An article from Arent Fox on 31 January said that the US State Department has finally brought the International Traffic in Arms Regulations (ITAR) into the 21st Century by means on of a new interim final rule adopting cloud computing encryption standards. As a result, the article says, companies will be able to use the Cloud for both ITAR and Export Administration Regulation (EAR)-controlled technology without ensuring that all of the cloud servers are located in the US. The new rule comes into operation on 25 March. However, there are conditions, including that the technology involved cannot include any classified information, and the encryption must be truly end-to-end. It also notes that the new rule does not cover non-US export-controlled technology, such as that controlled under EU laws, although the US Government says that it is in talks with allies regarding the adoption of global standards.
30 January 2020
POLICE ARE INVESTIGATING “SEVERAL” LATVIAN NON-RESIDENT BANKS
On 29 January, LSM in Latvia reported that local media had reported that the banks involved were Rietumu Bank, Industra Bank (which until last week was known as Meridian Trade Bank), BlueOrange Bank and Regional Investment Bank, and that the investigations were being conducted in cooperation with police in Germany. It is said that the actions could be linked to the major Deutsche Bank “Cum-Ex” money laundering scandal.
MARITIME INSURANCE MUTUALS FREE SAFETY GUIDE ON SEA CONTAINER STORAGE
On 27 January, The Exporter reported that the guide, developed by TT Club and UK P&I, comes after 1 January saw changes to the International Maritime Dangerous Goods (IMDG) Code. The amendment involves a number of changes designed to reduce the risk to cargo carriage by sea, particularly from ship fires. The guide is intended to support shippers, forwarders, shipping line booking staff and those who pack dangerous goods into cargo transport units for carriage by sea in the technical aspects of the IMDG Code.
The guide can be downloaded at –
REFERENCES TO “EU” AND “EEA” ETC AFTER BREXIT
On 28 January, Travers Smith produced a short brief explaining the need for care when drafting agreements during the Brexit transition period to 31 December, and explaining how a court would interpret references to the EU, EEA etc in agreements entered into during the period. The article says that, during the period, a court is likely to start from an assumption that the parties intended to include the UK.
REAL-TIME PAYMENTS PLATFORMS HAVE INCREASED FRAUD LOSSES FOR 4 OUT OF 5 ASIA-PACIFIC BANKS
Research and advisory company FICO published a survey on 22 January which says that 4 out of 5 Asia-Pacific banks (78%) say the introduction of real-time payments platforms in their country has resulted in increased fraud losses. It says that additional identity and authentication technologies are needed with social engineering named by 2 in 5 banks as the number 1 form of attack by fraudsters. 91% of respondents believe that convergence between fraud and compliance will improve the ability to stop criminal behaviour for real-time payments. The proliferation of real-time payments platforms, including person-to-person (P2P) transfers and mobile payment platforms across Asia-Pacific, has increased fraud losses for the majority of banks. 22% of respondents say that fraud will rise significantly in the next 12 months, with an additional 58% saying they expect a moderate rise in fraud.
US CUSTOMS OPERATION SEIZES RECORD-BREAKING $123 MILLION OF FAKE SPORTS MERCHANDISE
On 30 January, a news release from US Immigration and Customs Enforcement announced the seizure of more than 176,000 counterfeit sports-related items, worth an estimated $123 million manufacturer’s suggested retail price (MSRP), through a collaborative enforcement operation targeting international shipments of counterfeit merchandise into the US. Special agents from HSI teamed with industry, CBP, Miami-Dade police officers and other partner agencies to identify flea markets, retail outlets and street vendors selling counterfeit goods during the week leading up to Super Bowl LIV.
FCPA: 2019 DEVELOPMENTS AND PREDICTIONS FOR 2020
On 30 January, Wilmer Hale published a briefing providing 5 key takeaways regarding FCPA enforcement in 2019. The report said that enforcement activity reached new heights in 2019, with the 2 largest corporate resolutions in the history of the FCPA, corporate penalties paid to US enforcement agencies topping the previous year’s record levels, and individuals charged at a pace matching last year’s near-record level. The enforcement agencies also issued a number of policy announcements that may significantly impact prospective enforcement activity.
