26th March 2019
KAZAKH BANK CLAIMS NEW YORK DEVELOPER LAUNDERED MONEY IN TRUMP PROPERTY
KYC 360 on 26th March reported that Kazakhstan’s BTA Bank JSC has filed a lawsuit accusing a New York real estate developer of helping to launder tens of millions of dollars through a Trump-branded property and other US businesses. It alleges that wealthy Kazakh businessman Ilyas Khrapunov worked with long-time Trump ally Felix Sater in the mid-2000s to launder a portion of the $4 billion purportedly stolen from the bank a decade ago by its former chairman and Khrapunov’s father-in-law, Mukhtar Ablyazov, using 3 units in the Trump SoHo project, which Sater and his firm Bayrock LLC were helping to develop
NEW US SANCTIONS PUT SPOTLIGHT ON IRANIAN RESEARCH INSTITUTE
Science on 25th March published an article concerned with the sanctions imposed this month on 31 entities and individuals linked to a military institute — known as the Organization for Defense Innovation and Research, or SPND — that US officials allege is maintaining nuclear weapons expertise under the guise of civilian R&D. It describes them as a shot across the bow of all scientists in Iran contemplating working with SPND. The institute was founded in 2011 by Mohsen Fakhrizadeh-Mahabadi, a physicist at Imam Hussein University in Tehran who Western intelligence agencies say orchestrated Iran’s nuclear bomb effort. Iran refused IAEA access to Fakhrizadeh-Mahabadi when the agency was reviewing the “possible military dimensions” of Iran’s nuclear programme. It says that a US official stressed that SPND is “completely separate from Iran’s civil nuclear programme,” which the US is not targeting with sanctions.
DOGON MILITIA HEAD DENIES HIS GROUP WAS BEHIND MALI MASSACRE OF 154
The Japan Times on 26th March reported that the head of an ethnic Dogon militia blamed for a massacre in central Mali denied that his fighters had been involved in the gruesome attack that left 154 dead in an ethnic Peuhl village. Human Rights Watch has said that Toloba’s ethnic militia, known as Dan Na Ambassagou, has been implicated in scores of deadly attacks over the past year, as it accused ethnic Peuhl of collaborating with Islamic extremists increasingly operating in central Mali. The Peuhl and Dogon ethnic groups had long co-existed peacefully but that has been unravelled over the last several years, and the conflict has been fuelled by a proliferation in arms and an Islamic insurgency moving ever further south from its strongholds in Mali’s north.
SHUNNED BY WORLD, US SANCTION-HIT NATIONS’ CHEAP OIL FINDS HAVEN IN CHINA
Business Standard on 26th March carried an article saying that China bought 2.03 million metric tons, or 531,000 barrels a day, of crude from Venezuela last month, 17% more than January and the highest since December 2017. China is also said to have been allotted 360,000 barrels daily under the exemption to Iranian US sanctions, though that excludes the share of oil owed to Chinese companies that hold stakes in Iranian projects. It is said that China’s purchases are also probably spurred by a shortage of so-called heavy oil, which is more dense and sulfurous than lighter crude.
THE POSITION OF UK LIMITED COMPANIES IN AUSTRIA AFTER BREXIT
On 25th March, Bitterl König published a briefing saying that the last couple of years have seen a sharp increase in the numbers of companies registered in the UK but having their administrative headquarters in Austria – i.e. the popular private limited company (Ltd.). These companies are recognised in Austria as UK companies according to the ECJ’s case law on the freedom of establishment. In the absence of a Brexit deal, however, EU law will cease to apply to the UK once it has left the EU, and the risk is that limited liability company established under UK law but having its administrative seat in Austria would thus not be recognised according to Austrian law.
TAKE MY MONEY, SAVE JET AIRWAYS, VIJAY MALLYA TWEETS
The Times of India on 26th March reported that liquor tycoon Mallya has again repeated his offer again and urged PSU (public sector) banks to take his money and let his airline survive. Mallya is currently facing extradition to India from the UK, and is facing fraud and money laundering charges in India.
