4th June 2019
THE CITIZENSHIP BY INVESTMENT PROGRAMME REPORT AND CIP INDEX
On 3rd June, Maltese law firm Chetcuti Cauchi announced the launch of its Citizenship by Investment Programme Report (CIP Report) and simultaneously, its accompanying CIP Index. The CIP Report is said to provide a comprehensive analysis of Citizenship by Investment Programmes (CIP), highlighting each programme’s core features while also giving an overview of living and economic standards within the country. The CIP Index, including within the Report, ranks the citizenship programmes of 12 different countries – Malta, Cyprus, Austria, Moldova, Montenegro, Antigua and Barbuda, Dominica, Grenada, Saint Lucia, St Kitts and Nevis, Turkey, and Jordan. Perhaps not surprisingly, Malta ranked first out of the 12 countries analysed.
US AND UK COMPLETE LARGEST HEU REPATRIATION
The Arms Control Association has published an article saying that on May 3rd it was announced that the UK completed the transfer of nearly 700 kg of highly enriched uranium (HEU) to the US. A multiyear project removed the US-origin material from Scotland’s Dounreay nuclear facility, which is undergoing decommissioning. It explains that HEU to produce materials needed to manufacture isotopes for medical purposes, and that the US has agreed to provide less-sensitive nuclear materials to other European facilities to support the continued production of medical isotopes. HEU contains at least 20% of the uranium-235 isotope, and percentages above this threshold are considered potentially useful for nuclear weapons if available in sufficient quantities. The Dounreay transfer is the largest amount of material to have been repatriated from a single facility. To date, 6,713 kg of HEU from 47 countries plus Taiwan have been disposed of or repatriated, and Russia is undertaking a similar programme, with nearly all such repatriations by the US and Russia to be completed by 2022.
NIGERIA: POLICE ARREST INTERNATIONAL ARMS-SMUGGLING SYNDICATE
Sahara Reporters on 4th June reported that the Nigeria Police Force (NPF) says it has dismantled a 4-man international arms-smuggling syndicate. The criminal gang operated around parts of the Sahel region, North African and West African countries, and a total of 6,000 AK-47 ammunition were recovered.
VANCOUVER MAN FINED $18,000 FOR TRYING TO SMUGGLE 19 LIVE TURTLES INTO CANADA
Global News on 3rd June reported that Li Wan was caught with the turtles at the US-Canada Border in January 2018, after failing to declare them.
HUGE MARBELLA MARIJUANA SEIZURE
Global FM reports that the Guardia Civil in Marbella have made 12 arrests and seized over 3,000 kg of marijuana. The drugs were being transported in 2 vans. The Guardia Civil made their move as the vans left a port.
GLENCORE’S LONG-STANDING OIL BOSS QUITS AMID US INVESTIGATIONS AROUND CORRUPTION AND MONEY LAUNDERING
This is Money on 3rd June reported that Alex Beard, 51, helped build Glencore into one of the world’s top 3 oil trading houses and became a billionaire when it listed on the stock market in 2011. The US DoJ The is scrutinising Glencore’s activities in the DRC, where it produces copper and cobalt, and Venezuela and Nigeria, where it trades oil, in relation to anti-corruption and money laundering laws; and it has revealed that the US Commodity Futures Trading Commission was also investigating whether the company might have been involved in ‘corrupt practices’.
ESTONIA ACCELERATES CRACKDOWN ON MONEY LAUNDERING
KYC 360 on 4th June reported that the Estonian government intends to move forward with a raft of measures that will seek to make the country far less appealing destination for financial criminals following the Danske Bank scandal.
ICO: LEGAL CLASSIFICATION OF UTILITY TOKENS
On 3rd June, Bird & Bird published Part 4 of a 5-part series of articles on initial coin offerings (ICO), in the context of the law in Germany. This Part deals with Utility Tokens, which are a kind of digital voucher which can be redeemed against a promised service of the issuer. “True” Utility Token are not (yet) regulated as financial instruments in Germany. The issuer pledges a service or delivery of goods when redeeming the token, and also symbolises rights and obligations between the issuer and the purchaser.
SINGAPOREAN FINED S$336,000 FOR INSIDER TRADING OF SHARES ON LSE
The Business Times on 3rd June reported that the Monetary Authority of Singapore (MAS) said it has imposed a civil penalty of S$336,000 on Singaporean Raphael Tham Wai Mun for insider trading in the shares of Auhua Clean Energy PLC (ACE). Tham was the non-executive vice-chairman of ACE.
