15th March 2019
VENEZUELA SANCTIONS: OFAC EXTENDS EXPIRATION DATE OF GENERAL LICENSE RELATED TO PDVH AND CITGO
On 14th March, OFAC announced that it had extended General License 7A for transactions involving US refiners PDV Holding, Inc (PDVH) and CITGO Holding Inc so that it now expires 18 months from 14th March.
US: LEADER OF NON-PROFIT MUSIC ORGANISATION PLEADS GUILTY IN VISA FRAUD SCHEME
On 6th March, Homeland Security Today reported that the operator of a non-profit organisation called Big Apple Music Awards Foundation Inc based in New York pleaded guilty to involvement in a visa fraud scheme to bring foreign nationals illegally into the US by fraudulently claiming that they were members of traditional Armenian performance groups and thus qualified for visas as “culturally unique” artists or entertainers.
UK ACCOUNTING BODIES ‘LAX’ IN SCRUTINISING MONEY LAUNDERING ISSUES AND 92% ‘FEAR’ LOSING MEMBERS
On 15th March, the AML supervisory body OPBAS claimed that professional accounting bodies responsible for enforcing AML standards are more focused on representing their members than robustly supervising those standards. 92% of accountancy supervisors are said to have expressed concerns about taking robust action if this would damage their ability to attract or retain members; 86% preferred to offer support and guidance to members to improve their AML compliance over an extended period rather than issue penalties; 1 had statutory restrictions on their power to fine members for AML breaches; 23% had no form of supervision; and 18% had not even identified who they needed to supervise. The report also highlighted serious shortfalls particularly within the accounting sector.
The report is available at –
LiDAR SENSORS USED ON AUTONOMOUS CARS AS DUAL-USE TECHNOLOGY
On 13th March, iHLS in Israel carried an article saying that LiDAR sensors used on driverless cars measure the distance to target objects by illuminating them with laser light and measuring the reflected pulses. However, these sensors also have applications in other areas. LiDAR sensors form the foundation of a number of autonomous car systems, including those from Uber and Lyft. However, if dual-use technology they would be subject to export licensing controls (and certainly one can see their application for unmanned military vehicles, for example). The principle behind LiDAR is said to be quite simple – shine a small light at a surface and measure the time it takes to return to its source, using modern high-speed computer technology to measure the minute fraction of a second it takes.
IRAN HUNTS FOR MORE SHIPS TO KEEP ITS OIL FLOWING
Yahoo Finance on 13th March reported that Iran is discreetly scouring the globe for second-hand oil tankers to replace its ageing fleet and keep crucial crude exports flowing as U.S. sanctions start to bite. Plans for for up to 10 new supertankers from South Korea have stalled, Panama has removed at least 21 Iranian tankers from its registry and Iran is now looking for extra vessels in places such as Vietnam. Oil exports accounting for an estimated 70% of Iran’s revenues.
GUERNSEY: Q&A – NEW AIC CODE AND IMPLICATIONS FOR LSE-LISTED OFFSHORE COMPANIES
On 13th March, Ogier published an article on a new AIC Code – a framework of best practice in respect of the governance of investment companies. It has been endorsed by the Financial Reporting Council and the Guernsey FSC and is supported by the Jersey FSC. It is said to be relevant to boards of directors of Guernsey companies whose shares are quoted or listed on any of the LSE markets.
TAX ALERT: UK VAT ZERO-RATING ON AIRCRAFT COMPONENTS
On 13th March, Bird & Bird reported on a recent case that appears to mean that for aircraft components to be considered for 0% VAT, they must be installed in qualifying carriers and with clarification from the customer. A recent tribunal decision criticises HMRC guidance for implying that customer confirmation as to the use being made of an aircraft part is not always required.
UKRAINE INTRODUCES AEO TO REDUCE CUSTOMS FORMALITIES
An article from CMS Law on 13th March reported that, in February, the Ukrainian parliament approved the first of a new law which amends the Customs Code of Ukraine and introduces an authorised economic operator (AEO). The Amendments aim ultimately at improving customs formalities and gradually implementing the EU Customs Code into Ukrainian legislation. As in other countries, including the UK, AEO status allows a Ukrainian company to enjoy simplified customs formalities. The law is not likely to be enacted until 2020, at the earliest.
