17th October 2018
TRUMP’S NEW IRAN SANCTIONS MAY HIT SNAG WITH GLOBAL FINANCIAL SERVICE SWIFT
The New York Times on 12th October published an article saying that there is one important financial link to Iran remaining: the financial messaging service that plays a crucial role in moving money around the international banking system and run by a Belgian cooperative called Swift. Owned and used by banks around the world, plays a central role in the flow of money across the globe and the importance of the messaging service is hard to overstate. It has not cut its ties with Iran, and the US sanctions take effect from 4th November. If Swift is allowed to continue it could facilitate the flow of money to and from Iran, and help the EU maintain its connections. However, if Swift stopped processing Iranian money flows, the US might end up with less information about money moving in and out of Iran, as it gets information from Swift on such movements. An alternative suggested is putting sanctions on members of the board of Swift, rather than the organisation itself, so avoiding (hopefully) to drastic effects on the international financial framework.
https://www.nytimes.com/2018/10/12/business/dealbook/swift-sanctions-iran.html
US BUSINESSMAN AGREES TO FORFEIT $7.5 MILLION FOR ALLEGED VIOLATION OF ARMS CONTROL ACT
The Courier Post in the US on 16th October reported that Roger Sobrado, who had 2 companies (Tico Manufacturing Inc. and Military and Commercial Spares Inc.) supplying parts to the US military, for supplying spare parts claiming they came from approved sources, and was also accused of illegally providing “one or more foreign nationals” with technical data “related to the design and manufacture of defence hardware items and spare parts”. He also agreed to pay over $500,000 to the IRS for unpaid income tax. It is said that he recruited various family members to create companies that would submit false and fraudulent bids on Department of Defense contracts.
EGYPT: FRANCE “FLOUTS EU LAW” BY CONTINUING TO EXPORT ARMS USED IN DEADLY CRACKDOWNS
Amnesty International on 16th October claimed that armoured personnel carriers supplied by France were used with deadly effect by the Egyptian security forces to violently and repeatedly disperse protests and crush dissent. A new report claims that between 2012 and 2016 France supplied more arms to Egypt than it had in the previous 20 years; and in 2017 alone it delivered more than €1.4 billion worth of military and security equipment to Egypt. It says that the transfer of armoured vehicles appears to be a flagrant violation of the EU’s 2008 Common Position which governs the control of exports of military technology and equipment. French authorities informed Amnesty International that they have only licenced such equipment to the Egyptian military as part of the “fight against terrorism” in Sinai and not for law enforcement operations.
BURMA/MYANMAR: ILLEGAL TRADE TAKES A HEAVY TOLL ON COUNTRY’S ECONOMY
The Myanmar Times on 17th October published an article saying that smuggling and illegal trade continue to be a major problem for the country’s economy, says the Union of Myanmar Federation of Chambers of Commerce and Industry. The Union says that illegal trade stands at 6th among the top 10 issues hampering the country’s economy, according to a survey it has undertaken. The illegal trade encompasses products from neighbouring countries entering Myanmar via unofficial trade routes and also domestic products being smuggled out. Among the most pressing examples of problem are the illegal exports of local rice to China, which has sprung up over the last 3 years. It is said that just the illegal beer trade in Myanmar cost the government between $48 million and $52 million in lost tax income last year. Illegal trade is mainly occurring along the border areas with China and Thailand. The country is last among 21 Asian countries in the 2018 Global Illicit Trade Environment Index produced by the Economist Intelligence Unit.
https://www.mmtimes.com/news/illegal-trade-takes-heavy-toll-countrys-economy.html
EGYPT CONFISCATES HISTORIC MANUSCRIPT AT CAIRO INTERNATIONAL AIRPORT
Egypt Independent on 16th October reported that Egypt’s Antiquity Unit, in cooperation with the Egyptian Customs Authority at Cairo International Airport, has succeeded in retrieving a historic manuscript.
OMAN: MORE THAN 14 TONNES OF ILLEGALLY SMUGGLED FISH SEIZED
The Times of Oman on 16th October reported that customs officers foiled an attempt to smuggle more than 14.6 tonnes of Sharkha fish (lobster) through Hafeet port out of Oman.
https://timesofoman.com/article/265876
UNDERCOVER INVESTIGATION REVEALS THE MAGNITUDE OF PUPPY SMUGGLING TRADE IN UK
Various media sources on 16th October reported that the Dogs Trust is calling on the government to take urgent action to stop the illegal importation of puppies into the UK. This follows an undercover investigation, which exposes the magnitude and ease of trade routes into the UK for European smugglers. The findings continue to expose gaping loopholes in the existing Pet Travel Scheme (PETS), the rules of which changed in 2012 to allow puppies to enter the UK at a much younger age.