NUCLEAR SCIENCE REVEALS SOBERING TRUTH ABOUT FAKED SCOTCH WHISKY
On 28 January, the Bulletin of Atomic Scientists published an article saying that researchers from the Radiocarbon Lab at the Scottish Universities Environmental Research Centre in Glasgow found that half the bottles of expensive aged Scotch whisky they tested weren’t as old and valuable as purported.
The article refers to a research paper from Cambridge University – Using Carbon Isotopes to Fight the Rise in Fraudulent Whisky – which says that a major threat to the Scotch whisky industry is the sale of counterfeit single malt whiskies with purported distillation years in the 19th and early- to mid-20th Centuries.
NEW US PROGRAMME AIMS TO EASE HUMANITARIAN TRADE TO IRAN
On 30 January, the Wall Street Journal reported that the Trump administration has announced the completion of the first transactions under a new programme meant to allow humanitarian trade to Iran, while leaving in place broader sanctions on the country’s economy. The transactions for the benefit of Iranian medical patients used a payment mechanism through Switzerland that bypasses the Iranian government.
VENEZUELA’S PROBLEM ISN’T SOCIALISM – THE MADURO REGIME AMOUNTS TO A LOOSE CONFEDERATION OF FOREIGN AND DOMESTIC CRIMINAL ENTERPRISES
An article in Foreign Affairs on 27 January examines the situation in Venezuela, saying that the problem is not that it purports to be a socialist state, but rather that it has become a “den of thieves” – with the collapse of the Venezuelan state and the takeover of its resources by a confederation of ruthless criminals from both inside and outside the country.
EMERGING TECHNOLOGIES AND THE NEED FOR NEW APPROACHES TO EXPORT CONTROL
The latest edition of the Strategic Trade Research Journal includes 2 papers about the problems with controls of new and emerging technologies.
The first says that the US government in August 2018 announced the Export Control Reform Act (ECRA) tailored to so-called emerging technologies which, it says, caused uncertainty amongst governments worldwide as well as within the current Multilateral Export Control Regimes, in particular the Wassenaar Arrangement for the control of dual-use goods. The new Act Export Control Regulation Act lists 14 technology categories that the US government may subject to export control regulations in the future. The paper posits that innovative approaches to export control are needed to deal with new challenges posed by today’s emerging technologies. It also argues that the rise of new security concerns and ethical considerations – including related to human rights – is blurring the lines between economic and national security when it comes to export controls. Traditional export control mechanisms – customs controls and licensing – are increasingly unfit tools to regulate fast-changing digital technologies.
The second paper addresses the challenge of controlling emerging technologies in the absence of an objective mechanism that can provide for meaningful parameters to put them under a control list, looking at emerging technologies and the challenges of controlling intangible technology exports.
GERMAN OPERATION AGAINST AZERBAIJANI LAUNDROMAT SUSPECTS IN BELGIUM AND GERMANY
On 30 January, OCCRP reported that police raided homes and offices of money laundering suspects across Germany and Belgium in an attempt to track a money trail flowing from an Azerbaijani laundromat operation to shell companies in the Baltic. It is claimed that 1 current and 1 former member of the Bundestag, accused of bribing public officials, were targeted in the raids, while a third suspect is Belgian citizen.
ARRESTS IN BELFAST AND LONDON OVER €13 MILLION CYBER-HEIST ON BANK OF VALLETTA
On 30 January, the Times of Malta reported that 3 men, one who is just 17-years-old, have been arrested in the UK over the cyber-heist which robbed Bank of Valletta of €13 million.
