21st December 2018
US SANCTIONS PROMPT SLACK TO CLOSE ACCOUNTS OF PEOPLE FROM, OR WHO VISITED, IRAN, NORTH KOREA, CUBA
Silicon Angle and others on 20th December reported that Slack Technologies Inc (the online messaging service) has started banning accounts with links to Iran and other nations. Some of the reports said users with hardly any remaining ties to Iran, living as far and wide as Finland and Canada, as well as the US, had found their Slack accounts deactivated. It is said that accounts had also been closed because the owners had at one point either visited Iran or North Korea. One user said she had been banned for “legally visiting” Cuba many years ago. Another, a Ph.D. student in Canada, said he had lost his account because he’s “ethnically associated with Iran”.
THE MONEYVAL 4-STEP ENHANCED PROCEDURE COMPLIANCE MECHANISM
In an article about consideration of Romania at the December Plenary of MONEYVAL (the Council of Europe FATF-style body), the 4-step process for when countries are placed in enhanced follow-up (known as Compliance Enhancing Procedure or CEP) following an assessment of their AML/CFT systems was explained.
In Step 1 (which Romania is responding to at the Plenary) MONEYVAL invites the Secretary General of the Council of Europe to send a letter to the relevant Minister(s) of the State or territory concerned, drawing his/her/their attention to non-compliance with the reference documents and the necessary corrective measures to be taken. With Step 2, the CEP process ramps up considerably via a high-level mission to the non-complying state or territory to meet relevant ministers and senior officials to reinforce this message. Step 3 involves the start of a serious crackdown and the application of a FATF recommendation that triggers the issuance of a formal public statement that states that “a State or territory insufficiently complied with the reference documents and inviting the members of the global AML/CFT network to take into account the risks posed by the non-complying State or territory”. Step 4 places the state or territory in hot water by “referring the matter for possible consideration under the FATF’s International Co-operation Review Group (ICRG) process – which itself can impose a 12-month time limit for changes, and lead to placing on the FATF blacklist. There are 4 ICRG regional review groups. FATF specifically requests high-level political commitment from each reviewed jurisdiction to implement action plans.
GANG CAUGHT LAUNDERING £3.5 MILLION OF CRIMINALS’ CASH JAILED FOR 11 YEARS
The Lancashire Telegraph reported on 20th December that the defendants had salted away more than £3.5 million in banks across Blackburn, Accrington, Burnley, Nelson, Preston, Bolton and Leyland, and CCTV caught them making 821 cash deposits between May and November 2015 – in one single day, they made 33 different deposit in banks, totalling more than £95,000.
DRUGS KINGPIN SERVING 15½-YEAR SENTENCE CONVICTED OF MONEY LAUNDERING
Teeside Live on 20th December reported that Carl Hannan, 35, is already serving a prison sentence for being the leader of a Teesside cocaine and heroin dealing operation. Hannan was one of 14 men who have been jailed for a total of more than 80 years for the cross-country drugs plot. Criminal gangs in Teesside, Newcastle and Liverpool worked together to deal drugs, some hiding their trade behind legitimate business.
GUERNSEY TO UPDATE CORPORATE TAX RESIDENCE LAW
On 11th December, Carey Olsen published an article saying that, following an announcement in Guernsey’s 2019 Annual Budget, revised draft legislation updating the island’s corporate tax residence law has now been published. The article provides an overview of the legislation, under which an incorporated company will not be treated as tax resident in Guernsey where it is proved matters to the satisfaction of the Director of the Revenue Service that the company is genuinely tax resident elsewhere (and the effective tax rate there is at least 10%).
IRISH GOVERNMENT TO ESTABLISH A NEW CORPORATE ENFORCEMENT AUTHORITY
On 20th December, Dillon Eustace published an article about a new independent corporate law enforcement agency, to overcome some of the difficulties currently faced by the Office of the Director of Corporate Enforcement.
LUXEMBOURG FACES ‘VERY HIGH’ INHERENT THREAT FROM MONEY LAUNDERING
The Luxembourg Times on 21st December reported that the country’s first-ever national risk assessment of money laundering and terrorist financing said the “highest threat” for Luxembourg was money laundering of criminal proceeds, due to the nature of its financial centre, with private banking and foreign trusts ranked as highest risk sub-sectors.
