OTHER THINGS YOU MAY HAVE MISSED – OCTOBER 25

25th October 2019

ROSNEFT SAYS SWITCHED CONTRACTS TO EUROS FROM DOLLARS AMID US SANCTIONS

On 25th October, Hellenic Shipping News reported that the head of Russia’s largest oil company Rosneft has fully switched the currency of its contracts to euros from US dollars in a move to shield its transactions from US sanctions.  The US has threatened to impose sanctions on Rosneft over its operations in Venezuela.

https://www.hellenicshippingnews.com/rosneft-says-switched-contracts-to-euros-from-dollars-amid-u-s-sanctions/

HONG KONG UPDATES GUIDANCE ON E-BANKING RISK MANAGEMENT

On 25th October, Regulation Asia reported that the HKMA (Hong Kong Monetary Authority) has issued a new supervisory policy manual on “Risk Management of E-banking”, replacing a 2015 version, following consultation with industry associations.  The changes made are said to be for a variety of reasons, including strengthening risk management controls for e-banking amid evolving cyber threats and fraud risks, introducing suitable changes in preparation for the introduction of virtual banking, and clarifying certain existing requirements particularly those relating to new digital banking services.  There is an emphasis on a “risk-based approach” to managing the risks associated with e-banking.

https://www.regulationasia.com/hkma-updates-guidance-on-e-banking-risk-management/

US: 2 BNP PARIBAS ENTITIES FINED $15 MILLION FOR AML PROGRAMME AND SUPERVISORY FAILURES INVOLVING PENNY STOCK DEPOSITS AND RESALES, AND WIRE TRANSFERS

On 24th October, FINRA in the US announced that it has fined BNP Paribas Securities Corporation and BNP Paribas Prime Brokerage Inc $15 million for AML programme and supervisory failures involving penny stock deposits and resales, and wire transfers, that spanned 4 years, 2013-17.  As part of the settlement, FINRA also required BNP to certify within 90 days that its procedures are reasonably designed to achieve compliance in these areas.

http://www.mondovisione.com/media-and-resources/news/finra-fines-bnp-paribas-securities-corp-and-bnp-paribas-prime-brokerage-inc/

REGISTRATION OF ULTIMATE BENEFICIAL OWNERS IN THE BALTIC STATES

On 23rd October, Sorainen, a law firm in the Baltic States and Belarus, published an article outlining the requirements in Estonia, Latvia and Lithuania and saying that following introduction of the 4th EU AML Directive in 2015, the corresponding laws in the 3 states have been amended, implementing a requirement for companies having their registered address in any of the countries to disclose and register their ultimate beneficial owners in commercial registers.  However, the status of the Directive and the procedure for implementing it vary slightly from country to country.

https://www.sorainen.com/publications/registration-of-ultimate-beneficial-owners-in-the-baltics/

BANK OF LITHUANIA ISSUES GUIDELINES FOR REGULATING SECURITY TOKEN OFFERS

Crowdfund Insider on 24th October published an article saying that the bank has issued guidelines intended to “provide greater regulatory clarity and aim at higher investor protection” in the country’s security token offering (STO) market.  The Bank also said that the current focus on security token offerings is taking over the waning interest in initial coin offerings (ICO). Businesses are interested in this particular way of raising capital as an alternative to bank lending; and that the Guidelines on Security Token Offering are aimed at explaining our position in this regard rather than creating new regulatory arrangements.  The guidelines provide “legal qualifications of tokens” and discuss “regulatory implications when tokens qualify as a financial instrument”.

https://www.crowdfundinsider.com/2019/10/153239-bank-of-lithuania-issues-guidelines-for-regulating-stos/

RUSSIA TO TEST ITS ABILITY TO DISCONNECT FROM THE INTERNET

On 24th October, Defense One reported that Russia will test its internal RuNet network to see whether the country can function without the global internet, the Russian government has announced.  The tests will begin after 1st November and will recur at least annually, as the latest move in a series of technical and policy steps intended to allow the Russian government to cut its citizens off from the rest of the world.  It is said that Russia also intends to build its own domain name directory, part of a reaction to what it sees as a strategic vulnerability: reliance on Western IT, the dependence as a nation on imported/foreign hi-tech and the perceived vulnerabilities that Russia sees in such technology use.  The article says that RuNet isn’t expected to improve the online experience for Russian people or companies.  It’s all about control, making the country more technologically independent, and reducing the Putin regime’s vulnerability to popular uprising.

