The latest Suspicious Transaction Report podcast from RUSI discusses the challenges that will face financial institutions in 2020. It considers the recent financial crime news, and then considers the UK’s transposition of the EU’s Fifth Anti-Money Laundering Directive.
15th January 2020
PODCAST: THE FRENCH ANTI-CORRUPTION AGENCY
In the latest TRACE podcast, Emmanuel Farhat of the AFA discusses Sapin II and his organisation’s role in vetting the implementation of the corporate compliance programmes that the law mandates.
PODCAST: INTERVIEW WITH BILL BROWDER OF HERMITAGE CAPITAL AND THE MAGNITSKY ACT
In the latest podcast from KYC 360 Bill Browder, an American-born British financier and political activist, has for the past several years led an international campaign to expose corruption and human rights abuses in Russia. His efforts culminated with the 2012 passage of the Magnitsky Act, which forbids “gross abusers” of rights in Russia from banking in or visiting the US, and named after Browder’s lawyer Sergei Magnitsky, a whistleblower who died in a Moscow prison in 2009. In a wide-ranging interview Martin Woods talks to him about the scourge of corruption and money laundering through financial institutions and what can be done to stop it. In the interview, he said that officials in the UK and bankers throughout Scandinavia turned a blind eye to the influx of illicit Russian funds linked to Europe’s biggest money laundering scandals, according to a British financier and anti-corruption activist.
US SUPREME COURT: ANOTHER POTENTIAL LOSS FOR PROSECUTORS FIGHTING PUBLIC CORRUPTION
On 14 January, NPR reported that “Bridgegate” was the political scandal in 2013 that marked the beginning of the end of New Jersey Governor’s Chris Christie’s presidential hopes. The scandal’s legal consequences could prove more consequential if, as prosecutors fear, the criminal convictions in the case are thrown out by the Supreme Court. It is said that lawyers will argue that the actions involved were driven by a political motive, and while that may not be attractive, it is not fraud. The government argues that the use of public funds and property to carry out and cover-up the plot made it fraud. It is feared that should the Court rule against it, the government will lose a tool in the fight against public corruption.
UK FAILED TO ALERT EU OF 75,000 CRIMINAL CONVICTIONS AS IT WAS REQUIRED TO DO
|On 14 January, the New York Times reported that not only did the UK fail to report the crimes, it then concealed the omission to avoid “reputational impact”. A computer system failed to send details of 75,000 convictions — 1 in 3 of those required— during a period of 5 years. The arrangement allows local European police agencies to monitor people convicted of serious crimes abroad and to prevent offenders escaping convictions by moving to another EU country. The newspaper says that the mistake may weaken European trust in British law enforcement agencies as the UK and EU begin negotiating their post-Brexit relationship.|
WARNING OF ‘UNPRECEDENTED RISE’ IN PIRATE KIDNAPPINGS IN GULF OF GUINEA
On 14 January, Seatrade Maritime News reported that the Gulf of Guinea saw a more than 50% increase in kidnappings by pirates in 2019 with a sharp rise in the fourth quarter, according to the annual report of the International Maritime Bureau (IMB) – with 121 kidnappings of seafarers by pirates in the Gulf of Guinea in 2019 as a whole, compared to 78 in 2018.
LETTERS OF CREDIT IN AIRCRAFT LEASING: A REFRESHER
On 15 January, an article from Vedder Price said that letters of credit are often issued in aircraft leasing transactions as an alternative to the provision of a cash security deposit and, less frequently, the obligation to pay maintenance reserves in cash. It says that it is important to understand the differences that exist between different forms of letter of credit and some of the challenges that may arise for an enforcing lessor or financier.
