11th October 2018
OVERCOMING NEW RESTRICTIONS ON INVESTING IN US TECHNOLOGIES
On 9th October, Orrick published an article on the role of the Export Control Reform Act and the Foreign Investment Risk Review Modernization Act (FIRRMA) to screen investment projects contemplated by foreign investors and examining the national security implications of foreign investments, and its leading concern is transfer of technology important to the security of the US to a foreign entity in an acquisition or investment transaction. It says that the good news is that FIRRMA introduces a special beneficial treatment (without being subject to CFIUS’ review) for investments through investment funds which satisfy certain criteria set forth by FIRRMA, and briefly outlines these criteria.
PERU’S OPPOSITION LEADER FUJIMORI ARRESTED IN MONEY LAUNDERING PROBE
Xinhua and others on 11th October reported that Keiko Fujimori, head of Peru’s opposition Popular Force party and daughter of ex-president Alberto Fujimori, had been arrested on charges of money laundering and accepting illegal campaign financing received for the 2011 presidential campaign.
ACTIVISTS ‘SHOCKED’ AFTER HONG KONG POLICE CHIEFS BLOCK ALERT TO BANKS ON HUMAN TRAFFICKING-LINKED TRANSACTIONS
The South China Morning Post on 11th October reported that Hong Kong’s determination to tackle money laundering linked to human trafficking has been called into question after it emerged that police chiefs blocked an alert – prepared by a specialist law enforcement unit – warning banks in the city to be aware of the problem. The alert – titled “Combating Human Trafficking in Hong Kong and the Asia-Pacific Region” – was prepared by the recently formed Fraud and Money Laundering Intelligence Taskforce (FMLIT), a police-led joint effort involving the Monetary Authority and major banks and financial institutions.
BRAZIL PROBES MONEY LAUNDERING AFTER SEIZING DIAMOND-STUDDED WATCHES
Business Insider on 10th October reported that federal police in Brazil are investigating possible money laundering in a case related to the airport seizure of wristwatches valued at some $15 million from the vice-president of Equatorial Guinea in September, and had carried out 7 search warrants in 2 states. They seized $1.4 million and 20 diamond-studded watches valued at $15 million belonging to Teodoro Nguema Obiang at an airport in September. Last October, millions of euros of assets belonging to Teodorin were ordered seized by a French court that found him guilty in absentia of using money plundered from his country to buy property and luxury cars.
OCCUPIED CRIMEA: EUROPE’S GREY ZONE – THE SITUATION IN CRIMEA SINCE ITS ANNEXATION BY RUSSIA
On 10th October, the European Policy Centre published a briefing that provides a comprehensive account of the situation in Crimea since its annexation by Russia in March 2014, and explains the economic depression in both Crimea and Ukraine, as a result of Moscow expanding its control of the Sea of Azov and its blockade against the Ukrainian ports of Mariupol and Berdyansk. It also describes the severe degradation of the human rights situation, and details of the rapid militarisation of Crimea by the Russian army. It says that, in the face of EU and US sanctions, Russia is playing for time, in the expectation that EU unity will eventually collapse, and that the return of Crimea to Ukraine seems impossible for the foreseeable future.
PROTESTS AGAINST NEW TAX ON MONEY TRANSFERS IN ZIMBABWE BANNED
Defence Web on 10th October reported that Zimbabwe police will stop planned protests by the labour movement against a new tax on money transfers because of a standing order outlawing public gathering in the capital following a cholera outbreak. The labour body called for the strike against the new tax as well as a central bank decision to order banks to open accounts for clients who earn foreign currency and separate their money from dollars in the local banking system, known as “Zollars”. Businesses and ordinary people objected to the 2% tax, arguing it eats into earnings while funding profligate spending by government.
