3rd September 2019
NEW ASSET FORFEITURE NATIONAL LAW IN MEXICO
On 2nd September, Cuesta Campos Abrogados and Norton Rose Fulbright published articles saying that on August 9th a decree containing a Asset Forfeiture National Law had been issued. The Decree also amends the Criminal Procedures National Code, the Federal Law for the Administration and Disposal of Assets of the Public Sector, the Bankruptcy Law and the Law of the Federal Public Administration. The new law is a result of the international commitments assumed by Mexico, and in accordance with the UN Convention against Transnational Organized Crime, Corruption, Illicit Traffic of Narcotic Drugs and Psychotropic Substances and other international instruments that require confiscation. There are 2 processes for the asset forfeiture action, one through a special civil basis and the other on a criminal basis.
BREXIT AND THE FUTURE OF TAX HAVENS – THE IMPACT OF BREXIT ON TAX EVASION AND MONEY LAUNDERING
On 23rd January, the Tax Justice Network published the text of a speech given by John Christenson at an event at the European Parliament on 22nd January. He spoke on the impact of Brexit on tax evasion and money laundering, offering up some recommendations on how the EU should (could?) move forward in its treatment of the UK, its satellite havens and the City of London.
UK: THE CORPORATE OFFENCE OF FAILING TO PREVENT BRIBERY – WHAT CAN WE EXPECT IN TERMS OF FUTURE DEVELOPMENTS IN THIS AREA?
Linklaters LLP has released a new video, the second in its ABC video series, in which potential future developments in respect of the corporate “failure to prevent bribery” offence under the UK Bribery Act.
UK LAW FIRMS IGNORANT OF MONEY LAUNDERING RISKS
On 3rd September, KYC 360 reported that half of law firms do not understand the threat posed to them by criminals looking to launder dirty money in the UK, a survey has shown. 1 in 3 firms said this failure was due to the rapidly changing techniques used to find and exploit gaps in AML regulations.
FORMER GOLDMAN SACHS BANKER TOLD TO PAY BACK $7.3 MILLION LINKED TO JAMES IBORI, FORMER GOVERNOR OF NIGERIA’S DELTA STATE. OR FACE JAIL
On 3rd September, KYC 360 reported that Ellias Preko, 60, a former Goldman Sachs banker who helped a corrupt Nigerian politician hide a fortune in offshore accounts has been ordered to pay back £7.3 million or face 10 years more in jail. He was jailed for 4½ years in 2013.
CORRUPTION IN THE BANGLADESH SHIPPING SECTOR
On 3rd September, the Dhaka Tribune reported on the arrest of a surveyor of the Department of Shipping in Dhaka, for allegedly taking a bribe to issue a fitness certificate, saying that this sheds light on the “rampant corruption” in issuing registration and re-registration, fitness certificate, and bay crossing permission in the shipping sector of the country. As the article explains, this was not the first case of corruption against shipping department surveyor or engineers, and there are widespread allegations that shipping department officials solicit bribes from vessel owners to speed up the process for obtaining different certificates, and services.
UK SOLICITOR GENERAL VOWS TO IMPROVE SAR REGIME
On 2nd September, the Law Society Gazette reported that the Solicitor General has pledged to improve the Suspicious Activity Reports (SAR) regime, claiming businesses will enjoy a ‘more efficient and effective’ system.
AUSTRALIAN TAX OFFICE LOSES $92 MILLION CASE AGAINST MINING GROUP GLENCORE
The Guardian on 3rd September reported that a federal judge had set aside 3 years of tax bills levied against Glencore over its claims for the cost of processing copper from a copper line. This case is unrelated to another case involving the use of Panama Papers information and currency swaps. However, the newspaper says that Glencore’s victory is a blow for the ATO in its attacks on complex transactions that take place between different members of the same corporate group, especially in the resources sector.
UK: FRAMEWORK AGREEMENT BETWEEN THE LAW OFFICERS AND THE DIRECTOR OF PUBLIC PROSECUTIONS (CPS)
On 29th August, the MoJ published a news release containing an updated document defining the relationship between the Law Officers and the Crown Prosecution Service.
IRANIAN IN US PLEADS GUILTY TO ILLEGAL SHIPMENT OF CARBON FIBRE TO IRAN
Kenneth Rijock in his blog on 2nd September reported that Behzad Pourghannad, an Iranian procurement agent who was engaged in the illicit transshipment of US-manufactured carbon fibre to Iran, and who was extradited from Germany, has entered a guilty plea to a conspiracy charge. The carbon fibre, which was misdescribed to disguise its true identity when passing through intermediary countries, was shipped via certain undisclosed European nations, to the UAE, or via Georgia to Iran.