https://www.defenseone.com/technology/2019/10/russia-will-test-its-ability-disconnect-internet/160861

THE MOMENT TO END TURKEY’S OTHER WAR, IN CYPRUS, IS FADING FAST

Pass Blue, which covers stories relating to the UN, published an article on 24th October saying that while hopes had been raised that new talks on unfreezing the Greek/Turkish conflict and division of the island would find momentum after the UN General Assembly opened its annual session in September, Turkey’s invasion in northeast Syria this month and difficulties finding common ground in Cyprus are shuffling the cards.  The last bilateral talks collapsed in 2017 – and negotiations were supposed to occur in September or early October, but no announcement has been made as to when a tripartite meeting involving the UN and Greek and Turkish Cypriots will happen.  Parties involved in the negotiations say they won’t meet before mid-November, at the earliest.  Turkish Cypriots rely heavily on the government for military, economic and political support – Turkey has about 35,000 soldiers stationed in Northern Cyprus, while the UN has 1,100, based at its mission in Nicosia.  In 1974, Turkey invaded the island after a Greek coup, allegedly to protect the community of Turkish Cypriots there, and Turkey’s troops never left.  Another major issue stalling progress in resolving the Cyprus conflict is Turkey’s drilling of natural gas offshore of Cyprus. Turkey has not signed the UN Convention on the Law of the Sea; and it also disagrees with 3 articles of the convention, including one stating that islands, like Cyprus, have maritime jurisdiction.

https://www.passblue.com/2019/10/24/the-moment-to-end-turkeys-other-war-in-cyprus-is-fading-fast

DUTCH-BOSNIAN CARTEL LAUNDERED DRUG MONEY THROUGH ING AND ABN AMRO

On 25th October, the NL Times carried an report saying that Dutch media has said that police suspect a Dutch-Bosnian drug cartel of large-scale money laundering, part of which happened through ING and ABN Amro bank accounts and involving €2.5 million of real estate in Breda.

https://nltimes.nl/2019/10/25/dutch-bosnian-cartel-laundered-drug-money-ing-abn-amro-report

MEDIA FACTSHEET: UK BORDER SECURITY

On 25th October, the Home Office blog published a factsheet outlining border checks and technology, Border Force resources, law enforcement and international collaboration, and “juxtaposed controls” operated in conjunction with France and Belgium for the purposes of the Channel Tunnel services.

https://homeofficemedia.blog.gov.uk/2019/10/25/media-factsheet-border-security/

UK: FAKE LAW FIRM BOSS DISQUALIFIED FOR A SECOND TIME

On 25th October, the Law Society Gazette reported that the director of a bogus law firm which falsely claimed to be registered with the Solicitors Regulation Authority has been banned from running a company for 10 years.  French Fox Ltd represented itself as a law firm, and its director, Tashia Joseph, 39, from London, had previously served a 4-year directorship disqualification.

https://www.lawgazette.co.uk/news/fake-law-firm-boss-disqualified-for-a-second-time/5101926.article

EU ASSESSES CYBER SECURITY AND 5G NETWORKS

A Commentary from RUSI on 25th October said that the EU’s consolidated risk assessment of the cyber security of 5G networks is not just about Huawei.  It highlights wider cyber security risks to 5G networks.  Given the lack of market incentives to address these risks, regulation to safeguard 5G networks is becoming more likely.

The risk assessment is at –

https://europa.eu/rapid/press-release_IP-19-6049_en.htm

https://rusi.org/commentary/eu-assesses-cyber-security-and-5g-networks

POLICE IN NORTHERN IRELAND HAVE DETECTED A “SHARP INCREASE” IN MODERN SLAVERY OVER THE PAST 6 MONTHS

On 25th October, an article from Out-Law said that the PSNI has seen increasing numbers of victims identified and referred to the National Referral Mechanism; with 54 cases since April 2019, compared to 33 cases over the same period last year and 59 cases in total over the 2018-19 financial year.

https://www.pinsentmasons.com/out-law/news/northern-ireland-police-identifying-more-victims-of-modern-slavery

UK: TOBACCO COMPANIES HAVE BEEN ACCUSED OF USING LOOPHOLES TO CIRCUMVENT PLAIN PACKAGING LAWS

On 22nd October, TJI reported a Guardian article which quoted a recent report in the British Medical Journal’s BMJ Open publication, which stated that tobacco companies have found loopholes in the UK’s plain packaging laws, in order to make their brands more recognisable.

