31st October 2019
INDIA: THE PROCEEDS OF CRIME AND THE PREVENTION OF MONEY LAUNDERING ACT 2002
AZB & Partners have produced an article saying that an understanding of the scope of the term ‘proceeds of crime’ is crucial to the understanding of the crime of ‘money laundering’, as the offence of ‘money laundering’ is triggered only when the laundered property falls within the ambit of ‘proceeds of crime’. Hence, it examines what are proceeds of crime, and how they might be “attached” (restrained) and confiscated. It also mentions the Fugitive Economic Offenders Act 2018, which uses the same definition of proceeds of crime.
CHINESE MAN AND WOMAN CAUGHT IN FRANCE SMUGGLING 60 KG OF LIVE BABY EELS ONTO PLANE IN SUITCASES
On 31st October, the South China Morning Post reported that ‘glass eels’ can fetch $5,600 per kg in China, with a prosecutor calling the case an example of ‘new form of trafficking that is exploding’. The 20-year-old woman and 44-year-old man were stopped at Paris Charles de Gaulle airport on a transit stop from the city of Toulouse and inside their 4 suitcases, officers found plastic bags with water carrying the eels, also known as “elvers”.
THE HELMS-BURTON LAW: UNCERTAINTY FOR INVESTORS IN CUBA
On 30th October, the Lupicinio International Law Firm published an article saying that after the lifting of the suspension of Title III of the Helms-Burton Act (which allowed for “compensation” claims over property seized during the Cuban Revolution), there is still some caution and uncertainty when it comes to assessing US embargo claims against Cuba. There is still a long way to go to establish parameters that are consolidated and accepted by the judges, as well as to determine who may have standing in these cases. It says that, based on current lawsuits to date, there are 51 plaintiffs, including the plaintiffs named in the class actions. The exact number of plaintiffs is impossible to determine because the 5 class action lawsuits filed represent numerous anonymous plaintiffs whose number could far exceed that of the few plaintiffs appointed to represent other persons who are in a similar situation within the class action. Current lawsuits have interpreted “trafficking” in the assets involved in general terms to include not only the direct use and benefit of confiscated goods, but also indirect use through the provision of services related to confiscated goods that lead to financial benefits. The article closes by saying that the EU and countries such as Japan, Canada or Mexico have “antidote laws” designed to counteract such US sanctions.
US FEDERAL TRADE COMMISSION KNOCKS DOWN MULTILEVEL MARKETING PYRAMID SCHEME
On 29th October, Manatt Phelps & Phillips LLP published an article saying that the Federal Trade Commission reached a $150 million deal with multilevel marketing (MLM) defendants that also includes a ban from the business. The FTC had accused AdvoCare International LP, its former CEO and 4 other top promoters of operating an illegal pyramid scheme by marketing a business opportunity to distribute health and wellness products (such as the Spark energy drink) through a network of hundreds of thousands of participants. Amongst other allegations, it was said that the defendants encouraged distributors to make “exaggerated claims” about the amount of money consumers could make (hundreds of thousands or even millions of dollars per year) in order to recruit others.
DAIWA BANK LOSES UK DUTY OF CARE APPEAL, FACES $150 MILLION BILL OVER “SUSPICIOUS” FUNDS TRANSFER
On 31st October, KYC 360 reported that Daiwa Capital Markets Europe has lost a court appeal that leaves the Japanese bank facing a $150 million damages bill and reinforces the expected duty of care between a bank and a corporate customer. The case relates to a payment Daiwa made at the request of the main shareholder in Singularis Holdings and whether it had sufficiently carried out its duty as a financial institution to guard against fraud. It is said to raise the prospect of a much higher duty of care burden for financial institutions when it comes to dealing with corporate clients. The Supreme Court said that Daiwa should have realised that something suspicious was going on and suspend payment until it had made reasonable enquiries to satisfy itself that the payments were properly made.
RUSSIA’S VTB BANK DEMANDS $500 MILLION FROM MOZAMBIQUE GOVERNMENT
On 31st October, the Moscow Times reported that Mozambique guaranteed $500 million of loans from the Russian bank on defence and development projects which have been hit by a corruption scandal. The loans were made to 3 state-owned companies in Mozambique and were guaranteed by the government of Mozambique. In 2012-14 the companies awarded Abu Dhabi-based Privinvest Group contracts to build a coastal defence system, a tuna fishing fleet and a shipyard in the country, these were financed by nearly $2 billion worth of loans issued by Credit Suisse and VTB Capital.
