5th June 2019
SMUGGLING OVER 2,000 TONS OF FUEL FROM KAZAKHSTAN TO KYRGYZSTAN REVEALED
AKI Press has reported that the Anti-Corruption Service of the National Security Committee has foiled the smuggling of gasoline from Kazakhstan to Kyrgyzstan by railroad under the pretence of being raw gas condensate. Reports claims that estimates are that every fourth litre of gasoline in Kyrgyzstan was sold illegally, bypassing the payment of taxes to the state budget, and that Russia is Kyrgyzstan’s only fuel supplier – with Kazakhstan having banned the export of petroleum products due to a shortage of fuel on its own market.
US: FORMER CHIEF FUNDRAISER FOR MEDICAL CENTRE, TO PLEAD GUILTY TO MONEY LAUNDERING AND EMBEZZLEMENT
On 4th June, the Greater Baton Rouge Business report reported that John Paul Funes, the former chief fundraiser for Our Lady of the Lake Regional Medical Center, has agreed to plead guilty to money laundering and wire fraud in connection with an embezzlement scheme that cost the foundation $550,000 and could mean prison for more than 3 years. For several years between 2012 and 2018 he submitted fraudulent payment vouchers to the foundation’s accounting department, and it appears he was able to get away with it largely because he could approve his own payment vouchers.
SINGAPORE: FORMER CLEANER LINKED TO $40 MILLION SKILLSFUTURE SCAM JAILED FOR MONEY LAUNDERING
On 4th June, the Straits Times reported that a jobless man, who got involved with a crime syndicate that perpetrated what has been described as the largest case of fraud against a public institution in Singapore, has been jailed. He helped launder more than $1 million of nearly $40 million in criminal proceeds from the company which oversees an initiative aimed at promoting lifelong learning among Singaporeans. The syndicate used 9 Singapore-registered companies in perpetrating the scam, and these dormant entities submitted a total of 8,386 fraudulent course fee grant applications and a corresponding 8,391 claims to SSG between May and October 2017. Following the scam, SkillFutures Singapore formed a dedicated fraud and enforcement division to monitor suspicious claims.
TRUMP COMPANIES ACCUSED OF TAX EVASION IN PANAMA
KYC 360 and many other sources reported on 5th June that the owners of a 70-story Panama City hotel tower formerly managed by President Donald Trump’s companies are accusing them of evading taxes due to the Panamanian government.
https://www.riskscreen.com/kyc360/news/trump-companies-accused-of-tax-evasion-in-panama/
MALTA’S ANTI-COUNTERFEIT CIGARETTES SEIZURE AT FREEPORT
On 4th June, Ganado Advocates published an article about recent detections of goods passing through Malta. The end of May saw the destruction of the last 2 containers in a record haul of 37 million counterfeit cigarettes, which had been split into 4 containers and on their way from Cambodia to Northern Africa. The seizure was promptly followed up by a request by the trade mark owners to the Maltese Courts to order the destruction of the goods in accordance with EU and local laws – GANADO Advocates acting as the agents of the trade mark owners.
GLOBAL AIRCRAFT TRADING SYSTEM (GATS): KEY TERMS AND E-DOCUMENTS
Law firm Bird & Bird has published an article about the Global Aircraft Trading System (GATS) – a fully electronic system for buying and selling aircraft and engines on lease, created by the Aviation Working Group (AWG) – and intended to simplify and streamline trading, critically removing the need to novate the lease (and associated time and cost overruns) whilst preserving the airline’s existing contractual protections in the lease. The aim is to launch the GATS Platform by Q1 of 2020. Fully electronic, with e-signatures, e-delivery of documents and with use of a blockchain e-ledger to record transactions, it makes the buying and selling of aircraft and engines on lease simpler and more efficient.
https://www.twobirds.com/en/news/articles/2019/global/global-aircraft-trading-system
See also the quick reference guide to GATS from the same firm –
And a set of presentation slides from AWG –
http://awg.aero/assets/docs/GATS%20modernizing%20aircraft%20transfers.pdf
INVESTING IN THE FUTURE OF CANNABIS IN THE UK – LESSONS FROM THE GERMAN MODEL
On 4th June, Bird & Bird published an article saying that the growth in sales of legal cannabis derivatives such as CBD, and the view from jurisdictions which have already taken greater strides towards deregulation, in particular with Canada’s full legalisation in late 2018, has persuaded companies and investors that there is real opportunity in the UK market. The article first sets out the current legal and regulatory position of cannabis in the UK. It then looks at the recent evolution of the German cannabis industry. Then it examines the current law governing investment by UK-based investors in companies involved in the growth, processing and distribution of medicinal cannabis products, to give a flavour of what investments can be made right now to be in prime position to profit from the potential market growth. It concludes that the UK is well set for further deregulation and an increase in the use of medicinal cannabis, alongside the already burgeoning CBD market.