GIBRALTAR LICENSES FIRST CRYPTO EXCHANGE — COINFLOOR
Coingeek on 16th October reported that Coinfloor has become the first crypto exchange to be licensed by Gibraltar’s “ground breaking” blockchain legislation. Coinfloor will be regulated as a distributed ledger technology (DLT) provider under the new licence. It is said that the company was tested on 9 principles aimed at determining whether the exchange has sufficient AML, and KYC protections in place.
https://coingeek.com/gibraltar-licenses-first-crypto-exchange-coinfloor/
BRAZILIAN PRESIDENT INDICTED FOR CORRUPTION, MONEY LAUNDERING
Xinhua on 17th October reported that Brazilian President Michel Temer has been indicted for corruption, money laundering and conspiracy to commit crimes. 10 other people, including his daughter Maristela and a close friend, Colonel Joao Baptista Lima Filho, were indicted.
http://www.xinhuanet.com/english/2018-10/17/c_137538567.htm
EU: 4 PROPOSALS ADOPTED TO MODERNISE AND CONSOLIDATE THE VAT SYSTEM
CMS Law on 16th October reported that, on 2nd October, Member States of the EU (EU) adopted 4 of the proposed reforms which comprise the European Commission action plan to modernise and consolidate the VAT system –
- strengthens the conditions required to benefit from the VAT exemption, in the Member State of origin, for the intra-Community supply of goods;
- harmonising the evidence needed to presume the effective dispatch or transport of goods between Member States in order to benefit from the exemption for intra-Community supply of goods;
- simplifying the call-off stock rules across the EU; and
- establishing a harmonised rule for ascribing the dispatch of goods in chain transactions
All of the above take effect from 1st January 2020.
A new Directive will allow Member States that are most severely affected by carousel fraud will be able to apply the reverse charge mechanism to the customer for all domestic B2B transactions in excess of €17,500 until 30th June 2022, and Member States may now apply a reduced rate, including a rate below the general threshold of 5% to books, newspapers and periodicals supplied electronically.
http://news.cms-fl.com/rv/ff0041f36605b7aab526dc2a6d4489d974a8e536
PRIVATE PROSECUTIONS – THE NEW COMMERCIAL REALITY AND ALTERNATIVE
On 11th October, Ashford published an article which starts by saying that, under a Freedom of Information Act request, the Financial Times has revealed that the number of reported fraud offences have risen from 142,991 in 2011 to 641,539 in 2016; yet in the same period white collar crime prosecutions fell 26% below the number prosecuted in 2011. It also says that Action Fraud, which acts as a sifting organisation into which all fraud and Computer Misuse Act offences are reported, now has an algorithm which automatically rejects cases worth less than £100,000. Recently, the article says, a private prosecution was successfully brought where the fraud alleged was valued at £88 million, the CPS having previously refused to act. The firm, which acts in prosecutions for a number of government bodies, points out that the legal basis for bringing a Private prosecutions has been enshrined in statute and can be found under section 6(1) of the Prosecution of Offences Act 1985 which provides that any person can institute or conduct criminal proceedings in England and Wales.
https://www.ashfords.co.uk/news-and-events/news/private-prosecutions-the-new-commercial-reality
OPERATION CAR WASH
On 11th October, Jenner & Block LLP published an article reflecting on the background and outcome of Operation Car Wash, which began in 2008 as a routine investigation by Brazilian authorities into Brazilian money launderers who laundered criminal profits through car washes and other small businesses. This led to an investigation that has brought down Brazilian politicians and officials at Brazilian state-owned energy company Petrobras, and led to criminal charges and multilateral resolutions against both Brazilian and international companies, including the construction giant Odebrecht S.A., oil and gas service company SBM Offshore, and ship and rig company Keppel Offshore & Marine for their involvement in a massive bribery scheme to distribute Petrobras contracts and generate kickbacks to Petrobras officials and their political patrons. Enormous settlements have resulted, including a $3 billion shareholder lawsuit.
https://jenner.com/library/publications/18347
PROPOSAL TO EXTEND UNION CUSTOMS CODE TRANSITIONAL PERIOD
BIFA has reported that a proposal for an extension to the transitional implementation period for the UCC is progressing. The proposed amendment would enable customs authorities and economic operators to continue using, until 2025 at the latest, already existing systems for the completion of certain customs formalities. While most of the new or upgraded electronic systems that are necessary to apply the provisions of the UCC will be operational by 2020, some electronic systems may not be fully completed until 2025.
https://www.bifa.org/news/articles/2018/oct/extension-of-the-ucc-transitional-period?l=y
COSTA RICA GAMBLING COMPANY OWNER KIDNAPPED AND RANSOMED
Gambling 911 reported on 16th October that the unnamed owner of Costa Rica-based 5Dimes was kidnapped whilst driving in his Porsche, the family paid a $750,000 ransom via Bitcoin and have yet to hear back. This is said to be the second high-profile kidnapping in the country recently. The wife of a Chinese importer was kidnapped in September and released after her captors were paid $17,500. 6 individuals tied to that kidnapping have since been apprehended by police.
http://www.gambling911.com/5Dimes-Owner-Kidnapped-Bitcoin-Ransom.html
https://calvinayre.com/2018/10/17/business/5dimes-tony-missing-costa-rica-reported-kidnapped/
EU DEFENCE: THE REALISATION OF PERMANENT STRUCTURED COOPERATION (PESCO)
On 16th October, the House of Commons Library published a briefing on PESCO, a concept allowing that a smaller group of eligible, willing, Member States will be able to adopt decisions regarding greater military co-operation, therefore moving forward in certain areas without the full approval of all EU Member States. Among the aspirations for PESCO are capability harmonisation, the pooling of assets, co-operation in training and logistics, regular assessments of national defence expenditure and the development of flexibility, interoperability and deployability among forces. The UK will remain outside PESCO, regardless of Brexit outcomes.
