5th November 2019
SOUTH AFRICA: WILL THE FATF EVALUATION RECOGNISE THE JUDICIARY’S CONTRIBUTION TO EFFECTIVENESS?
On 4th September, South African law firm Cliffe Dekker Hofmeyr published an article posing this question. It considered a recent High Court decision that appears to empower commissions of inquiry as powerful tools to uncover wrongdoing, and if the country’s AML/CFT system will be found compliant with the FATF standards – or will the chickens of corruption and state capture come home to roost? After the last evaluation in 2009 South Africa was placed in enhanced follow-up until 2017, when (among other things) deficiencies relating to CDD and record keeping were addressed and FATF decided to remove South Africa from its targeted follow-up process. The article says that South Africa’s risk lies in FATF’s recognition that corruption and money laundering are intrinsically linked. It says that South Africa’s track record over the last decade regarding money laundering and corruption paints a less-than-perfect picture. The Basel AML Index of 2018 and the Transparency International Corruption Perception Index have shown poor results for the country, and the 2019 Rule of Law Index places South Africa in position 47, in the lower half of the world ratings. The article asks if FATF accept new developments as sufficient evidence of South Africa’s effectiveness in its AML/CFT and anti-bribery regime?
UK AND US INTERVENE IN GREEK CORRUPTION TRIAL
An article from BCL Solicitors LLP discusses the intervention by the US DoJ and UK’s SFO in a major corruption trial in Greece in which a client, John Dougall, was acquitted. The individual, Dougall, had been the the SFO’s first co-operating defendant in a major overseas bribery and corruption case – and was being prosecuted in Greece (using SFO-sourced material) for conduct that was part of, or wholly collateral to, his UK conviction. In 2009, Dougall had entered into an agreement with the SFO which required him to plead guilty to conspiracy to corrupt (in Greece), and to co-operate fully with the SFO and any foreign competent judicial authority investigating the affairs of the companies involved. He also met with and provided a detailed account to the DoJ, which granted him a non-prosecution agreement in the US. However, in 2014 a Greek Investigating Judge issued an Indictment charging him with fraud and money laundering based on the same facts as his UK conviction and using material provided by the SFO and UK Central Authority to the Greek authorities by way of Mutual Legal Assistance. In May 2017, Dougall was tried (alongside 19 others) in Greece. The SFO intervened, saying that it had not consented to use of the material supplied (and even sent a representative to appear for the defence). The DoJ also supported the SFO position. In July 2019, over 2 years after the trial began, Dougall was acquitted of fraud – though 13 others were convicted. The article says that the fact that the SFO and DoJ were willing to intervene in the Greek proceedings demonstrates the important public interest in supporting and protecting the position of co-operating defendants.
PHILIPPINES: LAWMAKERS SEEK PROBE INTO SUBSTANDARD STEEL SMUGGLING
On 4th November, MENA FN reported that lawmakers have sought a congressional investigation of the reported smuggling and proliferation of substandard steel products in the local market to determine those behind the anomalies, and after a series of earthquakes damaged some 30,000 buildings in various provinces. There are also claims of alleged collusion between large steelmakers and some corrupt officials and employees of the Department of Trade and Industry (DTI) and the Bureau of Customs.
NEW ZEALAND: AML LEGISLATION COST REAL ESTATE PROFESSION IN EXCESS OF $20 MILLION
On 5th November, Scoop reported that the cost of implementing the AML legislation this year has cost the real estate profession in excess of $20 million according to new research undertaken by the Real Estate Institute of New Zealand (REINZ). From 1st January this year, all real estate agencies became reporting entities.
IMF COMMENTS ON ESTONIA AFTER REVIEW
On 4th November, an IMF Concluding Statement following an Article IV Mission to Estonia included comments on the country’s AML/CFT systems. It says that the process to impose monetary penalties for violations of AML/CFT-related obligations needs to be streamlined, and the maximum penalty increased. Efforts should continue to increase the number of financial institutions that may be covered by inspections each year and to develop risk-based targeted and thematic AML/CFT inspections and/or further increasing resources. The recently-approved Center for Strategic Analysis should be fully and expeditiously operationalised, with strong expertise to produce the risk analysis needed. Estonia should hold internal discussions on enhancing integration/consolidation of AML/CFT supervision at the EU or Nordic-Baltic levels and arrive at a governmental position.
OMAN: CENTRAL BANK TO CLOSE MONEY LAUNDERING LOOPHOLES
The Times of Oman on 4th November reported that the Central Bank of Oman will spearhead efforts to look at any gaps in the Sultanate’s financial system that enables people to launder money. This followed discussions on the National AML/CFT Risk Assessment Report. A meeting confirmed the need to devise a comprehensive national risk management strategy discussing all areas of probable risks, and the strengthening of co-operation between the relevant entities in a way that all sorts of risks and dangers can be effectively mitigated. The Sultanate’s systems is scheduled to be assessed by both FATF and the Middle East and North Africa Financial Action Task Force (MENAFATF).
