Day: September 3, 2019

On 3^rd September, American Shipper reported that the BIS Office of Export Enforcement has “revealed schemes” by Pakistani entities attempting to acquire US technologies to support the country’s nuclear programme.  It said that investigations had “revealed schemes to export items subject to the EAR (Export Administration Regulations) to nuclear- and missile-related entities in Pakistan listed on the Entity List without the required licenses”.  The article notes that BIS routinely adds Pakistani firms and individuals to its export control Entity List for their efforts to import US-made technology for use in the country’s nuclear programme.

https://www.freightwaves.com/news/commerce-stresses-due-diligence-with-exports-to-pakistan

The BIS guidance is at –

https://www.bis.doc.gov/index.php/policy-guidance/pakistan-due-diligence-guidance

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https://www.imf.org/external/pubs/ft/fandd/2019/09/the-true-cost-of-global-corruption-mauro.htm

In the September edition of the IMF Finance & Development magazine, an article argues that the loosely regulated art market is rife with opportunities for washing illicit cash.  It notes proposals to tighten up controls, including in the US where a Bill before Congress would require “dealers in art and antiquities” to establish AML programmes, keep records of cash purchases, and report suspicious activity and transactions exceeding $10,000 to federal regulators.  In addition, the art industry would be required to look into a client’s background and examine purchases and sales for evidence that the money might be tainted.  In the EU, the 5^th AML Directive requires art businesses to augment efforts to vet customers and to discern “as far as reasonably possible” the purpose of all large, unusually complex, or secretive transactions.  It says that the art industry is fighting the regulations – some sectors are asserting that examples of actual money laundering via the art trade are rare or exaggerated by law enforcement agencies eager to generate sensational headlines; and others, like the International Confederation of Art and Antique Dealers Associations, say the reporting requirements are too burdensome for smaller players in the art market.  A former US prosecutor is quoted as saying that, given that upward of 70% to 90% of auction catalogue listings for valuable antiquities provide scant information about the seller, art merchants would be wise to accept the inevitable and move toward greater transparency and more due diligence. The proposed regulations, he says, would simply enshrine into law the steps that art dealers ought to be taking in the first place to stave off criminal acts.

https://www.imf.org/external/pubs/ft/fandd/2019/09/the-art-of-money-laundering-and-washing-illicit-cash-mashberg.htm

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On 3^rd September, a news release from HM Treasury announced that thousands of customs “experts” will be trained and businesses supported for trading post-Brexit with thanks to £16 million in new government funding.  The funding is now available to help businesses train staff in making customs declarations, and to help businesses who support others to trade goods to invest in IT.  It says that more than 3,000 agents have already been trained as part of an £8 million investment earlier this year, which has also been used to develop new online learning products for customs staff such as an electronic learning package and a new UK Customs Academy, launched on 12^th August.

https://www.gov.uk/government/news/16-million-funding-boost-to-support-thousands-more-customs-experts

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On 3^rd September, Deutsche Welle reported on the opening of a criminal trial involving 2 British investment bankers, who stand accused of helping engineer dubious transactions resulting in massive tax losses.  Reporters have called the trial and scandal “the biggest financial fraud trial” and “the most complicated” tax case trial in modern German history.  Asking if the process involved was a legal loophole or fraud, the news site explains that cum-ex trades are equity deals where investors rely on the sale of borrowed shares right before a given firm was slated to pay dividends.  To put it differently, it says, shortly before the dividend pay-out day, shares with (“cum”) and without (“ex”) dividend rights were quickly traded among various market players, resulting in double tax reclaims for share traders — reclaims that authorities now call illegitimate.  The role of Germany’s biggest lender Deutsche Bank in the deals will also be scrutinised, as it was involved in financing clients’ cum-ex transactions alongside many other lenders such as Sweden’s SEB AB, Barclays Plc. and M.M. Warburg & Co.

https://www.dw.com/en/german-trial-looks-into-controversial-cum-ex-dividend-deals/a-50271463

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On 3^rd September, following publication of the report on Greece, FATF issued an updated version of its consolidated schedule of countries’ AML/CFT assessment ratings.

http://www.fatf-gafi.org/media/fatf/documents/4th-Round-Ratings.pdf

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FATF: GREECE – MUTUAL EVALUATION REPORT OF AML/CFT SYSTEM

On 3^rd September, FATF published the mutual evaluation report on Greece, saying that Greece has the foundations for effective action against money laundering and terrorist financing.  However, it needs to improve prosecution of these crimes and focus more on the risks that face the non-financial sector.  Greece completed its first comprehensive national assessment of money laundering and terrorist financing risks in 2018 and has a good understanding of the risks it faces.  The lucrative drug trade in Greece is one of the most important money laundering risks the country faces.  Other risks include corruption and smuggling of migrants.  The country’s terrorist financing risks come primarily from domestic terrorist groups.  The onsite visit took place in October/November 2018, and the report was adopted at the June Plenary of FATF.  In terms of effectiveness, the report says that major improvements are needed to strengthen supervision and implementation of preventive measures, prosecution of money laundering, confiscation, preventing misuse of legal structures and the non-profit sector, and formal mutual legal assistance and extradition.  On technical compliance, matters requiring attention are identified as being measures related to preventing misuse of legal structures and the non-profit sector, correspondent banking and cash couriers.

http://www.fatf-gafi.org/publications/mutualevaluations/documents/mer-greece-2019.html

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On 3^rd September, Bellingcat reported that allegations of an illicit scheme to secure funding for Italy’s far-right party in the upcoming European parliament elections.  The funding was to be funnelled via artificially under-priced Russian oil export transactions, allowing room for a “value added” allocation to a sham broker, which was to be secretly channelled to Lega Nord.

https://www.bellingcat.com/news/uk-and-europe/2019/09/03/lega-nords-bedfellows-russians-offering-illicit-funding-to-italian-far-right-party-identified/

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On 3^rd September, an NCA news release advised that NCA has seized £472,740 from convicted money launderer, Kashaf Ali Khan under the Proceeds of Crime Act 2002.  The confiscation order was granted in 2018, after Khan, 44, bought a £412,000 house with money he claimed had been won with 123 prize-winning tickets in the Pakistan lottery. Khan made the purchase in his elderly father’s name, but it was actually Kashaf Khan who was the real purchaser of the property.

https://nationalcrimeagency.gov.uk/news/nca-recover-nearly-half-a-million-pounds-in-proceeds-of-crime-from-convicted-money-launderer-who-claimed-he-won-the-lottery-123-times

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On 3^rd September, iExpats published the US IRS list of foreign financial institutions (FFI) – country by country -reporting under the Foreign Account Tax Compliance Act (FATCA), which increased to 343,676 in July – a rise of 1,947.  The number of FFI worldwide on the list covers more than 200 countries.  The next FATCA list is due in October 2019.

https://www.iexpats.com/fatca-list-september-2019/

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