19th October 2018
BVI: ‘DISABLED’ BEARER SHAREHOLDERS HAVE A CONSTITUTIONAL RIGHT NOT TO BE DEPRIVED OF THEIR PROPERTY WITHOUT COMPENSATION
Harneys on 16th October published an article saying that recent BVI Court of Appeal decisions held that ‘disabled’ bearer shareholders were found to have a constitutional right not to be deprived of their property without compensation. Under the Business Companies Act 2004 holders of bearer shares were given a deadline of 31st December 2009 to deposit those shares with a custodian or to redeem, convert or exchange them for registered shares. After that date, any un-deposited, unredeemed or unconverted bearer share would be immobilised and the holder of any such share would lose all entitlements which those shares conferred, including the right to vote. The decisions mean that the court has a flexible jurisdiction to appoint receivers for the purpose of redeeming those disabled shares, thereby ultimately restoring the companies to a functional state.
http://harneysoffshorelitigation.com/unlocking-disabled-bearer-shares/
HOW CHINA’S AI TECHNOLOGY EXPORTS ARE SEEDING SURVEILLANCE SOCIETIES GLOBALLY
The Diplomat in the US on 18th October published an article saying that China is exploring technologies that enable high tech state authoritarianism, and is increasingly used its technological advances against its own people. However, it says that the effects of China’s high-tech surveillance model reach well beyond its borders: Increasingly China has been selling its blueprint, including the software and hardware it uses in its surveillance regime, abroad.
MALTA: ‘CANNABIS SOAP’ SUSPECT’S POLICE STATEMENT MUST BE EXPUNGED
Malta Today on 18th October reported that the case against a man accused of conspiring in 2009 to smuggle 30 kg of soap which he thought was cannabis looks unlikely to go ahead after a constitutional court ruled that his statement to police was inadmissible. The consignment had arrived via dinghy launched from an anchored yacht from Libya. A court-appointed expert had later discovered that the substance thought to be cannabis was actually soap. Despite this, the men were charged with, amongst other things, conspiracy to import drugs.
SUDAN “BLEEDING GOLD TO EGYPT AND ERITREA”
All Africa on 18th October reported claims by a Sudan MP that a large proportion of the gold produced by traditional mining methods in Sudan is reportedly being smuggled to neighbouring countries.
https://allafrica.com/stories/201810180576.html
BULGARIAN CUSTOMS SEIZE 3.8 MILLION UKRAINIAN ALCOHOL EXCISE STAMPS
Xinhua on 18th October reported that Bulgarian customs at checkpoint near the border with Turkey have seized smuggled Ukrainian excise stamps for alcohol during a detailed customs inspection of a truck with Turkish registration travelling from Turkey to Ukraine.
http://www.xinhuanet.com/english/2018-10/18/c_137542146.htm
PODCAST: AI AND FINANCIAL CRIME COMPLIANCE, INVESTIGATIONS AND ANALYSIS
A Crimecast podcast from ACFCS on 18th October consists of an interview with David McLaughlin, the CEO and founder of QuantaVerse, which uses data science and artificial intelligence (AI) to help institutions better identify financial crimes.
EUROPEAN SUPERVISORS ANNOUNCE 2019 WORK PRIORITIES INCLUDE AML/CFT ISSUES
An article from Shearman & Sterling on 18th October focuses on the 2019 work programme of the Joint Committee of the European Supervisory Authorities (that is, the European Banking Authority, the European Securities and Markets Authority and the European Insurance and Occupational Pensions Authority). Amongst other things, it is said that it will continue to provide a forum for consideration of emerging risks and sharing information and good practice and will focus on the implementation of aspects of the EU AML Roadmap: including updating Joint Guidelines on money laundering and terrorist financing risk factors; instituting its own-initiative Guidelines for enhancing collaboration and cooperation between national regulators; a review and update of existing guidelines and technical standards where necessary; and developing an enhanced framework for co-operation between AML/CTF and prudential supervisors.
https://www.jdsupra.com/legalnews/european-supervisors-announce-2019-work-51356/
US: DOES THE ART WORLD HAVE A MONEY LAUNDERING PROBLEM?