https://researchbriefings.parliament.uk/ResearchBriefing/Summary/CBP-8149#fullreport
SOUTH KOREA WATCHDOG TO TIGHTEN COMPLIANCE REGULATIONS FOR FINANCIAL FIRMS
The Korea Herald reported on 17th October that stricter compliance regulations are to be adopted for financial institutions within the market watchdog’s jurisdiction to enforce stricter internal control and prevent errors and fraud, according to the Financial Supervisory Service. It is proposed that at least 1% of the entire staff and executives in a financial institution should be assigned to compliance operations, while compliance officers must be executives of the company with at least 2 years of experience in the field.
http://www.koreaherald.com/view.php?src=ilaw&ud=20181017000689
HOW TERRORISM AND ORGANISED CRIME ARE INCREASINGLY INDISTINGUISHABLE
A paper from ETH Zurich on 16th October argues that terrorism and organised crime are increasingly blurred, such that differentiating between the them can be counterproductive. Instead, efforts must be made to stabilise insecure regions. Policymakers should direct their focus toward stabilising insecure spaces in the West and developing world. Only by devoting more attention to the so-called violent entrepreneurs operating in these areas, beyond the reach of law enforcement, the authors contend, can we begin to leverage the diplomatic, developmental, economic and policing tools that will be necessary to confront this threat. The key points highlighted are –
- since 2001, policy debates on countering terrorism and organised crime have prioritised the former and neglected the latter;
- a growing overlap between terrorism and organised crime now requires greater attention to stopping illicit flows;
- insecure spaces in the developing world allow for a crime-terror convergence that rapidly erodes state capacity; and
- policy discussions should be redirected towards stabilising these insecure spaces.
UK: THE RETURN OF CULTURAL OBJECTS (REVOCATION) REGULATIONS 2018
On 16th October, the Department for Digital, Culture, Media and Sport published this statutory instrument which will revoke the domestic regulations which implement EU Directive 2014/60, relating to the return of cultural objects unlawfully removed from the territory of EU Member States, so avoiding a one-sided obligation upon the UK to return cultural objects, in the event of ‘no deal’ with the EU upon exit. Since 1993, the EU has had legislation providing for the return of cultural objects that have been unlawfully removed from the territory of another Member State. When the UK leaves the EU, EU Member States will no longer need to return objects unlawfully exported from the UK under the framework of the Directive.
AUTHORISED PUSH PAYMENT (APP) FRAUDS AND THE CONTINGENT REIMBURSEMENT MODEL (CRM)
On 16th October, Dentons published an article about the draft CRM, out for consultation until 15th November. The CRM seeks to introduce measures that will tackle the problem and provide a measure of protection for victims by requiring banks to provide compensation. APP scams occur when fraudsters entice or trick victims into sending them payments – and the introduction of services such as Faster Payments, the scammed funds are quickly gone and almost impossible to recover. The CRM encourages firms to improve their transactional analytics and employee training to better identify customers and payment authorisations that run a higher risk of perpetrating or becoming the victims of APP fraud. The CRM requires firms to take “reasonable steps” to protect their customers from APP fraud and provide them with “effective warnings” at key stages; and requires firms to take reasonable steps to delay or freeze payments suspected to be fraudulent and even repatriate the funds to the payer. The article comments on the proposals and says that, as currently drafted, the CRM presents firms and
victims with a number of practical and legal issues.
https://www.jdsupra.com/legalnews/authorised-push-payment-frauds-the-98007/
UK VAT AND MAKING TAX DIGITAL (MTD)
On 16th October, VAT Live reported that HMRC is opening the test pilot for its Making Tax Digital for VAT programme to the public. MTD will require digital recording and filing of UK VAT returns from 1st April – but it is deferring the MTD obligations for Group VAT returns, non-residents and other use cases until October 2019.
GAMBIA: CREATION OF A TRUTH AND REPARATIONS COMMISSION
Jurist on 16th October reported that a Truth and Reparations Commission to investigate and reconcile the crimes of former president Yahya Jammeh, who reigned over The Gambia for 23 years, taking power through a bloody coup. In January 2017, after the African Union declared they would no longer support his presidency, he fled the country.
https://www.jurist.org/news/2018/10/gambia-launches-truth-and-reparations-commission/
ARREST OF HIGH-RANKING HONDURAS POLICE OFFICERS ACCUSED OF HAVING CRIMINAL NETWORK TIES
Illicit Crime on 16th October reported that the Honduran Attorney General’s Office announced the arrest of National Police Commissioner Lorgio Oquelí Mejía Tinoco and another 15 police officials, some on active duty and some who had already left the force or lost their positions, accused of participating in a cattle trafficking network during the commissioner’s previous tenure as head of the police force on the Nicaraguan border. At least 3 of the officers allegedly involved had already been let go as part of a purging process that began in 2016. More than 5,000 police employees have left the institution as a result of the purge, and another 2,000 are still being investigated.
https://www.insightcrime.org/news/analysis/arrests-honduras-police-reveal-setbacks-purge/
18th October 2018
SPAIN’S WANTED DRUG SMUGGLER TURNS HIMSELF IN TO POLICE AFTER MUSIC VIDEO APPEARANCE
Xinhua on 17th October reported that one of the most wanted drug smugglers in Spain turned himself in after 2 years on the run. Francisco Tejon is thought to be the leader of one of the most important gangs dedicated to smuggling hashish into the south of Spain from Morocco. Tejon’s younger brother, Antonio had previously been detained in June. The arrest comes just days after Tejon had surprisingly appeared in a music video with Cuban singer “Clase-A” for a song called “Candela” which was released earlier in October.
