15th May 2019
CANADA: WHEN IS A PAINTING OF ‘NATIONAL IMPORTANCE’?
On 14th May, the Law Times published an article about a case where the Federal Court of Appeal said that a 127-year-old impressionist painting is of “outstanding significance”” and “national importance” and may not be exported from Canada. The case involved a painting sold to a gallery in the UK, after 60 years in the private collection of a Canadian collector. The application was refused, this decision being upheld by a seven-member review board. The board said that the painting was on the Canadian Cultural Property Export Control List, and was of such outstanding significance and national importance that “its export would significantly diminish the national heritage”. The article considers the criteria for refusal of an export licence, saying that Parliament had intended to give the review board “broad discretion” to assess what constituted “national importance”.
AUSTRALIA: CANNABIS COMPANY EXPORT LICENCE
Business News Australia on 15th May reported that THC Global, a developer of medicinal cannabis and a distributor of hydroponics equipment, had been granted a new export license approved by the Office of Drug Control. Needing more product, THC will boost growing capacity at its existing Northern NSW cultivation site by an additional 150,000sq meters. Another company, it is said, called EVE will also be able to purchase cannabis which has been cultivated from the new site in order to produce its signature ‘cannabis honey’ under the Meluka Health brand.
ALLEGED “KIDNAPPING” OF TANKER BY VENEZUELA
On 15th May, the PanAm Post reported that Venezuela’s intelligence service, SEBIN, is said to have recently forced the crew of the “Manuela Sáenz” to transport oil to Cuba, reflecting a new strategy of piracy and hijacking to evade sanctions. It is alleged that intelligence officials decided to replace the captain when he refused to take the ship to the island, and intimidated the crew who had protested against the measure, and that during the voyage the vessel’s GPS tracker system was disconnected,
WORLD BANK GROUP SANCTIONS SIEYUAN ELECTRIC OVER FRAUD
Modern Ghana on 14th May reported that the World Bank had announced the 15-month debarment of Shanghai-based Sieyuan Electric Co., Ltd, a company that specializes in research and development relating to electric power technology, in connection with alleged fraudulent practices under the Inter-Zonal Transmission Hub Project, which was part of the Western Africa Power Pool Programme. It means that Sieyuan and its affiliates are ineligible to participate in World Bank-financed projects, and is part of a settlement agreement under which the company acknowledges responsibility for the underlying sanctionable practices.
https://www.modernghana.com/news/932524/world-bank-group-sanctions-sieyuan-electric-over-fraud.html
UKRAINE CIVIL SOCIETY GROUPS CALL FOR US SANCTIONS AGAINST GOVERNMENT OFFICIALS
The Kiyv Post on 14th May reported that Ukrainian civil society groups are seeking US sanctions on Prosecutor General Yuriy Lutsenko and Interior Minister Arsen Avakov. 20 organisations cited the Global Magnitsky Act, which allows U.S. authorities to block assets and impose visa bans on people who have committed human rights offenses or are involved in corruption schemes and they accused Avakov and Lutsenko of gross violations of human rights, sabotage of reforms, corruption and obstruction of justice — accusations the individuals deny.
https://www.kyivpost.com/ukraine-politics/watchdogs-want-sanctions-against-avakov-lutsenko.html
TAIWAN-NORTH KOREA (NON-)TRADE
On 14th May, an article in 38 North examined the trading relationship between Taiwan and North Korea. It starts by saying that North Korea attempted to sell submarine designs to Taiwan in 2016, saying that it was not the first business overture between Taiwan and North Korea, though it is the one most closely tied to Taiwan’s security. It says that interest persists in expanding commercial and business opportunities with the North. It points out that Taiwan is not a member of the UN and therefore is not obligated to comply with UN Security Council sanctions on North Korea – nonetheless it scrupulously complies with these sanctions. Trade with North Korea fell to zero in 2018, following the decision by the Taiwanese government to impose a total ban on trade with North Korea in September 2017.
https://www.38north.org/2019/05/pkennedy051419/
WHY A CENTRALISED KYC DATABASE WILL NEVER BE VIABLE
Tech Radar Pro on 14th May published an article (by the CEO of a KYC support company) seemingly triggered by the imminent “death” of Bloomberg’s Entity Exchange platform due to lack of uptake, described as the latest confirmation of this fact. It starts by saying that the sharing model where a group of companies agree on standards to exchange information on request seems like a good idea. However, it argues, every centralised KYC project has serious faults that are the same in every FATF jurisdiction, problems that have proven so far to be insurmountable. First, a centralised KYC repository is a great hacker target – and a huge reputational and civil liability risk. Second, legislation such as GDPR has increased the risk of holding pooled information. The political and economic haggling between regulated institutions is impossible to overcome, and there is the issue of exposing customer data among competitors. Finally, there is the question of who actually owns the personal KYC data and who can profit from it.
https://www.techradar.com/news/why-centralized-kyc-will-never-be-viable
AML REGULATION OF CRYPTOCURRENCY: US AND GLOBAL APPROACHES 2019
On 14th May, Allen & Overy said that members of Washington, D.C.’s Financial Services Regulatory and Litigation and Investigations groups recently authored an article on US and global cryptocurrency AML risk considerations. The article first appeared in the April 2018 edition of the ICLG to: Anti-Money Laundering, but has been updated to reflect the current state of AML regulation of cryptocurrency in the US and in selected jurisdictions across the globe.
