29th July 2019
NOOSE TIGHTENS AROUND IRANIAN SHIPPING
An article in the Japan News on 28th July looks at what has been happening internationally in respect of Iranian shipping, saying that nations that register vessels under so-called “flags of convenience” allowing them to sail legally have de-listed dozens of tankers owned by Iran in recent months, tightening the economic noose around it. Earlier this year, Panama de-listed 59 Iranian vessels, and it says that a Reuters analysis of shipping registry data shows that Panama has de-listed around 55 Iranian tankers since January, Togo has de-listed at least 3 and Sierra Leone de-listed 1 – which represents the majority of Iran’s operational fleet of tankers. When a vessel loses its flag, it typically loses insurance cover if it does not immediately find an alternative, and may be barred from calling at ports. The article contains accounts of several Iranian ships, including the Grace 1, which was seized by authorities in Gibraltar, and 2 cases of ships at least claiming to be under the Samoa flag.
MOLDOVA TEMPORARILY SUSPENDS CITIZENSHIP BY INVESTMENT PROGRAMME
Eurofast reported that Moldova’s President has informed the local press that the government had suspended the country’s recently introduced citizenship by investment programme, pending a review. The government started an initiative to review the entire programme, including various companies that have been involved as service providers.
WTO PANEL RULING CASTS A SHADOW ON STATE PREFERENCES IN RENEWABLE ENERGY LAWS
On 25th July, Beveridge & Diamond published an article saying that a June 2019 ruling concludes that preferences for in-state manufacturers, a common feature of many state renewable energy statutes, violate the General Agreement on Tariffs and Trade (GATT). It says that while the ruling does not result in immediate invalidation of those laws, it opens up the possibility of countervailing requirements and may create pressure for the repeal of in-state preference provisions. This followed action initiated by India in 2016, with a complaint citing the US submitted to the WTO in 2017. The article also mentions that individual US state protectionist measures might fall foul of US law.
ART AND AML: REGULATORS TAKING BROAD BRUSH APPROACH
An article on Lexology from K2 Intelligence on 25th July said that, as banks and other financial institutions have improved their ability to detect and prevent money laundering, criminals are turning to other avenues to conceal illicit funds — one of which is the trade in fine art and antiquities. As a result, regulators around the world are looking more closely at the global art market; some are already implementing rules with which art businesses must comply. It looks at US and EU initiatives – with the latter enacting the 5th AML Directive, which comes into effect in 2020, and which extends controls art gallery and auction house transactions over €10,000, and to persons storing, trading or acting as intermediaries in the trade of works of art when this is carried out by free ports. It looks at precautions that can be applied – KYC, risk awareness, provenance of funds and use of expert resources.
TAX HAVEN-BASED COMPANIES WIN ROUGHLY 5% OF VALUE OF PUBLIC TENDERS THROUGHOUT EU MEMBER STATES
On 29th July, EU Observer reported that in the last 12 years, €56 billion from public tenders around Europe went to tax havens, according to a new study. The study says that the most frequent ties lead to Switzerland, Bermuda, BVI, Cayman Islands and Curaçao
The study is at –
INDIA: INDIABULLS HOUSING FINANCE GROUP SHARES TUMBLE UP TO 10% ON MONEY LAUNDERING ALLEGATIONS
Business Standard on 29th July reported that the fall happened after allegations that the group has created more than 100 shell firms and took loans from National Housing Bank (NHB). It then re-allocated or siphoned it off to many real estate companies.
A MARATHON LONDON COURT CASE BETWEEN RUSSIAN FISHING TYCOONS LOOKS SET TO CONTINUE AS THE PARTIES PREPARE TO SETTLE ‘SUBSTANTIVE’ COSTS
The Law Society Gazette on 29th July reported that the case concerns a dispute between Vitaly Orlov and Alexander Tugushev over a stake in Norebo, an international business which supplies fish to the likes of McDonalds, Tesco and Birds Eye. Orlov took control of Norebo in 2016 and Tugushev claims that his one-third interest in the company is not being recognised, alleging that Orlov and other defendants conspired to remove him from the company.
VIETNAM SAYS IT HAS BROKEN UP LARGEST-EVER CHINESE-LED GAMBLING RING
On 29th July, Calvin Ayre reported that Vietnam has broken up what local police are claiming is the biggest foreigner-run illegal online gambling operation in the nation’s history. It says that around 500 police in Hai Phong staged a raid that resulted in the arrest of over 380 Chinese nationals suspected of operating an illegal online sports betting and lottery business targeting gamblers on the Chinese mainland.
