An article in the February 2019 edition of the CTC Sentinel warns that non-state actors could employ the networks that facilitates the development of IED to gather the knowledge, people, materials, finances, and infrastructure required for WMD development and employment. It also says that the possibility of the profit-minded suppliers within vast, transnational IED networks expanding into WMD proliferation is high due to the opportunity for profits at relatively low additional risk. It asserts that, during the 12-months period September 2017, to the end of August 2018, there were “approximately 16,300 reported” improvised explosive device (IED) incidents worldwide, not including those within the US. These attacks caused over 25,000 casualties. Of these incidents, roughly 37% (approximately 6,000) occurred outside of Iraq and Afghanistan – in countries like Nepal, Colombia, and India. The number of incidents worldwide highlights the growth of IED facilitation networks by what have been described as “profit-minded suppliers” to meet the demand. It says that, similarly, there has been a growth in the number of WMD incidents by non-state actors; and that the increasing rate of WMD incidents associated with non-state actors demonstrates their desire to possess a WMD, whether developed internally or acquired externally.
Day: February 21, 2019
OTHER THINGS YOU MAY HAVE MISSED – FEBRUARY 21
21st February 2019
TRUMP’S NEW AVIATION SECURITY STRATEGY LOOKS TO COUNTER PROLIFERATION OF MANPADS
Urdu Point on 21st February reported that the Trump Administration is looking to reduce the threat of man-portable air defence systems (MANPADS) falling into the hands of terrorists, the US National Strategy for Aviation Security (NSAS) revealed. The document also warned that unmanned aerial systems (UAS) in private hands pose a rapidly growing risk to US domestic civilian aviation – drones have been used to fly drugs and money and weapons across borders.
https://www.urdupoint.com/en/world/trumps-new-aviation-security-strategy-looks-556807.html
SAUDI LONG-RANGE MISSILE FACTORY SPARKS PROLIFERATION FEARS
The New Arab website carried an article saying that satellite photos published in January reveal that Saudi Arabia may possess a factory capable of producing ballistic missiles. Saudi already possesses “antiquated” Chinese-made DF-3A ballistic missiles which it acquired from Beijing in the 1980s, and in 2007 it also purchased more accurate Chinese-made DF-21 missiles.
ILLEGAL REFRIGERANT IMPORTS COST POLAND €7 MILLION IN 2018
Cooling Post on 20th February reported that illegal refrigerant imports – including R134a used in car air conditioning, either smuggled or imported outside of the EU quota system, are said to have cost the Polish treasury an estimated €7 million in uncollected taxes and customs fees in 2018. The illegal material, originating in China and imported via countries on the EU borders (Ukraine and Turkey) is said to have amounted to 40% of Polish demand last year and was valued at €55 million.
https://www.coolingpost.com/world-news/illegal-imports-cost-polish-treasury-e7m-in-2018/
GREEKS £DRINK 4,000 TONS OF SMUGGLED COFFEE EACH YEAR”
The IBNA website carried a report on 20th February saying that smuggling is, according to executives of the Hellenic Coffee Association (HCA), extremely high, especially in northern Greece. It is claimed that 10% of the coffee consumed is a smuggled product, with Bulgaria and Albania being the main gateways. The demand of the newly established Hellenic Coffee Association, which represents 85% of the market, is the abolition of excise duty, said to have stimulated the smuggling.
https://www.balkaneu.com/greeks-drink-4000-tons-of-smuggled-coffee-each-year/
STANDARD CHARTERED FINED $133 MILLION BY FCA
KYC 360 on 21st February reported that the FCA has reportedly fined Standard Chartered of £102.2 million over issues pertaining to its financial crime controls. The development follows remarks in the bank’s 2018 interim report, in which it said it expects to pay a ‘hefty’ fine to the FCA for violating financial crime rules in an ongoing investigation.
