19th February 2019
GERMANY WARNS IT WILL STOP EXTRADITION OF ITS CITIZENS TO UK AFTER BREXIT
KYC 360 on 19th February reported a Financial Times story saying that will stop extraditing Germans to Britain immediately after Brexit even if it leaves the EU with a deal.
THE PANAMA PAPERS AND MADURO REGIME INVESTMENTS IN PANAMA
On 18th February, the Guardian carried an article saying that in the wake of the Panama Papers it became harder to launder money through investment in Panamanian real estate for Venezuelans who grew rich on the back of their political connections. Panamanian real estate was a favourite investment of the boliburgues, those associated with Chavez and Maduro.
CHINESE DRUG MONEY “MASS LAUNDERED IN AUSTRALIAN PROPERTY”
Macrobusiness on 19th February carried an article saying that revelations about Chinese asset recovery agents operating covertly in Australia will put pressure on the Department of Home Affairs to introduce law reforms ahead of the May general election. The federal government will be under pressure to be seen to act FATF before an assessment visit later this year, and FATF will want to see evidence Australia has acted upon the weaknesses set out in its 2015 mutual evaluation report, including a failure to regulate lawyers, accountants and real estate agents.
https://www.macrobusiness.com.au/2019/02/chinese-drug-money-mass-laundered-aussie-property/
COMMERZBANK SPENDS €600 MILLION ON COMPLIANCE SINCE 2015, DRIVEN BY US MONITOR
On 19th February, Reuters reported that the framework had also resulted in a reduction in both products and customer reach. The framework includes a AML and sanctions compliance programme, monitoring and sanctions screening, and the definition and roll-out of international KYC processes.
SOUTH KOREAN NONGHYUP BANK FOCUSES ON AML ISSUES
Korea News Plus on 19th February reported that the bank, aka NH Bank, is trying to deal with AML issues, which left its New York branch facing an $11 million fine in 2017. Although not the largest fine imposed by New York regulators – which was very negative about the lender’s practices after conducting 3 examinations following the branch’s launch in 2013 – the $11 million was almost twice as much as the net income of the NH New York branch in 2016.
https://newsarticleinsiders.com/nonghyup-focuses-on-anti-money-laundering-issues
SON OF FORMER ARMENIAN PRESIDENT CONFIRMS MONEY LAUNDERING CHARGE
Hetq on 18th February reported that Sedrak Kocharyan, the eldest son of Armenia’s former President Robert Kocharyan verified rumours that Armenia’s National Security Service (NSS) has charged him with money laundering and evasion of taxes but argues that the charges are a fabrication.
https://hetq.am/en/article/100998
WHEN DO DIRECTORS’ DUTIES AT LAW SWITCH TO BEING OWED TO THE COMPANY’S CREDITORS?
On 18th February, CMS Cameron McKenna Nabarro Olswang LLP published an article saying that the risk of insolvency is not necessarily enough for the duties of a board of directors to switch from being owed to its shareholders to being owed to its creditors. A Court of Appeal case confirmed that the duty to creditors arises when the directors know or should know that the company is or is likely to become insolvent – similar to the caution for wrongful trading. It also confirmed that it was possible for a dividend to be lawful (i.e. paid in accordance with the Companies Act) and yet be found to be a transaction defrauding a creditor or creditors under the Insolvency Act.
NEW CAYMAN CASE LAW ON THE CAYMAN ISLANDS INFORMATION DISCLOSURE LAW (CIDL) REGIME
On 14th February, Carey Olsen reported that recent cases before the courts in the Cayman Islands have had the result of providing guidance on the regime, and how businesses can or should react when faced with a Norwich Pharmacal court order – described as a form of pre-action disclosure order designed to compel disclosure from third parties who have (typically innocently), become mixed up in the underlying wrongdoing which is being alleged in the pending proceedings. The article says that the net effect of the guidance set out in the judgment is that the circumstances in which a direction under CIDL is required before the responding to an order compelling disclosure of information will be much less frequent than practitioners may have hitherto assumed.
