18 December 2019
Cayman Islands: adoption of resolutions to appoint or dismiss directors by companies whose shares and assets are frozen is not prohibited by the UN Libya sanctions regime
A post on the EU Sanctions blog on 18 December reports on a decision of the Cayman Island Court of Appeal in the Palladyne case, in which the court held that what was involved did not allow access to or make a change that “would enable use” of the companies’ assets.
The Global Footprints of ‘Putin’s Chef’ Yevgeny Prigozhin
On 18 December, KYC 360 reported on a OCCRP inquiry into this Russian’s activities – being a Russian businessman and close associate of President Vladimir Putin. It is said that an investigation tracked the registration details and movements of business jets linked to Prigozhin. They reveal significant Russian involvement and activity in Africa, and a mysterious trail of previously undisclosed European companies linked to Prigozhin. It notes that OFAC targeted 3 of Prigozhin’s jets, a yacht called St. Vitamin, and front companies he used to manage them. He is also believed to be behind the Wagner Group, a shadowy mercenary organisation suspected of fighting on behalf of the Russian government in Syria and eastern Ukraine, and maintaining a strong presence in Africa.
MALTA MEDIA REVEALS UNPUBLISHED REPORT THAT RECOMMENDED POLICE INVESTIGATIONS INTO “PANAMA PAPERS” CLAIMS
On 18 December, KYC 360 referred one to a Times of Malta report saying that a 1,500-page and unpublished report had ordered the police to investigate Nexia BT partner Karl Cini for perjury, Egrant whistleblower Maria Efimova for calumny and Pilatus Bank’s operations for money laundering. It also ordered an investigation into who falsified and distributed documents linking the Prime Minister’s wife Michelle to Egrant.
Angola recovers more than $5 billion in stolen assets
On 18 December, KYC 360 reported that the justice minister has said the country has so far this year recovered more than $5 billion stolen from state funds, both at home and abroad, but did not give specific details about how the money was stolen, but including $3 billion stolen from the sovereign wealth fund. The anti-corruption drive accelerated since 2017, when the nearly 40-year grip on power by Jose Eduardo dos Santos was ended.
Canada: lawsuit seeking to seize a property allegedly linked to a $200-million-plus international stock fraud
On 18 December, KYC 360 reported that a $2.4-million property off the east coast of Vancouver Island, has been added to two properties that the B.C. Civil Forfeiture Office is already pursuing in the area, alleging that the property is the proceeds of crime and was used to launder money. The action is said to be linked to a US$165 million pump-and-dump stock fraud that used shell companies to hide the true and beneficial owners of shares.
UK Sanctions post-Brexit – avoid traps for the unwary
On 17 December, Allen & Overy published an article saying that a new UK sanctions regime in a hard Brexit scenario is expected to broadly mirror that which is in place in the EU. However, there will be some key differences. Businesses should be alert to these differences in order not to breach any post-Brexit new UK sanctions or existing EU sanctions. There are, it warns, some real potential traps for the unwary. Notably, EU Russian sectoral sanctions may catch any UK businesses partially owned by certain Russian entities – at present these sanctions only apply to businesses outside the EU, but the UK will be outside the EU in the event of a “hard” Brexit. Furthermore, the new UK and existing EU sanctions licencing regime may not dovetail completely, creating potential stumbling blocks.
Important amendments to the Law on the Prevention of Money Laundering and Terrorist Financing
On 17 December, Motieka & Audzevicius published an article about a new AML/CFT law that was approved in November. It will transpose the provisions of the 5th EU AML Directive into the national law. The article provides tips on things businesses need to do before the new law comes into effect. One element is use of the Information System of Participants of Legal Entities (JADIS).
Switzerland: Abolition of Bearer Shares and Clarifications on Beneficial Owners’ Notification
On 9 December, an article from Loyens & Loeff said that some significant changes came into effect on 1 November. These include that, in principal, private Swiss companies are no longer allowed to issue bearer shares and all existing bearer shares must be converted into registered shares until 1 May 2021; and that bearer shareholders that have not complied with their disclosure duties will not be able to exert their shareholder rights.