LEGAL LOOPHOLE ALLOWING LIQUID NICOTINE TO BE IMPORTED INTO AUSTRALIA
On 3rd September, Customs Today reported that liquid nicotine for e-cigarettes can’t be imported without a prescription, but a media special investigation has revealed authorities are letting it through unchecked. The chemical is a by-product of the vaping craze and it can be lethal.
CITES: REVISED TRADE RULES FOR DOZENS OF WILDLIFE SPECIES, INCLUDING TREES, MAMMALS, FISH, AMPHIBIANS, AND REPTILES
On 3rd September, Sandler Travis Rosenberg reported that the recently-concluded triennial conference of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) revised trade rules for dozens of wildlife species, including trees, mammals, fish, amphibians, and reptiles. Highlights of the decisions adopted by CITES are detailed in the article.
COMPETITION LAW RISKS AND PRIORITIES FOR DIRECTORS IN IRELAND
On 2nd September, law firm Matheson published an article saying that internal company awareness of the consequences of competition law breaches, and how to mitigate them, is crucial. It says that the increasing level of competition enforcement and disqualification orders against directors makes it vital that Irish directors understand competition law and the associated risks. Directors should ensure that there are appropriate competition compliance procedures and policies in place thereby promoting a culture of training and compliance led from the top down, and should be sufficiently aware of their company’s affairs to identify competition law risks and take measures to mitigate against these.
COLOMBIA’S LOAN SHARKS EXPLOIT CHILE MARKET
An article from Insight Crime on 2nd September reported that a Colombian gang leader has been accused of operating a loansharking network in Chile — evidence that this extortion tactic continues to spread across the region. Julián Isaza Puerta, alias “Chuky,” was arrested on August 12th at Bogotá’s international airport.
“DISTRIBUTED COMPLIANCE” IS THE KEY TO BANKS INCREASING CDD AND KYC CHALLENGES
An opinion piece in Fintech Futures on 3rd September argued that there is a bottleneck of work that is required to meet the strict regulations and KYC requirements for transacting with commercial entities, and the challenges faced by financial institutions in meeting CDD and KYC compliance in a continuously evolving regulatory landscape. It says that there is a need to focus on how to maximise the potential of human and machine working together to address the incredibly disjointed process corporate clients are currently subjected to. Few banks, it says, have looked at how to distribute the workloads tech solutions create, in order to create a more efficient process for customers. Distributed compliance recognises that the proliferation of KYC tasks has had a negative impact on a bank’s ability to onboard customers in a timely, orderly fashion, and furthermore that many of the tasks not requiring specialist knowledge can be best performed by other teams. It involves giving the compliance team control of a sophisticated decision engine to enable data coming in to have rules applied and tasks created; and it enables the distribution of these tasks to appropriate staff (according to the rules), monitoring the completion of the tasks and evidencing the whole process. The automation aspect of this is fundamental, the article argues.
GUIDE TO RIVALRY BETWEEN SAUDI ARABIA AND IRAN (AND ISRAEL) THAT THREATENS TO TEAR MIDDLE EAST APART
The European Council on Foreign Relations has produced a comprehensive guide saying that 2 opposing coalitions in the Middle East define a rivalry that threatens to tear the region apart. As competition for dominance intensifies, the confrontation between Iran’s network of state and non-state actors, and a counter-front of traditional Western allies – centred on Saudi Arabia, the UAE, and Israel – has become the region’s central battle line. The fault-line between the 2 coalitions has already become the axis on which regional politics turns, and the key to understanding many geopolitical developments in the Middle East.
AQAP IN SOUTH YEMEN: PAST AND PRESENT
On 30th August, the Washington Institute published an article about al-Qaeda in the Arabian Peninsula (AQAP). It says that AQAP — arguably the most powerful branch of al-Qaeda — uses a large portion of southern Yemeni territory seized following the Yemeni revolution in 2011 as its base. A few years later, it further secured its position during the instability in the south caused by Yemen’s most recent conflict between Houthis and the Hadi government. However, the development of the AQAP stretches back much further than the current conflict, with its roots developing decades earlier.
