8th May 2019
SHOCK WAVE GENERATOR FOR IRAN’S NUCLEAR WEAPONS PROGRAMME: MORE THAN A FEASIBILITY STUDY
On 7th May, a report from the Institute for Science and International Security (confusingly abbreviated to “ISIS”!) commented on the development by Iran of a “shock wave generator”, saying that documents obtained by Israel showed that under Iran’s early 2000s nuclear weapons programme known as the “Amad Plan,” it was developing and manufacturing a key nuclear weapon sub-component called a “shock wave generator”. A shock wave generator is a multi-point initiation (MPI) system, which has the purpose of uniformly initiating a spherical shell of high explosives, or the “main charge”, which in turn compresses the nuclear core made from weapon-grade uranium to achieve a supercritical mass for a nuclear explosion.
CHINA ARRESTS 43 SUSPECTS IN MASSIVE OIL SMUGGLING CASE
Brinkwire on 8th May reported that Chinese authorities have arrested 43 suspects in a major refined oil smuggling case worth $189 million. A foreign oil tanker and 4 smaller vessels, an oil depot and 16 oil tanks containing 29,500 tonnes of smuggled refined oil were seized.
FORMER DANSKE BANK CEO BORGEN CHARGED OVER ESTONIA CASE
KYC 360 on 8th May reported that Danish prosecutors have charged Thomas Borgen, former CEO of Danske Bank, over his involvement in one of the world’s biggest money laundering scandals. He is the first person to be charged in a case that involves suspicious transactions of some €200 billion that passed through Danske Bank’s Estonian branch between 2007 and 2015.
EU-IRAN TRADE VEHICLE “UNLIKELY” TO MEET AML NORMS
On 8th May, KYC 360 reported that US Treasury Under Secretary for Terrorism and Financial Intelligence said that it would be hard for the Iranian side of Instex, with much of Iran’s economy both opaque and connected to institutions under US sanctions such as the Revolutionary Guard Corps (IRGC), to meet requirements.
HMRC’S £1 BILLION HEADACHE
MacFarlanes LLP on 3rd May published an article on the final European Commission state aid decision following the investigation into the UK’s Controlled Foreign Companies (CFC) regime, and the need for HMRC to recover £1 billion in underpaid tax. It argues that the complexity and time frame within which the UK government is expected to collect that tax will be a headache for both government and businesses alike. By 2nd June, the UK must provide to the Commission a list of beneficiaries; a calculation of the aid; and evidence that the businesses have been ordered to pay, and holding letters have been issued by HMRC to the taxpayers thought to be affected. The UK government can also appeal the decision to the European General Court within the 2 months. It says that here will also be grounds for taxpayers to challenge the UK government over recovery of tax.
ANTI-CORRUPTION GUIDANCE IN RUSSIA
On 6th May, Squire Patton Boggs LLP issued an article saying that outreach efforts to combat corruption in Russia lack compliance guidance. The Russian Anti-Corruption Law outlines a compliance framework but lacks specifics, and guidance to US companies may be able to fill the gap. It says that Russian authorities may consider a company’s compliance arrangements when deciding who to prosecute and how to sentence the company. It suggests that, in the absence of meaningful guidance from the Russian law enforcement authorities, companies operating in Russia should consider looking to the US guidance for assistance.
LAW PROFESSOR ACCUSES DOJ OF STILL FAILING TO PROSECUTE EXECUTIVES
Global Investigations Review on 26th April reported that a law professor at Duke University has warned that corporate enforcement has taken a hit under the Trump administration and that individual prosecutions are also suffering. He argues that that implementation of the 2015 Yates Memo had fallen short, then in November, the DoJ relaxed enforcement of the Memo, by requiring companies to turn over information only on those “substantially involved in” criminal conduct, rather any individual even partially tied to the scheme. As a result, he remains unconvinced by the government’s claims that it is hotly pursuing white-collar criminals.
PERUVIAN GOVERNMENT PASSES LAW TO TACKLE TAX AVOIDANCE
VoA on 6th May reported that the Peruvian government has passed a law aimed at closing loopholes that allow companies to avoid paying taxes, estimating it will be able to collect additional revenues equal to nearly 1% of GDP per year. It targets tax schemes including corporate reorganisations and contracts that defer earnings or bring forward spending in order to avoid taxes.
BULGARIANS DETAINED FOR PHONE FRAUD IN ROMANIA NOW HANDED OVER
On 8th May, the Focus Information Agency reported that 6 suspects accused by the Bulgarian Special Prosecutor’s Office of involvement in an organised crime group for phone fraud, and who were detained in Romania, have now been handed over to the Bulgarian judicial bodies. In the course of the investigation, 17 addresses were searched and 132 mobile phones and 137 SIM cards were found. More than 25 Bulgarians were detained in a police operation called Ring Ring. The group included more than 23 “dialers” who were dialling different phone numbers on the territory of Bulgaria.