KEY FINDINGS OF UNODC STUDY ON TRAMADOL TRAFFICKING IN WEST AFRICA DISCUSSED
On 29th July, the UN Office of Drugs and Crime reported on a meeting in Lagos to discuss the findings of a study on tramadol and other pharmaceutical opioids trafficking in West Africa funded by the EU. The study will be published by the end of the year. Trafficking of pharmaceutical opioids and their non-medical use has reached an alarming state in West Africa. The meeting highlighted the need to strengthen law enforcement responses including intelligence gathering and analysis, interagency co-operation, and international co-operation.
INTERACTIVE MAP SHOWS MILITANT ISLAMIC ACTIVITY IN AFRICA 2010-2018
On 9th July, the Africa Center for Strategic Studies published an interactive map of Africa showing, year by year, violent episodes involving militant Islamist groups over the past decade underscores the shifting nature of Islamist militancy in Africa. The accompanying notes provide highlights from the review, including militant Islamist group activity in Africa has doubled since 2012, with 3,050 violent events in 2018—a record level of activity. Reflecting the growing fragmentation of the militant Islamist group threat, 13 African countries now face regular attacks from the groups (up from 5 in 2010). Furthermore, there are now roughly 2 dozen active militant Islamist groups versus 5 in 2010.
PODCAST: HOW SANCTIONS AGAINST NORTH KOREA IMPACT HUMANITARIAN AID
On 26th July, NK News issued a podcast in the light of South Korea’s ongoing efforts to provide a humanitarian aid package to the North via the World Food Program and UNICEF (and the obstacles encountered), and which demonstrate the enormous resources necessary to navigate international sanctions against the North.
3M PROBES POTENTIAL FCPA CORRUPTION ALLEGATIONS IN CHINA
On 26th July, the Wall Street Journal reported that 3M has said it was conducting an internal investigation into possible violations of US anti-corruption laws after discovering suspect travel and record-keeping related to marketing its products in China. It said in a financial filing (and to the DoJ and SEC) that it had retained outside counsel and a forensic accounting firm to help conduct the investigation.
FINANCIAL SERVICES: EU COMMISSION SETS OUT ITS EQUIVALENCE POLICY WITH NON-EU COUNTRIES
On 29th July, a news release from the EU said that the Commission was taking stock of its overall approach to equivalence in the area of financial services. EU equivalence has become a significant tool in recent years, fostering integration of global financial markets and cooperation with third-country authorities. The EU assesses the overall policy context and to what extent the regulatory regimes of a given third country achieves the same outcomes as its own rules. A positive equivalence decision allows EU authorities to rely on the third-country rules and supervision, allowing market participants from third countries who are active in the EU to comply with only one set of rules. It says that recent updates to EU legislation will ensure even greater effectiveness of the EU single rulebook, supervision and monitoring, while also fostering cross-border business in global markets, and that the Commission has to date taken over 280 equivalence decisions with regard to over 30 countries.
IRELAND: 2 MEN JAILED OVER €5.5 MILLION FORESTRY INVESTMENT FRAUD
On 29th July, RTE reported that the scheme by the so-called Arden Forestry Management (with a “virtual” office in Dublin) involved the same parcels of forestry land being sold again and again to different investors and, while the judge said that it could not be classified as a Ponzi scheme, she had come to the inescapable conclusion that this was a simple case of calculated fraud, which was “pure” and well executed. The court heard the investment would have required around 858 acres of land to be serviced, but when the fraud came to light the company owned just over 30 acres, purchased for €61,000. Investors were sent a welcome pack with false timber certificate and land folio documents endorsed by legitimate companies without their knowledge.
THE EVOLVING LANDSCAPE OF AML/CFT IN THE BAHAMAS
The Bank of International Settlements has published the remarks (with diagrams etc) by Governor John A Rolle of the Central Bank of The Bahamas (as prepared for delivery) at the 2019 AML/CFT Risk Management Seminar of The Bahamas Group of Financial Services Regulators on 26th June. The Governor set out to – explain where the Central Bank is seeing material money laundering risks in the Bahamian economy, and what the responsible authorities are doing about these risks; summarise recent progress on AML/CFT risk management among supervised financial entities (SFI) licensed by the Central Bank; and the Central Bank’s plans to improve both the reality and the reputation of Bahamian AML/CFT risk management.
