OTHER THINGS YOU MAY HAVE MISSED – JANUARY 21

21 January 2020

NEW REPORT ON US ARMS EXPORT CONTROL GAPS IN COMBATING CORRUPTION

On 21 January, Security Assistance Monitor reported that a new report from Transparency International Defense and Security examines widening gaps in US arms export controls that are undermining efforts to curb corruption in the defence sector of partner militaries and finds that recent reforms ignore known corruption risks in key security relationships – this being despite the known risks that corruption poses to the military effectiveness of US security partners.  The report assesses the state of American arms export controls for 3 major arms transfer programs – Foreign Military Sales (FMS), Direct Commercial Sales, and the 600 Series (for commercial arms sales) – and identifies ways the US can curb corruption risk and avoid fraud.  Where there is most room for improvement, the report finds, is in the 600 series sales regulated by the Commerce Department, which fails to collect key information on arms brokers, bribery risks, or unwanted third parties to arms sales.  The 600 Series is  the Commerce Department’s oversight of arms exports on the Commerce Control List (CCL) and is largely focused on regulating the US defence companies and individuals exporting these items to foreign governments and commercial entities.  The report says that the Department also takes a more limited approach to preventing bribery and conducting end-use checks on arms already delivered

The report is at –

https://ti-defence.org/wp-content/uploads/2020/01/US_Arms_Export_Gaps_in_Combatting_Corruption_v2d_digital.pdf

UK SAR FALL FROM KEY COMPANY FORMATION AGENTS

On 21 January, KYC 360 reported that the number of SAR filed by company formation agents (TCSP) has fallen by more than half to only 23 in the year to March 2019, despite government attempts to improve the system.

https://www.riskscreen.com/kyc360/news/uk-sars-fall-from-key-company-formation-agents/

AUSTRALIA – PACKER AND HO FACE QUESTIONING IN CROWN RESORTS MONEY LAUNDERING PROBE

On 21 January, KYC 360 reported that an inquiry in New South Wales into Crown Resorts’ casino operations will assume the powers of a Royal Commission to summon James Packer and Lawrence Ho to answer questions.  Crown Resorts is under scrutiny over allegations of money laundering at its casino in Melbourne and its connections to junket operators with alleged criminal links.

https://www.riskscreen.com/kyc360/news/australias-packer-to-face-powerful-crown-probe-into-alleged-money-laundering/

EX-PORTUGUESE MINISTER NAMED IN €35 MILLION CORRUPTION PROBE INVOLVING VENEZUELAN FUNDS

On 21 January, KYC 360 reported a Portugal Resident story claiming that a former Socialist minister – once tipped as a contender for party leader – is being cited by Spanish prosecutors over a “scheme of corruption and money laundering” involving more than €35 million in Venezuelan funds.  The scheme was allegedly headed by a former Spanish ambassador to Venezuela whose son is married to the daughter of a Portuguese politician.

https://www.riskscreen.com/kyc360/news/ex-portuguese-minister-named-in-e35-million-corruption-probe-involving-venezuelan-funds/

“TRACK AND TRACE” FOR CIGARETTES AND HAND-ROLLING TOBACCO PRODUCTS

An article from RPC on 20 January is concerned with changes to the sale of cigarettes and hand-rolling tobacco come into force in the UK in May 2020.  From 20 May retailers selling cigarettes and hand-rolling tobacco will only be permitted to sell these products if they are “Track and Trace” compliant.  The UK regulations are implementing the EU Revised Tobacco Products Directive in UK law, with the intention to protect public health by reducing the supply of cheap or illegal tobacco products.

https://www.rpc.co.uk/perspectives/retail-therapy/retail-compass-winter-edition-2020/track-and-trace-for-cigarettes-and-hand-rolling-tobacco-products/#page=1

ISLE OF MAN FOLLOWS UN, EU AND UK LEAD ON DELETING ENTRIES FROM ISAQ SANCTIONS LIST

On 21 January, the Isle of Man issued a news release announcing that 15 Iraqi entries had been removed from the list of those subject to sanctions, thus following the UN, EU and UK lead in this matter.

https://www.gov.im/news/2020/jan/21/financial-sanctions-iraq/

US STATE DEPARTMENT TRAVEL BAN ON IRANIAN GENERAL HASSAN SHAHVARPOUR

On 17 January, the EU Sanctions blog reported that the US State Department had imposed a travel ban on the General and Khuzestan Province’s Vali Asr Commander, on the basis of his involvement in gross violations of human rights against protesters in November.