US STATE DEPARTMENT ISSUES ADVISORY ON SECONDARY SANCTIONS ON THE IRAN METALS INDUSTRY
On 16 December, an Advisory intended to alert persons globally to the sanctions risks for parties involved in transfers or exports to Iran of graphite electrodes and needle coke, which are essential materials for Iran’s steel industry. It says that the US Government is taking strong action to deny Iran revenue derived from Iran’s steel sector, since such funds may be used to advance the Iranian regime’s malign behaviour, including its proliferation programs, campaigns of regional aggression, and support for terrorist groups. It says that transfers or exports to Iran of graphite electrodes or needle coke create significant sanctions risk for entities and individuals, including but not limited to producers and exporters of graphite electrodes and needle coke, port operators, shippers, shipping companies, and vessel operators and owners. Sanctions risks may be present even if the intended end-user is not in Iran’s steel sector. It explains that graphite electrodes are mainly used in electric steelmaking, due to their high levels of electrical conductivity and ability to withstand high temperatures; and that needle coke is needle-shaped carbon material characterised by low electrical resistance and strong shock resistance, and is the main input used to create graphite electrodes.
Assessing strategies for countering illegal trafficking of pangolins in Africa
On 6 November, ENACT Africa carried an article saying that pangolins – also known as scaly anteaters – are among the most trafficked wildlife species in Africa and are considered the most trafficked mammal globally. The huge demand for their scales and meat, largely from SE Asia, has created a lucrative illicit market run by transnational criminal syndicates. The article introduces a policy brief which identifies the gaps in existing policies and strategies, and offers evidence-based policy recommendations for the protection of pangolins and to stem illicit trade in Africa.
Finland: S-Bank fined nearly €1 million over lax monitoring of money laundering
On 18 December, Reuters and others reported that the Finnish Financial Supervisory Authority (also known as FIN-FSA or Fiva) has fined S-Bank €980,000 over negligence in its customer oversight and its KYC procedures, saying that the bank’s “risk-based approach has not been sufficiently comprehensive to meet the requirements of the Act on Detecting and Preventing Money Laundering and Terrorist Financing nor had it obtained adequate customer due diligence data”. S-Bank has Finland’s largest number of customers.
OFAC REMOVES 5 LATVIAN ENTITIES FROM SANCTIONS LIST AND ISSUES AN AMENDED GENERAL LICENSE
On 18 December, OFAC removed from its Global Magnitsky (human rights and corruption) sanctions lists 5 Latvian entities linked to Aivars Lembergs, and which were only recently added to the lists. The entities are connected to Ventspils Freeport. On a related matter, OFAC also issued General License 1A “Authorizing Certain Activities Necessary to the Wind Down of Transactions Involving Ventspils Attistibas Agentura, Biznesa Attistibas Asociacija, and Latvijas Tranzita Biznesa Asociacija”.
US: 11 defendants arraigned in drug-trafficking ring involving UPS employees
On 17 December, a news release from US Immigration and Customs Enforcement announced that a State Grand Jury had indicted 11 individuals accused of shipping illegal drugs and contraband across the country through the United Parcel Service (UPS); collectively the defendants face 48 felony counts, including money laundering, transportation of marijuana for sale, transportation of narcotic drugs for sale, misconduct involving weapons, and illegally conducting an enterprise. It is said that the investigation began in 2017 when law enforcement discovered that UPS employees in the Tucson area were allegedly using the UPS distribution network to ship illegal drugs and other contraband.
Podcast: Key Takeaways from 2019
In the latest TRACE podcast, Bill Steinman, senior partner at boutique compliance firm Steinman & Rodgers, walks us through some continuing trends–and a few surprises–from 2019 involving financial crime and corruption.