Website Hyperallergic on 18th October carried an article asking this question, and saying that experts are not convinced that the proposed extension to the Bank Secrecy Act would effectively quash financial wrongdoing in the industry. This comes as lobbying grows and the US Congress considers extension of the Act to the arts and antiquities market. It reports that a recent symposium convened by Case Western Reserve University and the Fashion Institute of Technology (FIT) gathered art market experts with lawyers and money laundering specialists to discuss how prevalent financial malfeasance is in the industry.
https://hyperallergic.com/465736/does-the-art-world-have-a-money-laundering-problem/
2 MEN IN KILDARE COURT ON €800,000 MONEY LAUNDERING CHARGE
The Leinster Leader in Ireland on 18th October reported that the men, one from Sligo, and one from Lucan, were charged with having the money at a garage in Newhall in 2017. It is alleged that the money is the proceeds of crime.
https://www.leinsterleader.ie/news/news/342606/kildare-800-000-money-laundering-allegation-y-y.html
RIVAL DISTILLERS ON ISLE OF MAN ROW OVER TT RACE SPONSORSHIP
The Drinks Business on 18th October carried an article saying that the Manx vodka label made by Douglas-based Seven Kingdom Distillery is sponsoring TT race rider Andrew Dudgeon, and the labelling of the product, has been upheld by the Portman Group, the UK’s regulator on alcohol advertising. However, Kella Distillers’s owner, Alan Dixon, raised concerns that the sponsorship of a participant of the Isle of Man TT Race, which it said was known as one of the most dangerous road circuits in the world, implied that the brand advocated or condoned violent or dangerous behaviour. The article also refers to Kella’s battle with the Scotch Whisky Association in the 90s.
https://www.independent.co.uk/news/uk/home-news/whisky-war-rages-over-manx-white-1276535.html
UK: RECYCLING OPTIONS DWINDLE FOR COUNCILS HIT BY CHINA WASTE IMPORT BAN
Manx Radio on 19th October reported that councils in the UK are re-thinking their recycling policies as dealing with unwanted plastic becomes more difficult. Until earlier this year, the UK sent much of its used plastic to China, where it was used to make items such as computers, toys and appliances. China’s ban on plastic waste imports had meant the UK recycling industry has “had to find other countries that are able to take this waste for recycling”.
https://www.manxradio.com/news/uk-news/recycling-options-dwindle-for-councils-hit-by-china-ban/
COURT OF JUSTICE OF THE EUROPEAN UNION RULES AGAINST HMRC OVER RED DIESEL
The RYA on 17th October reported that HMRC has informed the RYA that it has lost its case at the CJEU (Case 503/17). The court ruled that the UK failed to fulfil its obligations under Council Directive 95/60/EC on fiscal marking of gas oil and kerosene. The European Commission took action against the UK saying that, by allowing the use of marked fuel for the purposes of propelling private pleasure craft, the UK has failed to fulfil these obligations. The EU had asked the UK to change its rules to ensure that private pleasure boats such as luxury yachts can no longer buy lower taxed fuel intended for fishing boats. As the UK remains subject to the Fuel Marker Directive, it must bring its practices into line with this ruling.
https://www.rya.org.uk/newsevents/news/Pages/court-rules-against-HMRC-over-red-diesel.aspx
CONFLICT-FREE MINERALS? TANTALUM TRACKER UNVEILED IN RWANDA
Defence Web on 18th October reported that the chief executive of Rwanda’s Mines, Petroleum and Gas Board announced the world’s first blockchain project to track tantalum from pit-face to refinery, part of a push to woo investors seeking a conflict-free source of minerals and help Rwanda combat allegations its resources are blended with smuggled minerals used to fuel conflict in neighbouring Democratic Republic of Congo.
