21st November 2018
€1 BILLION WORTH OF SMUGGLED TRAMADOL PILLS DESTROYED – SEIZED IN MALTA FREEPORT
The Times of Malta on 20th November reported that the DEA has destroyed over €1 billion worth of illegal drugs seized by Malta in 2017 and destined for use as a fund-raiser for ISIS. Malta Customs and the police worked with the DEA and the US Embassy in Malta to destroy the 215 tonnes of illegally smuggled tramadol pills that had been found in 13 containers at Malta Freeport. The drug is a synthetic opioid trafficked by terrorist groups to generate revenue.
4 RUSSIAN TANKERS UNDER SANCTIONS FOR SMUGGLING OIL TO SYRIA
The Maritime Bulletin on 20th November reported that the latest US sanctions included 4 Russian tankers on the list – ALMETYEVSK (IMO 9621558, owner AK BARS Leasing, Kazan, Russia); TRUVOR (IMO 9676230, dwt 8900, owner Trinity Shipping, S-Petersburg); VOLGA (IMO 9104770, owner STAKSEL Co., Samara); and YAZ (IMO 9735323, owner TRANSPETROCHART, S-Petersburg).
TRINIDAD & TOBAGO BANKS LOSING CORRESPONDENT PARTNERSHIPS BECAUSE OF COUNTRY’S FAILURE TO COMPLY WITH INTERNATIONAL TAX RULES
On 20th November, according to Newsday, the head of the Trinidad & Tobago bankers’ association is reported to have confirmed the Attorney General’s assertion that local banks have started to lose correspondent international partnerships because of the country’s failure to comply with multi-lateral tax regulations, and said that he was aware of one bank that has lost 2 correspondent banking relationships. Despite signing up to on to several international tax conventions, including the Global Forum on Transparency and Exchange of Information for tax purposes and FATF, the country lacks compliant legislation, and it has until the end of November to pass the first compliant legislation, amendments to the Income Tax Act, or potentially face a backlash if foreign banks refuse to do business with local counterparts.
AUSTRALIA: CBA ‘FAILURES’ HINDERED POLICE ENFORCEMENT OF MAJOR CRIME
Business News Australia reported that police and law enforcement authorities were unable to disrupt money laundering by drug and firearm syndicates because of Commonwealth Bank’s “failures”, according to its CEO. He made the dramatic admission that the contraventions were extremely serious at a banking royal commission hearing. In June, CBA paid a $700 million penalty for AML/CFT failings over failure to notify AUSTRAC of more than 53,000 transactions at its network of so-called ‘intelligent’ automated cash deposit machines (IDM), with a total transaction value of $624 million.
BRAZIL’S PRESIDENTIAL CANDIDATE ACCUSED OF MONEY LAUNDERING
The Rio Times reported on 20th November that the PT (Workers’ Party) candidate and ex-mayor of São Paulo defeated in the race for the Presidency of Brazil, Fernando Haddad, is a defendant against charges of passive corruption and money laundering. The Public Prosecutor’s Office in Sao Paolo accuses him of receiving a bribe from a construction company to pay off campaign debts in 2012.
SINGAPORE: PROPERTY DEVELOPERS FACE NEW AML/CFT RULES
Channel News Asia on 20th November reported that new rules just enacted by the parliament will require them to perform due diligence checks on their buyers and flag suspicious activity.
CENTRAL BANK OF CYPRUS SHIP MANAGEMENT SURVEY
On 21st November, Elias Neocleous & Co LLC published an article saying that since 2009 the Central Bank of Cyprus’s statistics department has carried out semi-annual market surveys, covering residents of Cyprus who provide ship management services to ship-owning companies registered in Cyprus and abroad. The surveys collect data on the financial transactions (revenues and expenses) between the resident ship management companies and non-residents of Cyprus. The article provides some details from the latest survey. Of note –
- ship management revenues make up 5.1% of Cyprus’s GDP – the highest level recorded since 2013;
- the top 28% of the companies surveyed accounting for 90% of total revenue;
- the main export destination for the services of the ship management industry was Germany, with 47% of the sector’s revenue, but with Russia in joint second place with 7%.