PHILIPPINES: IMMIGRATION BUREAU CANCELS WORKING VISAS OF 528 FOREIGNERS DUE TO FRAUD
Coconuts in the Philippines reported on 4th June that more than 500 foreigners working across 6 unidentified companies in the consultancy, real estate, education, and information technology industries have had their working visas cancelled for allegedly submitting fraudulent documents, the Bureau of Immigration (BI) announced. The workers allegedly submitted fake Alien Employment Permits (AEP), a document issued by the Department of Labor and Employment that is required when applying for a working visa. Among those involved were 259 Indians, 230 Chinese, 14 South Koreans, 11 Japanese, 5 Taiwanese, 3 Vietnamese, a German, a Burmese, a Nigerian, a Nepalese, a Sudanese, and a Yemeni.
4 BULGARIANS АCCUSED BY THE АNTI-CORRUPTION PROSECUTION OFFICE IN ROMANIA IN €45 MILLION CASE
On 4th June, Novinite reported that they are accused for signing a contract with the Paying Agency to the Romanian Ministry of Agriculture to supply white flour and sunflower oil as part of a food delivery programme for disadvantaged people. However, only 30% of the contracted quantity is delivered.
AUSTRALIA: GOLD COAST FINANCIER CHARGED WITH $4.6 MILLION FRAUD
Channel 9 News on 4th June reported that the former financial boss of Octaviar – formerly known as the MFS Group, which had interests in financial services, travel and leisure and childcare businesses -has been accused of misappropriating $4.6 million from the Gold Coast investment group that collapsed owing $2.5 billion more than 10 years ago. A court ruled in 2016 that he was one of 4 MFS executives who acted dishonestly by misappropriating $143.5 million of investors’ money, and as disqualified from managing corporations for 25 years and ordered to pay more than $500,000 in compensation for the misappropriation of funds.
IRISH MAN HANDED OVER TO UK AUTHORITIES OVER FINE FOR TAX EVASION
On 4th June, the Irish Times reported that Daniel O’Connell owes €13 million including interest on original unpaid confiscation order for £6.3 million, and spent 3 years in an English prison in the early 2000s for one of the UK’s biggest-ever VAT frauds.
MAN WHO MADE £1.1 MILLION FROM FAKE WATCHES IS JAILED
On 4th June, the Northern Echo reported that Warren Stuart Chung-Williams, owner of Wristy Business Ltd, pleaded guilty to 4 offences of selling counterfeit watches online in Middlesborough. The court heard how trading standards officers launched their investigating after receiving a complaint from a North Yorkshire resident, who had bought an Emporio Armani Ceramica watch from Chung-Williams’ website.
US FEDERAL JUDGE RULING ON WIRE ACT REJECTS DoJ INTERPRETATION
On 4th June, Calvin Ayre published an article saying that US intrastate online gambling operators are celebrating a federal court ruling that restricts the scope of the Wire Act to interstate sports betting. The 1961 Act prohibits the interstate transmission of wagering information – and last year the DoJ’s Office of Legal Counsel (OLC) issued an opinion which claimed that the Wire Act applied to nearly all forms of online gambling – reversing a 2011 opinion. The article says that the DoJ will undoubtedly appeal the ruling, as the judge himself had previously suggested the case would likely end up at the US Supreme Court regardless of which side prevailed in his court.
US: CARGO FLIGHTS FROM VENEZUELA SUSPENDED
On 4th June, Sandler Travis Rosenberg reported that the US Department of Transportation has suspended all foreign air transportation for cargo or passengers to or from any airport in Venezuela.
PROJECT ExplAIn FROM THE INFORMATION COMMISSIONER’S OFFICE AND THE ALAN TURING INSTITUTE: PRACTICAL GUIDANCE TO ASSIST ORGANISATIONS WITH EXPLAINING ARTIFICIAL INTELLIGENCE (AI) DECISIONS
The ICO and the Alan Turing Institute have published an interim report on the Project which seeks to create practical guidance to assist organisations with explaining artificial intelligence (AI) decisions to the individuals affected. As part of this Project, the ICO and Institute conducted public and industry engagement research to help them understand different points of view on this complex topic. Included in the key findings were the need for improved education and awareness around the use of AI for decision-making; and the challenges to deploying explainable AI such as cost and the pace of innovation. The report ends with next steps for the project, including a summary of the planned guidance. The ICO says that its involvement arose because it recognises the need for effective guidance for organisations seeking to address data protection issues arising from the use of these technologies; and followed a 2017 ICO paper: “Big data, artificial intelligence, machine learning and data protection”.
