Diamond.net reported on 8 January that Belgium has introduced legislation requiring managers of diamond companies to prove their good conduct and knowledge of money laundering laws. Firms wishing to trade diamonds or continue as an accredited diamond business must submit criminal records or proof of good conduct for the company and each senior officer. New entrants to the sector must provide the documentation to the Federal Public Service Economy before being accepted, while existing traders have one year to submit their paperwork.
The Netherlands has issued (including in English) these guidelines, which are similar to those issued by the EU.
8th January 2020
PODCAST: “MONEY TREE: TEAK AND CONFLICT IN SOUTH SUDAN”
In the first TRACE podcast of 2020, C4ADS Senior Analysts Stella Cooper and Cecile Neumeister discuss their report on the little-known problem of illegal logging in South Sudan and the environmental, social, financial and security implications.
MILLIONS OF DOLLARS-WORTH OF ILLEGAL TEAK IS COMING FROM A VERY UNLIKELY SOURCE – SOUTH SUDAN
The C4ADS report referred to in the TRACE podcast starts by saying that illegal logging is the most lucrative natural resource crime, currently valued between $52 and $157 billion per year. Deforestation of teak has escalated as global demand grows, a direct consequence of teak’s high value and scarcity. Originally planted in the 1940’s by British colonists, South Sudan’s teak reserves are among the largest in Africa. It is said that the report serves as the first comprehensive review of the regulatory and security environment surrounding this little-researched topic, and it examines how conditions within South Sudan have made its teak sector more vulnerable to exploitation from illicit actors and contributed to the country’s instability; including how international demand for teak has exacerbated underlying issues plaguing South Sudan’s teak sector.
UK NOTICE TO EXPORTERS – EU DUAL-USE EXPORTS LIST UPDATED
On 8 January, the Department for International Trade published Notice to Exporters 2020/01, which advised of updates to the control list (Annex 1 of the relevant EU Regulation) to reflect the changes previously agreed in the international export control regimes. It also said that open general export licences (OGEL) affected will be updated and republished shortly.
TRAVELEX ‘BEING HELD TO RANSOM’ BY HACKERS SAID TO BE DEMANDING $3 MILLION
The Guardian reported on 7 January that the currency exchange business had been forced to take down its websites as a consequence of the attack. The attack took place on 31 December and involved 5GB of customers’ personal data — including social security numbers, dates of birth and payment card information. Travelex, which is based in London, has a presence in more than 70 countries with more than 1,200 branches and 1,000 ATM worldwide. It processes more than 5,000 currency transactions every hour.
PANAMA: COUPLE FOUND WITH $257,000 CASH JAILED
Newsroom Panama reported on 7 January that 2 people found with $257,672.36 stuffed into 2 suitcases and a piggy bank on 3 January have been jailed following a court appearance and a plea deal. The couple could not justify the amount of money and took taking advantage of the penalty agreement and took responsibility for the money seized.
PANAMA: FORMER LEGISLATOR CHARGED WITH EMBEZZLEMENT AND MONEY LAUNDERING
On 7 January, Newsroom Panama reported that former Panamenista legislator Adolfo Beby Valderrama was formally charged with money laundering and embezzlement. As well as Valderama, there are already 10 people charged in this case, including former PRD deputy Jaime Pedrol and former Pandeportes directors, Roberto Arango and Mario Pérez, among others.
PANAMA STAYS ON FRENCH TAX HAVEN LIST
On 7 January, Newsroom Panama reported that France has updated its list of tax havens having removed Guatemala, but Panama remains on the list which includes 13 countries or territories – Anguilla, Bahamas, Fiji, Guam, US Virgin Islands, BVI, Oman, American Samoa and Samoa, the Seychelles, Trinidad and Tobago, and Vanuatu.
