OFAC ADDS TO VENEZUELAN SANCTIONS – SAID TO DISRUPT CORRUPTION NETWORK STEALING FROM VENEZUELA’S FOOD DISTRIBUTION PROGRAM (CLAP)

On 25th July, the US Treasury announced that OFAC had designated Colombian national Alex Nain Saab Moran, which it described as a profiteer orchestrating a vast corruption network that has enabled President Nicolás Maduro and his regime to significantly profit from food imports and distribution in Venezuela through the Local Committees for Supply and Production (Los Comités Locales de Abastecimiento y Producción), commonly known as CLAP.  Using a sophisticated network of shell companies, business partners, and family members, Saab is said to have laundered hundreds of millions of dollars in corruption proceeds around the world.  Also designated are Maduro’s 3 stepsons, Walter, Yosser, and Yoswal (the trio also being known as “Los Chamos”), to whom Saab funnelled money in exchange for access to contracts.   Also said to be implicated was the stepsons’ cousin, Carlos Erica Malpica Flores, who was already designated in September 2018, and Tareck Zaidan El Aissami Maddah, who was designated in February 2017 for alleged involved in drugs trafficking.

A news release details the allegations against Saab and Los Chamos, including illicit operations in the gold sector, with gold resources used to pay for some CLAP contracts.  Only alleged is the gold sent to Turkey was, in part at least, used by a company controlled by Saab in Turkey, Mulberry, purchased goods in Turkey on behalf of Venezuelan clients, marking up prices before being sold back to Venezuela.

In addition to Saab and Los Chamos, 6 other persons are being designated at the same time for their involvement – including Jose Gregorio Vielma Mora, the former Minister of Foreign Trade and International Investment of the Government of Venezuela, and Saab’s 2 sons.

13 companies said to be connected or involved were also designated – these including companies registered in Mexico, the UAE, Turkey, Panama, Colombia, Hong Kong and the state of Delaware in the US.

https://home.treasury.gov/news/press-releases/sm741

https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20190725.aspx

 

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WORLD BANK HAS DEBARRED MERCK BUSINESS UNIT

On 24th July, the FCPA Blog reported that the World Bank has debarred a business unit of a Merck subsidiary for 12 months for a “fraudulent practice” involving a health project in Bangladesh.  Institutional Family Planning Services Department (IFPSD) is a business unit of Merck Sharp & Dohme BV.

http://www.fcpablog.com/blog/2019/7/24/world-bank-debars-merck-business-unit.html

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BBC PODCAST: THE LOOT BOX SCANDAL

In the first episode of a 3-part BBC Radio 4 investigation the programme explores whether children are being enticed into gambling through video game “loot boxes”, and how an apparently harmless bit of fun has links that stretch all the way across the world and involve a small Caribbean island (Curacao) which has seen gambling-related murder and high-level corruption.  It says that maybe the question is not whether loot boxes involve gambling, but rather if they cause harm.

https://www.bbc.co.uk/programmes/m00070hh

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MOTHER OF SENIOR AIDE TO MEXICO’S EX-PRESIDENT ARRESTED IN GERMANY ON MONEY LAUNDERING CHARGES

KYC 360 on 25th July reported that the mother of Emilio Lozoya, the former CEO of Mexican state oil company Pemex and a close confidant to ex-President Enrique Pena Nieto, has been arrested in Germany.  Lozoya and several of his family members have been accused of involvement in a wide-ranging bribery and money laundering probe involving Brazilian construction firm Odebrecht.  It is said that Gilda Austin, 71, was arrested in connection with money laundering charges stemming from a $155,000 deposit made to her bank account.

https://www.riskscreen.com/kyc360/news/mother-of-senior-aide-to-mexicos-ex-president-arrested-in-germany/

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WHAT IS BITCOIN LAUNDERING?

Australian law firm, Nyman Gibson Miralis has produced a short note on the role of 2 key components of money laundering using Bitcoin are Bitcoin mixing services and Bitcoin exchanges –

Bitcoin mixing services – which aim to disassociate bitcoins from their source, which is often of a criminal nature; and

Bitcoin exchange services – which aim to anonymously convert bitcoins to spendable money.

https://ngm.com.au/bitcoin-laundering/

It also refers to a paper published in May 2018 in the Journal on Financial Crime in which the authors examine how cybercrime proceeds can be laundered using services that are offered on the Dark Web.

https://www.emerald.com/insight/content/doi/10.1108/JFC-11-2016-0067/full/html

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DUTY TO PRESERVE DOCUMENTS IN THE ANTICIPATION OF LITIGATION

Bristows LLP has produced a note which outlines the duties of parties that may become involved in litigation before the Courts of England and Wales to preserve any documents that may be relevant to the dispute as soon as litigation is contemplated.

https://www.bristows.com/about-us/compliance-information/duty-to-preserve-documents/

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CAYMAN ISLANDS: PROPOSED LEGISLATIVE CHANGES FOLLOWING CFATF AML/CFT MUTUAL EVALUATION REPORT

On 18th July, Campbells in the Cayman Islands published an article on the consequences of the assessment report which evaluated technical compliance (i.e. having legislation in place) but also, for the first time for the Cayman Islands, evaluated the effectiveness of Cayman Islands legislation.  It says that the report identified gaps in the legislative framework regarding: availability and accuracy of information; interagency co-ordination and cooperation; international cooperation; and monitoring and enforcement, and provided recommendations on how the regime could be strengthened.  As a consequence, a number of legislative changes are proposed and the article lists 13 Bills to be debated in the Islands’ legislature.  It identifies 8 of these as being noteworthy and provides a thumbnail sketch of their proposed changes.  FATF will review the progress made by the Cayman Islands at its June 2020 Plenary to determine if the recommended actions have been taken.  However, it says that the government has stressed that the changes do not move the Cayman Islands closer to implementing public registers of beneficial owners and should not be seen as such – making the list of directors for a company publicly available is a response to a CFATF recommended action.

The CFATF report is available at –

https://www.cfatf-gafic.org/index.php/home/cfatf-news/549-fourth-round-mutual-evaluation-report-for-cayman-islands

https://www.campbellslegal.com/client-advisory/cayman-islands-update-legislative-enhancements-following-cfatf-aml-cft-mutual-evaluation-report-4962/

 

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