US: FIRST NATIONWIDE UNDERCOVER OPERATION TARGETING DARKNET VENDORS OF FENTANYL
On 3rd June, Homeland Preparedness News reported that the DoJ is crediting Operation Dark Gold, in 2018 the first nationwide undercover operation targeting darknet vendors, with yielding a series of illegal drug dealing indictments. 65 targets were identified by the undercover operation, which led to the arrest and impending prosecution of more than 30 darknet vendors.
UK FCA CONFIRMS NEW RULES FOR P2P PLATFORMS
An article on Mondo Visione from the FCA on 4th June said that the FCA is introducing rules designed to prevent harm to investors, without stifling innovation in the peer-to-peer (P2P) sector. When the FCA set its first rules for P2P, it committed to keep these under review as the sector evolved, and these new rules are designed to help better protect investors and allow firms and fundraisers to operate in a long-term, sustainable manner. P2P platforms need to implement these changes by 9th December, except for the application of Mortgage and Home Finance Conduct of Business (MCOB), which applies with immediate effect.
ANALYSIS OF BURNING AGRICULTURE IN IRAQ
On 3rd June, Bellingcat reported its research into reports that agricultural areas of central and northern Iraq were being set ablaze — allegedly by remaining pockets of fighters from the so-called Islamic State, torching crops to force farmers to pay them taxes. Amongst its conclusions are that, based on open source reporting and available satellite imagery, the fires in May alone have already burned over 1000 square kilometres of land in central Iraq at least 50 sites, with a considerable amount being agricultural lands and orchards. This increased fire activity has combined causes, ranging from attempts by ISIS to displace farmers and extort money and as a scorched-earth tactic, to local gangs using it for extortion. Other causes include IED, counter-ISIS air strikes and, often, just plain accidents.
UK: AMENDMENT OF OPEN GENERAL EXPORT AND TRADE CONTROL LICENCES
Notice to Exporters 2019/08 on 4th June announced that 3 open general licences had been amended.
The Open General Export Licence (OGEL) for Iraq has been amended to make a correction.
The OGEL for the export of military goods after exhibition or demonstration is amended to allow goods to be moved directly from one exhibition to another (or returned to their origin); and no longer requires goods to be returned directly to their origin after a single exhibition event.
The Open General Trade Control Licence (Maritime Anti-Piracy) – which allows the movement of materials required for armed anti-piracy work – has been amended to reflect the change of control entry for non-military shotguns.
REMINDER OF THE 12 “REQUIREMENTS” FOR IRAN TO HAVE A NEW DEAL WITH THE US
On 4th June, Defense One reminded one of the 12 requirements Secretary of State Pompeo laid out 13 months ago as steps Tehran must take for a new deal of some kind with the US, and so that Iran will (once every step is taken) “behave like a normal country” —
- Iran must provide a complete account of its previous nuclear-weapons research.
- Iran must stop uranium enrichment and never pursue plutonium reprocessing.
- Iran must provide the IAEA “unqualified access” to all sites in the country.
- Iran must stop providing missiles to militant groups and halt the development of nuclear-capable missiles.
- Iran must release all US and allied detainees.
- Iran must stop supporting militant groups, including Hezbollah, Hamas and Palestinian Islamic Jihad.
- Iran must respect Iraqi sovereignty and permit the demobilization of the Shiite militias it has backed there.
- Iran must stop sending arms to the Houthis and work for a peaceful settlement in Yemen.
- Iran must withdraw all forces under its command from Syria.
- Iran must end support for the Taliban and stop harbouring Al-Qaeda militants.
- Iran must end support by its paramilitary Quds Force for militant groups.
- Iran must end its threats to destroy Israel and stop threatening international ships. It must end cyberattacks and stop proxies from firing missiles into Saudi Arabia and the UAE.
The Wall Street Journal on 3rd June said that the US has not dropped these demands.
NORTH KOREA “TAKING STEPS TO RESTRICT IMPORTS OF FOREIGN CIGARETTES”
NK News on 4th June reported that the new rules come amid changes to the country’s Tobacco Control Law, the KCNA news agency reports.