MALAYSIAN EX-DEPUTY PM CHARGED WITH MONEY LAUNDERING, GRAFT
Reuters on 19th October reported that Malaysia’s former deputy prime minister, Ahmad Zahid Hamidi, was charged with 45 criminal offences including money laundering and graft, as part of a renewed crackdown.
LARGE PHONES, LAPTOPS AND TABLETS ARE NOW ALLOWED IN THE CABIN ON THE MAJORITY OF FLIGHTS TO THE UK
The Department for Transport issued a news release on 18th October updating information and saying that the vast majority of carriers operating from airports in Saudi Arabia and Lebanon are no longer subject to these restrictions. Passengers should contact their airlines for advice about whether their flights are affected. Restrictions on carrying large phones, laptops, tablets and accessories into the cabin of UK-bound flights from Turkey, Egypt, Jordan, Saudi Arabia, Lebanon and Tunisia were introduced in March 2018.
https://www.gov.uk/government/news/changes-to-uk-aviation-security
THE STATUS OF, AND MAIN ISSUES AFFECTING, THE UK OVERSEAS TERRITORIES
Written evidence given by the FCO to the House of Commons Foreign Affairs Select Committee in September 2018 is concerned with the 14 OT: Anguilla, Bermuda, British Antarctic Territory, British Indian Ocean Territory, Cayman Islands, Sovereign Base Areas of Akrotiri and Dhekelia in Cyprus, Falkland Islands, Gibraltar, Montserrat, Pitcairn Islands, St Helena, Ascension and Tristan da Cuhna, South Georgia and the South Sandwich Islands, Turks and Caicos Islands, and BVI. It outlines the relationship between the UK and the OT. Amongst the matters it touches on are governance and constitutional issues, pointing out that the OT are not sovereign so have no international legal personality separate from the UK, and that thus the UK has a fundamental interest and responsibility to ensure the security, defence and good governance of the OT and their peoples. It says that the Westminster Parliament is able to make laws for the OT and has done so in a number of areas, usually with the support of or at the request of OT Ministers. There are also separate powers to make Orders in Council for most of the OT. The powers to legislate for them without their consent are, it says, generally exercised only in exceptional circumstances. It mentions the Sanctions and Anti Money Laundering Act 2018, which enables the UK to impose and implement sanctions regimes in order to comply with obligations under the UN Charter and to support wider foreign policy and national security goals. On the subject of beneficial ownership registers, the submission says that the FCO acknowledges the ill-feeling created in the OT as a result of the legislation, and that many OT Governments felt that Parliament had interfered in an area of their devolved responsibility. The submission also says that the UK Government expects and encourages OT to implement and maintain high standards of regulation to tackle any potentially harmful use of their globally significant jurisdictions. It says that, “Whilst OT have made commitments to implementing global standards, they are at varying stages of progress, due to a lack of political prioritisation by some, and a lack of technical and financial resources to implement technical protocols. Combined these have the potential to cause the OTs to fall below global standards or be considered candidates for blacklisting”.
BITCOIN HEDGE FUND AND CEO $2.5 MILLION PENALTY FOR PONZI SCHEME
Coin Telegraph on 19th October reported that cryptocurrency hedge fund Gelfman Blueprint Inc (GBI) and its CEO Nicholas Gelfman have been ordered by a New York court to pay over $2.5 million for operating a Ponzi scheme.
SERBIAN BUSINESSMAN WITH ORGANISED CRIME TIES TO PROFIT BIG IN AIRPORT DEAL
OCCRP on 18th October carried an article saying that Stanko Subotic, a businessman twice indicted for cigarette smuggling and known for his links to an alleged drug lord, is set to make millions from the expansion of Belgrade’s airport.