http://www.xinhuanet.com/english/2018-10/18/c_137539872.htm
UK SUPREME COURT RULES ON SCOPE “MALICE” IN WAR RISKS INSURANCE POLICY – AND WHETHER SMUGGLING OF COCAINE ON A VESSEL CONSTITUTED MALICE
Hellenic Shipping News carried on 17th October an article from Cooleys about a clause in the standard form War and Strikes Clauses 1/10/83 that will have a wide-ranging application to commercial shipping insurance. In the case the Supreme Court was asked to consider whether the smuggling of cocaine on a vessel, unknown to the owners or crew, constituted a ‘person acting maliciously’ in a war risks insurance policy. The Supreme Court upheld the earlier Court of Appeal decision, albeit on different grounds. The Supreme Court held that the smugglers’ conduct did not amount to a malicious act, as the smugglers “were not intending that any act of theirs should cause the vessel’s detention or cause it any loss or damage at all”; that there must be some level of spite or ill-will either in relation to the insured property or, at least, to other persons or property, leading to consequential loss of or damage to the insured vessel, whereas the smugglers had (obviously) been hoping the vessel would travel without the cocaine being detected. The result is that insurance coverage is excluded because of the “arrest, restraint, detainment, confiscation or expropriation under quarantine regulations or by reason of infringement of any customs or trading regulations”.
ABERDEEN SOLICITOR WHO BROKE MONEY LAUNDERING RULES AND FLED COUNTRY STRUCK OFF THE REGISTER
The Press & Journal on 18th October reported that Ian McDougall, worked from the McDougall & Co office on Ashgrove Road West for 30 years has now been struck off the register by the Law Society of Scotland. He was suspended from the profession in June 2015 after inspectors from the Law Society’s financial compliance department checked his firm’s accounts and found concerns of a “serious nature”.
TANZANIA ANTI-CORRUPTION BODY CHARGES MINING COMPANY SUBSIDIARIES WITH TAX EVASION, MONEY LAUNDERING
Mining.com on 17th October reported that Acacia Mining, the country’s top gold mining company, has seen 3 local subsidiaries, an employee and a former staffer charged with money laundering and tax evasion. All the accused had pleaded not guilty to all 39 charges, which include tax evasion, conspiracy, a charge under organised crime legislation, forgery, money laundering and corruption. The company is majority owned by Barrick Gold of Canada.
http://www.mining.com/tanzania-anti-corruption-body-arrests-acacia-mining-employees/
NIGERIAN POLITICIAN LOSES APPEAL AGAINST UK MONEY LAUNDERING CONVICTION
The Epoch times on 17th October reported that James Ibori, a former governor of oil-producing Delta state in southern Nigeria, had lost his Court of appeal case.
Meanwhile, the Independent in Nigeria reported that he has instructed his lawyers to drag the United Kingdom to the Court of Appeal at the European Court of Human Rights (ECHR).
https://www.independent.ng/ibori-drags-uk-to-eu-court-of-human-rights/?src=ilaw
FINANCIAL OMBUDSMAN SERVICE TO BE EXTENDED TO MORE SME
UK Finance on 17th October reported that the FCA has announced plans to extend access to the Financial Ombudsman Service to SME with an annual turnover below £6.5 million and fewer than 50 employees.
MIXED MESSAGES: IS THERE AN INCONSISTENCY AS TO THE EXTRA-TERRITORIAL AMBIT OF DISCLOSURE BETWEEN POCA AND TO THE SFO?
A posting from law chambers 6KBW on 17th October said that the High Court case of KBR Inc v the Director of the SFO had ruled that requests for the production of documents could be made to foreign companies which have a “sufficient connection” to the UK contrasts with the attempt to extend beyond the UK the ambit of information notices under section 357 of the Proceeds of Crime Act 2002 in the Supreme Court case of Serious and Organised Crime Agency v Perry. It details the decision in the former case, and then asks what about Perry? It asks how the KBR decision sit with Perry, mentioning that the information notices were issued against persons outside and unconnected with this country, whereas the notices issued against KBR were issued against a company based here where the wider group was sufficiently connected with the UK; and that the legislation in the KBR case already had “some extraterritorial application”, which was not the case with POCA – although the post argues that it does not, on its face, assert any extraterritorial ambit, any more than section 357 of POCA did. Examining possible ramifications of the latest decision, it says that the matter is not yet finished.