KENYA: TREASURY SETS UP AML UNIT
The Kenyans website on 26th March reported that a high-powered task force had been established to investigate the extent of money laundering in a bid to close loopholes used by criminals and cartels to clean illicit cash. It will mainly focus on casinos, land and luxury vehicle transactions. The task force comprises 30 state agencies including the judiciary, banks, saccos, real estate and gaming regulators. It is expected to craft a national strategy on combating money laundering and terrorism financing by March 31st 2020.
IRELAND: MAN JAILED FOR LAUNDERING KINAHAN MONEY LOSES APPEAL
The Irish Times on 25th March reported that Paul Carew, given 8 years for laundering €660,000 linked to the Kinahan crime gang has lost an appeal against the severity of his sentence.
UPPING THE ANTE ON HUMAN RIGHTS DUE DILIGENCE
EurActiv on 25th March carried an article saying that the EU has a patchwork of laws promoting transparency and supply chain due diligence in some sectors, and is under increasing pressure to table new legislation to protect human rights. A ‘Gearing up EU action in Responsible Business Conduct’ event, including the presentation of a shadow EU action plan for Responsible Business Conduct by MEPs, examines how such legislation should be shaped, what tools are needed by civil society, and how company sentiment towards such initiatives has evolved.
ENGLISH LAW AND IMPLIED TERMS – WHEN DOES THE COURT STEP IN AND IMPLY TERMS INTO A CONTRACT?
Forwarder Law on 25th March carried an article about implied terms – terms that have not been expressly agreed by the parties, the latter being stated in the contract. It says that implied terms are not as straight forward as express terms, and require the courts to insert a term into a contract where the contract is incomplete and/or it is required for the contract to operate effectively. They exist as a form of redress filling in the contractual gaps and principally seeking to preserve the legitimate expectations of the contracting parties. The article looks at the common law provisions and how they are applied.
CROSS-BORDER CANNABIS INVESTMENT: MANAGING MONEY LAUNDERING RISK
On 25th March, White & Case published an article saying that Canada legalised recreational cannabis in October 2018 and it may be that other countries follow suit. UK and US investors, and those who facilitate investments in legal recreational cannabis businesses overseas, need to be aware of money laundering risks that arise and what they can do to protect themselves. It points out that, in the UK, cannabis is a controlled drug and it remains unlawful to possess, produce, grow and sell cannabis for recreational purposes. While it may be legal in Canada, funds generated due to investment in the recreational cannabis sector may be classified as proceeds of crime in the UK. In the US, funds derived strictly from Canada’s legal cannabis sector may not necessarily represent proceeds of crime, but there are sufficient risks for a US investor to be wary – and it says the situation in the US is far from straightforward. The article suggests that, if UK investors, or others, are concerned that they may commit a substantive money laundering offence relating to investing in overseas cannabis production or distribution, they can make a SAR seeking consent to proceed from the NCA. If consent is granted, then the investor will have a defence to a substantive money laundering offence in relation to the relevant transaction.
LIABILITY IN UNINCORPORATED ASSOCIATIONS
Irish law firm Matheson published an article on 25th March concerned with unincorporated associations – a group that does not have separate legal personality from its members. Unlike the case of a company, there is no separate body with limited liability. The members of an unincorporated association have duties and liabilities to each other that stem from the rules of the association. Sports clubs, local organisations, charitable fundraising groups or community groups very often comprise unincorporated associations. The liability of members for any wrongdoing by other members of the group varies according to the wrongdoing that has taken place. Liability in unincorporated associations under Irish contract and tort law is summarised in the article.