THE CONSEQUENCES OF VOLUNTARY AML SELF-DISCLOSURE IN THE US
On 9th May, an article (available to read free online) from Crutcher LLP on the ICLG website looks at the question of whether or not to voluntarily disclose. It looks at what it calls “uncertain” guidance from the DoJ and that of other agencies, recent BSA/AML and FCPA resolutions and other considerations.
CONTEMPORARY ASIAN DRUG POLICY – INSIGHTS AND OPPORTUNITIES FOR CHANGE
The RAND Corporation has published a report, the outcome of research, which says that, historically, countries in Asia have addressed illicit drug use and supply with harsh punishments, including compulsory treatment and the death penalty. The region has long espoused the goal of creating a drug-free society, a goal that has been abandoned in other parts of the globe for being infeasible. The report describes the illicit drug policy landscape for the Association of Southeast Asian Nations (ASEAN), plus 3 other countries (China, Japan, and South Korea), which account for about 30% of the world’s population. The authors also present 3 case studies on the shifting drug policy landscape in Asia:
- the violent crackdown on people who use or sell drugs in the Philippines;
- Thailand’s move from a similar crackdown toward an alternative approach of reducing criminal sanctions for drug use and improving access to medication treatment and needle exchange; and
- China’s emergence as a major source of many new chemical precursors and drugs, like fentanyl, that are exported outside Asia.
One of the findings of the research was that China is a leading source of legitimate chemicals for global markets, but gaps in regulatory oversight and an abundance of manufacturers permit illicit export of precursors and synthetic drugs, including fentanyl. China has attempted to bring new chemicals under regulatory control, but producers are quick to adapt, impeding efforts to stem the flow to global markets.
https://www.rand.org/pubs/research_reports/RR2733.html
ILLICIT INFLUENCE: THE USE OF ENERGY AS A LEVER FOR INFLUENCE BY RUSSIA
On 25th April, NPO C4ADS published Part 2 of a report into the ways Russia is said to exercise hidden and illicit influence in or over Western countries. Part 1 in December 2018 looked at the Russian-domiciled First Czech Russian Bank (FCRB) and money laundering by corrupt elites on a massive scale through the “Russian Laudromat”. Part 2 says that the Russian government has learned to use energy (oil and gas) to cultivate politically important relationships in consumer countries and, at the same time, Russia uses its tools of asymmetric influence, including political interference and disinformation, in furtherance of its energy goals.
https://raytoddblog.files.wordpress.com/2019/05/1b8b2-illicitinflucencept2.pdf
MORE THAN HALF OF THE UK’S VERY LARGE PRIVATE COMPANIES LACK A CLEAR CORPORATE GOVERNANCE FRAMEWORK
On 15th May, Baker McKenzie reported results of a survey saying that, as the Government reforms requiring very large private companies to report on their corporate governance arrangements come into force, over a quarter of the affected companies surveyed say that they are still struggling to implement the changes necessary to comply, with 56% noting that they lack a clear corporate governance framework in their organisation. 50% admit that they have limited or no budget available to address the new reporting requirements, though 80% say that good corporate governance is a priority for their board.
GIBRALTAR: POLICE HAVE ARRESTED A SENIOR CIVIL SERVANT ON SUSPICION OF MISCONDUCT IN PUBLIC OFFICE AND FRAUD BY ABUSE OF POSITION
The Gibraltar Chronicle on 15th May reported that this stems from an ongoing investigation in which 3 local men were arrested over allegations of conspiracy to defraud a local company and several computer misuse offences.
http://chronicle.gi/2019/05/police-arrest-senior-civil-servant-part-ongoing-fraud-investigation/
IMPACT OF THE 2017 US SANCTIONS ON VENEZUELA
On 14th May, the Brookings Institute published a paper referring to a research paper “Economic sanctions as collective punishment: The case of Venezuela”, which set out to assess the causal effects of the financial sanctions imposed by the US on Venezuela in August 2017. In the new paper, the authors revisit the evidence for the claims made in the earlier research paper for the sanctions’ effects, and present several findings. The new paper finds that the methodology used was unfit to estimate the causal effect of the 2017 sanctions on the Venezuelan economy, and thus the conclusions were invalid. The new analysis finds insufficient evidence to conclude that the sanctions were responsible for the worsening of the socio-economic crisis in the country, and the bulk of the deterioration in all the socio-economic indicators occurred prior to the August 2017 sanctions.
SANCTIONS: UKRAINE HAS INTRODUCED AN EMBARGO ON RUSSIAN CEMENT AND PLYWOOD
On 15th May, a news release announced a Resolution to expand the list of prohibited goods originating from Russia – now banned are Portland cement, aluminous cement, slag cement, sulfate cement and similar hydraulic cements, painted or unpainted, ready or otherwise, as well as plywood, panels veneered panels and similar materials with layered wood.
