20 November 2019
SEC: MOST WHISTLEBLOWERS HAD FAILED TO GET EMPLOYER TO REACT BEFORE REPORTING TO SEC
On 20th November, in an item on the annual SEC report on whistleblowers, it is noted that Nearly 70% of those receiving awards from the SEC were current or former employees at the companies at issue in their tips when they came forward to the SEC. It is also reported that of these, about 85% raised their concerns about misconduct internally — to supervisors, compliance personnel or internal reporting mechanisms — or understood other personnel to be aware of violations before reporting information about wrongdoing to the SEC. One commentator is quoted as saying that this suggests that corporate compliance programmes are not effectively addressing internal disclosures about securities law violations. Meanwhile, Reuters reported on 15th November that the SEC is considering revising the rewards programme which allows the SEC to reward tipsters whose original information leads to a penalty exceeding $1 million with between 10% and 30% of the fine – with a warning that any reworking could weaken the effect of the whistleblower arrangements.
AUSTRALIA: WESTPAC HIT WITH CHILD EXPLOITATION, MONEY LAUNDERING CLAIMS
On 19th November, Yahoo Finance reported that AUSTRAC has applied for civil penalty orders against Westpac bank over 23 million instances of money laundering failures resulting in “serious and systemic non-compliance”. It says that around 19.5 million international fund transfers amounting to $11 billion were not reported to the regulator. AUSTRAC also alleges Westpac also failed to carry out due diligence on transactions to the Philippines and SE Asia with recognised child exploitation indicators.
GERMAN POLICE RAID SUSPECTED HAWALA BANKING RING
On 19th November, Deutsche Welle reported that authorities watched the suspected illegal banking operation for a year before the raid of suspects accused of running an illegal hawala banking system between Germany and Turkey. Police searched about 60 apartments and offices and say 27 people are suspected of being involved in the scheme; with 6 arrest warrants issued. Hawala activities are illegal under Germany’s Payment Services Oversight Act (ZAG), which specifies that it is forbidden to offer services similar to those of a bank without a banking license. Activities that break the ZAG law carry up to 5 years in prison.
SWEDISH BANK SEB SAYS IT ENDED BUSINESS WITH MOST OF THE 194 CLIENTS NAMED IN REPORT
On 20th November, KYC 360 reported that SEB said it’s terminated business with the vast majority of customers identified by Swedish public broadcaster SVT in an investigative piece on money laundering. About 95% of the accounts have already been terminated while the remaining clients meet the bank’s screening criteria, SEB said.
US INVESTIGATING IF SWEDBANK BREACHED SANCTIONS AGAINST RUSSIA
On 20th November, Yahoo Finance reported that SVT TV in Sweden reported that US authorities are investigating whether Swedbank AB’s Baltic unit allowed money transfers that violated US sanctions against Russia. It was claimed that the programme had uncovered transactions between sanctioned Russian weapons maker Kalashnikov JSC and Kalashnikov USA, a company based in Florida that produces guns based on its namesake’s designs. Swedbank said it was not aware of the allegations but was investigating.
SLOVAK AUTHORITIES SEIZE 700 KG OF SMUGGLED AMBER FROM UKRAINE
On 19th November, Rferl reported that Slovak authorities have detained 4 Ukrainians who allegedly smuggled more than $722,000 worth of raw amber into the country in the trunks of 3 vehicles with Ukrainian licence plates. Importing amber into Slovakia is legal but it must be declared with the customs office. The report says that about 90% of the fossilised tree resin in Ukraine is extracted illegally using crude techniques that devastate the forest and cause environmental damage, and the illicit trade in amber is lucrative.
LIBERIA DOWNGRADED BY GIABA, THE FATF-STYLE REGIONAL BODY
On 20th November, Front Page Africa reported that Liberia has been downgraded by the Inter-Governmental Action Group against Money Laundering and Terrorist Financing in West Africa (GIABA), meaning that it will report every 6 months, instead of the usual 12 months, on progress made in meeting international AML/CFT standards and requirements. The move is said to come after the departure of Alexander Cuffy, who was the executive director of the FIU until September.