CHINA CRACKS DOWN ON ‘HIMALAYAN VIAGRA’ USED TO BRIBE OFFICIALS
OCCRP on 25th March reported that Chinese anti-corruption authorities in the north-west Qinghai province have launched a 3-month campaign to crack down on “Himalayan Viagra,” a fungus that is more valuable than gold and is used to bribe officials. The fungus, a genus called Ophiocordyceps sinensis, or cordyceps, lives on certain caterpillars in the mountainous regions of China and Tibet and has been used by traditional healers since ancient times. It is thought to cure dozens of ailments, but it is mostly used to treat kidney disorders and male sexual problems.
PROTECTION FROM PRYING EYES: TRUSTS IN THE CAYMAN ISLANDS
On 13th March, Carey Olsen published an article which says that the need for protection from the courts from disclosure was recently dealt with by the Grand Court of the Cayman Islands. In that case, the Court was required to act as a judicial watchdog, with one eye on the private needs of locally established trusts and the other eye on the public requirements of open justice. In this case, the Judge was satisfied that there was no public interest in open justice, which outweighed the countervailing interests of protecting the welfare of minor beneficiaries, protecting the private lives of adult beneficiaries, and generally protecting the Trustee’s ability to ‘peaceably hold and administer the trust assets’.
US CUSTOMS: FIGHTING THE OPIOID SCOURGE
An article in US Customs and Border Protection’s Frontline digital magazine says that CBP has a large role in battling the opioid emergency, because it is at the front lines, at the border. It examines how CBP is attempting to combat the scourge, saying that CBP officials have created a broad strategy to combat opioids with 4 primary goals: enhance collaboration and information-sharing; produce actionable intelligence; target the opioid supply chain; and protect CBP personnel from exposure to opioids. The article looks at each of these elements.
UK IMMIGRATION CHANGES MARCH 2019
On 25th March, Osborne Clarke published an article saying that UKVI announced the latest changes on 7th March. It says that the most significant changes relate to Tier 1, Tier 2 and the EU Settlement Scheme. In light of Brexit, there will be more significant changes to Tier 2 in the future. Should the UK enter into a withdrawal agreement as it currently stands, this would be at the end of December 2020, when the transitional period is due to end (subject to any extension), or shortly thereafter. The article details the changes involved.
THE CAUSES AND CONSEQUENCES OF US EXTRA-TERRITORIAL COUNTER-PROLIFERATION ENFORCEMENT
An article in the Contemporary Security Policy journal published on 25th March poses the question: how can a multilateral, norms-based international regime like UN SCR 540 contend with extraterritorial enforcement based on national interests? The article argues that increased US extraterritorial counter-proliferation policies are a consequence of the inconsistent implementation of UN SCR 1540, adaptive and resilient proliferation networks, and a history of expanding legal interpretations of jurisdiction. It finds that while US extra-territorial enforcement can effectively disrupt networks hiding in overseas jurisdictions, doing so creates disincentives for states to implement UN SCR 1540 obligations and undermines broader non-proliferation objectives.
EUROPEAN STATES ALIGN THEMSELVES WITH EU SYRIA SANCTIONS
A news release from the EU on 26th March reported that North Macedonia, Montenegro, Serbia, Albania, Iceland, Liechtenstein, Norway, Moldova and Georgia have confirmed their alignment with EU sanctions on Syria.
HUMAN RIGHTS WATCH URGES UAE TO ENSURE FAIR TRIAL FOR 8 LEBANESE OVER HEZBOLLAH LINKS
Reuters on 25th March reported that the NGO had urged the UAE to ensure a fair trial for 8 Lebanese nationals accused of setting up a “terrorist cell” with links to Hezbollah in Lebanon. They are all Shi’ite Muslims and have lived and worked in the UAE for more than 15 years, were arrested in late 2017 and early 2018.
FORMER RUSSIAN GOVERNMENT MINISTER IS DETAINED IN EMBEZZLEMENT CASE
Meduza in Latvia reported on 26th March that the Russian Federal Investigative Committee has launched a criminal case against Mikhail Abyzov, Russia’s former Open Government Affairs minister, on suspicion of embezzling $62.2 million.
