14th January 2020
US TREASURY UNVEILS NEW RULES FOR FOREIGN INVESTORS IN US BUSINESSES
On 13 January, the Wall Street Journal reported that the Treasury had unveiled rules designed to increase scrutiny of foreign investors whose potential stakes in US businesses could pose a national security threat. The rules clarify the circumstances in which foreign investors will be required to seek permission from CFIUS before they can acquire a stake in a US business that handles personal data or technology used by the US military. Areas affected could include telecom, energy or transportation industries, or handle sensitive personal data, such as health, genetic testing or geolocation information. Investors in Australia, Canada and the UK will avoid scrutiny, and other countries could be added to the list.
KRATOM: HELPFUL HERB OR DANGEROUS DRUG?
On 13 January, NPR carried an article about a supplement that acts in the brain a bit like an opiate and is available in many places to children. Usually, the leaf, from a tropical SE Asian tree, is chewed, brewed or crushed into a bitter green powder and chemicals in the herb interact with different types of receptors in the brain. Often sold in the US in a processed form as both a pick-you-up and, in larger amounts, a sedative. The FDA and DEA Food worry that kratom carries the risk of physical and psychological dependency and, in some people, addiction.
ILLICIT TRADE IN SOUTH AFRICA CHALLENGES AND SOLUTIONS
Available online is this report, published in October, which says that the country still faces a number of challenges, including a significant threat from illicit trade. Some of the problems, it says, can be attributed to the many, long and porous borders with multiple country entry points, which are difficult to police comprehensively, as well as regional integration through the Southern African Development Community (SADC), which allows illicit goods to enter into South Africa from foreign seaports that have less oversight and enforcement, while poor legislation on goods-in-transit across Africa aggravates the problem. The scope and depth of illicit trade presents challenges for South Africa’s continued economic development, but the report says that there have been some positive developments in recent years suggesting progress in addressing some of the country’s underlying vulnerabilities to illicit trade.
UK: GAMBLING ON CREDIT CARDS TO BE BANNED FROM APRIL 2020
the Gambling Commission has announced a ban on gambling businesses allowing consumers in Great Britain to use credit cards to gamble, from 14 April. It is said that UK Finance estimate that 800,000 consumers use credit cards to gamble, and research undertaken by the Commission shows that 22% of online gamblers using credit cards to gamble are classed as problem gamblers.
PANAMA: 5 MARTINELLI EX-MINISTERS AMONG 24 TO TRIAL IN $33 MILLION HELICOPTER SCAM
On 13 January, Newsroom Panama reported that 5 former ministers and several former directors of entities of the administration of former President Ricardo Martinelli are among the 24, and the involves $33.1 million helicopter rental services processed by different state entities.
JERSEY, GUERNSEY AND ISLE OF MAN TO SHARE DATA WITH RUSSIAN AUTHORITIES
On 14 January, KYC 360 reported that Jersey, Guernsey and the Isle of Man are set to share details on bank accounts, properties, investments and other assets owned by Russian citizens to the Russian Federal Tax Service this year, despite the UK and Russia having cancelled an international agreement which facilitates the sharing of such financial information. Russia lifted all previous restrictions on Russian citizens holding overseas bank accounts from the beginning of January — as long in a jurisdiction which participates in automatic information sharing with the Russian tax authorities.
INDIA: SUPREME COURT ALLOWS FEDERAL AML AGENCY CAN SEIZE ASSETS OF JP MORGAN INDIA UNIT
On 14 January, KYC 360 reported that the permission was for allegedly violating foreign investment rules. The court had in July asked the Enforcement Directorate to probe JPMorgan’s role in allegedly helping a property developer in a case being investigated by the ED.
UNJUST ENRICHMENT AND JERSEY’S LEGAL ‘HOT POTATOES’
On 12 January, an article from Ogier concerned a long-running fraud case – still dealing with attempts to limit discovery – which it said illustrates the difficult task that the Channel Island courts sometimes have in comparing and distinguishing between developed principles of English law and foundational elements of the customary law of the islands, which borrows from French and other civilian law jurisdictions. The “hot potatoes” referred to are the question of the rights between wrongdoers to claim an indemnity or contribution outside the scope of the limited statutory scheme between joint tortfeasors, and (and more fundamental) the extent and nature of the doctrine of unjust enrichment under Jersey law.