US SENATE APPROVES POTENTIAL NORD STREAM 2 SANCTIONS ACT
The EU Sanctions blog on 18 December reported that the US Senate has approved an Act which provides for targeted sanctions on Nord Stream 2, an oil pipeline currently being constructed from Russia to Germany. It still requires signing by President Trump to become law. Anyone designated could become subject to a travel ban and asset freeze, with the Act allowing for 30 days for those targeted to wind down operations.
Beijing’s Friends in Canada
This new white paper from TRACE addresses business and cultural ties between China and Canada through a case study about wealthy and powerful Chinese who enjoy connections to Canada through real estate, business, investment and politics. Those profiled include Huawei CFO Meng Wanzhou; a real estate tycoon with ties to Prime Minister Justin Trudeau; and a Chinese national who unsuccessfully ran for mayor of a town in British Columbia in 2018.
US DoJ “New, Unprecedented Use” of the Foreign Agents Registration Act
On 18 December, Lawfare carried a post saying that the DoJ is using a once-obscure law, most commonly used today to require the registration of those who lobby in the US on behalf of foreign governments, to target foreign-based anonymous disinformation actors on social media. What is the significance of this unprecedented move, and what can be done to develop a sustainable enforcement regime for these anonymous online actors? The law was enacted in 1938, in the midst of the first House Un-American Activities Committee’s investigation into the effects of Nazi propaganda efforts on US soil. In the past few years, when FARA once again began making headlines, after Special Counsel Robert Mueller charged President Trump’s former campaign chairman, Paul Manafort, and his deputy, Richard Gates, with violating FARA for acting as agents of the Ukrainian government without filing the appropriate paperwork with the DoJ. The article argues that the DoJ has also begun to employ FARA in an entirely new context, a move that has so far failed to attract significant attention or analysis.
Canada’s Attorney General Blocks Disclosure of Evidence in National Security Case
An article from Lawfare on 17 December said that for the first time the federal government has ever issued a security certificate, a legal mechanism that allows the attorney general to block the disclosure of information if disclosure would harm Canada’s national security interests. The case involved “conspiracy to provide Canadian military secrets” to the Chinese government.
CFATF Report of Regional Money Laundering and Terrorist Financing Cases
The FATF-style regional body, the Caribbean Financial Action Task Force (CFATF), recently released a report containing a compilation of cases based on regional money laundering and terrorist financing investigations and prosecutions. The report categorises these cases, some of which show money flows across corridors, using myriad legitimate facilities. It consists of 13 sanitised cases received from 7 CFATF member countries, 2 of which show clear elements related to terrorist financing. The cases, as compiled, enables the CFATF Risk Trends and Methods Group to have an updated categorised list of regional ML/TF activities from which future projects may be selected.
ENGLISH LAW SOCIETY WARNS OF ADVENT OF FIFTH MONEY LAUNDERING DIRECTIVE
On 18 December, a news release from the Law Society for England & Wales saying that law firms should be aware there will be a narrow window in which to review and adjust to changes to the AML regulations expected in January. It looks at the expected changes firms should be preparing for ahead of the transposition deadline of 10 January. The Legal Sector Affinity Group, of which the Society is a member, will publish interim guidance as soon as possible once the text of the legislative changes is confirmed.
US extractive industries disclosure rule comes back to life
A blog post on the FCPA Blog on 18 December said that the SEC has voted to propose another version of its rule to require resource extraction issuers to disclose payments to foreign governments for the commercial development of oil, natural gas, or minerals. Such a rule was proposed in 2012, but blocked in 2013. However, the relevant Act continues to require the SEC to adopt a disclosure rule for extractive industries, and it has said that its third version of the rule satisfies the directive in the Act.
US Seeks to Squeeze Shipping and Metals in New Iran Sanctions Bid
On 18 December, Hellenic Shipping News reported that the Trump administration plans to strengthen enforcement of Iran sanctions now that it’s driven oil exports down to unprecedented lows, with a plan to increase pressure on global shippers, Chinese state-owned enterprises and exporters of raw materials used in metal production. This is said to mark the next phase of Trump’s bid to squeeze Iran’s economy so hard that the government has no choice but to negotiate new limits on its nuclear and ballistic-missile programmes.
