TUNISIA: FATF AML/CFT ASSESSMENT FOLLOW-UP REPORT

On 7 January, FATF published the 4th follow-up report on Tunisia, following its mutual evaluation in 2016.  The ratings for 9 FATF Recommendations have been upgraded to “compliant” or “largely compliant”.   However, Tunisia will remain in enhanced follow-up and should submit its next enhanced follow-up report to FATF in November 2020.

http://www.fatf-gafi.org/media/fatf/documents/reports/fur/MENAFATF-FUR-Tunisia-2020.pdf

tunisia

UK BENEFICIAL OWNERSHIP REPORTING REQUIREMENT CHANGES

A news releases from Companies House on 10 January advised that organisations supervised under AML legislation will need to report certain persons of significant control (PSC) discrepancies to Companies House under EU 5th AML Directive requirements implemented from 10 January.  The requirement extends to any obliged entity required to carry out CDD under AML regulations. These entities include –

  • credit institutions
  • financial institutions
  • auditors, external accountants and tax advisors
  • notaries and other independent legal professionals
  • trust or company service providers
  • estate agents, including when acting as intermediaries
  • other persons trading goods in cash amounting to 10,000 euros or more
  • gambling services
  • exchange services between virtual and fiat currencies
  • custodian wallet providers
  • art dealers in galleries and auction houses
  • art dealers in free ports

It is said that discrepancies must be reported if there’s a material difference between the institution’s and Companies House sets of information. Companies House will investigate these discrepancies and, if necessary, contact the company.

https://www.gov.uk/government/news/new-reporting-requirement-for-obliged-entities-comes-into-force

It also released guidance on how to tell Companies House if the information held as an obliged entity, about a beneficial owner is different from the information on the people with significant control (PSC) register.  It says that it will investigate the discrepancy and, if it is valid, it will contact the company to ask for their comments and request that they resolve the discrepancy to make sure the PSC register is up to date.  The company will not be informed that a discrepancy report has been made about their PSC register information, but Companies House will tell the obliged entity the outcome of the investigation.

https://www.gov.uk/guidance/report-a-discrepancy-about-a-beneficial-owner-on-the-psc-register-by-an-obliged-entity

OTHER THINGS YOU MAY HAVE MISSED – JANUARY 9

9th January 2020

NORTH KOREA SEEKS SCRAP TYRES, $500,000 IN FOREIGN INVESTMENT FOR RUBBER PLANT

On 8 January, NK News reported that a North Korean trading company wants foreign investors to help with a rubber factory, with a public call for outside funding – $500,000 and an “in-kind investment of scrap & second-hand tires”.  This comes despite UN ban on joint ventures with DPRK companies.

https://www.nknews.org/2020/01/north-korea-seeks-scrap-tires-500000-in-foreign-investment-for-rubber-plant/

NEW TAX LAWS COULD ENHANCE IRELAND AS TAX HAVEN AND DOUBLE-TAX SOME COMPANIES

An article in Fortune magazine on 8 January says that, for years, Google and other companies employed a legal tax avoidance strategy called the Double Irish, Dutch sandwich and involving transferred ownership of intellectual property.  It says that one of the Irish laws that made the tactic possible expired on 1 January due to international pressure from many countries.  However, it says that the 2017 US tax rules could have some unexpected — and undesired — consequences, and some provisions could unwittingly do the opposite of what legislators originally intended.

https://fortune.com/2020/01/08/corporate-tax-haven-laws-loopholes/

BANKS TAKING A CLOSER LOOK AT ENVIRONMENTAL AND SOCIAL RISKS IN CREDIT UNDERWRITING

On 8 January, the Wall Street Journal reported that a survey has revealed that 67% of 182 banks worldwide screen their loan portfolios for environmental, social and governance risks when considering loans to corporate borrowers.  Some banks are making commitments to stop lending to companies in industries viewed as high-risk.

https://www.wsj.com/articles/banks-taking-a-closer-look-at-esg-risks-in-credit-underwriting-11578438224