CANADIAN MINING EXECUTIVE WON MILLIONS IN A LEGAL FIGHT WITH KAZAKHSTAN. WAS IT WORTH IT?
On 14 January, the MacLeans website in Canada reported that a Canadian mining executive’s decades-long tussle with Kazakhstan is finally over — he hopes. But even though he won, Paul Carroll doesn’t see much to celebrate. He went to Kazakhstan prospecting for gold and 25 years later, the 78-year-old Toronto-based mining executive ﬁnally reached the end of a seemingly endless legal battle with that country’s government. The ﬁght took him to courtrooms in Washington and tribunals in Stockholm and London. The Kazakhs always seemed to gain the upper hand — that is, until Carroll’s legal team convinced international arbitrators that an obscure bilateral treaty proved they were right all along and he was awarded nearly $53 million for his trouble.
LAOS REVIEW OF ITS AML/CFT POLICIES AND SYSTEMS
On 14 January, the Star Online reported that Laos is planning to proceed to the second evaluation of implementation measures for AML/CFT by regional FATF-style body, the Asia/Pacific Group on Money Laundering, in March this year. Laos had its first evaluation in 2010 and was placed in the grey list by FATF, causing difficulties for domestic commercial banks when transacting with banking partners overseas who had to close accounts with commercial banks in Laos. The country was removed from the list in 2017.
RECENT SOUTH AFRICAN PUBLICATION ON NON-PROFIT ORGANISATIONS AND FINANCIAL CRIMES
The National Law Review on 13 January reported that the Financial Intelligence Centre recently issued a public compliance communication on AML/CFT relating to non-profit organisations. The publication aimed to create “awareness within the NPO sector around the vulnerabilities that NPO face,” and sets out FATF principles relating to NPO. While FIC does not view all NPO as inherently high-risk entities, it does provide information on why certain NPO can pose a higher risk from a terrorist financing and money laundering perspective. The publication provides multiple recommendations for NPO, and also provides helpful guidance to third parties that have relationships with NPO. Many of the materials in the publication echo FATF recommendations and best practices, as well as material published by the US Treasury.
INSTEX FAILS TO SUPPORT EU-IRAN TRADE AS NUCLEAR ACCORD FALTERS
On 14 January, an article on EurActiv reported on the apparent failure of INSTEX, which was created by 3 EU States party to the JCPOA in January 2019 as a special purpose vehicle to help EU companies do business with Iran and facilitate non-US Dollar transactions to bypass and avoid breaking US sanctions. 6 European countries – Finland, Belgium, Denmark, Netherlands, Norway, and Sweden – joined the INSTEX. The article says that INSTEX has become a point of contention between Europe and the Trump administration, with Washington effectively threatening to sanction anyone using the mechanism. Though trade between Iran and the EU is still amounting to €6.3 billion, exports to Iran fell by 53% to €3.7 billion in the first 10 months of 2019, compared with the same period in 2018, and Iranian exports to the EU slumped by 94% to €586 million.
see also the latest EU news release on Iran –
EU ISSUED UPDATED TERRORISM SANCTIONS LIST
On 14 January, the EU published EU Regulation 2020/19/EU, the Annex to which provided an updated list of those persons, groups and entities subject to sanctions measures under EU Regulation 2580/2001/EC. This sanctions regime is separate from the EU regime implementing UN Security Council resolutions targeting Al-Qaida and ISIL/Da’esh. The EU also has its own sanction regime which allows the EU to apply sanctions autonomously to ISIL/Da’esh and Al-Qaida and persons and entities associated or supporting them.
See also EU Council Decision 2020/20/CFSP.
