12th September 2019
SAUDI BUSINESSMAN TESTS US JURISDICTION OVER 1MDB-LINKED ASSET
On 12th September, KYC 360 reported that Tarek Obaid, a businessman with dual Saudi and Swiss citizenships, is to argue before a Los Angeles-based federal judge that the judge doesn’t have jurisdiction to order the seizure of his shares in Palantir Technologies Inc, allegedly bought with 1MDB-linked funds. It says that the question of whether the civil forfeiture lawsuits for overseas assets, acquired by foreigners with Malaysian money, actually belong in a Southern California courtroom. The article reflects on the possible effect on the 30 forfeiture lawsuits seeking real estate, investments, art and jewellery valued at $1.7 billion that Low Taek Jho (aka Jho Low), the Malaysian financier and alleged mastermind behind the looting of 1MDB, and his accomplices bought.
INVESTIGATIONS AND WHITE-COLLAR CRIME: IRELAND’S ANTI-CORRUPTION LAW BEGINS TO BITE
On 11th September, McCann Fitzgerald published an article on a recent case of alleged corruption involving a Garda, information from the Criminal Assets Bureau investigation and a director of a company under investigation. It also mentioned that a Garda Anti-Corruption Unit is to be established.
IRELAND: FUNDS, MANAGEMENT COMPANIES AND INVESTMENT FIRMS SHOULD PREPARE FOR THE POSSIBILITY OF AML/CFT INSPECTION
Dillon Eustace on 10th September published an article explaining why funds, management companies and investment firms should prepare for the possibility of a AML/CFT inspection by the Central Bank of Ireland’s dedicated Anti-Money Laundering Division. It also explains what they should expect. It says that the number of AML inspections has more than doubled in the last 2 years (72 in 2018) and last year the CBI held 59 AML review meetings and issued 259 risk evaluation questionnaires for completion. The number of enforcement cases for AML breaches has also increased recently – in the last 3 years 7 firms have been fined for AML breaches, with 3 of these fines running into 7-figure sums.
WHAT’S MISSING FROM US BSA/AML REFORM? THE FUNDAMENTAL FLAW
On 10th September, White & Case published an article saying with all the talk of reform in the US systems, an underlying flaw is that the 2 principal objectives of the Bank Secrecy Act (creating actionable financial intelligence and preventing money laundering) align in theory but conflict in practice, and the tension between the objectives results in conflict among the agencies overseeing the regime, procedure-driven approaches to compliance by financial institutions, and a corresponding misalignment of compliance resources away from AML activities with potentially greater value. It says that the problem dates back to the passage of the Annunzio-Wylie Anti-Money Laundering Act of 1992, reinforced by the PATRIOT Act of 2001. The practical consequence of the changes of 1002 was, the article says, to skew the incentives for financial institutions from a risk-based and reasonableness approach to financial intelligence investigations to a procedure-driven approach that has since become misaligned with the real risks of money laundering. The article concludes that the current US BSA/AML regime results in AML programmes at financial institutions that are rigid and process-driven and that align resources to proving a negative rather than addressing real AML risks.
AML AND FRAUD IN THE BVI
On 7th January, Harneys had produced the AML and fraud framework in the BVI. It remarked on then recent developments and the legal and enforcement framework.
355 METERS OF SNAKESKIN SEIZED FROM PASSENGER’S LUGGAGE AT ISTANBUL AIRPORT
Daily Sabah in Turkey on 11th September reported that Turkish customs and anti-smuggling officers seized 93 pieces of snakeskin, which when combined reached a lengthy 355 meters, from a passenger who tried to smuggle it in checked baggage at Istanbul Airport (IST) from Indonesia. The market value of the snakeskin seized was estimated to be around $55,447.
FIDUCIARIES IN CYPRUS TO BE REGULATED BY SINGLE LAW
In Cyprus on 12th September reported that the supervision of undertakings providing administrative services (Fiduciary Services) to private companies in Cyprus will soon be amended at the request of Moneyval, informed sources have said. By law, fiduciaries have been regulated by the Cyprus Securities and Exchange Commission (CySEC) since 2012, but registered lawyers and accountants who provide fiduciary and corporate services via their respective firms and associated companies have been regulated throughout by the Cyprus Bar Association and the Institute of Certified Public Accountants of Cyprus.
UK BANKS TAKE AN ACCELERATED APPROACH TO MERGE FRAUD, FINANCIAL CRIME OPERATIONS
The Paypers on 12th September reported research on 12th September that most UK banks plan to integrate their fraud and financial crime compliance systems and activities, in response to new criminal threats and punishing fines. It found that 60% of banks across the regions surveyed have strategic plans for further integration, either to fully integrate functions or share resources where synergies exist, and a further 20% are actively seeking to obtain synergies even if they are only taking a tactical approach.