US INDICTS 5 FOR ILLEGAL EXPORTS TO PAKISTAN’S NUCLEAR WEAPONS PROGRAMME
On 15 January, VoA reported that 5 Pakistani businessmen have been indicted in the US for operating an international network of front companies to export US-origin goods to Pakistan for use in that country’s nuclear weapons programme. The defendants, all associates of a Pakistan-based front company called “Business World”, were charged in federal court in New Hampshire. 2 Pakistani entities named — AERO and PAEC — are on the Commerce Department’s list of companies required to hold export licences because their activities are deemed contrary to US national security or foreign policy interests.
BORIS ROTENBERG LOSES SANCTIONS SUIT AGAINST NORDIC BANKS
On 15 January, ACFCS reported that Boris Rotenberg, a Russian businessman under US sanctions (but not EU ones) over the Ukraine conflict due to his close ties with President Vladimir Putin, has lost a discrimination lawsuit he filed in a Finnish court against 4 Nordic banks. The court rejected a complaint over the right to banking services and damages for discrimination. The court said he had failed to prove he was a person living in the EEA and therefore he was not entitled to basic banking services in Finland. It also ruled the banks’ concerns of significant financial risks related to Rotenberg’s transactions were not unfounded. The court ordered him to pay the banks’ legal expenses, amounting to around €530,000.
VENEZUELAN ATTORNEY AND BUSINESSMAN ADDED TO ICE MOST WANTED LIST FOR CONSPIRACY TO VIOLATE THE FOREIGN CORRUPT PRACTICES ACT AND MONEY LAUNDERING
On 15 January, a news release from US Immigration and Customs Enforcement announced that Raul Antonio De La Santisima Trinidad Gorrin Belisario, a Venezuelan attorney and businessman, a Venezuelan citizen with a residence in Miami, had been added to its “Most Wanted” list. It is said that he paid millions of dollars in bribes to 2 high-level Venezuelan officials to secure the rights to conduct foreign currency exchange transactions at favourable rates for the Venezuelan government.
EU NOTICE TO PANAMA OF THE POSSIBILITY OF BEING IDENTIFIED AS A NON-COOPERATING THIRD COUNTRY IN FIGHTING ILLEGAL, UNREPORTED AND UNREGULATED (IUU) FISHING
On 15 January, the EU published a Notice to Panama under EU Regulation 1005/2008/EC which provides that a third country may be identified as a non-cooperating third country if it fails to discharge the duties incumbent upon it under international law as flag, port, coastal or market State, to take action to prevent, deter and eliminate IUU fishing. Information gathered by the EU Commission and shortcomings identified during 2019 visits to Panama prompted the Commission to consider the possibility of identifying Panama as a non-cooperating third country in the fight against IUU fishing.
PAPUA NEW GUINEA MP RESPONDS TO ALLEGATIONS OF EXPLOITATION AND ABUSE IN LOGGING INDUSTRY
On 15 January, ABC in Australia says that, in the wake of an explosive documentary alleging corruption and abuse in PNG’s logging industry, a local member of parliament says authorities will investigate the companies involved. UK-based Sarawak Report claims communities are being recklessly exploited by foreign logging companies, and PNG authorities are ignoring their pleas.
TEXAS DOCTOR GUILTY FOR ROLE IN $325 MILLION HEALTH CARE FRAUD SCHEME INVOLVING FALSE DIAGNOSES OF LIFE-LONG DISEASES
A news release from the DoJ on 15 January advised that the $325 million health care fraud scheme involved Jorge Zamora-Quezada, MD, 63, falsely diagnosing patients with life-long diseases and treated them with toxic medications on the basis of that false diagnosis.
2 PERUVIANS PLEAD GUILTY TO OVERSEEING CALL CENTRES THAT THREATENED AND DEFRAUDED SPANISH-SPEAKING US CONSUMERS
A news release from the US DoJ on 15 January advised that 2 Peruvian men had pleaded guilty to conspiracy to commit mail fraud and wire fraud for operating a large fraud and extortion scheme. Johnny Enso Hidalgo Marchan, 40, and Rodolfo Hermoza, 44, oversaw call centres in Peru that used government impersonation, lies, and threats to steal money from thousands of US Spanish-speaking victims. Both men were extradited from Peru in December 2019.
