On 7 February, HMRC published information to help one find out if you’re an art market participant and need to register with HMRC under the Money Laundering Regulations. This follows implementation of the 5th EU AML Directive. Those subject to control includes the operator of a freeport where the participant stores works of art in a freeport where the value for a person (or a series of linked persons) is €10,000 or more. A freeport is a warehouse or storage facility within an area chosen by HM Treasury as a special area for customs purpose. On the same day, HMRC also issued guidance on how to help prevent money laundering and terrorist financing for art market participants. It includes information on customer due diligence (CDD), record-keeping and reporting suspicious activity.
An article on Medium on 4 February said that, in January, Panama took important steps towards a register that lists the real beneficiaries of companies in which a Panamanian lawyer, or a Panamanian law firm, provides the service of ‘resident agent’ – the role that Mossack Fonseca infamously played in thousands of companies inside and outside of Panama. Unless the President of Panama partially or fully vetoes the Bill to create the new register, it will automatically come into effect. However, the article says, questions remain about how effective the change will be. It says that foreign states will not have direct access to the information (nor will be local police and judiciary in Panama): they will continue rely on exchange arrangements signed by Panama with specific counterparts or, for general cases, on lengthy mutual legal assistance requests every time a Panamanian company or a private foundation is involved in deals they are investigating. Another point mentioned is that the custodian and administrator of the registry is not responsible for the truthfulness or accuracy of the information provided by the resident agent – nor, it seems, the resident agent either. The resident agent may be liable for providing false information, but the penalty imposed is described as “very low” — only up to $10,000.
See also (in Spanish) –
On 7 February, OFAC announced that Venezuelan state-owned airline CONSORCIO VENEZOLANO DE INDUSTRIAS AERONAUTICAS Y SERVICIOS AEREOS, S.A. (aka CONVIASA) and 40 registered aircraft to the Venezuela sanctions lists. CONVIASA operates as a commercial airline based in Caracas, Venezuela, flying both domestic routes as well as providing service to select international locations.
On 7 February, a Notice from HM Treasury advised that Seka BALUKU had been added to the Consolidated List, following the addition of the person to the UN lists on 6 February.
EU Regulation 2020/169/EU on 7 February amended Regulation 147/2003 to bring it into line with UN SCR 2498 (2019) which reaffirms a general and complete arms embargo on Somalia and amends the exemptions, advance approvals and notifications concerning the delivery of arms and related materials to Somalia. Furthermore, the Resolution reaffirms the prohibition on the import of charcoal from Somalia and introduces restrictions on improvised explosive device components.
See also EU Council Decision 2020/170/CFSP.
On 7 February, KYC 360 reported on a survey and report by RUSI, ACAMS and YouGov. The survey of the global financial industry shows that international banks are leading efforts in counter-proliferation finance, with local and national banks at greater risk of being exploited by proliferators, such as North Korea. It found that US banks are most exposed to proliferation risk from Iran and that few banks consult UN Panel of Experts Reports on North Korea, and that that international banks are likely to be more familiar with proliferation finance risk than national or regional ones. Also worryingly, it found that 81% respondents think proliferation finance is primarily about the procurement and financing of nuclear, chemical and biological weapons, rather than primarily about the proliferation efforts of specific state actors or non-state groups, and that survey respondents from the US are also less likely to be aware of and consult proliferation finance red flags, compared to other regions.
The survey and results are at –
On 7 February, KYC 360 reported that Ghanaian prosecutors charged a former finance minister for alleged crimes that contributed to the collapse of one of the West African nation’s biggest local lenders. Kwabena Duffuor served as finance chief from 2009 to 2013, and was named along with 7 other individuals in connection with the collapse of Unibank Ghana Ltd, which was declared insolvent in August 2018. A court filing also named Johnson Asiama, who served as a deputy governor of the Bank of Ghana until 2018, for granting a facility for the benefit of Unibank through another lender without following due procedure.
On 3 February, the American Bankers Association Banking Journal carried an article providing guidance and information about the use and uses of hemp. It explains briefly the historic uses of the product, saying that until late 2018, industrial hemp was covered by the restrictions that applied to marijuana and other narcotics under the federal Controlled Substances Act, even though industrial hemp lacks the same chemical compounds that provide the “high” produced from ingesting marijuana. However, the Farm Bill in 2018 carved out a special exception from the Controlled Substances Act for certain strains of hemp. And, as a result, hemp can be legally grown in the US, as long as certain conditions are met. For bankers, it says, those conditions are the critical factor. For example, for a plant to qualify as hemp it must have less than 0.3% concentration of tetrahydrocannabinol, or THC. The article also mentions one derivative that has generated a great deal of interest: CBD, or cannabidiol, which is subject to oversight by the Food and Drug Administration (FDA).
