Back from travels again…
29th September 2019
ARE SANCTIONS WORKING IN VENEZUELA?
On 3rd September, the Center for Strategic and International Studies published a paper that sets out to provide clarity and assess the efficacy of past sanctions, as well as their impact on standards of living in Venezuela. It also provides recommendations for improving policy in this area.Among the key facts highlighted is that by 2016, the Venezuelan bolívar had already hit an inflation rate of 255%, and inflation has now surpassed 1 million percent and is projected to be 1- million percent by year end; oil production in Venezuela dropped from roughly 2.4 million barrels per day in 2015 to about 1 million at the end of 2018 before broad sanctions against PdVSA were implemented; and, in addition to the EU, 5 countries (the US, Canada, Switzerland, Mexico, and Panama) have issued sanctions. The paper also mentions the July report from the UN Commission on Human Rights which illustrates the excesses of Venezuela’s authoritarian status – saying that a crippling economic spiral has been exacerbated by extrajudicial killings, political imprisonment without due process, and pervasive violence due to the presence of groups: criminals, pro-government, Colobian FARC etc. The paper concludes that sanctions can take time to have their intended effect and, even when successful, are not sufficient to dismember and rebuild a government. They are, it says, simply a tool for coercing good behaviour, but a focus on targeted sanctions is not enough. Having a feasible exit ramp for Maduro and his inner circle while having a compassionate effort at humanitarian assistance are crucial.
UK EXPORT CONTROL SYMPOSIUM
On 27th September, the Department for International Trade announced that the next Export Control Symposium will take place in Birmingham on Tuesday, 26th November. This event is for companies with fewer than 250 employees and cost per delegate is £150. Places are limited and will be allocated on a first-come, first-served basis.
ARGENTINA IMPOSES FOREIGN EXCHANGE CONTROLS AND OBLIGATIONS TO REPATRIATE EXPORTS PROCEEDS
On 17th September, DLA Piper published an article saying that on September 1st, the Argentine Government issued an Executive Decree which reinstated certain foreign exchange restrictions that had been in effect prior to 2016. These new restrictions are effective from September 1st until December 31st, and the article provides a summary of the main provisions of the relevant Regulations. They introduce a series of restrictions – such as requiring prior approval by the Central Bank to access the Argentine foreign exchange market to make dividend payments or other distributions abroad; the transfer of funds outside Argentina to pay for services rendered by foreign affiliates will be subject to prior approval by the Central Bank, except for credit card companies on account of tourism services; and acquisition of foreign currency/assets will be subject to prior approval by the Central Bank (except for individuals who will be entitled to purchase up to $10,000 per month). Other restrictions involve exporters of goods and residents are required to transfer to Argentina and settle in Pesos in the FX Market the proceeds from exports, and non-Argentine residents will generally require prior Central Bank approval to acquire foreign currency in excess of $1,000 per month. The article warns that violation of any of the foreign exchange restrictions will be deemed a criminal offence with fines of up to 10 times the amount of the transaction for the first violation, fines of 3 to 10 times the amount of the transaction or imprisonment for 1 to 8 years Directors, legal representatives, chief executives, managers, and members of the supervisory committee who participate in such transactions will be jointly and severally liable for any fines.
DEEP FAKES AND CHEAP FAKES
On 18th September, Data & Society published an article which traces decades of audiovisual (AV) manipulation to demonstrate how evolving technologies aid consolidations of power in society. Deepfakes, the authors argue, are no new threat to democracy. They explain that a “deepfake” is a video that has been altered through some form of machine learning to “hybridize or generate human bodies and faces”, whereas a “cheap fake” is an AV manipulation created with cheaper, more accessible software (or, none at all). Cheap fakes can be rendered through Photoshop, lookalikes, re-contextualising footage, speeding, or slowing.
PEACE IS A LOSING STRATEGY IN MOZAMBIQUE – ELECTIONS COULD CAUSE ANOTHER CIVIL WAR
On 27th September, Foreign Affairs published an article saying that in August the Frelimo party government and the rebel group turned opposition party Renamo signed a peace deal that ended the most recent flare-up in an intermittent civil conflict dating back 4 decades. The plan sets out to decentralise power and established a process through which Renamo rebels can hand in their weapons and join more inclusive national military and police forces. However, the article warns that elections planned on October 15th could end up triggering yet another round of conflict – if Renamo emerges from the election feeling thwarted by the political process, the party will likely revert to the one strategy that has worked for it time and again: violence. The August peace deal is the country’s third since 1976, when civil war broke out between Frelimo, which came to power after leading the independence struggle against Portugal, and Renamo, whose support base consisted of traditional authorities and farmers who opposed Frelimo’s efforts to create a socialist, one-party state. Frelimo has dominated the state since independence, never loosened its chokehold on power.
