12th April 2018
PACE URGES INTERNATIONAL ACTION AGAINST MONEY-LAUNDERING “LAUNDROMATS”
The Council of Europe Parliamentary Assembly on 11th April reported that the group has expressed its deep concern at the extent of money laundering in Council of Europe member States, notably the recent examples known as the “Global Laundromat”, the “Azerbaijani Laundromat” and the “Troika Laundromat”, and has urged improved national mechanisms and international co-operation to combat it. The resolution involved said that the cases exploited various weaknesses across multiple jurisdictions, including shell companies, often based in the UK or its Overseas Territories, and poorly regulated banks, notably in the Baltics.
ARGENTINA UPDATES AEO PROGRAMME TO FACILITATE GLOBAL TRADE
On 11th April, HKTDC reported that Argentina has updated its authorised economic operator programme in line with WCO parameters in an effort to modernise this scheme and facilitate the signing of mutual recognition agreements with the customs authorities of other countries.
US: CUSTOMS BROKERS, CARRIERS, OTHERS TO BE SCRUTINISED IN COUNTERFEIT GOODS INITIATIVE
On 11th April, HKTDC reported that President Trump has directed federal agencies to develop a plan to combat “the dangers and negative effects of counterfeit and pirated goods, including those that are imported” through third-party intermediaries such as on-line marketplaces, carriers, customs brokers, payment providers, vendors and others. While the memo encourages deeper partnerships with third-party intermediaries as part of an effort to expand and enhance federal efforts to deter on-line trafficking in counterfeit and pirated goods, it also allows for the possibility of tougher enforcement.
CZECH BILLIONAIRE VITEK SUED FOR $3 BILLION BY NEW YORK HEDGE FUND CLAIMING FRAUD
BNE Intellinews reported that Czech real estate mogul and largest commercial property landlord in Berlin, Radovan Vitek, has been accused of defrauding New York-based Kingstown hedge fund and Czech investment firm Investhold, owned by Czech entrepreneur Marek Cmejla and Swiss citizen Jiri Divis.
GEORGIA’S LATEST BANKING SCANDAL TESTS THE LIMITS OF ITS DEMOCRATIC INSTITUTIONS
Eurasia Review on 12th April carried an article about the February 2019 “attack” by the government on TBC Bank, one of the biggest banks in the country, which it accuses of financial misconduct and possible money laundering. The official allegations date back to a single transaction made in 2008 during the August crisis and the global financial meltdown. However, the case is 11 years old and the statute of limitations for it expired 5 years ago – thus the article says, the National Bank of Georgia has breached the law by filing the case against the private bank. Criticising the government, the article says that the government’s actions show that the rule of law is being threatened in what is supposed to be a liberal democracy by signalling that it wishes to repeal the legally binding agreement. It also says that abuse of power is threatening Georgia’s strategic interests and jeopardising country’s banking system, putting pressure on projects that make Georgia a success story and a reliable partner. This threatens the initiatives that have potential to attract its breakaway regions and, by intimidating businesses, the government sends wrong messages to potential investors and endangers economic growth at home.
ICAEW GUIDANCE: GDPR TRANSPARENCY OBLIGATIONS ARE DIFFICULT BUT NOT IMPOSSIBLE
On 11th April, the Institute of Chartered Accountants in England & Wales has produced a new guide, Data Protection and Transparency, which explains the transparency principle of the GDPR and gives essential guidance on how to comply with its requirements.
US DEPARTMENT OF COMMERCE PUTS 7 HONG KONG COMPANIES ON WARNING LIST
Customs Today on 12th April reported that the Department of Commerce has put 7 Hong Kong companies – Able Supply Chain Ltd, Boson Technology Co Ltd, HK Hengyu Storage Logistics Ltd, Ling Ao Electronic Technology Co Ltd, Rising Logistics Company Ltd, Swelatel Technology Ltd, and Universe Market Ltd – on an “unverified list” that urges US companies to exercise extra caution when doing business with them – alongside 37 Chinese companies and schools. Some of the 7 companies have suspended operations or have had their registrations cancelled. The US move reflected concerns over the export of technology.
UAE ACCOUNTS FOR ABOUT 14% OF THE WORLD’S GOLD TRADE
Customs Today on 12th April reported that the gold, diamond and precious metals sector is one of the most important sectors for the UAE’s economic diversification, and is expected to witness significant growth in the coming period as part of the country’s diversification objectives.
UK LAND REGISTRY SUCCESSFULLY TRANSFERS HOUSE USING BLOCKCHAIN
On 12th April, Legal Futures reported that a trial of blockchain involving the digital transfer of property ownership has been completed by HM Land Registry, but the agency has no plans to adopt the emerging technology itself any time soon. It says that the Land Registry’s Digital Street project has given itself a long time window – until 2030 – to familiarise itself with likely technologies the front-runners in the conveyancing industry might adopt.
