11th March 2019
GLOBAL ARMS TRADE: USA INCREASES DOMINANCE; ARMS FLOWS TO THE MIDDLE EAST SURGE
On 11th March, the Stockholm International Peace Research Institute published new data showing that the volume of international transfers of major arms in 2014–18 was 7.8% higher than in 2009–13 and 23% higher than in 2004–2008. The 5 largest exporters in 2014–18 were the US, Russia, France, Germany and China. Together, they accounted for 75% of the total volume of arms exports in 2014–18. The flow of arms increased to the Middle East between 2009–13 and 2014–18, while there was a decrease in flows to all other regions. The data also showed that the top 5 arms importers in sub-Saharan Africa were Nigeria, Angola, Sudan, Cameroon and Senegal. Together, they accounted for 56% of arms imports to the subregion.
BERMUDA AMENDS PROCEEDS OF CRIME LAW TO MEET INTERNATIONAL REQUIREMENTS
On 10th March, the Royal Gazette reported that changes approved to the Proceeds of Crime Amendment Act 2019 focused particularly on international financial sanctions. It was also in parliament that that the assessment of Bermuda’s AML/CFT regime was at “an advanced stage”.
US NAVAL TECHNOLOGIES TARGETED BY CHINESE HACKERS
Israel Homeland Security reported that Chinese hackers have targeted over 2 dozen universities in the US and Canada in an apparent bid to steal key maritime military research. All 27 universities were found to have been hit by the hackers. Some universities in Canada and SE Asia were also targeted. Higher education research institutions are said to be a rich source for China’s larger information collection efforts.
UK PROPERTY SECTOR POSES ECONOMIC RISK FROM AML PERSPECTIVE
Today’s Conveyancer on 11th March reported that a new Parliamentary Committee report accused estate agents and solicitors of being enablers of economic crime, failing to adequately prevent the spread of money laundering. In particular, it says, the report focused on the various sectors’ use of SAR. Of the 634,113 reports submitted between October 2015 and March 2017, 525,361 (82.85%) SAR were completed by credit institutions and banks – but reports made by estate agents were a mere 0.12% (766) of the total. The report was critical of the number of AML supervisors that complicate the reporting process – banks are supervised through the FCA, solicitors are beholden to their regulatory professional body and estate agents should be registered with the HMRC.
BREXIT – SOME UK COMPANY LAW CHANGES
On 7th March, Brodies LLP published an article about new regulations to ensure that the UK’s company law framework can continue to function after Brexit. The changes, explained in brief in the article, are largely technical. Broadly speaking, they ensure that the UK does not provide preferential treatment to EEA companies or EEA States.
DO YOU NEED AN EORI NUMBER TO CARRY ON TRADING WITH THE EU IN CASE OF A ‘NO DEAL’ BREXIT?
On 7th March, Ashfords LLP published an article saying that if the UK leaves the EU without a deal on the 29th March then you will need to make sure you have a UK EORI number for your business to continue trading in the EU. You would need an EORI (Economic Operator Registration and Identification) number to trade goods if the UK leaves the EU without a deal if your main business is established in the UK, the Channel Islands or the Isle of Man and you will import or export goods with the EU (or places outside the UK, as now).
US TO ALLOW PRIVATE ACTIONS AGAINST ENTITIES ON CUBA RESTRICTED LIST
A briefing from Baker McKenzie on 7th March said that, from 19th March, the suspension of the right to bring private actions in US federal court against Cuban entities handling confiscated property under the Helms-Burton Act will not apply to Cuban entities or sub-entities identified on the State Department’s List of Restricted Entities and Sub-entities Associated with Cuba. The right to sue all other Cuban entities and foreign entities under the Act has been further suspended, but only for a 45-day period to April 17th. The Act allows US nationals who formerly owned commercial property expropriated by the Cuban Government after the country’s 1959 revolution to file suit in US courts against persons (including foreign companies) that may be “trafficking” in that property. The threat to lift restrictions is likely an effort to pressure the Cuban government, which has been supportive of the Maduro regime in Venezuela, it says. It advises that companies doing business in or with Cuba may wish to begin assessing their potential exposure to potentially trafficked property – particularly if the suspension on “other Cuban and foreign entities” is not renewed after 17th April.
NORTHERN TRIANGLE OF CENTRAL AMERICA “IS SHAPING UP TO BE A NEW ECONOMIC FORCE IN LATIN AMERICA”
Arias in Honduras published an article on 31st January which said that the 3 countries of El Salvador, Guatemala and Honduras will benefit from the Central American Single Invoice and Declaration (FYDUCA), with the border crossing time has been reduced to less than 15 minutes.