FLEGT: VOLUNTARY PARTNERSHIP AGREEMENT BETWEEN THE EU AND VIETNAM ON FOREST LAW ENFORCEMENT, GOVERNANCE AND TRADE
EU Council Decision 2019/854/EU recognises the latest agreement between the EU and a third country under the EU’s Forest Law Enforcement, Governance and Trade (FLEGT) initiative for the implementation of sustainable management of all types of forests, halt deforestation, restore degraded forests and substantially increase afforestation and reforestation globally.
https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=OJ:L:2019:147:FULL&from=EN
WORLD TRADE IN 2019: THE US AND THE WTO
On 4th June, the House of Commons Library published a briefing asked what is happening in the World Trade Organization, and how does this relate to the current US administration’s trade policy? This briefing paper explores these issues, and considers what consequences they might have for a post-Brexit UK.
http://researchbriefings.files.parliament.uk/documents/CBP-8465/CBP-8465.pdf
FRANCE: FULFILMENT HOUSE DUE DILIGENCE SCHEME
On 4th June, VAT Live reported that France is looking at requiring fulfilment houses to undertake basic checks on their non-EU customers to help identify non- or underdeclared VAT and duties. This would replicate the UK Fulfilment House Due Diligence Scheme – to tackle import VAT and customs fraud (estimated to cost the UK between £1.0 and £1.5 billion per annum).
https://www.avalara.com/vatlive/en/vat-news/france-fulfilment-house-due-diligence-scheme.html
LONDON BOROUGH £33,000 FROM CONFISCATION ORDER IMPOSED ON CHURCH
On 4th June, Local Government Lawyer reported that Barking and Dagenham Council has received more than £33,000 from a church which operated from premises for 3 years in breach of a planning enforcement notice. Mountain of Fire and Miracles International, was given a confiscation order of £91,264 – the council said this was the income the church had received after using the venue as a place of worship. The local authority receives 37.5% of the confiscation order.
Cluster munitions, often called cluster bombs, are weapons made up of a hollow shell which contain smaller bombs called submunitions. Each weapon can contain from several to hundreds of explosive submunitions. They are dropped from the air or fired from the ground and are designed to break open in mid-air, releasing the submunitions and saturating an area that can be as wide as several football fields.
The Convention on Cluster Munitions prohibits all use, production, stockpiling, and transfer of cluster munitions. It also provides countries with deadlines for clearance of affected areas and the destruction of stockpiled cluster munitions. It includes articles concerning assistance to victims of cluster munitions incidents.
http://www.the-monitor.org/en-gb/the-issues/cluster-munitions.aspx
http://www.the-monitor.org/en-gb/the-issues/convention-on-cluster-munitions.aspx
NETHERLANDS EXPORT CONTROL POLICY TIGHTENED
In its International Trade Compliance Update for May 2019 (see page 67), Baker McKenzie reported on tightened arms export policy in connection with the conflict in Yemen. This included General Transit Regulation NL007 being amended and is now no longer usable for exports with Egypt as its final destination – with an individual licence now required. The transit arrangement can be used again for the final destination Qatar since this country is no longer part of the coalition led by Saudi Arabia. In addition, a new policy regarding the period of validity of licenses will take effect on 1st July – the new requirements for both military and dual-use goods are detailed in the newsletter.
https://f.datasrvr.com/fr1/719/92161/May_2019_International_Trade_Compliance_Update.pdf
THE POLAR CODE: SHIPPING IN POLAR WATERS
The International Maritime Organisation has adopted an international code of safety for ships operating in polar waters. Mandatory under both the International Convention for the Safety of Life at Sea (SOLAS) and the International Convention for the Prevention of Pollution from Ships (MARPOL), it entered into force on 1st January 2017. The Polar Code covers the full range of design, construction, equipment, operational, training, search and rescue and environmental protection matters relevant to ships operating in the inhospitable waters surrounding the poles.
http://www.imo.org/en/MediaCentre/HotTopics/polar/Pages/default.aspx
EU PLANS TO MODERNISE DUAL-USE EXPORT CONTROL REGIME
A news release from the EU announced that the European Council plans to negotiate with the European Parliament a new regime to simplify and improve the licensing process; harmonise control of supplying technical assistance relating to sensitive items; and add cyber surveillance items to the regime and authorising competent authorities to the control such items.