THE THREATS FACING HONDURAS’S FIGHT AGAINST CORRUPTION
On 15 January, a Q&A from WOLA provides facts and context essential for understanding the MACCIH’s role and impact in combating corruption in Honduras, the troubling legislative agenda pushed by the Honduran Congress, and what potential there is for the US government to play a more productive role in advancing anti-corruption efforts in Honduras.
POLICE AND PROSECUTOR’S OFFICE DISRUPT PROPERTY FRAUD GROUP IN SOFIA
On 14 January, Bulgarian National Television reported that 6 people have been detained so far, including police officers, bailiffs, lawyers and employees from the Chief Directorate for Civil Registration and Administrative Services. Sources of the investigation say the group had forged documents and thus acquired properties.
ITALIAN APPEALS COURT ACQUITS SAIPEM, ENI IN ALGERIAN GRAFT CASE
On 15 January, Reuters reported that an Italian appeals court has acquitted oil services group Saipem and oil major Eni of corruption and lifted an asset seizure order in a long-running trial over bribery allegations in Algeria. It also acquitted a series of other defendants, including former Eni Chief Executive Paolo Scaroni and former Saipem CEO Pietro Tali. The case involves allegations that Saipem paid intermediaries about €198 million to secure contracts worth €8 billion with Algeria’s state-owned Sonatrach.
ZIMBABWE: ANGLICAN BISHOP ARRESTED FOR FRAUD
On 15 January, OCCRP reported the arrest of the head of the Manicaland Diocese, Bishop Eric Ruwona. It is alleged that Ruwona used a piece of land belonging to the church as collateral to obtain the loan without official authorisation. The money was not used for its intended purpose.
ITALY SMASHES MAFIA RACKET DEFRAUDING EU AGRICULTURE FUNDS
On 15 January, Reuters reported that Italian police arrested 94 people in pre-dawn raids on Wednesday as part of an investigation into an alleged Mafia scam that defrauded EU agriculture funds of millions of euros. It is suspected that the fraud was orchestrated by 2 Mafia clans in eastern Sicily who obtained at least €5.5 million in EU farm subsidies for land they did not own between 2010 and 2017.
MAN GIVEN CASH FORFEITURE ORDER FOR LAUNDERING CASH FOR VAT FRAUDSTERS
The Warrington Guardian on 15 January reported that Douglas Brown was jailed for over 4 years in 2018 after using his IT recycling company to wash cash for an organised crime gang who swindled more than £2.6 million in VAT repayments. He stole £100,000 himself. He has now been ordered to repay £76,439 within the next 3 months or face an extra year in jail.
US IRS UPDATES VIRTUAL CURRENCY FAQ
On 15 January, Tax News reported that the IRS has recently updated its list of frequently asked questions and answers on the tax treatment of transactions involving virtual currencies, as an additional set of FAQ to supplement guidance contained in Notice 2014-21.
UK: CLOCK IS TICKING FOR WASTE CRIMINALS AS NEW TASKFORCE LAUNCHED
On 15 January, DEFRA announced that a new unit – Joint Unit for Waste Crime (JUWC) – will bring together law enforcement agencies and UK environmental regulators to target waste criminals. It is to be dedicated to tackling serious and organised waste crime, such as dumping hazardous materials on private land and falsely labelling waste so it can be exported abroad to unsuspecting countries. Serious and organised waste crime is estimated to cost the UK economy at least £600 million a year.