INVESTIGATION FINDS MASSIVE COVER-UP OF DEFENCE FUNDS THEFT
The Kiyv Post on 15th March carried an article about the emerging scandal in Ukraine claiming that almost every law enforcement agency in Ukraine helped cover up corruption in state defence conglomerate UkrOboronProm, according to a new investigative journalist report.
KENYAN COURT CLEARS ARISTOCRAT JACK MARRIAN OF SMUGGLING COCAINE
The Times reported on 15th March that Jack Marrian, grandson of the late Earl of Cawdor, has been cleared of smuggling $4.5 million worth of cocaine following a 3-year legal case in Kenya during which prosecutors admitted that they had no evidence against him. He was arrested after black plastic bags filled with 100 kg of cocaine were found on a container ship in Mombasa in 2016. The drugs were hidden among bags of brown sugar addressed to his trading company.
GERMAN SOLDIER MANFRED KURZ FACING JAIL AFTER OPERATING BULLET SMUGGLING GANG FROM HIS CROYDON HOME
The Evening Standard on 14th March reported that the gun enthusiast brought suitcases of bullets into the UK under the cover of his German firearms licence, and was also caught with explosives and bullet-making equipment. His niece built a distribution network for the bullets across the country, enlisting her cousin and 2 others.
NATIONAL BANK OF CAMBODIA (NBC) LAUNCHES NATIONAL STRATEGY FOR COMBATING MONEY LAUNDERING AND FINANCING OF TERRORISM 2019-2023
The Phnom Penh Post on 15th March reported that it provided stakeholders with a document outlining the key strategies to fight money laundering and terrorism financing in the next 5 years. It was drafted with the co-operation of 22 institutions and was technically and financially supported by the IMF and endorsed by the Cambodia FIU. It comprises 10 key national strategies and objectives. FATF last month placed Cambodia on its “grey list” because of concerns that the Kingdom is vulnerable.
GREEK BANKER FACES MONEY LAUNDERING PROBE
On 14th March, the National Herald reported that Lavrentis Lavrentiadis, a Greek banker charged with stealing at least €511 million from a bank in which he was the major shareholder is now the focus of a money laundering probe involving a fertilisers company he owns, Greek Fertilizers and Chemicals (ELFE).
STEINHOFF PROBE WILL REVEAL ‘FRAUD ON A GRAND SCALE’
Business Day in South Africa reported on 15th March that Steinhoff International Holdings former non-executive director Johan Van Zyl says a forensic report by PwC focuses on the wrongdoing of a ‘few individuals’, but reveals “fraud on a grand scale”.
MYANMA TIMBER ENTERPRISE “NOT WORRIED” ABOUT EIA CORRUPTION REPORT INTO TEAK TRADE
Frontier Myanmar on 15th March reported the response of the company to a report by the Environmental Investigation Agency alleging widespread corruption in the teak trade. The report by the EIA, which focused heavily on a Hong Kong man named Cheng Pui Chee, who later obtained Thai citizenship under the name Chetta Apipatana. The alleged conspiracy with senior military and government officials and had established a secret off-the-books system for fraudulent trade in the best quality teak.
REFORMS TO UK INVESTOR VISA AND NEW ENTREPRENEUR VISA RULES
A briefing from Dixcart details the changes from 29th March. The changes primarily concern the closure of the Tier 1 (Graduate Entrepreneur) and Tier 1 (Entrepreneur) categories to new applicants, and these will be replaced by the Start-up, and Innovator visa routes. The Tier 1 (Investor) category will remain open with new applicants having to hold funds for a longer period. The Statement of Changes also reiterates the UK Government’s intention that the EU Settlement Scheme will fully open to all eligible applicants.
UK CRIMINAL LEGAL AID REVIEW
On 14th March, the MoJ issued a news release providing the details of the Ministry of Justice’s review of criminal legal aid, announced in December 2018. The review will consider criminal legal aid throughout the life cycle of a criminal case. It says that it is committed to delivering a final report, including any recommendations, towards the end of the summer 2020.
FEDERAL WATCHDOG UNABLE TO RELIABLY ESTIMATE SCOPE OF CANADA’S MONEY LAUNDERING PROBLEM
On 13th March, Baker McKenzie reported that Canada has no idea how much dirty money local gangsters, violent drug cartels and sophisticated transnational gambling networks are washing within its borders every year, according to a confidential draft research paper from the country’s money laundering watchdog. FINTRAC estimates vary between $5 billion and $40 billon.
