7th May 2019
CANADA: BUDGET 2019 TARGETS FINANCIAL CRIME AND TRADE-BASED MONEY LAUNDERING
An article from Borden Ladner Gervais on 16th April highlighted AML-linked developments in the Canadian Budget 2019. These include the establishment of 2 new units – the Anti-Money Laundering Action, Coordination and Enforcement (ACE) Team and the Trade Fraud and Trade-Based Money Laundering Centre of Expertise. The ACE Team will operate as a pilot programme for 5 years and serve as an inter-agency forum for law enforcement and intelligence agencies. The Trade Fraud and Trade-Based Money Laundering Center of Expertise will “strengthen capacity” at the Canada Border Services Agency (CBSA) and FINTRAC in their efforts to tackle trade-based fraud and money laundering. The article suggests that the latter may model itself on Trade Transparency Units in the US.
CONFRONTING MONEY LAUNDERING AND TERRORIST FINANCING: MOVING CANADA FORWARD
In November 2018, the Standing Committee on Finance of the Canadian Parliament published a report which constituted a statutory review of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. This report made no less than 32 recommendations for improvements to the country’s AML/CFT system. The 2000 Act had established the current AML/CFT system, and the country’s FIU, FINTRAC.
NEW IRAN AIR DIRECTOR ON US SANCTIONS LIST
On 7th May, the Big News Network reported that Touraj Dehghani Zanganeh, the newly-appointed managing director of the Islamic Republic of Iran Airline (Iran Air), is on the U.S. sanctions list. Zanganeh was the CEO of Meraj Airline, and that airline and its head were sanctioned by the US in 2018.
PHILIPPINE FIU SEEKS AN END TO BANK SECRECY LAW
Regulation Asia on 7th May reported that The Philippine AMLC (Anti-Money Laundering Council) is seeking additional powers to combat financial crime, including the lifting of the bank secrecy law, allowing it to check all accounts regardless of transaction thresholds.
BRITISH COLUMBIA LAW SOCIETY PROPOSES RULES TO CRACK DOWN ON MONEY LAUNDERING
Canadian Lawyer on 6th May reported that the Law Society is proposing a rule change relating to trust funds plus issued guidelines for private loans agreements in a bid to protect lawyers from becoming collateral damage and, if adopted, it would make the province’s among the first law societies in Canada to adopt the trust fund rule changes. Possible approval has been deferred to July. It is said that what the rule change aims to clarify is that a trust account may not be used as a practical or convenient conduit for parking funds until a later decision on what to do with them. The Law Society has posted a checklist of signs that may indicate a money-laundering transaction is behind the private loan, and these are itemised in the article. British Columbia has introduced the Land Owner Transparency Act, which, when passed, will establish a public, searchable registry of beneficial owners of property in the province.
MONETARY AUTHORITY OF SINGAPORE ISSUES FURTHER CONSULTATION ON VARIABLE CAPITAL COMPANIES (VCC) REGIME
Sidley Austin LLP on 6th May published an article about consultation issued by MAS on 30th April about VCC, which it says are essentially a Singapore-domiciled investment company that can operate as an open-ended or closed-ended fund entity, with the option to be set up as a stand-alone fund or an umbrella fund with separate sub-funds. The consultation is said to cover operational aspects of the VCC framework, including the incorporation of a VCC, the registration of sub-funds and the re-domiciliation process to Singapore of foreign corporate entities as VCC. A separate consultation covers AML/CFT issues.
HIGH COURT SEEKS TO CLARIFY WHETHER SPECULATIVE INVESTMENT BY A PRIVATE INDIVIDUAL IS A BUSINESS OR CONSUMER ACTIVITY
An article from RPC on 7th May was concerned with a case where the High Court in London dismissed a jurisdiction challenge against a private individual making speculative currency transactions on the basis that she could be considered a consumer under the recast EU Brussels Regulation. In the case, the defendant was a Cypriot company offering financial products and services through its online trading platform, UFX; and the claimant, Ms Ang, was a person of substantial wealth who invested in bitcoin futures on a leveraged basis through the UFX platform. Ang issued proceedings in England, her country of domicile and the defendant challenged the jurisdiction of the English court on the basis of the exclusive jurisdiction clause and Article 25 of the recast EU Brussels Regulation. Ang claimed that the exclusive jurisdiction clause was ineffective and did not require her to bring the claim in Cyprus. The Court held that the fact that Ang was wealthy and had some knowledge of the investment did not preclude her from being a consumer, and could bring proceedings where she was domiciled.
MORGAN STANLEY TO SHUT DOWN ITS RUSSIAN BANKING BUSINESS IN FIRST QUARTER OF 2020
KYC 360 on 7th May reported that Morgan Stanley is planning to send a formal notice to the Russian central bank that it will close down its banking operations in the country in the first quarter of 2020.
