4th September 2019
RUSSIAN OLEG DERIPASKA CLAIMS US HAS FAILED TO PROVE HE WAS AGENT OF PUTIN
On 3rd September, Bloomberg reported that Oleg Deripaska is suing the US Government over sanctions imposed on him, saying that a redacted version of US Treasury records concluded that he supported Putin’s projects, not that he acted on the leader’s behalf. OFAC imposed sanctions on Deripaska and 6 other Russians it labelled oligarchs in April 2018.
CHINA STILL PURSUING NUCLEAR FUEL PROCESSING PLANT WITH FRENCH COMPANY AREVA
On 3rd September, Reuters reported that the head of the National Nuclear Safety Administration and vice minister of ecology and environment said that commercial negotiations on the Areva project are “almost concluded”. This came despite China General Nuclear Power Corp (CGN) and its subsidiaries being blocked from dealing with US companies as they were alleged to be involved in activities contrary to the national security and foreign policy interests of the US.
AUSTRALIAN NAVIGATIONAL GUIDE EXPLAINING LAWS FOR SPACE (ANGELS) WEBSITE
On 3rd September, a release on the Newsmaker website announced that the ANGELS facility was available, having been developed under a project of the same name by the University’s Adelaide Law School and law firm International Aerospace Law and Policy Group and with funding from the Law Foundation of South Australia. It is said that information provided on the ANGELS website gives guidance to space start-ups in Australia on how to conduct their business in accordance with Australian, foreign and applicable international law.
ILLEGAL WILDLIFE TRADE “RAMPANT” IN MALAYSIA
An article in The Star in Malaysia on 4th September says that, from urban centres to deep jungles, the illegal wildlife trade is a business spread across the peninsula, Sabah and Sarawak. The most popular animals include macaques, hornbills, rare parrots, colourful birds, rare reptiles, baby sun bears, deer, tortoises, leopard cats. Malaysia is known as a notorious “destination airport” and transit location on the wildlife trade route.
TURKISH BUSINESSMAN GETS 27 MONTHS IN PRISON FOR EVADING US SANCTIONS ON IRAN
Ahval reported on 3rd September that Resit Tavan, 43, conspired to smuggle Wisconsin boat engines and other marine products to the Iranian military and on behalf of the Iran-based Qeshm Madkandalou Shipbuilding Cooperative. He was arrested in Romania in 2017 and extradited to the US. A co-defendant charged in the same Indictment, Fulya Kalafatoglu Oguzturk, another Turkish citizen, remains at large as a fugitive.
GAMING AND GAMBLING IN GERMANY AND SPAIN
On 3rd September, separate article posted on Lexology provide essential information, in a Q&A format, on the legal position of gambling in the two countries. Particularly useful in the case of Germany, where the legal situation is, at least, grey.
BOTSWANA: GOVERNMENT TO IMPLEMENT AML/CFT ACTION PLAN
Following the recent publication of by FATF of the mutual evaluation report on Botswana, on 2nd September, All Africa reported that Botswana has accepted the FATF International Cooperation Review Group (ICRG) action plan and is committed to implementing it. This is part of the enhanced follow-up to the report and follows the decision by FATF to list Botswana under countries with deficiencies. Botswana is to conduct risk assessment with persons, legal arrangements, non-profit organisations and to develop and implement the risk-based National AML/CFT and the Proliferation of Arms of Mass Destruction strategy; and AML/CFT authorities are to develop and implement risk-based AML/CFT supervisory manuals. The FIA (the FIU) is required to improve and enhance the use of financial intelligence by the relevant law enforcement agencies. Finally, the country is required to ensure that there was adequate terrorism financing investigation capacity and to operationalise the Counter-Terrorism Analysis and Fusion Agency.
25 COUNTRIES TO JOINTLY PROBE LATVIAN BANK ABLV’S POSSIBLE PART IN MONEY LAUNDERING
On 4th September, LSM reported that a working group has been set up of 25 countries to analyse participation of the to-be-liquidated ABLV Bank in possible money laundering schemes, said the head of the FIU. The FIU has discovered circulation of illegal money in ABLV Bank. The article says that at the end of September 2017, ABLV Bank was the third largest bank in Latvia by assets. The bank’s majority shareholders Oļegs Fiļs, Ernests Bernis and Nika Berne own, directly and indirectly, 87.03% of the bank’s share capital.
