In the latest edition of the Strategic Trade Research Journal includes a paper that addresses this issue, saying that export control requirements apply to WMD-related commodities even beyond first sale, but knowledge of these requirements is sometimes lost as commodities are sold and resold—and many “outdated” products can still contribute to a WMD development programme. The paper concerns a study to assess the secondary market and form recommendations to plug gaps in training and awareness, as well as control programmes. It is said that the secondary market for listed commodities may pose proliferation risks and export control challenges that may not be well understood, and that while measures may exist to mitigate the risks posed by the secondary market, those measures may not have been systematically integrated into export enforcement and outreach programs and secondary market resellers may not be aware of the requirements associated with exporting these commodities.
On 30 January, a news release from OFAC announced that Ali Akbar SALEHI and the ATOMIC ENERGY ORGANIZATION OF IRAN (AEOI) had been added to its Iranian sanctions lists.
On 29 January, the US Government Accountability Office released a report which says that whilst trade-based money laundering is believed to be on the rise, financial institutions charged with flagging payments linked to it often have little insight into the nature of the deals. In the report, “open-account” trade is described as “one of the primary vulnerabilities of the US financial and trade systems”. Most international trading is done using open-account, as opposed to “documentary transactions”, in which banks review related documentation (bills of lading, invoices, packing lists etc) and so can mitigate the risks of providing letters of credit or other financing and potentially detect or prevent money laundering. The GAO cites a claim by the Wolfsberg Group of leading banks that 80% of world trade is carried out using open-account trading.
29 January 2020
US TARGETS PHONE COMPANIES FOR ALLEGEDLY AIDING ROBOCALLERS
On 28 January, the Wall Street Journal reported that prosecutors sought restraining orders against 2 sets of telecommunications providers – one from New York, the other from Arizona – in what was described as a first-of-its-kind legal action – they said have facilitated hundreds of millions of fraudulent robocalls coming into the US from overseas.
DESPITE US SANCTIONS, A SOUTH FLORIDA BUSINESSMAN IS THE LARGEST OWNER OF A JOINT PROJECT WITH THE VENEZUELAN MOD TO PROCESS GOLD MINED IN THE DEPTHS OF THE AMAZON RAINFOREST
On 28 January, the Miami Herald reported that Venezuelan-Trinidadian businessman Clemente Ricardo Silva is the main investor in a gold-processing plant under construction in partnership with the Venezuelan military and key figures of the authoritarian government, though Silva claims he sold his interest in the project.
KEIKO FUJIMORI RETURNS TO PERU JAIL PENDING LAUNDERING TRIAL
On 29 January, KYC 360 reported that opposition leader Keiko Fujimori will be returned to jail while she’s investigated for money laundering, less than 3 months after she’d been freed by Peru’s top court on the grounds that her constitutional rights had been violated.
UK: PRIVILEGE – A ROUND-UP OF SIGNIFICANT RECENT CASES
On 27 January, a briefing from Stewarts says that t here have been a number of significant cases relating to privilege throughout the last 6 months. It looks in brief at some of these cases, including one that makes it clear that privilege survives the dissolution of a company.
ISLE OF MAN UPDATES UKRAINE SANCTIONS LIST
On 29 January, a news release from the Isle of Man confirmed that 7 names had been added to Ukraine sanctions lists.
US DoJ REVISES POLICY ON SELF DISCLOSURE OF EXPORT CONTROL AND SANCTIONS VIOLATIONS
On 28 January, Squire Patton Boggs published a briefing which says that the DoJ National Security Division (NSD) recently revised its policy on the cooperation credit available to companies that voluntarily self-disclose potentially wilful violations of export control and sanctions laws. The guidance document emphasises a commitment to rewarding proactive and cooperative behaviour by subjects and targets of investigations. The briefing says that the new guidance should be a part of any discussion regarding how to address potentially wilful export control or sanctions violations and, given the appropriate circumstances, companies may find that the potential benefits of the voluntary self-disclosure policy are sufficient to warrant proactive outreach to NSD. The briefing compares the previous 2016 and the new guidance.
EXPERT: QATAR’S AML/CFT REGULATIONS “TOUGHEST IN THE REGION”
MENA-FN on 29 January reported that Qatar’s regulations on AML/CFT are the toughest in the region, according to an international expert on Governance, Risk and Compliance (GRC). However, it says, the effectiveness will be evaluated later this year by FATF.
BULGARIA: €900,000 MONEY LAUNDERING SCHEME IN VARNA
The Sofia Globe reported a case involving the alleged laundering of €900,000, said to originate from a fraud committed in Switzerland and that were transferred to a bank account of a Bulgarian trading company, with subsequent transfers to various accounts of Bulgarian citizens, companies in Bulgaria and abroad.