GERMAN FAR-RIGHT AFD PARTY LEADER LOSES POLITICAL IMMUNITY IN TAX EVASION CASE
On 30 January, Deutsche Welle reported that German lawmakers have stripped AfD party leader Alexander Gauland of parliamentary immunity, allowing tax evasion investigations against him to proceed, as prosecutors raided the politician’s addresses.
UK: DAC6 REPORTING REGIME LOOMS DESPITE BREXIT – AND LACK OF GUIDANCE
On 30 January, the Law Society Gazette reported that the EU Directive aka DAC6 imposes mandatory reporting of cross-border deals bearing the hallmarks of aggressive tax planning. However, the Gazette says, many questions remain about what transactions will have to be reported, the timetable of reporting and who will be liable for penalties. Solicitors are also said to have raised concern that compliance could put them in breach of legal professional privilege.
see also Eversheds Sutherland DAC 6 update –
CONTAINER SHIPPING TRACK AND TRACE STANDARDS
On 30 January, Lloyds Loading List reported that the standard covers around 60 different events that have been agreed by the 9 carrier members that make up the digital Container Shipping Association (DCSA). The standards can be implemented by carriers, shippers and third parties to enable cross-carrier shipment tracking using a common terminology for data and events. It is said that it will enable customers working across different carriers to use one application programming interface to get information from all of them.
ELDERLY ART THIEF ARRESTED SMUGGLING €50,000 HELMET INTO BELGIUM
On 29 January, the Brussels Times reported that German police have caught an 77-year-old art smuggler in the act of transporting a valuable Corinthian helmet from the 4th century BC. It is said that the man has long been suspected of illegally smuggling art into Belgium to offer on the international art market.
ITALY AND INTERPOL LAUNCH GLOBAL PROJECT TO COMBAT ‘NDRANGHETA
On 30 January, an Interpol news release announced that the focus of the INTERPOL Cooperation Against ‘Ndrangheta (I-CAN) project will be enhancing the ability of law enforcement to identify its activities and dismantle one of the most extensive and powerful criminal organisations in the world. Present in 32 Countries, 17 of which are European, the ‘Ndrangheta is supported by its enormous financial power built mainly on drug trafficking, corruption and the diversion of public funds through fraud and rigged contracts.
UK: INTERIM INJUNCTION REQUIRING A BITCOIN EXCHANGE TO HELP AN INSURANCE COMPANY RECOVER FUNDS IT PAID TO HACKERS
On 30 January, an article from Out-Law says that details of the case from late last year have only just been made public. In the case an injunction required the Bitfinex exchange to disclose information that could help the insurer identify those responsible for carrying out a ransomware attack on one of its customers, and to prevent bitcoin traced from the ransom payment from being moved from a Bitfinex account. It is said that the case demonstrates that businesses and individuals who have become a victim of fraud and malware attacks, and have paid ransom monies – whether in fiat currency or cryptocurrency – can seek to trace the payment of those monies even where the fraudsters are unknown, using various civil fraud and High Court remedies available.
LOOT BOXES: GAMING OR GAMBLING?
On 30 January, Dentons published an article saying that one of the hottest and most debated topics in the gaming sector is related to so-called “Loot Boxes”. Loot Boxes have become a major source of income in the videogame industry but many countries are currently setting up specific committees to establish whether, for instance, certain kinds of Loot Boxes should be qualified as gambling and need to be regulated appropriately. The article looks at what Loot Boxes are and what are the main related legal issues? It examines European and international initiatives addressing Loot Boxes (and in Italy, the Dentons office that produced the article).
UK GAMBLING COMMISSION’S BAN ON CREDIT CARDS
An article from Dentons on 30 January said that the Commission has been persuaded that there were risks of harm associated with using credit cards for online gambling and it resolved to take action to protect consumers. In January 2020 it announced that a ban on using credit cards for all online and offline gambling (save for lotteries) will come into effect on 14 April. It is said that the Commission claims to be prepared to alter or reverse its intervention if the evaluation concludes that it has contributed to adverse and disproportionate unintended consequences.