DESPITE BLOCKADE, OPPORTUNITIES ARE INCREASING FOR QATAR TO DEVELOP BROADER REGIONAL TIES
On 30th August, the Washington Institute published an article reflecting on the 2-year standoff in the Gulf Crisis between the “Quartet States” — Saudi Arabia, the UAE, Bahrain, and Egypt — and Qatar which has continued to shape Gulf foreign policy. The embargo remains incomplete due to an attempted air blockade being blocked by the ICAO, and both sides continue to work to impose land and sea ‘hoops’ around the other, shifting their broader regional alliances in the process. In order to counter-balance these isolation efforts, it is in Qatar’s interest to work in co-operation with Pakistan, Oman, Somalia, and Djibouti to re-establish a balance of power throughout the Gulf and surrounding regions. Now that Qatar’s economy appears to have stabilised and new trade routes avoiding the blockade have been established, Qatar is in a position to provide an alternative to increasing Saudi and Emirati influence in the region.
HOW A SECRET DUTCH MOLE AIDED THE US-ISRAELI STUXNET CYBERATTACK ON IRAN
On 2nd September, Yahoo News published an article that sets out to say how the US and Israel get their malware onto computer systems at an highly secured uranium-enrichment plant?
TRADE WAR PUSHES GARMENT COMPANIES BACK TO BANGLADESH
On 3rd September, the Wall Street Journal reported that the ongoing trade war between the US and China has led many fashion brands to shift production to spots across Asia, including to Bangladesh, despite that country’s safety and human rights record.
CURTAIN FALLS ON KNOEDLER GALLERY FAKE ART SAGA
On 3rd September, Art Law & More from law firm Boodle Hatfield carried a post saying that the long series of litigation over fake art sold by the defunct Knoedler Gallery has finally ended. It dated from 2011, over the authenticity of a collection of abstract expressionist paintings sold by Knoedler to unsuspecting buyers. When one purchasing trust submitted samples of paint from a painting for forensic testing the results confirmed their worst fears: the oil painting was counterfeit. Defendants included the Gallery, its former president, Ann Freedman, gallery owner Michael Hammer, Long Island dealer Glafira Rosales from whom Knoedler purchased the fake works and her former partner, Jose Carlos Bergantiños Diaz, who hired Chinese painter, Pei-Shen Qian, to forge the artworks at Qian’s home in Queens. The long-established Knoedler Gallery was founded in 1846 and suddenly and permanently shut shop in 2011 after the scandal broke.
JUVENTUS FOOTBALL CLUB SIGNS NORTH KOREAN PLAYER
On 3rd September, NK News reported that Juventus had signed North Korean player Han Kwang Song, 20, to play as a forward on its under-23 team, with its management insisting he was not subject to sanctions. He joined Cagliari in 2015, becoming the first North Korean to compete in Italy’s Serie A league in a 2017 match against Palermo and playing on loan with AC Perugia Calcio between 2017 and 2018. Few North Korean players play internationally, with only a handful signed to clubs across Asia and Europe.
IS MOZAMBIQUE CREATING THE NEXT BOKO HARAM?
On 1st September, Lawfare carried an article saying that Mozambique has a small terrorism problem (from the al-Sunnah wa Jamaah or ASWJ), but the government’s response threatens to make it a big one. The authors argue that Mozambique is overreacting to the danger with a heavy-handed crackdown that is inflaming tension while doing little to disrupt the most radical elements there. Indeed, they argue that Mozambique risks following the path of Nigeria, where a ham-fisted government response to a radical sect led to a surge in support for the group that became Boko Haram.
UK LIVE ANIMAL EXPORTS
On 3rd September, the House of Commons Library published a briefing paper on this subject, saying that there are a number of ongoing campaigns calling for a ban on live exports for slaughter, on welfare grounds. Brexit has prompted renewed calls for such a ban. There are also concerns amongst farmers about the impact of Brexit on their ability to export live animals, including between Northern Ireland and Ireland.
KENYA: WHY OVER 1,000 CORRUPTION CASES ARE BOUND TO FALL DUE TO SECRET SEARCHES
On 3rd September, KDR TV reported that more than 1,000 corruption cases are bound to collapse after a ruling by Supreme Court judges that outlawed secret searches during investigations – as the cases will lack merit and be considered illegal as the evidence and investigations collected was obtained using secret search warrants.
ANDER HERRERA AMONG 42 DEFENDANTS IN SPAIN’S FIRST MAJOR MATCH-FIXING TRIAL
The Hindustan Times on 3rd September reported that Spain’s first major match-fixing trial has begun with former Manchester United midfielder Ander Herrera among 42 defendants charged over a ‘suspect’ 2011 match between his former club Real Zaragoza and Levante.