EUROJUST SUPPORTS MAJOR CRACKDOWN ON CAR SALES VAT FRAUD
A news release from the EU on 14 January was concerned with a day of simultaneous and coordinated actions in 9 EU countries, judicial and police authorities dealt a blow to a criminal organisation involved in large-scale VAT fraud with the sale of luxury cars. 26 persons were interviewed and 33 premises searched in Bulgaria, the Czech Republic, France, Germany, Spain, Latvia, Lithuania and Romania, with over €100 000, as well as luxury cars and products, seized. The suspects allegedly set up a VAT carousel for the purchase of luxury cars, buying vehicles on behalf of shadow companies controlled by French citizens.
INDIA: COMPLAINT AGAINST CUSTOMS OFFICIALS OVER DIAMOND EXPORT SCAM
On 14 January, NDTV reported a case which was referred to the CBI after a Directorate of Revenue Intelligence probe found alleged involvement of Customs officials in the conspiracy. The law enforcement agency has charged 17 individuals and companies, including 3 Mumbai-based senior Customs officials, for allegedly being part of a money laundering racket using over-invoiced import of diamonds. Rough diamonds were imported at “highly exaggerated value” to siphon off excess foreign exchange overseas to cover the differential cost of other imports and park money abroad for unlawful activities.
GERMANY HITS PESTICIDES WHOLESALERS WITH LARGE FINES FOR OPERATING A CARTEL
On 14 January, Compliance Week reported that Germany’s competition regulator has fined seven pesticide wholesalers a total of €155 million for operating a cartel for 17 years between 1998 and 2015 – several individuals, reported to be managers, have also been fined.
HOW DID ALLEGED UKRAINIAN MONEY LAUNDERERS BUY UP DOWNTOWN CLEVELAND?
An opinion piece in the Belt Magazine on 14 January posed this question. This followed the filing in May 2019 of a lawsuit filed by the Ukrainian financial institution PrivatBank “alleging massive money laundering via American real estate”. Those accused allegedly funnelled illegally-obtained funds into American real estate deals and, during the course of this alleged money laundering, they became the largest property owners in Cleveland.
US FEDERAL TAX EVASION: WHY IT MATTERS AND WHO DOES IT
On 14 January, Journalist Resources at the Shorenstein Center at the Havard Kennedy School published a briefing providing what it terms “a few ins and outs of federal tax evasion” — why it matters, why people do it and how they do it.
UK OIL PRODUCER SEES SHARES TUMBLE 70% ON LOAN FRAUD
On 14 January, Oil Price.com reported that London-listed oil producer Lekoil has suspended trade in its shares amid a budding scandal involving a loan from a company claiming to act on behalf of the Qatar sovereign investment fund. The Financial Times reported that this is not the first time a Nigerian-focused oil company has had trouble. In 2018, Lekoil’s partner in the Ogo field was found guilty of money laundering and fraud, for example. Lekoil bought off Afren and currently has 40% in the field.
MEDITERRANEAN OLIVE OIL PRODUCER USES IBM BLOCKCHAIN TO FIGHT FOOD FRAUD
On 14 January, the Coin Telegraph reported that one of the largest olive oil producers in the southern Mediterranean has announced that it is using IBM’s blockchain technology to provide traceability for its Terra Delyssa extra virgin olive oil. Utilizing blockchain allows it to track Terra Delyssa across 8 quality assurance checkpoints, including the orchard where the olives were grown, the mill where olives were crushed, and the facilities where the oil was filtered, bottled and distributed.
US SUPREME COURT REJECTS ATTEMPT BY SUDAN TO REVIEW EMBASSY BOMBING CASE THAT AWARDED BILLIONS TO VICTIMS’ FAMILIES
On 14 January, Jurist reported that the Court had denied a review filed by the Republic of Sudan concerning the 1998 embassy bombings in Kenya and Tanzania. In 2017, a Court of Appeals awarded several billion dollars to family members of victims of the embassy bombings. A 2001 lawsuit filed by US citizens held Sudan liable for damages and injuries caused by the attacks on the grounds that it had provided sanctuary to the Al Qaeda members who committed the bombings; and family members of foreign nationals working at the embassies at the time of the attacks filed a lawsuit against Sudan in 2017.