FREE MOVEMENT OF PERSONAL DATA? CROSS-BORDER TRANSFERS
The first of a 2-part series on the data transfer laws of the EU, the UK, Hong Kong, Mainland China, India and the APEC was published by Ince Law on 10th April.
FEDERAL AGENTS SEIZE MICHAEL AVENATTI’S JET
On 11th April, AIN Online reported that federal agents in California had seized a HondaJet belonging to high-profile attorney Michael Avenatti, as part of a grand jury indictment on a raft of fraud and tax offences.
GUILTY PLEA IN IRELAND’S FIRST CRIMINAL PROSECUTION INVOLVING “GUN-JUMPING” IN A MERGER
LK Shields on 10th April reported that on 8th April, Armalou Holdings Limited pleaded guilty in Dublin Metropolitan District Court to putting into effect a merger without first securing the necessary competition approval contrary to the Competition Act 2002. Under Irish competition law, mergers or acquisitions, which reach certain thresholds in the State, must be notified to the Competition and Consumer Protection Commission (CCPC). Failure to notify such a merger or acquisition is referred to as “gun-jumping”, which is a criminal offence under Irish law and the transaction is deemed void.
UBER TECHNOLOGIES SAYS DoJ IS INVESTIGATING POSSIBLE FCPA VIOLATIONS RELATED TO ITS ACTIVITY IN ASIA
A post on the FCPA Blog on 11th April says that, according to Uber’s S-1 filing, the DoJ is investigating potential bribes in countries including Indonesia, Malaysia, China, and India. In Indonesia, the company is being investigated for allegations of small payments to police, and “other potential improper payments”.
LORI LOUGHLIN AND MONEY LAUNDERING CONSPIRACY CHARGES IN THE US STUDENT ADMISSIONS SCANDAL
A post on the FCPA Blog on 11th April comments that it is hard to commit most other white collar crimes without also committing money laundering. 16 parents involved in the college admissions scandal who had not already pleaded guilty to bribery have been additionally charged with conspiring to commit fraud and money laundering. The post says that the conspiracy section of the federal money laundering statute is uncomplicated – hence it is popular with law enforcement. Proving a federal money laundering conspiracy is not difficult – prosecutors only need to show that a defendant, working with someone else, was “trying to conceal or disguise the nature, location, source, ownership, or control of the proceeds of unlawful activity”.
US – NRC CLARIFIES EXPORT REPORTING FOR NUCLEAR FACILITIES, EQUIPMENT AND NON-NUCLEAR MATERIALS
On 5th April, Baker McKenzie published an article saying that the Nuclear Regulatory Commission had published a Regulatory Issue Summary (RIS) to clarify the reporting requirements for certain exports of nuclear facilities, equipment, and non-nuclear materials. The RIS includes information relating to this reporting requirement and clarifies that the quarterly reporting requirement is in addition to, and not obviated by, the separate NRC annual reporting requirement in its regulations.
INVESTIGATION, COMPLIANCE, AND REGULATORY DEVELOPMENTS IN SOUTH-EAST ASIA – SANCTIONS, BANKS, AND SOUTH-EAST ASIA
On 3rd April, Hogan Lovells published the first edition of a new newsletter, SEA View, which will feature investigation, compliance, and regulatory developments in SE Asia. Over a 12-month spell, 1 monthly article will showcase our insights on particular developments in the region. The first edition looks at sanctions, banks, and SE Asia.
UK’S ASSET-FREEZING REGIME QUARTERLY REPORT TO PARLIAMENT
On 12th April, HM Treasury published the quarterly Terrorist Asset-Freezing etc Act 2010 report, with data to 31st December 2018. 8 licences were issued under the ISIL-Al Qaida regime during this quarter and 4 general licences remained current during this quarter. Only £90,000 was frozen under the various regimes as at the end of the quarter.
UK: COURTS SHUT DOWN RENEWABLE ENERGY INVESTMENT COMPANY
On 12th April, a news release from the Insolvency Service reported that UK Renewable Investments (AD) plc, a Darlington company that sold investment opportunities in renewable energy plants, has been shut down after it failed to pay back millions of investors’ funds. Between July 2015 and September 2016 UKRI sold corporate bonds to 208 people. £2.5 million was raised and investors were told their funds would go towards developing anaerobic digestion plants that generated renewable energy. The bonds had a 5-year term and were to generate an interest rate of 11% per annum. Most the money raised was loaned to a separate company, Bio Green Energy Ltd, to pay for the construction of 15 anaerobic digestion plants in Northern Ireland, themselves owned by individual special purpose vehicles, but these plants were never completed, and Bio Green Energy was placed in administration in 2017.