PODCAST: PROSPERITY THEOLOGY: “SPIRITUAL PICKPOCKETS”
In the latest TRACE podcast, Jonathan Walton, Harvard professor and ethicist, discusses prosperity theology and the role it plays in both power and poverty – such as with US TV evangelists and Trump and his ilk.
https://www.traceinternational.org/bribe_swindle_or_steal
REGULATION OF ICO IN IRELAND: AN OVERVIEW OF THE LEGAL, TAX AND REGULATORY POSITION
On 10th October, Matheson published this guide. It starts out by saying that, currently, there are no laws specific to offerings of digital assets in Ireland, and it is possible, depending on the nature of the digital assets, that the offering, holding or trading of such assets may fall outside current securities law, financial services regulation and other laws. However, this will not always be the case and, to the extent applicable, the offering, holding and trading of digital assets will be subject to existing securities law, financial services regulation and other applicable laws (including banking, payment services, data protection and consumer protection legislation).
https://www.matheson.com/images/uploads/brochures/Regulation_of_ICOs.pdf
STUDY FINDS RISING ILLICIT CIGARETTE TRADE ON SOCIAL MEDIA
EurActiv on 17th October reported that social media and delivery services have become new outlets for organised crime activities when it comes to illicit cigarette trade, according to a new study from RUSI that has raised eyebrows among EU policymakers. The study emphasised that in countries such as the UK and France, social media played a major role in selling illicit tobacco products online.
The report is available at –
GUIDANCE DOCUMENT FOR EU MEMBER STATES IN THE CASE OF DOUBTS AS TO THE LEGALITY OF TIMBER FROM CITES-LISTED SPECIES IMPORTED INTO THE EU
On 18th October, the EU published this guidance for cases where competent authorities of the EU Member States in relation to the implementation of the EU Wildlife Trade Regulations, in situations where shipments of timber from species listed under CITES are being imported into the EU with an export permit delivered by the authorities of an exporting country, but where there are doubts that the wood was harvested in compliance with the applicable legislation in the country of harvest. The guidance is especially important since the entry into force in 2013 of the EU Timber Regulation (13) (EUTR), which prohibits the placing of illegally harvested timber on the EU market. Further information regarding the verification of legality under the EUTR, and notably the definition of ‘applicable legislation’ provided in Article 2(h) of that Regulation, is provided in the Annex to the guidance.
https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=OJ:JOC_2018_376_R_0001&from=EN
NEW UK CHEMICAL WEAPONS SANCTIONS REGIME PREPARED
CHEMICAL WEAPONS (ASSET-FREEZING) AND MISCELLANEOUS AMENDMENTS REGULATIONS 2018
These new UK Regulations provide for the implementation and enforcement in the UK of the new sanctions regime to be adopted under Council Regulation (EU) 2018/1542 with effect from 16th October. The Council Regulation does not currently contain any designated persons to whom the new financial sanctions provisions apply, but the EU will designate persons by including them in Annex I in due course.
http://www.legislation.gov.uk/uksi/2018/1090/contents/made
PROCEEDS OF CRIME ACT 2002 (EXTERNAL INVESTIGATIONS AND EXTERNAL ORDERS AND REQUESTS) (AMENDMENT) ORDER 2018
The Criminal Finances Act 2017 made a number of amendments and introduced new powers to the Proceeds of Crime Act 2002. These powers are available in domestic cases, but they can, by way of Orders in Council, be made available to provide assistance in overseas cases where evidence, or a person or property is in the UK. The CFA 2017 was introduced to significantly improve the UK’s ability to tackle money laundering, corruption, tax evasion and terrorist financing. The Orders in Council that are being amended by this new Order provide the mechanism for international co-operation through mutual legal assistance in investigating, freezing and recovering the proceeds of crime, and the amendments ensures that the UK can provide the widest and most effective possible assistance to other countries where evidence, people or property of interest in their cases are in the UK. Most significant are said to be the introduction of 2 new civil powers to enable the forfeiture of monies stored in bank and building society accounts and the forfeiture of items of personal property, such as precious metals and artistic works. The existing Orders dealing with the use of investigation powers are amended to also relate to include unexplained wealth orders (UWO) and to allow officers of the SFO to have direct access to investigation powers under the 2014 criminal investigation Order.
http://www.legislation.gov.uk/uksi/2018/1078/contents/made
NORTH KOREA (UNITED NATIONS SANCTIONS) (AMENDMENT) (NO. 2) ORDER 2018
This UK SI amends and extends the enforcement provisions in the North Korea (United Nations Sanctions) Order 2009, as amended, to provide express legal authority for the seizure and disposal of items identified on foreign ships and ships without nationality in international waters, where the sale, supply, transfer or export of those items to or from North Korea is prohibited by relevant resolutions of the UN Security Council.
http://www.legislation.gov.uk/uksi/2018/1060/contents/made
THE GERMAN FIU PROBLEMS AND DEVELOPMENTS
The Local on 17th October reported on the performance of the German FIU – which was a part of the Federal Criminal Police Office until 2017, but since then it has been a part of the customs department and the responsibility of the Finance Minister. It reports that, of the almost 60,000 reports of money laundering in Germany in 2017, only 474 cases resulted in judgements, sentences and indictments. Until now, it says, the FIU has been ineffective, slow and unsuccessful. There are currently 130 permanent and 230 temporary employees respectively, with an increase to 475 employees planned. However, many federal states have hardly any staff working against money laundering; the FIU alone cannot fix it.
https://www.thelocal.de/20181017/is-germany-becoming-a-money-laundromat
INDIA: BILLIONAIRE SINGH BROTHERS FOUND TO HAVE DEFRAUDED COMPANY
The Star in Malaysia on 18th October reported that India’s stock market regulator has determined the former owners of the nation’s second-largest hospital chain, Fortis Healthcare Ltd, defrauded the company of $54.3 million and ordered that they return it. In the meantime, it has given the founders and former majority owners Malvinder and Shivinder Singh, and their related corporate entities, 3 months to pay the money back.