BRAZIL’S PORT OF NATAL NEW LINK IN NETHERLANDS COCAINE CHAIN
Insight Crime on 15th March reported that, in February, Brazilian authorities seized 3.3 tons of cocaine in 2 separate shipments of tropical fruits at the port of Natal, the first seizures of this kind at Brazil’s easternmost port; and during the past 4 months, authorities in Rotterdam have discovered 7 tons of cocaine in shipments all coming from the port. French shipping giant, CMA CGM Group, which is the only company exporting fruit from the port, has suspended services, rerouting them to another port. Authorities have launched a 3-month investigation and have requested a new container scanner, which the port previously lacked.
RECORD-HIGH DRUG SEIZURES AND ARRESTS IN ARGENTINA: A SUCCESS STORY?
On 14th March, Insight Crime carried an article posing the question if the record seizures were a sign of success of not. It is said that the vast majority of cases (reflected in the latest figures) are related to personal drug use, micro-trafficking, and women coerced to transport drugs. When you take all those out of the equation, the number of cases that are actually related to large-scale drug trafficking organisations is around 3%.
ITALY’S NEW ANTI-CORRUPTION LAW
On 15th March, Baker McKenzie published an article about a new law that came into force in January and which introduces important measures affecting Italian criminal law and significantly amends Legislative Decree No. 231/2001 with respect to corporate liability.
CONTAINER CONTROL PROGRAMME ANNUAL REPORT 2018
The UNODC and WCO have published this report about their joint CCP. Since its establishment in 2004, the UNODC-WCO Container Control Programme has sought to assist countries seeking to improve supply chain security and counter the threat of trafficking in the containerised supply chain by building capacity within Customs and other relevant law enforcement agencies. This is achieved through the creation of multi-agency Port Control Units (PCU) and Air Cargo Control Units (ACCU) whose officers, following weeks of progressively advanced training, can successfully identify high-risk containers from pre-arrival manifest information. A total of 9 new Units were inaugurated during 2018 at seaports in Ukraine, Turkmenistan and Vietnam; airports in Afghanistan, Ukraine and Cambodia; a rail terminal in Kazakhstan; and at 2 land borders in Afghanistan. Since the launch of the Programme in 2004 up until the end of December 2018, the PCU and ACCU have recorded approximate cumulative seizures as follows:
- 1710 tons of precursor chemicals (for both drugs and explosives)
- 325 tons of tramadol
- 265 tons of cocaine
- 71 tons of cannabis
- 6 tons of heroin
- 1 ton of new psychoactive substances (NPS)
- 805 kg of other psychotropic substances
- 1,232 billion counterfeit or non-declared cigarettes
- 1,499 shipments with other Customs revenue-related violations
- 820 shipments of intellectual property rights (counterfeit) goods
- 152 shipments of environmental crime
- 90 shipments of strategic trade goods
- 3 shipments of fisheries crime
UK: BANS FOR DISQUALIFIED DIRECTOR AND STOOGE BOSS
On 15th March, Accountancy Daily reported that a previously disqualified director has been banned for a second time after illegally running a Yeovil restaurant using former colleague as a stooge boss, with both of them remiss in paying tax and filing tax returns during the period it was in operation.
BRAZIL SUPREME COURT DECISION SEEN AS BLOW TO CAR WASH PROBE
Reuters on 14th March reported that Brazil’s Supreme Court has ruled that corruption cases involving illegal campaign donations should be handled by electoral courts – rather than having them heard by federal criminal courts, a move that some prosecutors warned could hurt their ground-breaking crusade against graft. Many of the Car Wash convictions involved illegal campaign donations as an aspect of the case.
US CONSIDERING CURBS ON VENEZUELA TRANSACTION PROCESSING BY VISA AND MASTERCARD ETC
Bloomberg on 14th March reported that the US is considering sanctions that would effectively prohibit financial institutions from processing transactions in Venezuela. Similar limits on international transactions have been imposed in Syria, North Korea and Iran, and to a lesser degree in Russia.
GERMAN AUTHORITIES ASKED TO INVESTIGATE ELECTED OFFICIALS OVER AZERBAIJANI LAUNDROMAT BRIBERY SCANDAL
On 14th March, Transparency International announced that it had filed a criminal complaint against a current and a former Bundestag MP over an alleged bribery case orchestrated by the Azerbaijani government. The evidence for the criminal complaint stems from the leaked bank records from 2012 to 2014 that were analysed by OCCRP. The Azerbaijani Laundromat revelations were published in 2017.