RUSSIAN MILITARY HARDWARE DELIVERED TO MOZAMBIQUE
On 27th September, Defence Web reported that a Russian Air Force An-124 transport aircraft has delivered an Mi-17 helicopter and other equipment to Mozambique as reports continue to indicate Russian military activity. Russian military advisors have apparently been deployed to Mozambique since the end of August, with local media reporting that at least 160 Russian military personnel have been in Cabo Delgado since then to help neutralise attacks in the region.
3 SCENARIOS FOR SUDAN – NON-VIOLENT REVOLUTION OR DEMOCRATIC REFORM?
On 25th September, the EU Institute for Strategic Studies published an article speculating on the future of Sudan following the ousting of its former President in a coup in April, following a large-scale non-violent uprising against the regime. The article warns that non-violent resistance does not automatically lead to a more participatory and peaceful society; and that protest movements across the world – from Hong Kong to Algeria and Nicaragua – struggle to maintain their momentum and to evolve from revolution to lasting democratic reforms. The article analyses the recent civil resistance in Sudan, examines its distinctive characteristics and evaluates the prospects for a peaceful and stable transition in the country; examines why and how non-violent resistance increases the chances of peaceful societal change; goes on to provide an analysis of the recent political events in Sudan – and then outlines scenarios for the transition process and discussing ways to support stability.
A GUIDE TO KEY TERMS IN ART LAW
Law firm Boodle Hatfield has published an A to Z as what it described as a handy guide to some common terms that crop up during the course of matters relating to art law, which it says it hopes will provide a useful reference for those involved.
FATF REPORTS ON THE HONG KONG AML/CFT REGIME
On 24th September, Deacons published an article reminding one that FATF published the Mutual Evaluation Report on Hong Kong on 4th September, assessing Hong Kong’s AML/CFT regime to be compliant and effective overall. The article says that regulator SFC issued a circular on 6th September which highlighted some of the focus areas for further work moving forward. The article highlights the key points which licensed corporations need to note based on the content of the Report and the Circular.
KAZAKHSTAN: A CENTREPIECE IN CHINA’S BELT AND ROAD
ETH Zurich has published a briefing on the role of the country in the Belt and Road Initiative (BRI). It says that Kazakhstan is a linchpin for trade and transport links on the Eurasian continent – for the BRI and beyond – due to its location, vast landmass and energy reserves. It is both the object and the subject of Chinese, Russian and Western geopolitical interests. The Kazakhstani case shows that the shape and success of the BRI largely depend on internal, not external, factors.
HOW A SANCTIONS-BUSTING SMARTPHONE BUSINESS THRIVES IN NORTH KOREA
Japan Today on 29th September published an article saying that North Korea is evading UN sanctions to cash in on soaring domestic demand for smartphones, using low-cost hardware imports to generate significant income for the regime, according to defectors, experts and an analysis of North Korean-made phones. It says that economists estimate as many as 6 million North Koreans – a quarter of the population – now have mobile phones. The phones feature Taiwanese semiconductors, batteries made in China and a version of Google’s open-source Android operating system, analysis of the North Korean phones revealed. North Korean phones can only be used to call domestic numbers and have some unique security features, e.g. downloading or transferring files is severely restricted.
CARS SEIZED FROM AFRICAN LEADER’S SON WORTH $25 MILLION BEING SOLD AT AUCTION AFTER MONEY LAUNDERING PROBE
On 29th September, the Straits Times reported that an auction house in Switzerland is set to sell 25 luxury cars including Ferraris, Rolls-Royces and Lamborghinis that Geneva authorities seized from the son of Equatorial Guinea’s president in a money laundering probe. The auction comes after the Geneva prosecutor’s office announced in February it had closed a case against Teodoro Nguema Obiang Mangue. Swiss authorities seized the cars and ordered the sequestration of a yacht in 2016. The yacht was released after Equatorial Guinea agreed to pay Geneva authorities CHF1.3 million “notably to cover procedural costs”.