WHY SCANDINAVIAN BANKS’ CLEAN REPUTATIONS ARE THREATENED BY DIRTY MONEY
The New York Times on 6th April published this interesting and useful article about Scandinavian banks said to be “mired” in a growing money laundering scandal, accused of helping Russian oligarchs, corrupt politicians and organised crime lords send hundreds of billions of ill-gotten dollars to offshore tax havens. It sets out to answer questions about the situation – How did the Swedes and Danes get sucked into underworld relationships? Why are American investigators — federal and New York State — poring over their accounts? How does this all harken back to the fall of Communism 2 decades ago?
UK: SAFE CAR WASH APP REVEALS HUNDREDS OF POTENTIAL SLAVERY CASES
On 7th April, the BBC reported that nearly 1,000 reports of potential human trafficking were made in the first 5 months of an app enabling hand car wash users to report concerns over workers. The Safe Car Wash app was launched by the Church of England’s anti-slavery arm, the Clewer Initiative, and the Catholic Church last year. Users of the app have flagged up fearful workers, lack of protective clothing and workers living on site. These are among the signs people might be working in conditions of slavery.
MONEY LAUNDERING EXPOSED: FACING THE THREAT
This report from LexisNexis contains the candid insights of senior AML experts in the UK, who highlight where the UK is winning, but crucially, where we must improve to combat money laundering and the insidious crimes which rely on it. Topics include barriers to information sharing, conflicting legislation, improving the SARs regime, and the need for greater public/private collaboration. Some of the comments are that –
- The fact that banks are struggling to get ahead of the curve is a common theme for the senior financial crime experts interviewed for this report, who feel strongly that more needs to be done to deter financial crime.
- There are multiple supervisory bodies in the AML space, with over 20 regulatory authorities in total, and beyond this, different working groups, committees and sub-committees, which inevitably leads to an inconsistent approach to AML regulations and policy incoherence.
- There is a lot of activity, but arguably, not enough productivity as a result. Given the resources invested, there is a perception that the outcomes and outputs are woefully insufficient.
- Regulation is already complex, with an increasing number of laws that apply in the AML space. New legislation is being layered on top of existing regulation, which amplifies the complexity. There is also a problem with regulatory creep, or ‘gold plating’ of legislation, where companies in regulated sectors end up going beyond best practice, and setting a new standard for others to follow.
- A siloed nature exists within sectors as well as jurisdictions. The inability of the banking sector and professional services firms to share information more freely on suspicious persons and activity is also widely believed to be hampering progress in adopting a more preventative approach.
- A major sticking point preventing further advances in using AI-led financial crime detection and prevention is that regulators are not comfortable with the lack of transparency and audit trail.
UK: NEW LAWS UNDER COUNTER-TERRORISM AND BORDER SECURITY ACT 2019 COME INTO FORCE
On 12th April, the Home Office advised that it is now illegal to recklessly express support for, or publish images of flags, emblems or clothing in a way which suggests you are a member or supporter of a proscribed organisation and certain preparatory terrorism offences, including encouragement of terrorism or the dissemination of terrorist publications, now carry a maximum sentence of 15 years. It also gives the Home Secretary the power to designate an area outside of the UK, subject to Parliamentary approval, to restrict UK nationals and residents from entering or remaining in that area, if he is satisfied that it is necessary to protect members of the public from terrorism. The Act extends extra-territorial jurisdiction for a number of terrorism offences including inviting support for a proscribed organisation and making or possessing explosives for the purposes of carrying out an act of terrorism. It also extends Serious Crime Prevention Orders for terrorism offences.
FORMER TOP GEAR MECHANIC HELPED FATHER AND SON TAX CHEATS ESCAPE FROM THE UK JAILED FOR 15 MONTHS
Car Dealer Magazine on 12th April reported that Stephen Howard assisted Jamie Colwell and his father Brian in fleeing to Spain before they could be sentenced for a near-£1 million VAT scam. The pair have since been extradited back to the UK and are currently serving prison sentences totalling almost 8 years. Howard bought travel tickets for the pair and hired a van to drive Brian Colwell to a hideout in Spain. The 60-year-old, who helped to build and modify specialist racing cars on the BBC show Top Gear, was convicted of perverting the course of justice.
UK: STUDENT BEHIND $100 MILLION DARK WEB SITE JAILED FOR 5 YEARS 4 MONTHS
On 12th April, a news release from the NCA says that an unemployed university drop-out has been jailed after running a dark web business selling illegal drugs and for hoarding a catalogue of horrific child sex abuse images he wanted to sell for profit. Thomas White, 24, took over the running of the notorious dark web site Silk Road after it the FBI closed it in 2013.