INSURANCE CLAIM FOR LOSS OF FRAUDULENT CARGO
The Shipping Bulletin from Stephenson Harwood for November 2018 included a report on the case of Engelhart CTP (US) LLC v Lloyd’s Syndicate 1221. In this case, the defendant insurers face a claim involving a supposed 7,000 tonnes of copper ingots. When the containers were opened to inspect a leak, it was discovered that they did not contain copper ingots, only slag of nominal commercial value, and no copper was ever shipped. The bills of lading, packing lists and quality certificates were therefore fraudulent. The court held that, on the facts, no copper was ever shipped, so there was no cargo to be physically lost or damaged. The assured’s losses were economic losses due to the acceptance of fraudulent documents in the expectation that they covered physical goods, and the relevant clause in the insurance contract expressly referred to the physical loss of goods – and there cannot be a physical loss when nothing existed in the first place.
CIGARETTE SMUGGLING ORGANISED CRIME GANG FROM EASTERN EUROPE BUSTED
On 19th November, a news release from Eurojust reported that on 15th November, co-ordinated action was taken against an Italian organised crime group involved in the smuggling of cigarettes from Eastern European countries into Italy. 8 people were arrested, and assets totalling €15 million were seized during searches in 2 countries. The cigarettes were stolen from a factory in Eastern Europe, with a destination in Libya listed on paperwork used as the recipient. The goods were indicated on the fraudulent paperwork as having travelled through Italy, thus receiving a special tax exemption. Once in Italy, the tobacco was unloaded and a false container with empty boxes continued on to Libya. The cigarettes were resold in Italy on the black market.
16 CHARGED IN $76 MILLION DANISH FRAUD CASE
Reuters on 21st November reported that 16 people and 3 companies have been charged in Denmark with tax fraud and receiving stolen goods worth up to a combined $76 million, using a chain of companies to channel money with the purpose of tax avoidance.
3 SINGAPOREANS CHARGED OVER ALLEGED BRIBING OF INDONESIAN EMBASSY OFFICIAL
The Straits Times on 21st November reported that 3 Singaporeans, including an insurance agent, have appeared in court over their alleged roles in a bribery case linked to performance bond guarantees for Indonesian maids.
IMPLEMENTATION OF EU TAXATION SUBSTANCE REQUIREMENTS – GUERNSEY AND ISLE OF MAN
Dixcart in its briefing IN558 seeks to explain the legislation that has been designed to meet the high level of commitment made by the Crown Dependencies, in November 2017, to address the EU Code of Conduct Group’s concerns, that some companies tax resident in these Islands do not have sufficient ‘substance’ and benefit from preferential tax regimes. It includes a flowchart for each jurisdiction to determine if a company meets the substance requirements.
CHINESE POLICE BUSTS CRIMINAL GANG SELLING 500,000 BOXES OF FAKE ‘DUREX’ – WITH SOME EVEN MADE FROM RECYCLED USED CONDOMS
Mail Online on 21st November reported that Chinese police have busted a criminal gang selling 500,000 boxes of counterfeit condoms worth an estimated £5.5 million, arresting 17 suspected gang members across Henan, Hebei and Zhejiang provinces. Officials claimed the poorly-made condoms, which even included recycled rubber, presented a risk to public health.
ALBANIA’S GROWING POTENTIAL AS A SUPERYACHT DESTINATION
Superyacht News on 20th November carried an article asking why is the number of visiting yachts increasing and what infrastructure does the country have to offer?
PODCAST: RUSSIAN TROLL FARMS
In the latest TRACE podcast, Finnish journalist Jessikka Aro is interviewed. She has investigated pro-Russia Internet trolls, their disinformation efforts and related financial crimes since 2014. She has continued in spite of the barrage of death and rape threats designed to silence her. Now, a recent verdict has brought some relief and vindication with sentences for three of the worst offenders for aggravated defamation and stalking.
PERU SAYS EX-PRESIDENT GARCIA HAS SOUGHT ASYLUM IN URUGUAY
Baker McKenzie reported on 20th November that former Peruvian President Alan Garcia has sought asylum in Uruguay’s diplomatic mission hours after a judge retained his passport as part of a corruption probe.