DIGITAL CURRENCY WARS: A US NATIONAL SECURITY CRISIS SIMULATION
The Belfer Center has produced a report on a mock National Security Council meeting unfolded at Harvard Kennedy School on November 16, as former cabinet officials, career diplomats, technologists, and academics convened to debate responses to a game-changing technology. The scenario proposed was that North Korea tests a nuclear missile that demonstrates significant advancements in its nuclear programme and analysts believe it could land a nuclear weapon in the continental US within a year. As China, Russia and Iran have already begun issuing their own digital currencies, the President calls on the NSC to assess threats to US national security and recommend responses. Tactically, how should the US respond to North Korea’s missile test if economic sanctions are no longer effective? And strategically, how can the US continue to leverage economic power in the world of national digital currencies?
BERLIN HOSTEL TOLD TO CLOSE DUE TO UN SANCTIONS ON NORTH KOREA
On 29 January, the EU Sanctions blog reported that the Berlin Administrative Court has ordered City Hostel Berlin, situated on the premises of the North Korean embassy, to close, as its lease is said to contravene UN sanctions.
GAZPROM WILL COMPLETE NORD STREAM 2 WITHOUT EU ASSISTANCE TO AVOID US SANCTIONS SNAGS
On 28 January, Gazprom said that it will complete the construction of the Nord Stream 2 pipeline, reportedly 94% complete, without the assistance of foreign companies. The pipeline was previously being built by Gazprom and 5 EU companies.
DUTCH MP ADDED TO RUSSIA’S SANCTIONS LISTS
On 29 January, the EU Sanctions Blog reported that the Russian Federation has added Sjoerd Wiemer Sjoerdsma to its sanctions list, so that he is now subject to a travel ban and asset freeze. It is said that the MP was one of the primary campaigners for the EU’s recently announced human rights sanctions regime.
NEW COMMISSION SURVEY ADDRESSES CONSUMER FRAUD IN THE EU
On 29 January, the EU advised that the Commission is publishing the results of an EU-wide survey on scams and fraud. The survey shows that more than half of the respondents (56%) across the EU were exposed to at least one scam or fraud in the last 2 years.
RESIDENCE DOCUMENTS FOR FOREIGN NATIONALS IN THE UK
On 29 January, in the light of Brexit, the Home Office published this information, waring that some current residence documents will no longer be valid after 31 December.
UK DIGITAL SERVICES TAX
On 29 January, the House of Commons Library published a briefing which discusses the background to the UK Government’s proposals, announced in the 2018 Budget, to introduce a Digital Services Tax from April 2020, in the context of wider concerns as to the challenge of taxing digital businesses and moves to agree reforms to the international tax system.
FBI RAIDS PHILIPPINES-BASED CHURCH IN LOS ANGELES IN SHAM-MARRIAGE IMMIGRATION BUST
In its 30 January edition, the South China Morning Post reported that followers were allegedly tricked into becoming fundraisers and victims had passports confiscated and were kept in US via the sham marriages. The local leader of the Kingdom of Jesus Christ church was arrested on immigration fraud charges in the early morning bust, along with a worker who confiscated passports of the victims of the scheme.
ENI AND SHELL CATCH A BREAK IN TRIAL OVER ALLEGED NIGERIA OIL BRIBES
On 29 January, Oil Price.com reported that a key witness for the prosecution recanted on previous testimony that he had seen evidence that oil majors Eni and Shell were involved in bribery over an oil deal in Nigeria, in the latest twist in the trial against the oil companies in an Italian court. The 2011 acquisition of block OPL 245, according to Italian and Nigerian prosecutors, involved a transfer of money to personal accounts held by the Nigerian oil minister at the time.
FINANCIAL SERVICES FIRMS HIT WITH $36 BILLION IN AML, KYC AND SANCTIONS FINES SINCE FINANCIAL CRISIS
Finextra on 29 January reported that data, put together by regtech Fenergo, shows that penalties for AML, KYC and sanctions violations increased by 160% in the 15 months since the last tally. Of the world’s top 50 banks, 12 were hit with fines in 2019. Two-thirds of all fines issued by US regulators were aimed at European financial institutions for AML breaches and sanctions violations. The article also notes that a separate report from Encompass Corporation earlier in January found that in 2019 global penalties for AML failures hit $6.2 billion at an average of $145.33 million per fine.
THE US TREASURY AND COMBATING HUMAN TRAFFICKING
On 29 January, the US Treasury published an information source on the Department’s role. It says that it brings significant financial expertise to the fight against human trafficking and is committed to leveraging the Department’s economic tools to target, disrupt, and counter those who undermine American values and engage in human trafficking.
