15th July 2019
INDONESIA: SUSPECTED SMUGGLERS ARRESTED FOR ATTEMPTING TO SMUGGLE LOBSTER LARVAE FROM INDONESIA TO VIETNAM THROUGH SINGAPORE.
The Star reported on 15th July that 4 suspected smugglers, including a 29-year-old Singaporean, were arrested by Indonesian police for attempting to smuggle 113,412 lobster larvae from Indonesia to Vietnam through Singapore.
SMUGGLERS OF NORTH KOREA COAL GIVEN SUSPENDED SENTENCES IN SOUTH KOREA
UPI reported on 14th July that a court in South Korea has given suspended prison terms for 3 unnamed defendants who were convicted of smuggling North Korean anthracite coal into the country. They imported more than $1.35 million of coal into the South, in violation of UN sanctions. They falsely declared the coal as being from China and Vietnam.
FROM FUEL TO AMPHETAMINES: THE WORRISOME EVOLUTION OF MOROCCO’S BLACK MARKETS
Morocco World News carried an article on 14th July saying that the existence of informal and illicit trade networks among North African countries is not unheard of, nor is it a new phenomenon. Despite decades of war, failed diplomatic efforts, and a closed border, smugglers in Algeria and Morocco have retained close ties. It reports a article in the Washington Post in June, based on over 200 interviews with smugglers, state representatives, and civil society groups, and which found that much of the region’s smuggling occurs in conjunction with local and state authorities. It says that for years, the most lucrative goods being smuggled in North Africa was gasoline, with Morocco one of the main destinations for smuggled Algerian petrol. Other cheap consumer goods such as medicines, scrap metal, household appliances, tobacco, agricultural goods, and vehicle parts are routinely smuggled into Morocco from Algeria, and the north of Morocco is full of well-organised contraband networks that have long-standing family and trade connections with smugglers in Algeria. The revenue generated from smuggling also offers political influence. Smugglers of fuel, cigarettes, and cannabis had been using donkeys and mules to transport jerry cans of contraband and, as a result, Moroccan authorities began tagging donkeys for traceability, while Algeria shot at unaccompanied animals near the border. Now the cross-border smuggling of consumer goods such as fuel, dates, milk, cigarettes, and Turkish-made clothes has been significantly curbed by new border control measures, but smugglers are turning to drugs instead. Morocco has always been one of the world’s top cannabis producers, but now smugglers exporting cannabis to Algeria are bringing back amphetamines (locally known as karkoubi).
CAMBODIA: 1,000 SMUGGLED DUCKS FREED
The Phnom Penh Post reported on 15th July that provincial police questioned 3 men suspected of attempting to smuggle more than 1,000 lesser whistling ducks into Phnom Penh from the Cambodia-Thai border area. After the suspects were detained and their truck confiscated, the Forestry Administration released the ducks. It said that lesser whistling ducks are categorised by the International Union for Conservation of Nature (IUCN) as a species of “Least Concern” – that is, they are evaluated as not being a focus of species conservation.
HOUSTON OIL EXECUTIVE GETS 18 YEARS IN PRISON FOR DEFRAUDING INVESTORS
On 14th July, the Houston Chronicle reported that Daniel Walsh, the CEO of Houston-based Western Capital Inc, was sentenced to 18 years in state prison for defrauding investors who thought they were paying for the drilling and testing of wells – but instead paid the executive’s mortgage. He had claimed to be raising money for the drilling and testing of oil wells in Galveston between 2007 and 2009. It is not the first time Walsh has been accused of fraudulent business practices: in 2005, the Pennsylvania Securities Commission issued a cease and desist action against his company for selling unregistered investments in 2 oil wells in Texas.
ISLE OF MAN COMPANY TAKES AIR ZIMBABWE TO COURT OVER “DONATED” AIRLINERS
CH Aviation on 15th July reported the story of a court case in Zimbabwe brought by a special purpose vehicle company in the Isle of Man against the state airline. It concerns 2 that were part of a 2012 deal between China Sonagol of Hong Kong and the Mugabe regime to help revive the debt-ridden state-owned airline. The deal was structured via a pair of IOM-based SPV. However, only one of the aircraft ever entered sustained operations while the other has not operated since January 2014, given a lack of funds needed to effect major repairs to its airframe and landing gear. It is said that, in May 2016, the then Minister of Transport explicitly stated that the aircraft had been dry-leased from the Chinese petroleum firm. The Zimbabwean state now claims that the 2 airliners were “donated” to it in 2013, a claim the SPV has explicitly rejected. It is reported that loss of the aircraft and the imposition of a hefty backdated lease account would add to Air Zimbabwe’s already mountainous debt pile, said to exceed $350 million. It also reports on a 2019 report to the Zimbabwe parliament on the airline, which revealed accountability problems, “missing” funds, unsupported expenses and unexplained differences between costs quoted and what suppliers confirmed.