https://www.europeansanctions.com/2020/01/us-state-dept-travel-ban-on-irgc-general/

MAURITIAN AML/CFT HANDBOOK PUBLISHED

On 21 January, an article on Mondaq reported that the Mauritian Financial Services Commission (FSC) has issued its first AML/ CFT Handbook.

http://www.mondaq.com/Article/885812

https://www.fscmauritius.org/en/being-supervised/amlcft/fsc-code

7 ARRESTED OVER £215 MILLION LAUNDERING SCAM CALLED ‘ONE OF MOST SIGNIFICANT IN UK’

The Mirror and others on 21 January reported that 6 men and a woman have been arrested on suspicion of high-end money laundering through bank accounts in the UK and internationally after 15 searches across Northern Ireland and said to involve a number of shell companies and bank accounts held in Northern Ireland.  The investigation has identified over 50 companies and over 140 bank accounts.

https://www.mirror.co.uk/news/uk-news/seven-arrested-over-215m-laundering-21327776

AUSTRALIA’S MUTUAL BANKING SECTOR: ASSESSING THE MONEY LAUNDERING RISKS

On 21 January, Australian law firm Nyman Gibson Miralis reported that AUSTRAC has issued a report which explores the money laundering and terrorism financing risks faced by the mutual banking sector – this being defined as approved deposit-taking institutions (ADI) that are owned by their customers, such as mutual banks, building societies and credit unions.  It is said that the sector has seen a 50% decrease in entities from 2008-2018, whilst the value of the sector itself has almost doubled.  The overall risk level is assed as being “medium”, but with a high level of vulnerability, with a consequent assessment of the consequences for the sector as being moderate, with the sector vulnerable to criminal exploitation in the form of money laundering, fraud, tax evasion and terrorism financing.

https://ngm.com.au/australia-mutual-banking-money-laundering-risks/

OREGON’S SPORTS BETTING CONTRACTOR SUES STATE GOVERNMENT AND STATE LOTTERY TO KEEP STATE CONTRACT SECRET

Oregon Live on 21 January reported on a battle over public records with a company working for the Oregon State Lottery obtaining a temporary restraining order blocking the release of its contract with the state to the media.  Although public tenders are said to be normally made public, SBTech, a Malta-based company which runs the lottery’s new sports betting operation, has fought the release of its contract – despite an order from Oregon’s attorney general that the contract must be disclosed.  The company argues that release of the agreement would reveal confidential and proprietary trade secrets and pricing systems that belong to SBTech and would do “irreparable harm” to the company.  The article says that, while based in Malta, it also has connections to the Isle of Man, which the media site describes as “both notorious tax havens”, and it points out that most of SBTech’s operations are in Bulgaria.

https://www.oregonlive.com/news/2020/01/oregons-sports-betting-contractor-sues-lottery-state-justice-department-oregonian-to-keep-state-contract-secret.html

HOW SHOULD WE MEASURE THE DIGITAL ECONOMY?

On 21 January, the Brookings Institute in the US published a report saying that many internet services are free, they largely go uncounted in official measures of economic activity such as GDP and Productivity.  The report comments on new research to estimate the internet’s contribution to the economy.  This research suggests that there has been a substantial increase in well-being that is missed by traditional metrics like GDP, or productivity.

https://www.brookings.edu/wp-content/uploads/2020/01/WP57-Collis_Brynjolfsson_updated.pdf

KIDNAPPED INDIAN MINE OWNER’S SON RELEASED IN BURKINA FASO

On 21 January, Defence Web reported that the son of an Indian gold mine owner in Burkina Faso, kidnapped by unidentified assailants in 2018, has been released.  His father owns the Ghana-based Balaji mining group.

https://www.defenceweb.co.za/security/human-security/kidnapped-indian-mine-owners-son-released-in-burkina-faso/

TURKEY TO EXPLORE FOR OIL OFF SOMALIA

On 21 January, Defence Web reported that President Tayyip Erdogan said Somalia had invited his country to explore for oil in its seas.  Turkey is a major source of aid to Somalia following a 2011 famine.  Turkish engineers are helping build roads in Somalia and Turkish officers train Somali soldiers to build up the country’s army.

https://www.defenceweb.co.za/sea/sea-sea/turkey-to-explore-for-oil-off-somalia/

EDIBLE CANNABIS PRODUCTS MAY NOW BE SOLD IN CANADA

A news release from the European Monitoring Centre for Drugs and Drug Addiction (EMCDDA) on 21 January advised that since 16 December, edible cannabis products are permitted to be sold in Canada.  The EU agency explains the rules and regulations involved.