6 February 2020
TIJUANA CURRENCY EXCHANGE HOUSE OWNER LAUNDERED $13 MILLION OF NARCOTICS PROCEEDS FOR SINALOA CARTEL
On 4 February, a news release from US Immigration and Customs Enforcement announced that, following an 8-year investigation, Cesar Hernandez-Martinez, 29, has been sentenced to 137 months in custody for laundering $13 million of narcotics proceeds for the Sinaloa Cartel. He owned and operated currency exchange houses in Tijuana that received proceeds from the sale of cocaine, methamphetamine and heroin smuggled into the US by the cartel. In addition to the 6 defendants also involved in this case, approximately 20 other individuals have entered guilty pleas and been sentenced previously in related cases. Those cases have involved individuals based in the US or who frequently crossed into the US and served as money couriers, drug couriers and drug stash house operators and who were part of, or related to, the same money laundering and drug trafficking organisation.
UK: CHANGE IN EXPORT LICENSING INSPECTION PROCEDURES
On 6 February, Notice to Exporters 2020/04 advised that changes had been made to the inspection process regarding the use of open licences and electronic standard individual export licences (SIEL). Because of the problems experienced in trying to arrange on-site inspections at businesses, which has caused an unacceptable reduction in the total number of inspections it has been able to carry out, businesses will now be informed of the exact date when an inspection of their records will take place. The Export Control Joint Unit says that it will no longer be able to offer alternative dates, but that it will still try to give businesses between 4 and 6 weeks’ notice of the inspection date. This change does not affect the right to enter premises at any reasonable time to inspect records.
UK: METRO BANK HIRES LAWYERS OVER CUBA AND IRAN SANCTIONS BREACHES
On 6 February, KYC 360 reported that the bank has hired law firm DLA Piper to help it investigate payments routed through the bank that breached US sanctions. The bank notified US regulators in 2017 about the sanctions breaches.
US CLASS ACTIONS AGAINST AUSTRALIA’S WESTPAC AMID MONEY LAUNDERING SCANDAL
On 6 February, KYC 360 reported that Westpac was sued by Australia’s financial crime watchdog AUSTRAC in November for 23 million alleged breaches of AML laws. It now also faces civil lawsuits accusing the bank of not carrying out appropriate due diligence on transactions in SE Asia and the Philippines, and failing to monitor terrorism financing risks with movement of money into and out of Australia among others.
HOW TO COMPEL CRITICAL EVIDENCE FROM WITNESSES IN ANOTHER EU MEMBER STATE
A briefing from Irish law firm McCann Fitzgerald on 5 February is concerned with the workings of the EU Evidence Regulation which facilitates the obtaining of evidence from a witness in another EU Member State on both a voluntary and non-voluntary basis, and in civil or commercial proceedings. The Evidence Regulation overcomes the jurisdictional limitation of a subpoena (i.e. the target has left the country to avoid being served with or answering the subpoena) in an EU context.
UK: RESPONDING TO APP FRAUD CLAIMS
On 31 January, Denton produced a briefing about the legal and practical implications of responding to claims under the Contingent Reimbursement Model Code for Authorised Push Payment Scams introduced in May 2019, and which creates a mechanism for victims of APP fraud to make claims for compensation. The guide is provided in an infographic flowchart.
US CONSIDERING VENEZUELA-RELATED SANCTIONS AGAINST OIL COMPANIES
On 5 February, the Financial Times reported that the US is considering sanctions on major oil companies dealing with Venezuela, as President Trump signalled renewed backing for opposition leader Juan Guaidó. It is said that Russia’s Rosneft (in which BP holds a substantial stake), India’s Reliance, Chevron of the US and Spain’s Repsol have reportedly partnered with the Venezuelan oil company PDVSA.
FATF FACES AN IRANIAN CRUNCH
On 6 February, a Commentary from RUSI said that, until June 2016, alongside North Korea, Iran was on the FATF’s ‘blacklist’. However, following the implementation of the Iran nuclear deal JCPOA in January 2016 the FATF entered into the spirit of entente. FATF suspended Iran’s blacklist status for an initial period of 12 months in light of its proposed Action Plan to address its strategic AML/CFT deficiencies. If, after a year, Iran had not ‘demonstrated sufficient progress in implementing the Action Plan’ the suspension would be reversed. The FATF plenary meets 3 times a year and the FATF has repeatedly extended Iran’s suspension since 2016 – although the Action Plan expired with many requirements not addressed. The next FATF Plenary is on 17 February and, from a technical perspective, the case for returning Iran to the blacklist seems clear – but will it, or will it issue another “final” warning?