VENEZUELA DEFAULTS ON GOLD SWAP WITH DEUTSCHE BANK
On 4th June, Bloomberg reported that Venezuela has defaulted on a gold swap agreement valued at $750 million with Deutsche Bank, prompting the bank to take control of the 20 tonnes of gold used as collateral and close out the contract. It also says that opposition leader Juan Guaido’s parallel government has asked the bank to deposit $120 million into an account outside President Nicolas Maduro’s reach. The article says that the country’s reserves are at a 29-year low, and that despite sanctions it sold $750 million of gold last month.
A TALE OF JUSTICE AND CORRUPTION IN KOSOVO
Al Jazeera on 5th June carried a report and video about the work of a Swedish judge involved in an EU-run mission which aims to get the Kosovo justice system on its feet, and assigned to preside over the mission’s largest corruption case; which includes a former Kosovo Liberation Army commander and the current deputy prime minister.
KANSAS CONTRACTOR PLEADS GUILTY TO $346 MILLION FRAUD
On 5th June, Global Construction Review carried an article on the so-called “rent-a-vet” scam – where the owner of a Kansas-based Matthew McPherson, 43, the owner of Topeka-based McPherson Contractors, has pleaded guilty to helping steal $346 million from the US government by fraudulently winning contracts intended for veterans and ethnic minorities over 9 years. It is said that he and his co-conspirators, Matthew Torgeson and Patrick Michael Dingle, set up Zieson Construction Co in 2009, with an African American disabled veteran Stephon Ziegler as the nominal owner. They won 199 federal contracts before setting up another company, Simcon Corp, in Missouri.
http://www.globalconstructionreview.com/news/kansas-contractor-pleads-guilty-346m-fraud-through
IS THIS THE NEW MEDELLIN CARTEL?
On 5th June, Colombia Reports carries an article saying that the 2 most powerful heirs of the defunct Medellin Cartel have allegedly teamed up with other organised crime groups to dominate Colombia’s drug trade. It is said that paramilitary group AGC and Medellin crime syndicate Oficina de Envigado teamed up with the Pachenca gang from Santa Marta and the “Clan del Oriente” to form a “consortium” dedicated to exporting drugs and importing arms. It is said to have a bridge to the Italian Mafia, Mexican cartels and other structures. AGC is said to be responsible for the vast majority of cocaine trafficked to the US while the Oficina de Envigado is known to use Medellin’s largely informal economy to launder money.
https://colombiareports.com/is-this-the-new-medellin-cartel
UKRAINE: PRIVATBANK’S US LAWSUIT AGAINST FORMER OWNERS ALLEGES $470 BILLION IN MONEY LAUNDERING
The Kyiv Post on 5th June reported that PrivatBank had filed a lawsuit against its former owners, Ihor Kolomoisky and Gennadiy Bogolyubov, in the Delaware Chancery Court in the US with a detailed description of alleged fraud by the bank’s previous owners.
AFRICAN DEVELOPMENT BANK (AFDB) BARS QUALITRENDS GLOBAL SOLUTIONS NIGERIA LIMITED FROM CONTRACTS FOR 36 MONTHS
Ripples Nigeria on 5th June reported that the AfDB has barred the Nigerian company after an investigation conducted by the Bank’s Office of Integrity and Anti-Corruption. There are alleged numerous acts of fraud in bidding for a construction contract under the Agricultural Transformation Agenda Support Program Phase One in Nigeria (ATASP-1).
https://www.ripplesnigeria.com/afdb-blacklists-nigerian-company-over-bidding-fraud
SEC OBTAINS ASSET FREEZING ORDER AGAINST PONZI SCAMMERS TARGETING COLLEGE KIDS
Finance Feeds on 5th June reported an order against Syed Arham Arbab, Artis Proficio Capital Investments, LLC (APCI), and Artis Proficio Capital Management, LLC (APCM), and following an order to halt a Ponzi scam run from a college fraternity house. It is said that they offered and sold investments in a purported hedge fund, called Artis Proficio Capital which promised very high rates of return, and sent investors account updates purporting to substantiate those claims. Arbab also offered and sold certain “bond agreements,” which function like promissory notes. However, it seems that the fund never existed, and, upon information and belief, there is no brokerage account existing in the name of the Fund, APCI, or APCM.
