and the User’s Guide that accompanies the EU Common Position, improving the quality of reporting, and increasing the coherence and co-ordination of the EU’s broader export control regime.