BLOOD SIMPLE: HOW A SILICON VALLEY START-UP FOOLED AN ENTIRE INDUSTRY
The Irish times on 21st December carried an article about a new book, Bad Blood: Secrets and Lies in a Silicon Valley Startup, which looks at the scandal involved Theranos – once the darling of Silicon Valley with a $9 billion valuation. Its founder, Elizabeth Holmes, and her second-in-command, Ramesh Balwani, are facing fraud charges.
UK PARLIAMENTARY COMMITTEE DEMANDS TO KNOW IF FROZEN LIBYAN ASSETS ARE BEING TAXED
The Irish Examiner on 21st December reported that British MPs have urged the Chancellor to reveal whether the British Government is collecting taxes on frozen Libyan assets. Members of the Northern Ireland Affairs Committee have demanded clarity after a British Foreign Office minister told them the estimated £12 billion worth of assets are not exempt from tax.
UK CROSS-GOVERNMENT FRAUD LANDSCAPE ANNUAL REPORT 2018
On 19th December, the Cabinet Office published this report which focuses on the public sector fraud landscape in central government, and the levels of fraud and error loss outside of the tax and welfare system; focuses on the 2016-17 loss trends, and highlights the work that Government is undertaking to find more fraud through raising standards and improving capability – including the Cabinet Office Centre of Expertise for Counter Fraud.
OIL TRADER GUNVOR PURSUED BY CHINA FOR ALLEGEDLY EVADING TARIFFS
On 19th December, Customs Today reported that Gunvor Group Ltd, one of the world’s largest energy traders, has been ordered to pay the Chinese government $54 million for import tariffs it allegedly evaded by smuggling oil into the country – and this must be confiscated from Gunvor’s Singapore unit and transferred to the Chinese treasury. The case concerns oil product shipments into China from the Philippines, which benefit from preferential tax treatment, and in 2014-16, Gunvor allegedly smuggled about 1.3 million tons of light cycle oil in 36 shipments into China by falsely reporting that it originated in the Philippines. The company denies the claims.
US CUSTOMS SEEKS INPUT ON 21ST CENTURY CUSTOMS FRAMEWORK
On 21st December, Sandler Travis Rosenberg reported that US Customs and Border Protection is seeking input by 4th February and will hold a public meeting on March 1st to discuss the 21st Century Customs Framework, an initiative that will seek to address and enhance numerous aspects of the agency’s trade mission to better position it to operate in the 21st Century trade environment. The article lists the key themes that CBP has identified and to be addressed in the consultations – including ways for CBP to work with e-commerce platforms and carriers to identify and deter illicit shipments and for new actors in the global supply chain to work with CBP to improve trade security. Data access and data-sharing is another heading.
REVIEW CALLS FOR NEW POWERS FOR UK CORPORATE GOVERNANCE REGULATOR
Out-Law on 20th December reported that the UK needs a new corporate governance regulator, with a new mandate and enhanced powers to hold company directors to account, an independent review has concluded. The report, commissioned by the Business Secretary, has recommended that the Financial Reporting Council (FRC) be replaced with an independent statutory regulator, accountable to parliament. The new body, the Audit, Reporting and Governance Authority (ARGA), would have an expanded corporate governance oversight role, and would be subject to an overarching duty to “promote the interests of consumers of financial information, not producers”. The report recommends that the new regulator be funded by a statutory levy, rather than on a voluntary basis as with the FRC.
OECD STUDY FINDS THAT GOVERNMENT OFFICIALS PUNISHED IN ONLY ONE-FIFTH OF BRIBERY CASES
An article from Buckley Sandler on 20th December reported that a study from the OECD examined the consequences faced by public officials who allegedly accepted bribes. The study analysed 55 foreign-bribery cases concluded between 2008 and 2013 in which companies based in OECD countries had been sanctioned for bribery. It found that government officials were criminally sanctioned in only one-fifth of the 55 cases studied. The study also found that none of the countries in which bribes were paid, the demand-side countries, detected that their public officials demanded a bribe. Instead, the study found that the “media plays a major role in international information flow.”