THE PERFECT AML PROGRAMME: A 10-POINT GUIDE
On 20th February, KYC 360 carried an article from Suresh Chavali, a specialist in the risk and compliance sector.
https://www.riskscreen.com/kyc360/article/the-perfect-aml-programme-a-ten-point-guide/
EU COMPANY LAW TO BE ADAPTED TO THE DIGITAL ERA
MAMO TCV Advocates in Malta published an article on 19th February saying that the European Council has announced that it has reached a provisional agreement with the European Parliament on a draft Directive that will facilitate and promote the use of online solutions in a company’s contact with national regulatory authorities throughout its life cycle. The draft Directive provides for the amendment of EU company law rules to allow for greater efficiency, transparency and legal certainty in company matters through the use of digital tools. The draft Directive also provides for safeguards against fraud and abuse in online procedures, including the control of the identity and legal personality of a person setting up a company, and the possibility of requiring physical presence before the competent regulatory authority.
https://www.mamotcv.com/resources/news/eu-company-law-to-be-adapted-to-the-digital-era
MALTA: ARTICLES OF THE CUSTOMS ORDINANCE AND EXCISE DUTY ACT FOUND TO CONTRAVENE HUMAN RIGHTS CONVENTION
MAMO TCV Advocates in Malta published an article on 20th February about a court case in Malta brought by a man whose vessel was seized by customs in December 2008 for alleged cigarette smuggling. Due to the small amount of unpaid duty involved, he could have opted to pay a penalty and the criminal charges would have been dropped. However, if he exercised this option, he would have had to renounce the bank guarantee of €45,000 he had lodged to obtain release of the vessel – 20 times the value of the duty and excise tax allegedly due and 10 times the penalties that could have been imposed.
OFAC OFFERS A TUTORIAL ON REMEDIATING SANCTIONS VIOLATIONS
On 18th February, Bradley Arant Boult Cummings LLP published an article saying that 2 recent civil penalty actions by OFAC supply guidance for how entities should address sanctions violations after they are discovered – saying that organisations that act proactively, swiftly, and decisively in response to discovery of likely sanctions will be granted greater lenience than those organisations that do not. One example looked at involved –
- Review –to detect any other violations; and a system for reporting future violations;
- Control – require senior management to certify there are no sanctions-related activity, and hire outside counsel to investigate the matter;
- Education – written and in-person training for employee’s trade compliance policies; and
- Blocking – block the potential sanctions violating customers from future orders.
GLENCORE WILL ‘VIGOROUSLY CONTEST’ $680 MILLION TRANSFER PRICING TAX DEMAND IN UK
On 20th February, Euronews reported that the Swiss-based but London-listed mining and trading company Glencore said it would “vigorously contest” a $680 million tax demand linked to transfer pricing.
https://www.euronews.com/2019/02/20/glencore-will-vigorously-contest-680-million-tax-demand
EU MEASURES IN SUPPORT OF GENERIC PHARMACEUTICALS PRODUCERS
A news release on 20th February advised that the EU is adopting new rules which should boost the competitiveness of EU producers of generic medicines and biosimilar products, and introduces an exception to the protection granted to an original medicine by a supplementary protection certificate (SPC) for export purposes and/or for stockpiling. EU-based manufacturers of generics and biosimilars will be entitled to manufacture a generic or biosimilar version of an SPC-protected medicine for the purpose of exporting to a non-EU market where protection has expired or never existed or for the purpose of creating a stock that will be put on the EU market after the SPC has expired.