FEDERAL DISTRICT COURT OVERTURNS OFAC’S $2 MILLION FINE AGAINST EXXON MOBIL
On 7 January, an alert from Crowell Moring was concerned with the overturning of a $2 million fine levied by OFAC against Exxon Mobil Corporation for alleged violations of the Ukraine-Related Sanctions Regulations. The 2017 penalty had related to 8 contracts with the the President and Chairman of the Board of Russian state-owned oil company Rosneft in 2014, which was not itself designated as an SDN. The alert says that, going forward, OFAC and other Executive branch agencies may be less willing to provide commentary on the meaning of OFAC sanctions regulations outside of carefully-vetted guidance such as OFAC’s FAQ, or formally requested interpretive guidance.
AML RISKS ARISING FROM INVESTMENT IN THE CANNABIS INDUSTRY
On 6 January, an article from Baker McKenzie said that the prospective relaxation of cannabis regulations in jurisdictions around the world offers UK businesses investment opportunities. However, investors should be wary of potential exposure under UK AML legislation and consider taking appropriate safeguarding actions prior to any transaction. It says that a discrepancy between cannabis laws in the UK and those in other jurisdictions creates a potential problem under UK AML legislation for UK businesses looking to invest in the legal cannabis industry abroad, or otherwise enter into arrangements with companies in the industry (for example, through the provision of debt finance or insurance). It says that there is currently no court of government guidance to date, and then goes on to consider the “Spanish bullfighter” defence. This defence is available under POCA in respect of criminal conduct, which is legal in the country in which it occurs, if the criminal conduct would attract a maximum custodial sentence of 12 months in the UK. It also mentions a recent Lloyds of London circular about the provision of insurance, but says that businesses may feel uncomfortable acting as if POCA will not apply in the absence of clear guidance from the courts or the government.
SFO SECURES A SIXTH DPA
On 6 January, a blog post from Herbert Smith Freehills reported on a deferred prosecution agreement agreed between the SFO and Guralp Systems Ltd and approved in October 2019. GSL agreed to disgorge relevant profit of £2,069,861 in relation to charges of conspiracy to make corrupt payments and failure to prevent bribery by its employees, both in respect of South Korean business; although 3 GSL personnel, who were also charged with conspiracy to make corrupt payments, were subsequently acquitted.
LONDON POLICE CONSIDER ASSET FREEZES IN CRACKDOWN ON VIOLENCE AND MID-LEVEL DRUG DEALERS
On 8 January, KYC 360 reported that unexplained wealth orders, seen as a tool for seizing high-end London real estate from overseas kleptocrats, may soon be put to use against mid-level drug dealers and other criminals fuelling violence in the U.K. capital.
EXCESSIVE FISHING BECOMING ‘INSTRUMENT OF NATIONAL POWER’ IN OCEANIA, PACIFIC
USNI News on 7 January reported that the nations in SE Asia facing an existential threat from illegal fishing are the ones least able to protect themselves from it, the senior US Coast Guard officer in charge of operations has said, and that 20% of fishing hauls is illegally caught, China is by far the nation with the largest long-distance fishing fleet, and Taiwan ranks second.
MISDECLARED LITHIUM BATTERIES CAUSED FIRE ON CONTAINER SHIP ON 5 JANUARY
On 8 January, Loadstar reported that Chinese authorities say that the cause of the blaze which broke out on the Cosco Pacific on 5 January was a shipment of misdeclared lithium batteries. Cosco is reported as saying that the 3 containers in which this cargo was loaded were due to be unloaded in India, declared as “spare parts and accessories”.
CAMBODIA DEPORTS NORTH KOREAN WORKERS, SHUTS DOWN BUSINESSES TO COMPLY WITH SANCTIONS
On 8 January, Radio Free Asia reported that the authorities in Cambodia have arrested 16 North Koreans, shortly after announcing that they would shut down North Korean-owned businesses in an attempt to comply with UN sanctions, which require all North Koreans working abroad had to be repatriated by the end of 2019. The 16 suspects were using passports with tourist visas that were expired, and were working as computer technicians, installing illegal software.