LAST DEFENDANT CONVICTED IN STANFORD BANK $7 BILLION INVESTMENT FRAUD SCHEME
A release on Mondo Visione on 30 January advised that the DoJ had announced that Leroy King, the former chief of Antigua’s Financial Services Regulatory Commission (FSRC) has pleaded guilty for his role in connection with the Stanford International Bank (SIB) Ponzi scheme.
PAKISTAN: FEDERAL BOARD OF REVENUE HAS APPREHENDED LARGE ALLEGED CASE OF MONEY LAUNDERING/TERROR FINANCING
The News International in its 31 January edition reported that the FBR has apprehended one of the largest alleged case of money laundering/terror financing in which one accused possessed over Rs6.2 billion into bank accounts but he used to pay only Rs84 tax for declaring income of just Rs400,000.
WHY MONEY LAUNDERING THRIVES ON CANADA’S WEST COAST
An article in The Conversation poses this question, saying that Vancouver has become a haven for illicit capital flight and money laundering, drawing a host of criminal organisations with links to China, Mexico and Iran, with buyers from high-risk laundering jurisdictions continue to pour tens of millions of dollars into Vancouver real estate.
ST KITTS AND NEVIS PASSES VIRTUAL ASSETS BILL
On 30 January, the FATF-style regional body, CFATF, published a notice saying that St Kitts & Nevis passed the Bill on 23 January. The Bill requires an application process for the registration of virtual asset businesses, with due diligence and information requirements.
DRUG SMUGGLING INCREASES ON THE HIGH SEAS
A Commentary from American Shipper on 30 January, in the light of recent cases in a number of countries (including the US), says that the odds are in the favour of the drug smugglers. At some locations, such as the Belgian port of Zeebrugge, only 1 in 100 containers is X-rayed. Though this represents one of the least obstructive ports of entry, only 1 container of 10 is checked in most places. It is also claimed that drug cartels would have formerly sent their illicit goods by truck from Mexico into the US are turning to the shipping industry – the new transport plan shining a light on a disconcerting lack of inspection at ports around the world.
A release on Mondo Visione on 30 January advised that the DoJ had announced that Leroy King, the former chief of Antigua’s Financial Services Regulatory Commission (FSRC) has pleaded guilty for his role in connection with the Stanford International Bank (SIB) Ponzi scheme.
On 30 January, Local Government Lawyer reported that a law firm involved said that the case was the first to consider which director’s duties survived the insolvency of a company and what restrictions a director will face in purchasing assets from an insolvency practitioner. In the case, the sole director of a company which was placed into administration and subsequently entered creditors’ voluntary liquidation was found to have unfairly bought a 2-bedroom house from the original insolvency practitioner involved for £75,000 less than it was worth, 18 months after his company went out of business.
On 30 January, HM Treasury made available a web page which tells you what you’ll need to do from 1 January 2021, saying that it will be updated if anything changes. It contains links to 40-page general guidance on UK sanctions, and a separate 7-page guide to Russian sanctions. It says that the Sanctions and Anti-Money Laundering Act 2018 will enable sanctions to continue uninterrupted on 1 January 2021 (i.e. after the end of the Brexit transition period). Secondary legislation under the Act will transfer existing EU sanctions into UK law. While, during the transition period, the UK can also bring into force autonomous sanctions regimes under the Act, most sanctions regimes, for which regulations have been laid under the Act, will not come into force fully until 11pm on 31 December 2020.
In the latest edition of the Strategic Trade Research Journal includes a paper that addresses this issue, saying that export control requirements apply to WMD-related commodities even beyond first sale, but knowledge of these requirements is sometimes lost as commodities are sold and resold—and many “outdated” products can still contribute to a WMD development programme. The paper concerns a study to assess the secondary market and form recommendations to plug gaps in training and awareness, as well as control programmes. It is said that the secondary market for listed commodities may pose proliferation risks and export control challenges that may not be well understood, and that while measures may exist to mitigate the risks posed by the secondary market, those measures may not have been systematically integrated into export enforcement and outreach programs and secondary market resellers may not be aware of the requirements associated with exporting these commodities.
