10th July 2019
FATF GUIDANCE IN RELATION TO THE RISK-BASED APPROACH FOR TRUST AND COMPANY SERVICE PROVIDERS (TCSP)
On 9th July, Herbert Smith Freehills published a short analysis of FATF guidance issued on 26th June and intended to assist TCSP in apply the risk-based approach in the implementation of FATF Recommendations on AML/CFT. The guidance sets out what the risk-based approach entails, outlines high-level principles involved in applying it, and provides examples of good practices for legal and regulatory authorities and TCSP practitioners in the design and implementation of an effective risk-based approach for AML/CFT.
ROMANIA: LACK OF PROGRESS ON ANTI-CORRUPTION MEASURES
On 9th July, the Council of Europe anti-corruption body, GRECO, published a report on Romania. It says that Romania has made very little progress to put in place measures to prevent corruption among parliamentarians, judges and prosecutors and to address the concerns raised by its controversial judicial reform. It calls on the Romanian authorities to take determined action to achieve tangible progress as soon as possible, and welcomes the Romanian Prime Minister announcing the intention to abandon the controversial judicial reforms.
COUNCIL OF EUROPE REPORT ON CORRUPTION IN GEORGIA
On 2nd July, the Council of Europe anti-corruption body, GRECO, published an evaluation report on corruption prevention in respect of members of parliament, judges and prosecutors. GRECO had previously made a number of recommendations to improve the situation in Georgia. The new report says that Georgia has implemented satisfactorily 5 of the 16 recommendations contained in the 4th Round Evaluation Report and, of the remaining recommendations, 8 have been partly implemented and 3 have not been implemented. GRECO notes that tangible progress has been made in respect of all themes, but that further efforts are necessary to implement the remaining recommendations within the next 18 months.
FAILURES IN SOME COUNTRIES TO PROPERLY DISPOSE OF AND DESTROY EXCESS SMALL ARMS AND LIGHT WEAPONS (SALW) AND THEIR AMMUNITION
This 2017 report from International Action Network on Small Arms (IANSA) documents failures in some countries to properly dispose of and destroy excess small arms and light weapons (SALW), and their ammunition. It illustrates the different ways that excessive, poorly secured, weapons, especially firearms and ammunition, leak out into the hands of abusers and to those unauthorised to trade and use them, and the dire consequences that result from such failures. It states the obvious, that careful management of stockpiles of small arms, light weapons and their ammunition as well as the destruction of surpluses undoubtedly helps to reduce the risk of the diversion of such weapons to crime, terrorism and armed conflict. The cases examined include Afghanistan, Brazil, DRC, the European Union, El Salvador, Libya, Rwanda, South Sudan and Southern Africa (Malawi and South Africa).
NEW ZEALAND: CORRUPT FORMER BANKER FORFEITS $850,000 AFTER TAKING BRIBES IN $54 MILLION MORTGAGE FRAUD SCHEME
On 10th July, the New Zealand Herald reported that a corrupt banker, Former BNZ staffer Zongliang (Charly) Jiang, has forfeited $850,000 and will now be eligible for parole sooner after being jailed for taking bribes to facilitate a $54 million mortgage fraud scheme. He was one of 4 people convicted after being charged by the SFO over 76 Auckland and Hamilton properties and suspicious mortgages, involving 57 loan applications and 110 transactions. He was one of 2 bankers taking bribes of $7,000 per transaction to approve the loans, the other being former ANZ banker Peter Cheng who fled to China.
INDIA: BHUSHAN STEEL CASE – 70,000-PAGE CHARGE SHEET
On 10th July, The Economic Times carried an article about a case with 284 accused. The decision to file a charge sheet against a large number of accused is based on the Supreme Court’s guidelines that mandate that all those involved in alleged offences be charged. However, it’s up to the court to decide who will stand trial.
TUNISIA: PROSECUTION FREEZES FUNDS OF FORMER MEDIA OWNER AND POLITICIAN AND HIS BROTHER
On 10th July, the Middle East Monitor reported that the Tunisian public prosecutor announced the imposition of a travel ban on media figure Nabil Al-Qarawi and his brother, in addition to freezing their bank accounts as a precautionary measure after being charged with money laundering. He is the former owner of the private channel Nessma. He is also the president of Heart of Tunisia party, the new name of the newly-established Social Peace party.