2 BUSINESSMEN SETTLE BRIBERY CHARGES LINKED TO VENEZUELA PROBE IN US

In its 10 January blog, the Wall Street Journal reported that 2 businessmen – Juan Jose Hernandez Comerma of Florida and Charles Quintard Beech III of Texas – have pleaded guilty to foreign bribery charges for their roles in a scheme to secure contracts from Venezuela’s state oil giant PDVSA, the latest admissions in a broad investigation.

https://blogs.wsj.com/riskandcompliance/2017/01/10/two-businessmen-settle-bribery-charges-linked-to-venezuela-probe

PROSECUTOR GETS 5 MONTHS TO CLOSE PANAMA’S BIGGEST CORRUPTION PROBE

Newsroom Panama on 8 January reported that Prosecutor Zuleyka Moore has been granted 5 more months to complete investigations into the Odebrecht bribery scandal.  It says that Panama remains the only country where no one has been punished, although at least $90 million was paid in bribes.

https://www.newsroompanama.com/news/prosecutor-gets-5-months-to-close-panamas-biggest-corruption-probe

ANTIQUITIES AND ANCIENT ART – LEGAL ISSUES IN A CHANGING TRADE

On 8 January, an article from Boodle Hatfield refers to concerted efforts by source nations to encourage regulation of the trade in antiquities, resulting in a proliferation of national laws, international treaties and conventions that deal with the protection, movement and marketing of ancient objects.  It says that small dealers and auction houses are reportedly facing a rising number of challenges when dealing in objects coming to the market that have been removed from their country of origin, even if they were removed legitimately or are not subject to restrictions.  It also says that larger auction houses have also faced difficulties in recent years involving multi-million pounds lots that were sold amidst protests from national governments.  The article goes on to examine the current state of play.  It then provides practical points for the trade – on due diligence and how to respond to claims.  Anyone involved in the antiquities market must look carefully at who is selling an object, their reputation, the physical object and its provenance and the nature of the transaction.

https://www.boodlehatfield.com/the-firm/articles/antiquities-and-ancient-art-legal-issues-in-a-changing-trade/

LEBANESE HEZBOLLAH’S CRIMINAL NETWORK BREACHES US, HELPS IRAN

On 9 January, Homeland Security Today carried an article saying that Lebanese Hezbollah is using money laundering and the drug trade — and used cars — to raise revenue for their own operations and benefit their Iran regime benefactors, a leading DEA official has said.  It also says that of 68 groups designated as foreign terrorist organizations by the US, the DEA has linked 25 of those to drug trafficking or some role in the drug trade. The type of criminal activity conducted by Hezbollah’s networks varies from continent to continent, but in North America the main operations are money laundering, the used car trade, and drug trafficking.  In South America, Hezbollah is said to have benefited from a “long history of Islamic extremism in the Tri-Border Area” and its ties to Colombian cartels and a corrupt Venezuela government.

https://www.hstoday.us/subject-matter-areas/border-security/drugs-laundering-and-used-cars-hezbollahs-criminal-network-breaches-u-s-helps-iran/

US COAST GUARD COULD FACE A NARCO SUBMARINE EPIDEMIC IN 2020

On 8 January, Homeland Security Today reported a Forbes article which says that the number of narco submarine incidents has risen sharply in recent years.  2018 saw 35 reported, and 2019 saw 36.  For every sub stopped, it says, many more get though.  The majority are actually low-profile vessels (LPV) which do not fully submerge, and in recent years the trend has been to reduce the cargo capacity, instead sending more subs.

https://www.forbes.com/sites/hisutton/2020/01/07/why-america-could-continue-to-face-a-narco-submarine-epidemic-in-2020/#b9621fe73694

US CUSTOMS TO ASSESS COLLECTION OF DNA SAMPLES

On 8 January, Homeland Security Today reported that US Customs and Border Protection has initiated a limited, small-scale 90-day pilot programme to assess the operational impact of proposed regulatory changes that would require the collection of DNA samples from certain individuals in CBP custody.  The pilot will assess the operational impact of a DoJ proposed amendment to the regulation that requires the collection of DNA samples from certain individuals (listed in the article).

https://www.hstoday.us/subject-matter-areas/border-security/cbp-to-assess-collection-of-dna-samples/