On 30 January, a news release from OFAC announced that Ali Akbar SALEHI and the ATOMIC ENERGY ORGANIZATION OF IRAN (AEOI) had been added to its Iranian sanctions lists.
On 29 January, the US Government Accountability Office released a report which says that whilst trade-based money laundering is believed to be on the rise, financial institutions charged with flagging payments linked to it often have little insight into the nature of the deals. In the report, “open-account” trade is described as “one of the primary vulnerabilities of the US financial and trade systems”. Most international trading is done using open-account, as opposed to “documentary transactions”, in which banks review related documentation (bills of lading, invoices, packing lists etc) and so can mitigate the risks of providing letters of credit or other financing and potentially detect or prevent money laundering. The GAO cites a claim by the Wolfsberg Group of leading banks that 80% of world trade is carried out using open-account trading.
29 January 2020
US TARGETS PHONE COMPANIES FOR ALLEGEDLY AIDING ROBOCALLERS
On 28 January, the Wall Street Journal reported that prosecutors sought restraining orders against 2 sets of telecommunications providers – one from New York, the other from Arizona – in what was described as a first-of-its-kind legal action – they said have facilitated hundreds of millions of fraudulent robocalls coming into the US from overseas.
DESPITE US SANCTIONS, A SOUTH FLORIDA BUSINESSMAN IS THE LARGEST OWNER OF A JOINT PROJECT WITH THE VENEZUELAN MOD TO PROCESS GOLD MINED IN THE DEPTHS OF THE AMAZON RAINFOREST
On 28 January, the Miami Herald reported that Venezuelan-Trinidadian businessman Clemente Ricardo Silva is the main investor in a gold-processing plant under construction in partnership with the Venezuelan military and key figures of the authoritarian government, though Silva claims he sold his interest in the project.
KEIKO FUJIMORI RETURNS TO PERU JAIL PENDING LAUNDERING TRIAL
On 29 January, KYC 360 reported that opposition leader Keiko Fujimori will be returned to jail while she’s investigated for money laundering, less than 3 months after she’d been freed by Peru’s top court on the grounds that her constitutional rights had been violated.
UK: PRIVILEGE – A ROUND-UP OF SIGNIFICANT RECENT CASES
On 27 January, a briefing from Stewarts says that t here have been a number of significant cases relating to privilege throughout the last 6 months. It looks in brief at some of these cases, including one that makes it clear that privilege survives the dissolution of a company.
ISLE OF MAN UPDATES UKRAINE SANCTIONS LIST
On 29 January, a news release from the Isle of Man confirmed that 7 names had been added to Ukraine sanctions lists.
US DoJ REVISES POLICY ON SELF DISCLOSURE OF EXPORT CONTROL AND SANCTIONS VIOLATIONS
On 28 January, Squire Patton Boggs published a briefing which says that the DoJ National Security Division (NSD) recently revised its policy on the cooperation credit available to companies that voluntarily self-disclose potentially wilful violations of export control and sanctions laws. The guidance document emphasises a commitment to rewarding proactive and cooperative behaviour by subjects and targets of investigations. The briefing says that the new guidance should be a part of any discussion regarding how to address potentially wilful export control or sanctions violations and, given the appropriate circumstances, companies may find that the potential benefits of the voluntary self-disclosure policy are sufficient to warrant proactive outreach to NSD. The briefing compares the previous 2016 and the new guidance.
EXPERT: QATAR’S AML/CFT REGULATIONS “TOUGHEST IN THE REGION”
MENA-FN on 29 January reported that Qatar’s regulations on AML/CFT are the toughest in the region, according to an international expert on Governance, Risk and Compliance (GRC). However, it says, the effectiveness will be evaluated later this year by FATF.