ENDORSEMENT FOR US AND EU BANKS ALLIANCE TOOLKIT FOR TACKLING HUMAN TRAFFICKING
On 19th December, the Wolfsberg Group – an association of 13 global banks which aims to develop frameworks and guidance for the management of financial crime risks, particularly with respect to KYC and AML/CFT policies – says that it endorses a new practical Toolkit designed to tackle human trafficking and modern slavery. The Toolkit has been developed by the United States Banks Alliance (USBA), a multi-stakeholder working group established and coordinated by the Thomson Reuters Foundation. This toolkit builds on previous work and aligns to the European Bankers Alliance toolkit that the Group endorsed in 2017.
It also endorsed a practical toolkit designed to tackle human trafficking and modern slavery. developed by the European Bankers Alliance, a multi-stakeholder working group established and co-ordinated by the Thomson Reuters Foundation.
UZBEKISTAN, KAZAKHSTAN TO LAUNCH ‘SILK VISA’ PROGRAMME IN FEBRUARY
On 21st December, Rferl reported that Uzbekistan and Kazakhstan aim to launch a programme dubbed Silk Visa, which will allow foreigners with visas issued by either of the 2 countries to travel in both Central Asian republics. Kazakhstan said earlier that it was working to attract Azerbaijan and Turkey to join the Silk Visa programme, which is intended to ultimately function along the same lines as the Schengen visa system in Europe.
US AUTHORITIES CHARGE 3 FOR “ATTACK-FOR-HIRE” WEBSITES
Krebbs on Security on 20th December reported that authorities in the US had brought criminal hacking charges against 3 men as part of an unprecedented, international take down targeting 15 different “booter” or “stresser” sites — attack-for-hire services that helped paying customers launch tens of thousands of digital sieges capable of knocking Web sites and entire network providers offline.
DRAFT EU WHISTLEBLOWERS EXCLUDES TAX AVOIDANCE AND TAX EVASION WHISTLEBLOWING
Politico reported on 20th December that the EU Council’s legal service has advised that tax avoidance and tax evasion leaks should be excluded from the protections to be afforded to whistleblowers under EU law. This is apparently in the details of leaked documents seen by the news service. The proposed EU Regulation would provide protection for individuals reporting breaches of EU law, such as those involved in the Lux Leaks and Panama Papers cases.
FORMER ALSTOM POWER EXECUTIVE CONVICTED AS UK WRAPS UP 9-YEAR PROBE
The Wall Street Journal reported on 20th December on the case of Nicholas Reynolds, a former sales director, whose conviction follows guilty pleas by 2 other former Alstom Power executives — John Venskus and Göran Wikström – in a case that dates back to 2009. They were found guilty of conspiracy to corrupt related to a bribery scheme in Lithuania for contracts worth €240 million. The SFO also revealed that Alstom Network UK Ltd. was found guilty in April on a count of conspiracy to corrupt for making payments to win a tram and infrastructure contract in Tunisia. The company had paid €2.4 million to a company it later acknowledged was a front for corruption in exchange for help in securing an €85 million contract. However, Alstom Network was acquitted in April along with 2 executives of charges relating to alleged corruption to win transportation contracts in India and Poland; and also was acquitted along with 3 other executives for their roles in alleged corruption over the supply of trains to the Budapest Metro system.
THE FORGOTTEN SECURITY DIMENSIONS OF THE EU’S DIGITAL SINGLE MARKET STRATEGY
A briefing from RUSI on 13th December says that while consumers are likely to rejoice at renewed efforts to harmonise prices across the single market, organised crime groups reliant on the postal system to traffic illicit goods are also likely to benefit. It says that, over the past few years, organised crime groups have already demonstrated a vast capacity to permeate the postal and delivery service market, using these often-unwitting providers to move all manner of illegal goods, from counterfeit clothing to weapons and drugs. This incessant flow of postal traffic does not minimise the significance of large-scale containerised shipping methods in moving illicit and illegal commodities, but it does demonstrate the versatility and creativity of the groups and their ability to capitalise on new trends in the delivery marketplace and it says that the new EU regulations are one such trend. It points out that recent research suggests that EU customs agencies have struggled to adapt to the risks posed by shifting delivery patterns, and the steady rise in the volume of small parcels in the postal system. For law enforcement, detecting and seizing counterfeit goods transported this way is a time-consuming and costly activity – and criminals know this. It notes that the UK NCA National Strategy Assessment devotes a significant portion of its threat assessment to the postal system and fast parcel-service providers. The briefing concludes that it is unlikely that the additional resources required to deal with new demands have been incorporated into future customs planning – with many agencies (including UK Border Force) under-resourced anyway.