COUNTERFEIT GOODS WORTH MORE THAN £850,000 SEIZED ON JUST 2 OCCASIONS AT EDINBURGH AIRPORT
The Evening Express on 5th June reported that around 1,600 fake items worth more than £850,000 have been seized on just 2 occasions at the airport in April, including counterfeit designer label handbags and clothing.
‘COUNTY LINES’: THE MODERN CYBER SLAVES OF BRITAIN’S DRUG-TRAFFICKING NETWORKS
On 5th June, a Commentary from RUSI says that vulnerable children are being used to peddle drugs in the UK’s rural communities. Efforts to stamp out this form of modern slavery are recording only feeble successes, it says.
https://rusi.org/commentary/‘county-lines’-modern-cyber-slaves-britain’s-drug-trafficking-networks
DISCIPLINARY ACTIONS AGAINST BOSNIA’S TOP JUDICIAL OFFICIAL DROPPED
OCCRP reported on 5th June reported that Bosnia’s top judicial authority has dropped a disciplinary complaint against its boss, Milan Tegeltija, who became embroiled in a corruption scandal after a secretly-filmed video was released showing him allegedly taking bribes through a middleman.
INTERPOL: FIGHTING ILLEGAL, UNREPORTED AND UNREGULATED FISHING
In the framework of the International Day for the Fight against Illegal, Unreported and Unregulated (IUU) Fishing, a news release from INTERPOL highlights some of the work conducted by INTERPOL through its policing capabilities.
BOLIVIAN CUSTOMS SEIZES OVER $31 MILLION IN SMUGGLED GOODS
Prensa Latina on 4th June reported that over $31 million smuggled goods have been seized to date in Bolivia, in a joint operation between the National Customs and the Armed Forces (FFAA), in 3,182 anti-smuggling operations mainly on the Chile-Bolivia border.
PHILIPPINES: WASTE SHIPMENT FROM HONG KONG SENT BACK
The Manila Bulletin on 4th June reported that a shipment of waste materials found 5 months ago was returned to Hong Kong, the Bureau of Customs said. It was supposed to contain electronic accessories. However, when inspected it was found to be loaded with mixed plastic waste.
https://news.mb.com.ph/2019/06/04/waste-shipment-from-hong-kong-sent-back/
OECD PROPOSAL TO REVOLUTIONISE WORLDWIDE TAXATION
On 5th June, Clifford Chance published a briefing containing an assessment of a proposal to entirely reshape the basis on which tax is allocated between different countries. The briefing outlines the new OECD proposals, and assesses both their potential impact, and the likelihood they will be adopted.
https://www.cliffordchance.com/briefings/2019/06/the_oecd_proposaltorevolutioniseworldwid.html
WHY THERE ARE MORE COUNTERFEIT ROLEXES THAN ANY OTHER PRODUCT IN THE WORLD
The Fashion Law on 4th June carried an article containing the claim that there are more fake Rolex watches on this planet than all other fakes combined. It says that the sheer number of counterfeit Rolex watches is partially due to the way the 113-year old watch brand distinguishes between real and fake. Unlike nearly every other product on the market, which can be altered freely by its owner without losing its status as an authentic good, Rolex is different – the distinction between real and fake is much more stringent: replace a part from an authentic watch with a non-Rolex approved part – this includes any non-brand custom additions – and your otherwise legitimate watch is automatically counterfeit.
MALTA TOLD TO BEEF UP POLICE UNITS WITH RISE IN GAMING AND CRYPTO FRAUD
Malta Today on 5th June reported that the rise of gaming, finance and crypto needs beefed-up economic crime police, the EU tells Malta. The Commission, in its recommendations to Member States for the use of EU funds, said that the size of Malta’s financial and gaming sector, and the efforts to attract cryptocurrency operators required an effective AML enforcement.
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