EU Regulation 2019/162/EU has formally removed a total of 8 entities from the Iraq sanctions lists, following the decision of the UN on 29th January.
4th February 2019
SOUTH AFRICA: “PROPHET” BUSHIRI TO APPEAR IN COURT ON FRAUD CHARGES
On 4th February, eNCA reported that Enlightened Christian Gathering Church leader Shepherd Bushiri and his wife have been charged with fraud and money laundering. It says that last year reports emerged that he had been sending about R15-million per month to his home country, Malawi, in his private jet.
INDIA LAUNCHES MONEY LAUNDERING PROBE AGAINST FORMER ICICI BANK CHIEF
Regulation Asia on 4th February reported that India’s Enforcement Directorate has launched a money laundering probe against former ICICI Bank chief Chanda Kochhar, and her husband Deepak Kochhar, for alleged irregularities and corrupt practices in sanctioning $262 million in loans to Videocon Group. Venugopal Dhoot, the head of Videocon Group, and others have also been named in the case, together with Videocon International Electronics and Videocon Industries; Supreme Energy, and Nupower Renewables, which is controlled by Deepak Kochhar.
BRIEF ON FINCEN GEOGRAPHICAL TARGETING ORDERS (GTO)
A post on RIS Media provides a summary of the effects of the GTO which that impose data collection and reporting requirements on title companies involved in certain residential real estate transactions, until (at least) May 15th. They cover any real estate transaction of $300,000 or more in a number of areas, including San Diego and San Francisco, Miami-Dade, Honolulu, Dallas and parts of New York.
ALLEGED MONEY LAUNDERING CLAIMED TO BE FORM OF TRADITIONAL MORMON FINANCIAL SYSTEM
The Salt Lake City Tribune reported on 3rd February on a case where Washakie Renewable Energy is accused of money laundering, but those accused claim that what went on was a form of the religious custom. Of $6.2 million, $4.5 million was returned into the original company, after passing through several other businesses, including the group’s own church.
CRIME LORD TERRY ADAMS, 64, LIVES IN A COUNCIL FLAT AFTER HE PAID BACK £730,000 TO AVOID RETURNING TO JAIL
The Daily Mail on 3rd February reported on the case of Terry Adams, now back in court fighting a demand for £46,000 unpaid court costs. He had been forced to sell a £1.6 million “mansion” to pay a confiscation order, imposed in 2007 after a money laundering conviction. He was part of the the ‘Clerkenwell Crime Syndicate’ with brothers Patsy and Tommy.
SANCTIONS: THE NEW ‘DERIPASKA RULE’ – A TWIST TO REGULATION?
On 3rd February, KYC 360 published an interesting take on the agreement between OFAC and Oleg Deripaska, whereby sanctions on companies he (formerly) controlled were removed, and this after a lengthy period where the sanctions’ effects had been suspended by the issue of several general licences. The article argues that the deal means that Deripaska has not suffered as much damage or inconvenience as one might expect, and that OFAC has watered down the effects of its own sanctions, and ignored its own 50% control rule. For example, it says that there appears to require that the ultimate owner of the shares transferred to the VTB bank not be on the SDN List, the shares could, in theory, end up in the hands of other Russian oligarchs, officials or state-owned companies that are not currently designated.
CANADA’S REGULATORS PUBLISH AML/CFT GUIDANCE
On 28th January, ACFCS reported that Canada’s 2 regulators – FINTRAC and OFSI – had published guidance and called on banks to be more aware and detailed when investigating and filing on potential illicit activities and engage in more urgency, depth and timeliness when reporting materially damaging hack and cybersecurity incidents. Its FIU released 3 sets of guidance intended to help financial institutions better understand when, how and if they should file a STR when faced with certain classic and emerging red flags related to money laundering and terrorist financing. Its banking supervisor updated guidance on what and how to report when the institution suffers a material data breach or cybersecurity incident that impairs banking technologies and related systems, with a tight turnaround time of roughly 2 months.
AMERICANS CAN BUY VENEZUELAN OIL UNTIL APRIL 28TH
The Wall Street Journal on 1st February reported that the US Treasury will allow US customers to buy Venezuelan oil until 28th April, according to FAQ issued by OFAC.