GENOA RECONSTRUCTION AT RISK OF MAFIA INFILTRATION: ITALY’S ANTI-CORRUPTION CHIEF
Focus information agency on 11th October reported that the head of Italy’s Anti-Corruption Commission (ANAC) warned of the potential for the mafia to infiltrate the reconstruction of Genoa’s Morandi bridge. n particular, the ANAC chief expressed consternation at the fact that the text of the decree exempts the commissioner from having to follow Italy’s Anti-Mafia Code, highlighting that this presents a “concrete risk” that the mafia could extend its tentacles into the reconstruction efforts.
NIGERIA: EXECUTIVE ORDER 8 ON OFFSHORE MONEY LAUNDERING
This Day Live on 11th October reported that the Nigerian president had signed this Order under which Nigerian taxpayers who hold offshore assets and incomes are expected to, within a period of 12 months, voluntarily declare those assets and pay required taxes from such assets. If they then pay a one-time levy of 35% on the total offshore assets or pay all outstanding taxes, penalties and interest after forensic audit of their offshore assets and income shall obtain immunity from prosecution.
THAILAND: MAN JAILED OVER FAKE BOMB DETECTOR FRAUD
The Bangkok Post on 11th October reported on a 9-year jail term to an executive of a distributor of AVIA Satcom Co in a third fraud case involving bogus GT200 bomb detectors. It was the third fraud case involving AVIA Satcom Co which supplied the devices to several state agencies. According to the Department of Special Investigation (DSI), 16 cases have so far come to light. The National Science and Technology Development Agency conducted tests and found they did not contain any electronic components.
REFORMING ADMINISTRATION OF THE UK HORSERACE BETTING LEVY
On 10th October, the Department for Digital, Culture, Media and Sport published a news release detailing the proposal to reduce administrative inconveniences and financial costs on those affected by the Levy. The draft Order will transfer responsibility for Levy assessment, collection and enforcement to the Gambling Commission, and pass responsibility for application of Levy funds to a body to be designated by the Secretary of State from April 2019. The reforms will result in the closure of the Horserace Betting Levy Board. The draft Order was laid before Parliament on 9th October. The Board was established in 1961 and is required to assess and collect a statutory levy from the gross profits of bets taken on British horseracing. People forget that the levy was introduced to offset the decline in race day revenue for the racing industry following the legalisation of bookmakers’ off-course operations, which had meant that people wishing to place a bet on a horse race no longer needed to attend the racecourse. The 10% levy now also extends to offshore online bookmakers – which significantly boosted the Board’s income.
COMPANIES IN FINANCIAL DIFFICULTIES – DUTIES AND LIABILITIES OF DIRECTORS UNDER IRISH LAW
On 10th October, Matheson published a guide that summarises the principal duties and potential liabilities of directors under Irish law where a company is in financial difficulty. The duties and potential liabilities summarised in the document will normally arise when a company is in financial difficulty or is insolvent based on a cash flow test or a balance sheet test.
PRINCIPAL DUTIES OF DIRECTORS UNDER IRISH LAW
On the same date the law firm also published this other guide.
SWISS TOP COURT REJECTS BID TO EXTEND BANKING SECRECY
Reuters on 10th October reported that Switzerland’s highest court has ruled that prosecutors cannot extend Swiss banking secrecy rules to all corners of the globe to pursue whistleblowers and other leakers at foreign subsidiaries. It rejected an appeal by Zurich prosecutors in a 14-year legal battle involving former private banker Rudolf Elmer, who had been acquitted of breaking secrecy laws.
RESTRICTION ON THE USE OF FOREIGN CURRENCY IN TURKISH CONTRACTS – EXEMPTIONS ANNOUNCED
On 10th October, CMS Law provided an update on the September law that restricted the use of foreign currency denominated or indexed payments for certain types of contracts among Turkish residents. Now exemptions have come into effect upon their publication in the Official Gazette on 6th October. The restriction only applies to contracts among Turkish residents – meaning either corporate entities established in or individuals resident in Turkey. Contracts involving a foreign party are exempt from the restriction, subject to certain conditions. The article summarises the exemptions available.