CANADIAN CRYPTOCURRENCY EXCHANGE SHUTS DOWN AMID MONEY LAUNDERING CHARGES
Cryptopolitan reported on 5th November that the British Columbia Securities Commission (BCSC) has taken action against a Vancouver-based cryptocurrency exchange called Einstein Exchange after receiving complaints about possible money laundering, and its founder, Michael Ongun Gokturk, going missing.
ISLE OF MAN: FREEDOM OF INFORMATION REQUEST FAILS TO UNCOVER TAXPAYER BURDEN IN NEW EARTH FUND LIQUIDATION
International Adviser on 4th November reported that the FSA has declined to disclose details of the costs borne by local taxpayers for the liquidation of companies linked to the Premier Group, which was behind the ill-fated £300 million New Earth Group of funds that collapsed in 2016. The information sought is said to be “exempt from disclosure” under the Financial Services Act 2008.
LATVIA’S CENTRAL BANK CHIEF ACCUSED OF BRIBERY
On 5th November, KYC 360 reported that, in the first corruption trial of a European Central Bank governor, Latvia’s public prosecutor has accused Ilmars Rimsevics, 54, the Latvia central bank head, of accepting the offer of a €500,000 bribe and taking a paid holiday in Russia. Rimsevics sits on the governing council of the ECB.
BELIZE TO BE REMOVED FROM EU TAX HAVEN BLACKLIST
EU Observer on 5th November reported that EU finance ministers are set to remove Belize from the EU blacklist of tax havens. The other 8 jurisdictions are expected to remain on the list: Fiji, Oman, Samoa, Trinidad and Tobago, Vanuatu and the 3 US territories of American Samoa, Guam, and the US Virgin Islands.
ANGOLA: HOW THE WEST IS COMPLICIT IN ENTRENCHING ANGOLA DICTATORSHIP
An opinion piece on All Africa on 4th November claimed that the trend by the West to turn a blind eye to certain human rights abuses in the developing world is playing itself out in Angola where President Joao Lourenco is accused of complicity in corruption and selective application of the rule of law to tighten his grip on power. It argues that, while the international community hail the so-called war against corruption and hold Lourenco in high regard, in reality, a series of events in the past few weeks have again brought into question his government’s sincerity.
THALES TO APPEAL ZUMA ERA CORRUPTION CHARGE RULING IN SOUTH AFRICA’S TOP COURT
Reuters on 5th November reported that French defence company Thales will ask South Africa’s highest court for permission to appeal an October ruling dismissing its request to have charges that it bribed former President Jacob Zuma permanently dropped. It is accused of agreeing to pay Zuma $34,000 annually for protection from an investigation into a $2 billion arms deal in 1999.
PONZI SCHEMER DUBBED ‘KING PERRY’ WHO MASTERMINDED $100 MILLION CON HAS PLEADED GUILTY IN US
On 4th November, the Daily Mail reported that Perry Santillo, 39, pleaded guilty to fraud in Pennsylvania. He had pleaded guilty to related charges last month in Rochestor, New York. Santillo ran the scheme along with conspirators 2008-2018 when he scammed more than $115million from 1,000 investors by coaxing clients to cash in their retirement accounts and invest in sham companies under their control, using the money from newer investors to repay earlier investors.
ARGENTINA’S GAMBLERS FACING NEW LIMITS ON THEIR ABILITY TO WAGER OR PURCHASE CRYPTOCURRENCIES OUTSIDE THE COUNTRY – UNDER NEW EXCHANGE CONTROL RESTRICTIONS
Calvin Ayre on 4th November reported that Argentina’s gamblers who travel outside the country are facing new limits on their ability to wager or purchase cryptocurrencies. The central bank has announced new currency controls aimed at limiting credit, debit or prepaid card use for specific purposes while traveling abroad, and among the activities facing these restrictions are “participation in gambling and betting of different types”. Card issuers etc will require prior approval from the central bank to access the foreign exchange market to make payments abroad, and the central bank has also imposed a new $50 limit on cash advances for Argentinians who are travelling abroad. Also restricted are fund transfers to accounts of payment service providers or international investment managers, and cryptocurrency purchases. The new restrictions are intended to arrest capital flight and preserve the government’s dwindling foreign exchange reserves.
POLICE LINKS TO DRUG TRAFFICKING ENDEMIC IN PARAGUAY
Insight Crime on 4th November reported that nearly 2 dozen police officers in Paraguay are accused of protecting a transnational drug smuggling ring led by an alleged Brazilian trafficker, Levi Adriani Felicio, providing renewed evidence of the profound corruption within the country’s security forces.
FATF: FOLLOW-UP AML/CFT ASSESSMENT REPORTS ON ZIMBABWE AND ETHIOPIA PUBLISHED
On 5th November, FATF published the follow-up reports on 2 countries originally evaluated by the FATF-style regional body, ESAAMLG, which also published these follow-up reports last month. The reports were accepted at the recent FATF Plenary.