US PUBLIC DESIGNATION OF 13 FORMER EL SALVADOR MILITARY OFFICIALS BECAUSE OF VIOLATIONS OF HUMAN RIGHTS
On 29 January, the US State Department issued a news release advising that the 13 individuals had been designated under a 2019 Act due to their involvement in gross violations of human rights in El Salvador related to the planning and execution of the extrajudicial killings of 6 Jesuit priests and 2 others on November 16, 1989 on the campus of Central American University in El Salvador. It says that these 13 former Salvadoran military personnel, ranging in rank from general to private, were involved in the planning and execution of the extrajudicial killings. These individuals and their immediate family members are ineligible for entry into the United States.
30 MILLION PAYMENT CARDS LISTED ON FRAUD MARKETPLACE
On 29 January, Techradar reported that hackers have put the payment card details of more than 30 million Americans and over 1 million foreigners up for sale on the Internet’s largest carding fraud forum, Joker’s Stash.
UK NOTICE TO IMPORTERS: CURRENT RANGE OF EU MEASURES IN FORCE ON STEEL
In the light of Brexit, on 29 January the Department for International Trade issued a Notice to importers which gives guidance on the current range of EU measures in force on steel.
FAKE BINARY OPTIONS INVESTORS BUSTED IN BELGIUM AND FRANCE
On 29 January, a news release from Europol advised that French and Belgian police, and the Israeli Police, supported by Europol and Eurojust, have brought down a large network of investment fraudsters that was allegedly involved in money laundering and binary options investment fraud. During 2019 a number of arrests were made in Europe and Israel, and more than €1 million have already been seized from the fraudsters’ accounts. A French-Israeli citizen who has already been convinced of massive fraud related to carbon tax is suspected to be the mastermind.
On 29 January, an Occasional Paper from RUSI in the UK which shows that e-commerce continues to be exploited by criminal actors, and says that regulators and governments can do more to prevent this. It identifies that E-commerce businesses can be exploited for criminal purposes in 4 major ways:
- Committing fraud against the customer by failing to deliver goods or services;
- Buying goods or services using stolen bank card data;
- Creating e-commerce businesses as a front for illicit transactions (for example, to accept bank card payments for drugs); and
- Abusing online marketplaces to move criminally obtained funds (for example, through the sale of computer-generated books sold via Amazon).
It also says that the latter two present particular money laundering and terrorist-financing (financial crime) threats because they involve consensual transactions that are intended to remain undetected. However, the paper argues, these purposes remain poorly understood, including so-called “transaction laundering” using bogus or disguised online payments. The paper says that there has been no examination of the effectiveness of online marketplaces’ defences against financial crime, and makes a number of recommendations – including that the FCA should consider a thematic review of risks related to transaction laundering and financial institutions’ ability to detect it, with a view to identifying best practices; and that the UK’s next national risk assessment of money laundering and terrorist financing addresses the risks of phantom transactions and mispricing involving online marketplaces/
On 29 January, Rferl reported that Bulgarian gaming czar Vasil Bozhkov has been charged in absentia with extortion and attempted bribery among other crimes, and placed on an international wanted list. He is one of Bulgaria’s richest men and has dominated the country’s gaming business since the early 1990s as well as owning the country’s biggest lottery. He also owns Levski Sofia, one of the two most popular soccer teams in the Balkan country, as well as a stake in Georgia’s national lottery, and a collection of antiques and paintings.
Following the publication of the most recent reports on Belarus and Slovenia, FATF has published an updated version of its consolidated schedule of all AML/CFT ratings.
On 29 January, FATF published the second follow-up report on Slovenia which says that while the country has made progress, some minor deficiencies identified in the mutual evaluation remain and Slovenia remains partially compliant on 10 FATF Recommendations. Slovenia remains in enhanced follow-up and will report back to the Plenary within 1 year. The mutual evaluation report of Slovenia was adopted in June 2017 and its first enhanced follow-up report with technical compliance re-ratings was adopted in December 2018. As with that first follow-up, this new report addresses only technical compliance, and not effectiveness ratings. The report says that, in light of the progress made by Slovenia, its technical compliance ratings with the FATF Recommendations are maintained. However, Slovenia remains partially compliant on 10 Recommendations, including Recommendations 5 and 6. Therefore, the recent FATF Plenary urged Slovenia to address the outstanding deficiencies as soon as possible. In this respect, the Plenary recalled the expectation that countries will have addressed most, if not all, technical deficiencies by the end of the third year from the adoption of their mutual evaluation report.
On 29 January, FATF published the mutual evaluation report produced by FATF-style regional body EAG. The on-site visit took place in March 2019.