OTHER THINGS YOU MAY HAVE MISSED – JUNE 17

17th June 2019

HIGH COURT PROVIDES GUIDANCE ON REGISTRATION REQUIREMENTS FOR ENFORCING EUROPEAN JUDGMENTS IN ENGLAND

On 14th June, CMS Law published an article about a recent case which considered the requirements for registering a foreign judgment for enforcement in England under the Brussels Regulation providing a detailed interpretation of the operation of the registration process and helpful guidance to parties seeking to enforce judgments under the Regulation or its updated version, the Recast Brussels Regulation (which replaced it in 2015).  The article says that the decision provides some helpful clarity on the English courts’ interpretation of the requirements of the Brussels Regulation, including its willingness to consider additional grounds of appeal beyond those expressly listed in the Regulation itself.

http://www.cms-lawnow.com/ealerts/2019/06/high-court-provides-guidance-on-registration-requirements-for-enforcing?cc_lang=en

Q&A ON CAYMAN AML REGIME: SERVICE PROVIDERS, DELEGATION AND RISK-BASED APPROACH

On 4th April, Ogier published this article concerned with amendments made to the Islands’ AML regime in 2018.

https://www.ogier.com/publications/qa-the-cayman-aml-regime-service-providers-delegation-and-the-risk-based-approach

GREEK PM SAYS MAY SEEK SANCTIONS AGAINST TURKEY IN GAS ROW

The Tasnim News Agency in Iran on 17th June reported that Greece and Cyprus will push ask EU states to penalise Turkey, including the possible option of sanctions, if Ankara is verified to have started drilling for gas west of Cyprus, the Greek Prime Minister said.  The article says that a Turkish ship has been anchored west of Cyprus since May and Cyprus and Greece say the vessel is encroaching into Cyprus’s exclusive economic zone (EEZ) – but Turkey says the area is on its continental shelf.  However, EurActiv reported that Turkish President Recep Tayyip Erdoğan  said Turkey would not back down from gas exploration in Cyprus after southern European leaders urged Ankara to stop.

https://www.tasnimnews.com/en/news/2019/06/17/2033951/greek-pm-says-may-seek-sanctions-against-turkey-in-gas-row

IRAQ SECURES NEW US SANCTIONS WAIVER FOR IRANIAN POWER IMPORTS

S&P Global from Platts on 16th June reported that the US State Department has granted Iraq a 120-day sanctions waiver allowing it to keep importing Iranian electricity and natural gas to ease power shortages.  The exemptions have gotten progressively longer, from a 45-day waiver granted when US sanctions on Iran’s energy customers snapped back in November. Iraq then secured two2in-a-row 90-day waivers.  Iraq is heavily reliant on Iran to maintain its power supply.

https://www.spglobal.com/platts/en/market-insights/latest-news/natural-gas/061619-iraq-secures-new-us-sanctions-waiver-for-iranian-power-imports

6 ARRESTED ON SUSPICION OF SMUGGLING GEORGIANS INTO ISRAEL

The Jerusalem Post on 17th June reported that Israeli police have arrested 6 people and detained 8 others on suspicion of smuggling Georgian migrants through Ben Gurion Airport.

https://www.jpost.com/Israel-News/Six-arrested-under-suspicion-of-smuggling-Georgian-citizens-into-Israel-592773

HONG KONG SETS OUT AML/CFT BEST PRACTICES FOR SME ONBOARDING

Regulation Asia on 17th June reported on Hong Kong Monetary Authority has offered guidance on the application of AML/CFT measures to its regulated bodies when onboarding SME customers.  This followed a review which found that improvements in the risk-based approach adopted by institutions was necessary.   It noted that in some cases there is insufficient guidance for frontline staff to support the use of discretion and judgement in the application of the risk-based approach.

https://www.regulationasia.com/hkma-sets-out-aml-cft-best-practices-for-sme-onboarding/

The Circular containing the advice is at –

https://www.hkma.gov.hk/media/eng/doc/key-information/guidelines-and-circular/2019/20190614e2.pdf