UK CANNABIS ACCOUNTING INDUSTRY READY TO ROLL
On 12th September, Accounting Web reported that mainstream acceptance of cannabis is increasing across the world, and more than 50 countries have legalised some form of cannabis for medical use, including the UK which amended its laws in November 2018. It quotes the head of practice at one firm saying that accountants servicing the cannabis sector have become essential in navigating the complex tax regulations that were introduced. It also says that European law firms have started to spin off cannabis-specific practices from their life science arms, where the work would traditionally have been carried out. The US accounting sector is also grappling with the tax implications of serving cannabis businesses, with some clear lessons for Europe to learn should recreational markets begin to open up. The article points out that the UK’s medicinal market is currently so small and wrapped in red tape it may as well not exist, and yet the UK itself is the world’s largest exporter of legal cannabis in the world. It also cites a report by specialist cannabis analysts Prohibition Partners projects the UK’s medicinal market could be worth up to £8.8 billion in the next decade – though, to date, Home Office bureaucracy has ensured that very few patients who meet the strict criteria have managed to get hold of cannabis.
UK PORTS PUSH AHEAD WITH ‘FREEPORT’ PLANS
Lloyds Loading List on 11th September reported that a new coalition of airport and seaport operators, Port Zones UK, calls for planning reforms to assist development of Foreign Trade Zones, expected to become more relevant if and when the UK leaves the EU.
LAW FIRMS “NEED DATA-SHARING GUIDANCE” TO AVOID GDPR BREACHES
Legal Futures on 12th September reported that the Information Commissioner needs to provide specific guidance to law firms on how they can lawfully share personal data, leading City law firm Kennedys has argued. It was responding to the Information Commissioner’s Office consultation on a new statutory code of practice on data sharing.
4 SENTENCED FOR THEIR PART IN THE UK’S LARGEST-EVER VISA FRAUD
A CPS news release on 11th September advised that 4 people have been sentenced for their part in the UK’s largest immigration fraud and attempting to cheat HMRC of payroll tax. The case centred on ‘immigration advisors’ who created a network of sham companies to cheat the Home Office.
FOREIGN BANKS COULD LOSE ACCESS TO US DOLLARS IF FOUND TO FACILITATE TERRORIST FINANCING
On 12th September, the RANE Network reported a Wall Street Journal story saying that the new Executive Order imposing enhanced sanctions could result in foreign financial institutions losing access to banks, money services businesses, and cryptocurrency exchangers and administrators, as well as to the world’s largest economy and the dollar, which is critical to most of the world’s trade and finance.
US COMPILING LIST OF BUSINESSES WITH LINKS TO CHINESE MILITARY
The Financial Times reports that the Pentagon is compiling a list of businesses with Chinese military ties, as part of an increased Trump Administration effort to stop China from getting a hold of sensitive technologies and protect US defence supply chains.
US: ICE HAS A NEW $30 MILLION CONTRACT WITH ISRAELI PHONE CRACKING COMPANY CELLEBRITE
On 12th September, the Daily Beast reported that the Immigration and Customs Enforcement agency has expanded its work with Cellebrite, an Israeli data extraction company best known for offering to crack the San Bernardino shooter’s iPhone at the behest of the FBI in 2016. It is said that the company’s technology can bypass most smartphones’ locks and download data from all their apps for law enforcement. The article says that it is unclear what use ICE will put Cellebrite’s technology to and where it will do so.
FORMER No. 2 AUDITOR AT KPMG LLP WILL GO TO PRISON OVER AUDIT SCHEDULE SCANDAL
On 11th September, the Wall Street Journal reported that David Middendorf, the former second-in-command of KPMG’s US audit practice, was convicted for his role in a scheme to steal the names of the firm’s clients whose audits were going to be reviewed by the nation’s accounting regulator. He is to be jailed for 1 year and 1 day.
LUFTHANSA CARGO BANS VAPE SHIPPER AND FORWARDERS AFTER LITHIUM ION “INCIDENT”
Loadstar reported on 12th September that Chinese vape manufacturer, ShenzhenAbuFan Technology, has been blacklisted by Lufthansa Group carriers for all forms of airfreight. China Freight and Flexport Asia have also been blacklisted over the same incident. Loadstar describes the situation as a reminder of the dangers of misdeclaring lithium ion battery shipments.
HAPAG-LLOYD IS PILOTING ITS OWN ONLINE INSURANCE PRODUCT AS PART OF A DIGITAL OFFERING
On 12th September, Loadstar reported that the initiative, Quick Cargo Insurance, is intended to try to overcome the widespread practice of shippers relying on the limited cover provided under the terms of carriers’ bills of lading.
TRADING IN DRUG PRECURSORS IF THERE’S NO BREXIT DEAL
On 12th September, HMRC published updated information on how trading in drug precursor chemicals would be affected if the UK leaves the EU with no deal. Essentially, you will need to apply for an import and/or export licence when trading with EU countries in certain categories of drug precursor chemicals if the UK leaves the EU without a deal, and current rules for trading in these chemicals with countries outside the EU will apply to trade with the EU.
FIREARMS MOVEMENTS WITH EUROPE IF THERE IS NO BREXIT DEAL
On 12th September, HMRC provided updated information, reminding one that UK residents would no longer be able to use a European Firearms Pass.