MONEY LAUNDERING, TERRORIST FINANCING, AND HAWALA’S DAMAGE TO THE AFGHAN ECONOMY
The Small Wars Journal has published this article which says that money laundering, including the financing of terrorism, along with drug trade, criminal activity, and corruption, is devastating Afghanistan’s already weak economy. It says that a Ministry of Finance report indicated “only 35% of the financial flows within the country are legal”. The article argues that providing full visibility of money transfers would allow the government to manage money demand, interest rates, levy taxes and duties, and provide long-term stability for the Afghan economy and legitimacy to its government, all the while cutting off a key element of the CTF efforts against the Taliban, ISIS-K, and Al-Qaeda. The article concentrates on the risk from the hawala system. The Arabic word hawala means “change” or “transform,” and those who provide the services are known as hawaladars. In the 1990s, the article says, the Taliban regime replaced the formal banking system with the hawala market. The article says that the hawala system in Afghanistan is a covert means to move terrorist funds, but it also serves as the “most effective, reliable, and sometime sole method for moving funds across the country”. Hence, not all hawala transactions are for illicit activity, but based on the volume, its lack of centralized oversight, and limited monitoring, it is difficult for the economy of Afghanistan to properly maintain sound monetary policy. The article argues that integrating and eventually replacing the hawala system with a centralized banking system will assist the Afghan government with stabilising a volatile economy. It also says that corruption must be addressed, saying that abolishing the hawala system would obstruct corrupt officials from participating in illegal activity and force them to move assets above the table rather than below it.
INDIA: PUBLIC SECTOR UNDERTAKING (PSU) BANKS HAVE EMERGED AS THE NEW PREFERRED CHANNEL PARTNER FOR MONEY LAUNDERING
On 28th September, the Sunday Guardian published an article saying that the FIU has come across multiple instances where the PSU banks have failed to adhere to steps that are required to stop money laundering through banks. In many cases, it says, the FIU has levied penalty on these banks and repeatedly asked them to focus more on AML mechanism, but most of their requests have gone unheeded. In India, a PSU is a entity owned by the central, state or territorial government.
UK: USING CUSTOMS PROCEDURES IN A NO-DEAL BREXIT
On 27th September, HMRC issued updated guidance about simplified customs processes for UK businesses trading with the EU in a no-deal Brexit. Interestingly, the release notes prominently that “This guidance does not apply to importing or exporting goods between Ireland and Northern Ireland”.
SOUTH AFRICA: LAW ENFORCEMENT COMPONENT OF MARITIME OPERATIONS
On 27th September, Defence Web carried an article about the Department of Environment, Forestry and Fisheries (DEFF) Green Scorpions law enforcement division being a major contributor to the marine protection services component of Operation Phakisa – a government initiative aimed at extracting value from the oceans around South Africa and is made up of a number of components, including ensuring maritime laws and regulations are effectively implemented. It is said that the situation pertaining to illegal harvesting of marine resources along the seaboard remains critical, with poachers becoming increasingly aggressive.
BELARUS FINDS ILLEGAL UKRAINIAN ARMS SHIPMENTS TO RUSSIA
Customs Today on 27th September reported that Belarus claims to has uncovered an illegal cross-border weapons smuggling network from Ukraine to Russia. It is said that Belarussian security and customs agencies have shut down a smuggling channel that moved weapons, weapon parts and ammunition from Ukraine to Russia via Lithuania and Belarus. It is said that Belarus has opened 3 times as many criminal cases into arms smuggling in 2019 as it did in the same period last year.
SWISSPORT HAS BEGUN A ROLL-OUT OF SELF-SERVICE CARGO CHECK-IN KIOSKS – AT BRUSSELS AND SCHIPHOL
Loadstar on 27th September reported that these were the first gateways to deploy the system aimed at reducing congestion. The kiosks identify drivers, scan air freight documentation and direct trucks to the relevant drop-off points, the last step completed by text message. The service also provides for shipping information to be entered via a kiosk web portal by forwarders, as well as allowing a link to Swissport’s database.
DOMINICAN REPUBLIC MAY REOPEN LAWSUIT AGAINST ODEBRECHT
OCCRP on 27th September reported that the Attorney General’s Office (PGR) of the Dominican Republic said that that the Brazilian construction giant did not pay a $32 million instalment of a corruption fine, thus creating a possibility for the lawsuit to be reopened. OCCRP reports that an agreement signed with the Dominican judicial authorities in 2017 required the company to pay a $184 million fine – twice as much as it spent on bribes to obtain public contracts between 2001 and 2014.
NEW ICC INCOTERMS 2020 RELEASED
On 23rd September, the freight industry body FIATA published its latest e-Flash which included a reminder that the International Chamber of Commerce has launched Incoterms 2020, the newest edition of the renowned trade terms in 29 languages. Access to the rules have also been made easier through a dedicated Incoterms 2020 mobile app. The article provides some brief highlights –
- Provides for demonstrated market needs in relation to bills of lading (BL) with an on-board notation on the Free Carrier (FCA) Incoterms®;
- Aligns different levels of insurance coverage in Cost Insurance and Freight (CIF) and Carriage and Insurance Paid To (CIP);
- A change in the 3-letter name for Delivered at Terminal (DAT) to Delivered at Place Unloaded (DPU);
- Includes arrangements for carriage with own means of transport in FCA, Delivered at Place (DAP), Delivered at Place Unloaded (DPU), and Delivered Duty Paid (DDP); and
- Includes security-related requirements within carriage obligations and costs.