LATVIAN PROSECUTOR HANDS CENTRAL BANK CHIEF GRAFT CASE TO COURT
KYC 360 on 10th July reported that a corruption case against Latvian central bank governor Ilmars Rimsevics has been handed to a court for consideration, the Latvian Prosecution Office said. He was detained by the Latvian anti-corruption agents in mid-February 2018 and was later charged with accepting bribes – a pleasure trip and €250,000 from a Latvian bank – and money laundering.
MEXICAN PROSECUTORS ARREST PROMINENT LAWYER IN CAPITAL
On 10th July, KYC 360 reported that Mexican federal prosecutors say they have arrested a prominent lawyer, Juan Ramón Collado – a prestigious attorney with connections to various political parties in Mexico, on suspicion of involvement in organised crime and money laundering.
FOUNDER AND FORMER DIRECTOR OF GLOBAL FORESTRY INVESTMENTS HAS BEEN CHARGED WITH CONSPIRACY TO DEFRAUD, FORGERY, AND MISCONDUCT IN THE COURSE OF WINDING UP, FOLLOWING HIS ARREST AT HEATHROW AIRPORT
On 9th July, the Institute of Chartered Accountants in England & Wales reported that the founder and former director of Global Forestry Investments, Andrew Skeene, has been charged with conspiracy to defraud, forgery, and misconduct in the course of winding up, following his arrest at Heathrow Airport. This relates to a case where it is alleged that small investors – including many pensioners – were persuaded to invest in “ethical” tree plantations in the Brazilian rainforest. Skeene and his business partner, Omari Bowers, set up Global Forestry Investments up in 2010 with offices in London, Brazil and Dubai and offered returns of 10% to 20% p.a.
SON OF AZERI OIL CHIEF AND A STOLEN £1.35 MILLION WATCH
On 9th July, OCCRP carried an article saying that the theft in Spain of a $1.35 million Richard Mille watch has stirred heated speculation, accusations, and counter-accusations in Azerbaijan. The alleged former owner of the watch is the son of the president of SOCAR, the state-owned oil company, and the affair could have serious political implications. Azerbaijani media tentatively identified 25-year-old Rashad Abdullayev as the victim of the theft on 19th June. Abdullayev’s father Rovnag Abdullayev, is the company president. According to a SOCAR annual report, the official salaries and benefits for the company’s president and its 12 vice presidents totalled $755,000 in 2018.
ROMAN COURT SENTENCES 24 SOUTH AMERICANS FOR INVOLVEMENT IN OPERATION CONDOR UNDER MILITARY DICTATORSHIPS
On 9th July, Jurist reported that the 24 people were sentenced to life in prison, including senior officials in Chile, Paraguay, Uruguay, Brazil, Bolivia and Argentina’s military dictatorships. They were found to have been involved in Operation Condor, a US-backed operation which took place in the 1970s and 80s and involved tracking down and removing political opposition to South American military rule. The case before the court focused on the disappearance of 43 people, 23 of whom were Italian citizens. There is evidence provided by prosecutors in South America and Italy that at least 100 left-wing activists were killed in Argentina. The trial began in 2015, and is a result of years of pressure from the families of the victims who were kidnapped and assassinated. Only one of the 24 people convicted and sentenced to life in prison is in Italy, and the other 23 were sentenced in absentia.
WEALTHY FISHERMEN RAN MAJOR DRUG TRAFFICKING RINGS IN COSTA RICA
On 9th July, Insight Crime reported that drug smuggling fishermen in Costa Rica owned large private properties and luxury vehicles — riches gained from leading “transportista” groups, which are becoming increasingly common in the Central American nation. The arrests of wealthy fishermen indicate that so-called “transportista” organisations — which receive, store and move drugs — have appeared anchor in Costa Rica, already being seen in El Salvador, Guatemala and Honduras. The amount of cocaine seized in Costa Rica has also spiked and Costa Rica seized a record 33.6 tons of cocaine in 2018.
