31st October 2018
PARA STATES IN THE POST-SOVIET SPACE
New Eastern Europe on 30th October carried an article about the non-states created in bits of the former Soviet Union (such as Abkhazia and South Ossetia or Transnistria) and their recognition or non-recognition, described as a major geopolitical issue. Respect of human rights is another issue, and this too directly concerns states without international recognition and outside the jurisdiction of international law. It says that, since the Donbas conflict in Ukraine in 2015, the proliferation of such territories has provided a significant challenge to international organisations such as the EU, NATO, and the OSCE. The article asks if Russia using separatism to slow down EU enlargement, or trying to protect minorities under threat in the chaotic post-Soviet space? The non-recognition of smaller territories like Abkhazia and Transnistria, or even Kosovo, is mostly due to strategic reasons. Spain, for example, still does not recognise Kosovo because it would exacerbate its problems with the potential breakaway region of Catalonia.
‘NAIVE’ TELFORD COUPLE GROOMED INTO SUPPLYING PARTS FOR IRAN’S NUCLEAR PROGRAMME
The Shropshire Star on 30th October carried a story about Paul and Iris Attwater, both in their 60s, and from Telford, who smuggled prohibited aircraft parts to Alexander George in Malaysia from their company Pairs Aviation. But the couple were handed suspended sentences after Mr Attwater insisted he had no idea the ‘nuts and bolts’ he was exporting had a military application. George, 76, who is due to be sentenced next month, acted as a broker between the couple and Iranian buyers – he sourced parts from Pairs Aviation which were then exported by the Attwaters via a Dutch shipping company and on to Iran through a network of companies in the Far East. The aircraft parts could have been used in Iran’s nuclear programme. However, the Attwaters were well aware of the need for a licence to export some of their products after border officials impounded their goods.
“ISIS TRYING TO SMUGGLE DRONES FROM EUROPE FOR GLOBAL ATTACKS”
The Jerusalem Post on 30th October reported that despite losing territory it controlled, ISIS is trying to smuggle drones from Europe to perpetrate global attacks, said a report late Monday by the Meir Amit Intelligence and Terrorism Information Center. It reports that in September Danish authorities detained 2 men from an ISIS network for purchasing drones in Europe, exposes the threat. A seized drone is said to be a Phantom 4 Advanced model, manufactured by the DJI Chinese technology company, a leading producer of drones used for civilian purposes. In early 2017, ISIS operated armed drones against Iraqi army targets during the campaign over Mosul.
PRESIDENT OF PANAMA CALLS UPON PARLIAMENT TO LEGISLATE AGAINST TAX EVASION
The Koz Post on 30th October reported that the president of Panama has called for the Parliament to quickly approve a draft law providing for prison terms of up to 5 years in jail for fiscal evasion in excess of $ 300,000. He has said that he will convene the Parliament in extraordinary session at the end of November if the bill is not debated before the 31st October, the date of the end of the current regular session – the next being from 1st January. Panama is one of the few countries in the world where tax evasion is not a crime, but the government introduced at the beginning of the year a draft law providing for prison terms of up to 5 years.
US SLAMS REMOVAL OF PAKISTAN BAN ON JuD, FIF TERRORIST GROUPS
Defence Aviation Post on 31st October reported that the US has said the recent removal (expiry) of the ban on Hafiz Saeed-led Jamaat-ud-Dawa and Falah-i-Insaniyat Foundation runs counter to Pakistan’s commitment to the FATF and would jeopardise the country’s ability to meet its commitments to fight terrorism under the UN Security Council resolution. They are no longer on the list of banned outfits in Pakistan as the ordinance that proscribed them under a UN Resolution has lapsed and the new Imran Khan-led government did not extend it.
https://defenceaviationpost.com/us-slams-removal-of-pakistan-ban-on-jud-fif/
BAHAMAS PLACED ON UK’S MONEY LAUNDERING WATCH LIST
International Investment on 30th October noted that, following FATF recommendations, the UK has added the Bahamas to its money laundering watch list, with the HM Treasury now requiring firms to put special procedures in place when dealing with Bahamian resident entities and clients.