The ICC warns users to be wary of anything other than official ICC guidance; relying on information found online is a major cause of incorrect usage of Incoterms®, with adverse consequences for businesses and their insurers. FIATA recommends members to reference the ICC new rules in their day-to-day business dealings.
THE DRONE DATABOOK
Published by Dan Gettinger, founder and co-director of the Center for the Study of the Drone, this online publication is a study of military drone use, with profiles of 101 countries, a report on military drone infrastructure around the world, and technical specifications of more than 170 types of drones currently available. The publication evaluates each country’s capabilities, including scope for export of its drones.
RED FLAGS: WARNING SIGNS AND POLITICAL DRIVERS OF ARMS TRADE CORRUPTION
The World Peace Foundation has published a report that considers ‘Red Flags’ – the warning signs that can help citizens, NGO, governments, and those companies actually seeking to avoid corruption to identify and avoid corruption risks; and what it terms as the ‘Red Diamonds’ – the underlying politics and economics of the arms trade that create situations where companies and government actually choose the option of corruption at a high level. The Foundation says that this report follows its research into more than 40 cases of corruption in the arms trade. The report concludes that –
- Corruption is very common in the international arms trade, and seems to occur particularly frequently in certain sectors;
- Most of the cases involve bribery as the central element of the corruption;
- Arms trade corruption is not limited to the ‘third world’, or countries with particularly high levels of corruption in general;
- Nonetheless, processes and institutions do matter;
- There are a relatively small number of major cases involving the US as a seller; and
- The extent to which political finance is a common feature of corruption in arms deals.
ARE WE HEADING TOWARDS A STRATEGIC CRISIS OVER TAIWAN?
The IISS website carried an interview with the author of a new book on 27th September. Brendan Taylor, author of a new IISS book on Taiwan’s security, explains why, amid shifts in the military balance between China and the US, there is an increasing risk of a cross-strait conflict flaring up and why policymakers should be worried about it.
AFRICA’S DRUGS CRISIS STIMULATED BY POOR POLICY
On 24th September, ENACT Africa reported that a looming drugs crisis in Africa is being made worse by ineffective drug policy, fuelled by corruption and organised crime, according to the ENACT transnational organised crime programme. African consumption of illegal drugs, including non-medical use of prescription opioids, threatens national development and is projected to become a public health emergency. Sub-Saharan Africa will see the world’s biggest surge in illicit drug users in the next 30 years, with its share of global drug consumption projected to double. New research suggests that East Africa will experience the sharpest increase in the proportion of its population using illicit drugs, but with West Africa set to remain the continent’s largest regional drug market.
US SANCTIONS EXPLAINED: HOW A FOREIGN POLICY PROBLEM BECOMES A SANCTIONS PROGRAMME
On 22nd September, The Atlantic Council published a feature in which its experts detail the complex route policy makers follow to develop and deploy sanctions. It addresses a number of questions, such as can the US Congress introduce new sanctions programmes – saying that it can, through legislation and to codify or build on existing sanctions programmes that are introduced by the executive branch (i.e. the President). While Congress has introduced stand-along sanctions legislation, such as the Sergei Magnitsky Rule of Law Accountability Act and the Foreign Narcotics Kingpin Designation Act, it is more common for Congress to pass sanctions-related legislation that is complimented and strengthened through a subsequent executive order issued by the President, as in the case of the Global Magnitsky Human Rights Accountability Act and Executive Order 13818.
EU PARLIAMENT PROPOSES 1 HOUR FOR INTERNET FIRMS TO REMOVE TERRORIST CONTENT
EU Business reported that Internet companies would be forced to remove content promoting terrorism within an hour of being informed, under new EU rules adopted by an EU Parliament committee. They would have to remove terrorist content when told to do so by the competent national authority, at the latest within 1 hour of receiving the order. However, MEPs insist that internet companies hosting content uploaded by users should not be obliged to proactively identify terrorist content, something that these platforms claim would be a heavy burden for them. Monitoring the information or actively seeking facts indicating illegal activity should be the responsibility of the competent national authority. The Parliament also believes that there should be no compulsory use of filters nor automated tools as this could lead to inaccuracies and innocuous content being tagged as “terrorist”.
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