ING BELGIAN UNIT FINED FOR MONEY LAUNDERING VIOLATIONS
KYC 360 on 15th July reported that ING Groep NV in Belgium was fined €350,000 by the central bank for violating legislation against money laundering.
CHINA SANCTIONS US COMPANIES OVER TAIWAN ARMS SALES
On 15th July, KYC 360 reported that China has announced sanctions against US companies involved in a recent arms deal with Taiwan. The deal includes 108 General Dynamics Abrams tanks and 250 Raytheon Stinger missiles. The deal is worth $2.2 billion, and, if approved by the US Congress, constitutes the largest arms sale to Taiwan since a $5.8 billion deal in 2011.
CANADA: LAW AMENDED TO IMPROVE MONEY LAUNDERING PROSECUTIONS
On 15th July, KYC 360 reported that Criminal Code amendments to make it easier to prove money laundering, adding recklessness, are now in force in Canada. It lowers the threshold from having to prove that the offence was connected to an illegal activity, such as drug trafficking.
TRADE COMPLIANCE AND A CHINA CUSTOMS AUDIT
A briefing from the Global Law Office is concerned with China customs audits aims at identifying non-compliance. It explains the scope of customs audits and how they might be triggered – being either routine or in cases of suspected non-compliance, or when special audit campaigns are launched. It also covers procedures and legal obligations, and provides some tips to cope with the audit process. It concludes that trade compliance is the best way to avoid legal risks of, or in, a customs audit. If there is a customs audit, the best approach is for the company to keep a balance between co-operating with the customs and being defensive.
ZIMBABWE CORRUPTION ON THE RISE
Pindula on 15th July reported that a recent survey by the Afrobarometer and Transparency International has suggested that corruption has been on the rise over the past 12 months. The survey disclosed that 60% of Zimbabweans think that corruption levels have increased in the past 12 months. The article claims that Zimbabwe ranked better than the Democratic Republic of Congo, Liberia and Sierra Leone. Recently, the ZANU PF youth league released a list of individuals alleged to be corrupt. Senior Zanu PF officials including secretary for administration Obert Mpofu and other politburo members featured on the list.
FORMER FOX & FRIENDS HOST CLAYTON MORRIS LEAVES US AMID REAL ESTATE FRAUD ALLEGATIONS
Newshounds in the US on 14th July reported claims that Clayton Morris has reportedly moved with his family to a resort town in Portugal while he fights dozens of lawsuits from investors who have accused him of defrauding them in real estate deals.
On 14th July, in his blog, Kenneth Rijock reported on Turkey’s Citizenship Through Investment (CBI) programme and the substantial reduction in the amount of capital required to acquire Turkish citizenship and passport, from the original $2,000,000 to a $500,00 deposit, or $250,00 to be invested in real estate. The overwhelming majority of applicants are from high-risk countries in the Middle East. An infographic shows that the most recent group of applications, according to statistics provided by the Interior Ministry were made by nationals from a number of neighbouring countries, which the majority from Iran.
UK POLICE LAUNCH NATIONAL FORCED MARRIAGE CRACKDOWN AT AIRPORTS
On 15th July, Police Professional reported that officers from across England and Wales and the Border Force will join together in a national week of intensification (15th – 19th July) called Operation Limelight. Partners like social services, the health service and charities are also involved and will be assisting police. It will focus on flights connecting the UK to destinations where there is a high prevalence of forced marriage.
UNODC ASSISTS MOZAMBIQUE TO ADDRESS GROWING THREAT OF ILLICIT TRAFFICKING AND TERRORISM
On 12th July, the UN Office on Drugs & Crime reported that Mozambique is increasingly becoming a centre of attention of UNODC efforts to combat the growing threat of illicit trade on the East African coast. From heroin from West Asia arriving and transiting through the region, to ivory and timber leaving its ports to reach Asian markets, the region is a growing hub with dire consequences to fragile economies. In the north, so-called terrorist groups have since January 2019 increased their intensity of attacks, which left more than a dozen dead in June alone.