FIJI: ALLEGED SUPERMARKET MONEY LAUNDERERS BAILED
The Fiji Broadcasting Corporation on 31st October reported that 3 former executives of a major supermarket chain who have been charged for their alleged involvement in deceptively obtaining more than $220,000 were granted bail. It is alleged between 2011 and 2016 while they were employed at the supermarket’s headquarters they paid additional salaries to themselves.
http://www.fbc.com.fj/fiji/70338/alleged-supermarket-money-launderers-bailed-
MONGOLIA TO CRACK DOWN ON MONEY LAUNDERING AND TERRORIST FINANCING
China.org on 30th October reported that Mongolia will stand firm on combating money laundering and terrorist financing, according to the country’s Prime Minister at an international conference in the country. According to data from Mongolia’s National Police Agency, 26 cases of money laundering were recorded in the first half of this year, while only 7 cases of this kind were reported last year in Mongolia. Most of the money laundering cases in Mongolia are linked to fraud, embezzlement, bribery, tax evasion and drug trafficking, the agency said.
http://www.china.org.cn/world/Off_the_Wire/2018-10/30/content_69114883.htm
MALTA: FIAU RELEASES DOCUMENT PROVIDING GUIDANCE IN RELATION TO AML LEGISLATION
On 30th October, the Malta Independent reported that the Finance Intelligence Analysis Unit has released for consultation a guidance for banks, companies and any subject persons in relation to the recently introduced laws regarding the 4th EU AML Directive. It is over 200 pages long and helps provide guidance in terms of the obligations persons would have when, for example, setting up a relationship with a client, described their obligations. Certain consultations have already taken place and the public consultation will close on 31st December.
The consultation document is at –
http://www.independent.com.mt/file.aspx?f=179774
CHARTING HUMAN RIGHTS IN A DRAMATIC NEW WAY
The Pass Blue website on 30th October published a feature showing a new way to map out and illustrate the human rights performance of a country. It says that a project called the Human Rights Measurement Initiative has launched metrics and tools to track the performance of more than 140 countries, with colourful graphics that throw everything into sharp relief, from freedom from hunger to freedom to vote. The initiative, supported by private donations and contributions from organisations like George Soros’s Open Society Foundations, aims to fill that gap. It is also a resource to help further research and advocacy. Access to the data is free.
https://www.passblue.com/2018/10/30/charting-human-rights-in-a-dramatic-new-way/
EXTENSION OF UK TRUST REGISTER REQUIREMENTS
On 29th October, Boodle Hatfield published an article saying that, since June 2017, both UK and non-UK trusts which are liable to certain UK taxes (such as income tax, capital gains tax (CGT), inheritance tax (IHT), stamp duty land tax (SDLT) and stamp duty reserve tax) have been required to register their details with HMRC disclosing their beneficial owners. However, following the 5th EU Money Laundering Directive which was passed by the EU on 9th July, the scope of the UK trust register will need to be extended from 2020.
http://www.boodlehatfield.com/the-firm/articles/extension-of-trust-register-requirements/
VIDEO : BELT AND ROAD INITIATIVE: WHAT DO YOU NEED TO KNOW?
On 24th October, Baker McKenzie released a video asking: what do Chinese and international companies need to know about investing in and working on BRI projects? As part of China’s hot legal issues video series to celebrate the 25th and 15th anniversary milestones of its Beijing and Shanghai offices, it is launching a second video which focuses on the Belt & Road Initiative.
https://www.bakermckenzie.com/en/insight/publications/2018/10/belt-and-road
REVISED ANNUAL REPORT ON THE EU COUNCIL COMMON POSITION DEFINING COMMON RULES GOVERNING THE CONTROL OF EXPORTS OF MILITARY TECHNOLOGY AND EQUIPMENT
On 31st October, the EU published this report which covers statistics on licences and exports of conventional arms from EU Member States during the 2016 calendar year. It also covers activities undertaken by the EU and its Member States in the framework of the implementation of the Council Common Position. It mentions that the following third countries have officially aligned themselves with the criteria and principles of the Common Position: Albania, Bosnia and Herzegovina, Canada, FYR Macedonia, Georgia, Iceland, Montenegro and Norway. The Common Position is an evolution of the EU Code of Conduct on arms exports, which it replaced in December 2008. It includes assessment criteria for export licence applications, an extension of controls on brokering, transit transactions and intangible transfers of technology, as well as strengthened procedures to promote the convergence of Member States’ export policies. Member States implement the provisions of the Common Position in their national export control systems and have to ensure that their national legislation or administrative rules conform to the Common Position.