A NEW OPCW TEAM IS READY TO FIND THE CULPRITS BEHIND CHEMICAL ATTACKS IN SYRIA
The Pass Blue website, which covers the UN, published an article on 6th May reminding one that, in April 2018, gas cylinders filled with chlorine were dropped from a helicopter in the residential areas of Douma, outside the capital of Damascus, and at least 70 people were killed and up to 650 people were wounded in a flagrant violation of the International Chemical Weapons Convention, of which Syria is a signatory. The Organisation for the Prohibition of Chemical Weapons has a newly-formed attribution team of legal and technical experts working for the OPCW will begin operating this month, and before the end of the year it is expected to send its findings to the UN Secretary-General. The article says that, despite a new mandate for the OPCW to attribute the use of chemical weapons last year in Syria, the team’s work will present an enormous challenge not just technically but also politically, as the organisation’s members may not fully agree with the findings when the report of the team is due by the end of the year. Then it will be clearer as to whether the OPCW has the ability to name names.
BERNIE MADOFF’S WIFE AGREES TO PAY VICTIMS $600,000 TO SETTLE LAWSUIT
The Business Times in Singapore on 7th May reported that Bernie Madoff’s wife agreed to give victims of her husband’s Ponzi scheme almost $600,000 to settle a decade-long lawsuit by a trustee who claimed she profited from the fraud.
HOW DO HYPERSONIC MISSILES WORK?
RARE VIPERS ARE BEING POACHED IN KENYA
National Geographic on 4th April reported that Christian beliefs, superstition and fear of bites have made it easier for poachers to take endangered snakes from the wild illegally and not face repercussions. Poachers are typically seen not as law breakers but problem solvers, eliminating a threat to the community. Despite the snakes’ protection in law, few poachers are arrested in Kenya. Law enforcement officers aren’t good at detecting snake smuggling, and if vipers are confiscated, officials have no place to house and maintain the animals, which must be kept available as evidence in legal proceedings.
UK: ‘SIGNIFICANT MINORITY’ OF SOLICITOR FIRMS FAILING ON AML
The Law Society Gazette on 7th May reported that a significant minority of law firms are not doing enough to prevent money laundering, with some falling seriously short, according to the Solicitors Regulation Authority following a review of 59 practices providing trust and company services.
WALMART PAYING AUDIT COMMITTEE EXTRA TO COPE WITH FCPA AUDIT
A post in the FCPA Blog says that Walmart Inc has said in an SEC filing that it’s paying the chair of its audit committee $90,000 in extra compensation because of the workload created by the company’s ongoing FCPA investigation. Other members of the board’s audit committee are being paid $45,000 extra for the FCPA-related work, according to the SEC filing. First disclosed in December 2011, the FCPA investigation has involved allegations of potential FCPA violations in Mexico, Brazil, China, and India, among others.
UK PARLIAMENT APPROVES REGULATIONS IMPLEMENTING EU BLOCKING STATUTE IN UK POST-BREXIT
Parliament has approved the draft of the Protecting against the Effects of the Extraterritorial Application of Third Country Legislation (Amendment) (EU Exit) Regulations 2019. These Regulations would implement the EU sanction-blocking statute in UK law post-Brexit, seeking to counter US sanctions on Cuba and Iran.
WIGS AND FALSE EYELASHES FROM NORTH KOREA – ITEMS THAT INCORPORATE SYNTHETIC HAIR ARE CLASSIFIED AS CRAFT PRODUCTS AND SO NOT SUBJECT TO SANCTIONS
The Telegraph on 7th May claimed that North Korea is increasingly turning to wigs and false eyelashes to stave off an economic crisis. Unlike coal, minerals, food and other exports, items that incorporate synthetic hair are classified as craft products and not subject an export ban. Therefore, state-owned factories in North Korea are raising production and setting up partnerships with Chinese middlemen in border cities, boosting their exports by 100%. It says that, in February, North Korea exported goods valued at about £13.69 million to China, with processed hair products accounting for more than 10% of the total.
8 YEARS AFTER THE DEATH OF BIN LADEN, WHERE IS AL-QAEDA?
An article from the BBC on 7th May examines the status and operations of Al-Qaida 8 years after Usama Bin Laden was killed – asking how influential is the group today, and what threat does it now pose to global security? In doing so, it lists its “affiliates” around the world – Al-Qaeda in the Islamic Maghreb (AQIM); Al-Qaeda in the Arabian Peninsula (AQAP); Al-Qaeda in the Indian Subcontinent (AQIS); Jama’at Nusrat al-Islam wal-Muslimin (JNIM); Al-Shabaab; Hayat Tahrir al-Sham (HTS); and Al-Qaeda in Egypt.
EUROJUST HELPS DISMANTLE LUXURY CAR FRAUD NETWORK IN BELGIUM
A news release on 7th May advised that, with co-ordination at Eurojust, Belgian and French authorities have dismantled a criminal network that committed large-scale fraud in the purchase of second-hand luxury cars, leading to over 30 arrests. The criminal network members presented themselves to the owners of the cars, offered for sale on a Belgian website, as potential buyers. They conned more than 600 owners into supposedly selling their vehicles to them, when, in reality they only made fake down payments. The members of the criminal network also occasionally used violence or the threat of violence to gain possession of cars for alleged test drives, after which the vehicles were never returned to the owners.