BRAZIL’S INCOMING ENVIRONMENT MINISTER FOUND GUILTY OF IMPROPER CONDUCT
Reuters on 20th December reported that a Brazilian court has convicted the new President-elect’s pick for environment minister of “administrative impropriety” while he was the head of a Sao Paulo state environmental agency in 2016. Ricardo Salles was found guilty of infractions including altering maps in an environmental protection plan to benefit mining companies when he was the state’s environment secretary.
FINDING COMMODITY CODES FOR IMPORTS OR EXPORTS
On 21st December, HMRC published updated information on why you need a commodity code and the different ways you can get one. All imports or exports (including goods sent to the UK from abroad) must be declared to HMRC using a commodity code. The declarant (importer/exporter) is legally responsible for the correct tariff classification of your goods.
RUSSIAN MONEY LAUNDERING SCANDAL PUTS LATVIA ON VERGE OF FINANCIAL CATASTROPHE
UA Wire in Ukraine on 21st December reported that after becoming one of the primary “laundromats” for laundering shady capital from Russia, the Latvian banking system is now facing the threat of international isolation. Latvia risks being blacklisted by the FATF, observed the US ambassador to the country. In Q3 2019, Latvia will be visited by a delegation from Moneyval, which will assess the progress in conjunction with FATF. If it is found to be inadequate, Latvia may officially be given the status of being a “grey zone” at a plenary FATF session in February 2020.
UK OPEN EXPORT LICENCE UPDATED
Notice to Exporters 2018/25 on 21st December notified that 7 open general export licences (OGEL) and 1 open general transhipment licence (OGTL) have been updated reflecting EU dual-use control list changes. The changes officially take effect from 4th January.
TOTAL FINED €500,000 BY PARIS COURT FOR IRAN CORRUPTION
RTE on 21st December reported that a French court has fined oil company Total €500,000 for corruption after finding it guilty of paying bribes while bidding for a huge gas contract in Iran in 1997. The French company was accused of paying $30 million in bribes to middlemen.
SOUTH KOREAN BITCOIN EXCHANGE DENIES FRAUD ALLEGATIONS AS EXECUTIVES ARE FORMALLY CHARGED
CCN on 21st December reported that a financial regulator has formally filed fraud charges against executives of one of the Asian country’s biggest cryptocurrency exchanges. 3 senior executives of Upbit, including the founder Song Chi-Hyung were charged with making fraudulent transactions between September and December last year.
PETROBRAS STOPS WORKING WITH MAJOR COMMODITY TRADERS
The Oil & Gas Year on 21st December reported that, amid an investigation into alleged corruption, Petrobras in Brazil has suspended commodity trading with Vitol, Trafigura and Glencore. Earlier this month, Brazilian prosecutors announced that the 3 traders were among several companies being investigated as part of the massive Operation Car Wash case.
UK CONSOLIDATED LIST OF STRATEGIC MILITARY AND DUAL-USE ITEMS THAT REQUIRE EXPORT AUTHORISATION
On 21st December, the Department for International Trade published an updated list of ‘controlled’ military and dual-use items that require an export licence.
SAINT KITTS AND NEVIS BUDGET FOCUSES ON COMPLIANCE
Lowtax.net on 21st December reported that Saint Kitts and Nevis is planning a number of compliance initiatives and legislative amendments to conform with evolving international tax standards. The Government has announced that proposals will be tabled to amend sections of the Companies Act to fulfil commitments made to the EU on harmful tax practices, to ensure the territory does not end up on the EU’s tax blacklist of non-cooperative territories; and efforts will continue to implement the measures proposed by the OECD to prevent base erosion and profit shifting (BEPS).
BRITISH HEAD OF CRIMINAL ORGANISATION CONVICTED IN FRANCE
A news release from NCA on 21st December reported that Robert Dawes, 46, originally from Nottinghamshire, was found guilty of drug trafficking offences and sentenced to 22 years in prison. The trial followed a lengthy investigation involving law enforcement in the UK, France, Spain, the Netherlands and South America into a huge 1.3 tonne cocaine seizure at Paris Charles de Gaulle Airport in September 2013. The drugs were found in suitcases on a flight from Caracas to Paris. Dawes was at the centre of a huge multi-national criminal enterprise, supplying drugs and laundering money, with criminal connections across the globe, in Europe, South America, the Middle East and Asia. He left the UK in 2001 and has since lived in the UAE and Spain, but maintained criminal contacts back in the East Midlands, particularly in the Nottingham area. His network used high levels of violence and intimidation, and associates of Dawes and his crime group are suspected of involvement a number of shootings and murders in the UK and mainland Europe.