“SMART CONTRACTS: ONE-PAGE GUIDE
BITCOIN: ONE-PAGE GUIDE TO BASIC TRANSACTIONS
BELGIUM WILL TAKE IN FORMER IVORY COAST PRESIDENT LAURENT GBAGBO
Defence Web on 4th February reported that Gbagbo, who ruled Ivory Coast from 2000-2011, spent 7 years in custody in The Hague. He and co-defendant Charles Blé Goudé were acquitted of atrocities charges on January 15th.
GAMBLING ADVERTISING: REGULATION IN GREAT BRITAIN
On 4th February, the House of Commons Library published this briefing paper.
INDIAN TYCOON MALLYA VOWS TO APPEAL EXTRADITION FROM BRITAIN
Mail Online on 4th February reported that the Home Office had approved the extradition of Vijay Mallya to India. He has 2 weeks to appeal the decision.
EXPORTING AND IMPORTING FISH IF THERE’S NO BREXIT DEAL
On 4th February, DEFRA issued a news release about rules and processes for exporting and importing wild-caught marine fish if the UK leaves the EU with no deal.
HMRC SIMPLIFIES IMPORTING FROM THE EU AS PART OF ‘NO DEAL’ PREPARATION
On 4th February, HMRC advised Transitional Simplified Procedures for customs, should the UK leave the EU without a deal, by writing to 145,000 VAT-registered businesses trading with the EU.
CLAIM THAT CRIMINALS LAUNDERED MONEY THROUGH CANADIAN CASINOS USING GOVERNMENT ACCOUNTS
Calvin Ayre on 4th February reported another facet in the ongoing scandal surrounding the laundering of money through British Columbia casinos. There are claims that Chinese high-rollers used Canadian banks, as well as the “patron gaming fund” offered by the BC Lottery Corporation (BCLC) to launder their funds.
ISRAELI CLAIM OF HAMAS AND PFLP INFILTRATION OF NGO
A white paper from the Israeli Ministry of Security Affairs claims that Hamas and PFLP have infiltrated key positions in NGO promoting the Boycott Divestment and Sanction (BDS) campaign against the State of Israel.
EU COURT DISMISSES 2017 IRISL APPEAL
On 4th February, the European Sanctions Blog reported that the ECJ has dismissed an appeal brought by the Islamic Republic of Iran Shipping Lines and others, against the General Court’s judgment upholding the EU re-listings of IRISL and others after they successfully challenged their initial sanctions listings in September 2013.
LITIGATION FUNDING IN IRELAND 2019
On 4th February, Matheson published an article that answers the Irish questions in the 3rd edition of a guide to litigation funding, explaining why third-party litigation funding is not generally permitted in Ireland, citing recent Supreme Court cases.
STRONGEST MEASURES AXED IN EU GOLDEN VISA REPORT
On 4th February, OCCRP reported that the toughest demands in the recent report into use and abuse of “golden visa” citizen by investment schemes were excluded. It said that an October 2018 draft of the report seen by OCCRP reveals that the EU in fact removed some of its toughest measures and recommendations ahead of the document’s public release.
GUERNSEY ROYAL COURT ISSUES REGULATORY DECISION ON PROHIBITION ORDERS, FINES AND PUBLIC STATEMENTS
On 4th February, Ogier published a briefing about a recent decision of the Royal Court which saw a decision to impose a 4-year prohibition order that prevented a person from acting as a director, controller, partner, manager etc under any of the regulatory laws for a period of 4 years. The person was also subject to other penalties, including a £13,000 fine. The Deputy Bailiff found that the GFSC did not have the jurisdiction or power to make prohibition orders that are limited in time, they only had the power to make unlimited prohibition orders (as in the UK). The judge also said that public statements must be more focused and, even if investors’ money is not at risk, or AML rules breached, an individual can still be prohibited from working as a director etc.
ISLE OF MAN FSA JOINS THE GLOBAL FINANCIAL INNOVATION NETWORK (GFIN)
On 4th February, the FSA reported that it has joined the Global Financial Innovation Network (GFIN) which was formally launched on 31st January. It explains that GFIN is a network of 29 organisations and creates a new framework for co-operation between financial services regulators on innovation-related topics, sharing different experiences and approaches.