EGYPT DRAFT BILL ALLOWING FUNDS CONFISCATED FROM POLITICAL DETAINEES TO BE INVESTED
On 3rd September, the Middle East Monitor reported that Egypt’s parliament is set to discuss a new Bill proposing a body be setup to invest assets confiscated from detainees. According to the Ministry of Justice, the entity would be entitled to manage and invest funds which courts order be confiscated as a result of corruption, embezzlement or those belonging to members of the Muslim Brotherhood.
UKRAINIAN PARLIAMENT CANCELS IMMUNITY FOR LAWMAKERS
Rferl on 3rd September reported that Ukraine’s parliament has voted in favour of cancelling immunity from prosecution for lawmakers, a step toward President Volodymyr Zelenskiy’s pledge to stamp out corruption.
UK: VISA FOR ARTISTS
On 3rd September, the House of Commons Library has produced a briefing paper in anticipation of a Westminster Hall debate on the subject. It says that refusals for visas for non-EU artists and performers have attracted parliamentary and media attention, particularly in Scotland; saying that visa requirements have prevented UK festivals from featuring non-EU artists and performers, with the reports focusing on those bound for Scottish festivals.
CHINESE CUSTOMS SEIZE METEORITES
A story on the Shine website on 3rd September reports that Customs at the Shanghai Pudong International Airport have seized more than 800 kg of meteorites from goods imported from Africa. They had been falsely declared as dolomite — a white mineral often used in the manufacture of cement and as a building material. It is said that meteorites are believed by some people to be able to bring stability to home and family, exorcise demons, bring wealth, good luck and even lengthen lives – they are also popular with collectors and scientific researchers.
CUSTOMS OFFICIAL THWART ATTEMPT TO SMUGGLE 17,000 BABY LOBSTERS OUT OF BALI
The Coconuts website on 3rd September reported that Customs officials from Bali’s Ngurah Rai International Airport had thwarted an attempt to smuggle over 17,000 baby lobsters. Authorities seized 19 plastic bags containing baby lobsters, which had been hidden in a backpack placed inside a cardboard box.
BANKS SENDING LETTERS TO JERSEY ACCOUNT HOLDERS FOR WHOM THEY DO NOT HAVE SUFFICIENT KYC DOCUMENTATION
An article from Appleby on 3rd September is concerned with reports that Lloyds Bank had written to 8,000 account-holders, as part of an ongoing initiative to improve its AML arrangements – with press reports suggesting that HSBC, Barclays and The Royal Bank of Scotland International have followed suit. It says that the story is just one of a number of developments which demonstrate Jersey’s commitment to maintaining its reputation as a leading offshore financial centre.
FORMER LIVE WELL FINANCIAL CEO CHARGED IN $141 MILLION BOND SCAM
Baker McKenzie on 3rd September reported that 3 former executives of a collapsed reverse-mortgage company, including the founder and former CEO, Michael Hild, have been charged in connection with a $141 million bond fraud scheme. They are accused of a scheme to fraudulently inflate the value of a portfolio of bonds owned by the company in order to induce securities dealers and at least one financial institution to loan Live Well more money than they would have had they known the actual value of the portfolio.
TAKING STOCK OF UPCOMING IMPLEMENTATION CHALLENGES FOR FIRMS UNDER EU FINANCIAL SERVICES LEGISLATION
On 3rd September, Clifford Chance published a report saying that with the start of the new European Commission’s term on 1st November, now is a good time to take stock of upcoming implementation challenges for firms under EU financial services legislation, as well as to review possible future legislation. The Parliament and the Council of the EU reached agreement on more than 20 new EU Directives and Regulations directly affecting the financial services sector during the last sessions of the previous European Parliament. The firm has compiled a report on this new legislation and other outstanding EU financial services legislation awaiting implementation, as well indicating what legislative proposals have been carried over to the new term and the ongoing and upcoming reviews of current legislation. It is 4 parts – Section A provides a stocktake of measures, including expected timing for publication in the Official Journal, entry into force and application of new requirements; Section B identifies key EU financial services legislation in the implementation phase –i.e.legislation that is already in force but where requirements that have not yet taken effect; Section C then lists the main proposals for financial services legislation where the Parliament and the Council had not yet reached agreement and on which work may resume under the new Parliament and Commission later in the year; and Section D identifies various upcoming or ongoing reviews of existing legislation.