CAMBRIDGE UNIVERSITY ACADEMIC FRAUDULENTLY CLAIMED ALMOST £2.5 MILLION IN GOVERNMENT GRANTS JAILED FOR 4 YEARS
An NCA news release on 21st December reported that Dr. Ehsan Abdi-Jalebi, 38, a former engineering student and Bye-Fellow at the university, used faked documents to siphon off money into his own accounts from funding allocated to the development of renewable energy projects.
The money was used by Abdi-Jalebi to fund a lavish lifestyle including the purchase of a property near Cambridge and the lease of a Maserati sports car. He was initially detained by Border Force officers at Heathrow as he attempted to board a flight to Tehran in September 2015. Officers found £137,000 cash hidden inside his luggage and referred the case to the NCA.
3 MEN JAILED FOR SMUGGLING OVER £7 MILLION CASH ON OVER 80 FLIGHTS FROM THE UK TO MULTIPLE DESTINATIONS ACROSS EUROPE
An NCA news release on 21st December reported that 2 Albanian brothers organised travel for 4 others who acted as couriers by carrying large amounts of cash in their luggage. Over 80 trips were made by the group between November 2016 and January 2018 to countries including Belgium and Greece for onward transportation to Albania.
FIREARMS TRAFFICKING GANG AND BRITISH CUSTOMER JAILED IN BELGIUM
The NCA reported in a news release on 21st December that, in October, a British man who travelled to Belgium to purchase a haul of illegal weapons has been jailed, along with 5 members of a firearms trafficking group, for a total of 16½ years following a joint investigation by the NCA and the Belgian Federal Police (BFP).
TRUMP SIGNS NICARAGUA SANCTIONS ACT INTO LAW
The European Sanctions Blog on 21st December reported that President Trump has signed into law a new Act which instructs the US to oppose international loans to the Nicaraguan government, unless they are sought for the purposes of addressing basic human needs or promoting democracy in Nicaragua. It also imposes targeted sanctions (asset freezes and travel bans) on any foreign person, including any current or former Nicaraguan government official, determined to be responsible for (inter alia) serious human rights violations and corruption.
SWOOP ON GERMAN-LITHUANIAN ORGANISED CAR CRIME GANG
A news release from Europol on 21st December reported that 12 Lithuanians suspected of luxury car theft in Germany were arrested in Germany and Lithuania as part of a co-ordinated swoop against this organised crime group. The German authorities initiated an international investigation in November 2018 after receiving information that Lithuanian citizens had been targeting luxurious cars in Germany and then selling them outside of the EU.
UN: NO CHANGES NEEDED TO SANCTIONS AGAINST ISIL AND AL-QAIDA ‘AT THIS TIME’
A news release from the UN on 21st December reported that the UN Security Council has decided that no further adjustments were necessary at this time to targeted measures specified in Resolution 2368 (2017) against individuals and entities included on the Islamic State in Iraq and the Levant (ISIL/Da’esh) and Al-Qaida sanctions list. However, it will continue to evaluate the implementation of such measures and make adjustments, as necessary, to support their full implementation with respect to all individuals, groups, undertakings, and entities listed.
GREECE: AUTHORITIES SEIZE $113 MILLION WORTH OF DRUGS ON SYRIAN-FLAGGED SHIP
On 21st December, Hellenic Shipping Report reported that the of drugs were found on a Syrian-flagged ship “Noka”, which was later confiscated and held at the port of Herakli in Crete. Police reportedly seized over 6 tonnes of hashish and about 3 million tablets of Captagon. The shipment was reportedly bound for Benghazi, Libya.
LIBYA: SECURITY FORCES SEIZE 2 CONTAINERS OF CANNABIS IN TOBRUK
Also on 21st December, a report in the Hellenic Shipping Report said that security forces seized 2 containers filled with cannabis in the north-eastern port city of Tobruk; noting that Libya has become a transit point for such drugs.