CIDL came into force in 2016. The law it replaced had applied the common law duty of confidentiality that already existed between banks and their customers to the widest range of professional relationships dealing with confidential information across the financial services industry in the Cayman Islands – with criminal sanctions for any breach of its provisions. In contrast, CIDL provided for the disclosure of confidential information in a wider range of specific circumstances both without the sanction of the courts and without the threat of criminal sanctions.
https://www.careyolsen.com/briefings/open-secrets-new-cayman-case-law-cidl-regime
https://www.ais-cpa.com/tax-avoidance-by-the-numbers-the-paradise-papers/
ISLE OF MAN CONFIRMS LISTING OF 3 NEW NAMES FOR AL-QAIDA/ISIL SANCTIONS, PLUS 1 AMENDED ENTRY
On 18th February, a news release advised that the Isle of Man had followed the UK and EU and that 3 new names were subject to sanctions, with one other entry being amended.
https://www.gov.im/news/2019/feb/18/financial-sanctions-isil-daesh-and-al-qaida/
ESMA RENEWS BINARY OPTIONS PROHIBITION FOR FURTHER 3 MONTHS FROM 2nd APRIL
On 18th February, the European Securities and Markets Authority (ESMA) has agreed to renew the prohibition of the marketing, distribution or sale of binary options to retail clients, in effect since 2nd July 2018, for a further 3-month period.
CHINA STEPS UP ACTION ON COUNTERFEIT GOODS
HKTDC on 18th February reported that counterfeit, substandard and passing off goods are to face tighter control under a range of new measures set to be introduced by the State Administration for Market Regulation – with a particular focus on the medical, food and financial sectors (especially with regard to rural areas, schools and e-commerce sales).
SOUTH AFRICAN COMPANY ACCUSED OF CORRUPTION PLACED INTO LIQUIDATION
The Irish Times on 19th February reported that Dublin-based African Global Operations, known as Bosasa, a facilities management company that has been implicated in a massive public sector corruption scandal has gone into voluntary liquidation because local banks have closed all its accounts.
GUERNSEY INTRODUCES REVISED AML/CFT HANDBOOK
On 12th February, Carey Olsen published a briefing saying that on 12th November the Guernsey FSC issued a revised Handbook on Countering Financial Crime and Terrorist Financing. The revised rules in the Handbook are due to take effect from on 31st March, by way of a new Schedule 3 to the Criminal Justice (Proceeds of Crime) (Bailiwick of Guernsey) Law, 1999 which imposes the revised statutory duties on all Specified Businesses. The briefing outlines the details and changes contained in the revised Handbook.
COMPARISON OF LAWS IN BERMUDA, THE CAYMAN ISLANDS AND THE BVI RELATING TO LIMITED PARTNERSHIPS
A briefing from Conyers Dill Pearman on 18th February which the firm says was prepared for the assistance of those who are considering the formation of an exempted (or international) limited partnership in an offshore jurisdiction such as Bermuda, the Cayman Islands or the BVI for the conduct of business outside such jurisdiction. It deals in broad terms with the requirements of each jurisdiction for the establishment and operation of exempted or international limited partnerships.
NEW DECRYPTION TOOL RELEASED FOR LATEST VERSION OF GANDCRAB RANSOMWARE
On 19th February, Europol announced that a new decryption tool has been released for free on the No More ransom depository for the latest strand of GandCrab, one of the world’s most prolific ransomware to date. This tool was developed by the Romanian Police in close collaboration with the internet security company Bitdefender and Europol, together with the support of law enforcement authorities from Austria, Belgium, Cyprus, France, Germany, Italy, the Netherlands, UK, Canada and the FBI.
THE COST OF CORRUPTION FOR CORPORATIONS IN INDONESIA: RECENT ENFORCEMENT
On 15th February, Control Risks published a short article saying that the successful implementation of corporate criminal liability in the case against PT Nusa Konstruksi Enjiniring paves the way for subsequent indictments and sentencing of corporations for criminal actions. In 2018 alone, KPK named 4 corporations as suspects in a number of corruption cases, which include a state-owned entity. It says that the successful implementation of corporate criminal liability in the NKE case paves the way for subsequent indictments and sentencing of corporations for criminal actions.
