3rd January 2020
US INSIDER-TRADING PROSECUTIONS GET EASIER WITH COURT RULING
On 2 January, Bloomberg reported that prosecutors have a stronger hand going after insider trading following a court ruling that lowered the bar for bringing cases. Upholding convictions under securities-fraud provisions of the 2002 Sarbanes-Oxley Act, in which those accused had argued for the verdicts to be overturned in part because prosecutors failed to show the supplier of the illicit information received a “personal benefit,” such as cash. However, the appeals court said the personal-benefit requirement did not apply to the 2002 law, which groups insider trading with wire and mail fraud.
THE DECADE THAT BUSINESS EMAIL COMPROMISE (BEC) FRAUD TOOK OFF
On 26 December, Wired carried an article about the rise in BEC fraud, saying that the scale is staggering; in September alone, Toyota lost $37 million and Nikkei $29 million. Between June 2016 and July 2019, the FBI counted 166,349 BEC incidents in the US and abroad totalling more than $26 billion in losses, and FinCEN estimated that BEC losses crossed $300 million per month with more than 1,100 incidents per month in 2018 – and that just covers incidents that victims reported.
IN 2019, 14 COMPANIES PAID A RECORD $2.9 BILLION TO RESOLVE FCPA CASES
On 2 January, a post on the FCPA Blog reported that the $2.9 billion includes amounts assessed in resolutions with the DoJ or SEC or both. Various big names were involved, some with huge settlements – Ericsson, MTS, Walmart, Fresenius, Deutsche Bank, Microsoft Corporation, Juniper Networks, and Barclays PLC. It provides a summary of the various cases involved.
FORMER PANAMA PRESIDENT RICARDO MARTINELLI’S NAME SURFACED IN INTERNATIONAL MEDIA RE REPORTS OF THE SCORES OF MILLIONS OF DOLLARS ALLEGED PAID IN BRIBES BY THE SPANISH COMPANY IN PANAMA AND OTHER CENTRAL AMERICAN COUNTRIES
On 2 January, Newsroom Panama reported allegations that the company was awarded the construction of projects, including participation together with Odebrecht as part of the consortium that built Lines 1 and 2 of the Panama Metro, FCC paying commissions that would add up to $82.7 million. It is alleged that a complicated network of companies was used, with the funds ending up in the office of a local lawyer, alleged to have been the frontman for Martinelli.
THOUSANDS OF FOREIGN STUDENTS IN US ON STUDENT VISAS MAY HAVE ‘WORKED’ FOR FAKE COMPANIES
On 3 January, KYC 360 reported an NBC story that a federal visa programme allowing international students to work at businesses in the US after graduation appears to have been exploited by fake companies providing false employment verification. In a recent case, a defendant admitting in court papers she had provided false employment records for nearly 2,700 students. In that case, Weiyun “Kelly” Huang pleaded guilty on behalf of herself and 2 entities that were co-defendants in the case, Findream LLC and Sinocontech LLC.
AML COURSE MANDATORY FOR BRITISH COLUMBIA REAL ESTATE AGENTS AND PROPERTY MANAGERS
On 2 January, the Vancouver Sun reported that the regulator for the province’s real estate professionals is launching a mandatory AML course to show real estate agents and strata and property managers how to recognise red flags and what steps they’re obligated to take to report suspected cases.
THE WEST AFRICAN CFA FRANC USED BY 8 COUNTRIES, WILL BE DITCHED IN 2020
In its 4 January edition, The Economist reported the demise of the West African CFA Franc – one of 2 monetary unions (the other being the Central African CFA Franc, used by 6 countries) pegged to the euro and backed by France. It says that the eco will have far looser ties to France. The central African CFA franc is unchanged, but many expect the countries using it to implement similar reforms.
OFAC DESIGNATES ASA’IB AHL AL-HAQ
On 3 January, OFAC designated this group (which has numerous alternative names, including “League of the Righteous” and “People of the Cave”) and 2 Iraqis linked to the group.
MOTHERSHIP IDENTIFIED FOR GULF OF GUINEA PIRATES
Lloyds List on 30 December reported that at least 9 vessels attacked and 89 crew hijacked for ransom in 2019. It also says that a London-based company has identified a mothership, which one pirate group is using to operate deep offshore, as well as a separate group that’s exploiting ambiguous and haphazard patrolling on the outskirts of Nigeria’s Economic Exclusion Zone. The EEZ extends for 240 nautical miles. It says that a mothership used by one pirate group further offshore was identified using global satellite imagery as the Togo-flagged, 3,250 dwt chemical tanker Determination 2 (IMO 8201014) according to tankertrackers.com, and another ship, a 2013-built, Nigerian-flagged, 950 dwt product tanker, is being monitored.
2 PIRACY ATTEMPTS IN SINGAPORE STRAIT ON ONE DAY, WITH 5 ATTACKS IN JUST 4 DAYS
On 23 December, the Straits Times reported that, under the cover of darkness, pirates attacked 2 vessels separately in the Singapore Strait on 23 December, bringing the total number of such incidents to 5 in just 4 days.