HMRC: ATTEMPTS TO AVOID AN INCOME TAX CHARGE WHEN A COMPANY IS WOUND UP
On 8th May, the Chartered Institute of Taxation said that it and ICAEW recently met with HMRC to discuss Spotlight 47 with a view to better understanding HMRC’s position re information about tax avoidance schemes that try to avoid an income tax charge on distributions when winding up a company contained in Spotlight 47 of February 2019.
MAERSK ADDS CUSTOMS CLEARANCE TO BOOKING CAPABILITY
On 8th May, Lloyds Loading List reported that Maersk has become the first shipping line to integrate customs brokerage services within its container shipping booking processes, part of plans to be a one-stop-shop for container logistics. It says that the online customs clearance capability is launched initially in 7 European countries but with plans for a global roll-out by the end of this year. It also says that the new platform may prove a threat to freight intermediaries, particularly in the small and medium-sized shipper segment, according to logistics analyst Ti. Ti also points out that the company was making another investment aimed at building up its digital capabilities, and has invested in the European digital freight forwarding start-up FreightHub, which offers digital-powered forwarding solutions to more than 1,500 customers and as such paves the way for mutual collaboration opportunities.
US C-TPAT MINIMUM SECURITY CRITERIA UPDATED
On 8th May, Sandler Travis Rosenberg reported that the first major update to the minimum security criteria for the Customs Trade Partnership Against Terrorism was released May 3rd. It lists the entities eligible for use of the system, which includes importers, exporters, manufacturers in Canada and Mexico, Mexican long-haul highway carriers, air carriers, rail carriers, sea carriers, US highway carriers, third-party logistics providers, consolidators, customs brokers, and US marine port authority and terminal operators. US CBP states that it has added to the MSC requirements to help address the most prevalent and evolving security threats – re cybersecurity, protection against agricultural contaminants and pests, prevention of trade-based money laundering and terrorism financing, using security technology to fortify existing physical security requirements, and CBP has also added a recommendation that addresses social compliance programmes. CBP seeks to establish a holistic approach to ensuring supply chain security
3 GERMANS CHARGED WITH RUNNING A WALL STREET MARKET DARK WEB MARKETPLACE
On 8th May, OCCRP reported that 3 Germans have been charged by US prosecutors with administering one of the world’s largest dark web marketplaces, Wall Street Market, a site with thousands of listings for drugs, contraband, counterfeit goods and illegal narcotics. The DoJ describes Wall Street Market as a “sophisticated” online marketplace where over 5400 vendors sold everything from crystal meth to computer hacking software.
SPAIN: CRYPTOCURRENCY LAUNDERING AS A SERVICE
On 8th May, a news release from Europol has supported Spain in dismantling a criminal organisation providing large-scale crypto money laundering services to other criminal organisations. The criminals carried out several money laundering schemes involving the transfer from fiat currency to virtual assets to hide the illegal origin of the proceeds, and some of the identified modi operandi used crypto ATM and smurfing. The news release lists some of these –
- The organisation managed a cryptocurrency exchange business, including two crypto ATM to deposit criminal cash and transform it into cryptocurrency for other criminal groups;
- Cash pick-ups carried out by cash-carriers followed by smurfing techniques to deposit the criminal cash in several bank accounts controlled by the organisation. The funds were moved through several accounts in the process of layering. Afterwards, the money was exchanged into cryptocurrency; and
- Large transfers to bank accounts controlled by the organisation coming from corporate entities owned by gangs using their criminal money laundering services. Immediate overseas transfers were then wired to crypto exchange platforms.
NEW EU FRAMEWORK FOR SCREENING FOREIGN DIRECT INVESTMENT
On 8th May, Dentons issued a reminder about its explanatory article of 29th March on the EU framework for screening foreign direct investment has come into force and will apply across all EU Member States from 11th October 2020 (including the UK if it is then an EU Member).
UP TO 20% OF DRUGS SOLD IN THE INDIAN MARKET ARE “COUNTERFEIT”: INDIA, CHINA ARE LEADING SOURCES
The Week in India on 4th May published an article about a special report released on April 25th by the Office of the United States Trade Representative (USTR). The report says that China and India are reportedly leading sources of counterfeit medicines distributed globally. However, experts from health groups and representatives of Indian pharmaceutical industry disagree with the US allegation – one spokesman saying that the trouble lies in the terminology used in the report (“counterfeit drugs”), and its conflation with the issue of patient safety to protect the interests of the US industry. It says that, in a bid to end the confusion, in 2017, the World Health Assembly adopted the term “substandard and falsified (SF) medical products”. The article also repeats statistics from the health ministry claiming that 3% of the drugs in the country were “not of standard quality”, and 0.02% were spurious.
SAUDIS FIGHT WITH BELGIAN WEAPONS IN YEMEN
The Knack in Belgium on 7th May reported on research which it says offers a sobering look at the Belgian share in global war industry. In which a small country can be great.