UK: MAN AND WOMAN TO REPAY MORE THAN £10 MILLION AFTER BEING CONVICTED IN 2017 FOR THEIR ROLES IN A MULTI-MILLION POUND FRAUD
On 12th September, the Bucks Herald reported that David Mills, 62, and his wife Alison Mills, 54, were convicted alongside 4 others in 2017 for their roles in fraudulent trading, corrupting banking officials and money laundering. They were sentenced to a total of more than 18 years’ imprisonment following Operation Hornet, a 6-year investigation led by Thames Valley Police which uncovered their illicit activities. They defrauded struggling businesses out of huge sums of money to fund a lavish criminal lifestyle. They have now been ordered to repay money and assets valued at £10,451,949.54 under a confiscation order which will include the seizure of luxury yachts and holiday properties.
SRI LANKA: THE AVANT GARDE FLOATING ARMOURY CASE – COURT OF APPEAL ORDERS RELEASE OF SUSPECTS
On 12th September, the Daily Mirror in Sri Lanka reported that the Court of Appeal has set aside both the orders and directed the Magistrate’s Court to discharge the 8 accused including former defence minister Gotabaya Rajapaksa from the corruption case filed by the Bribery Commission. The Commission had filed the corruption case against the defendants for allegedly causing a tax loss to the government by permitting Avant-Garde Maritime Services (Pvt) Ltd to operate a floating armoury.
UK: NEW EXPORT SECURITY STRATEGY
On 12th September, the Department for International Trade announced this new strategy which is intended to set out how the Government will ensure that UK companies remain at the forefront of growing global demand for security exports and services. It is intended that support will involve encouraging businesses to export; providing export “know how” and guidance; connecting businesses with partners in the UK and overseas; and ensuring that no viable UK security export fails for a lack of finance or insurance from the private sector through promotion of the UK Export Finance (UKEF) offer to business.
AUSTRALIAN FEDERAL POLICE CLOSE ALLEGED BRIBERY INVESTIGATION OF TABCORP
On 12th September, Calvin Ayre reported that Australian Federal Police (AFP) are said to have opted to end their 3-year investigation of Australia’s largest gambling operator, Tabcorp. The investigation began when it was alleged that Tabcorp had made a payment of $200,000 to a business link to the PM of Cambodia.
ALLY OF PRESIDENT MACRON TARGETED IN FRENCH CORRUPTION PROBE
Baker McKenzie on 12th September reported that French prosecutors have opened a probe into the past business activity of the speaker of the National Assembly, examining whether Richard Ferrand, who ran Mr. Macron’s presidential campaign, abused his role as an executive at Mutuelles de Bretagne in 2011.
US: THREAT FROM DOMESTIC TERRORISTS RISING, EXPERTS TESTIFY BEFORE CONGRESS
On 12th September, Homeland Preparedness reported that, on the eve of the 18th anniversary of the 9/11 attacks, experts testified to US Congress that while Islamic jihadists remain a threat to the security of the US, so too do domestic terrorists in the form of white supremacists and other radical right-wing groups – and witnesses stated that Americans were more likely to die at the hands of an American with a gun than at the hands of an international terrorist.
FARMER JAILED FOR SMUGGLING GARLIC INTO AUSTRALIA
On 12th September, Illicit Trade reported that Letitia Anne Ware, 53, was jailed for 11 months for illegally importing 2,000 garlic bulbs, in violation of the country’s strict importation laws. Garlic imports are strictly controlled due to the risk from xylella fastidiosa bacteria.
SCOURGE OF SLAVERY INCREASES AMID NEW RANGE OF GLOBAL ISSUES, SAYS UN EXPERT
On 12th September, an article on Ekklesia the Special Rapporteur on contemporary forms of slavery, Urmila Bhoola, said in a report presented to the Human Rights Council in Geneva that over 60% of those in forced labour work in the private sector and 98% of women and girls subjected to forced labour have experienced sexual violence. In a world where over 40 million people are enslaved and 1 in 4 victims is a child, the scourge of modern-day slavery is only likely to increase as a result of environmental degradation, migration and demographic shifts.
MyPayrollHR, A NOW DEFUNCT CLOUD-BASED PAYROLL PROCESSING FIRM BASED IN NEW YORK, HAS ABRUPTLY CEASED OPERATIONS OWING $35 MILLION
On 12th September, a post on the Krebs on Security blog said that countless people have had money drained from their bank accounts and the scandal has left nearly $35 million worth of payroll and tax payments in legal limbo.
CANADA ANNOUNCES FUNDING TO COMBAT HUMAN TRAFFICKING AND APPOINTS SPECIAL ADVISER
On 7th September, Homeland Security Today reported that the Canadian government has announced substantial funding and its new National Strategy to Combat Human Trafficking. The new strategy takes a whole-of-government approach that will empower victims and survivors to regain self-confidence and control over their lives; prevent more of these crimes from taking place; better protect those who are most vulnerable to trafficking; prosecute human traffickers for their heinous crimes; and embrace partnerships with provinces and territories and other organisations. To support the new strategy, the Minister of Public Safety has now appointed a new Special Advisor on Human Trafficking, retired RCMP Assistant Commissioner. She will offer ongoing advice and recommendations to the government on its efforts to combat human trafficking and bring awareness domestically and internationally.
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