UK: GOVERNMENT SCHEME FOR USE OF CHILDREN AS ‘SPIES’ IS LAWFUL, HIGH COURT JUDGE RULES
Local Government Lawyer on 9th July reported that the Government’s scheme governing the use and authorisation of juvenile covert human intelligence sources (JCHIS) – or ‘child spies’ – in particular by police in the context of criminal justice is lawful.
REVIEW OF GLOBAL CARGO THEFT IN 2018
On 10th July, Hellenic Shipping News said that TT Club and BSI Supply Chain Services & Solutions have teamed again to produce a full year analysis of cargo theft, together with some further loss prevention commentary to assist those considering how to combat this on-going threat. It highlights prevailing trends on both a regional and global basis. Overall, food and beverages, alcohol and tobacco and consumer products account for 49% of all cargo stolen globally. Electronics and clothing account for another 12% respectively and together make up the top 5 targeted commodities. The report is available at –
US COURTS’ INTERPRETATION OF AGENCIES’ INTERNATIONAL TRADE REGULATIONS
On 9th July, Akin Gump published an article saying that after a recent court case, the US courts may no longer rely on an agency’s own interpretation of its rules – such as those of the Department of Commerce, US Customs and Border Protection, the US International Trade Commission and the US Trade Representative – when a dispute arises between an agency and a private party over the meaning of a regulation’s terms. The article concludes that federal courts must conduct a searching review of an agency’s interpretation of its own regulation. Federal agencies operating in the international trade arena likewise will need to more fully explain their reasons for interpreting a regulation in a particular way. They may no longer assert ambiguity based on the regulation’s terms and expect deference from the courts. It says to expect an increase in the number of challenges filed contesting an agency’s interpretation of its own regulations.
LATVIA HAS AGREED AN EXTENSION IN INTRODUCTION OF MONEYVAL RECOMMENDATIONS
On 10th July, the Baltic Times reported that Latvia has been able to agree to an extension in the introduction of the recommendations from Moneyval.
US MISSILES FOUND IN LIBYAN COMPOUND BELONGED TO FRANCE
On 10th July, AP reported that US missiles captured from the so-called Libyan National Army, and originally suspected as being diverted US-supplied missiles to one of its Gulf allies, were originally in Libya for use in protecting French forces there – and hence there had been no breach of an arms embargo. It is said that the missiles had been “damaged” and stored for destruction.
FCA HIGHLIGHTS FALL IN SUSPICIOUS SHARE TRADING BEFORE TAKEOVERS
On 10th July, UK Finance reported that suspicious trades that can indicate insider trading occurred before 10% of takeover announcements in the UK in 2018, the FCA revealed in its annual report. This was the lowest level since 2006 and a marked drop from the previous year, when suspicious trades occurred before 22% of takeover announcements.
6-MONTH TIME-LAPSE SHOWS CONTINUED ACTIVITY AT NORTH KOREAN COAL TERMINALS
An article in NK Pro on 10th July reported that time-lapse satellite imagery provided by Planet Labs from the first half of 2019 shows continued and frequent traffic at 2 North Korean coal terminals on the country’s western side. It says that the images do not show the direction of the trade, though the availability of coal within the DPRK and minimal imports likely signals that most of the country’s coal terminals are export-focused. Despite sanctions, North Korea has continued some level of coal trade by transhipping coal through Russia or via transferring coal between vessels at sea, away from the prying eyes of customs authorities and regulators. The article concludes that, taken together with other evidence, the activity at the ports correlates with the UN Panel of Experts’ assessment that Pyongyang’s ship-to-ship smuggling has seen a “massive” increase since the passage of UN Resolution 2397, with North Korea adapting and evolving its methods to maintain some level of commodity trade.
US: IMMIGRATION OFFICIALS USE SECRETIVE GANG DATABASES TO DENY MIGRANT ASYLUM CLAIMS
Government Executive on 9th July reported that federal immigration officials are relying on databases run by foreign police and militaries to check whether migrants crossing the US border have gang affiliations, which would allow officials to detain and eventually deport them. The information is being provided through a new “fusion” intelligence-gathering centre in El Salvador that is funded by the State Department and works in tandem with the Department of Homeland Security. The article says that legal experts and human rights advocates say they were not told about the databases and question their reliability.