LAW COMMISSION REVIEW INTO HATE CRIME ANNOUNCED
The UK Law Commission on 18th October reported that it is to complete a wide-ranging review into hate crime to explore how to make current legislation more effective and consider if there should be additional protected characteristics such as misogyny and age.
https://www.lawcom.gov.uk/law-commission-review-into-hate-crime-announced/
SRA PROSECUTES SOLICITOR FOR SECOND TIME OVER SAME CASE INVOLVING COLLAPSED INVESTMENT SCHEME
Legal Futures on 18th October reported that the Solicitors Regulation Authority is taking the unusual step of prosecuting a solicitor for the second time over the same issue. This is despite having already taken action against Charles Valentine Fraser-Macnamara for acting in a conflict of interest while a consultant to a law firm. He was one of 3 solicitors sanctioned for their involvement in a collapsed overseas investment scheme – Ecohouse Developments and 849 individual investors, over five developments in Brazil, when he was suspended for 12 months.
https://www.legalfutures.co.uk/latest-news/sra-prosecutes-solicitor-for-second-time-over-same-case
GERMANY: SANTANDER BANK CAUGHT UP IN MAJOR TAX EVASION INVESTIGATION
KYC 360 on 19th October reported that prosecutors in Germany have launched a probe into the role Spanish bank Santander may have played in a widespread tax fraud scheme. The probe, which has seen the authorities examine the role of other banks, looks at allegations that Santander executed trades that facilitated ‘severe tax evasion’ between 2007 and 2011.
https://kyc360.com/news/germany-santander-bank-caught-up-in-major-tax-evasion-investigation/
A STING OPERATION LIFTS THE LID ON CHINESE ESPIONAGE
Real Clear Defense on 18th October carried an article about how Belgium extradited a Chinese intelligence officer to the US after an Ohio court had indicted the operative on charges of “economic espionage involving theft of trade secrets from leading US aviation companies”.
FORMER KYRGYZ PRESIDENT ATAMBAEV’S ASSOCIATE ADDED TO WANTED LIST
Rferl on 19th October reported that an associate of former Kyrgyz President Almazbek Atambaev, Ikramjan Ilmiyanov, has been charged in absentia with corruption and added to a list of wanted persons by Kyrgyzstan’s State Committee for National Security (UKMK). Atambaev left office in November 2017, and has been at odds with current President Sooronbai Jeenbekov since then. 2 of Atambaev’s close allies, former Prime Ministers Sapar Isakov and Jantoro Satybaldiev, who served during his presidency, were arrested in June also on corruption charges.
COMBATING CRIMINAL CONSORTIA IN THE LOGGING SECTOR
On 20th September, ENACT Africa published an article saying that organised crime syndicates – often with connections to Chinese markets – have been consolidating illegal timber exploitation in Africa on an unprecedented and accelerating scale. It reveals the layers of criminality that have come to define the logging supply chain, from extraction of rare species through to the sale of high-value timber in international markets. The report also reveals how transnational organised crime allies with corrupt actors at the highest levels of states to profit from this lucrative and environmentally destructive illicit trade.
ENDING CRIMINALITY AND CORRUPTION IN AFRICA’S LOGGING SECTOR
In a companion piece, on 15th October, ENACT Africa published another article which says that bans on the felling, transportation and export of forest products have been widely used in Africa, but their impact often falls short of expectations. It argues that it is time for a sharp reconsideration of the value of moratoria as a tool for forest governance in Africa.
ISLE OF MAN ANNOUNCES UPDATES OF ISIL/DA’ESH/AL-QAIDA SANCTIONS LISTS
On 19th October, the Isle of Man issued 2 news releases advising that ANJEM CHOUDARY (just released from prison in the UK) and Algerian BOUGUETOF HOCINE had been added to sanctions lists.
https://www.gov.im/news/2018/oct/19/financial-sanctions-isil-daesh-and-al-qaida/
https://www.gov.im/news/2018/oct/19/financial-sanctions-isil-daesh-and-al-qaida-2/
GERMANY LOOKING TO CO-ORDINATE GLOBAL MINIMUM CORPORATE TAX
Reuters on 19th October reported that the German Finance Minister is working with international counterparts on a global minimum corporate tax, a ministry spokesman said, as governments look to prevent companies from shopping around for tax havens.