http://www.tobaccojournal.com/Tobacco_firms_accused_of_subverting_plain_packaging_laws.55500.0.html

NO COUNTRY IS PREPARED FOR EPIDEMICS OR PANDEMICS

On 24th October, the Nuclear Threat Initiative reported that a joint project by NTI and the Johns Hopkins Center for Health Security, with research by The Economist Intelligence Unit (EIU), the inaugural Global Health Security Index finds severe weaknesses in countries’ abilities to prevent, detect, and respond to significant disease outbreaks.  No country is fully prepared to handle an epidemic or pandemic, according to this first comprehensive assessment and benchmarking of health security and related capabilities across 195 countries.  The GHS Index findings and recommendations for how to address significant gaps in global health security come amid an ongoing Ebola outbreak in the DRC and 5 years after the UN Security Council met in crisis over the Ebola epidemic in West Africa.

https://www.nti.org/newsroom/news/inaugural-global-health-security-index-finds-no-country-prepared-epidemics-or-pandemics/

For a US perspective, see –

https://www.csis.org/analysis/ounce-prevention-worth-pound-cure

IRISH CREDIT UNIONS FINALLY TAKE ON BANKS WITH NEW CURRENT ACCOUNT OFFERING

On 25th October, Fintech Futures reported that 30 of Ireland’s largest credit unions have said they will roll out new “full-service current account[s]” for their members, sparking fresh competition with banks.  Under the collective brand “thecurrentaccount.ie”, the unions announced the new product offering on International Credit Union Day, which is the third Thursday of October.

https://www.fintechfutures.com/2019/10/irish-credit-unions-finally-take-on-banks-with-new-current-account-offering/

FIRST SYRIAN SANCTIONS PROSECUTION IN CANADA

Nader Mohamad Kalai, a Syrian national resident in Canada, has been charged with breach of the country’s Syrian sanctions law for allegedly sending around C$140,000, to property and telecoms company Syrialink.

https://www.europeansanctions.com/2019/10/1st-canadian-syria-sanctions-prosecution/

WILL RAMPANT CORRUPTION SPARK AND “ARAB AUTUMN”?

On 24th October, Transparency International published an article asking this question, and echoing the “Arab Spring” (and false hopes) of several years ago.  It says that mass protests have erupted in Egypt, Iraq and Lebanon.  Over a million have taken to the streets in Lebanon alone, to protest against injustice, often in defiance of violent suppression by the authorities.  Although the protesters’ demands differ between countries – and even within protest movements – a common factor has underpinned much of the outpouring of outrage: corruption and financial mismanagement by governments.  It notes that in the most recent survey of corruption respondents in MENA reported the highest rate of bribery of any region in the world.  It says that there has been a glimmer of hope in Tunisia, but warns that the old guard is still in charge in Algeria.

https://www.transparency.org/news/feature/will_rampant_corruption_spark_an_arab_autumn

US TASK FORCE MAKES PROGRESS IN SUPPLY CHAIN SECURITY

On 17th October, Government CIO Media & Research reported that a Cybersecurity and Infrastructure Security Agency task force aimed at identifying and developing strategies to improve information communications technology supply chain security is emphasising public-private partnerships and international collaboration with allies as key steps to risk management.  The article says that the Information and Communications Technology Supply Chain Risk Management Task Force, comprising 20 federal partners and 40 industry members, highlighted its findings and recommendations in its first interim report released last month, which highlighted 2 key takeaways: information-sharing between federal and industry partners remains a priority, and the global supply chain threat landscape is diverse. And 3 key recommendations for lawmakers to consider in strengthening national ICT supply chain security.  4 working groups within the task force will focus on information-sharing, threat evaluation, qualified bidder and manufacturer lists, and policy recommendations to incentivise the procurement of ICT from authorised resellers and original equipment manufacturers.

https://www.governmentciomedia.com/cisa-task-force-makes-progress-supply-chain-security

BRAZIL PROSECUTORS SEEK $1.32 BILLION IN FINES FROM DOZENS ACCUSED OF CRIMES INVOLVING AN INVESTMENT FUND LINKED TO PROMINENT BUSINESSMAN JOESLEY BATISTA

On 25th October, Reuters reported that a task force of Brazilian public prosecutors said it is seeking to fine over a dozen people $1.3 billion on accusations of fraud, money laundering and corruption involving an investment fund.  Batista, the biggest shareholder in meatpacker JBS SA, is not among the 14 people accused of crimes.  It is said that the Batista brothers have admitted to corruption crimes in exchange for not being prosecuted.  The case involves pension funds and a timber investment and private equity fund.

