18th January 2019
ENGAGING WITH EUROPE’S DE FACTO STATES AND BREAKAWAY TERRITORIES: THE STRANGE NORMALITY OF LIFE IN A BREAKAWAY AND UNRECOGNISED STATE
On 11th January, the Carnegie Center Europe published an article saying that Abkhazia, Transdniestria, and northern Cyprus exist on maps but are not full nation states. Life goes on, but it is all a little more complicated than elsewhere in the world. The article introduced a report published in December about the status of, and situation in, the 3 places. The report also compares and contrasts the 3 more established “countries” with 2 new unrecognised territories that have emerged as a result of the conflict in Ukraine and calling themselves the Donetsk People’s Republic and Lugansk People’s Republic (DNR and LNR). The other trio of European statelets are among the few territories in the world, mostly formed by war, which exist on maps but are not full nation states, or members of international organisations. However, it says, they are self-governing and fairly stable. On the other hand, it says, that is not to say they are without problems. Human trafficking, for example, is a big issue in both northern Cyprus and Trans-Dniester. Trans-Dniester, which has quietly signed up to Moldova’s free trade agreement with the EU and its cars use neutral-looking number plates registered in Moldova.
GERMAN POLICE ARREST SUSPECTED SICILIAN MOBSTERS FOR DRUG SMUGGLING: ALLEGED LINKS WITH TURKISH CLANS AND THE CALABRIAN ‘NDRANGHETA.
On 17th January, Deutsche Welle reported that Italian and German police have launched raids against members of the Sicilian Mafia, according to Italian officials. The suspects in Germany were allegedly linked with Turkish clans and the Calabrian ‘Ndrangheta. It says that in recent years, both the Sicilian Cosa Nostra and the Calabrian ‘Ndrangheta have developed extensive operations in Germany.
HOW AI IS TRANSFORMING THE FIGHT AGAINST MONEY LAUNDERING
The World Economic Forum blog on 17th January published a post saying that it is up to financial institutions to take the leap and use AI and machine learning to detect human traffickers, narcotics and arms sales, terrorist payments, and the money laundering that fuels these activities. It also says that regulators are now encouraging financial institutions to experiment, and to use the power of AI and machine learning to detect suspicious activity; and to implement these AI solutions successfully, subject matter experts must be integral to the process to translate the problem, identify the challenges to solving it, and find the best solution to address the issues in this area. Helpfully, it explains that there are 2 kinds of AI and machine learning: supervised and unsupervised and each has its own particular strengths –
- supervised learning: a model is trained using already categorised data to identify potentially suspicious transactions; and
- unsupervised learning: computer scientists expose the system to raw uncategorised data. Through interactions with the data, the computer system identifies patterns that might signal money laundering – and also suggests new ways to organise and analyse data.
CAN BREXIT FRUSTRATE A LEASE?
Taylor Wessing on 17th January published an article saying that, in an interesting and potentially far reaching case concerning Brexit, the owner of the Canary Wharf estate has brought a claim in the High Court to determine whether Brexit is capable of rendering a lease contract terminated, through the legal doctrine of frustration, after the European Medicines Agency (EMA) has decided to relocate from London to Amsterdam in the wake of the uncertainty caused by the ongoing Brexit negotiations.
THE LATEST CASH CRUNCH BEHIND ZIMBABWE’S PROTESTS
On 17th January, Defence Web produced an explanation of what caused the latest protests and clashes in Zimbabwe. There is a severe shortage of dollars, fuel and medicines, while inflation hit 31% in November, the highest in a decade. Foreign investors are said, by and large, to be staying away. In the past 2 months, the country has suffered acute shortages of imported goods, including medicines, food and fuel. The country abandoned the Zimbabwe dollar in 2009 after inflation reached 500 billion percent the year before. In its place, the government adopted the US dollar and other currencies including sterling and the South African rand – but supplies of these have dried up and authorities launched a surrogate currency – paper ‘bond notes’, but banks have limited withdrawals to around $30 a day. Companies are struggling to import raw materials and equipment, forcing them to buy dollars on the black market.