INTERPOL ISSUES RED NOTICE AGAINST BUSINESSMAN HRANOVSKY UNDER REQUEST OF ISRAEL
Interfax Ukraine on 21st February reported that INTERPOL, upon request of judicial agencies of Israel, has issued a red notice against Ukrainian businessman Oleksandr Hranovsky (Granovskyi), who has business assets in hospitality, publishing and financial areas.
https://en.interfax.com.ua/news/general/567632.html
ILLEGAL MONEY LENDER ORDERED TO PAY BACK £230,000
Peak FM in Derbyshire on 21st February reported that an illegal money lender has been told to pay back more than £230,000 of criminal benefit he made from vulnerable customers. Following a confiscation hearing, Andrew Gent, 50, was ordered to pay back £231,250 in proceeds of crime and was given 3 months to pay the amount or face a 6-month default prison sentence. He must also pay £1,000 in prosecution costs. Gent amassed a large customer base of around 170 customers and charged an average interest of 40% on each loan.
https://www.peakfm.co.uk/news/local/illegal-money-lender-from-wingerworth-ordered-to-pay-back-230000
5 COUNTRIES ACCOUNT FOR OVER 50% OF IRAN’S IMPORTS
Customs Today on 20th February reported that, apart from China, Iran mainly imported goods from the UAE ($5.45 billion), Turkey ($2.038 billion), Germany ($2.018 billion) and India ($1.928 billion). These 5 countries together accounted for 57% of Iran’s total imports.
http://www.customstoday.com.pk/five-countries-account-for-over-50-of-irans-imports/
MORE SCHIPHOL AIRPORT WORKERS ARRESTED IN DRUG TRAFFICKING INVESTIGATION
On 21st February, Customs Today reported another 2 men worked in the baggage, catering and cleaning departments had been arrested. 12 other arrests were made in the investigation last year, with 9 of those suspects worked at Schiphol. The suspected workers had access to the secured area of the airport, such as the area where baggage is handled.
http://www.customstoday.com.pk/schiphol-workers-arrested-in-drug-trafficking-investigation/
RUSSIA: FEDERAL CUSTOMS SERVICE INQUIRY DEPARTMENT HEAD ACCUSED OF BRIBERY
Customs Today on 20th February reported that a criminal case had been started alleging the taking a bribe of $140.000 against head of the inquiry department of the Office of Customs Investigation, Sergey Galenkov.
http://www.customstoday.com.pk/federal-customs-service-inquiry-department-head-accused-of-bribery/
FURTHER DEVELOPMENTS IN LEGAL PRIVILEGE
On 19th February, Ogier published a briefing containing advice aimed at Jersey businesses. It says that, following the landmark judgment in SFO v. ENRC [2018], there have been 2 further significant judgments on litigation privilege, and should be noted by all litigants, including directors of trustees and companies in trust structures. One case involved privilege of internal communications regarding settlements and the other about dual purpose when relying on litigation privilege – where documents have been created for more than one purpose, but the dominant purpose was not legal proceedings.
https://www.ogier.com/publications/further-developments-in-litigation-privilege
PODCAST: CONFLICTS OF INTEREST
In the latest TRACE podcast, Stephanie Davis, Chief Ethics & Compliance Officer for Volkswagen Group of America, discusses how to uncover and address conflicts of interest in the workplace.
https://www.traceinternational.org/bribe_swindle_or_steal
US OPENS PROBE INTO BRAZILIAN OIL BRIBERY SCHEME
Baker McKenzie on 21st February reported that The DoJ is investigating Rodrigo Garcia Berkowitz, a former US-based oil trader for Brazil’s Petrobras already charged in his home country with taking part in a corruption scheme involving commodity companies Vitol SA, Glencore PLC and Trafigura AG. This is said to be the first confirmation that US investigators have joined a new phase of Brazil’s “Car Wash” corruption probe, which has toppled presidents in 2 countries and sent more than 130 politicians and businessmen to jail across Latin America.
http://www.riskandcompliancehub.com/u-s-opens-probe-into-brazilian-oil-bribery-scheme-2/
IRAN UNVEILS SUBMARINE THAT CAN LAUNCH CRUISE MISSILES
Real Clear Defense on 20th February reported that Iran has unveiled a Iran-built submarine that the nation says is capable of firing cruise missiles several hundred miles and staying more than 650 feet underwater for 5 weeks.