US DISTRICT JUDGE DECLARES MISTRIAL IN “FLASH CRASH” SPOOFING CASE
A post from Cadwallader on 7th May reported that the mistrial was declared after jurors were unable to reach a unanimous verdict concerning an alleged commodity spoofing scheme related to the 2010 Dow Jones “Flash Crash“. The defendants are charged with creating an automated programme to reduce the risk that an order intended to spoof other traders would be executed, and gave the automated programme to another trader who used it to place spoof orders. Spoofing is a form of market manipulation in which a trader places a large order to buy or sell a financial asset that creates an artificial impression of high demand for the asset.
PODCAST: PROMOTING A CULTURE OF COMPLIANCE
In the latest TRACE podcast, Jonathan Drimmer, currently the Chief Compliance Officer of Barrick Gold Corporation, describes practical, effective steps toward building and sustaining a culture of compliance.
ROMANIA: ORGANISED CRIME GROUP SCAM COUNTERFEITING FUEL CARDS
On 8th May, a news release from Eurojust reported that Romanian judicial and law enforcement authorities, in close co-operation with Eurojust, dismantled an organised crime group involved in a scam of counterfeiting fuel cards. 27 houses were searched in Romania, and 24 suspects were identified. The criminals, who were mainly Romanian nationals, fraudulently copied the data stored on the magnetic stripe of fuel cards, which belonged to several people outside Romania. The alleged fraudsters installed special copying devices into payment terminals (ATM) located abroad, to extract the magnetic stripe data and manufacture counterfeit copies of the original fuel cards. They then used the fake cards at filling stations to refuel their cars to the detriment of the original card holders.
RITA ORA’S FORMER ACCOUNTANT JAILED FOR FIVE YEARS OVER £3 MILLION FRAUD
On 8th May, Sky News reported that Andrew Munday, 38, an accountant with high-profile clients such as singer Rita Ora and World Cup-winning rugby player Matt Dawson has been jailed for more than 5 years, after he committed a £3.35 million fraud.
ADMINISTRATORS OF DEEPDOTWEB INDICTED FOR MONEY LAUNDERING CONSPIRACY LINKED TO SALES OF FENTANYL, HEROIN AND OTHER ILLEGAL GOODS ON THE DARKNET
A DoJ news release on 8th May reported that the alleged owners and operators of a website known as DeepDotWeb (DDW) have been indicted by a federal grand jury sitting in Pittsburgh. The website has now been seized by court order. Tal Prihar, 37, an Israeli citizen residing in Brazil, was arrested on May 6th in Paris and Michael Phan, 34, an Israeli citizen residing in Israel, was arrested in Israel on May 6th. From in and around October 2013 and continuing through the date of the indictment, Tal Prihar and Michael Phan allegedly owned and operated DDW, hosted at http://www.deepdotweb.com and also accessible on the Darknet.
PROPERTIES WORTH £2 MILLION FROZEN IN NORTHERN IRELAND IN PARAMILITARY INVESTIGATION
An NCA news release on 8th May announced that NCA officers, working as part of the Paramilitary Crime Task Force (PCTF), have obtained orders on 9 Property Freezing Orders in Northern Ireland.
IRELAND: NEW GARDA ANTI-CORRUPTION UNIT WILL BE IN PLACE BY END OF YEAR
The Journal on 8th May reported that a new anti-corruption unit in An Garda Síochána will be up and running by the end of the year. It will investigate allegations around drug use, the flow of information outside of the organisation and inappropriate associations with criminals.
MoU BETWEEN THE UK AND IRELAND ON THE COMMON TRAVEL AGREEMENT
A news release on 8th May from the Cabinet Office reported that this means that if you are a British citizen or an Irish citizen, you do not need to take any action to protect your status and rights associated with the CTA. After the UK leaves the EU, you will continue to enjoy these rights, no matter what the terms of the UK’s exit. Both the UK and Irish governments have committed to taking all necessary measures to ensure that the agreed CTA rights and privileges are protected in all outcomes.
SOUTH AFRICAN INVESTMENT FUND LOOTED PENSION FUND WITH INSIDER INFORMATION
On 8th May, OCCRP reported that an investment company, a little-known boutique operation, raked in at least $9.2 million by trading on the turmoil following the sacking of the finance minister in 2015. Related deals under investigation may have raised the total profit to as much as $32 million as the country went through 3 finance ministers in just 4 days. It claims that Regiments Capital most likely knew for weeks that respected Finance Minister Nhlanhla Nene would be dismissed in December 2015. The article says that a group of South Africans: pensioners of the state-owned railway and transport company Transnet were most affected. The firm involved managed one of its retirement funds and leveraged that position to make money from Nene’s dismissal while setting up Transnet’s 50,000 pensioners to take a corresponding loss.