http://www.emcdda.europa.eu/news/2020/canada-edible-cannabis-products-may-now-be-sold-in-canada_en

EXPORT OF DRUGS AND MEDICINES FROM THE UK: SPECIAL RULES

On 21 January, the Home Office issued updated information explaining how you must get permission to export certain drugs and medicines.  You need permission to export controlled drugs like opioids, certain stimulants or psychotropic substances, certain drugs that can be used for lethal injection (capital punishment) outside the EU (seen as mainly targeting the US), and medicines for humans or animals.  It explains that there is a different process if you travel with controlled drugs for personal use – for example, taking medicine with you on holiday.

https://www.gov.uk/guidance/export-drugs-and-medicines-special-rules

UK: TOUGHER SENTENCING AND MONITORING IN GOVERNMENT OVERHAUL OF TERRORISM RESPONSE

On 21 January, a news release from the Home Office advised that the UK Government plans tougher sentences, an end to early release and a review of the management of convicted terrorists among measures announced to strengthen the UK’s response to terrorism.  These measures are to be included in a new Counter-Terrorism Bill.

https://www.gov.uk/government/news/tougher-sentencing-and-monitoring-in-government-overhaul-of-terrorism-response

UK ENTERPRISE ZONES

On 21 January, the House of Commons Library issued a briefing paper about the 44 Enterprise Zones in England, with plans for a further 4.  Businesses in these small areas will benefit from tax and planning concessions and superfast broadband.  It mentions that similar policies have been adopted by devolved administrations in Scotland and Wales; 4 Enterprise Areas spread across 15 sites are operational in Scotland while 7 Enterprise Zones are operational in Wales. A pilot scheme is operating in Northern Ireland.

http://researchbriefings.files.parliament.uk/documents/SN05942/SN05942.pdf

ANGOLA SAYS HAS REACHED OUT TO OTHER COUNTRIES IN CORRUPTION CRACKDOWN

On 21 January, Reuters reported that Angola has reached out to a number of countries for help in recouping funds lost to corruption in the past, according to the country’s minister of state for economic coordination.

https://www.reuters.com/article/us-angola-corruption/angola-says-has-reached-out-to-other-countries-in-corruption-crackdown-idUSKBN1ZK20G

FORMER INTERPOL PRESIDENT SENTENCED TO PRISON IN CHINA FOR CORRUPTION

On 21 January, NPR reported that Meng Hongwei, the former president of Interpol has been sentenced 13½ years in prison for corruption in a Chinese court.  He had pleaded guilty to using his position in China to obtain more than $2 million in bribes between 2005 and 2017.

https://www.npr.org/2020/01/21/798121397/former-interpol-president-sentenced-to-prison-in-china-for-corruption

INDIAN RAILWAYS E-TICKET FRAUD WITH SUSPECTED TERRORISM LINKS

On 21 January, ANI News reported that the Railway Protection Force is said to have broken an e-ticket fraud scam and arrested a software engineer suspected of money laundering and terrorism links – though the “kingpin” is said to probably be in Dubai.

https://www.aninews.in/news/national/general-news/rpf-busts-e-ticket-racket-with-suspected-links-to-terror-financing-money-laundering-1-held20200121195125

INDIA TO AUCTION RARE ART BELONGING TO DIAMOND MAGNATE NIRAV MODI

On 21 January, Reuters reported that the seized assets of Indian diamond magnate Nirav Modi, arrested in the UK last year over fraud allegations, will be auctioned within the next 2 months.

https://in.reuters.com/article/india-fraud-auction/india-to-auction-rare-art-belonging-to-diamond-magnate-nirav-modi-idINKBN1ZK1KH

BELGIUM: 7 MILLION COUNTERFEIT CIGARETTES SEIZED BY POLICE IN LIMBURG

On 21 January, the Brussels Times reported that special units raided 2 industrial sheds in part of a major investigation into cigarette fraud.  The counterfeit cigarettes were of the Superking brand, mainly consumed in the UK.

https://www.brusselstimes.com/brussels/90861/a-look-at-the-most-expensive-house-in-brussels-prince-d-orange-guy-uccle/

COLOMBIA AND HONDURAS DESIGNATE HEZBOLLAH AS A TERRORIST ORGANISATION

On 21 January, Kenneth Rijock in his blog reported that the two countries have designated Hezbollah a terrorist organisation. Colombia has adopted US & EU lists of terrorists and terrorist organisations.  Argentina and Paraguay have previously sanctioned Hezbollah; but were the only other Latin American nations to have taken that step.