US PREPARING SANCTIONS AGAINST NORDSTREAM 2 COMPANIES IN EU
On 11th March, EU Observer reported that, according to the Wall Street Journal, the US is preparing to impose sanctions on EU firms that co-finance Russia’s Nord Stream 2 pipeline to Germany and companies involved in laying the pipes in the Baltic Sea.
IN THE WAKE OF THE TROIKA LAUNDROMAT NEWS: SOME ACTION, SOME WAFFLING
On 11th March, OCCRP reported on the outcome to date of the scandal implicating major Western banks, Prince Charles, Putin’s childhood friend, and $4.6 billion of dirty Russian money, European bank shares tumbled, authorities launched investigations and officials split over whether more actions should be taken. Apart from Raiffeisen, Citibank, Danske Bank, Nordea Bank, Swedbank, Credit Agricole and Germany’s Deutsche Bank have been implicated in the scandal.
EU TO ADD BERMUDA TO TAX HAVEN LIST, ITALY BLOCKS UAE LISTING
Reuters on 11th March reported that EU finance ministers are set to add Bermuda to the bloc’s tax haven blacklist in a major revamp of the listing. The draft list prepared by EU tax experts also includes the UAE, but Italy and Estonia are blocking its listing.
FRENCH TYCOON FACING TRIAL OVER ARBITRATION PACKAGE LINKED TO ADIDAS SALE
The Irish Examiner on 11th March reported that Bernard Tapie (with 5 others) is facing a criminal trial over a fraudulent €404 million arbitration package linked to his sale of sportswear company Adidas in the 1990s. Civil courts have already ruled the unusually generous 2008 award was the result of fraud and ordered Tapie to refund the money.
BILLIONAIRE IRANIAN FOOTBALL SPONSOR ON TRIAL FOR FINANCIAL CORRUPTION
On 11th March, Radio Farda reported that the prosecutor in the corruption trial of Hossein Hedayati, a super-rich sponsor of major Iranian football clubs, says one of the suspects in the case had opened 242 bank accounts within a day in his 8-year-old son’s name, Iranian news agencies reported.
IRAN BEGINS TRIAL OF 14 EXECUTIVES ACCUSED OF EMBEZZLING MORE THAN $7 BILLION
On 11th March, The National in UAE reported that a trial has started in an Iranian court for 14 petrochemical industry executives charged with embezzling $7.4 billion under rising pressure from public anger over widespread corruption. The 14 executives are accused of embezzling from state funds by creating overseas shell companies to circumvent sanctions. 11 were tried in court and 3 were tried in absentia.
ROMANIAN RUNAWAY BUSINESSMAN RUNS IN EUROPEAN ELECTIONS
Romania Insider on 11th March reported that former Romanian MP Sebastian Ghita, who fled to Serbia in 2017 after being sued in several corruption cases, will be the leading candidate on the list of the United Romania Party (PRU) for the EU elections.
AUCKLAND ACCOUNTANT EMBEZZLED $4.7 MILLION FROM EMPLOYER
Stuff in New Zealand on 11th March reported that businessman, Mujeeb Mundath formerly of Auckland, was found liable for a $4.7 million fraud by the High Court in Auckland, in January. He was found to have embezzled at least $5.4 million from his employer, the Sharma Group, which owns backpackers, hotels and restaurants. The fraud came to light when the Sharma Group discovered he had misapplied $395,000 early last year.
FinCEN ADVISORY FOLLOWING FATF PLENARY
On 8th March, OFAC issued an Advisory providing an update to the list of jurisdictions with AML/CFT deficiencies following the FATF Plenary in February.
ORGANISED CRIME LIKELY TO RISE IN WAR-TORN SOUTH SUDAN
On 6th March, ENACT Africa reported that amid signs of a faltering peace deal, South Sudan is grappling with already entrenched forms of armed and organised crime. It says that, according to official sources, over 3.2 million unauthorised small arms are in circulation in South Sudan. It also mentioned that a recent report claimed that elite politicians and members of the military are competing to buy homes and invest in the East African region – Nairobi and Kampala serving as second homes and safe havens for a number of top government officials.
CHINA PROSECUTES 11 PEOPLE IN $119 MILLION TOTOABA FISH BUST
AFP on 7th March reported that Chinese authorities have prosecuted 11 people for smuggling $119 million worth of Mexican totoaba fish swim bladders, one of the country’s biggest busts related to the trafficking of an endangered species used in traditional medicine. It says that Mexico has urged China for years to crack down on totoaba smuggling. The group of smugglers, led by an individual named Liang Weihua, transported the fish parts in “large quantities” and sold them to consumers in China. The fish’s swim bladder can fetch up to $20,000 on the black market in China, where it is believed to have beautifying properties and cure a host of ailments, from arthritis pain to discomfort during pregnancy. In fact, it says, they are so prized that some Chinese simply display them in fancy cases in their homes.