Interpol coordinates second worldwide operation targeting severe criminal maritime pollution
On 18 December, Illicit Trade reported that Interpol and Europol have led a major global crackdown on the perpetrators of serious marine pollution crime in a month-long operation “30 Days at Sea 2.0”, involving law enforcement agencies from 61 countries, identified hundreds of violations and exposed serious cases of contamination worldwide, including the illegal discharge of harmful material and waste at sea, in rivers and around coastal areas. During October, the 200 enforcement agencies that took part in the effort identified over 3,000 offences during 17,000 inspections. Examples cited included intelligence shared between Malaysia and Holland which resulted in investigators being able to identify the source country of seven containers of plastic waste being illegally shipped into Malaysia from Belgium via Hong Kong, and to initiate their repatriation.
Ukraine Lifts Prosecutorial Immunity For Members Of Parliament
In its 19 December, Rferl reported that Ukraine’s national legislature has passed a Bill in its final reading that cancels prosecutorial immunity for lawmakers. It is said that the Bill essentially simplifies the procedure for prosecuting corrupt lawmakers allowing law enforcement to bypass parliament when requesting permission to detain or arrest them. It also contains a disputed rule that gives the prosecutor-general the sole power to initiate criminal proceedings against members of parliament. If the president signs the Bill, it will go into effect on January 1.
Greece: Criminal justice system inadequate to counter corruption
On 18 December, a news release from the Council of Europe’s Group of States against Corruption (GRECO) said that GRECO had published a report concluding that the Greek government has to some extent re-introduced more appropriate sanctions in this respect, with the reintroduction, to some extent, of stronger criminal legislation in respect of bribery offences as of 18 November.
Malta: investigation risks being compromised while Prime Minister is in office
A news release from the EU on 18 December said that, following the passing of a Resolution by the Parliament, MEPs are concerned about the credibility of investigations into the murder of journalist Daphne Caruana Galizia and the lack of progress on related accusations. The Resolution points to the allegations of corruption and money laundering against the Maltese Prime Minister, and in particular his Chief of Staff and the former Minister for Tourism, other government members and private companies and individuals connected to them, regretting that parallel investigations “have not advanced or have not even been launched”.
FATF CONSOLIDATED AML/CFT ASSESSMENT RATINGS
On 18 December, following the latest mutual evaluation reports on Russia and Turkey, FATF issued an updated consolidated schedule of all AML/CFT assessment markings.
19-YEAR-OLD NEW YORK MAN MADE $1 MILLION IN SIM-SWAPPING CRYPTOCURRENCY SCAM
On 18 December, the Daily Mail reported that Yousef Selassie stole the identities of at least 75 people in the scam where he ‘circumvented two-factor authentication security measures to access the victims’ online accounts’, by requesting that recovery codes be texted to the associated phone numbers which he now controlled’. Selassie then accessed the victims’ online accounts – including ones run by Gmail, Yahoo, and Dropbox – to check whether they had cryptocurrency accounts and in some cases he changed the passwords so victims couldn’t regain control.
Man from Slough convicted of his role in a plot to import 96 lethal firearms into the UK
A news release from the NCA on 18 December reported that Stephen Spires, a 37-year-old man from Slough has been convicted of his role in a plot to import 96 lethal firearms into the UK following an investigation by the joint NCA and Metropolitan Police Organised Crime Partnership (OCP).
Advisory Network on Terrorism and Propaganda Workshop: “Defining the global right-wing extremist movement”
A news release from Europol on 17 December reported that more than 100 participants from national agencies, EU institutions and agencies and international organisations gathered at Europol in a closed workshop to learn from leading experts in the field about online dimensions of right-wing extremism and terrorism. The news release contains details of the speakers at the workshop and abstracts of what they presented.