BULGARIA: €900,000 MONEY LAUNDERING SCHEME IN VARNA
The Sofia Globe reported a case involving the alleged laundering of €900,000, said to originate from a fraud committed in Switzerland and that were transferred to a bank account of a Bulgarian trading company, with subsequent transfers to various accounts of Bulgarian citizens, companies in Bulgaria and abroad.
DIGITAL CURRENCY WARS: A US NATIONAL SECURITY CRISIS SIMULATION
The Belfer Center has produced a report on a mock National Security Council meeting unfolded at Harvard Kennedy School on November 16, as former cabinet officials, career diplomats, technologists, and academics convened to debate responses to a game-changing technology. The scenario proposed was that North Korea tests a nuclear missile that demonstrates significant advancements in its nuclear programme and analysts believe it could land a nuclear weapon in the continental US within a year. As China, Russia and Iran have already begun issuing their own digital currencies, the President calls on the NSC to assess threats to US national security and recommend responses. Tactically, how should the US respond to North Korea’s missile test if economic sanctions are no longer effective? And strategically, how can the US continue to leverage economic power in the world of national digital currencies?
BERLIN HOSTEL TOLD TO CLOSE DUE TO UN SANCTIONS ON NORTH KOREA
On 29 January, the EU Sanctions blog reported that the Berlin Administrative Court has ordered City Hostel Berlin, situated on the premises of the North Korean embassy, to close, as its lease is said to contravene UN sanctions.
GAZPROM WILL COMPLETE NORD STREAM 2 WITHOUT EU ASSISTANCE TO AVOID US SANCTIONS SNAGS
On 28 January, Gazprom said that it will complete the construction of the Nord Stream 2 pipeline, reportedly 94% complete, without the assistance of foreign companies. The pipeline was previously being built by Gazprom and 5 EU companies.
DUTCH MP ADDED TO RUSSIA’S SANCTIONS LISTS
On 29 January, the EU Sanctions Blog reported that the Russian Federation has added Sjoerd Wiemer Sjoerdsma to its sanctions list, so that he is now subject to a travel ban and asset freeze. It is said that the MP was one of the primary campaigners for the EU’s recently announced human rights sanctions regime.
NEW COMMISSION SURVEY ADDRESSES CONSUMER FRAUD IN THE EU
On 29 January, the EU advised that the Commission is publishing the results of an EU-wide survey on scams and fraud. The survey shows that more than half of the respondents (56%) across the EU were exposed to at least one scam or fraud in the last 2 years.
RESIDENCE DOCUMENTS FOR FOREIGN NATIONALS IN THE UK
On 29 January, in the light of Brexit, the Home Office published this information, waring that some current residence documents will no longer be valid after 31 December.
UK DIGITAL SERVICES TAX
On 29 January, the House of Commons Library published a briefing which discusses the background to the UK Government’s proposals, announced in the 2018 Budget, to introduce a Digital Services Tax from April 2020, in the context of wider concerns as to the challenge of taxing digital businesses and moves to agree reforms to the international tax system.
FBI RAIDS PHILIPPINES-BASED CHURCH IN LOS ANGELES IN SHAM-MARRIAGE IMMIGRATION BUST
In its 30 January edition, the South China Morning Post reported that followers were allegedly tricked into becoming fundraisers and victims had passports confiscated and were kept in US via the sham marriages. The local leader of the Kingdom of Jesus Christ church was arrested on immigration fraud charges in the early morning bust, along with a worker who confiscated passports of the victims of the scheme.
ENI AND SHELL CATCH A BREAK IN TRIAL OVER ALLEGED NIGERIA OIL BRIBES
On 29 January, Oil Price.com reported that a key witness for the prosecution recanted on previous testimony that he had seen evidence that oil majors Eni and Shell were involved in bribery over an oil deal in Nigeria, in the latest twist in the trial against the oil companies in an Italian court. The 2011 acquisition of block OPL 245, according to Italian and Nigerian prosecutors, involved a transfer of money to personal accounts held by the Nigerian oil minister at the time.