MAN SERVING 24 YEARS IN A NIGERIAN MAXIMUM-SECURITY PRISON USED A NETWORK OF ACCOMPLICES TO CONDUCT AN INTERNATIONAL SCAM THAT BROUGHT IN $1 MILLION
CNN on 20th November reported that Hope Olusegun Aroke was convicted of fraud 4 years ago and was held at a maximum-security prison in Lagos. Not only did he manage to continue to run an internet scam from prison, he was also taken to the hospital for an undisclosed illness and instead of returning to prison, he ended up in hotels, where he would meet his wife and children, and attend social functions. It is said that had access to internet and mobile phone in the correctional centre where he is supposed to be serving his jail term.
FRENCH DATA PROTECTION AGENCY ISSUES GUIDANCE ON USE OF FACIAL RECOGNITION
In his blog on 19th November, Kenneth Rijock reported that France’s National Commission on Computing & Liberties (CNIL) has issued guidance on the appropriate use of biometric facial recognition software technology.
The guidance (in French) is at –
PUSH PAYMENT FRAUD SUPREME COURT DECISION
On 18th November, Forum Chambers produced a briefing about a recent UK Supreme Court case, Singularis Holdings Ltd (in liquidation) v Daiwa Capital Markets Europe Ltd. This, it says, places the over 25-year-old Quincecare duty of care principle on a firm legal footing, and that henceforth it is clear that banks owe a duty to take reasonable care to protect their customers from losses caused by payments which the bank ought to have realised were fraudulent. This duty plainly applies where the fraud was committed by an officer or employee of the company, but the rationale of the Supreme Court’s decision opens the door for the duty to be invoked in the increasingly common scenario of authorised push payment fraud.
WORLD TOILET DAY: HGV DRIVERS DEPRIVED OF HUMAN RIGHT TO SANITATION
On World Toilet Day on 19th November, the Freight Transport Association says that many of the UK’s HGV drivers are deprived of the UN Human Right to sanitation due to the lack of toilet facilities on the national road network, according to FTA, renewing its calls for government to prioritise the provision of sufficient welfare facilities for professional drivers across the UK.
WEST AFRICAN NATIONS ARE FAILING TO CO-ORDINATE THEIR RESPONSE TO PIRACY, SAYS TOGO
Insurance Marine News on 20th November carried an article saying that, according to Togolese President Faure Gnassingbe, West African states were failing to co-ordinate their response to piracy, and this was the main reasons that the attacks were continuing. The Gulf of Guinea now accounts for more than 80% of crew kidnappings globally, but Togo has a coastline of only 30 miles and its forces typically pursue pirates only in their own waters – and they then need to hand over to a neighbouring state.
DoJ CHARGES SWEDISH CITIZEN WITH SECURITIES FRAUD AND MONEY LAUNDERING
On 19th November, Cadwalader reported that the DoJ had charged Roger Nils-Jonas Karlsson, a Swedish citizen, and his company with committing securities fraud, wire fraud and money laundering by allegedly operating a securities business through several website platforms used to make false representations about the businesses’ primary investment product: “Pre-Funded Reversed Pension Plans”. He was extradited from Thailand to stand trial in the US.
PODCAST: THE GDPR v ANTI-BRIBERY DUE DILIGENCE
In the latest TRACE podcast, Paul Lavery of McCann FitzGerald in Dublin discusses the conflict between the GDPR’s emphasis on privacy and the requirement under anti-bribery laws that companies undertake reputational due diligence on their business partners. There is a direct and as yet unreconciled conflict between privacy and transparency.