BELARUS POLICE BUST ‘BIGGEST MARIJUANA OPERATION IN YEARS’
Rferl on 4th February reported that police searching for the source of “high-quality” marijuana that started circulating in the eastern Vitsebsk region in recent months found the facility in a town in the neighbouring Minsk region. The marijuana-growing operation was located in a 200-square-meter house with barred windows.
US CUSTOMS (CBP) ENFORCEMENT OF TEXTILE TARIFF AND TRADE LAW
A US Customs and Border Protection leaflet says that it has made textiles and wearing apparel a Priority Trade Issue (PTI) because these products are subject to high duty-rates and a myriad of intricate laws and regulations, a combination that makes textile imports susceptible to trade fraud. It says that CBP focuses on the following potential risks within the textile industry that may negatively impact domestic industry – illegal transshipment/origin fraud; invalid Importers of Record; Inaccurate description, underreporting, and undervaluation of goods; and smuggling.
POST-EXPORT CONTROLS: EUROPEAN PRACTICES AND THEIR CHALLENGES
A report from the Group for Information on Peace & Security (GRIP), in French, on 4th February says that final end-user certificates and post-export controls sometimes associated with them are essential tools in the fight against the diversion of arms; and several European states have recently undertaken to employ them. However, it notes disparities between states. This analysis examines various national initiatives in European post-export controls, with special attention given to the study of verification systems put in place by the Switzerland and Germany.
MALTA FSA PUBLISHES AML/CFT SUPERVISORY STRATEGY
The Malta Independent on 4th February reported that the strategy, according to a MFSA statement, is focused on enhancing the MFSA’s approach towards its role in AML/CFT supervision but also to enhance its supervisory standards in order to safeguard the integrity and trust in the Maltese financial services sector. It provides guidelines for regulated firms indicating the applicable procedures and controls expected out of them. It says that MFSA’s remit is to support national AML/CFT supervision by ensuring that all regulated firms have in place broader, overarching systems and controls to counter potential money laundering activities.
MONEY LAUNDERING CASE OF FORMER EU COMMISSIONER’S DAUGHTERS HITS YET ANOTHER SNAG
Malta Today on 4th February reported that the compilation of evidence against the daughters of former EU Commissioner John Dalli over money laundering allegations appears to have ground to a halt again. Louise Dalli and Claire Gauci Borda, are facing charges of money laundering, misappropriation of funds, fraud, making a false declaration to a public authority and the falsification and use of documents; with 4 others facing similar charges.
IRISH GOVERNMENT PUBLISHES SCHEME FOR “NO-DEAL” BREXIT BILL
On 30th January, Irish law firm William Fry published an article saying that on 24th January, the Irish Government published the general scheme of the ‘Miscellaneous Provisions (Withdrawal of the United Kingdom from the European Union on 29 March 2019) Bill 2019’ which will be enacted in the event that the UK leaves the EU without having ratified a Withdrawal Agreement (the “no-deal” Brexit) and becomes a ‘third country’ outside the single market and customs union.
TRANSFRONTIER SHIPMENT OF RADIOACTIVE WASTE AND SPENT FUEL (EU EXIT) REGULATIONS 2019
This UK SI repeals and replaces 2008 regulations on the supervision and control of shipments of radioactive waste and spent fuel, as the process and procedures for authorising the import, export and transit of shipments of radioactive waste and spent fuel into and out of the EU would become redundant after the UK leaves the EU. They abolish the distinction between EU Member States and third countries when exporting.
ISRAELI CITIZEN LISSA MEL PLEADS GUILTY IN BINARY OPTIONS FRAUD CASE IN US
Finance Feeds reported on 4th February that Lissa Mel, whose activities are linked to those of the ex-CEO of Yukom Communications Lee Elbaz, has pleaded guilty to conspiracy to commit wire fraud. Yukom Communications provided investor “retention” services for 2 websites, known as BinaryBook and BigOption, promoting and marketing binary options.