REPORT ON THE FURTHER DEVELOPMENT OF THE EU COMMON POSITION ON ARMS EXPORTS
On 4th October, the Stockholm International Peace Research Institute published a report on the further development of the EU Common Position on arms exports, prepared by SIPRI experts for the European Parliament Sub-Committee on Security and Defence (SEDE). SIPRI experts highlighted the divergences in Member States’ export policies which have emerged in the last decade and provided a number of options that could be taken into consideration during the 2018 review. This included adjustments to the language of the criteria and the User’s Guide that accompanies the EU Common Position, improving the quality of reporting, and increasing the coherence and co-ordination of the EU’s broader export control regime.
SOLOMON ISLANDS MP ARRESTED FOR CORRUPTION
Radio New Zealand on 31st October reported that an MP in Solomon Islands, Dickson Mua, has been arrested and charged for corruption. He is accused of misusing a shipping grant worth more than $374,000 which he received in 2013 purportedly to buy a ship for his constituency. It is alleged the ship was never purchased and instead the MP spent $300,000 buying outboard motor powered canoes and other equipment for his supporters, and then withdrew most of the remaining money and used the rest on expenses unrelated to the purpose of the shipping grant.
UAE SET TO PARTNER PAKISTAN IN FRESH CLAMPDOWN ON MONEY LAUNDERING
The National in the UAE reported on 31st October that the countries are working together for closer co-operation and mutual assistance, particularly is respect of cash smuggled out of Pakistan. Each year it is estimated that $10 billion is smuggled out by charter flight, ship, via Afghanistan or by hawala.
JUSTICE MINISTER: BULGARIA TO RETHINK LAW ON CITIZENSHIP
The Sofia Globe on 31st October reported that a working group has been set up to propose amendments to the Bulgarian Citizenship Act by the end of 2018. This is in the light of alleged corruption in the issuing of certificates proving Bulgarian ancestry, by law a gateway to citizenship.
https://sofiaglobe.com/2018/10/30/bulgaria-to-rethink-law-on-citizenship-justice-minister
US: TOURISM PROMOTER CHARGED BY FEDS IN HAITI PORT BRIBERY SCHEME
The Miami Herald on 30th October reported that Roger Richard Boncy, 74, a dual U.S. and Haitian citizen who resides in Madrid, and a politically-connected tourist and jobs promoter for Haiti has been charged in a scheme to bribe Haitian government officials over the construction of an $84 million port. He was indicted in Massachusetts with conspiracy to violate the Foreign Corrupt Practices Act and the Travel Act, violating the Travel Act and conspiracy to commit money laundering. Already charged is Dr Joseph “Joe” Baptiste, 66. Baptiste, a retired US Army colonel and practising dentist who lives in Maryland and was indicted in 2017. The CEO of Hispaniola Invest, LLC, Boncy was named Haiti Ambassador-at-Large in 2013, and served as permanent representative of Haiti to the UN World Tourism Organisation, according to his LinkedIn profile.
https://www.miamiherald.com/news/nation-world/world/americas/haiti/article220875150.html
TEXAS BUSINESSMAN PLEADS GUILTY TO MONEY LAUNDERING CHARGES IN CONNECTION WITH VENEZUELA BRIBERY SCHEME
On 30th October, the DoJ issued a news release saying that Ivan Alexis Guedez (Guedez), 47, of Katy, Texas, a former procurement officer of Venezuela’s state-owned and state-controlled energy company, Petroleos de Venezuela SA (PDVSA), has pleaded guilty for his role in an international money laundering scheme involving bribes paid by the owners of US-based companies to Venezuelan government officials in exchange for securing additional business with PDVSA and payment priority on outstanding invoices.