https://www.reuters.com/article/us-brazil-corruption/brazil-prosecutors-seek-1-32-billion-in-fines-from-dozens-accused-of-crimes-idUSKBN1X420N

NEW ZEALAND: CUSTOM’S SECURE EXPORTS SCHEME (SES) AEO PROGRAMME BEING EXPANDED TO KIWI BUSINESSES WHO USE AIR FREIGHT

On 25th October, Voxy reported that under the SES scheme, New Zealand businesses can see their customs check times fall from around an hour to just 17 seconds on average, but, before now, the express scheme was only available for sea cargo exports.  It is said that exporters who package and transport their goods securely will see quicker cargo clearance, fewer document checks, and fewer inspections from Customs officers in New Zealand and partner agencies in key markets.  SES is the New Zealand version of the Authorised Economic Operator (AEO) programme which exists in a number of countries worldwide, including the UK,

http://www.voxy.co.nz/politics/5/350903

https://www.customs.govt.nz/business/export/secure-exports-scheme/

 

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FinCEN DESIGNATES IRAN AS A JURISDICTION OF PRIMARY MONEY LAUNDERING CONCERN UNDER SECTION 311 OF THE USA PATRIOT ACT, AND IMPOSES NEW RESTRICTIONS TO PROTECT THE US FINANCIAL SYSTEM

On 25th October, FinCEN announced that it had identified Iran as a jurisdiction of primary money laundering concern under section 311 of the USA PATRIOT Act, and issued a new rulemaking to protect the US financial system from malign Iranian financial activities.   New restrictions prohibit the opening or maintaining of a correspondent account in the US for or on behalf of an Iranian financial institution.   The new rule also prohibits foreign financial institutions’ correspondent accounts at covered US financial institutions from processing transactions involving Iranian financial institutions.  FinCEN says it has found evidence that international terrorist groups, including Hizballah and HAMAS, have transacted business in or with Iran and rely on Iranian financial support.  Estimates indicate that the Iranian government has historically provided approximately $700 million of Hizballah’s estimated $1 billion annual budget.  Iran’s support to HAMAS is estimated to be in the tens of millions of dollars per year and as high as $300 million per year.  FinCEN is also said to have found that the Iranian regime continues to engage in deceptive financial practices, such as the use of front companies and shell companies, to facilitate the advancement of its ballistic missile arsenal.   With more than 10 types of ballistic missiles in its inventory or in development, some of which are inherently capable of delivering a nuclear explosive device.

https://home.treasury.gov/news/press-releases/sm804

https://www.fincen.gov/sites/default/files/2019-10/Iran%20311%20Final%20Rule_20191025_508.pdf

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IRAN SANCTIONS: US ANNOUNCES NEW HUMANITARIAN MECHANISM TO INCREASE TRANSPARENCY OF PERMISSIBLE TRADE FOR THE IRANIAN PEOPLE

On 25th October, the US Treasury and State Department made a joint announcement about a mechanism that they say will help the international community perform enhanced due diligence on humanitarian trade to ensure that funds associated with permissible trade in support of the Iranian people are not diverted by the Iranian regime to develop ballistic missiles, support terrorism, or finance other malign activities.  They say that they will establish a process to help ensure that participating governments and financial institutions commit to conducting enhanced due diligence to mitigate the higher risks associated with Iran-related transactions.  It will require foreign governments and financial institutions that choose to participate in the mechanism to conduct enhanced due diligence and provide to Treasury a substantial and unprecedented amount of information, with appropriate disclosure and use restrictions, on a monthly basis.  The mechanism includes a number of safeguards to prevent any sanctionable dealings with persons that have been designated in connection with Iran’s support for terrorism or WMD proliferation.   The mechanism is designed solely for the purpose of commercial exports of agricultural commodities, food, medicine, and medical devices to Iran.  In 2013, OFAC had issued guidance on the sale of food, agricultural commodities, medicine, and medical devices by non-US Persons to Iran.  However, the US government says it has seen the Iranian regime abuse the goodwill of the international community, including by using so-called humanitarian trade to evade sanctions and fund its malign activity.  The new mechanism will enable foreign governments and foreign financial institutions to seek written confirmation from the US Treasury that the proposed financial channel will not be exposed to US sanctions in exchange for foreign governments and financial institutions committing to provide to Treasury robust information on the use of this mechanism on a monthly basis – and if foreign governments or financial institutions detect any potential abuse of this mechanism by Iranian customers, or the involvement of designated individuals or entities, they will be required to immediately restrict any suspicious transactions and provide relevant information to the US Treasury.