https://www.thestar.com.my/business/business-news/2018/10/18/ex-billionaire-singh-brothers-found-to-have-defrauded-company
SANCTIONS ROUND UP: THIRD QUARTER 2018
Shearman & Sterling on 16th October published its latest update on sanctions developments, including discussion of those affecting Russia, North Korea, Iran and Venezuela, as well as global Magnitsky Act, organised crime and counter-terrorism designations.
https://www.jdsupra.com/legalnews/sanctions-round-up-third-quarter-2018-97450/
UK: 73 ARRESTED IN NATIONWIDE MODERN SLAVERY CRACKDOWN
An NCA news release on 18th October reported that more than 90 potential victims of slavery have been identified and 73 people arrested following a fortnight of law enforcement activity in September involving 37 police forces targeting modern slavery and human trafficking for the purposes of sexual exploitation. Around 950 criminal investigations are now under way into modern slavery and human trafficking across the UK, up from 300 in August 2017.
ISRAEL COURT ORDERS FIRST BLOCK OF UNAUTHORISED ONLINE GAMBLING SITES
Calvin Ayre on 17th October reported that Israel’s anti-online gambling campaign has ratcheted up a notch after a local court ordered ISP to block 3 unauthorised gambling domains: p2vbet.com, 1xbet.com and totobet777.com.
https://calvinayre.com/2018/10/17/business/israel-court-orders-online-gambling-domains-blocked/
ROLL-OUT OF NEW HMRC CUSTOMS SYSTEM TOO SLOW AS BREXIT LOOMS, SAYS LOGISTICS SECTOR
Loadstar on 17th October reported that UK freight industry sources are becoming increasingly anxious that roll-out of the country’s recently introduced Customs Declaration System (CDS) is not quick enough and could throw the country’s international trade into chaos in the event of a no-deal Brexit.
https://theloadstar.co.uk/roll-new-uk-customs-declaration-system-slow-brexit-looms/
THE PASSPORT KING WHO MARKETS CITIZENSHIP FOR CASH
OCCRP on 17th October reported in the Caribbean, they call Christian Kalin, 46, the passport king – he has transformed a small firm of wealth advisers into the leading player in a $3billion global industry. His company, Henley & Partners, tells small countries how to transform passports into cash – a legitimate and legal business.
https://www.occrp.org/en/thedaphneproject/the-passport-king-who-markets-citizenship-for-cash
NGO CALL FOR HALT TO EU-VIETNAM TIMBER AGREEMENT
OCCRP on 17th October reported that a group of Cambodian civil society organisations have asked the EU to reconsider signing an agreement on timber trade with Vietnam, saying that the country has not done enough to stop the flow of illegally-cut Cambodian wood across its borders.
SECURITY OVER ART: GENERAL DEVELOPMENTS & HIGHLIGHTS
On 17th October, Field Fisher published a briefing paper saying that a number of particular issues and difficulties arise for lenders in taking security over art as opposed to other assets, especially in relation to art owned by natural persons. This briefing paper includes an update to the subject, sets out some of the recent general developments in the art market and highlights some traps for the unwary.
https://www.fieldfisher.com/publications/2018/10/security-over-art-an-update
EL SALVADOR ESCALATES EFFORTS AGAINST CORRUPTION AS EGMONT SUSPENDS MEMBERSHIP
Insight Crime on 17th October reported that an investigation in El Salvador has uncovered links between former members of the Attorney General’s office and the government of ex-President Mauricio Funes. This comes shortly after the Egmont Group of FIU suspended El Salvador’s membership. 16 arrest warrants have been issued against 25 people, including former President Funes, former Attorney General Luis Martínez, and Enrique Raís, a powerful businessman. Raís owns the waste disposal company Manejo Integral de Desechos Sólidos (MIDES), one of the Salvadoran government’s largest contractors.
TRADE INFORMATION NETWORK LAUNCHED BY 7 BANKS TO TRANSFORM TRADE FINANCE
Banking Tech on 17th October reported that 7 large banks – namely ANZ, Santander, BNP Paribas, Citi, Deutsche Bank, HSBC and Standard Chartered – have unveiled a joint initiative to build a digital “Trade Information Network” by the end of 2018. The pilot version of the network is now complete and Canadian tech company CGI will continue to support the development of the Trade Information Network. Once operational, Trade Information Network will become the first inclusive global multi-bank, multi-corporate network in trade finance, the organisers say. “It has the potential to transform international trade.”
EUROPEAN TRAVEL INFORMATION AND AUTHORISATION SYSTEM (ETIAS)
On 17th October, the EU Parliamentary Service published a briefing on an automated system that would gather information on visa-exempt travellers prior to their arrival, in order to determine any irregular migration, security or public-health risks associated with them. The proposal follows similar models already existing in the US, Canada and Australia, among others. With agreement reached in April 2018 in trilogue negotiations, this now needs to be formally adopted by the EU Parliament and Council.
http://www.europarl.europa.eu/RegData/etudes/BRIE/2017/599298/EPRS_BRI(2017)599298_EN.pdf
MARITIME TRADE ROUTE FACILITATES AFRICA’S GROWING DRUG PROBLEM
Maritime Executive on 17th October published an article saying that sub-Saharan Africa will experience the largest rise in illicit drug users globally in the next 3 decades. Findings from an ENACT transnational organised crime project forecast that East Africa will be hit the hardest, with the proportion of people using illicit drugs increasing faster than other regions. This spike is due largely to changes in drug flows, urbanisation and the large youth population. It reports that the Institute for Security Studies (ISS) in Africa says that a network of maritime routes stretching along the East and Southern African coastline forms a trade corridor increasingly used by drug traffickers for the illicit shipment of heroin to Western Europe. The trade feeds a system of criminal governance in each country along the coast, tying political figures, their parties and their country’s prospects for democracy to the illicit economy.
