10th May 2019
9 REASONS WHY DECLARING THE MUSLIM BROTHERHOOD A TERRORIST ORGANISATION WOULD BE A MISTAKE
On 3rd May, the Carnegie Center published a Quick Take listing 9 reasons – legal, diplomatic, pragmatic, and civil rights reasons – why such a designation would undermine efforts to keep Americans safe from terrorism.
RUSSIA (AND CHINA) KEEPS NORTH KOREA AT WORK
The Asia Times on 10th May reported that, on Russia’s frozen Pacific coast, thousands of North Korean workers are employed in the construction industry while others toil in local factories at low wages. However, later this year they will all have to return home to North Korea if Russia is faithful to its pledge to implement UN SCR 2397. The deadline for implementing the measure, which will impact both overseas North Korean workers and companies, is December 22nd. In January, the English-language Moscow Times reported that Russian politicians had petitioned for North Korean labourers to be allowed to remain in the country despite the sanctions, and allegedly Russian partners have also willingly helped North Korean state corporations hide their true identities under new names. A Russian government statement in March said that Russia had sent home nearly two-thirds of some 30,000 North Koreans working there as of 2018. If true, that still leaves 10,000 North Korean workers in Russia, most of whom work for companies in Vladivostok and other far eastern cities close to North Korea. Russia is not the only place where North Korean workers are earning money for the regime back home in Pyongyang. US government sources estimate the total number of North Korean workers worldwide to be at around 100,000 – China is another major destination for North Korean workers. Tens of thousands of North Koreans are believed to be working illegally in China, most of whom are in areas in the Chinese side of the border. The article cites the case of the Korea Rungrado General Trading Corporation, an affiliate of the Pyongyang City committee of the ruling Workers Party of Korea – Rungrado has since registered several of its Russia-based subsidiaries as local companies under Russian and other names while several of its North Korean owners are listed as Vietnamese.
BLOOD SMUGGLING INTO HONG KONG STILL COMMON AS PARENTS IN CHINA LOOK FOR BABY BOYS
The Harbour Times in Hong Kong on 9th May reported that the preference for male children remains strong in mainland China with the number of people taking blood samples across the border to help prospective parents identify the gender of their future offspring. In Hong Kong, women who are pregnant for 7 weeks or more can do a blood test to check the gender of the unborn baby for as little as HK$3,500. For mothers-to-be who cannot be in Hong Kong in person to do the test, there are agents in the market who offer to take their blood samples across the border. It reports that, in March, a 12-year old girl was caught carrying into Hong Kong 142 blood samples for gender testing and, in another incident in 2017, a woman was caught smuggling 203 blood samples from the mainland China to Hong Kong.
THE CRIMINAL EVOLUTION OF METHAMPHETAMINE IN NEW ZEALAND
On 9th May, the New Zealand Herald carried an article saying that Methamphetamine changed the criminal underworld forever in New Zealand 20 years ago and the lucrative market keeps evolving. By 2000, it was clear New Zealand had a “major problem” with methamphetamine. Outlaw motorcycle gangs such as the Hell’s Angels, the Head Hunters and the Highway 61 took control of the lucrative market. Some members accumulated millions of dollars of assets, others spent their cash living a fast and loose lifestyle – including a gold-plated motorcycle, shown in the article. In addition, so-called “ethnic” gangs – such as the Mongrel Mob and Black Power – controlled the ingredients, whilst the biker gangs controlled the production. Whilst China was formerly the main source, since 2016, Customs and police have noticed an upswing in importations of from the West Coast of the US and Canada; and methamphetamine is most likely being manufactured in Mexico by the Sinaloa and Jalisco (better known as CJNG) cartels.
FINRA REMINDS BROKER-DEALERS OF THEIR AML DUTIES
On 9th May, the Think Advisor website reported that the Financial Industry Regulatory Authority is reminding broker-dealers of their obligations regarding suspicious activity monitoring and reporting obligations – to develop and implement a written AML programme reasonably designed to achieve and monitor the firm’s compliance with the requirements of the Bank Secrecy Act, and the implementing regulations from FinCEN. Reports are required where a transaction involves or aggregates funds or other assets of at least $5,000, and the broker-dealer knows, suspects or has reason to suspect the transaction. FINRA stated that operational risks such as CDD and SAR reviews would be part of its 2019 examination priorities, and that it would assess firms’ compliance with FinCEN’s Customer Due Diligence rule, which became effective on May 11th 2018.