CHINA LAUNCHES FRESH WAVE OF ANTI-WASTE SMUGGLING ACTION
On 12th April, Let’s Recycle reported that China’s customs authority is extending its anti-waste smuggling campaign into 2019. This follows on from 10 months of enforcement action over the last year, dubbed ‘Blue Sky 2018’ – during which 481 cases of illegal waste activity uncovered by customs officials. China’s action to crack down on illegal waste imports and the introduction of strict quality controls for material that can enter the country – dubbed National Sword – has also had far-reaching impacts on the global recovered materials market, in particular waste paper and plastics.
MOROCCAN POLICE SEIZE 12 TONNES OF CANNABIS
Morocco World News reported on 11th April that Moroccan police, in co-ordination with customs officers on the Mauritanian border, seized 11.94 tonnes of cannabis on a truck bound for “an African country”.
CHINESE CUSTOMS BUSTS EDIBLE BIRD’S NESTS SMUGGLING GANGS
Xinhua on 12th April reported that customs police in southern China detained 18 suspects who allegedly smuggled edible bird’s nests, which have been highly prized due to nutritional value. Around 300 kg of bird’s nests have been seized in an action conducted by customs police and public security departments in southern Chinese provinces of Guangdong, Fujian and Guangxi Zhuang Autonomous Region. 8 smuggling gangs involving bird’s nest purchases, transportation and delivery were busted in the action. Customs police said buyers had purchased bird’s nests in Indonesia and Malaysia since 2018, and gangs had later smuggled the nests into China through border cities.
BOLIVIA HAS SEIZED NEARLY 2 TONS OF BLACK MARKET MEDICINE
Insight Crime on 12th April reported that customs authorities in Bolivia have seized nearly 2 tons of contraband medicine this year, highlighting the scale of an illegal industry that many countries throughout Latin America are struggling to combat. In just the first 3 months of 2019, customs officials in Bolivia have seized 1.9 tons of contraband pharmaceutical drugs. The confiscated drugs are often anti-inflammatories, antibiotic creams and cancer-treating products.
SEC CHARGED 2 FORMER DIRECTORS OF INVESTMENTS AT WOODBRIDGE GROUP OF COMPANIES LLC FOR THEIR ROLES IN ITS MASSIVE PONZI SCHEME
On 12th April, the SEC announced that those arrested were responsible for fraudulently raising at least $1.2 billion from more than 8,400 retail investors, many of them seniors, and together received more than $3 million in transaction-based and other compensation.
MALAYSIA AIRLINES CABIN CREW MEMBER JAILED FOR SMUGGLING 2.5 KG OF HIGH-PURITY HEROIN INTO AUSTRALIA
On 12th April, Illicit Trade reported that a flight attendant who worked for Malaysia Airlines has been jailed for more than 5 years after being caught attempting to smuggle packages of heroin into Australia.
REGULATOR SHOULD OVERSEE BAILIFF INDUSTRY, SAYS JUSTICE COMMITTEE OF PARLIAMENT
On 12th April, an article on Ekklesia said that the UK Government should introduce new regulation for the bailiff industry to ensure that people in debt are treated fairly, says the House of Commons Justice Committee in its report Bailiffs: Enforcement of debt. Following an inquiry into concerns over complaints about bailiffs, also known as enforcement agents, the report expresses surprise at their under-regulation compared to other sectors.
A STRATEGIC PORT IN THE HORN OF AFRICA IS AT THE CENTRE OF A $500 MILLION LAWSUIT
On 12th April, Hellenic Shipping News provided an article about the continuing dispute about whether or not Djibouti breached the rights of Dubai port operator DP World to manage the Doraleh Container Terminal when it ended a 30-year concession agreement, signed in 2006. The fight over who manages the harbour comes as Djibouti seeks to become one of the biggest trading ports in Africa. With a population of less than a million people, the port is an important gateway to the Gulf of Aden, and a crucial route for global shipping operations. N Complicating matters, Djibouti has also been working with China Merchants Port Holdings, a Hong Kong-based subsidiary of state-owned conglomerate China Merchants Group (CMP), to develop alternative container facilities. It says that the fight over the Doraleh terminal highlights the challenges posed by China’s deepening reach in Africa. Djibouti is home to several military bases, key among them the US lone permanent outpost in Africa, and China’s first overseas military base, opened in 2017.
UK CANNABIS TRADE BODY WILL ALSO FOCUS ON CLINICAL TRIALS
The Pharmaceutical Journal on 12th April said that the the Centre for Medical Cannabis (CMC), which describes itself as an industry advocacy group and think tank, has announced that it will extend its remit to focus on clinical trials, to help boost learning and accelerate patient access to medicines, as well as market authorisation for cannabis-based medical products.
DHSC COMMISSIONS ‘RAPID’ EVALUATION OF MEDICAL CANNABIS PRESCRIBING
On 10th April, the Pharmaceutical Journal reported that the Health and Social Care Secretary has asked NHS England to launch an evaluation of medical cannabis prescribing to “address barriers” to its prescription, as many patients still cannot access medical cannabis.