UK: LIST OF BUSINESSES THAT HAVE NOT MET THEIR OBLIGATIONS UNDER THE 2017 AML REGULATIONS
On 3rd September, HMRC published a list saying that it publishes anonymously if it considers that the effect of publishing details about an individual or business would be disproportionate. In addition, it does not publish details at all if it decides that a penalty under these regulations is minor or may affect financial markets significantly. These details will be published regularly on GOV.UK and will be available to view for at least 5 years. They only apply to breaches under the 2017 Regulations.
HUNGARY TOPS EU ANTI-FRAUD INVESTIGATION LIST
On 3rd September, EU Observer reported that Hungary tops the list of the EU’s anti-fraud agency’s number of closed investigations into the misuse of EU funds, according to the annual report of OLAF. Hungary also tops OLAF’s list of countries where the agency made a financial recommendation to recover EU funds in the period between 2014 and 2018.
RUSSIA: LACK OF PROGRESS ON CRIMINALISATION OF CORRUPTION AND TRANSPARENCY OF PARTY FUNDING
An unsurprising report from the Council of Europe body, GRECO, on 3rd September. The 4th assessment report of the anti-corruption body says that GRECO regrets that no tangible progress has been made to implement the outstanding recommendations on incriminations and transparency of party funding.
UK: NEW SYSTEM TO SIMPLIFY AND SPEED UP MODERN SLAVERY REFERRALS
On 3rd September, the Home Office issued a news release referring to the digitisation of the National Referral Mechanism to support victims of modern slavery. The fully digitised system will simplify the process that first responders – including police officers, social workers or immigration officials – follow when referring victims of modern slavery to the NRM.
CHINA: ILLEGAL $14 MILLION CRYPTO MINING RACKET HIJACKED CHINESE INTERNET CAFES
CCN on 4th September reported that 15 Chinese individuals have reportedly been arrested for their involvement in an illegal cryptocurrency mining operation that hijacked the bandwidth of scores of internet cafes to mine approximately $14 million in cryptocurrency. It involved the bribery of over 9,000 internet cafe administrators who infected their systems with a Trojan allowing the remote operation of their cafes’ computers.
IRELAND ANNOUNCES UPDATES TO TRANSFER PRICING RULES
On 3rd September, Matheson published an article saying that the Irish Department of Finance has issued a statement outlining changes that will be made to the Irish transfer pricing rules with effect from 1st January. Irish transfer pricing rules apply to certain transactions entered into by associated parties. The key changes to the Irish rules are summarised in the article. The changes that have been announced are broadly in line with what had already been signalled by the Department. Matheson has included additional detail on each of the proposed changes. It says that draft language included in the Statement is expected to form the basis of the changes that will be included in Finance Bill 2019 which is due to be published in mid-October; and that it is clear that the Irish transfer pricing regime will be more expansive and will impose increased compliance burdens.
VIETNAMESE EX-MINISTERS ACCUSED OF TAKING $3 MILLION IN BRIBES
On 3rd September, OCCRP reported that Vietnamese authorities have accused a former information minister and his successor of taking more than $3 million in bribes in exchange for signing and implementing a suspicious contract with state-owned telecom, MobiFone. Nguyen Bac Son and Truong Minh Tuan allegedly received the funds from Pham Nhat Vu, ex-chairman of Audio Visual Global JSC.
HONG KONG JOCKEY CLUB ISSUES “CEASE AND DESIST” DEMAND TO BETFAIR
On 4th September, Intergame reported that the Hong Kong Jockey Club has issued a cease and desist demand to Betfair, stating that the exchange’s actions in offering wagering are “cavalier” and “unconscionable”. Betfair began offering exchange wagering on Hong Kong racing on September 1st.