LAOTIAN HELD IN JAPAN FOR TRYING TO EXPORT IVORY TAKEN FROM ZOO
Nippon.com on 14 January reported that police have arrested a Laotian on suspicion of trying to export ivory and other items he took from a Japanese zoo where he worked. In July 2019, the suspect allegedly tried to export to Laos via Vietnam some 220 items, including African elephant ivory, Asian elephant bones and hair, white rhinoceros bones, cheetah teeth and deer horn, packed in a suitcase and other containers.
UK: CONTEMPT PROCEEDINGS FOR PRE-ACTION CONDUCT
On 13 January, an article in the Law Society Gazette reported that a landmark decision has held that the High Court has jurisdiction to commit for contempt of court in respect of false witness statements made under a pre-action protocol (PAP) even though proceedings were never issued.
FENTANYL: THE MOST DANGEROUS ILLEGAL DRUG IN AMERICA
An essay from the RAND Corporation on 13 January reported that researchers at RAND recently published the most comprehensive study to date on what’s driving the crisis, how it could play out in the future, and what may be done to save more lives. Findings include that the crisis is only likely to get worse. The lead author for the report is quoted as saying, “We haven’t seen anything like this since heroin first hit the streets more than 100 years ago”.
UK FINAL REGULATIONS FOR DISCLOSURE OF CROSS BORDER TAX ARRANGEMENTS UNDER EU DIRECTIVE
On 14 January, an article from Out-Law says that UK’s final regulations to implement EU Directive DAC6, which is designed to enable EU tax authorities to share information about cross-border tax schemes include some helpful changes. The rules will now only apply where there is an EU tax advantage, and the penalty regime has been changed so as not to unduly penalise genuine mistakes. HMRC intends to issue guidance before the rules come into force on 1 July.
AMAZON TO RAMP UP COUNTERFEIT REPORTING TO LAW ENFORCEMENT
On 13 January, Reuters reported that Amazon.com Inc is planning to give more data on counterfeit goods to law enforcement in a further crackdown on fakes listed on its e-commerce sites, and comes as Amazon faces public scrutiny over how it polices counterfeits and allegedly unsafe products on its platform.
INTERNATIONAL ASSET RECOVERY EFFORTS IN CORRUPTION CASES, 2010–2019
The World Bank/UNODC Stolen Asset Recovery Institute is conducting a new study on international asset recovery efforts in corruption cases, based on a questionnaire for country authorities. The study aims to collect data on global progress in international efforts to recover and return proceeds of corruption in a systematic and internationally comparable way. The most recent study on this subject, the 2014 StAR/OECD report analysed asset recoveries by OECD countries between 2010 and June 2012. No comparative data on international returns of proceeds of corruption since June 2012 or for non-OECD countries is available, a gap that this study seeks to fill.
GUATEMALANS DEMAND ARREST OF OUTGOING PRESIDENT FOR CORRUPTION
On 13 January, Al Jazeera reported that Guatemalan civil society groups are pressuring authorities to arrest President Jimmy Morales for corruption as soon as his successor takes office. As president, Morales has immunity from prosecution, but this will lapse when the president-elect is inaugurated, but Morales will likely regain immunity just hours later when he is expected to be sworn into the Central American Parliament (Parlacen), a multilateral body for regional cooperation grew out of a 1980s peace process.
US BANS FUGITIVE MOLDOVAN TYCOON FROM ENTRY FOR ‘SIGNIFICANT CORRUPTION’
Rferl reported on 13 January that Moldovan oligarch and former head of the Moldova’s Democratic Party (PDM) Vlad Plahotniuc has been banned from entering the US by the US State Department. Moldovan anti-corruption prosecutors have charged Plahotniuc, who fled the country in June.
AFRICAN OLIGARCHS TURN TO ASIAN OFFSHORE DESTINATIONS
A Financial Times article on 13 January reported on the diversification of African capital flight to Asian centres such as Dubai, Singapore and Hong Kong, with the daughter of the former Angolan president being said to have moved her residence and companies to Dubai, as had the Guptas, relocating from South Africa; and looking at why it is happening.