SWEDEN’S LOOMIS CASH HANDLING BUSINESS INVESTIGATING MONEY LAUNDERING ALLEGATIONS
Reuters on 9th May reported that Loomis AB said it would investigate allegations it played a role in a Danish money laundering scandal. Loomis had begun work to hire an external agency to carry out an independent inquiry and would update the market in due course.
ROSATOM PROJECT TO BUILD NUCLEAR POWER UNITS IN IRAN UNAFFECTED BY CURRENT TENSIONS SURROUNDING US SANCTIONS
World Nuclear News on 9th May reported that, in response to the question whether the latest developments around the nuclear deal with Iran will affect nuclear projects in that country, Rosatom Director General Alexey Likhachov told RIA Novosti: “Rosatom has always met and is meeting all its obligations in all of its international projects”. Russian-built Bushehr 1 – the first nuclear power unit in the Middle East – was connected to the national grid in 2011. Bushehr units 2 and 3 are to be completed in 2024 and 2026, respectively. Rosatom subsidiary ASE is the general contractor for the Bushehr project.
REGIONAL ORGANISATIONS IN THE FORMER SOVIET UNION
A report from ETH Zurich says that Moscow is seeking a more influential role in the post-Soviet space and is reorienting its policy towards Asia. Rather than breaking with the West, Russia wants to reposition itself as a central Eurasian great power. In order to gain influence in “Greater Eurasia” and accrue additional international leverage, Russia has led the way in creating the Eurasian Economic Union.
EU DIRECTIVE ON COMBATING FRAUD AND COUNTERFEITING OF NON-CASH MEANS OF PAYMENT
EU Council Directive 2019/713/EU establishes minimum rules concerning the definition of criminal offences and sanctions in the areas of fraud and counterfeiting of non-cash means of payment. It facilitates the prevention of such offences, and the provision of assistance to and support for victims. It includes provision for the exchange of information through national points of contact in each Member State. The Directive is to be transposed into national law by 31st May 2021. The new Directive updates and supplements Council Framework Decision 2001/413/JHA, which it replaces, in order to include further provisions on offences in particular with regard to computer-related fraud, and on penalties, prevention, assistance to victims and cross-border co-operation.
PHARMACEUTICAL DRUGS CARTEL “HOLDS ZIMBABWE TO RANSOM”
On the 10th May, the Zimbabwe Mail reported claims that a pharmaceutical drugs cartel, comprising mainly of business people with links to India, is holding the country to ransom, amid revelations that only a few wholesalers have permission to distribute most “fast-moving” and cheaper drugs from India to the local market.
AUSTRALIA: RUSSIAN TYCOON LOSES THIRD BAIL BID AHEAD OF US EXTRADITION HEARING
On 10th May, the West Australian reported that Russian-born Perth internet millionaire Zhenya Tsvetnenko’s latest attempt to get out of jail before an extradition hearing to face a US court over claims he was part of a multi-million text message scam has failed.
ENGLISH PARISH COUNCIL FACES HUGE LEGAL BILL AFTER NUNS CLEARED OVER FRAUD ‘CONSPIRACY’
The Law Society Gazette on 10th may carried this story, where the High Court dismissed a claim that Roman Catholic nuns fraudulently conspired to profit from a residential development on the site of a former convent school. A parish council had alleged that certain sisters fraudulently conspired to gain the benefit of a planning permission by misrepresenting the historic use of the school playing fields. The council contended that planning consent meant the order was able to sell the site to developers for more than £31 million.
FRAUDSTERS WHO POCKETED £1 MILLION FROM USED CAR SCAM MUST PAY BACK £488,000 OR FACE JAIL
Birmingham Live on 10th May reported that father and sons Guiseppe, Giovanni and Savatori Oliverio were ordered to pay back the cash within 16 weeks. Tunstall Trade Car Sales owner, Guiseppe Oliverio, aged 53, , was jailed after admitting fraudulent trading, conspiracy to defraud, conspiracy to apply false trademarks and perverting the course of justice. The sons were convicted of connected offences. Guiseppe Oliverio – who was described as the ‘prime mover’ in the scam – provided logbooks with fake stamps to make buyers think motors had been serviced so he could sell them at a higher price.