EU: REGULATING IMPORTS OF CULTURAL GOODS
On 17th October, the EU Parliamentary Research Service published a briefing paper saying that with the exception of 2 specific measures for Iraq and Syria, there is no EU legislation covering the import of cultural goods from third countries entering the EU. Moreover, the national legislation introduced by some Member States in this area is divergent. The legislative proposal tabled by the EU Commission in July 2017 aims to prevent the import and storage in the EU of cultural goods illegally removed from a third country, thereby combating trafficking in cultural goods, depriving terrorists of an income source, and protecting cultural heritage.
http://www.europarl.europa.eu/RegData/etudes/BRIE/2018/614697/EPRS_BRI(2018)614697_EN.pdf
EU: CHARGING OF HEAVY GOODS VEHICLES
On 17th October, the EU Parliamentary Research Service published a briefing paper in advance of a vote on a May 2018 report to be discussed at an EU Parliament plenary. There is a legislative proposal for a Directive amending Directive 1999/62/EC on the charging of HGV for the use of certain infrastructures (known as the Eurovignette Directive) that would substantially modify the existing legislation.
http://www.europarl.europa.eu/RegData/etudes/ATAG/2018/628270/EPRS_ATA(2018)628270_EN.pdf
REPORT ON THE LEGAL STATUS OF ELECTRONIC BILLS OF LADING
Law firm Clyde & Co has published a report, in conjunction with the International Chamber of Commerce’s (ICC) Banking Commission, on the legal status of electronic bills of lading. The report considers whether the law in this area reflects the technological change that is rapidly occurring in the international trade sector. The survey covers the following 10 jurisdictions: UK (English law), USA (NY law), Germany, Netherlands, UAE, China, Singapore, Brazil, India and Russia. The report sets out the relevant issues and the results of the survey.
The report is available at –
https://www.clydeco.com/uploads/Files/The_Legal_Status_of_E-bills_of_Lading_-_ICC_and_Clyde_Co.pdf
‘HARRODS SHOPAHOLIC’ FROM AZERBAIJAN FOCUSES ATTENTION ON ALIYEV FAMILY’S LONDON PROPERTIES
Rferl on 18th October carried an article saying that a lurid multimillion-dollar shopping spree at Harrods of London by the wife of a jailed Baku banker has prompted renewed interest in runaway corruption in Azerbaijan and luxury UK properties thought to be connected to Azerbaijan’s first family. The article discusses the list of Azerbaijanis known to have controlled expensive properties in London and a report from OCCRP and RFE/RL’s Azerbaijani Service issued in May 2016 identifying 3 properties in London.
PROTECTIONISM 2.0: DIGITAL FORCES DRIVING THE NEW PROTECTIONIST AGENDA IN TRADE
On 18th October, Gowling WLG announced a new report as a follow-up to last year’s global protectionism report (that showed the top 60 economies had adopted 7,000 protectionist trade measures). The new report reveals a new frontier in global trade, one that goes beyond the tariff and non-tariff barriers imposed, relaxed and then re-imposed between countries, regions and trading blocs, and into a world which many businesses may not yet have considered when setting an internationally focused strategy. This report explores a new front line of protectionism that had been identified by the expert contributors to the first report; the war for influence and even control of the engines of digital growth – data and raw materials. These two drivers of ‘digital’ protectionism add a layer of complexity to an already complicated protectionist landscape that demands the attention of those leaders within any business which has an international footprint.
SEC CHARGES FORMER INSURANCE WUNDERKIND WITH FRAUD
The Wall Street Journal on 17th October reported that the SEC has charged Alexander Chatfield Burns, 31, a former insurance industry wunderkind with fraud, claiming he and an associate, Andrew B Scherr, diverted more than $300 million from insurers they controlled and caused the companies to become insolvent. The alleged scheme was carried out through a New York-based company, Southport Lane Management LLC, that Burns created while in his early 20s.
EU AND THE REPUBLIC OF KOREA JOIN FORCES IN FIGHT AGAINST ILLEGAL, UNREPORTED AND UNREGULATED (IUU) FISHING
On 18th October, the EU announced that the EU and the Republic of Korea have pledged to work closely together to fight against Illegal, Unreported and Unregulated (IUU) fishing. Globally, IUU fishing is estimated to deprive coastal communities and honest fishermen of up to €20 billion of seafood and seafood products per year.
http://europa.eu/rapid/press-release_IP-18-6142_en.htm
2018 UK ANNUAL REPORT ON MODERN SLAVERY
The Home Office on 18th October released this report which provides an overview of modern slavery in the UK and explains how the UK has responded to this threat over the last 12 months. In 2017, 130 defendants were prosecuted under the Modern Slavery Act 2015; compared to 51 defendants prosecuted under the Act in 2016.