BILLIONAIRE HUMPHREY KARIUKI CHALLENGES DUAL CITIZENSHIP LAW IN KENYA
On 26th March, the Daily Nation reported that Business tycoon Humphrey Kariuki Ndegwa, the owner of Africa Spirits Limited who is facing a tax evasion investigation is also challenging the Kenyan law which means he faces a prison sentence for not declaring his dual nationality. He is seeking the suspension of the section of the law that specifies a punishment for failure to disclose dual citizenship. The Immigration Act prescribes a fine and 3 years’ imprisonment, or both, if one fails to disclose this status within 3 months of acquiring it. Africa Spirits was closed down on February 8th after illegal ethanol and fake Kenya Revenue Authority stamps were found during an inspection.
DELOITTE BEING SUED OVER AUDIT OF BOOKS FOLLOWING MADOFF SCAM
The Irish Times on 26th March reported that the liquidators of 2 BVI firms that were found to be insolvent after jailed fraudster Bernie Madoff’s Ponzi scheme was discovered are suing accountants in Ireland who audited their books for 2 years. In High Court proceedings, it is claimed Deloitte failed to conduct the audits in accordance with proper standards.
MINER ENRC LAUNCHES $93 MILLION CLAIM AGAINST SFO
Reuters reported on 26th March that Eurasian Natural Resources Corporation (ENRC), a mining company being investigated by the SFO, has filed a £70 million legal claim against the investigator and prosecutor for alleged wrongful conduct. It was delisted from the London Stock Exchange in 2013 after the SFO launched an investigation into allegations of fraud, bribery and corruption.
SOLICITOR LED ‘PONZI’ RUSE TO SUCK INVESTORS INTO DOOMED SCHEME, TRIBUNAL HEARS
On 26th March, the Law Society Gazette reported that a solicitor used his status to give the veneer of respectability to a Ponzi-type scheme that would ultimately rob investors of their life savings, the Solicitors Disciplinary Tribunal has heard. Charles Valentine Fraser-Macnamara, in his capacity as sole director of Ecohouse Developments, (EDL), is alleged to have allowed misrepresentations to be made to potential investors in property schemes that would were doomed to failure.
WEALTHY ARMENIANS JOIN DUBAI LAND RUSH
On 22nd March, OCCRP reported that Armenian government officials and businesspeople have flocked to Dubai in recent years, following rich people from around the world who have bought property. Some, it says, have purchased expensive properties that appear to be at odds with their positions and known or likely salaries. The article details some examples.
HOME OFFICE TENDERING FOR A PARTNER TO CONDUCT AN AUDIT OF CORPORATE COMPLIANCE WITH THE REPORTING REQUIREMENTS SET OUT IN MODERN SLAVERY ACT
An article from Out-Law on 26th March said that the Home Office is tendering for a partner to conduct an audit of corporate compliance with the reporting requirements set out in section 54 of the UK’s Modern Slavery Act 2015.
MALTA: CUSTOMS SEIZE 2 MORE CONTAINERS WITH €5.8 MILLION WORTH OF COCAINE
On 26th March, the Times of Malta reported that, just a week after a €32.4 million cocaine haul, Customs officers have found 51.6 kg of cocaine hidden in reefer containers at Malta Freeport. During routine screening of containers transiting Malta, 7 containers with a high-risk route were selected for scanning by the Container Monitoring Unit. Both containers found to contain cocaine were loaded with fruit and had come from South America en route to Albania.
ALL KNOWN FCPA-RELATED ONGOING PROSECUTIONS, FUGITIVES, SENTENCING, AND PENDING APPEALS
On 26th March, a post on the FCPA Blog summarises the “FCPA Docket” for individuals, which includes all known FCPA-related ongoing prosecutions, fugitives, sentencing, and pending appeals, as of March 25th.