MONGOLIA ARRESTS 800 CHINESE CITIZENS IN CYBERCRIME PROBE
On 31st October, Reuters reported that police also confiscated hundreds of computers and mobile phone SIM cards as part of an investigation into a cybercrime ring which is said to have involved illegal gambling, fraud, computer hacking, identity theft and money laundering. The article also mentioned that, a month ago, 324 undocumented Chinese citizens were arrested in the Philippines on charges of running illegal online gaming activities and engaging in cyberfraud.
JHO LOW: US TO RECOVER $700 MILLION FROM 1MDB FINANCIER
On 31st October, the BBC reported that the US has struck a deal with fugitive financier Jho Low to recover $700 million in assets tied to the multi-billion dollar 1MDB corruption scandal.
ECUADOR: A COCAINE SUPERHIGHWAY TO THE US AND EUROPE
An article in Insight Crime on 30th October said that little attention is paid to Ecuador. The murder rate is low, and there are no drug cartels like those that have dominated the criminal landscape in Mexico and Colombia. Yet Ecuador is one of the world’s cocaine superhighways. From the country’s ports, coastline and airports, it is then dispatched around the world, destined for the US, Europe and even Asia and the Pacific. The actors that run these drug routes are a combination of Ecuadorean, Colombian, Mexican and European criminal networks.
BOTSWANA: WIFE OF FORMER ENERGY MINISTER JEFF RADEBE DENIES MONEY LAUNDERING
On 30th October, iAfrica reported that Bridgette Motsepe-Radebe, the wife of former Energy Minister Jeff Radebe, said she was never involved in money laundering, illicit flows, regime change, supporting the opposition or terrorism in Botswana. She is subject to a travel ban by the Botswana government and she now requires a visa to visit the country.
INJUNCTIONS CAN BE OBTAINED TO ENFORCE AGREEMENTS NOT TO TRADE SHIPS SOLD ONLY FOR DEMOLITION
An article from Ince on 30th October said that the English High Court has recently made it clear that injunctions can be obtained to enforce agreements not to trade vessels sold only for demolition when a buyer ignores the agreement and trades the vessels after the sale. However, recovering damages is more difficult.
ISRAEL’S EMBASSIES AND CONSULATES AROUND THE WORLD ON STRIKE
On 30th October, Capital Financiero reported that the Israeli embassy in Panama, along with many others, closed on 30th October because of a dispute over expenses and wage conditions in the Ministry of Foreign Affairs and the Ministry of Finance.
MONEY LAUNDERING THROUGH ONLINE GAMES
On 22th October, RUSI published an article saying that in-game artefacts and currencies often have real-life value and can be used to move or invest criminal proceeds. But there are no clear expectations of what game operators can or should do to identify criminal activity. It said that online games – especially massive multiplayer online role-playing games – have long been suspected of offering an avenue for moving or otherwise using criminal proceeds, and asked how exactly can online games be used for money laundering, what evidence is there of this happening, and what should be done about this? Online games are not regulated, it says, which means there are no clear expectations of what game operators can or should do to identify criminal activity. For instance, while they could conceivably monitor changes in gaming patterns or IP use to identify accounts surreptitiously transferred from one user to another, whether doing so would be necessary or proportionate is subject to debate – a debate that is not yet happening. So far, governments have confined their examination of in-game transactions to consumer protection and/or gambling issues arising from ‘loot boxes’.
TRADE-BASED MONEY LAUNDERING: IS IT POSSIBLE TO PROMOTE LEGITIMATE COMMERCE WHILE REDUCING ILLICIT TRADE?
On 1st October, RUSI published a Commentary, the first of a series where RUSI researchers take a broad look at efforts to counteract illicit trade and trade-based money laundering. This one says that, despite the formidable challenges of combatting illicit trade and trade-based money laundering, several ongoing initiatives give cause for cautious optimism. The article deals with such things as the risks from free trade zones and geographical targeting orders in the US
TRAFFICKED FROM GUINEA-BISSAU AND FORCED TO BEG IN SENEGAL
On 24th October, ENACT Africa carried an article saying that, under the pretext of free religious education, thousands of children become slaves on Senegal’s streets. It points out that, in both Senegal and Guinea-Bissau, religious leaders are considered religious authorities and are usually very influential. Estimates are that children’s forced begging in Senegal generates $8 million annually. The article says that Senegal and Guinea-Bissau should urgently establish formal bilateral co-operation on the matter, and their respective judiciary police should exchange information. Both governments should provide law enforcement staff and border officials with adequate training in detecting and reporting trafficking; and religious leaders should also be involved in the fight against child trafficking through informing the population through their preaching, either in mosques or on radio.