DISRUPTION OF ORGANISED CRIME GROUP IN EUROPE SELLING WORTHLESS STOCKS
A news release from Eurojust on 20th November announced that an organised crime group involved in investment fraud and market manipulation has been dismantled. An estimated 400 victims were defrauded of approximately €16 million. More than 100 simultaneous searches were carried out in Germany, Austria, Greece, Switzerland and Liechtenstein, and 4 arrest warrants were executed. The German-led investigation was into a group that ran call centres and contacted potential victims, offering them shares in worthless stocks.
10 ARRESTED OVER £15 MILLION IN CASH FLOWN OUT OF THE UK IN 3-YEAR MONEY LAUNDERING CONSPIRACY
A news release from the NCA on 20th November announced that 10 suspected members of an organised crime group have been arrested on suspicion of flying an estimated £15.5 million out of the UK to Dubai hidden in suitcases. National Crime Agency officers believe also tried to smuggle 17 migrants into the country this summer. The suspects are alleged to have been part of a well-orchestrated conspiracy to launder millions of pounds of money made through Class A drugs and organised immigration crime. NCA officers also recovered a quantity of cash, illegal drugs and luxury cars, including Range Rovers, Audi Q7s and BMW 5 series.
2 SPANISH POLITICIANS GUILTY IN $752 MILLION FRAUD
On 20th November, OCCRP reported that 2 former Spanish politicians have been found guilty of misusing public funds and barred from running for office for their roles in a decades-long $752 million fraud known as the ERE case. Manuel Chaves, is a former member of the Spanish Socialist Workers’ Party, PSOE. Jose Antonio Gruinan succeeded him in 2009. Both were arrested in 2013. ERE is an acronym in Spanish for a workforce dismissal plan and the politicians’ administrations were supposed to oversee the expenditure of $752 million on helping unemployed people and struggling companies.
MOLDOVA’S NATIONAL ANTI-CORRUPTION CENTRE DETAINS HEAD OF FORENSIC MEDICINE CENTRE
On 20th November, Modpres reported that the detention is said to be linked to alleged faked expertise, black accounts and corruption at the institution. Prosecutors will ask the law courts to preventively arrest 6 forensic physicians out of 10 detained earlier, with the other 4 co-operating with the inquiry and are to be prosecuted at large.
DUBLIN CRIMINAL FACES €738,000 TAX BILL AFTER LOSING APPEAL AGAINST CAB
On 20th November, RTE reported that Martin Foley, 66, who is known as “the Viper”, has lost an appeal against the Criminal Assets Bureau demanding tax and interest payments of almost €750,000. Foley had claimed he had been “taken by surprise” by the proceedings and was prejudiced because of an “inordinate and inexcusable delay”.
MASSIVE DRUG LAB BUSTED IN RUSSIA
On 20th November, OCCRP reported that Russian authorities seized more than 100 kg of narcotics, over 600 kg of chemicals that could be used to manufacture illegal drugs, along with a lot of other drug paraphernalia from drug traffickers. The illegal production took place on a former farm located about 2 hours south of Moscow. Authorities said the organisation’s drug sales were carried out via an online store.
WORLD BANK DEBARS STATE-OWNED CHINESE ENGINEERING COMPANY
On 20th November, the FCPA Blog reported that Jiangxi Geo-Engineering (Group) Corporation (aka Jiangxi GE) – and its 14 wholly-owned subsidiaries – is ineligible to participate in World Bank-financed projects during a 15-month debarment, after an alleged involved fraud in a project in China.
UK ‘FREEZE AND SEIZE’ POWERS (ACCOUNT FREEZING AND FORFEITURE ORDERS) UPHELD IN MOLDOVAN MONEY LAUNDERING CASE
On 20th November, a post on the FCPA Blog reported that these lesser known provisions were introduced alongside Unexplained Wealth Orders in the same Criminal Finances Act 2017. A court has dismissed the first-ever appeal against an Account Forfeiture Order brought by the son of former Moldovan Prime Minister, Vlad Luca Filat. The post explains why the orders are so attractive to law enforcement, and compares them to Unexplained Wealth Orders.
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