AFRICA’S FREE-TRADE AREA NEEDS BUSINESS SUPPORT TO TAKE OFF
An article in Business Day in South Africa on 15 January starts by saying that the African Continental Free Trade Area (AfCFTA) involves all but one of the 55 countries making up the continent, and that it is designed to create a single African market for goods and services and to facilitate the free movement of people, capital, goods and services between all participating countries. Then it says that many businesses across Africa are still wondering what, if anything, the successful implementation of AfCFTA will mean for them, and whether it is actually in their best interests to support the initiative. It calls for their involvement, which it says would be of benefit to them. It says that African businesses should also start positioning themselves to take full advantage of AfCFTA when it is officially implemented in the middle of 2020.
INCOTERMS FOR COMMERCIAL CONTRACTS
On 15 January, Out-Law published an article reminding one that anew version of the Incoterms, published by the International Chamber of Commerce (ICC), came into force on 1 January. It says that as Incoterms are regularly used in commercial contracts businesses should make themselves aware of the changes and consider the impact on their contracts and operations. Incoterms are a set of 11 trade terms for use in business-to-business contracts for the sale and purchase of goods: such EXW for ex-works delivery and DDP for delivery duty-paid.
A PRIMER ON CANADIAN IMPORT/EXPORT REQUIREMENTS FOR CANNABIS
On 15 January, Dentons produced a briefing which provides an overview of international and domestic trade regulation of cannabis in Canada. It says that since legalisation, cannabis imports and exports in and out of Canada have been very small, but are increasing rapidly.
UK: SECURITY CHIEF TELLS ESTATE AGENTS ‘MORE TO DO’ OVER MONEY LAUNDERING
Estate Agent Today on 15 January carried an article saying that a security expoert has said that estate agents and others in the property industry have much more to do to deter money laundering. This is despite 74.5% of estate agents questioned in a survey think enough is being done by the UK regulator and regulated businesses collectively to tackle the issue.
PIRACY SPIKE IN SINGAPORE STRAIT PROMPTS CALLS FOR TIGHTER SECURITY
In its 16 January edition, Hellenic Shipping News reported that the call came as ReCAAP Information Sharing Centre (ISC) released its Annual Report 2019. It says that in 2019, a total of 31 incidents occurred in the Singapore Strait, of which 15 occurred in westbound lane of the Traffic Separation Scheme (TSS) mostly from January to August, and 16 in the eastbound lane of the TSS from the end of September to December. The organisation calls upon the littoral states to step up surveillance and patrol as well as to enhance their cooperation. The shipping industry is advised to exercise utmost vigilance, adopt preventive measures and report all incidents immediately to the nearest coastal state.
US DoJ HAS EXTRADITED A 65-YEAR-OLD DUTCH WOMAN INDICTED IN 2010 FOR BEING PART OF A CONSPIRACY TO FIX PRICES IN THE GLOBAL AIR CARGO INDUSTRY
A post on the FCPA Blog on 15 January is concerned with the extradition of Maria Christina “Meta” Ullings, formerly a senior vice president for Netherlands-based Martinair Cargo. Italian police arrested her in July 2019 while she was visiting Sicily, on an Interpol red notice from 2011 based on a US arrest warrant. It explains that she was responsible for setting prices and fuel surcharges for cargo handled for US and other customers, and the DoJ said she coordinated the prices and surcharges with other cargo carriers through a conspiracy that started in 2001 and continued for at least 5 years. A large number of airlines entered into plea agreements and in March 2017 the European Commission re-imposed about $860 million in fines against 11 cargo airlines.
On 15 January, Eversheds Sutherland published an alert which says that 2019 saw an effort by both Congress and various state legislatures to reduce the volume of robocalling and “spoofed” calls. Robocalls are pre-recorded calls placed through automated dialing equipment while spoofed calls falsely appear to come from a particular area code or legitimate place of business to increase the recipient’s chances of answering. The alert provides a general overview of the federal Act and also discusses several notable examples of state laws passed in 2019 aimed at reducing robocalling and spoofing.
The Economic Times reported on 15 January that the Revenue Department using its data analytics has discovered a fraud in GST refunds with as many as 1,200 exporters, who have claimed tax refunds but are now untraceable.