REPORT ORDERED BY PRESIDENT TRUMP WILL SHAPE FUTURE ADMINISTRATION ACTION ON COUNTERFEIT AND PIRATED GOODS
A briefing from Hogan Lovells on 8th May says that the report, due on 30th October will require the collection and analysis of information as well as preparation of recommendations concerning trade in counterfeit and pirated goods through online third-party marketplaces and third-party intermediaries. It reminds one that the OECD has estimated the value of the annual trade in counterfeit and pirated goods at $500 billion with 20% of the trade infringing on the IP rights of US persons. The Presidential memo calls for expanded co-operation and information sharing among agencies as well as the increased application of technology.
SINGAPORE REVOKES SHIP FUEL SELLER’S OPERATING LICENCE
Customs Today on 10th May reported that the Maritime and Port Authority (MPA) of Singapore has stripped marine fuel services provider Southernpec (Singapore) Pte Ltd of its licence to operate bunker barges that refuel ships in the port. Investigations revealed it had engaged in bunkering malpractice, using a magnet to interfere with the mass flow meter (MFM) during a fuelling operation. Southernpec in 2018 ranked as Singapore’s 30th-largest marine fuel supplier by volumes delivered out of 51 operators, according to the MPA.
BANGLADESH: ENTIRE EXPORT-IMPORT TRADE TO COME UNDER SCANNING SYSTEM
Customs Today on 10th May reported that Bangladesh’s entire export-import activities will be brought under the scanning system to check tax-dodging and money laundering. It says that Chittagong Port will procure 2 scanners, making a total of 6, and the government has a plan to install 4 other scanners at other ports and goods entry points to check for any illegal business.
ROUND-UP OF CORPORATE CRIME DEVELOPMENTS WORLDWIDE – SPRING 2019
CMS Law has published the Spring 2019 edition of “The Verdict”, which includes articles on the extension of corporate criminal liability in Chile, the new crime of obstruction of justice and money laundering developments in the Czech Republic, and many other developments in various countries.
UK: DISCLOSURE OBLIGATIONS OVERRIDE FOREIGN CRIMINAL LAW BREACH
On 9th May, Allen & Overy published a report on the Court of Appeal case of Bank Mellat v HM Treasury, in which the Court ordered production of unredacted documents, subject to confidentiality measures, in the interests of ensuring a fair trial, even though complying with this order would place the disclosing party in breach of Iranian criminal law. It says that the case illustrates how the English court exercises its discretion to make such an order, concluding here that the importance of the documents to the fair disposal of the proceedings outweighed the risk of prosecution.
EXTENSIVE TRAFFICKING ROUTES AND CUSTOMS LOOPHOLES MAKE VIETNAM A DRUG TRANSIT HUB
VN Express on 10th May reported that Vietnam’s long borders, multitude of trafficking routes and customs loopholes make it a major drug trafficking hub, top drug officials admit in an online conference. Long borders, multiple ports and easy overland connectivity with other countries make Vietnam a prime location for transiting drugs.
CUSTOMS DEPARTMENT FINDS FAKE SHOES AT LUXURY STORE IN PRAGUE
The Prague Daily Monitor on 10th May reported that Czech Television reports that customs officers found a number of high-end counterfeit limited-edition Nike shoes, at a luxury goods store. The customs department was warned by Nike, after an anonymous tip to the trademark holder. The shop owner claims that she did not know they were fakes and the customs department is trying to ascertain the origin of the shoes.
“TIMBER LAUNDERING” IN PERU: THE MAFIA IN THE MIDDLE
Insight Crime on 9th May carried an article on the illegal timber sector in Peru – from the loggers themselves to the timber traffickers who move the real volume and make the real money, hiding behind the facades of legal companies and “ghost companies”. Then there are the sawmills, and others involved in “laundering” the timer, making it appear legitimate. Many of the biggest players in the illegal wood trade are logging companies and timber conglomerates that launder illegal wood through their own legal forest concessions.
THE PATH FORWARD ON WTO REFORM
An article from Chatham House on 7th May says that, though it is under political pressure, there are reasons to be hopeful about the World Trade Organisation’s future. It says that all 3 of the WTO’s functions are under pressure and in need of reform: administering multilateral trade rules, serving as a forum for trade negotiations and providing a mechanism to settle trade disputes. To quell US concerns, the EU has made concrete proposals and Canada convened a meeting of trade ministers from 13 WTO members in 2018 to discuss reform; which the US has thus far rejected. It does says that efforts to resurrect the WTO’s relevance as a forum for trade liberalisation is an area where green shoots are sprouting, and recently, 76 WTO members – including the US, China, Japan and the EU – agreed to start negotiating rules on e-commerce. The article argues that, to be successful, reforming the WTO will have to address all 3 of its functions. But, because decisions at the WTO are based on consensus, the chances for a fundamental overhaul are slim. Therefore, WTO reform should cover broader institutional issues and members should revisit some of the organisation’s principles and system of decision-making.