HOME WITH BULLETPROOF WINDOWS, SAUNA AND €72,000 BURIED IN GARDEN “IS PROCEEDS OF CRIME”
The Irish Independent on 18th January reported that the High Court had ruled that a Dublin house with a hot tub, sauna and bulletproof windows, an apartment in Bulgaria and around €72,000 in cash are the proceeds of crime, beneficially owned by alleged drug trafficker Jason Boyle, but were registered in the names of his parents Larry and Rosaleen Boyle to conceal his involvement.
MALAWI: FORMER MINISTER IN COURT OVER CASH FOUND IN SUITCASES
The Nyasa Times on 18th January reported that George Chaponda, former minister of agriculture and water development, returned to court after the Anti-Corruption Bureau appealed a decision to acquit him in a corruption case relating to Zambian maize purchases in 2016. During the “Maizegate” investigation, ACB raided Chaponda’s home and found 2 suitcases stuffed with cash – he claimed the money belonged to the governing DPP political party.
WHY THE SUPER-RICH ARE FLOCKING TO PUERTO RICO
On 18th January, a video report from NBC News says that little-known regulations passed in 2012 made the island a tax haven for the richest 1%. It asks are the policies giving the economy the boost it needs, or doing more harm than good?
CHARITY COMMISSION INQUIRY INTO THE CUP TRUST CONCLUDES TRUSTEE RESPONSIBILITY FOR TAX AVOIDANCE SCHEME
UK Fundraising on 18th January reported on the conclusion of a 5-year long inquiry into The Cup Trust and its tax avoidance scheme has concluded clear responsibility by its corporate trustee Mountstar Ltd. The charity was involved in a complex tax avoidance scheme, which, if successful, would have resulted in the charity benefiting from gift aid payments from HMRC. It says that Mountstar Limited is responsible for “clear mismanagement and misconduct” and failed to fulfil its legal duties as trustee in entering the charity into the scheme and managing its participation in the scheme.
THE IMPORTANCE OF THE SANCTIONS REGIME IN SUDAN
On 18th January, the UK FCO published a statement by Ambassador Jonathan Allen, UK Deputy Permanent Representative to the UN at the Security Council briefing on the 1591 Committee.
SEGREGATED PORTFOLIO COMPANIES (SPC) IN THE BVI
On 17th January, Ogier published an article providing a look at registration, key features and licensing considerations of SPC.
BVI COMPANY INCORPORATION AND PARTNERSHIP FORMATION
Also on 17th January, Ogier produced this briefing.
A NEW TEST FOR RECTIFICATION OF TRUSTS IN JERSEY
On 17th January, Ogier published an article about a recent Jersey Court of Appeal case which considered the rectification of the terms of a Jersey law declaration of trust. It says that this was the first occasion that the Court of Appeal had considered the rectification of trusts in Jersey and resulted in the Court of Appeal setting out a new 7-stage test.
URUGUAY FIRST TO ADOPT PLAN PACKAGING FOR CIGARETTES IN SOUTH AMERICA
On 17th January, TJI reported that tobacco companies will have 1 year to comply with the new plain packaging law. Uruguay has already introduced other tobacco control policies such as 100% smoke-free laws, graphic health warnings, advertising bans and higher taxes on tobacco products. Australia, the UK, France, Ireland, New Zealand and Norway have already implemented plain packaging.
INDIA: WANTED IN 5 STATES, BOOKIE EVADED POLICE FOR 4 YEARS
On 18th January, the Indian Express carried the story of Anil Jaisinghani. In May 2015, the Gujarat Enforcement Directorate (ED) raided 2 of his houses and charged him under the Prevention of Money Laundering Act. He is wanted in si6x cases registered in 5 states, and arrested 3 times in one betting case, he has, in all, 16 cases registered against him.
GERMANY WEIGHS BANNING HUAWEI FROM 5G AMID HEIGHTENED SCRUTINY
The Wall Street Journal on 17th January reported that Germany is said to be exploring ways to ban the use of Huawei Technologies products in the country’s telecommunications infrastructure.
HM TREASURY AND ISLE OF MAN RENEW TERRORISM SANCTIONS
In Notices published on 18th January, OFSI at HM Treasury notified that sanctions measures imposed on EUZKADI TA ASKATASUNA (ETA) and the HIZBALLAH MILITARY WING under the Terrorist Asset-Freezing etc. Act 2010 (TAFA) have been renewed.
A news release from the Isle of Man on 18th January also notified the renewal of sanctions on ETA.