BRITISH SPIN DOCTOR TO FORMER MALAYSIAN PM CHARGED WITH MONEY LAUNDERING
The Guardian on 21st February reported that Paul Stadlen, who worked for Najib Razak, says charges over $3 million linked to 1MDB scandal are politically motivated. He worked for Najib as a public relations consultant during his 9 years in office, is facing 2 counts of money laundering of over $3 million that was allegedly proceeds from illegal activities, and is is accused of overseeing transfers of the money to different companies between June 2014 and August 2015.
NORTH KOREA’S KIM PURGES HIS WEALTHY ELITE TO KEEP GRIP ON POWER
Nikkei Asian Review on 21st February reported that he has executed more than 70 since taking power in late 2011 for misdemeanours ranging from running illicit businesses to watching South Korean TV dramas, a new report showed.
POLITICAL VIOLENCE AND CRIME INCIDENT REPORT
On 7th February, Control Risks published this report for Q4 2018, which analyses global incidents of war, terrorism, unrest and violent organised crime with commercial relevance in Q4 2018, as recorded within the essential risk monitoring toolkit, CORE.
SUSPENDED SENTENCE FOR BANKRUPT WHO BURNT CASH OWED TO INSOLVENCY PRACTITIONERS
On 21st February, Accountancy Daily reported that a bankrupt, David Lowes-Bird, who claimed to have burnt nearly £70,000 in cash rather than pay insolvency practitioners has received a suspended prison term. He Lowes-Bird had substantial debts and was unable to pay the insolvency practitioners and accepted a bankruptcy restriction undertaking lasting 9 years, after the insolvency practitioners petitioned for his bankruptcy. He then received nearly £80,000 in an insurance pay-out and this should have gone to the Official Receiver in order to pay his creditors, including the insolvency practitioners he had previously been ordered to pay costs to – but he removed the £80,000 from his account and claimed to the Official Receiver that he burned it in order to prevent the insolvency practitioners at all costs from receiving it.
https://www.accountancydaily.co/suspended-sentence-bankrupt-who-burnt-cash-owed
UN: OIL COMPANIES IN SOUTH SUDAN COULD BE COMPLICIT IN WAR CRIMES
The Wall Street Journal on 20th February reported that oil companies operating in South Sudan could be complicit in war crimes, as oil proceeds are funding the government-controlled security forces in the country’s brutal civil war, according to the UN. A report by investigators from the UN’s Commission on Human Rights in South Sudan laid out mounting evidence of widespread atrocities that constitute war crimes under international law, including mass rapes and civilian killings, torture and recruitment of children as soldiers.
ISLE OF MAN CONFIRMS UPDATES TO 2 INDIVIDUALS ON AFGHANISTAN SANCTIONS LIST
A news release on 21st February confirmed the amendment of 2 entries on the Afghanistan sanctions list, in line with recent announcements from the EU and the UK.
https://www.gov.im/news/2019/feb/21/financial-sanctions-afghanistan/
GUIDANCE ON TELLING HMRC YOUR ORGANISATION FAILED TO PREVENT THE FACILITATION OF TAX EVASION
On 21st February, HMRC issued guidance on how to self-report a company or partnership that did not prevent the facilitation of tax evasion if you are its authorised representative. It says to use this guidance to tell HMRC on behalf of a company or partnership that they have failed to prevent a representative from criminally facilitating UK tax evasion, and that they may be guilty of a corporate failure to prevent offence under Part 3 of the Criminal Finances Act 2017. It does caution that such self-reporting is voluntary, and says that you and the company or partnership you are acting on behalf of have a right to remain silent, and that you can give as much information in your report as you want.
