On 5th July, HM Treasury issued a Notice advising that, following the decisions of the UN and EU, the UK had removed 13 entities from its Consolidated List of those subject to sanctions.
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A fascinating and insightful feature from Bloomberg on 4th July looks in some depth at the osshore economy in the BVI saying that it is nominally home to 400,000 companies, and is desperate to fend off transparency – the companies sector providing 62% of its income. Amongst other things, it looks at BOSS – the beneficial Ownership Secure Search System – which the BVI began using in 2017 to meet international demands. However, it appears only 2 people at the Financial Investigation Agency have access to the whole system, even though around 600,000 companies and their owners (about a third of all offshore companies) have details held on the system. The article also reveals that last year regulators carried out only 4 onsite inspections of financial firms (though there would be likely little to find and inspect at the offices perhaps). Under new “economic substance” rules, taking effect this year, a company tax resident in the BVI must have local presence, which could lead many to leave or try to scale up their presence (which could be difficult given limited resources in the BVI). An even greater threat is said to be the UK-ordained requirement to have a public beneficial ownership register by 2020. The article disputes claims of legitimate uses for extreme secrecy – saying that the often elaborate attempts to conceal the ultimate owners are intended to make it difficult (if not impossible) to trace funds in business disputes, tax investigations and money laundering probes (amongst other things) – and it is these things that transparency really threatens. The article looks at the origins of the offshore sector in the BVI, and the people behind it, and how the US invasion of Panama in 1989 helped the BVI become the most popular offshore centre. It was ironic, therefore, that it was the release of the Panama Papers from 2013 that had helped BVI into the situation it finds itself in. The Financial Investigation Agency claims a good relationship with the UK NCA, and that it turns around 90% of requests within 24 hours (though anyone who has come across BVI companies knows that, without concrete evidence of wrongdoing, and plenty of time and energy, pursuing the true ownership of a BVI company can be, at best, highly difficult).
Blakes in Canada on 3rd July published an article about amendments to the regulations to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, and saying that regulated entities have been anxiously awaiting the final version of the regulations, after numerous rounds of consultations with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC). The regulations will be formally released in the Canada Gazette on July 10th, and the Department of Finance has already quietly released the final version of the regulations. Regulated entities will be required to significantly revamp their compliance policies and procedures, but except for one change that is beneficial to regulated entities, the amendments will not come into force until June 1st 2020 and in the case of some provisions, until June 1st 2021. The article contains an overview of the most substantive changes to the regulations.
On 4th July, Al-Arabiya reported that the recent US sanctions on the Iraqi-based South Wealth Resources Company (SWRC) have shone a light on how Iranian-backed militias are continuing to receive arms legally despite sanctions. It was designated for smuggling arms worth hundreds of millions of dollars to Iraqi militias linked to the Iranian Revolutionary Guards Corps (IRGC), but is said to be just one of many Iraq-based companies circumventing US sanctions using legal cover. They are said to do so by using a financial network consisting of hundreds of companies that claim to work in general trade, exchange, money transfer, agriculture, industry, and construction. It is said that there are at least 667 companies that are influenced by the IRGC, either through equity shares or positions on the board of directors. Despite the US freezing business activities and targeting boards of directors of numerous banks, financial institutions, and companies, dozens of other companies have been established legally under different names. The article says that a source close to Iraqi armed militias said that 4 men play a prominent role in arms trafficking on the Iraqi-Iranian border under “front companies” – Shibl al-Zaidi, the secretary general of the Iraqi Imam Ali Brigade; Sheikh Mohammed Kawtharni, a Lebanese national; Mohammed Jaber Abu Jaafar, a Syrian; and Sheikh Hussein al-Safi, an Iraqi.
Daily Sabah on 5th July reported that gendarmerie units in an eastern province have detained 2 suspects who were smuggling insects and butterflies abroad. Troops are said to have discovered equipment such as traps used to catch the animals, along with 600 different species of insects and 25 butterflies kept in boxes. It says that Turkey’s rich flora and fauna has often been the target of bio-smugglers in recent years. Authorities have stepped up efforts to clamp down on smugglers but laws only allow fines and deportation for captured foreign suspects.
https://www.dailysabah.com/investigations/2019/07/05/british-italian-smugglers-captured-in-adiyaman
The Jerusalem Post on 5th July reported that Panama’s Maritime Authority said that Grace 1, an Iranian oil tanker seized by British Royal Marines in Gibraltar, was no longer listed in Panama’s international boat registry as of May 29th. Panama de-listed the vessel after receiving an alert indicating that the ship had participated in or was linked to terrorism financing. Although the tanker flies a Panama flag, Iran claimed ownership and objected to the seizure of its ship.
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