MONEY LAUNDERING TACTICS ADAPTING TO BOOM IN COLOMBIA COCAINE PRODUCTION
Insight Crime on 10th October published an article detailing how criminal groups are having to diversify the ways in which they launder their money, reflecting the fragmented state of the country’s criminal world and the boom in cocaine production. They are increasingly diversifying their traditional money laundering techniques involving real estate and large public works contracts, as well as new laundering methods involving cryptocurrencies and non-profit organisations, according to a report from the country’s AML body (UIAF). Every year around $5 billion is moved through different money laundering schemes, according to the UIAF. The article says that the shift in money laundering techniques used by criminal groups in Colombia is likely tied to the departure of the now largely demobilized FARC and the increasingly fragmented criminal landscape that its exit ushered in.
COSTA RICA CRIME GROUPS DIVERSIFYING OIL THEFT TECHNIQUES
Insight Crime on 10th October reported that what were previously rustic oil taps are now becoming more sophisticated as groups of fuel thieves in Costa Rica are paying experts as much as $5,000 to perform professionally-made illegal oil taps on pipelines. Oil theft is big business in Latin America, and the industry is largely considered to be a relatively low-risk, high-reward revenue stream for crime groups. As crime groups grow stronger, the article says, it makes sense that they would venture into other, more profitable criminal activities like oil theft – but it remains to be seen if Costa Rica will face the same problems that the lucrative industry has created in Mexico.
WHAT TO MAKE OF THE ICJ’S PROVISIONAL MEASURES IN IRAN v US (NUCLEAR SANCTIONS CASE)
An article from the Belfer Center on 4th October examined what the preliminary decision of the International Court of Justice (ICJ) on 3rd October meant or might mean. Iran brought the case after President Trump pulled the US out of JCPOA in May and revoked sanctions relief provided in the framework of that agreement. It explains the basis of the hearing, despite the US withdrawal from compulsory ICJ jurisdiction in 1986. Instead Iran cited the 1955 bilateral Treaty of Amity, Economic Relations, and Consular Rights between Iran and the US as the basis for the court’s jurisdiction.
IMPACT OF RECENT US AND EU SANCTIONS ON THE MIDDLE EAST
Baker McKenzie on 11th October published an article which highlights of the key issues businesses operating in the Middle East are grappling with.
CAN EUROPE STAY CONNECTED TO IRAN?
On 10th October, the European Council on Foreign Relations published an article saying that despite the US withdrawal from the Iran nuclear deal and the re-imposition of economic sanctions, Europe remains committed to maintaining ties with Iran. It says that it is widespread expectation that several Iranian private banks and the Central Bank of Iran will be designated entities under the US sanctions measures. It looks at the problems for banks, large and small, and the possible solutions or ways around the US sanctions and asks if the proposed European “special purpose vehicle” (or vehicles) could work. It does say that US officials have stressed that US sanctions will target European central banks and SWIFT.
EU IS REPORTEDLY SET TO PUBLISH GUIDANCE FOR MEMBER STATES ON HOW TO MANAGE ‘GOLDEN VISAS’
KYC 360 on 11th October reported that the guidance would follow amid growing concerns that such visas are being used by rich criminals to live and move around Europe easily, and that they also pose a high risk of money laundering. It is expected to include ‘necessary background checks’ for applicants across the bloc, as opposed to different requirements laid out by national laws.
UK: SHARP RISE IN CRIMINALS USING YOUTHS’ BANK ACCOUNTS TO LAUNDER CASH
KYC 360 on 11th October reported that anti-fraud organisation Cifas is calling on banks to do more to warn young people of the dangers of being used as money mules, after figures showed that there has been a huge leap in the number of young people being targeted with a 26% increase over the previous year.