FINANCIAL SERVICES FIRMS HIT WITH $36 BILLION IN AML, KYC AND SANCTIONS FINES SINCE FINANCIAL CRISIS
Finextra on 29 January reported that data, put together by regtech Fenergo, shows that penalties for AML, KYC and sanctions violations increased by 160% in the 15 months since the last tally. Of the world’s top 50 banks, 12 were hit with fines in 2019. Two-thirds of all fines issued by US regulators were aimed at European financial institutions for AML breaches and sanctions violations. The article also notes that a separate report from Encompass Corporation earlier in January found that in 2019 global penalties for AML failures hit $6.2 billion at an average of $145.33 million per fine.
THE US TREASURY AND COMBATING HUMAN TRAFFICKING
On 29 January, the US Treasury published an information source on the Department’s role. It says that it brings significant financial expertise to the fight against human trafficking and is committed to leveraging the Department’s economic tools to target, disrupt, and counter those who undermine American values and engage in human trafficking.
US PUBLIC DESIGNATION OF 13 FORMER EL SALVADOR MILITARY OFFICIALS BECAUSE OF VIOLATIONS OF HUMAN RIGHTS
On 29 January, the US State Department issued a news release advising that the 13 individuals had been designated under a 2019 Act due to their involvement in gross violations of human rights in El Salvador related to the planning and execution of the extrajudicial killings of 6 Jesuit priests and 2 others on November 16, 1989 on the campus of Central American University in El Salvador. It says that these 13 former Salvadoran military personnel, ranging in rank from general to private, were involved in the planning and execution of the extrajudicial killings. These individuals and their immediate family members are ineligible for entry into the United States.
30 MILLION PAYMENT CARDS LISTED ON FRAUD MARKETPLACE
On 29 January, Techradar reported that hackers have put the payment card details of more than 30 million Americans and over 1 million foreigners up for sale on the Internet’s largest carding fraud forum, Joker’s Stash.
UK NOTICE TO IMPORTERS: CURRENT RANGE OF EU MEASURES IN FORCE ON STEEL
In the light of Brexit, on 29 January the Department for International Trade issued a Notice to importers which gives guidance on the current range of EU measures in force on steel.
FAKE BINARY OPTIONS INVESTORS BUSTED IN BELGIUM AND FRANCE
On 29 January, a news release from Europol advised that French and Belgian police, and the Israeli Police, supported by Europol and Eurojust, have brought down a large network of investment fraudsters that was allegedly involved in money laundering and binary options investment fraud. During 2019 a number of arrests were made in Europe and Israel, and more than €1 million have already been seized from the fraudsters’ accounts. A French-Israeli citizen who has already been convinced of massive fraud related to carbon tax is suspected to be the mastermind.
On 29 January, an Occasional Paper from RUSI in the UK which shows that e-commerce continues to be exploited by criminal actors, and says that regulators and governments can do more to prevent this. It identifies that E-commerce businesses can be exploited for criminal purposes in 4 major ways:
- Committing fraud against the customer by failing to deliver goods or services;
- Buying goods or services using stolen bank card data;
- Creating e-commerce businesses as a front for illicit transactions (for example, to accept bank card payments for drugs); and
- Abusing online marketplaces to move criminally obtained funds (for example, through the sale of computer-generated books sold via Amazon).
It also says that the latter two present particular money laundering and terrorist-financing (financial crime) threats because they involve consensual transactions that are intended to remain undetected. However, the paper argues, these purposes remain poorly understood, including so-called “transaction laundering” using bogus or disguised online payments. The paper says that there has been no examination of the effectiveness of online marketplaces’ defences against financial crime, and makes a number of recommendations – including that the FCA should consider a thematic review of risks related to transaction laundering and financial institutions’ ability to detect it, with a view to identifying best practices; and that the UK’s next national risk assessment of money laundering and terrorist financing addresses the risks of phantom transactions and mispricing involving online marketplaces/