ePASSPORT GATES TO EASE TRAVEL FOR PASSENGERS FROM MORE COUNTRIES
UK Border Force on 30th October announced that millions more people will be able to use ePassport gates as they arrive in the UK, under plans announced in the Budget on 29th October. From Summer 2019, eligible travellers from Australia, Canada, Japan, New Zealand and the US will be able to use the ePassport gates at 14 ports, both in the UK and at Eurostar terminals at Brussels and Paris. The ePassport gates expansion will provide an automated route through the border for an estimated additional 6 million international travellers arriving in the UK every year.
https://www.gov.uk/government/news/epassport-gates-to-ease-travel-for-passengers-from-more-countries
FURTHER INFORMATION REGARDING SPANISH INTERPRETATION OF UCC CUSTOMS CODE FOR YACHTS
On 31st October, Superyacht News published an article providing further information about an information note published by Spanish Customs on the interpretative criteria relating to the entry and exit of yachts into and from the Union Customs Territory (UCT), as well as the use of the Temporary Admission (TA) scheme, under the Union Customs Code (UCC) – entry and exit procedures and chartering.
http://www.superyachtnews.com/business/further-information-regarding-spanish-interpretation-of-ucc
A NEW WORLD OF VAT FOR VOUCHERS IN THE EU
On 31st October, CMS Law published an article saying that from 1st January, a new VAT regime for vouchers will take effect in all EU Member States. The regime will apply to all vouchers issued on or after 1st January and the UK will be implementing this regime despite Brexit.
http://www.cms-lawnow.com/ealerts/2018/10/a-new-world-of-vat-for-vouchers
WITH NORTH KOREAN THREATS LOOMING, US ARMY PURSUES FOREIGN CLUSTER MUNITIONS
The New York Times on 30th October reported that after the Pentagon last year dropped a longstanding pledge to destroy its existing cluster munitions stockpile, the US Army is moving ahead with renewed vigour to acquire at least 3 new foreign-made versions for its artillery. Cluster munitions are a type of weapon that distributes smaller weapons, called submunitions or bomblets, over a targeted area. They have been condemned by lawmakers and arms-control groups for causing indiscriminate harm to civilians even decades after conflicts end.
UNINCORPORATED JOINT VENTURES IN SOUTH AFRICA – WHAT YOU NEED TO KNOW
Eversheds Sutherland published a briefing on 31st October saying that while one option for companies seeking to set up joint ventures is to establish special purpose vehicles (incorporated joint ventures), unincorporated joint venture (UJV) arrangements are an (easier) alternative available.
RETIRING HEAD OF THE CPS WARNS CRIMES CANNOT BE TACKLED EFFECTIVELY DUE TO LACK OF RESOURCES
PNLD reported on 27th October a Guardian article which says that, prior to stepping down as head of the CPS, Alison Saunders has warned that the UK criminal justice system is ‘creaking’ and that the police and the CPS are too under-resourced to tackle crimes effectively.
https://www.theguardian.com/law/2018/oct/27/cps-alison-saunders-justice-system-cannot-cope-resources
NORDEA BANK AML FAILINGS FLAGGED UP BY SWEDISH REGULATOR
KYC 360 on 31st October reported that a recent review into Nordea Bank by Sweden’s Financial Supervisory Authority (FSA) has identified some deficiencies in its AML controls. The FSA picked up weaknesses in areas such as risk assessment and client knowledge.
https://kyc360.com/news/nordea-bank-anti-money-laundering-failings-flagged-up-by-swedish-regulator/
DEUTSCHE BANK TO SCRAP MEXICAN SALE PREVIOUSLY STALLED BY MONEY LAUNDERING ALLEGATIONS
KYC 360 on 31st October reported that a deal between Deutsche Bank and Mexican bank Accendo Banco that had stalled over money laundering allegations will not proceed although the accusations have been dropped. According to Reuters, Deutsche is planning to scrap an agreement to sell its Mexican assets to Accendo, but has not given an explanation.
KYRGYZ MAN ARRESTED FOR FINANCIALLY SUPPORTING TERRORISTS IN SYRIA
Rferl on 31st October reported that a Kyrgyz man suspected of wiring some $100,000 to terrorist groups in Syria has been apprehended, and the Kyrgyz authorities have said that some 500 men and women from Kyrgyzstan joined the Islamic State terrorist organisations in Syria and Iraq in recent years.