DAUGHTER OF ENRC FOUNDER CHARGED IN CONNECTION WITH GRAFT PROBE

The Kazakh Telegraph Agency on 17th June reported that the daughter of one of the founding oligarchs of ENRC, the miner that delisted from the FTSE 100 amid corruption allegations, has apparently been charged by the SFO.  Anna Machkevitch was charged in connection with the long-running corruption investigation into ENRC by the SFO – for failing to produce documents demanded by the SFO under a section 2 notice.

https://kaztag.kz/en/news/daughter-of-enrc-founder-charged-in-connection-with-graft-probe

BRIEFING: MAKING TAX DIGITAL

On 14th June, the House of Commons Library published a briefing paper on the HMRC strategy to implement a new system of digital tax accounts to be used by businesses, the self-employed and landlords.  The briefing paper discusses the background to this reform.

http://researchbriefings.files.parliament.uk/documents/CBP-7949/CBP-7949.pdf

US CUSTOMS SUPERVISOR HAD ‘HIGHLY SUSPICIOUS’ CONTACT WITH CHINESE OFFICIALS, PROSECUTORS SAY

Customs Today on 17th June reported on the case of US Customs and Border Protection supervisor Wei “George” Xu.  Xu, 56, was arrested in February and charged with dealing firearms without a licence.  But guns he has been held without bond since his arrest months ago amid concerns about his secret-level security clearance and what prosecutors described as “highly suspicious” contacts with Chinese consular officials in Los Angeles.

http://www.customstoday.com.pk/us-customs-supervisor-had-highly-suspicious-contact-with-chinese-officials-prosecutors-say/

NETHERLANDS: MASSIVE INCREASE IN ILLEGAL KETAMINE SEIZURES BY CUSTOMS

The NL Times on 14th June reported that last year customs officers seized 800 kg of ketamine, compared to only 2.6 kg in 2016.  Ketamine was developed as an anaesthetic and first used during the Vietnam War, and it is still used legitimately today.  However, it appeared as a “party” drug in the 90s, though it is said not to be as popular in the Netherlands as cocaine and ecstasy.

https://nltimes.nl/2019/06/14/massive-increase-illegal-ketamine-seized-customs

IRELAND: ANTELOPE HEAD AMONG UNUSUAL SEIZURES BY CUSTOMS OFFICIALS

The Irish Times on 17th June carried an article about unusual seizures by customs officials targeting smugglers at the country’s ports and airports this year.  These included the head of an oryx antelope from Turkmenistan, an ivory tusk of a walrus from Namibia, the teeth of a wild cat from Malaysia, as well as coral from the Maldives and Myanmar.   There were also weapons – including guns, tasers, machetes and samurai swords – ammunition, food and even car parts taken from travelling passengers.  Weapons seized included rifles, guns, stun guns, air guns, pistols, component parts for firearms, lasers, tasers, throwing stars, machetes, samurai and katana swords and many varieties of illegal knives, such as flick, stiletto and butterfly knives.

https://www.irishtimes.com/news/ireland/irish-news/antelope-head-among-unusual-seizures-by-customs-officials-1.3927630

IS A ‘SEIZE AND SIFT’ NOTICE REQUIRED FOR MOBILE PHONES?

On 12th June, a Q&A advice from the Police National Legal Database advised that it did not appear that a “section 52” notice under the “seize and sift” rules, which allow law enforcement to uplift bulk material seized under a warrant and sift through it at another place, where it is not reasonably practicable for it to be sifted through in the place where it was found.  A section 52 notice deals with the requirement to give a notice specifying what has been seized and why.

https://www.pnld.co.uk/your-legal-questions-answered/is-a-seize-and-sift-notice-required-for-mobile-phones/

CANADA MUST END COMPLICITY IN CHINA’S BRUTAL ORGAN-TRAFFICKING REGIME

An opinion piece in The Epoch times on 16th June accused Canada, among other developed countries, of involvement in the purchase and sale of human parts which has become an industry, and it has been supporting it.  It says that organ trafficking is a global phenomenon.  However, forced organ harvesting deserves special attention in the context of the Chinese, where it said to be driven by the state.  The article claims that the Falun Gong, Uyghurs, Tibetans, and some Christian sects are also being targeted.  A Bill in the Canadian parliamentary system seeks to put a stop to Canadian complicity by criminalising organ tourism – as generally, the Canadian Criminal Code only criminalises acts committed in Canada, and thus it is currently legal for Canadians to travel abroad and obtain organs from illicit sources, because such acts do not take place on Canadian soil.  Other important organ importers are named as the US, Australia, Israel, Japan, Oman, and Saudi Arabia.