EUROPEAN COMMISSION LAUNCHES NEW TOOL TO STRENGTHEN EU’S FIGHT AGAINST ILLEGAL, UNREPORTED AND UNREGULATED (IUU) FISHING
On 7th May, a news release from the EU says that its Environment Commissioner will launch the EU’s first IT tool, called “CATCH”, conceived to streamline the checks of seafood products entering the EU market. A catch certification scheme was established to protect the EU market against products stemming from illegal fishing. Certificates are required for each consignment of fishery products entering the EU territory, ensuring that fishery products from third countries come from legal sources. CATCH will digitalise the current paper-based certification scheme.
GHANA IS MAKING EFFORTS TO DEAL WITH ILLEGAL, UNREPORTED AND UNREGULATED FISHING (IUU) FISHING IN ITS WATERS
Defence Web on 7th May reported that illegal, unreported and unregulated (IUU) fishing is a major problem in West Africa, and according to one study, about 40% of the fish caught in the waters off the coast of West Africa are taken illegally. In Ghana, the fisheries sector generates over $1 billion in revenue each year and accounts for at least 4.5% of Ghana’s GDP, providing the livelihood to an estimated 2.4 million people. Ghana’s EEZ comprises over 64,000 square nautical miles, and that is a huge area compared to the land area of Ghana. The article involves an interview with Rear Admiral Peter Kofi Faidoo, Ghana’s Chief of Naval Staff about what Ghana is doing to combat IUU, new technology and collaboration.
CETA: THE EU-CANADA FREE TRADE AGREEMENT
On 7th May, the House of Commons Library published a briefing on the Comprehensive Economic and Trade Agreement (CETA), a free trade agreement between the EU and Canada. CETA has been in force provisionally since September 2017 and most, but not all, of the agreement is in force. CETA removes all tariffs on industrial products traded between the EU and Canada. Most were removed when the agreement came into force provisionally. All will be removed within 7 years. There is substantial liberalisation of trade in agricultural products and EU businesses will be allowed to bid for public procurement contracts in Canada.
GERMAN PROSECUTORS AIM TO FINE UBS OVER ALLEGED HELP IN CLIENT TAX EVASION
Reuters on 7th May reported that German prosecutors in Mannheim said they were seeking to fine the German unit of Swiss bank UBS about €83 million for helping clients to evade taxes. UBS paid about €300 million in 2014 to resolve a similar case in Bochum,
ACCOUNTANT AND 2 BANKERS JAILED FOR STEALING £390,000 FROM CUSTOMERS
A news release from the NCA on 7th May advised that 3 men have been jailed after defrauding elderly bank customers of more than £390,000 and laundering the cash through multiple fake accounts.
BANK OF CANADA AND MONETARY AUTHORITY OF SINGAPORE JOINTLY PUBLISH REPORT ON THE USE OF BLOCKCHAIN IN MAKING CROSS-BORDER PAYMENTS
On 7th May, K & L Gates published an article saying that the 2 authorities had published on a joint report on their trials of settling tokenised digital currencies across different blockchain platforms. MAS and BOC set out in 2016 to explore using distributed ledger technology (DLT) and the report outlines their key findings.
The report itself is available at –
2 INDIVIDUALS WHO SERVED TIME FOR A PONZI FRAUD ARE NOW IN CHARGE OF 6 SPORTS GAMBLING MUTUAL FUNDS IN VEGAS
Calvin Ayre on 7th May reported on a story from the Las Vegas Review-Journal that says 6 funds are under investigation by the SEC, after it had received complaints from investors that their dividends had dried up.
MEXICO TO LAUNCH CRIMINAL PROBE INTO ODEBRECHT
Baker McKenzie on 7th May reported that Mexico will launch a criminal probe into Brazilian construction conglomerate Odebrecht SA within 60 days, Attorney General Alejandro Gertz Manero has said. Mexican state-owned entities have been banned from doing business with Odebrecht or receiving proposals from the firm for 3 years. Odebrecht has been at the centre of the so-called Car Wash corruption investigation in Brazil, which has rippled across Latin America.
LATIN AMERICA LACKS REGIONAL STRATEGY TO HALT BITCOIN MONEY LAUNDERING
Insight Crime on 7th May reported that cryptocurrencies continue to offer a convenient haven for groups to launder criminal proceeds. It says that, in late April, agents from Brazil’s Department of Narcotics Investigations (DENARC) captured a man running a clandestine cryptocurrency mining lab in the city of Porto Alegre. Authorities seized 25 cryptocurrency mining machines, which ran 24 hours a day. The article says that limited legislation in Latin America to prevent such operations and the limited control financial authorities can wield over cryptocurrencies have made it an optimal plan for criminal structures seeking to clean shady money.
THE UK BUSINESS INTEGRITY CONSULTANCY SERVICE
The Department for International Trade says that the UK government has launched the The Business Integrity Consultancy Service to help companies prepare for and reduce these risks. The service provides access to consultancy at a reduced fee. It offers up to 5 days of consultancy for first-time users, which can be spread over 2 months. The service is available to importers, exporters and foreign investors in countries that receive official development assistance. “Integrity” included bribery and corruption risk, and other business risks.