HOW EAST AFRICA’S TERRORISTS BUILD THEIR BRAND STRENGTH
A briefing from RUSI on 15th March saying that to further its ambitious agenda, the Somali terrorist organisation Al-Shabaab has dedicated substantial time and effort into polishing its unique brand. It explains why “branding” is important to a terrorist organisation, which seeks to marry words and action, to build a distinct, credible reputation.
COUNTER-TERRORISM (SANCTIONS) (EU EXIT) REGULATIONS 2019
These are the latest set of post-Brexit sanctions-related regulations published by the UK. The UK Government will repeal Part 1 of the Terrorist Asset-Freezing etc. Act 2010 (TAFA) after EU Exit. When these regulations come into force they are intended to replace TAFA, with substantially the same effect. The Regulations confer a power on the Treasury to designate persons who are, or have been, involved in terrorism. Designated persons will be subject to financial sanctions, including having their funds and economic resources frozen.
GAMBLING-RELATED HARM IN UK
On 15th March, the House of Commons Library produced a briefing pack in anticipation of a Westminster Hall debate on 19th March. It looks at what the UK Government has done, and what charity GambleAware has done, and what the industry has done.
IRELAND: 115 CARS, €45,000 CASH SEIZED IN CAB RAIDS FOCUSING ON DRUGS GANG
On 15th March, RTE reported that the Criminal Assets Bureau has seized 115 cars and thousands in euro and sterling as part of an investigation into money laundering for a drugs gang in the mid-west of the country. Cars were driven away from the forecourt of a car sales company in Limerick, the latest move by CAB as part of its investigation into an organised crime gang in Limerick.
FORENSICS SHORTFALLS AND LEGAL AID RATES JEOPARDISING TRIALS IN UK
The Law Society Gazette on 15th March reported that shortfalls in forensics capacity are causing trials to be delayed, or even worse, collapse, while courts are being misled by so-called experts due to poor legal aid rates, according to a report published by the Forensic Science Regulator.
HONG KONG SFC HAS ISSUED ITS LARGEST FINE EVER FOR VIOLATIONS OF AML/CFT REGULATORY REQUIREMENTS
An article from Hogan Lovells on 15th March said that the Hong Kong Securities and Futures Commission (SFC) has issued its largest fine ever for violations of AML/CFT regulatory requirements. Last month, the SFC announced that it has fined Guosen Securities (HK) Brokerage Company, Limited (Guosen) HK$15.2 million for its internal control deficiencies and breaches of AML/CFT regulations. The article details what went wrong, asking if turning a blind eye to third party deposits risk – what are the consequences?
HOUSE OF LORDS COMMITTEE CALL FOR ENHANCEMENTS OF ‘GOLD STANDARD’ BRIBERY ACT
Out-Law on 15th March said that the UK’s Bribery Act 2010 has created “an international gold standard for anti-bribery and corruption legislation”, with little need for major improvements, according to a House of Lords Select Committee. The Committee backed a commitment by the Home Office to a centralised reporting mechanism for allegations of bribery and corruption, and also recommended clearer guidance and more support from the government, particularly for smaller businesses exporting overseas; and better training for police forces outside of the City of London.
CAA CANNOT CLAIM LEGAL ADVICE PRIVILEGE OVER EARLY DRAFTS OF A LETTER DATED BEFORE ITS IN-HOUSE LAWYERS WERE CONSULTED
An article from Out-Law on 15th March reports a High Court case in which is it is also said that it suggests that the same ‘dominant purpose’ test applies to documents over which legal advice privilege has been claimed as applies to documents over which litigation privilege has been claimed. It says that the taking of legal advice must therefore be not just one of the purposes, but the dominant purpose, of the creation of a document in order for legal advice privilege to apply.
BUSINESSES SUBJECT TO CRIMINAL INVESTIGATIONS MAY NOT NEED TO COMPLY WITH INFORMATION NOTICES SERVED BY THE UK INFORMATION COMMISSIONER
An article from Out-Law on 15th March says that businesses that are subject to criminal investigations may not need to comply with information notices served on them by the UK’s data protection regulator, but UK law does not prohibit the information commissioner from sending the notices in such circumstances, a tribunal has ruled.