LEGAL CHALLENGES TO EU MEMBER STATES’ ARMS EXPORTS TO SAUDI ARABIA: CURRENT STATUS AND POTENTIAL IMPLICATIONS
On 28th June, the Stockholm International Peace Research Institute (SIPRI) published an article which says that EU states have committed themselves to a set of rules which are meant to prevent and address the diverse effects of unregulated or poorly regulated arms trade on conflict, regional security and stability and, ultimately, human suffering, with the application of international humanitarian law being one important factor. However, there have always been differences in the way Member States have interpreted these rules, depending on their national laws, decision-making processes and political and economic interests. These differences have become particularly evident in the escalation of the fighting in Yemen. While some Member States have halted or restricted exports of military equipment to the Saudi Arabian-led coalition actively engaged in the conflict others have continued with supplies.
LARGE-SCALE MONEY LAUNDERING DETECTED WITH EUROJUST’S SUPPORT
On 10th July, a news release from Eurojust announced that a criminal network involved in transnational money laundering was targeted by the national authorities of the Netherlands, Belgium, Spain, Slovenia and Bosnia and Herzegovina, with Eurojust’s and Europol’s co-operation. The Netherlands initiated its investigation into a large scale-money laundering in November 2018. The main suspects are allegedly involved in massive money laundering activities through real estate investment in all countries concerned. The illegal proceeds supposedly originate from extended drug trafficking and smuggling between Europe and the USA.
PIMPING AND MONEY LAUNDERING NETWORK DISMANTLED WITH EUROJUST’S SUPPORT
On 10th July, a news release from Eurojust advised that Eurojust actively supported the national authorities of 15 countries in taking down an organised crime group involved in pimping and money laundering. It says that Eurojust swiftly set up a joint investigation team (JIT) with Spain, Finland and Sweden to speed up the criminal investigations into the group, which resulted in the arrest of the main suspects of the group in Malta, Romania and Finland. In April 2016, the Spanish authorities initiated an investigation into an organised crime group, suspected of money laundering of illegal proceeds, which were obtained through aggravated pimping in Nordic countries, with the alleged main suspect managing websites advertising sexual services offered by women of predominantly Nigerian origin, who worked as prostitutes in Finland and Sweden.
UK: THOUSANDS OF BORDER FORCE SEIZURES IN INTERNATIONAL OPERATION AGAINST WILDLIFE CRIME
On 10th July, the Home Office issued a news release saying that during the month-long global Operation Thunderball, co-led by the World Customs Organisation (WCO) and INTERPOL, Border Force officers in the UK made 168 seizures containing thousands of products regulated under CITES at ports and airports. The international operation involved police, customs, environment, wildlife and forestry agencies from 111 countries.
For more information on the international operations, see the WCO news release of 10th July –
UK: DRUG TRAFFICKERS CONVICTED OF IMPORTING HEROIN IN BOXING GLOVES
A news release from the NCA on 10th July advised that 4 members of an organised crime group have been convicted of smuggling £1.2 million worth of heroin from Pakistan into the UK via the post. A total of 13 packages were seized at 3 UK airports containing a total of 5 kg of high-purity heroin concealed within boxing gloves, equine dentistry tools, medical instruments, and motorcycle gloves.
MALAYSIA MOVES TO REFORM GAMBLING LAWS AS ILLEGAL GAMBLING BOOMS
Calvin Ayre on 10th July reported that, since the start of the year, over 14,700 individuals have been arrested and more than $917,757 seized. Malaysia is concerned that it is facing an illegal gambling epidemic and wants to stop the activity before it gets worse. In order to do so, lawmakers are going to take a closer look at gambling laws and update the “obsolete” gambling framework, mostly dating from the 50s and 60s.
ALLEGED DIVERSION OF FUNDS FROM LITHUANIAN OLYMPICS LOTTERY
On 10th July, OCCRP published an article about the Olifeja lottery, which calls itself an “Olympic lottery,” and is still the principal funding source for the Lithuanian National Olympic Committee, founded to fund Lithuania’s Olympic athletes. However, OCCRP claims that 2 lottery executives also amassed personal fortunes by evading the company’s obligation to share its profits with the athletes, the investigation found. It is alleged that, over a 14-year period, Olifeja paid a significant fraction of its income — over $120 million at current exchange rates — to several private companies owned by the two men in exchange for services of dubious value. However, the country’s prosecutor’s office has said that it found no evidence of unlawful activity.