AUSTRALIA: ABF SMASHES ILLEGAL TOBACCO SMUGGLING SYNDICATE AFTER 12 TONNE DETECTION
On 13th February, a news release from Australia Border Force reported that investigators had smashed an organised criminal syndicate involved in both the importation and domestic distribution of illicit tobacco in Sydney. On 3rd February, ABF officers located 1.87 million cigarettes and 12 tonnes of loose leaf tobacco, which represents a total evaded duty of $15.9 million.
https://newsroom.abf.gov.au/releases/280afdce-f927-49b0-a8b3-60f48cbbee2c
ANALYSIS OF RECENT WIDESPREAD DNS HIJACKING ATTEMPTS
The Krebbs on Security blog on 18th February carried a post saying that the US government and a number of leading security companies recently warned about a series of highly complex and widespread attacks that allowed suspected Iranian hackers to siphon huge volumes of email passwords and other sensitive data from multiple governments and private companies – but to date, the specifics of exactly how that attack went down and who was hit have remained shrouded in secrecy. This post seeks to document the extent of those attacks, and traces the origins of this overwhelmingly successful cyber espionage campaign back to a cascading series of breaches at key Internet infrastructure providers.
EBA OPENS FORMAL INVESTIGATION INTO POSSIBLE BREACH OF EU LAW BY THE ESTONIAN AND DANISH COMPETENT AUTHORITIES REGARDING MONEY LAUNDERING ACTIVITIES LINKED TO DANSKE BANK
On 19th February, a news release from the European Banking Authority said that it had initiated a formal investigation into a possible breach of Union law by the Estonian Financial Services Authority (Finantsinspektsioon) and the Danish Financial Services Authority (Finanstilsynet) in connection with money laundering activities linked to Danske Bank and its Estonian branch in particular.
WATCHDOG CLOSES DANSKE BANK’S ESTONIAN BRANCH OVER SCANDAL
RTE reported on 19th February that FSA, Estonia’s banking watchdog, has ordered Denmark’s largest lender Danske Bank to close its local branch within 8 months, following a money laundering scandal.
https://www.rte.ie/news/business/2019/0219/1031504-danske-bank-estonia
RECEIVER APPOINTED TO HOUSES OWNED BY KINAHAN GANG ASSOCIATES
On 19th February, the Irish Independent reported that a receiver has been appointed over 2 properties belonging to associates of the Kinahan cartel. The Dublin homes, owned by Liam Byrne and Sean McGovern, were previously ruled as being the proceeds of crime.
ZIMBABWE: CIVIL AVIATION AUTHORITY BOSS ARRESTED
On 19th February, Pundula reported that Civil Aviation Authority (CAAZ) CEO David Chawota has been arrested on corruption allegations.
https://news.pindula.co.zw/2019/02/19/civil-aviation-authority-boss-david-chawota-arrested/
UK: PRECURSOR CHEMICALS WALLCHART FOR DOMESTIC LICENSING
On 19th February, the Home Office published updated guidance which contains information on the domestic licensing and registration requirements for 3 categories of chemical substances. It also provides information on domestic licensing requirements when using these drugs in the UK or trading them within the EU and beyond.
https://www.gov.uk/government/publications/precursor-chemicals-wallchart-for-domestic-licensing
IRAN: BILLIONAIRE OIL FUNDS THIEF TO HANG (AFTER HE HAS RETURNS STOLEN FUNDS)
Kenneth Rijock in his blog on 19th February reported that billionaire thief Babak Zanjani will be executed, and that he will be hanged after he returns the more than $3 billion he stole from the Oil-for-Gold Iran sanctions evasion programme. He and his partners are said to have diverted billions of dollars they received while operating a massive global oil sanctions evasion sales scheme.
BANGLADESH BLOCKS GAMBLING AND ADULT WEBSITES ACCESS
On 19th February, Calvin Ayre reported that the Bangladesh Telecommunications Regulatory Commission (BTRC) had blocked over 2,200 gambling websites and over 15,000 “adult” websites, plus 2 popular video sharing apps for smartphones – Tik Tok and Bigo. This was in addition to a large number of websites to which access has been blocked since 7th February. It is said that the blocking of the apps appears to be purely for political reasons, after users queried anomalies in election results. All Internet use is completely controlled by the International Internet Gateway.
SHANGHAI CUSTOMS DETAIN 18 SUSPECTS WHO ALLEGEDLY SMUGGLED MORE THAN 1,500 LUXURY WATCHES
The Shine website on 19th February reported that Shanghai Customs officers have apprehended 18 suspects who allegedly smuggled more than 1,500 luxury watches worth over US$30 million.
https://www.shine.cn/news/metro/1902199813/
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