EMPLOYEES SPOT COMPLIANCE GAPS AT US CREDIT UNION
The Wall Street Journal on 30th October reported that the employees at Pentagon Federal Credit Union (PenFed), which serves 1.6 million members and has about $24 billion in assets, told executives and regulators about their concerns. In response, PenFed General Counsel Scott Lind said that the credit union’s AML programme “fully complies with all government regulations”. It is reported that whilst its regulator, the National Credit Union Administration, gave PenFed in 2015 the highest-possible rating, the following year, employees began documenting what they saw as compliance gaps, such as not having a process to identify potentially high-risk members, according to an internal report, as well as a backlog of transactions flagged for further investigation.
PODCAST: BLOCKCHAIN AND CRYPTOCURRENCY
In the latest TRACE podcast, Carrie Cohen of Morrison & Foerster explains the regulatory and compliance implications of blockchain-enabled technology, including cryptocurrency.
https://www.traceinternational.org/bribe_swindle_or_steal
FATF CONSOLIDATED ASSESSMENT RATINGS
On 31st October, FATF issued an updated schedule of consolidated mutual evaluation assessment ratings, following the publication of the updated report on Malaysia.
http://www.fatf-gafi.org/publications/mutualevaluations/documents/assessment-ratings.html
2018 REPORT ON IMPLEMENTATION OF EU TRADE AGREEMENTS
On 31st October, the EU published the latest report on the operation and benefits of trade agreements with third countries. The report looks at annual indicators such as – Changes in trade in goods and services, and foreign direct investment; Progress and outstanding issues on non-tariff barriers and rules, in particular those related to sustainable development; The extent to which companies actually use the tariff reductions and quotas; and Steps the EU Commission is taking to improve the situation. An accompanying document looks in detail at each trade agreement.
A factsheet summarising the findings is also available –
http://trade.ec.europa.eu/doclib/docs/2018/october/tradoc_157469.pdf
OIL FRAUD: NEW ARREST IN ITALIAN ILLEGAL TANKER OPERATION INVESTIGATION
Tanker Shipping on 31st October reported that Italian tax police have arrested another suspect in the ongoing investigation into a massive VAT fraud, invoice fraud, money laundering and smuggling operation of Libyan fuel oil by organised criminals. Antoni Desiata is accused of being the de facto administrator of the Rome-based Oilchem srl and of the Milan-based Xcel Petroleum – companies operating in the wholesale of petroleum products.
EU ENVOY SAYS MALAWI OFF TRACK IN GRAFT FIGHT
The Nyasa Times on 31st October reported that the EU Ambassador to Malawi is failing in its fight against corruption despite having sound policies and laws, and that the corruption situation in the country is fast depreciating. Her comments come as the opposition and civil society groups are demanding the resignation of the president over a donation from an “unscrupulous” Indian businessman.
https://www.nyasatimes.com/eu-envoy-says-malawi-off-track-on-graft-fight
CBS PODCAST: WHAT MAKES SANCTIONS BITE
On 31st October, in its weekly “Intelligence Matters” podcast – which covers national security and policy matters and it hosted by former CIA Acting Director and CBS News national security contributor, Michael Morell. In this episode Morell speaks with David Cohen, former Deputy Director of the CIA and Under Secretary for Terrorism and Financial Intelligence about whether, when, and how targeted financial sanctions work.
https://www.cbsnews.com/news/intelligence-matters-a-cbs-news-original-national-security-podcast
US WITHDRAWS EXTRADITION REQUEST FOR BULGARIAN NATIONAL SUSPECTED OF VIOLATING THE US TRADE EMBARGO AGAINST SYRIA
The BTA news agency reported on 31st October that the Bulgarian prime minister has told journalists here on Wednesday that the US has officially withdrawn the extradition request for Bulgarian national, Zhelyaz Andreev. Andreev was arrested in Bulgaria in April in connection with a Miami investigation against 11 individuals, including 5 Bulgarians, suspected of violating the US trade embargo against Syria. Andreev and several others of the accused worked for the Sofia office of AW-Tronics, a Miami-based company which shipped and exported various aircraft parts and equipment to Syrian Arab Airlines.