REPORTS TO DANISH REGULATOR OF SUSPECT ACTIVITIES DOUBLED IN PAST YEAR
On 5 February, International Investment reported that the number of referrals to the Danish State Prosecutor for Serious Economic and International Crime by banks and financial institutions jumped 55% to 41,000 through 2019. There has also been an increase of some 1,200 to 4,300 staff in the industry working on money laundering and compliance (though no timescale is given for this rise).
IRELAND: 2 MEN DUE IN COURT IN WEXFORD FOLLOWING €400,000 CASH SEIZURE
On 6 February, the Irish Mirror reported that the men, a 50-year-old Irish national and a Polish man aged 35, were arrested by gardai near Rosslare on suspicion of money laundering.
WORLD FOOD PROGRAMME GRANTED FIRST SANCTIONS EXEMPTION FOR NORTH KOREA AID WORK
On 6 February, NK Pro reported that the UN World Food Programme (WFP) has been granted its first sanctions exemption from the UN for aid projects in North Korea. It is said that this will allow WFP to bring hand-barrows, shovels, and pick-axes into DPRK.
US TREASURY ANNOUNCES 2020 NATIONAL ILLICIT FINANCE STRATEGY
On 6 February, a news release from the US Treasury announced that the report – the the 2020 National Strategy for Combating Terrorist and Other Illicit Financing – identifies key illicit finance concerns for the US and establishes a roadmap to modernise the US counter-illicit finance regime. It articulates 3 strategic priorities: increasing transparency and closing gaps in the US AML/CFT legal framework; improving the efficiency and effectiveness of the US AML/CFT regulatory and supervisory framework for financial institutions; and enhancing current AML/CFT operational capabilities. It also includes a number of enabling actions, including legislative proposals on beneficial ownership, expanding AML/CFT obligations to certain “uncovered” financial institutions and supporting responsible AML/CFT innovation and augmenting public-private partnerships.
OFAC PUBLISHES MALI SANCTIONS REGULATIONS
On 6 February, OFAC published regulations that implement the sanctions introduced by means of Executive Order 13882 of July 2019 and take effect from 7 February.
SERBIA: FATF PUBLISHES AML/CFT ASSESSMENT FOLLOW-UP REPORT
On 6 February, FATF published the 3rd follow-up report following the mutual evaluation of Serbia, carried out by MONEYVAL, which had published the report last month.
UK – INSOLVENCY: JOINT AND SEVERAL LIABILITY NOTICES FOR DIRECTORS
On 6 February, the House of Commons Library published a briefing paper which provides an overview of the proposal to empower HMRC to issue joint and several liability notices to directors (and others) when certain conditions relating to tax avoidance and insolvency are met, as well as to companies which have been involved with repeated insolvency or non-payment of tax.
PHOENIX TRADING AND LIABILITY OF DIRECTORS
On 5 December, the House of Commons Library published a briefing paper on situations where the assets of an insolvent business are re-acquired by its former management or closely connected parties to form a phoenix company. It looks at the legal position of directors of insolvent companies, and the relationship between phoenix companies and the “pre-pack” administration process.
JERSEY: FORMER JSPCA BOSS STEPHEN COLEMAN JAILED FOR ‘BRAZEN’ £405,000 FRAUD
On 6 February, the BBC announced that the former boss of Jersey’s animal shelter has been sentenced to 7 years for defrauding the charity out of £405,000 to fund a “luxury lifestyle”. Stephen Coleman, 62, pleaded guilty to 15 counts of fraud and four of forgery.
NORWAY: CRUISE CAPTAIN ACCUSED OF FRAUD AND TAX EVASION
On 6 February, News in English reported that a Norwegian cruise ship captain has been indicted on charges of serious fraud and tax evasion, after collecting disability pay from Norway’s state pension fund over a period of 8 years while also sailing from port to port as the captain on various cruise ships.
LEBANESE GOVERNMENT DECLARES WAR ON TAX EVASION
The National in UAE on 6 February reported that Lebanon’s new government plans a crackdown on tax evasion amid a worsening financial crisis and increasing mistrust of elected officials.
BREXIT: HOW THE TRADE REMEDIES INVESTIGATIONS DIRECTORATE WILL WORK
On 6 February, the Department for International Trade published information explaining how the UK’s new Trade Remedies Investigations Directorate (TRID) will investigate possible cases of dumped and subsidised imports and unforeseen surges in imports (known as safeguards investigations) after the UK leaves the EU and the transition period ends.