MEXICO AUCTIONS OFF JEWELLERY SEIZED FROM CRIMINALS
Deutsche Welle on 29th July carried a video article saying that around 2,000 lots of glitzy jewellery seized from criminals are going under the hammer in Mexico. The money raised by the auction will go toward infrastructure projects.
CBD- AND CANNABIS-RELATED ADVERTISING IN THE US
An Advisory from Davis Wright Tremaine LLP on 29th July says that the recent FDA enforcement action against cannabis and CBD producer Curaleaf exemplifies the need for awareness and understanding of the US federal and state laws applicable to advertising these heavily regulated products. It goes on to say that the hemp-derived CBD market has been booming following passage of the 2018 Farm Bill which removed hemp-derived CBD (containing less than 0.3% THC) from the Controlled Substances Act. Nevertheless, uncertainty persists around how products containing CBD can be labelled, marketed, and advertised. The Advisory identifies regulatory and legal trends affecting CBD and cannabis-related advertising and offers takeaways for advertisers and marketers to help mitigate risk in a rapidly changing regulatory and legal landscape.
FIJI TO TEACH SCHOOLCHILDREN TO RECOGNISE AND RESIST CORRUPTION
On 29th July, OCCRP reported that Fiji’s 9 to 18-year-olds will soon be learning about integrity and the importance of recognising and resisting corruption, as part of the island’s push to immunise an entire generation to nepotism and graft.
MORE THAN 18,000 OBJECTS SEIZED AND 59 ARRESTED IN INTERNATIONAL OPERATION TARGETING CULTURAL GOODS
Both Interpol and Europol reported in news releases on 29th July that customs and other law enforcement authorities from 29 countries, co-ordinated by the Spanish Civil Guard and supported by Europol, INTERPOL and the WCO, have joined forces against the trafficking of cultural goods in a project named Operation Pandora III.
BOLIVIA FORESTRY OFFICIALS PROFIT FROM HARVEST OF ILLEGAL WOOD
On 29th July, Insight Crime reported that officials within the agency entrusted with protecting Bolivia’s forests falsified data and provided documents legitimizing the illegal harvesting of timber, a scheme that occurs throughout South America. It is reported that René Noel Sivila Céspedes is accused of signing more than 2,096 documents that allowed for the clearing of protected areas while he was the head of a forest and land operation unit from 2015 to 2018.
4 ASSOCIATES OF BOOKMAKING EX-SERGEANT IN HONG KONG POLICE FOUND GUILTY OF LAUNDERING MORE THAN $12.8 MILLION FROM ILLEGAL HORSE AND FOOTBALL BETTING
The South China Morning Post on 29th July reported that the 4 men, including a brother-in-law, younger brother and former subordinate allowed bank accounts to be used for channelling illicit funds. The ex-policeman, So Wing-yiu, 71, pleaded guilty in April to 1 count of bookmaking and 7 counts of dealing with property known or believed to represent proceeds of an indictable offence.
HIDDEN IN PLAIN SIGHT: FISHING BOATS AS LINKS IN ILLICIT SUPPLY CHAINS
An article on Windward on 15th July says that millions of fishing vessels ply the world’s waters. In the global maritime ecosystem, they are like ants: myriad, ceaselessly industrious, and mostly unnoticed. The vast majority are hardworking and law-abiding – but fishing vessels are also perhaps the most underestimated carriers of transnational crime. The article looks at examples of the involvement of fishing vessels in smuggling of drugs, fuel in Libya and Nigeria or from Malaysia to Thailand, or from Hong Kong to Mainland China. Then there is cigarette smuggling in the Mediterranean and human smuggling. In the Philippines, vessels have been turned into floating meth labs.
US ADDS 4 NEW ENTITIES TO CUBA RESTRICTED LIST
A news release from the US State Department on 26th July announced that it had updated the Cuba Restricted List to add 4 sub-entities owned by the Cuban military. This action prohibits direct financial transactions with the listed sub-entities.
See also the FAQ on the Cuba Restricted List –
CHINA’S UNRELIABLE ENTITY LIST
On 29th July, Wilmer Hale published a Client Alert about the “Unreliable Entity List” regime, announced at the end of May, under which foreign entities or individuals which boycott or cut off supplies to Chinese companies for non-commercial purposes, causing serious damage to Chinese companies, may be listed as “Unreliable Entities” subject to legal action. It is said to be undergoing required internal review with detailed rules/measures soon to be promulgated. It is seen as a response to US moves, such as in relation to Huawei and foreign export control enforcement actions targeting Chinese companies, in particular the US sanctions against Huawei.