FRANCE CONFIRMS CONTESTED ARMS SHIPMENT TO SAUDI ARABIA
On 8th May, France 24 reported that a new shipment of weapons will head for Saudi Arabia, despite claims Riyadh is using the arms in the Yemen war.
UK: 14-YEAR BAN FOR BRAZILIAN SOCIAL HOUSING INVESTMENT BOSS
On 9th May, the Insolvency Service reported in a news release that Anthony Jon Domingo Armstrong-Emery, 41, who has links to Gibraltar, failed to appear at the High Court on 15th March, where the Chief Registrar handed down a Disqualification Order in his absence. He is banned for 14 years from directly or indirectly becoming involved, without the permission of the court, in the promotion, formation or management of a company. He and others were directors of Ecohouse Developments Ltd which offered investments in the construction of social housing in Brazil, under the ‘Mihna Casa, Mihna Vida’ scheme. Investors would typically pay £23,000 per unit and would expect to receive their capital plus a 20% return 12 months later. However, by January 2015, it was placed into liquidation as it could not pay its debts, owing more than 350 investors c.£21 million. A court heard that the directors had caused Ecohouse to maintain inadequate accounting records and did not deliver these to the liquidators and, as a result, the liquidators were unable to explain several substantial transactions.
BRITANNIA FIRST P+I CLUB TO JOIN MARITIME ANTI-CORRUPTION NETWORK (MACN)
Insurance Maritime News reported on 10th May that Britannia Club has become a member of MACN. It said that it was the first P&I Club to do so. MACN was established in 2011 by a group of maritime companies committed to eradicating the industry of all forms of corruption. It is now a global business network of over 100 members, representing a sizeable percentage of the global fleet.
LUTON COACH BOSS BANNED FOR HIDING FLEET
On 8th May, a news release from the Insolvency Service reported that Craig Andrew Hughes, 27, a director of HL Tours Limited has been banned for 9 years after intentionally hiding company assets, including 3 coaches worth almost £40,000, from the liquidator.
CHINA DOES NOT DISCLOSE CONTENTS OF NORTH KOREA UN SANCTIONS REPORT
KBS World Radio in South Korea on 9th May reported that China has delivered a report to the UN on the status of its implementation of sanctions against North Korea, but did not reveal its contents to the public.
EU COURT DISMISSES IRISL DAMAGES CLAIM
The EU General Court on 8th May said that the European Council had not made an error of assessment even though the listings of the Islamic Republic of Iran Shipping Lines (IRISL), and 6 associated companies of 2010, were annulled in 2013. It held that the EU Council did not deviate from the conduct expected from an administrative authority exercising ordinary care and diligence.
EU BACKS NICOSIA, HINTS AT SANCTIONS AGAINST ANKARA
EurActiv on 10th May reported that EU Member States have supported Cyprus in its stand-off with Turkey over the latter’s illegal drilling activities in its exclusive economic zone (EEZ) at the Sibiu EU summit. The EU decided to closely monitor Turkey’s activities off Cyprus and re-examine the issue at the next informal summit on 28th May, or at the European Council in June.
INDIAN SAILORS HELD CAPTIVE BY NIGERIAN PIRATES
On 10th May, Defence Web reported that 5 Indian sailors remain captive after being kidnapped by pirates off the coast of Nigeria last month, being abducted when their vessel, the oil tanker Apecus, was boarded off Lagos. There have been multiple incidences of piracy in the Gulf of Guinea over the last month, it says, with the most recent occurring on 5th May when Nigerian pirates hijacked the heavy lift vessel Blue Marlin. It was freed by Spanish and Equatorial Guinea naval personnel 2 days later and 10 pirates apprehended.
BUSINESS SUSPENDED FOR 40 FOREIGN COMPANIES IN LIBYA, INCLUDING TOTAL
On 10th May, Defence Web reported that Libya’s internationally recognised government suspended operations of 40 foreign companies, including French oil firm Total. A ministry said the companies’ licences had expired.