HIDDEN DEBT SCANDAL COULD ALIENATE ANGOLA FROM INVESTOR COMMUNITY
The Energy Mix Report on 21st February carried an article saying that indications of deals between Angola and global companies involved in the scandal is increasingly bringing to question the credibility of President Joao Lourenco’s already-debatable drive against corruption and presents Angola as risky for foreign investors. It relates a number of deals, and says that Angola is struggling to control its foreign and domestic debt, which is estimated at nearly $80 billion. An analyst is quoted as saying that the revelations of links with companies synonymous with Mozambique’s debt crisis indicate Angola might have a similar problem brewing, equivalent if not deeper than Mozambique’s.
https://www.energymixreport.com/hidden-debt-scandal-could-alienate-angola-from-investor-community
STANDARD CHARTERED TO TAKE $900 MILLION CHARGE OVER PROBES
In its 22nd February edition, the Taipei Times reported that Standard Chartered PLC is to take a $900 million charge tied to regulatory probes in its 4th Quarter results, this is for potential penalties from investigations over US sanctions contraventions, currency trading issues and financial-crime controls. It has been bracing for a possible US fine related to past dealings with Iran, and the charge could indicate a settlement is close.
http://www.taipeitimes.com/News/biz/archives/2019/02/22/2003710173
CLARITY ON THE 25% IMPORT DUTY ON US SUPERYACHTS ENTERING FRANCE
On 21st February, Superyacht News published an article saying that French customs had clarified its position on the additional 25% duty owed on US-built vessels entering the EU. This additional charge has been imposed in reaction to President Trump’s trade measures. However, it will not apply to vessels operating privately under temporary admission. Other exceptions, exemptions and options are said to be under discussion.
ABU DHABI GLOBAL MARKET CONSULTS ON AML RULES
Out-Law on 21st February reported that Abu Dhabi’s financial free zone, the Abu Dhabi Global Market (ADGM), has begun a public consultation to 12th March on changes to its rules for tackling money laundering; terrorist financing and proliferation, and the financing of unlawful organisations. The proposed revisions to the existing AML regime follow on from a recent review of the UAE’s federal laws on money laundering, terrorist financing and the financing of unlawful organisations. Perhaps not coincidentally, a planned mutual evaluation by the FATF of the UAE’s compliance with its recommendations is scheduled to take place in mid-2019.
HECKLER & KOCH FINED €3.7 MILLION OVER ILLEGAL ARMS SALES TO MEXICO
Deutsche Welle on 21st February reported that 2 former staff members at the weapons manufacturer were given suspended sentences for violating Germany’s War Weapons Control Act for their involvement in the delivery of G36 assault rifles to Mexico.
HECKLER & KOCH’S ILLEGAL ARMS DEAL WITH MEXICO
Deutsche Welle on 20th February carried a report saying that 5 H&K employees who conspired in a sale of G36 assault rifles to Mexico 2006-2009 await their sentences in Stuttgart; and the trial has offered insights into the weakness of Germany’s arms export control laws. Some of the G36 rifles were almost certainly used in the murder of 6 Mexican students, and the probable murder of 43 others whose bodies have never been found, in 2014. The trial turns on a loophole in Germany’s arms export controls, especially tailored for Mexico: that while selling weapons to the country, in general, was allowed, German authorities wanted to ban their use in specific Mexican states, and government authorities apparently misinterpreted the law.
https://www.dw.com/en/heckler-kochs-illegal-arms-deal-with-mexico/a-47596609
FATF CONSOLIDATED ASSESSMENT RATINGS
Following the recent publication of reports on Andorra, Slovenia and Hungary FATF had issued an updated version of its consolidated schedule of assessment ratings.
http://www.fatf-gafi.org/publications/mutualevaluations/documents/assessment-ratings.html
GUIDANCE ON TELLING HMRC YOUR ORGANISATION FAILED TO PREVENT THE FACILITATION OF TAX EVASION
On 21st February, HMRC issued guidance on how to self-report a company or partnership that did not prevent the facilitation of tax evasion if you are its authorised representative. It says to use this guidance to tell HMRC on behalf of a company or partnership that they have failed to prevent a representative from criminally facilitating UK tax evasion, and that they may be guilty of a corporate failure to prevent offence under Part 3 of the Criminal Finances Act 2017. It does caution that such self-reporting is voluntary, and says that you and the company or partnership you are acting on behalf of have a right to remain silent, and that you can give as much information in your report as you want.