FRAUDULENT FOREX SCHEME IN TEXAS
An article on Mondo Visione on 10th October detailed how the Texas Securities Board entered an action against Go Forex Group. The action found Go Forex Group was illegally soliciting investments in a forex, real estate and oil and gas programme. It is alleged that Go Forex Group was proving investors with a fake address for its business offices; it published a certificate of incorporation that falsely claims the firm was incorporated in Michigan but was found to be created using image-editing software to make changes to a government record for an unrelated corporation organised in Belize; found to be publishing false testimonials, including a fake testimonial from a contributor to National Public Radio.
AML SUPERVISION – A STRONGER ROLE FOR THE EBA?
McCann Fitzgerald on 28th September published an article saying that the EU is proposing to strengthen the role of the European Banking Authority (EBA) in the supervision and enforcement of AML/CFT rules. Among other things, proposals would empower the EBA 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 says that the Commission is calling on the Parliament and the Council to endorse the actions set out and to adopt the relevant legislative proposals by early 2019 at the latest.
EU COUNCIL AGREES ITS POSITION ON DIRECTIVE ON BUSINESS INSOLVENCY
On 11th October, a news release from the EU advised that the Council had agreed its position on the business insolvency directive. The Directive aims at providing access by viable enterprises in financial difficulties to preventive restructuring frameworks to enable them to restructure at an early stage, and so prevent insolvency. It also gives reputable bankrupt entrepreneurs a second chance, and introduces measures to increase the efficiency of restructuring, insolvency and discharge procedures. It is hoped to have the Directive in force in early 2019.
HERE’S HOW IRAN HIDES ITS SECRET OIL TRADE
Forbes on 11th October published an article saying that, despite US efforts and the risk of further efforts, new data on oil shipments from the month of September reveals a picture of the Iranian oil industry that is still robust. A new report claims that Iran has actually been exporting much more oil to many more destinations than we have been led to believe. The report comes from TankerTrackers, an online service that monitors oil tankers around the globe, usually via satellite, and has been following Iran’s oil storage and exports since 2015. ran exported at least 2 million barrels per day of oil in the month of September, which is actually an increase from its exports in August. Its latest report is said to be is one of the most comprehensive account of Iranian oil movements. The articles cites one example illustrating how exports can be disguised, where a tanker is first seen picking up Iranian condensates and Iranian oil before loading up its remaining space with Kuwaiti oil and then heading to Japan – it can appear to be a tanker of Kuwaiti oil, but, in fact, it carries a significant amount of Iranian oil.
TankerTrackers is at –
RUSSIA: INVESTIGATORS SEEK TO DETAIN VICE-PRESIDENT OF AIRCRAFT CORPORATION
The RAPSI news agency in Russia on 11th October reported that investigators have asked a Moscow court to detain a vice-president for special-purpose aviation of the United Aircraft Corporation, Sergey Gerasimov, as part of a large-scale fraud case. The company, established in 2006, is composed of about 30 entities with its activity being focused on the production of military goods for Russia’s Defense Ministry and foreign contractors.
UAE-BASED MASHREQBANK FINED $40 MILLION IN NEW YORK OVER MONEY LAUNDERING ALLEGATIONS
Retail Banker International on 11th October reported that Mashreqbank has agreed to pay $40 million to the New York State Department of Financial Services (DFS). This is to resolve charges of breaching AML laws. In addition to the penalty, the bank is required to hire a third-party compliance consultant to address the deficiencies. It is also required to deploy a ‘lookback consultant’ to carry out a comprehensive review of the New York branch’s transaction clearing activity between April 2016 and September 2016.
OECD PUBLISHES MUTUAL AGREEMENT PROCEDURE STATISTICS FOR 2017
Accountancy Daily on 11th October reported that the OECD has published the 2017 Mutual Agreement Procedure (MAP) statistics covering 85 jurisdictions and most MAP cases worldwide. Improving the effectiveness and timeliness of dispute resolution mechanisms is the aim of Action 14 of the Base Erosion and Profit Shifting (BEPS) Action Plan.