SPAIN ARRESTS MAN ‘FINANCING RETURN OF FIGHTERS’ FROM ISLAMIC STATE
Homeland Security Today on 3rd June reported that a Syrian man accused of financing the return to Europe of Islamic State (IS) group members has been arrested in Madrid, and is suspected of being part of the group’s financial structure and of sending money to fighters in Syria using hawala.
BVI FSC SIGNS POST-BREXIT MoU WITH UK FCA
On 20th May, Harneys published an article advising that the BVI Financial Services Commission had signed a MoU with the FCA relating to mutual legal assistance in the supervision of managers of AIF, their delegates and depositaries that operate on a cross-border basis in the BVI and the UK. It says that the MoU is generally structured similarly to an information exchange agreement and comes into force on the date the relavent EU legislation cease to have direct effect in the UK.
UK DBS CHECKS: GUIDANCE FOR EMPLOYERS
On 4th June, the Home Office published updated guidance for employers who may request a criminal record check as part of their recruitment process about Disclosure & Barring Service (DBS) checks, including how to apply, registering with the DBS and the code of practice. It also cautions that DBS can’t access criminal records held overseas so a DBS check may not provide a complete view of an applicant’s criminal record if they have lived outside the UK.
LATVIA ADDS LAUNDERING TO CHARGES AGAINST ECB COUNCIL MEMBER RIMSEVICS
The Gulf Times on 4th June reported that Latvian prosecutors had added to charges against European Central Bank Governing Council member Ilmars Rimsevics to include laundering the €250,000 bribe he is already accused of soliciting from a commercial bank that was later closed.
US: IDENTITY DOCUMENT TRAFFICKER PLEADED GUILTY FOR CONSPIRING TO SELL IDENTITY DOCUMENTS TO ILLEGAL ALIENS
A DoJ news release on 4th June advised that Jose Armando Pavon Salazar (Pavon), 37, a Honduran national, had pleaded guilty for his role in a scheme to sell identity documents belonging to Puerto Rican US citizens to individuals illegally residing in the US. Pavon was arrested in El Salvador in January 2018 and extradited to Puerto Rico.
CANADIAN ASSOCIATE TO “EL CHAPO” FACING CHARGES DRUG TRAFFICKING CHARGES IN NEW YORK
On 4th June, the New York Post reported that trucking company owner Mykhaylo Koretskyy (aka “Russian Mike” or Cobra”), a Canadian with ties to Joaquin “El Chapo” Guzman’s Sinaloa drug cartel, has been extradited from Curacao to New York on cocaine trafficking charges.
NEW REPORT SHOWS LATVIA NOT STOPPING CORRUPTION
OCCRP on 4th June reported that Latvia is falling behind in efforts to prevent corruption in government agencies and courts, according to a report published by the Council of Europe anti-corruption body, GRECO. It found Latvian efforts “are quite disappointing as no tangible results have occurred,” despite recommendations for improvement made in 2012.
UK: TRIBUNAL RULES ON APPLICABILITY OF MONEY LAUNDERING REGULATIONS TO “TAX ADVISER”
Accountancy Daily on 4th June reported the dismissal of an appeal by the Upper Tribunal. Online Tax Rebates Ltd helped employees submit tax repayment claims for flat-rate expenses such as laundering uniforms. Employees used the company’s services either online or following direct marketing. If online, the employee would enter into a contract with the company committing to pay the company a fee if they got a tax refund. The employee would enter various details and a Tax Claim and Deed of Assignment (TCDA) would be generated, which the employee could then print and send to HMRC. The company argued that it was not a “tax adviser”, and that the Regulations should not apply to it. It had been given a penalty by HMRC for failure to comply with the Regulations. The article suggests that it was arguable that the company may not have had a business relationship with its customers, but that instead the relationship was transactional and as the repayments would have been less than €15,000 each they would not have been categorised as ‘occasional transactions’ and therefore the relationships were outside the scope of the Regulations.
EXPLORING FACEBOOK’S CRYPTOCURRENCY PROJECT
On 4th June, RUSI published a Commentary saying that Facebook’s cryptocurrency ambitions could transform the global financial system. It is said that Facebook is planning to launch a new cryptocurrency payments system, nicknamed ‘Project Libra’ and referred to internally as GlobalCoin. The Commentary says that the cryptocurrency seems to be what is known as a ‘stablecoin’: a digital currency that is tied to the value of a traditional asset, such as the US dollar or pound.