OFAC REPORTS $500,000 PENALTIES FOR VIOLATIONS OF IRAN SANCTIONS BY CEMENT SOURCING COMPANY
On 21st February, OFAC announced that a US company, ZAG IP, LLC (formerly known as ZAG International, LLC) – a business focused on global sourcing and marketing of cement raw materials and providing strategic advisory services related to raw material selection for companies in the construction industry – had reached agreement to pay $506,250 in penalties for 5 self-reported, non-egregious apparent violations of the Iranian Transactions and Sanctions Regulations, for sourcing from Iran (via the UAE) alternative supplies to fulfil a contract. OFAC said that, whilst ZAG did exercise limited due diligence, it acted with reckless disregard for sanctions requirements by failing to substantively address the US sanctions prohibitions in place with respect to Iran despite contemporaneous risk indicators, that senior management knew what had happened, and that there had been considerable economic benefit to Iran as a result. Also, did not have an effective OFAC compliance programme in place at the time of the transactions commensurate with its level of risk, giving its status as an international trading company.
https://www.treasury.gov/resource-center/sanctions/CivPen/Documents/20190221_zag.pdf
CORRUPTION OF MYANMAR’S ILLEGAL TEAK TRADE ‘GOES TO THE HEART OF GOVERNMENT’
A news release on Ekklesia on 21st February reported that for 3 decades, the multi-million dollar international trade in Burmese teak has been riddled with crime and high-level corruption, driving conflict and human rights abuses in Myanmar. Now, a 2-year undercover investigation by the London-based Environmental Investigation Agency (EIA) has unearthed and exposed a near-mythic ‘Burmese teak kingpin’ at the centre of an international network, the so-called ‘Shadow President’ who conspired with and bribed the most senior military and Government officials in Myanmar. The report says that the late Cheng Pui Chee (in Thailand, aka Chetta Apipatana) – was able to establish a secret off-the-books system of fraudulent trade in the cream of the country’s teak logs, a trade run in parallel to, and within, the official legal trade administered by the State-owned Myanmar Timber Enterprise (MTE).
The report is at https://eia-international.org/wp-content/uploads/EIA-report-State-of-Corruption.pdf
MAJOR ODEBRECHT CORRUPTION CASES AND INVESTIGATIONS IN 2019
Insight Crime on 21st February published an article which presents a round-up of investigations or trials against prominent figures in Latin America and the Caribbean.
HOW A UK COMPANY IS USING A CARIBBEAN TAX HAVEN TO CASH IN ON SCRAPPING TOXIC SHIPS IN ONE OF THE WORLD’S POOREST COUNTRIES
The Independent on 20th February reported that lucrative ship-scrapping trade sees poor Bangladeshi workers face ‘abhorrent conditions with abysmal environmental protections. The newspaper says that the St Christopher and Nevis International Ship Registry Ltd (Skanreg), based in Romford in east London, is the official seller of shipping flags for St Kitts and Nevis. A Panamanian corporate entity St Christopher Holdings & Investments SA owns 50% of Skanreg. New figures from the NGO Shipbreaking Platform showed that almost half the 532 ships broken on the beaches of south Asia in 2018 flew flags of just 3 tiny offshore tax havens – the Comoros islands, Palau in the Pacific and St Kitts and Nevis (whose flag was found on 29); and all 3 flags are blacklisted by the EU due to their poor enforcement of international conventions. In the past 3 years, 143 St Kitts and Nevis vessels have been scrapped on south Asia’s beaches. EU rules have banned ships from being exported from European ports to south Asia since 2006; and a new Regulation was added in January 2019 so that it is now also illegal for any ship carrying a European flag to be sent to the south Asian beaches – which has been avoided by short-term re-registration through Skanreg.
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