http://rijock.blogspot.com/2020/01/colombia-and-honduras-designate.html

48 ARRESTS AND 6 ORGANISED CRIME GROUPS DISMANTLED IN EUROPEAN MEDICINE-TRAFFICKING OPERATION

On 21 January, a news release from Europol reported that it had supported a pan-European operation targeting the illicit online and offline trafficking of misused and counterfeit medicines.  The operation was led by Finnish Customs and the Central office against environmental and public health crime of the French National Gendarmerie.  The authorities from 11 EU Member States, Bosnia and Herzegovina, Ukraine, the US Drug Enforcement Agency (DEA) and the European Anti-Fraud Office (OLAF) also participated.  The operation took place between 15 and 18 October, the results of which can only be released now for operational reasons.  Results included 48 arrests in Cyprus, Finland, France, Hungary, Portugal, Spain, and UK; and the seizure of around 34.5 million units of medicines and doping products, and other substances such as antihistamines, anxiolytics, erectile dysfunction medicines, hormone and metabolic regulators, narcotics, painkillers, antioestrogens, antivirals, and hypnotics.

https://www.europol.europa.eu/newsroom/news/48-arrests-and-6-organised-crime-groups-dismantled-in-medicine-trafficking-operation

FRENCH CUSTOMS INTERCEPT 26 KG OF COCAINE HEADED FOR LUXEMBOURG

RTL on 21 January reported that, on 14 January, French customs officials seized 26 kg of cocaine bound for the Grand Duchy after they stopped a suspicious refrigerated truck – a Spanish-registered vehicle, driven by a Turkish driver based in the Netherlands.

https://today.rtl.lu/news/world/a/1459387.html

SEC FILES CHARGES AGAINST SCHEME TO SELL FICTITIOUS INTERESTS IN MARIJUANA COMPANY

A release on Mondo Visione on 21 January reported that the SEC had announced charges against Guy S. Griffithe and Robert W. Russell, and 3 companies they controlled, for an alleged scheme that defrauded investors who thought they were purchasing interests in a Washington-licensed recreational cannabis company out of approximately $4.85 million.

https://mondovisione.com/media-and-resources/news/sec-files-charges-against-scheme-to-sell-fictitious-interests-in-marijuana-compa/

HONG KONG: RESTRICTION ORDER TO FREEZE CLIENT ACCOUNTS LINKED TO SUSPECTED MARKET MANIPULATION

A release on Mondo Visione on 21 January advised that the SFC had issued a restriction notice to China Fund Securities Limited (CFSL), prohibiting it from dealing with or processing $170 million worth of assets held in 6 client accounts, which are related to suspected market manipulation in the shares of Hon Corporation Limited between November 2019 and early December 2019.

https://mondovisione.com/media-and-resources/news/hong-kong-securities-and-futures-commission-issues-restriction-notice-to-a-broke-1/

GROUP OF CENTRAL BANKS TO ASSESS POTENTIAL FOR CENTRAL BANK DIGITAL CURRENCIES

On 21 January, a release on Mondo Visione reported that the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Sveriges Riksbank and the Swiss National Bank, together with the Bank for International Settlements (BIS), have created a group to share experiences as they assess the potential cases for central bank digital currency (CBDC) in their home jurisdictions.

https://mondovisione.com/media-and-resources/news/central-bank-group-to-assess-potential-cases-for-central-bank-digital-currencies/

US COMMERCE DEPARTMENT TAKES OVER PART OF US FIREARM EXPORT CONTROLS

On 21 January, American Shipper carried a report saying that the move of certain firearms from the US Munitions List to the Commerce Control List does not decontrol these items but changes the level of export control oversight.  The relevant Final Rule will take effect in March.  Transfers from the USML to CCL include certain firearms, close assault weapons and combat shotguns (USML Category I); guns and armament (USML Category II); and ammunition and ordnance (USML Category III).

https://www.freightwaves.com/news/commerce-takes-over-swath-of-us-firearm-export-controls

IMPACT OF THE CHINA-USE TRADE DEAL ON IP PROTECTION

On 21 January, Greenberg Traurig published an article saying that the agreement details a set of promises made by both the US and China that, if implemented, will benefit the economies of both nations.  One of the elements of the agreement is that the US pledged to investigate additional means of combating the sale of counterfeit and pirated goods and to cooperate with China in the global fight to end the manufacture of counterfeit products with negative impacts on public health and safety, including through the bilateral Intellectual Property Criminal Enforcement Working Group.  The agreement also emphasises that anyone in either country can be subject to liability for trade secret misappropriation – and provides for civil remedies and criminal penalties to deter intellectual property theft and infringement generally, with changes so that China’s trade secret protections will be more consistent with the US legal position – including sweeping changes to China’s judicial process specifically relating to trade secret matters.