http://www.bta.bg/en/c/DF/id/1897468
MUSTARD GAS: INCIDENT MANAGEMENT AND GENERAL INFORMATION
For some reason, on 31st October, Public Health England issued 2 leaflets – one detailing how to deal with an incident involving mustard gas, and the other providing general information about the gas. Sulphur mustard is a chemical warfare agent and its production, use and storage is prohibited under the Chemical Weapons Convention, but was made famous during World War 1 (my father suffered gas attack injuries during that war).
https://www.gov.uk/government/publications/mustard-gas-incident-management
ROMANIA: OPPOSITION CHALLENGES MONEY LAUNDERING PREVENTION BILL AT CONSTITUTIONAL COURT
Mediafax on 31st October reported that Romanian opposition parties PNL and USR have filed with the Constitutional Court a challenge against the recently passed money laundering prevention Bills, which they say could block the activity of NGO. Romania’s Lower Chamber passed the Bill on October 24th, which aims to implement EU Directives on preventing money laundering.
INDONESIA: EXECUTIVE OF CHINESE-INDONESIAN CONGLOMERATE TO TESTIFY IN $21 BILLION BRIBERY PROBE
OCCRP on 31st October reported that Indonesia’s anti-corruption agency summoned, James Riady, the deputy chairman of the Chinese-Indonesian conglomerate Lippo Group as a witness in a bribery case related to a $21 billion construction project – Lippo Group’s Meikarta real estate project, which lies just outside of Jakarta. Last month 9 people were arrested including 2 Lippo Group consultants, several employees, government officials, and Billy Sindoro, Lippo’s operations director. Reuters reported that Sindoro was named as the prime suspect.
VENEZUELA GOVERNMENT CONTROLS SPUR CATTLE SMUGGLING INTO COLOMBIA
Insight Crime on 31st October reported that a growth in cattle smuggling from Venezuela to Colombia with participation from criminal organisations could be the result of heavy-handed controls that the government of President Maduro has been imposing on Venezuela’s farmers. Smugglers constantly open new routes, with authorities decommissioning more than 100 cross-border trails between Venezuela and Colombia this year alone.
https://www.insightcrime.org/news/brief/venezuela-govt-controls-spur-cattle-smuggling-colombia/
HONG KONG’S FIRST BLOCKCHAIN-BASED INTERNATIONAL TRADE FINANCE PLATFORM
A news release on Mondo Visone on 31st October reported that the Ping An Insurance (Group) Company of China Ltd has delivered Hong Kong’s first blockchain-based international trade finance platform, eTradeConnect, which is initiated by 7 founding banks in Hong Kong and facilitated by the Hong Kong Monetary Authority. At a launch ceremony, the HKMA announced the official launch of eTradeConnect, initially connecting 12 joining banks with some of their trade finance pilot clients to share trade information with the use of blockchain technology. It is said that leveraging blockchain’s distributed ledger technology, financial institutions will potentially be able to access real-time, secured and comprehensive trade information to conduct their risk assessment on loans.
REPORT ON US NAVY LASER, RAILGUN AND GUN-LAUNCHED GUIDED PROJECTILES
On 31st October, USNI News carried an article saying that the Congressional Research Service report, Navy Lasers, Railgun, and Gun-Launched Guided Projectile: Background and Issues for Congress was published on 23rd October. It says that the US Navy is developing three new ship-based weapons that could improve the ability of Navy surface ships to defend themselves against missiles, UAV, and surface craft: the Surface Navy Laser Weapon System (SNLWS), the electromagnetic railgun (EMRG), and the gun-launched guided projectile (GLGP), previously known as the hypervelocity projectile (HVP). Any one of these new weapons, if successfully developed and deployed, might be regarded as a “game changer” for defending Navy surface ships against enemy missiles and UAV. The issue for Congress is whether to approve, reject, or modify the Navy’s funding requests and proposed acquisition strategies for these three potential new weapons.
https://news.usni.org/2018/10/31/report-navy-laser-railgun-gun-launched-guided-projectiles
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