MONEYVAL COMMITTEE VISIT TO MALTA
The Council of Europe reported that a MONEYVAL carried out an on-site visit to Malta from 5th to 16th November. The group met with the authorities responsible for Malta’s AML/CFT system (i.e. competent ministries, criminal justice and operational agencies, financial sector bodies and supervisors of businesses and professions with AML/CFT obligations). The delegation also held meetings with a great number of private stakeholders (e.g. financial institutions, trust and company service providers, lawyers, real estate agents, notaries, casinos and remote gaming companies) and representatives from non-profit organisations. An evaluation report will follow in due course.
HAVING NO REVIEW PROCESS FOR PROSCRIBED ORGANISATIONS IS ‘AFFRONT TO THE RULE OF LAW’
Police Professional on 20th November reported that, in a debate on the Counter Terror and Border Security Bill 2018, the former Independent Reviewer of Terrorism, criticised the lack of a review process to assess whether a group should remain proscribed. In that role he had publicly reported that the Home Office had identified 14 proscribed groups that no longer met the statutory test for proscription. However, a planned de-proscribing process was not put in place, and there has only been one successful de-proscription, the People’s Mujahideen of Iran. He proposed an amendment to the Bill which was then rejected, a government minister saying that groups could apply to be removed from the list.
VENEZUELAN EX-TREASURER ADMITS HE TOOK $1 BILLION IN BRIBES
The Wall Street Journal reported on 21st November that Alejandro Andrade, a former Venezuelan national treasurer who has pleaded guilty in the US to money laundering admitted he took bribes of over $1 billion from businessmen to allow them to conduct illicit foreign-currency transactions even as the once-oil-rich country’s economy collapsed.
HUNGARY INTRODUCES NATIONAL SECURITY VETTING OF FOREIGN INVESTORS
Bird & Bird has published an article saying that, as of 1st January, foreign investors are required to notify the competent minister of any acquisitions made in Hungary in regulated sectors. Under the new rules, the Hungarian government may be able block foreign investments which they believe are in conflict with Hungary’s national security.
UK – EXPORTING WASTE: MEETING EU EQUIVALENT STANDARDS
On 21st November, the Environment Agency issued updated guidance and a look-up table of acceptable evidence that packaging or Waste Electrical and Electronic Equipment (WEEE) exporters can use to prove that overseas sites are operating to broadly equivalent standards to those operating in the UK.
UK: ‘ENABLER’ PROSECUTIONS ON THE WAY, MINISTER TELLS SOLICITORS
The Law Society Gazette on 21st November reported that the minister responsible, Ben Wallace, has said that law enforcement authorities are seeking out ‘enablers’ of money laundering for prosecution – warning that ‘not just the major criminals’ will be targeted.
EUROPEAN CENTRAL BANK TO CREATE DEDICATED AML WATCHDOG
Retail Banker on 21st November reported that ECB chief supervisor Daniele Nouy has said that the European Central Bank is set create new AML authority to augment anti-money laundering supervision over high-risk banks. It is said that it will establish an AML office, which will procure and share relevant information from its supervisors and other authorities, and this office will set up and chair ‘an AML Network’ among Joint Supervisory Teams in charge of the banks whose business model leads to a high level of money laundering risks.
DANSKE MONEY LAUNDERING WHISTLEBLOWER LABELS UK STRUCTURES A ‘DISGRACE’
Reuters on 21st November reported that the British man who sparked the Danske Bank money laundering crisis has said that the role of the UK is an absolute disgrace, and that Limited liability Partnerships (LLP) and Scottish Liability Partnerships (SLP) have been “abused for absolutely years”.
SWIFT LAUNCHES PAYMENT CONTROLS TO PREVENT FRAUD
Paypers on 21st November reported that the financial messaging system has introduced Payment Controls, an in-house solution to combat fraudulent payments, as well as to help strengthen customers’ existing security. To further facilitate customer defenses, the secure financial messaging service SWIFT will introduce a new “stop and recall” capability, with the purpose of enabling banks to immediately stop and recall a payment anywhere in the chain.