A Policy Paper from the IMF on 4th February says that it is increasingly recognised that effective AML/CFT frameworks, and financial integrity more broadly, are key to financial stability, and that efforts to this effect should be pursued. An Annex to the Paper sets out the evolution of the Fund’s AML/CFT programme. The Paper also explains the timeline of the assessment process, from pre-assessment to the final report. It also provides a handy guide to the FATF Immediate Outcomes assessment criteria for effectiveness –
Effectiveness is measured against 11 Immediate Outcomes (IO). Each of these represents one of the key goals that an effective AML/CFT system should achieve. The following is a summary of the 11 outcomes that are assessed, as reflected in much more detail in the FATF assessment methodology.
IO.1 Risk, policy and co-ordination
Money laundering and terrorist financing risks are understood and, where appropriate, actions coordinated domestically to combat money laundering and the financing of terrorism and proliferation.
IO.2 International co-operation
International cooperation delivers appropriate information, financial intelligence, and evidence, and facilitates action against criminals and their assets.
Supervisors appropriately supervise, monitor and regulate financial institutions and DNFBPs for compliance with AML/CFT requirements commensurate with their risks.
IO.4 Preventive measures
Financial institutions and DNFBPs adequately apply AML/CFT preventive measures commensurate with their risks and report suspicious transactions.
IO.5 Transparency of legal persons and arrangements Legal persons and arrangements are prevented
from misuse for money laundering or terrorist financing, and information on their beneficial ownership is
available to competent authorities without impediments.
IO.6 Financial intelligence
Financial intelligence and all other relevant information are appropriately used by competent authorities for money laundering and terrorist financing investigations.
IO.7 Money laundering investigation and prosecution
Money laundering offences and activities are investigated, and offenders are prosecuted and subject to effective, proportionate and dissuasive sanctions.
Proceeds and instrumentalities of crime are confiscated.
IO.9 Terrorist financing investigation and prosecution
Terrorist financing offences and activities are investigated and persons who finance terrorism are prosecuted and subject to effective, proportionate and dissuasive sanctions.
IO.10 Terrorist financing targeted financial sanctions and non-profit organisations
Terrorists, terrorist organizations and terrorist financiers are prevented from raising, moving and using funds, and from abusing the NPO sector.
IO.11 Proliferation financing targeted financial sanctions
Persons and entities involved in the proliferation of WMD are prevented from raising, moving and using funds, consistent with the relevant UNSCRs.
The latest edition of this online journal is now available. Its articles include –
GRADUAL SIGNS OF CHANGE: PROLIFERATION TO AND FROM CHINA OVER 4 DECADES
This article examines the role of Chinese state-owned enterprises and private actors in proliferation-related trade both to and from China and how that role has evolved over time; and considers how regulatory changes to Chinese export control law as well as China’s adherence to multilateral control regimes may have influenced this evolution. The article’s conclusion offers a predictive assessment of how China’s export and import policies may evolve in the future in light of the country’s proposed new Export Control Law.
SANCTIONS ON RUSSIA: ARE THEY WORKING, WORKABLE, AND WORTH IT?
This article says that there is little evidence to date that sanctions have had significant effect on Russia’s economy or behaviour, but the question of effectiveness is far from simple. This article addresses why effectiveness has been limited – is it a matter of scope, enforcement, or priority? What is meant by effectiveness in this context and what would it look like?
THE ROLE, UTILITY, AND MANAGEMENT OF JAPAN’S CENTER FOR INFORMATION ON SECURITY TRADE CONTROLS (CISTEC)
This article provides analysis on CISTEC’s development, mission, human resources, and financial structure; then explains its impact on Japan’s Ministry of Economy, Trade, and Industry (METI), other government agencies, and industry. The article concludes by identifying new and future challenges for CISTEC.
A briefing from the EU Parliament Research Service on 4th February says that a number of techniques are used, namely cash or opaque financing schemes, overvalued or undervalued prices, and non-transparent companies and trusts or third parties that act as legal owners. It also says that, in order to assess the existence of a money-laundering risk, concrete assessments of transactions and a customer’s situation provide indications that help raise red flags and trigger reporting obligations.
The Extraterritorial US Legislation (Sanctions against Cuba, Iran and Libya) (Protection of Trading Interests) (Amendment) Order 2018 came into force on 1st February. They extend the original 1996 Regulations to include Iran.