EUROPEAN POLITICIANS CALL FOR CLAMPDOWN ON CUM-EX TAX TRADE TRICK
Reuters on 19th October reported that European politicians have called for action to tackle dividend stripping where large banks were involved in trading schemes that cost taxpayers billions of euros. In Germany’s biggest post-war fraud investigation, prosecutors in Cologne are investigating banks involved in the trades, which secured illicit double tax rebates on dividend pay outs (the so-called “Cum-Ex” tax scandal).
FATF SUSPENDS COUNTERMEASURES AGAINST IRAN FOR ANOTHER PERIOD – TO FEBRUARY 2019
The Trend news agency in Azerbaijan on 19th October reported that FATF had made the decision to extend the suspension of countermeasures against Iran, to allow it time to make necessary changes to its AML/CFT regime, until February.
https://en.trend.az/iran/business/2968044.html
RUSSIAN ‘MAFIA’ GROUP AND MP REZNIK ACQUITTED IN SPAIN
The BBC on 19th October reported that Spanish judges have acquitted 17 Russians over alleged large-scale money-laundering for the Russian mafia, including Russian MP, Vladislav Reznik. 9 other suspects remain at large, including alleged gang boss Gennady Petrov, leader of the so-called Tambovskaya-Malyshevskaya gang based in St Petersburg. The National Criminal Court found insufficient proof that the Russians’ investments in Spain involved the proceeds of organised crime.
https://www.bbc.co.uk/news/world-europe-45907655
KENYA: “PANIC” IN PRIVATE SECTOR AS DPP PLEDGES TO GO AFTER CEO WHO STEAL AND COVER UP
The Kenyan Post reported on 19th October that the DPP has decried “rampant” corruption in the private sector and bribery when seeking lucrative government contracts. He vowed a crackdown on those involved in the private sector.
http://www.kenyan-post.com/2018/10/panic-in-private-sector-as-dpp-noordin.html
NEW UK ACCOUNT FREEZING ORDERS: ARE HNWI OPEN TO ABUSE?
Financial Reporter on 19th October published an article about new powers introduced into the Proceeds of Crime Act 2002 by the Criminal Finances Act 2017. It says that whilst there has been significant focus on Unexplained Wealth Orders, it is likely that lesser known provisions, which involve the freezing and forfeiture of money held in bank and building society accounts, will prove of most relevance and concern to financial institutions and bank account holders. It also says that the changes signal a change in approach by UK law enforcement, with civil recovery set to become the new norm. A new provision allows an officer to apply for an Account Freezing Order from a Magistrates’ Court not the Crown Court), if he has reasonable grounds to suspect that the funds in an account holding at least £1,000) maintained by a bank or building society are recoverable property (i.e. either obtained through unlawful conduct or intended for use in unlawful conduct). The article says that, in light of the lower evidential threshold required by the new orders, and the ease with which UK authorities will be able to secure these, financial institutions are likely to be served with these in increasing numbers.
http://www.financialreporter.co.uk/blogs/new-account-freezing-orders-are-hnwis-open-to-abuse.html
THIEVES TARGETED THE IRS AND $12 BILLION THROUGH TAX FRAUD
The Washington Post on 19th October reported that the IRS has estimated that online thieves attempted to steal least $12.2 billion, if not more, through identity theft tax refund fraud in 2016, according to the Government Accountability Office (GAO). IRS vigilance thwarted most of those attempts, but they still got away with at least $1.6 billion. The good news is the 2016 data represent a steady and significant drop in tax identity theft since 2012.