NATIONAL EXPERTS MEET TO RE-DESIGN UN GLOBAL DRUG INFORMATION SYSTEM AND IMPROVE COUNTRIES’ REPORTING ON DRUG MATTERS
On 3rd September, the UN Office for Drugs & Crime reported that it had gathered around 100 drug statistics experts from 60 countries in Vienna to discuss the update of a key international drug-data collection tool, the Annual Report Questionnaire (ARQ), how to modernise the ARQ in view of the fast-changing nature of the drug problem, as well as priorities for related capacity building. It considered issues such as the diversification of drugs and the implications for health, prevention and treatment, as well as new trafficking modes and increasing demand of the international community to better understand the links between drugs, corruption and illicit financial flows. The new ARQ is expected to go live and be used for data collection in April 2021.
DRAMATIC DECREASE IN CIGARETTE CONSUMPTION IN ENGLAND
On 3rd September, TJI reported a BBC report that, between 2011 and 2018, the average monthly cigarette consumption in England fell by a quarter, according to analysis from Cancer Research UK. This equated to around 118 million fewer cigarettes being smoked every month. The study also found that in England only 14% of people over the age of 18 smoke, a decrease of 5% since 2011, the BBC reported.
PERU: POLICE HAVE BUSTED A DRUG RING THAT USED DIVERS TO ATTACH COCAINE SHIPMENTS TO THE HULLS OF SHIPS
Insight Crime on 3rd September carried an article about a smuggling technique that appears to be spreading across South America. 12 people have been arrested and face trial in Peru for their involvement in the ring, including 2 Peruvian naval officers. Up to 600 kg could be smuggled per ship, without the crew’s knowledge and the technique allowed the traffickers to evade port security checks, and the need to pay off dock workers. It says that similar tactics have been seen in Colombia since at least 2014 and known as “parásito” (parasite). In June, police in Ecuador also warned that drug traffickers may be targeting the undersides of ships.
eBOOK: HOW TO DETECT THE 7 TYPES OF DOCUMENT AND IDENTITY FRAUD
A free e-book, available to download from Onfido looks at modified documents (i.e altered originals); illegitimate documents (i.e. wholly fake); and falsely represented documents (i.e. documents that may be legitimate or original, but don’t belong to the person presenting them). It also says that there are 4 tiers of attempt – from amateurish to expert.
THE FUTURE OF FENTANYL AND OTHER SYNTHETIC OPIOIDS
The RAND Corporation has published an e-book which says that deaths involving synthetic opioids in the US increased from roughly 3,000 in 2013 to more than 30,000 in 2018. In fact, synthetic opioids like fentanyl are now involved in twice as many deaths as heroin. The e-book offers a systematic assessment of the past, present, and possible futures of synthetic opioids in the US – to provide decisionmakers, researchers, media outlets, and the public with insights intended to improve their understanding of the synthetic opioid problem and how to respond to it.
US: DHS IS USING FAKE SOCIAL MEDIA PROFILES TO INVESTIGATE IMMIGRANTS
On 3rd September, Nextgov published an article saying that the Department of Homeland Security is using fake social media accounts to run background checks on people hoping to settle in the US, though at least one social media company plans to fight the practice. Under new guidelines, officials can create “fictitious accounts or identities” to access social media accounts of people applying for green cards, citizenship, work visas and other immigration benefits. Officers may also collect information on any other individuals associated with the applicant as long as it’s “reasonably relevant” to the investigation. They can also investigate potential fraud and study broader trends in immigration and the vetting process. However, a Facebook spokesperson is quoted as saying that the company plans to remove any fake accounts it uncovers, including those operated by DHS and other law enforcement agencies.
PODCAST: PRIMER ON MONEY LAUNDERING
In the latest TRACE podcast, John Madinger, a 22-year veteran of Treasury and consultant to the DoJ, sheds light on some of the money laundering schemes he has uncovered and why the Breaking Bad car wash scheme probably wouldn’t have worked.
JUNIPER FCPA SETTLEMENT PROVIDES USEFUL COMPLIANCE REMINDERS
A Client Alert from Wilmer Hale on 4th September is concerned with an SEC settlement to resolve an enforcement action against Juniper Networks Inc, a Silicon Valley-based cybersecurity and networking company, over alleged violations of the internal accounting controls and books and records provisions of the FCPA related to discounting practices and travel benefits provided by its subsidiaries and representative offices in Russia and China. Juniper agreed to pay a total of $11.7 million in penalties. It notes that the SEC charged only books and records and internal accounting controls violations, but did not bring an anti-bribery charge, perhaps because of the tenuous connection of the conduct to the US or perhaps due to the fairly scant evidence of corrupt intent. The Alert also notes a number of other notable points, saying that it highlights the importance of compliance controls around pricing and discounts; it may be necessary or appropriate in some cases to conduct audits of third parties or take other monitoring steps in order to detect some bribery schemes; and that it is a helpful reminder that travel and entertainment continue to be FCPA risk areas. It was also noted that employees used personal devices in an effort to thwart detection, and that US authorities have increasingly focused on the use of personal devices and the use of informal chat and text applications. The SEC emphasised the failure of the company to remedy the problem once alerted.