KYRGYZ OFFICIAL WITH TIES TO OLD REGIME ARRESTED
On 4th June, OCCRP reported that a former key member of ex Kyrgyzstan President Almazbek Atambaev’s administration – Manasbek Arabaev, former head of the judicial reform department – was arrested and is being detained, the latest Atambaev aide suspected of corruption while in office.
BELGIUM: ILLEGAL CIGARETTE FACTORY DISMANTLED: 25 MILLION CIGARETTES AND 10 TONNES OF TOBACCO SEIZED
A news release from Europol on 4th June advised that the Belgian Customs and Excise Administration had dismantled a large criminal network in an operation supported by the Belgium Federal Police and Europol. The criminals illegally produced cigarettes in the surroundings of the Belgian cities of Namur and Charleroi. During the operation, the Belgian authorities seized 10 tonnes of tobacco and 25 million cigarettes, ready to sell. Other seizures of cigarette components such as filters, glue, paper, aluminium foil and packaging were also made.
129 COUNTRIES AGREE ROADMAP FOR SOLUTION TO TAXING DIGITALISED ECONOMY
On 4th June, an article from Out-Law said that 129 countries have agreed how they will work together to reach agreement by 2020 on new ways to tax the digitalised economy, according to a programme of work published by the OECD. It is said that as new taxing rights are likely to lead to more disputes over double taxation, the OECD will also look at the effectiveness of existing dispute resolution procedures and consider whether new measures are needed. The UK has consulted on a proposed 2% digital services tax from April 2020 on the UK revenues of providers of social media platforms, search engines and online marketplaces. Other EU Member States have similar plans, but EU finance ministers agreed in March not to proceed, for now, with an EU proposal for a wide-ranging tax on the revenues of digital companies.
MILLIONS STOLEN BY HACKERS SHOWS VULNERABILITY OF MEXICO’S BANKS
Insight Crime on 4th June reported that hackers infiltrated Mexico’s banking system to transfer millions of dollars to bogus accounts and then made cash machines pay out the money. They infiltrated Mexico’s domestic financial transfer system.
PRIVATE PROSECUTIONS AND MISCONDUCT IN PUBLIC OFFICE
In the light of the court case involving Boris Johnson, on 4th May law firm Corker Bining posted an article saying that lawyers from across the political spectrum should be interested in what the decision says about private prosecutions and the offence of misconduct in public office. It notes that, perhaps surprisingly, the evidential threshold for obtaining a summons in a private prosecution is relatively low. Re the case in question, it says that misconduct in public office is an ill-defined common law offence, much criticised by law reform bodies such as the Law Commission – but this vagueness works to the private prosecutor’s advantage; its nebulousness is its virtue. It suggests that Mr Johnson’s legal team will almost certainly now invite the CPS to apply its own guidance, so as to take over and discontinue the prosecution.
SEC SUES KIK INTERACTIVE INC FOR CONDUCTING AN ILLEGAL $100 MILLION SECURITIES OFFERING OF DIGITAL TOKENS
A release on Mondo Visione on 4th June says that the SEC charges that Kik sold the tokens to US investors without registering their offer and sale as required by the securities laws. It says that, in early 2017, the company sought to pivot to a new type of business, which it financed through the sale of 1 trillion digital tokens. Kik sold its “Kin” tokens to the public, and at a discounted price to wealthy purchasers, raising more than $55 million from US investors, allegedly marketing the Kin tokens as an investment opportunity.
COMBATING NUCLEAR SMUGGLING? EXPLORING DRIVERS AND CHALLENGES TO DETECTING NUCLEAR AND RADIOLOGICAL MATERIALS AT MARITIME FACILITIES
On 3rd June, a paper was published in Volume 26 of the Nonproliferation review. It said that detection systems are now deployed at strategic locations for the purported purpose of detecting and deterring the smuggling of nuclear and radioactive materials. However, despite considerable investment in this area, few studies have examined how these programs are implemented or the operational challenges they face on a day-to-day basis. The paper seeks to address this with a focus on radiation-detection efforts at maritime facilities – which vary significantly across different national and organisational contexts, resulting in a fragmented global nuclear-detection architecture, which arguably undermines efforts to detect trafficked nuclear-threat materials. It argues that greater consideration should therefore be given to developing international standards and guidance, designing and adopting tools to support key parts of the alarm assessment process, and broader sharing of good practice.