OECD: MEXICO MUST INCREASE FOREIGN BRIBERY ENFORCEMENT: FULL IMPLEMENTATION OF ANTI-CORRUPTION REFORMS COULD HELP
The OECD issued a news release on 19th October as the Working Group on Bribery has just completed its Phase 4 evaluation on Mexico’s implementation of the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and related instruments. The report highlights several reforms following the constitutional amendment that resulted in the establishment of the National Anticorruption System. These could enhance implementation of the Convention, once fully operational. However, the OECD says that Mexico needs to give more priority to foreign bribery enforcement, having yet to prosecute a case involving the bribery of foreign public officials 19 years after ratifying the OECD Anti-Bribery Convention. This is a cause for significant concern, especially given the export driven nature of the Mexican economy, and because its exports include high-risk sectors for corruption, such as extractives, manufacturing and agricultural products.
FRANCE TO LEAD EUROPE WITH REGULATION OF ICO
Out-Law on 19th October reported that France is set to lead the rest of Europe by becoming the first country on the continent to establish a specific regulatory regime for ‘initial coin offerings’ (ICO). If France’s draft new law is approved, it will address the current uncertainty over whether ICO fall subject to securities laws or not. It is also aimed at combating risks retail investors can face when they are enticed into purchasing the tokens on offer in ICO.
https://www.out-law.com/en/articles/2018/october/france-lead-europe-regulation-of-icos/
BULGARIA: 4 ACCUSED OF ILLICIT TRADE IN CULTURAL ARTEFACTS REMAIN IN CUSTODY
The Focus Information Agency on 19th October reported that 4 suspects accused of participation in an organised crime group involved in illegal trade in cultural artefacts will remain in custody. The group were arrested on 8th October while attempting to sell a gold wreath to undercover officers. During the operation, other items were also seized – gold bracelets and coins. Experts from the National Archaeological Institute will now have to confirm their authenticity. During further searches of properties investigators found and seized more than 50 items of gold and silver, incl. a second golden wreath, as well as sculptures.
MAJOR INTERNATIONAL OPERATION SEIZES 55 TONNES OF DRUGS
Police professional on 18th October carried a report on an Interpol-led operation that has seized 55 tonnes of drugs and illegal substances across 93 countries. Operation Lionfish intercepted 35 tonnes of cocaine, 5 tonnes of heroin, 18 million Yaba synthetic drugs, 700,000 MDMA/ecstasy pills and 430,000 Captagon tablets, made from the drug fenethylline, for which there is a huge demand in the Arabian Peninsula. The operation also led to the arrest of 1,300 suspects. Drugs were found concealed in places ranging from a steamroller on a ship making for the Ivory Coast in Brazil to a private home in the Netherlands.
https://www.policeprofessional.com/news/major-international-operation-seizes-55-tonnes-of-drugs/
A WEARABLE PATCH TO DETECT CHEMICAL WEAPONS
The Bulletin for Atomic Scientists on 11th October reported that the US Army is investing in a new device that can be worn as a patch to detect “chemical, biological and other hazards in the vapour phase”. It will gather samples without need for a power supply, then technicians will apply chromatography — a technique that separates elements of a mixture — to distinguish among as many as 1,000 separate compounds. The process will be able, for instance, to distinguish a nerve agent like VX from a common pesticide.
https://www.c4isrnet.com/intel-geoint/sensors/2018/10/02/tk-poison/
OFAC TEMPORARY EXTENSION OF UKRAINE SANCTIONS GENERAL LICENCES
On 19th October, OFAC said that it had extended the expiration date of certain general licences related to GAZ Group, and issued 2 general licences: General license 13F – authorizing certain transactions necessary to divest or transfer debt, equity, or other holdings in certain blocked persons; and General License 15A – authorising certain activities necessary to maintenance or wind down of operations or existing contracts with GAZ Group.
https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20181019.aspx
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