NIGERIA TO REOPEN PETER ODILI’S MONEY LAUNDERING CASE, 13 YEARS LATER
Information Nigeria on 8 January reported that the Economic and Financial Crimes Commission has announced its decision to reopen the money laundering case against Peter Odili, former governor of Rivers state. He had obtained a court injunction preventing the EFCC from investigating or arresting him in 2007, and the EFCC was also restrained from probing the finances of the Rivers state government.
NEW ZEALAND PORN SITE OPERATOR CHARGED IN THE US WITH SEX TRAFFICKING – WILL BE EXTRADITED IF FOUND
On 8 January, Radio New Zealand reported that a California prosecutor says the US Government will seek to extradite a New Zealand man charged with child sex trafficking and sex trafficking by force, fraud and coercion, if he is found to be in the country. Michael James Pratt, 36, is accused of the crimes which are linked to the operation of a porn website. He is believed to have left the US, where he had lived since 2007.
BILLIONAIRE’S LETTERS TO CONGO’S KABILA WERE SOUGHT BY SFO IN UK
BNN Bloomberg on 8 January reported that UK fraud prosecutors sought an Israeli billionaire’s correspondence with the former President of DRC Joseph Kabila as part of one of their largest bribery investigations, a lawyer for the SFO said at a London trial of Anna Machkevitch, 37, who is accused of failing to produce the documents concerning her mining magnate father, Alexander. It is said that the case is an off-shoot from the SFO’s 7-year investigation into Eurasian Natural Resources Corporation (ENRC), a mining company owned by Machkevitch senior and 2 billionaire partners. It is said that the SFO is investigating how ENRC acquired valuable mineral assets in Congo.
10 CONFLICTS TO WATCH IN 2020
A blog post from ETH Zurich listed the 10 conflicts which it says one should keep an eye on in 2020 – Afghanistan, Yemen, Ethiopia, Burkina Faso, Libya, US-Israel-Iran and the Persian Gulf, US-North Korea, Kashmir, Venezuela and Ukraine.
NEPAL DEPORTS 122 CHINESE NATIONALS AFTER CYBER RAID
On 8 January, the Daily Mail reported that Nepal on Wednesday deported 122 Chinese nationals who were arrested on suspicion of operating a large-scale cyber fraud operation in Kathmandu last month.
UK CONSOLIDATED LIST OF STRATEGIC MILITARY AND DUAL-USE ITEMS THAT REQUIRE EXPORT AUTHORISATION
On 8 January, the Department of International Trade published updated information on controlled goods requiring an export licence.
REPORT ON HOW REGULATIONS TO IMPLEMENT COUNCIL DIRECTIVE (EU) 2018/822 ON INTERNATIONAL TAX ENFORCEMENT WILL BE USED IN DIFFERENT EU EXIT SCENARIOS
On 8 January, a news release from HM Treasury advised the release of a report on how the power in Finance Act 2019, which enables regulations to implement Council Directive (EU) 2018/822, will be used in different EU Exit scenarios. The powers allow for regulations to be made to implement the Directive concerned with administrative cooperation in the field of taxation as regards to mandatory automatic exchange of information in the field of taxation in relation to reportable cross-border arrangements that may have involved evasion of tax.
US: DWINDLING CONFIDENCE IN CORPORATE COMPLIANCE PROGRAMMES
On 8 January, an article from FTI Consulting said that findings from the 19th annual edition of the Law in the Boardroom study show eroding confidence in internal ethics and compliance programs among respondents. Only 35% reported feeling “very confident” compared to 46% a year ago. It speculates that the increasingly complex regulations and legislation faced by today’s organisations, which target an array of new risks that need to be addressed by corporate compliance and oversight, may be the reason for the fall.
SWITZERLAND TO PRIORITISE FIGHT AGAINST ‘NDRANGHETA IN 2020
On 8 January, OCCRP reported on recent commitments made by public officials to prioritise the fight against organised crime in 2020, an issue whose urgency has been underscored by the significant inroads made by the Calabrian ‘Ndrangheta — one of the world’s most powerful organised crime groups. It was said that the fight against the Italian mafia is a recurring topic that Switzerland will continue to deal with in 2020.