SWISS PARLIAMENTARY PANEL RECOMMENDS NOT REAPPOINTING ATTORNEY GENERAL AFTER HE HELD FIFA MEETINGS
Reuters on 4th September reported that a Swiss parliamentary panel recommended not re-electing Attorney General Michael Lauber after he held undocumented meetings with FIFA President Gianni Infantino even as his office investigated world soccer’s governing body on suspicion of corruption.
DENMARK NEEDS STRONGER ANTI-CORRUPTION POLICIES FOR GOVERNMENT AND THE POLICE FORCE
The Council of Europe reported on 4th September that a report from its GRECO anti-corruption body calls upon Denmark to strengthen its policies to prevent corruption in respect of persons entrusted with top executive functions (members of the government and – in certain cases – special advisers) and the police. The report calls for specific attention to be paid to rules on how persons with top executive functions engage with lobbyists, as well as on their employment following termination of their service in the public sector (revolving doors). It requires Denmark to adopt further corruption prevention tools in place.
UK GOVERNMENT ANNOUNCES IMMIGRATION PLANS FOR NO DEAL BREXIT
On 4th September, a news release from the Home Office outlined how a post-Brexit immigration regime will look like in the event of a “no deal” situation.
UK: FACT SHEET ON LIVE FACIAL RECOGNITION USED BY POLICE
On 4th September, the Home Office issued a short factsheet containing its views on facial recognition and its lawfulness in the UK.
IRELAND: AGRICULTURAL CONTRACTORS SEEK VAT REVAMP AND NATIONAL REGISTER TO TACKLE ‘BLACK ECONOMY’
On 4th September, Agriland reported on the 2020 Pre-Budget Submission from the Association of Farm Contractors in Ireland (FCI). It said to counter “significant black economy issues” and cash-flow challenges facing (farming) customers in the agricultural contracting sector, the Government must consider 2 possible options that would reduce VAT on services provided by contractors. It also called for the Revenue Commissioners to establish a National Register of Farm/Forestry Contractors.
TAX FRAUD AND HUMAN RIGHTS: BANKS’ OBLIGATIONS
On 4th September, International Banker carried an article by Juan Pablo Bohoslavsky, UN Independent Expert on Debt and Human Rights, who says that it has been estimated that the majority of all illicit financial flows are related to cross-border tax-related transactions. He also says that, in developing countries, trade and transfer mispricing are considered the main vehicles for tax evasion or abuse, transnational corporations’ tax evasion and avoidance schemes were identified as pressing issues in high-income countries; and many transnational corporations employ aggressive tax-planning strategies that amount to tax abuse. He contends that finance and human rights are closely related, and states have an obligation to take steps toward the full realisation of economic, social and cultural rights, to the maximum of their available resources. Thus, financial institutions that facilitate tax evasion and transnational corporations that employ aggressive tax-planning strategies — thus impacting available state resources — must recognise that their actions have negative human rights consequences. Furthermore, states have the duty to ensure that businesses operating in their territories do not abuse human rights. Interestingly, he says that, contrary to what might have been expected, the Panama Papers did not drive depositors away from banks operating in Panama. In fact, the total assets of the banking sector as of November 2016 were worth $119 billion, 1.7% more than in March 2016 before the revelations. That, he argues, calls into question whether the transparency agenda has either been ineffective or, conversely, whether further transparency would actually consolidate the Panamanian financial platform.