25 ARRESTS ACROSS EUROPE IN SERIES OF POLICE ACTIONS AGAINST ALBANIAN DRUGS TRAFFICKING GANG
A news release from Europol on 6 February advised that 25 suspects tied to an Albanian-speaking organised crime network were arrested during a simultaneous operation carried out in Belgium, Spain, the Netherlands, Germany and France – following a complex investigation initiated in 2017 by the Belgian police. Drugs were being smuggled hidden in containers into Belgium before being distributed further throughout Europe by using vehicles equipped with sophisticated hidden compartments. The same criminal group is also believed to have been managing cannabis plantations in Spain and Germany.
COLOMBIAN FUGITIVE CONVICTED OF RAPE AND MURDER ARRESTED AFTER 26 YEARS ON THE RUN
A news release from INTERPOL on 6 February reported that Jaime Saade Cormane had been on the run ever since he raped and murdered Ms Mestre Vargas in Colombia in 1994. Police representatives from 8 countries set up camp in INTERPOL’s Regional Bureau in Buenos Aires in October 2019 and focus on some of their most notorious fugitives. In total, 21 people subject to Red Notices were arrested in the operation, a EU-funded cooperation programme that seeks to strengthen capacities and facilitate international cooperation.
UK: DISPOSALS OF CRYPTOASSETS AND TAX
The Society for Computers and Law (SCL) has published an article which looks at the mechanics and tax implications of cryptoasset disposals in the light of the UK Jurisdiction Taskforce Legal Statement on cryptoassets and smart contracts in November 2019. It notes that the ruling of the Taskforce had been accepted by HMRC, but it has not yet been the subject of an authoritative ruling by an English court.
The Statement can be found at –
DIFFERENCES BETWEEN ENGLISH AND SCOTTISH PROPERTY LAW: THE BASICS
On 6 February, Dentons published a briefing that says that different systems of property law operate in each jurisdiction and, while some legal concepts are similar, there are plenty of distinctions to navigate and to catch out the unwary. In England, the 2 commonly encountered types of ownership are freehold and leasehold. In Scotland, the equivalent to “freehold” would be “heritable” interest – by far the most common way of “owning” property in Scotland. In addition, Scotland also has a concept of leasehold ownership. Amongst the things it points out is that commercial terms and expectations north and south of the border differ. For example, it is common in England for a buyer to pay a deposit of 10% of the price when contracts are exchanged. In Scotland, usually no money is paid until the deal completes.
CHINESE MAN CAUGHT TRYING TO SMUGGLE 200 LIVE VENOMOUS SCORPIONS OUT OF SRI LANKA
On 14 January, Illicit Trade reported that he was detained at Bandaranaike International Airport after border force guards discovered the live animals concealed inside plastic boxes before the man was able to board a flight to the Chinese city of Guangzhou. The boxes had been hidden in the man’s luggage. He admitted sourcing the animals after receiving information about where to buy them from “tuk tuk” drivers. Scorpion venom has been described as the most expensive liquid in the world.
CALAIS DREAMS OF BECOMING POST-BREXIT DUTY-FREE HAVEN
On 6 February, Hellenic Shipping Report carried an article saying that authorities in Calais are lobbying the French government to create a duty-free zone for British shoppers that would cover the entire port town in northern France if a future trade deal between Britain and the EU heralds a return of trade tariffs.
UPU LAUNCHES NEW REPORT EXPLORING POSTS’ ROLE IN DIGITAL FINANCE SOLUTIONS
On 5 February, Parcel & Post Technology reported that the Universal Postal Union had produced a report examining the role posts play in expanding access to digital finance around the world. The report is to be the first in a series of studies. This report explores a key factor that helps posts to attract, retain and grow their customer base – trust.
The report itself can be found at –
US CLOUD-BASED ONE-STOP-SHOP FOR ITAR-RELATED EXPORT LICENSING
On 6 February, Torres Law reported that the Department of State Directorate of Defense Trade Controls had announced that it will roll out the Registration and Licensing applications in its new online platform, Defense Export Control and Compliance System (DECCS) on 18 February. It also replaces other systems to become a cloud-based one-stop-shop for ITAR-related licensing, registration, commodity jurisdictions, disclosures, and advisory opinions. Companies and individuals requiring the above services will need to set up a User Account in DECCS by enrolling. ITAR stands for the International Traffic in Arms Regulations, and is a US regulatory regime to restrict and control the export of defence- and military-related technologies. It includes the US Munitions List (USML) of restricted articles and services.