https://www.gtlaw.com/en/insights/2020/1/impact-of-the-china-us-trade-deal-on-intellectual-property-protection

PRIVILEGED INFORMATION AND SETTLEMENT AGREEMENTS

An article from Parklane Plowden Chambers posed the question: do defendants have a right to see unredacted settlement agreements which have privileged communications in them? It refers to a recent Court of Appeal decision involving a case where one of 5 defendants agreed to full and frank disclosure of the confidential information they had supplied to another defendant. The communications formed part of the settlement agreement.  However, were the relevant parts of the settlement agreement protected by without prejudice privilege and/or litigation privilege?  The article argues that the effect of the judgment is that nothing in a settlement agreement is protected by privilege, even if the information is ordinarily protected.

https://www.parklaneplowden.co.uk/news/privileged-information-and-settlement-agreements

 

SFO PUBLISHES NEW ‘INTERNAL’ GUIDANCE FOR EVALUATING COMPLIANCE PROGRAMMES

A blog post on the FCPA Blog on 21 January reported that the UK Serious Fraud Office has published, with very little fanfare, new 8-page guidance about how it assesses the effectiveness of the companies it investigates.  It is said that the guidance is actually part of the SFO’s Operational Handbook, which by its terms is “internal guidance” for the SFO only.  The new guidance pays close attention to the 6 principles detailed in the Bribery Act guidance from the MoJ in 2011.  However, the post says that what the business world needs to know is just how the SFO weighs up precisely what it will consider adequate – but there is little that is new or noteworthy in the guidance that assists in this.

https://fcpablog.com/2020/01/21/sfo-publishes-new-internal-guidance-for-evaluating-compliance-programs/

AML/CFT MUTUAL EVALUATION REPORT ON THE TURKS AND CAICOS

On 21 January, the FATF-style regional body, CFATF, published the 4th round MER undertaken by CFATF.  This followed the on-site visit made in September 2018. Since the last CFATF Mutual Evaluation in 2008, the country has progressively advanced the legislative framework to address gaps in the country’s AML/CFT framework, so improving its technical compliance.  In the months preceding the on-site visit, it made a significant number of amendments to its AML/CFT laws and other subsidiary legislation.  In terms of effectiveness, the jurisdiction has achieved a moderate level of effectiveness for Immediate Outcomes (IO) 1, 2, 5, 6 10 and 11 a low level of effectiveness for IO 3, 4, 7, 8, and 9.

turks

https://www.cfatf-gafic.org/documents/4th-round-meval-reports/13615-turks-and-caicos-islands-4th-round-mer/file

COLOMBIA AND HONDURAS DESIGNATE HEZBOLLAH AS A TERRORIST ORGANISATION

On 21 January, Kenneth Rijock in his blog reported that the two countries have designated Hezbollah a terrorist organisation. Colombia has adopted US & EU lists of terrorists and terrorist organisations.  Argentina and Paraguay have previously sanctioned Hezbollah; but were the only other Latin American nations to have taken that step.

http://rijock.blogspot.com/2020/01/colombia-and-honduras-designate.html

OFAC AMENDS VENEZUELAN GENERAL LICENSE AND ISSUES IDENTIFICATION DETAILS OF A NUMBER OF AIRCRAFT ADDED TO THE SANCTIONS LISTS

On 21 January, OFAC advised that General License 20B (“Authorizing Official Activities of Certain International Organizations Involving the Government of Venezuela”) had been reissued in amended form, and that 15 aircraft (13 executive or business jets and 2 turboprop aircraft) had been added to the Venezuelan sanctions lists.  The aircraft are said to be the property of Petroleos de Venezuela, S.A. (PdVSA).

https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20200121_33.aspx

https://home.treasury.gov/news/press-releases/sm884

SWEDISH OIL REFINER NYNAS PROPOSES RESTRUCTURING TO ESCAPE US SANCTIONS

On 21 January, Reuters reported that Nynas, which is owned by Venezuela’s state-run PDVSA and Finland’s Neste Oil, said it planned to reorganise its business in an attempt to disentangle itself from US sanctions.  The proposed changes have been filed with OFAC.

https://www.reuters.com/article/us-nynas-reconstruction/swedish-refiner-nynas-proposes-restructuring-to-escape-u-s-sanctions-idUSKBN1ZK1SQ