The statistics are at –
with statistics and diagrams at –
ESTONIA MONEY LAUNDERING RISK SECOND LOWEST IN WORLD – DESPITE DANSKE BANK
ERR on 11th October reported that Estonia ranks second lowest globally in money laundering and terrorism financing risks, according to the Basel Anti-Money Laundering Index, in spite of the recent Danske Bank money laundering case affecting the Estonian branch of the bank. Estonia lies second (out of 129) after Finland with a risk score of 2.73 (the lower the score, the better).
ASIA PACIFIC GROUP SAYS PAKISTAN NEEDS TO ‘DO MORE’ TO GET OUT OF FATF GREY LIST
Pakistan Today on 11th October reported that an Asia Pacific Group (the relevant regional FATF-style body) team carrying out a further evaluation has recommended that Pakistan is seemingly dissatisfied with the country’s progress and must do more to get itself off the FATF grey list.
THE CONTINUED FAILURE TO TARGET THE PROCEEDS OF THE ILLEGAL WILDLIFE TRADE IS UNDERMINING THE RESPONSE TO THIS TRANSNATIONAL CRIME
On 11th October, RUSI published an article saying that alongside the animals themselves, money moves in markets, on online platforms and between corrupt officials. This illegal trade does not only affect wildlife: it is organised financial crime run on an industrial scale for profit. It says that the UN Office on Drugs and Crime and RUSI has highlighted an ongoing lack of engagement with the financial dimension of this crime, with initiatives for financial crime courses run by a range of multilateral actors. It says that another promising initiative is the establishment of a financial taskforce led by United for Wildlife, bringing together more than 30 international banks in a communal pledge to identify and share intelligence on illicit financial flows connected to the illicit trade. However, it says that taking action to identify the illicit proceeds and the use of financial investigation, confiscation laws and money-laundering charges to tackle criminals’ ill-gotten gains must be prioritised if the ‘financial’ appeal of the trade is to be addressed – put simply, is says, the low risk/high reward equation that currently characterises IWT needs to be reversed. It puts forward steps that need to be taken.
STOLEN MOTOR VEHICLES: INTERPOL SUPPORTS AUSTRIAN OPERATION
On 11th October, an Interpol news release reported that INTERPOL has supported an operation (Operation Austrocar) led by Austria’s Ministry of Interior over 3 days in September targeting motor vehicle crime, including the smuggling of stolen vehicles, spare parts and document fraud. It involved vehicle checks at border points between Austria and the Czech Republic, Hungary and Slovakia, with nearly 13,000 checks relating to spare parts, vehicles, documents and individuals, leading to the seizure of 15 stolen vehicles, including one valued at more than €100,000. In less than 2 weeks, the international operation led to the identification of 500 stolen cars and 26 motorcycles; seizure of 712 kg of heroin and 540 kg of cannabis; seizure of 9 weapons and 500 bullets; arrest of 140 suspected people smugglers; and detection of 230 fraudulent documents.
CHINA CENTRAL BANK CREATES AML REGULATIONS FOR ONLINE FINANCIAL INSTITUTIONS
Baker McKenzie on 11th October reported that the People’s Bank of China has announced new AML/CFT regulations for online financial institutions from 1st January.
NEW YORK STATE ASSEMBLYMAN CHARGED WITH TAKING BRIBE
Baker McKenzie on 11th October reported that Republican New York state Assemblyman Joseph Errigo, 79, has been charged with taking a bribe to introduce legislation that would have helped a developer.
BEARDED FRENCH HIPSTER JAILED FOR 20 YEARS AFTER ADMITTING TO BEING DARK WEB DRUG DEALER ‘OXYMONSTER’
Illicit Trade on 11th October reported that a French hipster Guy Vallerius, 36. who sports a distinctive long red beard has been jailed in the US after admitting to being a dark web drug dealer known online as “Oxymonster”. He was arrested in August 2017 while travelling to a beard and moustache contest in the US. He was sentenced to 20 years in a Miami federal court having pleaded guilty to 2 conspiracy charges of distributing drugs and money laundering while acting as a “senior moderator” on dark web marketplace Dream Market.