DISCLOSURE OF TAX AVOIDANCE SCHEMES: TAX AVOIDANCE USING OFFSHORE TRUSTS (SPOTLIGHT 52)
On 15th May, HMRC published a Spotlight concerning decisions by the First-tier Tribunal in 2 cases using tax avoidance schemes and disguised remuneration arrangements to avoid tax and National Insurance – Hyrax Resourcing Limited and Curzon Capital Limited. In both cases, the arrangements were designed to disguise income for which tax and NI contributions would be due. Scheme users were rewarded with amounts paid as loans which they ultimately owed to an offshore benefit trust. The FTT agreed with HMRC in both these cases that the arrangements were notifiable under the DOTAS rules.
VAT FRAUD: NEW TOOL TO HELP EU COUNTRIES CRACK DOWN
On 15th May, the EU announced the launch of the latest EU weapon to help cut down on criminal VAT fraud, and will allow Member States to rapidly exchange and jointly process VAT data, leading to earlier detection of suspicious networks. The launch of the Transaction Network Analysis (TNA) tool comes as recent media investigations once again laid bare the huge costs of VAT fraud for public finances, with criminal gangs profiting at the expense of honest taxpayers.
http://europa.eu/rapid/press-release_IP-19-2468_en.htm
PIRATE ATTACKS CONTINUE IN WEST AFRICA
Defence Web on 15th May reported that the Gulf of Guinea has recorded its third ship hijacking this month, with a chemical tanker captured off Togo, as the region continues to see a spike in maritime insecurity. Last month the International Maritime Bureau noted that the Gulf of Guinea represented a high number of piracy and armed robbery attacks at sea, with 22 incidents reported in the first quarter of 2019, and the region also accounted for all of the worldwide crew kidnappings.
https://www.defenceweb.co.za/featured/pirate-attacks-continue-in-west-africa/
UK: MUTUAL LEGAL ASSISTANCE REQUESTS
On 15th May, the Home Office published information for competent authorities abroad (and in the UK) about obtaining evidence within the UK (or abroad) to assist in criminal investigations or proceedings. The assistance includes the exchange criminal record information between EU states and civil recovery requests.
https://www.gov.uk/guidance/mutual-legal-assistance-mla-requests
KENYA: BOND TRADERS FINED FOR INSIDER TRADING FRAUD
On 15th May, the Standard Digital reported that another bond trader, Rodrick Muhoro, has been fined $2 million by the Capital Markets Authority (CMA) for insider trading of State-issued bonds. CMA had in February fined former CBA Capital bond trader David Maena $1.6 million for supplying Muhoro with insider information on bond trades.
https://www.standardmedia.co.ke/business/article/2001325667/bond-trader-fined-sh208m-for-fraud
2 ARRESTED IN CORRUPTION INVESTIGATION AT GENEVA AIRPORT
Swissinfo on 15th May reported that 2 people, including the head of security at Geneva airport, have been arrested in a corruption case involving the awarding of publicly-funded contracts.
FinCEN REISSUES REAL ESTATE GEOGRAPHIC TARGETING ORDERS (GTO) FOR 12 METROPOLITAN AREAS
On 15th May, FinCEN announced the renewal of its Geographic Targeting Orders (GTO) that require US title insurance companies to identify the natural persons behind shell companies used in all-cash purchases of residential real estate. The purchase amount threshold remains $300,000 for each covered metropolitan area. It says that GTO continue to provide valuable data on the purchase of residential real estate by persons possibly involved in various illicit enterprises.
BRITISH COLUMBIA TO HOLD PUBLIC INQUIRY INTO MONEY LAUNDERING
On 15th May, City News reported that the British Columbia government will hold a public inquiry into money laundering, following 2 reports examining money laundering in the province in the past few months.
DEUTSCHE BANK PANAMA PAPERS PROBE LEADS TO MORE GERMAN RAIDS
The Luxembourg Times and others on 15th May reported that suspects’ homes, more than 20 banks, tax advisers and asset-management companies have been raided in a tax evasion investigation. The raids are said to target clients who enlisted help from the bank’s BVI unit to set up offshore companies.
BAHAMAS: CROWN SEEKING A SECOND TRIAL FOR FORMER PROGRESSIVE LIBERAL PARTY SENATOR ON CHARGES OF BRIBERY AND EXTORTION
The Nassau Guardian on 15th May reported that Crown prosecutors are seeking a second trial for former Progressive Liberal Party Senator Frank Smith on charges of bribery and extortion. Smith was acquitted in February of allegations that from 2016 to 2017 he abused his position as Public Hospitals Authority (PHA) chairman.
https://thenassauguardian.com/2019/05/15/crown-argues-for-new-corruption-trial-for-frank-smith/
UK: 4 ONLINE CASINO OPERATORS FINED £4.5 MILLION
On 15th May, ShareCast reported that the Gambling Commission had fined 4 online casino operators into standards of AML controls, with many others told to improve their procedures and/or formulate action plans. It follows £14 million in penalties being issued to other operators in November as a result of the same investigation. The new penalties range from £230,000 to £2.2 million.
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