https://www.theepochtimes.com/canada-must-end-complicity-in-chinas-brutal-organ-trafficking-regime_2965642.html

CANADA: POLICE LAUNCH RAIDS AIMED AT COUNTERFEIT DRUG RING

On 4th June, the Montreal Gazette reported on an investigation opened in 2018, after Canadian Border Services Agency seized about 200,000 counterfeit Xanax tablets.  A series of were aimed at breaking a network alleged to have specialised in the production and export of counterfeit prescription drugs.

https://montrealgazette.com/news/local-news/laval-police-launch-raids-aimed-at-counterfeit-drug-ring

US PUSH FOR BLOCKCHAIN SOLUTION TO CONTROL PHARMACEUTICAL SUPPLY CHAIN

On 17th June, Loadstar reported that IBM and Walmart have been selected for a US government programme to develop a track and trace system for domestic pharmaceutical shipments using blockchain.  With KPMG and Merck, they were chosen by the FDA to participate in the pilot, scheduled for completion in Q4 of 2019.  However, it also notes a report from Gartner Research suggests blockchain has fallen short of its potential so far, with some 90% of supply chain blockchain projects remaining proof-of-concept.

https://theloadstar.com/us-pushes-for-blockchain-solution-to-better-control-pharma-supply-chain/

ISLE OF MAN PUBLISHES RESULT OF CONSULTATION ON MEDICINAL CANNABIS AND GROWING INDUSTRIAL HEMP

On 17th June, a news release advising of reports on these 2 issues after a 6-week consultation period which closed on 20th March.  It says that the number of responses to both was extremely high, with many respondents leaving additional comments and opinions as well answering the tick-box part of the online form.  The consultation into the medicinal use of cannabis garnered the largest number of responses.  By far the clearest result was where a majority of respondents (97%) supported the introduction of a regulatory framework within which industrial hemp production could be permitted in the Isle of Man.  There also appeared to be broad support on the issue of making quality-assured medicinal cannabis available.

https://www.gov.im/news/2019/jun/17/medicinal-cannabis/

GERMAN PROSECUTORS FILE CHARGES AGAINST 2 BRITISH BANKERS OVER SHAM TRADES

On 17th June, Reuters reported that German prosecutors have filed criminal charges against 2 British bankers, accusing the pair of involvement in a fraud that cost the state €440 million.  They had been accused of involvement in fraudulent reclaims between 2006 and 2011 in the so-called “cum-ex” fraud case, which involved trading company shares rapidly around a syndicate of banks, investors and hedge funds to create the impression of numerous owners, each of whom was entitled to a tax rebate.

https://www.reuters.com/article/us-germany-dividendstripping-charges/german-prosecutors-file-charges-over-sham-trades-idUSKCN1TI1J2

BAHAMAS: 24 ARRESTED IN DRUG, ARMS TRAFFICKING RAID

On 17th June, OCCRP reported that police in the Bahamas have announced the arrest of 24 drug and arms traffickers as part of a joint operation with US law enforcement.  They also seized a few pounds of cocaine, cartons of ammunition, and other evidence they believe might be related to organised crime on the island of Bimini.  6 of the 24 suspects were charged with firearm-related crimes.

https://www.occrp.org/en/27-ccwatch/cc-watch-briefs/9978-the-bahamas-24-arrested-in-drug-arms-trafficking-raid

SEC FINES KPMG IN THE US FOR ALTERING INFORMATION AND TRAINING CHEATING

The SEC had charged KPMG LLP with altering past audit work after receiving stolen information about inspections of the firm that would be conducted by the Public Company Accounting Oversight Board (PCAOB).   The SEC’s order also finds that numerous KPMG audit professionals cheated on internal training exams by improperly sharing answers and manipulating test results.  KPMG agreed to settle the charges by paying a $50 million penalty and complying with a detailed set of undertakings, including retaining an independent consultant to review and assess the firm’s ethics and integrity controls and its compliance with various undertakings.