CAR THEFT IN EAST AFRICA ON THE RISE
On15th October, ENACT Africa published an article about car theft in East Africa, and saying that even Presidents’ are not safe – in Uganda, President Museveni had an official car stolen in 2018 – only 1 of 1,370 stolen in 2018. It also says that East Africa’s car theft syndicates are also expanding their networks to the UK.
UK: NOTIFICATION AND TRANSFERS OF DEACTIVATED FIREARMS HELD IN THE UK AND THEIR TRANSFER
The Firearms Regulations 2019 implement in the UK the requirements of EU Directive amending Council Directive 91/477/EEC on control of the acquisition and possession of weapons. They require the notification to a competent authority in the UK of the holding or transfer of deactivated firearms. They come into force on 12th December.
SFO ARRESTS FORMER DIRECTOR OF ETHICAL INVESTMENT FIRM
Professional Advisor on 31st October reported that the SFO has arrested Global Forestry Investments former director Omari Bowers after he twice failed to attend a court hearing. He was arrested at Gatwick Airport, has been bailed and is set to appear in court on 1st November. In July, he was charged with conspiracy to defraud, forgery and misconduct in the course of winding-up related to alleged frauds concerning Global Forestry Investments between August 2010 and December 2015. This follows Andrew Skeene, another former director of Global Forestry Investments, being charged with the same offences in July.
NOTORIOUS ‘VOODOO’ GANG SPREADS IN SWEDEN
On 31st October, OCCRP published an article saying that Swedish police have said that a violent Nigerian sex and drug trafficking gang, The Black Axe, which allegedly often uses black magic – voodoo – to coerce people into crime, has started spreading throughout the country. The gang is also known for human trafficking and fraud and reportedly lures migrants from West Africa promising them jobs. It is said to have spread to Europe from Nigeria after establishing its network in Italy a few years ago, and the network further grew towards the north of Europe and crossed into Canada.
REPORT: CENTRAL AMERICA IS LOSING $13 BILLION A YEAR TO CORRUPTION
On 31st October, OCCRP reported that widespread corruption slows down development in Central American countries and causes them to lose as much as $13 billion a year, or equal to around 5% of the region’s GDP. The Central America region, especially El Salvador, Guatemala, Honduras and Nicaragua, are said to have very high levels of corruption.
The Anti-Corruption Digest is at –
ENGLISH COURT ORDERS IRELAND-BASED BOOKKEEPER TO DELIVER RECORDS TO LIQUIDATOR – CONFIRMING THAT THE INSOLVENCY ACT OF 1986 APPLIES OUTSIDE OF THE JURISDICTION IN THIS REGARD
On 31st October, an article from Out-Law said that the High Court judgment will assist officeholders in obtaining information outside of the jurisdiction.
VIETNAM SEIZES BICYCLES BOUND FOR US FOR ALLEGED COUNTRY OF ORIGIN VIOLATION
On 31st October, Bicycle Retailer in the US reported that Vietnam customs officials have seized a shipment of 313 bikes that was bound for the US, alleging that the exporter had improperly labelled the bikes as “Made in Vietnam” to avoid US tariffs on Chinese bikes. According to US Customs records, the US imported about 57,000 bikes, excluding e-bikes, from Vietnam in the 12-month period ending in June 2019 – up from about 7,700 units in the prior 12-month period. Separately, it was also reported that Vietnam customs officials had seized $4.3 billion worth of China-made aluminium that it said was falsely labelled as coming from Vietnam, with most destined for the US.
UK: FCA URGES VICTIMS OF ILLEGAL LOAN SCHEME TO COME FORWARD
On 31st October, it was reported that the FCA has urged customers who took out a loan with Mr Dharam Prakash Gopee to contact them as they may be eligible for compensation. He was convicted of illegal money lending offences in February 2018 and sentenced to 3½ years in prison. The FCA began confiscation proceedings in order to recover the financial benefit he obtained from his criminality, and money recovered under the confiscation order can then be used to compensate victims.
DATA PROTECTION LAW IN FORCE IN THE CAYMAN ISLANDS
Harneys reports that the Cayman Islands Data Protection Law came into force on 30th September with the Cayman Islands Office of the Ombudsman the supervisory authority for data protection related matters and responsible for enforcement of the Data Protection Law. It is said that in the initial 6 months of the new regime the main focus will be to assist entities to put in place mechanisms to comply with the law, and during this period monetary penalties will be reserved for the most serious breaches. The firm has produced a Client Alert and Client Guide explaining what a Cayman Islands data controller must do in order to comply with the new regime.
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