ARREST WARRANT ISSUED FOR FORMER SECRETARY OF KYRGYZ DEFENSE COUNCIL
On 15th July, Rferl reported that Kyrgyz authorities have issued an arrest warrant in absentia for the former secretary of Kyrgyzstan’s Defense Council, Busurmankul Tabaldiev – whose current whereabouts are unknown – on corruption charges. Since May, several former top Kyrgyz officials – including a deputy prime minister, a health minister, and a prosecutor-general – have been arrested on similar charges.
ITALY: SEIZED ARSENAL OF RIGHT-WING EXTREMIST FIGHTERS FROM UKRAINE
Corriere Della Sera in Italy on 15th July reported that weapons, including the latest generation of automatic assault rifles were seized by the police in several cities in Northern Italy in a round of counter-terrorism raids on a number of right-wing extremist groups including Italian fighters who participated in the war in the Donbass, in Ukraine. It reports that last year authorities in Kiev sent to Italian judiciary a list of 25 Italian citizens who fought in the Russian Donbass in 2014. Italian fighters on both sides of the Russian-Ukrainian conflict often have a similar origin. Are right-wing extremists, ultra-nationalists.
FRANCE TO RETURN MONEY FROM GULNARA KARIMOVA’S PROPERTY TO UZBEKISTAN
Eurasia Diary on 10th July reported a court ruling on the confiscation of French property of daughter of the late first President of Uzbekistan Gulnara Karimova. The money from sale of an apartment in Paris, a villa in Saint-Tropez area and a château in Paris suburbs, “which were obtained illegally,” will be returned to the national budget of Uzbekistan, Radio France Internationale reports. The decision of the French authorities on confiscation of Karimova’s property is said to be connected to an investigation in Switzerland.
UK: CALL FOR EVIDENCE ON INSOLVENCY PRACTITIONER REGULATION
On 12th July, the Insolvency Service issued a news release saying that stakeholders are being asked to give views on the current regulatory framework for insolvency practitioners in the UK following changes introduced in 2015.
GERMAN ARMS EXPORT APPROVALS SPIKE IN FIRST HALF OF 2019
Deutsche Welle on 11th July reported that permits for German arms exports soared in the first half of 2019 – with €5.3 billion worth of government approvals for arms sales between January and June – defying dips and restraint over the past 3 years, government data has shown. Hungary is the top destination for new weapons exports. It was followed by Egypt and South Korea €278 million, sixth on the list was UAE. Egypt and the UAE are members of a Saudi Arabia-led alliance of Arab states that since 2015 has fought Iranian-backed Houthi rebels in Yemen.
UK: CONSULTATION ON IMPLEMENTATION OF CJEU JUDGMENT ON DIESEL FUEL USED IN PRIVATE PLEASURE CRAFT
On 15th July, a news release from HMRC sought views on, and seeking information about, proposed changes to the rules for red diesel used in private pleasure craft as a result of a judgment of the Court of Justice of the EU. The consultation ends on 9th September.
PODCAST: CYBERWARFARE – WHAT ATTACKS HAVE THERE BEEN IN 2019? MANY, IT SEEMS
This podcast from Defense One in the first of a planned series of 3 that look at the contemporary risks of cyber warfare – from ransomware and extortion to online banking and culture wars. This episode details some of the (many) cyber attacks reported in the US this year, and talks to several experts about them. The examples include a malware attack on a US Coast Guard ship that triggered a service-wide alert.
UK SUPREME COURT CONSIDERS THE LAW RELATING TO RESTRICTIVE COVENANTS
A brief from Morton Fraser on 15th July reports on a Supreme Court case that has effectively overrules a case from 99 years previously. The Court considered when it is appropriate to omit words from within a restrictive covenant in circumstances where, if the words were to remain, the covenant would be void as an unreasonable restraint of trade. The Court preferred 3 criteria set out in a 2007 case, particularly the third criteria: the removal of the unenforceable provision does not so change the character of the contract that it becomes not the sort of contract the parties entered into at all. The original restriction said that the man concerned could not “directly or indirectly engage or be concerned or interested in any business carried on in competition with any of the businesses of the Company…….”, the change the Court agreed upon was to remove the words “or interested”.
SWISS AIRCRAFT MAKER PILATUS FLIES INTO CORRUPTION ALLEGATIONS
An article from OCCRP on 15th July is concerned with the Indian Air Force decision to cancel for trainer aircraft from Pilatus after reports of corruption and irregularities emerged in a previous, linked contract. The article also says that the Swiss federal prosecutor has confirmed he has opened a criminal investigation against Pilatus for selling its training aircraft to Saudi Arabia and UAE, both involved in the war in Yemen.