UK: FCA EXPECTS “CRYPTOASSET BUSINESSES” TO BE COMPLIANT UNDER AML/CFT RULES FROM 10 JANUARY
Crowdfund Insider on 3 January reported that, from 10 January, the FCA expects all “cryptoasset businesses” (i.e. VASPs, Digital Asset firms, etc.) to be compliant AML/CFT rules, as cryptoasset businesses have been added to their portfolio of regulation. It says that the he FCA has outlined the cryptoasset activities currently covered, and these are detailed in the article.
BAHAMAS INTRODUCING ITS CENTRAL BANK DIGITAL CURRENCY (CBDC) PLATFORM, KNOWN AS THE SAND DOLLAR
Baker McKenzie on 2 January reported that on 27 December, the Bahamas went live with its central bank digital currency platform, known as the Sand Dollar. This will undergo a pilot phase testing in Exuma, which will be extended in the first half of 2020 to Abaco. The article says it would be an identifiable liability of the Central Bank of The Bahamas, equivalent in every respect to the paper currency. Its value would be the same as the existing currency. The Sand Dollar is said to be intended for pockets of the population are excluded because of the remoteness of some communities outside of the cost-effective reach of physical banking services.
MALTA: ‘TURBULENT TIME’ FOR GAMING INDUSTRY
On 3 January, the Times of Malta carried an article saying that tighter controls, particularly AML regulations, are being blamed for the “turbulent” period being experienced by the gaming industry in Malta, according to one of the country’s top 5 companies, which also admitted the chance of major decisions in the wake of an ongoing “strategic review” as a consequence. Commenting on the country’s political turmoil, the CFO of the company warned that the longer this period of instability lasted the higher the risks for the gaming industry particularly for recruiting high-skilled foreign staff.
QUESTIONS ASKED ABOUT 111 AIRCRAFT PURCHASES AT A HIGH RATE FOR AIR INDIA
Pgurus in India on 3 January reported that a former finance minister has been questioned by the Enforcement Directorate (ED) for about 6 hours in connection with the controversial purchase of 111 aircraft for Air India at exorbitant prices in 2006 – investigating possible over-invoicing.
IVORY COAST COURT SENTENCES FORMER CABINET MINISTER AND YOUTH LEADER CHARLES BLE GOUDE TO 20 YEARS OF JAIL TIME ON MURDER, RAPE AND TORTURE CHARGES
On 3 January, Jurist reported that he was linked to former Ivory Coast president Laurent Gbagbo and was leader of the Young Patriots street militia during Gbagbo’s presidency. Nearly 3,000 people died in the civil war, in which he was involved.
TURKISH PRIVATE JET OPERATOR – FORMER NISSAN BOSS CARLOS GHOSN USED 2 OF ITS PLANES ILLEGALLY TO ESCAPE FROM JAPAN
On 3 January, Al Jazeera reported that MNG Jet had filed a criminal complaint about the incident, after Turkish police arrested 7 people, including 4 pilots, as part of an investigation into Ghosn’s passage through Istanbul on the way to Lebanon. It says that MNG Jet said in its statement it leased 2 jets to 2 different clients in agreements that “were seemingly not connected to each other”.
BELGIUM: COLLECTORS LINKED TO CONTROVERSY OVER COUNTERFEIT RUSSIAN ARTWORKS ARRESTED
On 3 January, ArtForum reported that Igor and Olga Toporovsky, who allegedly lent fake works to the Museum of Fine Arts Ghent for a 2017 exhibition dedicated to the Russian avant garde, have been arrested in Belgium. They were detained on suspicion of fraud and money laundering last month.
UK: COURT OF APPEAL RESTORES £27 MILLION WORLDWIDE ASSET FREEZING ORDER IN LONG-RUNNING CASE
On 3 January, Insurance Marine News reported on the latest twist in a long-running case in which, having obtained judgment for £37 million, against an Asian businessman, that businessman is said to have transferred £27 million to his mother in Taiwan, and he was then jailed after trying to flee the UK (on a ferry from Liverpool). The Court restored the order against the businessman’s mother.
MASS GPS SPOOFING AT PORTS IN CHINA
On 3 January, Insurance Marine News reported that the American Club, a P+I insurance club, has noted that there had been an increase of GPS spoofing incidents in and around coastal areas and ports in China during the past year. It says that a US Coast Guard investigation discovered that hundreds of ships had been spoofed and that the activity had been continuing for months, affecting ships across Shanghai simultaneously and mostly vessels navigating the Huangpu River. The Club said that it was likely that the kinds of mass disruptions as seen in the Black Sea and Chinese maritime regions were occurring elsewhere.
See also a report from the Massachusetts Institute of Technology –
Ghost ships, crop circles, and soft gold: A GPS mystery in Shanghai
This report from 15 November said that a sophisticated new electronic warfare system is being used at the world’s busiest port. But, it asks, is it sand thieves or the Chinese state behind it?