MOZAMBIQUE UPDATE: AL-SUNNAH’S INCREASING STRENGTH FUELS CONCERNS
Control Risks on 21st November published an article saying that it has been a year since Islamist militant group al-Sunnah staged its first attack in Mozambique’s gas-rich Cabo Delgado province. It says that the frequency of al-Sunnah attacks has increased. The number of incidents spiked in the aftermath of a joint security force operation in May, and again in September after the Mozambique Defence Forces (FADM) upped its activity near the border with Tanzania. Violence has also become more gratuitous.
VANTAGE DRILLING SIGNS $5 MILLION FCPA SETTLEMENT LINKED TO PETROBRAS PROBE
Baker McKenzie on 21st November reported that the Cayman-based offshore oil rig operator has agreed to disgorge $5 million in a settlement with US regulators related to a corruption probe in Brazil involving Petrobas. The company neither admitted nor denied the SEC’s findings.
ALLEGED NIGERIAN MAFIA GANG BUSTED IN CAGLIARI, SARDINIA
ANSA on 21st November reported that Italian police carried out several arrests and dismantled an alleged criminal ring linked to Nigerian mafia clan – the so-called ‘Calypso Nest’ gang is accused of human trafficking, exploitation of prostitution and drug dealing.
STRATEGIC SHIPPING ROUTES AT GROWING RISK FROM EXTREME WEATHER EVENTS: UK MILITARY
Hellenic Shipping News on 21st November reported that transport and trade routes, including chokepoints such as the Panama Canal, are likely to be disrupted, affecting global markets and supply chains. Increasingly intense storms, sea level rises and longer periods of heavy rain will disrupt shipping. Air transport is also likely to be affected, for example, the polar front jet stream (a current of fast-moving air in the upper atmosphere) will probably strengthen and, during the winter.
UK: AUTHORISED ECONOMIC OPERATOR (AEO) FOR IMPORTS AND EXPORTS
On 21st November, HMRC issued updated guidance about the benefits of AEO status, who can be an AEO and how to apply. The blurb says that AEO status is an internationally-recognised quality mark that shows your role in the international supply chain is secure, and that customs controls and procedures are efficient and meet EU standards. It’s not mandatory, but gives quicker access to some simplified customs procedures and, in some cases, the right to ‘fast-track’ your shipments through some customs and safety and security procedures.
DBS CHECKS: GUIDANCE FOR EMPLOYERS
On 21st November, the Home Office released updated guidance on use of the Disclosure and Barring Service (DBS) – including how to apply, registering with the DBS and the code of practice. An employer may request a criminal record check as part of their recruitment process. These checks are processed by the DBS. When a check has been processed by the DBS and completed, the applicant will receive a DBS certificate. DBS can’t access criminal records held overseas so a DBS check may not provide a complete view of an applicant’s criminal record if they have lived outside the UK.
OECD UPDATES GUIDANCE ON RESIDENCE/CITIZENSHIP BY INVESTMENT (CBI) SCHEMES
Accountancy Daily on 21st November reported that, following work with Panama, the OECD had up its guidance on such schemes that it says can be misused to hide assets offshore by escaping reporting under the OECD/G20 Common Reporting Standard (CRS). OECD has updated its guidance to indicate where documentation should be regarded as potentially high-risk in the context of the Common Reporting Standard (CRS) due diligence procedures.
MORE THAN A MILLION COUNTERFEIT CIGARETTES SEIZED AT BUSINESS IN LINCOLN
Lincolnshire Live on 21st November reported that more than a million counterfeit cigarettes have been discovered among various other illegal items after a raid on self-storage containers in Lincoln. Also discovered in the containers was 71 kg of tobacco and 1 kg of cannabis.
TAXATION ECONOMIC SUBSTANCE REQUIREMENTS IN BERMUDA
On 21st November, Appleby published an article saying that, in keeping with its commitment to tax transparency, the Government of Bermuda is addressing proposals raised by the EU Code of Conduct Group regarding economic substance. In November 2017, the Premier committed to addressing the proposals relating to economic substance for entities doing business in or through Bermuda and to pass legislation to implement any appropriate changes by 31st December this year.