FIRM CLEARED OF IMPROPERLY TRANSFERRED $2.4 MILLION FROM ITS ATTORNEY TRUST ACCOUNT TO PONZI SCHEMER

On 9 January, Law.com reported that the New Jersey Supreme Court has cleared law firm Fox Rothschild of claims that it improperly transferred $2.4 million from its attorney trust account to a now-convicted Ponzi schemer, finding that law firms are under no obligation to break with clients’ directions unless they are aware of a competing claim on funds.

https://www.law.com/njlawjournal/2020/01/09/nj-justices-clear-fox-rothschild-in-case-over-ponzi-scammers-transfers/

REFORMING UK SAR — REFLECTIONS ON THE REFORM PROGRAMME

On 8 January, a briefing from MacFarlanes says that the UK government has pledged to reform suspicious activity reports (SAR) to ensure UK enforcement agencies and IT systems are prepared to effectively prevent and tackle money laundering and terrorist financing.  The article considers the strength of the UK’s existing SAR regime and suggest what changes practitioners can expect from the reform programme as we enter 2020, and as announced in the Economic Crime Plan 2019.  It is said that the reform programme is both a response to a long-standing and widely acknowledged need for reform, as well as to a specific call for action by FATF at the end of 2018 in the mutual evaluation report.

https://www.macfarlanes.com/what-we-think/in-depth/2020/reforming-sars-reflections-on-the-reform-programme/

PHILIPPINES: MONEY LAUNDERING CHARGES FOR REMITTANCE BUSINESS IN $81 MILLION BANGLADESH BANK CASE
On 9 January, Inquirer.net reported that the DoJ had filed charges money laundering against the owners of local remittance firm Philrem Service Corporation in connection with the $81 million Bangladesh Bank cyber theft in 2016.
https://business.inquirer.net/286811/doj-file-money-laundering-charges-vs-philrem-for-81-m-bangladesh-bank-caper

MILLIONS IN EU ERITREA AID REPORTEDLY USED FOR FORCED LABOUR

On 9 January, EU Observer reported that after the EU gave Eritrea €20 million to build a road and stop the flux of migration, this road appears to be constructed by forced conscripts, according to the New York Times in a a system the UN calls “tantamount to enslavement”.

https://euobserver.com/tickers/147074

MEDICAL CANNABIS: UK REPORT ON RECENT DEVELOPMENTS

On 9 January, the House of Lords Library published a briefing paper which provides information on recent developments surrounding cannabis use for medicinal purposes.

http://researchbriefings.files.parliament.uk/documents/LLN-2020-0008/LLN-2020-0008.pdf

SEC TRACES $3.5 MILLION BACK TO ALLEGED FRAUDSTER BEHIND FAKE CRYPTO MINE

The Coin Telegraph on 9 January reported that the SEC has pressed charges of fraud against Donald Blakstad, crypto mining company Energy Sources International Corporation (ESI) and vehicle part company Xact Holdings Corporation, and described ESI as “a purported cryptocurrency mining operation”.  Blakstad allegedly gathered $3.54 million from at least 14 different investors via fraudulent offerings.  The SEC also charged Blakstad with accounts of insider trading in 2019.

https://cointelegraph.com/news/us-sec-traces-35m-back-to-alleged-fraudster-behind-fake-crypto-mine

FORMER HEAD OF POLAND’S FINANCIAL REGULATOR INDICTED FOR CORRUPTION

On 9 January, TVN24 reported that the state prosecutor had indicted Marek Chrzanowski, who was appointed in 2018, and who has denied the allegations.

https://tvn24.pl/tvn24-news-in-english,157,m/polish-prosecutor-indicts-former-head-of-financial-regulator,999131.html

FOUNDER AND PRESIDENT OF ONLINE GAMING COMPANY PLEADS GUILTY TO SECURITIES AND WIRE FRAUD

A DoJ news release on 8 January reported that Robert Alexander, president of an online gaming company, had induced investors through false statements about the health of his company and his own background.

https://www.justice.gov/usao-sdny/pr/founder-and-president-online-gaming-company-pleads-guilty-securities-and-wire-fraud

UK: FORMER FRESHFIELDS LAW FIRM TAX HEAD CHARGED IN GERMANY OVER ALLEGED FRAUD SCHEME

On 9 January, City AM reported that the former head of tax at law firm Freshfields Bruckhaus Deringer – Ulf Johannemann, who resigned last year has been charged by German prosecutors for his part in a suspected fraudulent trading scheme, the so-called “Cum-Ex” fraud.