http://www.mondovisione.com/media-and-resources/news/sec-kpmg-paying-50-million-penalty-for-illicit-use-of-pcaob-data-and-cheating/

ONLY A TOTAL BAN ON SECONDARY SALES CAN STAMP OUT MUSIC AND SPORTS TICKET FRAUD

On 16th June, an article on Illicit Trade reported a fraud awareness campaign launched in the UK by Action Fraud designed to encourage members of the public to only buy event tickets from authorised sellers.  It revealed that it had received 4,755 reports of ticket fraud in the 13 months to the end of April this year, noting that victims across the UK lost £1,654,888 to scammers over that period.  Meanwhile, last September a report said that around 12% of Americans said they had bought a concert ticket online that later turned out to be fake.

https://www.illicit-trade.com/2019/06/only-a-total-ban-on-secondary-sales-can-stamp-out-music-and-sports-ticket-fraud/

WHAT ROLE DOES THE WTO HAVE TO PLAY IN FIGHTING CORRUPTION?

A blog post on 17th June from the FCPA Blog asking what has been done to fight corruption, particularly by international organisations like the World Trade Organization (WTO), whose role is regulating international trade.  It refers to an article by the author of the post published by the Journal of World Trade, in which she says she shows that the WTO has increasingly adopted a more clear-cut approach to this problem and finally took an open stand regarding the relationship of anti-corruption measures and trade in its dispute settlement system – tracing this back to 2012.  In 2013, she says, member state members signed the multilateral Trade Facilitation Agreement (TFA) with the purpose of reducing bureaucratic border red tape that increase opportunities for corruption.  A decision of its Appellate Body in 2016 admitted that combating money laundering (as one of the many manifestations of corruption) is a vital interest for society and may run contrary to trade liberalisation – in other words, anti-corruption measures may be justified under WTO law if they restrict trade.  However, she says that the WTO must take additional measures to fight corruption in international trade.

http://www.fcpablog.com/blog/2019/6/17/what-role-does-the-wto-have-in-global-anti-corruption-enforc.html

THE HEAD OF ALGERIAN PARTNER OF VW HELD OVER GRAFT ALLEGATIONS

Middle East Monitor on 17th June reported that an Algerian court has ordered the detention of Mourad Eulmi, head of family-owned firm SOVAC that is a partner of Germany’s Volkswagen AG, on suspicion of corruption – part of a series of anti-graft investigations undertaken since mass protests erupted early this year.  A former head of state bank Credit Populaire d’Algerie (CPA)and 4 officials from the industry ministry were also ordered taken into custody by the same court in connection with the case, it reported.

https://www.middleeastmonitor.com/20190617-algerian-partner-of-germanys-vw-held-over-graft-allegations

DANISH POLICE RAID LOCAL NORDEA HEADQUARTERS AS MONEY LAUNDERING PROBE EXPANDS

Zero Hedge on 17th June reported on the recent police raid on Nordea’s Danish headquarters as part of an ongoing money laundering investigation.  The raid appears to be tied to the Danske Bank investigation.

https://www.zerohedge.com/news/2019-06-17/danish-police-raid-local-nordea-headquarters-money-laundering-probe-expands

THE UK INVESTIGATORY POWERS ACT, SAFEGUARDS AND BULK INFORMATION POWERS

On 17th June, the Home Office blog posted an article which gives more information on the Act, the safeguards it created and the way investigatory powers are used – in particular in relation to “bulk powers”, where the Act provides for the use of interception, communications data and equipment interference in bulk.  These can be used to obtain large volumes of data that are likely to include communications relating to terrorists or serious criminals.

https://homeofficemedia.blog.gov.uk/2019/06/17/fact-sheet-what-are-investigatory-powers/

SWEDEN REVOKES ONLINE GAMBLING LICENCE FOR AML AND SOCIAL RESPONSIBILITY FAILINGS

On 17th June, Calvin Ayre reported that Spelinspektionen has announced that it had ordered the immediate revocation of the online casino and sports betting licences of SafeEnt Ltd, a subsidiary of Sweden-based Global Gaming, after the regulator found the company’s social responsibility and AML measures to be inadequate.