BASIC INVESTIGATIVE STANDARDS (BIS) FOR INTERNATIONAL CRIMES INVESTIGATIONS: APP AVAILABLE
The Global Rights Compliance (GRC) group of international lawyers has developed an app for smartphones that uses the international standards it has drawn up (and is available in paper format) and which provides a range of minimum standards for the investigation of international crimes. The BIS relies on the most widely accepted international standards, including those employed by the International Criminal Court, increasing the likelihood that relevant information is collected in ways that preserve its potential to be useful evidence in future national or international trials or accountability mechanisms. The BIS addresses essential investigative and ethical principles that should be implemented throughout an investigation. It provides guidance on the practical steps that should be taken to ensure information is safely preserved, including how to record a chain of custody to ensure against interference; standards and procedures to be followed when collecting physical, documentary, digital and testimonial information (including that relevant to prosecuting sexual and gender-based crimes); and direction on how to develop a case theory. In addition, the BIS includes a function that will enable users to contact GRC, a specialist team of international lawyers, to obtain answers to questions concerning international justice and accountability.
A podcast from 1 Crown Office Row chambers involves an interview with Catriona Murdoch of GRC about the new app and how it is designed to help professionals in the investigation of international crimes and ensures that relevant information is collected in ways that it will be reliable evidence in court.
FACIAL RECOGNITION TECHNOLOGY: A PRIMER FOR LEGAL PRACTITIONERS
On 4th September, Kramer Levin Naftalis & Frankel LLP published an article which takes a closer look at how, in the context of the US, facial recognition works, who uses it and what to expect if regulations tighten in this area.
LITHUANIA: SON OF FIRST PRESIDENT’S WIDOW SENTENCED FOR TAX EVASION
On 4th September, OCCRP reported that the son of Lithuania’s first president’s widow was sentenced for tax fraud in a criminal case launched after OCCRP’s Lithuanian partners exposed his property in Florida and illegal possession of some $400,000, in 2017 revealing the hidden dealings of a hotel company owned by Ernestas Butrimas and his mother Kristina Brazauskiene, the widow of modern Lithuania’s first president.
PARAGUAY CURRENCY EXCHANGES LAUNDER VAST AMOUNTS OF BRAZIL DRUG MONEY
On 4th September, Insight Crime reported that Brazilian criminal gangs were able to use official currency exchanges in Paraguay to launder over $1.5 billion in drug money, showing, it says, how the country continues to be a paradise for organised crime groups seeking to hide their profits. Exchange houses used “black dollars,” legal US tender which circulates in the country parallel to the currency officially registered with the Central Bank of Paraguay while maintaining the same value.
CHINA FENTANYL BAN YET TO HAMPER MEXICAN CRIME GROUPS
On 4th September, Insight Crime reported that authorities in Mexico continue to make large seizures of the deadly synthetic opioid fentanyl, even as China, the world’s top producer of the drug, tightens regulations. China accounts for the vast majority of illicit fentanyl and its precursor chemicals that reach the US, and US officials have pressured the country to crack down on the drug’s production.
£11 MILLION “LAUNDERED FROM TERRACED HOUSE IN LEICESTER” TO INDIA AND HONG KONG
On 4th September, Leicestershire Live reported on a court hearing where the prosecution claim a corrupt money handling service was operated from a terraced house in Leicester. 5 people are on trial accused of using a sham money transfer business, Rushi Investments, to handle £11 million of criminal cash. Amounts were regularly sent abroad fictitiously based on income from non-existent customers and bogus invoices, it was claimed.
INTER-AMERICAN DEVELOPMENT BANK (IDB) 6-YEAR DEBARMENT OF MORE THAN 20 SUBSIDIARIES OF ODEBRECHT SA FOR BRIBING PUBLIC OFFICIALS IN CONNECTION WITH IDB-FINANCED PROJECTS
A post on the FCPA Blog on 4th September reported that the IDB had imposed the debarment in connection with bribery in 2 IDB-funded projects. The debarred Odebrecht units are CNO SA and Odebrecht Engenharia e Construção SA, as well as 19 CNO subsidiaries – but CNO branches in Africa are not debarred. Between 2007 and 2015, Odebrecht companies paid $118 million in bribes on the 2 IDB-funded projects – the Highway Rehabilitation Program in São Paulo, Brazil and the Tocoma Hydroelectric Power Plant Program in Venezuela. The bribes amounted to about 6% of the value of Odebrecht’s contracts under the projects.