VAT FRAUD: DISCLOSURE TO TAXPAYER OF EVIDENCE OBTAINED THROUGH INVESTIGATIONS INTO OTHER TAXPAYERS
An article from Out-Law on 10th July concerned an Opinion from the Advocate General of the Court of Justice of the EU which, if followed by the Court itself, could have implications for both HMRC and taxpayers. According to the Opinion, where a tax authority is denying the right to deduct input tax on the basis that the taxpayer knew, or should have known, about fraud by a supplier, the relevant evidence must be disclosed to the taxpayer before the tax authority makes its decision, so that the taxpayer has the opportunity to make representations and mount a defence during the decision-making process. The Opinion arises from a Hungarian VAT case submitted to the Court.
CHINESE CUSTOMS SEIZE LIVING ANTS HIDDEN IN PARCEL
On 10th July, Xinhua reported that Qingdao customs in east China’s Shandong Province have seized 12 living adult ants and 10 ant eggs in a parcel mailed from Australia. An investigation also revealed that the ants were originally scheduled to be kept by the recipient as pets. Living insects are listed in China’s banned entry objects.
BTA BANK WINS SANCTIONS AGAINST EX-CHAIRMAN IN THEFT LAWSUIT IN US
On 10th July, Baker McKenzie reported that a federal judge in New York has ordered former BTA Bank JSC chairman Mukhtar Ablyazov to pay the Kazakh lender’s legal fees for the discovery process after he failed to hand over evidence in a lawsuit accusing him of laundering hundreds of millions of dollars in US real estate. The judge is quoted as saying that Ablyazov was “less than forthcoming” in a court-ordered deposition carried out in France, during which he claimed not to remember his own phone number or whether he’d used an accountant since fleeing Kazakhstan in 2009. BTA has long claimed that Ablyazov was stringing the court along in the 3-year-old lawsuit accusing him of stealing billions of dollars. Ablyazov fled to France from Britain after a UK judge found him in contempt in a parallel case.
ALGERIA’S EX-INDUSTRY MINISTER DETAINED OVER ALLEGED GRAFT
Reuters reported on 10th July that Algeria’s supreme court has placed former industry minister Youcef Yousfi in custody over alleged corruption, the latest senior official to be detained in anti-graft investigations since protests earlier this year demanding the prosecution of those suspected of prosecution.
MEASURING ILLICIT ARMS AND FINANCIAL FLOWS
A new paper from the Stockholm International Peace Research Institute (SIPRI) reminds one that Target 16.4 of the UN Sustainable Development Goals aims to, among other things, ‘significantly reduce illicit financial and arms flows’ by 2030. It offers recommendations on how data collection for indicators on illicit arms and financial flows could be improved and how additional regional and national indicators could be developed. The paper concentrates on work carried out in Latin America and the Caribbean by regional organisations, states and NGO to collect data on illicit arms flows and the lessons these efforts provide for the SDG Target.
WHY ORGANISED CRIMINAL NETWORKS ARE MOVING INTO ANABOLIC STEROIDS AND OTHER PERFORMANCE ENHANCING DRUGS
Illicit Trade on 9th July carried an article saying that a growing number of image-obsessed individuals are increasingly turning to anabolic steroids and other cosmetic drugs such as fat-burning pills and tanning injections in order to achieve the appearance they desire, despite the huge amount of harm these substances can cause.
POLISH GANG MEMBERS JAILED FOR RUNNING BIGGEST-EVER MODERN SLAVERY RING IN UK
On 8th July, Illicit Trade carried an article saying that 8 Polish nationals have been jailed for heading up a modern slavery ring in the UK that forced over 400 people to work for almost no pay while its members raked in £2 million in profit. Once they arrived in the UK, victims were put to work by the gang at various businesses across the West Midlands, where they would be forced to put in long hours for as little as £10 a week.