https://www.cityam.com/former-freshfields-tax-head-charged-over-alleged-fraud-scheme/

MALTA RECORD €2.34 MILLION FINE FOR UNAUTHORISED GAMBLING

On 9 January, Calvin Ayre reported that Malta’s gambling regulator has issued a record financial penalty against Blackrock Media Ltd for offering gambling services without permission.  Blackrock Media is said to be owned by Dutch firm Blackrock Entertainment N.V., which operates the Curacao-licensed Wild Sultan online casino brand.

https://calvinayre.com/2020/01/09/business/malta-regulator-record-penalty-unauthorized-gambling/

ISLE OF MAN LEGISLATION ALLOWING FOR EU TURKEY SANCTIONS

The Order Paper for the 21 January sitting of the Island’s parliament includes the European Union (Turkey Sanctions) Order 2019 and Turkey Sanctions Regulations 2019, which give effect to EU Regulation 2019/1890/EU in the Island with certain modifications.  To date, of course, no person or entity has been designated under the EU sanctions regime.

http://www.tynwald.org.im/business/opqp/sittings/20182021/2019-SD-0476-0477-MEMO.pdf

THE UN 1540 COMMITTEE AND THE WMD TERRORISM REGIME COMPLEX

First published on 25 August, and available online, is this paper which looks at United Nations Security Council Resolution 1540 of 2004, the central international tool to prevent terrorism with WMD, saying that its implementation body, the 1540 Committee, has remained weak in terms of enforcement powers, budget allocation and human resources.  It examines specifically how the 1540 Committee has tried to overcome its structural constraints to achieve its objectives.  It argues that the lack of resources of the Committee has led it to seek to have matters dealt with by other organisations and actors and, while a large number of intermediary actors have integrated the provisions of UN SCR 1540 in their own agendas (e.g. FATF in its standards), the coordination of these actors by the 1540 Committee has remained largely ad hoc and lacked the systematic exchange of relevant information.

https://onlinelibrary.wiley.com/doi/abs/10.1111/1758-5899.12719#.XhYJmsFDP14.twitter

DETECTING, INVESTIGATING AND PROSECUTING EXPORT CONTROL VIOLATIONS: EUROPEAN PERSPECTIVES ON KEY CHALLENGES AND GOOD PRACTICES

In December, the Stockholm International Peace Research Institute published a paper saying that the effective implementation of arms and dual-use export controls is reliant on the ability of states to detect, investigate and—when appropriate—prosecute any violations that take place.  However, this aspect of export controls is also among the most challenging for states, including EU Member States.  This report highlights the broad and growing set of difficulties that EU Member States need to overcome when seeking to detect, investigate and prosecute export control violations.  In doing so, it details the range of approaches taken by states, outlines areas of good practice at the national level, and presents 7 cases (and accompanying lessons learned) where export control violations have been detected, investigated and prosecuted.  The report also includes a set of recommendations for steps that the EU could take to help to build national capacity and improve information sharing.  However, given that many of the challenges and good practices identified are shared by all states, the report has wider relevance beyond the EU.  The case studies examined involve –

  • Export of machine tools from Spain to Iran
  • Export of gas turbines from the Netherlands to Iran
  • Export of firearms from Germany to Colombia
  • Export of chemicals from Belgium to Syria
  • Export of valves from Germany to Iran
  • Export of aircraft spare parts from the UK to Iran
  • Exports of arms from Italy to Iran and Libya

https://www.sipri.org/sites/default/files/2019-12/1912_sipri_report_prosecuting_export_control_violations_0.pdf

 

 

GUIDANCE ON NEW UK AML REGIME COULD TAKE MONTHS TO ARRIVE

On 9 January, the Law Society Gazette reported that official guidance on how to comply with the new AML regime coming in to force from 10 January may not be available for months, the Solicitors Regulation Authority admitted.  It also said that that its enforcement activity will take into account the ‘limited time that firms have had to prepare’ for the 5th Anti-Money Laundering Directive.

https://www.lawgazette.co.uk/practice/guidance-on-new-aml-regime-could-take-months/5102676.article