UN REPORT FINDS NORTH KOREA (STILL) EVADING SANCTIONS
The Wall Street Journal on 10th March reported that North Korea is accelerating its import of petroleum products through illicit ship-to-ship transfers and stepping up coal exports, according to the latest twice-yearly report to the UN Security Council by a panel of international experts. It says that North Korea has also defied sanctions by selling small arms and other military equipment to the Iran-backed Houthi rebels in Yemen and to Libya and Sudan – made through foreign intermediaries, including a Syrian arms trafficker in the case of the Houthis.
ABANDONED CONTAINERS – WHO PAYS? IT COULD BE FORWARDERS
Loadstar on 11th March carried a story reporting a warning to industry from BIFA and saying that forwarders are being warned to consider themselves the ‘principal’ when it comes to container transport, amid mounting anger at unexpected storage and quay charges. The British International Freight Association issued the warning last week. If there is a problem – for example, goods not collected – the carrier will look to the forwarder for quay rent, etc, as the contracted party.
NCA PLAYED KEY ROLE IN AN INTERNATIONAL OPERATION WHICH LED TO THE SEIZURE OF AROUND 1.5 TONNES OF COCAINE IN THE USA
On 11th March, a news release from the NCA saying that, following a tip-off from the NCA, drugs were discovered by US Customs and Border Protection officers in a container at the Port of New York/Newark on 28th February. The container was due to be shipped to Rotterdam in the Netherlands, and then onwards to an address in London. The seizure is believed to be the biggest at the Port of New York/Newark in around 25 years.
UK BRIEFING: TAX AVOIDANCE AND TAX EVASION
On 11th March, the House of Commons Library produced an updated briefing saying that the UK Government has continued to introduce provisions to tackle both tax avoidance and tax evasion, including measures in both the Spring & Autumn Budgets in 2017, and the 2018 Budget. This briefing note provides an introduction to the issue of tax avoidance, looking in detail at the development of follower notices and accelerated payments, before discussing the current Government’s approach, including the introduction of the 2019 Loan Charge.
A briefing from the House of Commons Library on 11th March provides an overview of chemical weapons including types of chemical weapons and modes of delivery, chemical weapons control and disarmament, investigations of alleged attacks and chemical weapons defence in the UK.
CRYPTOCURRENCY ENTREPRENEUR PLEADS GUILTY IN “BITCOINTOPIA” LAND FRAUD
On 11th March, Baker McKenzie reported that Morgan Rockcoons, described as a bitcoin entrepreneur, and who pitched an elaborate vision for a cryptocurrency Utopia in the Nevada high desert pleaded guilty to wire fraud in San Diego federal court, admitting he sold land he never owned to investors.
PERU RUNNING OUT OF IDEAS TO STOP ILLEGAL MINING IN AMAZON RAINFOREST BORDERING BRAZIL AND BOLIVIA
Insight Crime on 11th March reported that illegal gold mining and other illicit activities in the Madre de Dios region continue. There are said to be more than 5,000 illegal miners, with thousands of merchants that capitalise on other criminal activities in the area. A recent Peruvian operation against illegal gold mining in Madre De Dios is just the latest in a string of similar operations that have failed to stop its expansion.
PANAMA PAPERS OFFERS HOPE TO SIERRA LEONE VILLAGERS SEEKING COMPENSATION
On 11th March, the ICIJ reported that families in one of Africa’s poorest countries hope documents will force a foreign-owned company to compensate them for alleged pollution, forced removal, health complaints and human rights violations. Lawyers representing 83 poor households from the Kono district appeared before the High Court in London in a ground-breaking case that seeks damages from a diamond mining company, Koidu Ltd, that is part of Israeli billionaire Benjamin Steinmetz’s BSG Resources.
CO-ORDINATED OPERATION AGAINST GUN SMUGGLING OPERATION BETWEEN FRANCE AND THE US
On 11th March, a news release from Europol reported that 7 suspects were arrested in France in February as a result of operation involving the French Gendarmerie Nationale targeting a criminal group suspected of importing firearms into France. An associate was also arrested on US soil earlier in the month. 60 handguns, 20 rifles and 9 sticks of dynamites were seized.
NEW HANDBOOK GUIDES AIRPORTS TO COMBAT HUMAN TRAFFICKING
On 6th March, Homeland Security Today reported that Airports Council International (ACI) World has published the first edition of its ACI Combatting Human Trafficking Handbook, a free resource providing real-life examples of the work that airports are doing to help in the fight against human trafficking. The handbook includes materials and advice to assist airports – irrespective of their size or location – to help them play a significant role in combatting human trafficking.