UK – REVIEW OF DRUGS: CALL FOR EVIDENCE
A news release from the Home Office on 10th May contained a call for the submission of evidence for a review which aims to provide a comprehensive picture of the use and supply of illicit drugs and to identify what more could be done to reduce harm to individuals and society. The first part will summarise the existing evidence relating to drug use, supply and effects, including current trends and future risks; to highlight the most important gaps in that evidence; and to suggest how to address those gaps.
FISH FEED FRAUDSTER SENTENCED FOR DISHONESTLY CLAIMING UP TO £4.7 MILLION IN GOVERNMENT GRANTS
A news release from the CPS on 10th May reported that a persistent fraudster, Anthony Smith, 72, who dishonestly claimed up to £4.7 million in government grants to support his companies in an elaborate aquaculture business and who took part in a prolonged fraud over a 5-year period has been sentenced to 3 years and 9 months in custody. He falsely promised the enterprise would bring 120 new jobs and investment to Carmarthenshire but in reality, only 11 people were employed as a result of the fraud.
KENYA ARRESTS 75 TAX OFFICIALS ON SUSPICION OF CORRUPTION
Reuters on 10th May reported that 75 Kenyan tax agency staff were arrested on suspicion of abetting tax evasion and bribery, the latest effort by authorities to fight corruption. The staff have not been charged and are being questioned. They work in the domestic tax department and customs and border control, and are accused of helping to fraudulently clear cargo and alter tax returns to help people dodge tax payments. Dozens of Kenyan government officials and business people have appeared in court since May 2018 in a new drive to tackle widespread graft.
SPAIN ARRESTS FORMER VENEZUELAN OFFICIAL ON US WARRANT
The State on 10th May reported that Spanish police say they have arrested Javier Alvarado Ochoa, Venezuela’s former minister of electrical development, on a warrant from the US on charges related to alleged money laundering linked to PDVSA. He is also under investigation in Portugal re possible bribery charges involving a Lisbon bank.
IRISH MAN FACING MORE THAN 100 YEARS IN US PRISON FOR ALLEGED $2.5 MILLION CRYPTOCURRENCY FRAUD
The Irish Independent on 10th May reported that Conor Freeman, 20, was arrested at his home taken before the High Court in Dublin where he was remanded in custody until May 22nd. Freeman and 5 others have been indicted on 15 counts with wire fraud, conspiracy to commit wire fraud and aggravated identity theft. The indictments relate to 7 online attacks that resulted in the theft of cryptocurrency valued at about $2,416,352. According to the indictment, the defendants are members of “The Community” and are alleged to have participated in thefts of victims’ identities in order to steal cryptocurrency via a method known as “SIM hijacking”.
CONNOLLY RULING CREATES COMPLICATIONS FOR PROSECUTORS AND COMPANIES IN US SEEKING TO CO-OPERATE
On 10th May, Wilmer Hale published a briefing on a decision of a court in the Southern District of New York in United States v. Connolly. As a result, statements made by an employee to outside counsel during an internal investigation were subject to certain constitutional protections because the government had “outsourced” its investigation to company counsel and company counsel’s actions were consequently “fairly attributable” to the government. It says that a number of the steps taken by company counsel in the matter are standard for a company hoping to receive co-operation credit in related regulatory or law enforcement proceedings. This decision, therefore, raises significant questions about how boards of directors, companies, law firms and the government will approach internal investigations in the future. In the case, 2 former Deutsche Bank employees argued that certain statements he had made to the bank’s outside lawyers while still an employee had been used against him in the criminal case. They relied on a 1966 case where former police officers successfully argued that the government could not introduce incriminating statements those officers had made to prosecutors in interviews the police officers had been compelled to sit for under threat of termination. In the new case, the 2 men argued that statements to the bank’s lawyers were effectively compelled by the government because of the manner in which the government co-ordinated with and relied on the investigation conducted by the bank, and because he understood he would be terminated if he refused.
UK PHARMACISTS LACK KNOWLEDGE AND CONFIDENCE AROUND CANNABIS, STUDY FINDS
The Pharmaceutical Journal on 10th May reported that in 3 studies sampling pharmacists’ beliefs, knowledge and concerns about medical cannabis, researchers found that self-reported knowledge and confidence was low. It reports that, of 3 studies sampling pharmacists, based in Canada, US and Australia, the Canadian study found that just over half of hospital pharmacists agreed that, overall, medical cannabis was effective. Across all 3 studies, however, self-reported knowledge was quite low.