IMF PAPER: THE RISE OF DIGITAL MONEY
On 15th July, the IMF published a paper which marks the launch of a new IMF series, “Fintech Notes”. Building on years of IMF staff work, it will explore pressing topics in the digital economy and be issued periodically. This first paper analyses how technology companies are stepping up competition to large banks and credit card companies. It identifies the benefits and risks and highlights regulatory issues that are likely to emerge with a broader adoption of stablecoins. The paper also highlights the risks associated with e-money: potential creation of new monopolies; threats to weaker currencies; concerns about consumer protection and financial stability; and the risk of fostering illegal activities, among others.
FEATURES WHICH MAKE ISLE OF MAN FOUNDATIONS ATTRACTIVE ASSET PROTECTION VEHICLES
Dixcart has issued a briefing on foundations available under Isle of Man law.
COURT TO HEAR CASE INVOLVING ALLEGED €4 MILLION BINARY OPTIONS SCAM BY IRISH FIRM AGAINST 35 INVESTORS
Breaking News on 15th July reported that 35 investors who claim they were defrauded and lost more than €4 million in an electronic-trading scam have had their case against an Irish registered firm – Greymountain Management Ltd (in liquidation), and 4 businessmen has been admitted to the Commercial Court. The investors claim they believed they were investing in a complex trade known as binary options, when in fact the software system their trades were conducted on was rigged to ensure they lost their money.
RUSSIA: 10 PEOPLE TO STAND TRIAL FOR ALLEGEDLY $64 MILLION OF ILLEGAL BANKING ACTIVITIES IN THE RUSSIAN CHUVASH REPUBLIC
OCCRP reported on 15th July that the defendants stand accused of creating 30 fake companies over 6 years, each existing for only a day, profiting about $800,000 off of the over 3,500 “investors”.
US CUSTOMS AIRCRAFT SEARCH TEAMS
In the latest edition of US Customs and Border Protection’s “Frontline” magazine, an article sets out to look behind the scenes at 2 of the busiest international airports in the US, where a unique team of CBP officers uncovers internal conspiracies involving airline and airport employees.
AUSTRALIA: $144 MILLION OF COCAINE FOUND HIDDEN IN AN EXCAVATOR
10 Daily on 15th July reported that a 348 kg shipment of cocaine from South Africa arrived in Australia in June, hidden in parcels inside a huge excavator machine, packed into the hydraulic lifting arm of the excavator. The excavator was sent to its intended destination in a controlled delivery.
CHINESE CUSTOMS RETURNS IMPORTED SOLID WASTE
On 14th July, Xinhua reported that Yantai customs in east China’s Shandong Province has shipped back a batch 156.4 tonnes of of solid waste imported from overseas to where it originated. It consisted of lead sludge from recycled lead-acid batteries and slags produced in metal smelting, which are banned from import in China.
THE UNCERTAIN FUTURE OF ALGERIA’S ANTI-CORRUPTION BATTLES
An article from the Washington Institute on 15th July says that a recent crackdown by Algeria’s transitional government has caused a number of prominent senior officials from the Bouteflika era to face charges from the Sidi M’hamed central court in Algiers, mostly related to corruption. However, questions regarding the motivation behind these cases have weakened the public’s trust in an already uncertain political and economic system. Concerns over the politicization of anti-corruption efforts have the potential to feed the worst elements of Algeria’s shadow economy while sacrificing long term investment and sustained growth; and if a new government does not materialize, Algerians will remain unconvinced that a democratic transition will end the long era of corruption in Algerian politics.
FINRA ISSUES NEW GUIDANCE ON CREDIT FOR EXTRAORDINARY CO-OPERATION
On 15th July, Wilmer Hale published a Client Alert saying that the US Financial Industry Regulatory Authority (FINRA) restated and supplemented prior guidance regarding the circumstances under which FINRA will award credit for “extraordinary cooperation” in investigations and the nature of credit available. It clarifies the difference between required co-operation and extraordinary co-operation. In particular, FINRA noted the importance of broad and prompt corrective measures, customer restitution, and substantial assistance to FINRA.
MEXICAN AUTHORITIES FREEZE BANK ACCOUNTS WHERE THE COUNTRY’S MOST POWERFUL DRUG CARTEL HAVE HIDDEN $280 MILLION IN ASSETS
The Mail Online on 15th July reported that the Office for the Treasury and Public Credit announced that it had identified accounts across several financial institutions where the Jalisco New Generation Cartel had hidden a chunk of the $20 billion in assets it owns. The finance system identified at least 550 accounts linked to the Jalisco New Generation Cartel.
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