CHINESE DRONE MAKER EXPECTS $150 MILLION LOSS DUE TO CORRUPTION
Reuters on 18th January reported that the world’s largest maker of consumer drones, China’s SZ DJI Technology Co Ltd, expects losses of more than $150 million for 2018 due to internal corruption. It is said that 40 people at the company are under investigation.
7 CHARGED IN TAIWAN OVER ILLEGAL CRYPTOCURRENCY INVESTMENT SCHEME
On 18th January, Focus Taiwan reported that 7 people who were arrested in June 2018 for allegedly operating a fraudulent cryptocurrency investment scheme have been officially charged. The Bitcoin investment scheme was both illegal under Taiwan law and also a fraud and was aimed at “investors” in Taiwan and China.
“FOOTBALL LEAKS” WHISTLEBLOWER ARRESTED IN BULGARIA
Der Spiegel in Germany reported on 18th January that Bulgarian police had arrested a 30-year-old Portuguese on an European arrest warrant from Portugal. He has been accused of attempted extortion and illegal acquisition of data. The Portuguese authorities are now seeking his extradition.
VENEZUELA: FORMER CHÁVEZ BODYGUARD MOVES OUT OF THE SHADOWS AND INTO THE GOOD LIFE
On 18th January, OCCRP published an article about Carlos Luis Aguilera Borjas, the former bodyguard of Venezuelan leader Hugo Chávez. He is said to have spent his time after leaving government amassing a fortune, participating in businesses in Venezuela and abroad that tapped into lucrative government contracts, registered companies in tax havens, opened an account in a Swiss bank, and took frequent trips via chartered jet. One Swiss bank official valued Aguilera’s fortune in 2013 at US$100 million. How he made his fortune was revealed by investigative reporting last year. He was part of a network of insiders who built fortunes during the Chávez years and during the administration of his successor, President Nicolás Maduro. His companies, including interests in real estate in Madrid, were in Spain, Panama and Barbados as well as Venezuela.
HACKING THROUGH VENEZUELA’S THICK FOREIGN EXCHANGE JUNGLE
Another article from OCCRP on 18th January is concerned with a strict foreign exchange system that gave government bodies control over official exchange rates – 16 years into a “temporary” measure – and the fraud and black market it spawned. Former government officials have estimated that as much as US$ 300 billion in state revenues went missing, while one Venezuelan economist estimates that the government has given away $41.27 billion in exchange subsidies between 2014 and mid-2018.
TRINIDAD & TOBAGO: CUSTOMS OFFICERS SEIZE SHIPMENT OF TEAK BOUND FOR INDIA
The Trinidad & Tobago Guardian on 18th January reported that Customs and Excise officers, carrying out an inspection of containers for export, discovered the teak in its rough, undressed format. The export of teak is not banned, but it must be properly prepared.
AFGHAN FIU REPORT
The Financial Transaction and Reports Analysis Center of Afghanistan (FinTRACA) has issued its annual report for 2018. It explains the AML/CFT framework in Afghanistan and details the numbers of SAR received, anti-corruption, narcotics and terrorism convictions, cash transaction reports etc. Only 767 SAR were received last year. It also provides an update on the progress of the AML/CFT national risk assessment project – due to be concluded during 2019.
NETHERLANDS: ING TO CUT BONUSES AFTER €775 MILLION SETTLEMENT IN MONEY LAUNDERING CASE
Dutch News on 18th January reported that banking group ING has less money to spend on 2018 performance-related bonuses because of the €775 million fine the bank has paid in an out-of-court settlement for money laundering failures, and bonuses will be ‘considerably smaller’ than the €403 million divided up between staff in 2017.
MHRA CONFIRMS IT WILL CONSIDER UK VERSION OF EU FALSIFIED MEDICINES DIRECTIVE
On 15th January, the Pharmaceutical Journal reported that with less than a month until the Falsified Medicines Directive (FMD) is implemented on 9th February, the Medicines and Healthcare products Regulatory Agency (MHRA) has confirmed that if there is a no-deal Brexit it will consider a UK-only version of the EU law and its “safety features”. It reminds one that if the UK leaves the EU without a deal, access to the EU database — including the European Medicines Verification System (EMVS), which is the heart of FMD compliance — will be revoked.
The MHRA had already said that FMD-compliance was to be part of its pharmacy inspections, and could include criminal prosecution for serious and persistent breaches.