UK: RICHARD BALDWIN LAUNDERED PROCEEDS OF INSIDER TRADING, NOW A FUGITIVE AND SENTENCED TO 5 YEARS IN PRISON
A release on Mondo Visione on 3rd September advised that Richard Baldwin had been sentenced to a total of 5 years and 8 months imprisonment. He was sentenced in his absence after he absconded from justice during his trial for money laundering in July 2017. The sentence also includes punishment for separate contempts of court that he admitted in November 2015 for breaching a Restraint Order made in June 2011. The criminal property was laundered between October 2007 and November 2008 and represented the proceeds of a conspiracy to insider deal by Martyn Dodgson and Andrew Hind, who were convicted in 2016. The laundering included Baldwin setting up companies in Panama and offshore accounts, including in Zurich. Operation Tabernula was one of the FCA’s largest and most complex insider dealing investigations. The offending in this case was highly sophisticated and took place over several years.
AUSTRALIA: AIRPORT WORKER WHO ASKED GOOGLE HOW TO BEAT CUSTOMS CHECKS JAILED FOR SMUGGLING DRUGS
Illicit Trade on 3rd September reported that an Australian airport worker who searched online for information on beating customs checks has been jailed for 9 years for attempting to smuggle 4 kg of cocaine through Melbourne Airport. Sam Kul worked as a security contractor at the airport.
PODCAST: THE TRUTH ABOUT ILLICIT FINANCIAL FLOWS
On 23rd July, the IMF published an 11-minute interview with Maya Forstater, Visiting Fellow at the Center for Global Development, who talks about how much or how little we really know about illicit financial flows; and saying that they are not easily found in macroeconomic statistics because people go to great lengths to hide them.
A transcript is also available.
JAPAN SPRUCES UP ITS CURRENCY WITH HOLOGRAMS, TRAILBLAZERS, AND ICONIC ART
The IMF Finance & Development magazine for September 2019 carries an article saying that the Japanese government recently announced a complete makeover for much of its currency. In April 2019 the finance ministry revealed redesigns of the 3 most commonly used banknotes (the 1,000, 5,000, and 10,000 yen bills) along with 500 yen coins, marrying cutting-edge anti-counterfeiting tech with world-renowned artwork and honouring pioneers in science, business, and education. The banknotes, which are redesigned every 20 years, will go into circulation in 2024, while the new coins will debut earlier.
THE RISE OF PHANTOM INVESTMENTS – EMPTY CORPORATE SHELLS IN TAX HAVENS
Another article in the IMF Finance & Development magazine for September 2019 says that empty corporate shells in tax havens undermine tax collection in advanced, emerging market, and developing economies. It starts by quoting statistics, saying that according to official statistics, Luxembourg, a country of 600,000 people, hosts as much foreign direct investment (FDI) as the US and much more than China – Luxembourg’s $4 trillion in FDI comes out to a highly unlikely $6.6 million a person. It refers to a forthcoming new study which creates a global network that maps all bilateral investment relationships — disentangling phantom FDI from genuine FDI. It identifies the 10 economies which host more than 85% of all such “phantom investments”.
GREECE’S TAX COLLECTION AGENCY’S MISSION TO IMPROVE COMPLIANCE
Another article in the IMF Finance & Development magazine for September 2019 says that tax evasion is a particular problem for Greece, which significantly lags other EU countries in tax collection efforts. It says that improving compliance is the key to lowering tax rates and paying for things like better social safety nets and higher public investment, and would help Greece recover from an 8-year economic crisis that cut its GDP by 25% and led to €289 billion in international bailouts. Greece’s shadow, or undeclared, economy was estimated to account for as much as 27% of GDP — among the highest percentages in Europe.
GREAT BREXIT INSURANCE MIGRATION SHIFTS $75 BILLION FROM LONDON
On 3rd September, Hellenic Shipping News reported that London’s outsized role in the global insurance industry is being whittled down by Brexit. It says that as much as £61 billion of business is shifting to rival financial centres in the EU as a consequence of Britain’s vote to leave the bloc – regardless of the divorce terms.
OFAC: PUBLICATION OF NICARAGUA SANCTIONS REGULATIONS
On 3rd September, the US Treasury announced that OFAC had published regulations which have effect from 4th September.
COURT OF APPEAL: KEY JUDGMENT CLARIFYING THE LAW ON RECTIFICATION OF DOCUMENTS
An article from Gowling WLG on 3rd September said that a recent decision on deeds provided welcome and much needed clarification of the test the courts should apply in deciding whether to rectify a document because of a common mistake of the parties. The article says that the decision highlights the importance of employers and trustees promptly seeking legal advice when spotting errors in scheme documents as the evidence needed to support a rectification application is likely to become more difficult to obtain as time passes.