3rd November 2019
HUNDREDS OF MILLIONS OF DOLLARS SHIPPED FROM RUSSIA TO VENEZUELA TO SIDESTEP US SANCTIONS
Market Insider on 2nd November carried a Bloomberg report claiming that that $315 million worth of cash in the form of US dollars and euros, were shipped from Russia in 2018-19, and that the cash allows Venezuela to buy back its money from oversees or get dividends from “a stake in a Moscow-based bank or revenue from sales of crude or gold”.
THE BUYERS, SELLERS AND THE DEMAND FOR LUXURY CARS IN CHINA FUELLING THE UNDERGROUND EXPORT MARKET IN VANCOUVER
The South China Morning Post on 3rd November carried an article about a scheme whereby residents in Vancouver’s suburbs are paid a few thousand dollars to buy BMW and Porsches and deliver them to resellers, who send the cars to China, where they sell for far higher prices. The trade is not illegal, but it does raise a host of red flags about the risk of money laundering and lost tax revenue for the Canadian government. The luxury car grey market is said to expose another loophole in British Columbia’s patchy regulatory regime, which has already left the province’s casino and real estate sectors wide open to dirty money. From 2014, Vancouver began to be known as the “luxury car capital of Canada”, with luxury car sales in British Columbia 41% higher than the Canadian average. In 2013, fewer than 100 grey market cars were exported outside the province, but by 2014, that had risen to over 700, and by 2018, exports numbered 4,400. Resellers who export cars out of the province can even apply to get their sales tax back – for example, in 2013, the province refunded C$400,000 in sales tax; but by 2018 this had risen to C$28 million, and the Ministry of Finance had to hire more staff just to handle the workload.
POLISH POLICE ARREST HEAD OF PAYMENT PROCESSOR TIED TO BITFINEX CRYPTO EXCHANGE
On 25th October, Coindesk reported that Polish police have arrested Ivan Manuel Molina Lee, president of Crypto Capital, on accusations of money laundering. Polish authorities claim that he is wanted in Poland for laundering up to about $390 million “from illegal sources,” according to a Polish report, allegedly “laundering dirty money for Columbian drug cartels using a cryptocurrency exchange”.
IRELAND: HORSE SEIZED BY CAB TO LINE UP IN €60,000 PUNCHESTOWN RACE
The Irish Independent reported on 3rd November that a racehorse called Labaik, seized from John Boylan, is scheduled to race, with the bulk of any winnings then going to the taxman. Labaik shocked the racing world when he won the Supreme Novice’s Hurdle at Cheltenham in March 2017 at odds of 25/1. The horse’s passport was seized by Criminal Assets Bureau officers the following month, which meant the horse couldn’t travel. In October, the High Court ruled that 90% of the Cheltenham-winning horse was bought with the proceeds of crime.
PRINCE CHARLES HIT BY COUNTERFEIT ART SCANDAL AS HE SENDS BACK £50 MILLION ‘FAKE’ MONET
The Daily Mirror on 3rd November reported that an American forger says he, and not Monet, painted the image of waterlilies that hung at Dumfries House, the headquarters of The Prince’s Foundation, with 2 other artworks there – a £42 million Picasso and a £12 million Dali – also allegedly counterfeit. These are among 17 paintings on loan to the house from bankrupt businessman James Stunt, the former husband of Formula 1 heiress, Petra Ecclestone.
SANCTIONS AND PROTESTS IN ZIMBABWE: A CLOSER LOOK
On 2nd November, Global Risk Intelligence published an article about protests about US and EU sanctions and speculating if the demonstrations were intended to deflect blame for the country’s economic troubles away from the government. As part of a campaign to lift the sanctions, President Mnangagwa declared October 25th a public holiday and called on supporters to denounce sanctions imposed by the US and EU. Supporters were bussed into Harare, offered food and beverages for their support, and provided with entertainment that included a concert and football match. However, on the same day, the US imposed an entry ban on Zimbabwe’s State Security Minister, Owen Ncube, citing his involvement in human rights violations. The article mentions that the IMF says that inflation reached nearly 300% in August 2019 – the highest in the world at that time, and in July 2019, Zimbabwe’s Finance Minister banned the publication of annual inflation numbers. However, sanctions from the US and EU do not target Zimbabwe as a whole, but rather specific individuals and entities within or linked to the government, including OFAC targeting the President.
TRANSATLANTIC TRADE SENSITIVITIES COME TO THE FORE WITH REGULATORY DIVERGENCE ON PESTICIDES
On 1st November, an article from Kelley Drye reported on the differences between the US and EU control of pesticides. For example, more than a quarter of pesticides used by US farmers are banned in the EU. Atrazine, the most widely used herbicide in the US was banned in the EU in 2003 due to concerns that it is a groundwater contaminant. In April 2018, based on potential health risks to bees, the 3 main neonicotinoid pesticides – clothianidin, imidacloprid and thiamethoxam – which are used to treat about 90% of the corn planted in the US also were barred in the EU for all outdoor usage. The EU moreover is planning new bans on pesticides that hold authorisations in the US based on potential harm to humans and bees. In a submission to the WTO Council for Trade in Goods on in July, the US and 14 other countries called on the EU to re-evaluate its approach to product approvals which “unnecessarily and inappropriately” restrict trade and to “use internationally accepted methods” of setting pesticide residue tolerances. The EU is said to be currently is undertaking a fitness check of regulations relating to pesticides approval and maximum allowed levels for pesticide residues which could lead to new or updated legislation, and it is expected that this will reaffirm the EU’s commitment to the precautionary principle.
VENEZUELA’S BUSINESS ELITE FACE SCRUTINY IN $1.2 BILLION MONEY LAUNDERING CASE
On 3rd November, the Miami Herald carried an article about what it says is a politically-connected class of businessmen with financial ties to Miami has grown fabulously wealthy from energy deals with the socialist government in Venezuela. The article puts in the spotlight, Alejandro Betancourt who, without any experience in the energy industry, co-founded a power company called Derwick Associates a decade ago that has reaped billions of dollars in government contracts for a string of new plants in Venezuela. Now, in Miami, the newspaper alleges that he is the unnamed “Conspirator 2” who has surfaced in a massive money laundering case that charges his cousin and several of the so-called Boliburgueses — young, well-educated entrepreneurs close to the Venezuelan regime — with conspiring to bribe government officials to approve a loan scheme to embezzle $1.2 billion from PDVSA. The article details the allegations made in the indictment. It also says that Martin Krull, the German-born son of a Lutheran pastor who was raised in Venezuela and educated in Switzerland, was based in Panama as a banker for the Swiss bank Julius Baer before his arrest in 2018 (and subsequent 10-year sentence) has , according to court records, helped investigators understand the complex web of relationships between the defendants and other suspects in the huge money laundering case.
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