SPAIN ARRESTS 4, SEIZES 115 PROPERTIES IN VENEZUELAN PROBE
The Miami Herald on 18th October reported that Spanish police have arrested a former Venezuelan official and an exiled opposition leader’s relative and seized more than 115 properties in a money laundering investigation into a ring that allegedly bought real estate in Spain with illicit funds from Venezuela. Amongst those arrested was reportedly Nervis Villalobos, a former Venezuelan deputy energy minister. He is also sought by the US for his role in a kickbacks-for-contracts scheme that plundered billions of dollars from the Venezuelan state oil company, PDVSA. he main suspect in the case is a Portuguese businessman, Hugo Gois, being investigated in the US for allegedly laundering more than $1.3 billion obtained through bribes in public contracts, Spanish police said.
https://www.miamiherald.com/news/business/article220222250.html#storylink=cpy
UK: NEW NAME CHECK RULES WILL ALERT BANK CUSTOMERS IF THEY TRANSFER MONEY TO FRAUDSTERS
On 18th October, Moneywise reported that from next year banks will have to alert customers if they transfer money to a new account and the name does not match as part of a new scheme from the UK payments operator. The ‘Confirmation of Payee’ service will reduce the risk of payments being sent to the wrong account and help combat authorised push payment (APP) fraud. Currently, when you send an electronic payment you enter the name, the sort code and the account number. However, the account name is not checked.
https://www.bbc.co.uk/news/business-45900955
LEICESTER SHOP EXPLOSION ‘LINKED TO INSURANCE FRAUD’
The BBC on 18th October reported that 3 men who are accused of murdering five people when a shop exploded in February have been charged with fraudulently trying to benefit from an insurance claim.
https://www.bbc.co.uk/news/uk-england-leicestershire-45904615
NEW RULES CLAMP DOWN ON PRIVATE AGENTS SNEAKING OVERSEAS PURCHASES INTO CHINA WITHOUT PAYING TAXES
The Global Times on 18th October reported that many Chinese make extra money by taking foreign goods into the country without paying tariffs, but starting in January 2019, rules will target this kind of tax evasion.A transnational online retailer said that shopping agents bring goods in the name of personal use to evade tariffs, and evade personal income tax after selling these goods. An anonymous courier told the Global Times that some courier companies provide a service to change the delivery address at the customers’ request. According to China’s newly released e-commerce law, private shopping agents conducting business on WeChat Moments and streaming live platforms should register with the industrial and commercial administrative departments and pay tax accordingly.
http://www.globaltimes.cn/content/1123528.shtml
KENYAN RUNNING LEGEND KIP KEINO FACES CORRUPTION CHARGES
The Las Vegas Review Journal on 18th October reported that he had handed himself into police, with he and 6 others accused of embezzling $545,000 intended for Kenya’s 2016 Olympic team.
DENMARK’S POOR PERFORMANCE IN THE FIGHT AGAINST FINANCIAL CRIME SHOWS WHY EUROPEAN REGULATION IS NEEDED
An article from RUSI on 18th October said that Denmark’s travails reflect an apathy towards financial crime that extends across the continent.
CURRENT LOGGING RATE WILL STRIP SOLOMON ISLANDS BY 2036
OCCRP reported on 18th October that Chinese demand for luxury timber is driving logging in the Solomon Islands at an unsustainable rate, and may see them stripped of forest by 2036, according to a new report by Global Witness.
TREASURY AGENT AT FINCEN NAMED FOR LEAKING INFORMATION PERTAINING TO PAUL MANAFORT AND THE RUSSIA PROBE
Jurist reported on 18th October that Edwards is “charged with one count of unauthorised disclosures of suspicious activity reports and one count of conspiracy to make unauthorised disclosures of suspicious activity reports”. Each of the charges carries a maximum of 5 years in prison.
https://www.jurist.org/news/2018/10/treasury-agent-charged-with-leaking-russia-probe-information/
HUNGARIAN CEO BRIBES MAN WHO PRETENDED TO BE DEPUTY MINISTER
OCCRP on 18th October reported that a Hungarian CEO who attempted to bribe his way to government contracts noticed too late that the “officials” he had given $81,000 only pretended to be working for the government and that the man at the end of the chain lied he was the deputy minister.
TERRORISTS USE OF DRONES AND OTHER EMERGING TECHNOLOGIES
The Soufan Center (TSC) is a non-profit organisation dedicated to serving as a resource and forum for research, analysis, and strategic dialogue related to global security issues and emergent threats. On 18th October, it produced a report that says that the use of drones and other emerging technologies by terrorists and violent non-state actors is not science fiction, nor is it a threat simply to worry about in the future; it is happening already, and proliferation and advance of new technologies typically outpaces the laws and policies designed to govern them.
http://thesoufancenter.org/intelbrief-terrorists-use-of-drones-and-other-emerging-technologies/
INDONESIA RAIDS HOME OF LIPPO GROUP DEPUTY CHAIRMAN IN BRIBERY PROBE LINKED TO $21 BILLION REAL ESTATE PROJECT
On 18th October, Baker McKenzie reported that Indonesia’s anti-graft agency said that it had raided 10 locations, including the home of Lippo Group Deputy Chairman James Riady, as part of a bribery investigation linked to the conglomerate’s $21 billion Meikarta real estate project.
https://www.pinterest.com/pin/501447739737006086/
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