UK TRADE WITH IRELAND
In the light of the ongoing Brexit wrangling, this briefing paper from the House of Commons Library may be of interest. provides some key statistics on the UK’s trade with Ireland. In 2018, UK exports to Ireland were worth £35.1 billion; imports from Ireland were £21.6 billion, resulting in a trade surplus of £13.5 billion with Ireland. Ireland was the UK’s 5th largest export market and the 10th largest source of imports.
LOOT BOXES IN VIDEO GAMES
On 5th November, the House of Commons Library published this briefing paper which provides a brief overview of concerns about loot boxes in video games – items in video games that may be bought for real-world money, but which provide players with a randomised reward of uncertain value. The Gambling Commission has said that the Gambling Act 2005 does not cover loot boxes. In recent reports, the Digital, Culture, Media and Sport Committee and the Children’s Commissioner have both called for Regulations to be made to extend the 2005 Act to loot boxes.
UK VAT GROUPS: FROM 1ST NOVEMBER PARTNERSHIPS, SOLE TRADERS AND TRUSTS CAN JOIN A VAT GROUP IF THEY CONTROL THE OTHER CORPORATE BODIES IN THAT GROUP
An article from Accounting Web on 5th November reported that, since 1973, only corporate bodies have been permitted to join a VAT group, such as limited companies or LLP which have a business establishment in the UK. Following a European Court decision in 2015, the position changed on 1st November, with unincorporated businesses now being allowed to join a group in certain cases, including individuals, English and Scottish partnerships and trusts.
HOW TO AVOID GETTING TANGLED IN MTIC/CAROUSEL VAT FRAUD
On 5th November, CRN Channel Web carried an article which seeks to explain how businesses can scrutinise their supply chains to make sure they don’t become a scapegoat in a VAT fraud. The author says that information provided by HMRC, including Form 726 Notices on Joint and Several Liability for unpaid VAT is not sufficient to ensure business owners are adequately equipped to tackle this type of activity or be properly warned of the consequences.
ATM COIN FOUNDERS ORDERED TO PAY $4.25 MILLION FOR FRAUD
On 5th November, in a Commodity Futures Trading Commission-led case, a US court has fined a cryptocurrency investment scheme for fraud and misappropriating client funds. Penalties were levied on Blake Harrison Kantor and Nathan Mullins plus 4 firms including Blue Bit Banc, Blue Bit Analytics, Mercury Cove and G. Thomas Client Services. The CFTC said the defendants further persuaded customers to deposit money in accounts in the island nation of St. Kitts and Nevis, increasing the difficulty of tracking such investments.
UK: TELLING PEOPLE ABOUT YOUR CRIMINAL RECORD
On 5th November, a news release from the MoJ is designed to help you work out what information to give people if they ask about your criminal record, which includes cautions given by the police and convictions given at court.
CHINA BUSTS MAJOR CAMBODIA-BASED GAMBLING RING AND OFFERS TO OFFSET CAMBODIAN GOVERNMENT LOSSES FROM BAN
On 5th November, Calvin Ayre reported that Chinese authorities have disrupted a major illegal online gambling operation based in the Sihanoukville region while promising to provide funds to offset the impact of Cambodia’s online gambling ban. Chinese authorities claim the ring handled wagers worth over $4.3billion from a customer base of around 1.2 million bettors.
MONGOLIA ARRESTS 800 CHINESE IN A MAJOR CYBERCRIME OPERATION
On 5th November, Calvin Ayre reported that authorities in Mongolia’s capital Ulaanbaatar made the arrests in a major cybercrime operation that included illegal gambling, fraud, identity theft and money laundering. The Chinese nationals all reportedly entered the country on 30-day tourist visas.
WIFE OF JAILED MEXICAN GOVERNOR BAILED BY UK COURT
Reuters reported on 5th November that Karime Macias, 43, who is wanted by Mexico on the charge of conspiracy to defraud the Gulf Coast state of Veracruz, was arrested in London last month. A magistrates’ court granted her bail until a decision is made on whether she should be extradited to Mexico.
CHINA AGREES TO ANTI-COUNTERFEIT ACCORD TO PROTECT EU PRODUCT IDENTITIES
On 4th November, Fortune reported that China and the EU will sign an accord to protect products that have a specific geographical origin — such as Champagne or Manchego cheese — in a bid to fight counterfeits. The market for products with EU geographical indications is around €54 billion, according to the European Commission.
OFAC PUBLISHES LICENSING REPORT FOR 3 QUARTERS OF 2018
On 5th November, OFAC announced details of licensing activity relating to licence applications requesting authorisation to export agricultural commodities, medicine, and medical devices to Iran and Sudan. The period covered is January-September 2018.
All such OFAC reports are available at –
LICENSING GUIDELINES FOR EXPORTS OF AGRICULTURAL COMMODITIES, MEDICINE, AND MEDICAL DEVICES TO IRAN AND SYRIA
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