https://calvinayre.com/2019/06/17/business/ninja-casino-swedish-license-yanked-aml-social-failures/

GERMANY HAS LAUNCHED NEW CAMPAIGN AGAINST ONLINE CASINO PAYMENT PROCESSORS

Calvin Ayre on 17th June reported that Germany has launched a new campaign against online casino payment processors following the approval of a new temporary federal gambling treaty.  The Lower Saxony state government had informed an unidentified international payment processor to immediately suspend its relationships with internationally-licensed online casino operators targeting German customers, saying that it expected payment service providers to observe the federal gambling treaty’s requirement to refrain from payments in connection with unauthorised gambling.  While Lower Saxony is only one of Germany’s 16 states, its responsibility for online gambling payment processing extends across the country.  The new treaty extended its ‘toleration’ of online sports betting while confirming the current ban on online casino, poker and ‘secondary lottery’ betting – despite Schleswig-Holstein recently renewing its online gambling licences.

https://calvinayre.com/2019/06/17/business/germany-targets-online-casino-payment-processing/

COLOMBIAN AUTHORITIES SEIZE OVER 19 TONNES OF COCAINE DESTINED FOR THE EU

On 17th June, a news release from Europol reported that Colombia and Europol co-led operation Tayrona, a transnational operation targeting the trafficking of cocaine and firearms between the Americas and the EU in March to June.  As well as 140 shipments of cocaine, more than 3 000 firearms were traced, 133 firearms seized, over 14 600 cartridges of ammunition, parts and components of weapons, several rocket launchers and hand grenades were seized.

https://www.europol.europa.eu/newsroom/news/colombian-authorities-seize-over-19-tons-of-cocaine-in-operation-tayrona

US PRIVACY SHIELD AND THE UK FAQ

The US Department of Commerce has updated its guidance on the EU-US Privacy Shield. It outlined whether a participant can rely on the Privacy Shield to receive personal data from the UK in light of the UK’s planned withdrawal from the EU.

https://www.privacyshield.gov/article?id=Privacy-Shield-and-the-UK-FAQs

NCAUAE’S SECRET HACKING TEAM OF US MERCENARIES

On 30th January, Reuters published a special report on Project Raven – a clandestine team that included more than a dozen former U.S. intelligence operatives recruited to help the United Arab Emirates engage in surveillance of other governments, militants and human rights activists critical of the monarchy.  It says that the story of Project Raven reveals how former US government hackers have employed state-of-the-art cyber-espionage tools on behalf of a foreign intelligence service that spies on human rights activists, journalists and political rivals.

https://www.reuters.com/investigates/special-report/usa-spying-raven/

JERSEY: PRIVY COUNCIL UPHOLDS ATTORNEY GENERAL’S POWERS TO OBTAIN DOCUMENTS BY COMPULSION IN CIRCUMSTANCES WHERE SERIOUS OR COMPLEX FRAUD IS SUSPECTED

A news release from Jersey on 17th June advised that the Judicial Committee of the Privy Council which has upheld the Attorney General’s powers to obtain documents by compulsion in circumstances where serious or complex fraud is suspected, and dismissed the appeal by Volaw Trust and Corporate Services Limited who had claimed that producing such documents violated its privilege against self-incrimination protected by Article 6 of the European Court on Human Rights.  It had refused to provide documents in relation to the group of companies and trusts administered by Volaw and connected with Mr Berge Gerdt Larsen (a Norwegian businessman involved in the oil and gas industry) which the Attorney General required be produced pursuant to a notice served in 2015.