https://home.treasury.gov/news/press-releases/sm804

The new guidance is available at –

https://www.treasury.gov/resource-center/sanctions/Programs/Documents/iran_humanitarian_20191025.pdf

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UK: RUSSIA SANCTIONS POST-BREXIT GUIDANCE

HM Treasury’s Office of Financial Sanctions Implementation has published guidance for the financial and investment restrictions in the Russia (Sanctions) (EU Exit) Regulations 2019.  The Regulations impose financial, trade, transport and immigration sanctions to encourage Russia to cease actions which destabilise Ukraine, including actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine – and they would enter into force on ‘exit day’ and thenceforward replace the EU sanctions regime relating to Russia’s actions in the Ukraine.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/842112/OFSI_-_Russia_guidance_-_October_2019.pdf

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MALTA: SALE OF A FERRARI BY THE CRIMINAL ASSET RECOVERY BUREAU (ARB) COULD TURN INTO A COSTLY MISTAKE

The Times of Malta on 21st October reported that the sale of a high-end Ferrari earlier this year by the State’s criminal Asset Recovery Bureau (ARB) could turn into a costly mistake, after the original owner claimed the Attorney General had no right to confiscate and auction off his supercar.  Italian national Davide Sapienza is also holding the Attorney General liable for letting his Ferrari 360 Modena slip away for a fraction of its actual value – it being sold by the ARB for €36,605 in August.  Sapienza was sentenced to 3 years imprisonment by a Rome court, after originally being arrested in Malta in 2013 on drug trafficking charges.

https://timesofmalta.com/articles/view/you-had-no-right-to-sell-my-ferrari.743379

This blog is primarily for my own use, to keep informed and up to date. However, if you would like to say thank you (and perhaps help me get a new, better laptop when I am away…) you can “buy me a coffee” at https://www.buymeacoffee.com/KoIvM842y

TERRORISTS’ GROWING USE OF TELEGRAM FOR CRYPTOCURRENCY FUNDRAISING CAMPAIGNS

In its CryptOsint newsletter on 22nd October, Bellingcat reported that, in August, the Middle East Media Research Institute published a report about terrorists’ growing use of Telegram for cryptocurrency fundraising campaigns and how the launch of Telegram’s own blockchain network could worsen this already growing problem.

https://www.bellingcat.com/resources/events/2019/10/22/sign-up-for-cryptosint-today/

The report, “The Coming Storm – Terrorists Using Cryptocurrency”, published on 21st August, is at –

https://www.memri.org/reports/coming-storm-–-terrorists-using-cryptocurrency

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LONDON METAL EXCHANGE (LME) ANNOUNCES ITS RESPONSIBLE SOURCING REQUIREMENTS

On 25th October, an article on Mondo Visione reported that the LME has announced its responsible sourcing requirements following a formal market-wide consultation on proposals underpinned by the OECD Due Diligence Guidance.  The LME requirements, which will apply to all its listed brands, rest on 4 core principles:

  • the combination of transparency and standards;
  • non-discrimination between large-scale mining (LSM) and artisanal / small-scale mining (ASM);
  • adherence to well-established work in the sector; and
  • a pragmatic and clear process.

While still using the OECD 5-step framework for risk-based due diligence in the mineral supply chain, the LME will now provide 3 “tracks” to achieve compliance:

  • producers (whether or not they exhibit red flags) who wish to follow an industry scheme may adopt an internal or external OECD-aligned standard (“track A”);
  • producers that raise no red flags in their initial assessment may complete a LME RFA standard-form template – which can then either be externally audited (“track B”); or
  • reviewed and then published by the LME (“track C”).

The LME has provided reasonable timelines for compliance, with full engagement required by 2022 and full compliance by 2023.

http://www.mondovisione.com/media-and-resources/news/lme-sets-out-responsible-sourcing-requirements/

https://www.lme.com/en-GB/About/Responsibility/Responsible-sourcing

This blog is primarily for my own use, to keep informed and up to date. However, if you would like to say thank you (and perhaps help me get a new, better laptop when I am away…) you can “buy me a coffee” at https://www.buymeacoffee.com/KoIvM842y