https://www.gov.je/News/2019/Pages/PrivyCouncilruling.aspx

UN SECURITY COUNCIL RESOLUTION 2462 ON COUNTER TERRORIST FINANCING

On 4th April, the Charity & Security Network published an article about UN SCR 2462, which was adopted on 28th March.  It is binding on all member states and can be enforced by UN sanctions.  The article says that it is the first comprehensive UN Resolution on CFT, incorporating a patchwork of previous resolutions and broadening CFT efforts to address new threats and improve investigation and enforcement activities.   Notably, UN SCR 2462 requires member states to take international humanitarian, human rights law and refugee law into account and make CFT efforts consistent with these existing legal obligations.  Binding provisions address issues include information-sharing and international co-operation, the need for robust enforcement bodies and the need for many countries to adopt legal measures in line with the Resolution.  It calls on all states to implement the comprehensive international standards embodied in the revised 40 FATF Recommendations on Combating Money Laundering, and the Financing of Terrorism and Proliferation and the interpretive notes.  It requires the UN’s Counter Terrorism Executive Directorate (CTED) to produce a report “on actions taken by Member States to disrupt terrorist financing” prior to a “joint special meeting on terrorist financing threats and trends as well as on the implementation” of the resolution within 12 months of adoption.  Member states are invited to submit information for the report by the end of 2019.

https://www.charityandsecurity.org/summary_UNSCR_2462

http://unscr.com/en/resolutions/2462

https://www.un.org/press/en/2019/sc13754.doc.htm

http://unscr.com/files/2019/02462.pdf

EU REVOKES MALDIVES SANCTIONS

A news release from the EU on 17th June advised that the framework adopted in July 2018 imposing a travel ban and an asset freeze on persons and entities responsible for undermining the rule of law or obstructing an inclusive political solution in the Maldives has been revoked.  No persons or entities were listed under the sanctions regime.

https://www.consilium.europa.eu/en/press/press-releases/2019/06/17/maldives-council-revokes-sanctions-framework

2019 SET TO BE RECORD YEAR FOR AML FINES

FS Tech on 28th May reported that, to April, $7.7 billion had already been imposed in fines, compared to $1.16 billion worth of fines in the same period last year; and combined value of penalties given out so far in 2019 is over 70% of the total handed out in the whole of the previous record year of 2014.

http://www.fstech.co.uk/fst/AML_Fines_Rising_Record_2019_Encompass.php

UNDERSTANDING THE MONEY LAUNDERING RISKS IN THE CAPITAL MARKETS

The FCA in the UK has published this thematic review which highlighted a number of significant weaknesses in AML controls applied across the industry.  A review of 19 firms was involved, and the FCA concluded that there is a general lack of deep understanding of money laundering risk to the capital markets.  Complex cross border deals made up of multiple parties to a transaction provide numerous loopholes and weaknesses for money launderers to exploit.  The FCA recommends that all market players start taking a full risk-based approach to money laundering in the context of the wider exposure they are liable to.  It appears that the FCA is considering a supervisory response.  The Annex to the review contains examples of typologies based on risks found in the sector, and which include helpful and simplified diagrams.  The Annex also identifies a number of features that could serve as red flags, or at least prompt further questions – remote booking of trades between group entities; pre-arranged trading; instructions or involvement from third parties; ‘free of payment’ asset transfers; non-standard settlement arrangements uneconomic or irrational trading strategies of a customer; unusual trading patterns, such as: counterparty concentration, unusual win/loss rates or flat/neutralising activity, and no trading on an account.

https://www.fca.org.uk/publication/thematic-reviews/tr19-004.pdf

MONEY LAUNDERING AND THE ILLEGAL WILDLIFE TRADE

On 28th May, the Asean Post published an article saying that, while it has all the hallmarks of transnational organised crime, the illegal wildlife trade continues to be viewed as being outside ‘mainstream crime’.  However, it says that the illegal wildlife trade generates an estimated $20 billion annually and is the fourth most profitable criminal trafficking enterprise behind drugs, arms and human trafficking according to UNOD, though cutting edge investigative techniques often employed in tackling other criminal investigations are rarely employed when it comes to the illegal wildlife trade.  Its cites the case of one of the region’s most notorious wildlife smugglers, Kampanart Chaiyamart, after being caught in December 2017, the Thai Anti-Money Laundering Office (AMLO) found that he had laundered $35 million in 2014, and that between 2011 and 2014 using as many as 28 separate accounts and connections in Thailand, Vietnam, Lao and Malaysia to move money through numerous cash transactions.

https://theaseanpost.com/article/money-laundering-and-illegal-wildlife-trade

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