On 10 February, Deutsche Welle reported that Teodorin Obiang was ordered to pay a €30 million fine and faces a suspended jail term of 3 years after a lower court found him guilty on a range of charges relating to graft and money laundering. Additionally, the Paris appeals court confirmed the seizure of his property, including a 6-level mansion in Paris which had been valued at €107 million in 2012.
On 10 February, HMRC issued a news release saying that, following a number of requests made under the Freedom of Information Act on this subject, it was publishing statistics on relevant compliance activities. The Corporate Crime Offence (CCO) for the failure to prevent the facilitation of tax evasion were introduced by Part 3 of the Criminal Finances Act 2017. As at 31 December, HMRC had 9 live CCO investigations with a further 21 opportunities under review across 10 different business sectors, including financial services, oils, construction, labour provision and software development. These investigations and opportunities sit across all HMRC customer groups from small business through to some of the UK’s largest organisations.
On 10 February, International Investment says that this effectively brings down the so-called ‘ring fence’ that kept separate tax rates for local and international business companies. As of January, the concept of an “International Business Company” in Barbados no longer exists: for tax purposes all companies are now Regular Barbados Companies, regardless of where their customers are and if they are foreign owned. A new law requires business companies that are resident in Barbados for tax purposes and which conduct certain types of activity to have adequate substance in the jurisdiction. The new requirements are in response to EU and OECD initiatives to prevent harmful tax practices and profit shifting, and mirror developments in many other offshore jurisdictions.
On 10 February, Global News in Canada reported in an interesting article that an Iranian-Canadian man, Bahram Karimi, 53,has been accused in New York of bank fraud in an alleged money laundering and sanctions evasion scheme involving Iran’s government, a state-owned oil company in Venezuela, and a complex web of offshore accounts and shell companies, and allegedly funnelling US$115 million through US banks and into accounts for the Iranian government. It is claimed that the case highlights that wealthy Iranian regime-friendly immigrants have used Canada to finance covert operations for Iran. The case is said to be development of investigations involving one of Iran’s most politically connected billionaires, Mohammed Sadr Nejad, and his son, Ali Sadr Nejad – who was arrested on a visit to the US in 2018 – and the Stratus Group, the Tehran-based international construction conglomerate directed by the father.
A briefing from Cohen & Gresser (UK) LLP on 7 February addressed this question, as the 5th EU AML Directive is implemented in the UK, and saying that individuals and firms within the art market need to put in place appropriate procedures to guard against the facilitation of money laundering. Previously, had AML/CTF obligations only if they were classed as a “high value dealer” – essentially someone who trades in goods and makes or receives a payment of more than €10,000 in cash. New 2019 Regulations now impose obligations on them when acting in any transaction whose value exceeds €10,000, and not only in cash. It says that guidance on implementing the 2019 Regulations is expected imminently from both HMRC and the British Art Market Federation but, in the meantime the firm provides a checklist which sets out some of the areas that one should consider when enhancing/designing systems and controls.
On 10 February, Loadstar reported that parcel shipments into the US are set to cost more as, in addition to rising charges for e-commerce sent by mail, the government is moving to raise charges to cover the cost of inspecting incoming parcels for counterfeit goods and illicit substances. A new Executive Order requires new regulations and that e-commerce operators step up controls – and rules to determine if foreign postal services are doing their part of the job (and presumably sanctions them in some way if they are thought to be falling short).
On 8 February, AP reported that financial irregularities across African football have been unearthed in a confidential audit by PwC of the continent’s governing body, the Confederation of African Football. It reports “possible abuse of power” and reported “potential fraudulent adjustments” in accounting records that are “unreliable and not trustworthy”.
On 10 February, KYC 360 carried an article saying that while FATF lists 3 main methods by which criminal organisations and terrorist financiers move money for the purpose of disguising its origins and integrating it into the formal economy, the third of these receives less attention than the others – and the scope for abuse of the international trade system has received relatively little attention. It then says that recently there has been heightened focus from both governments and regulatory bodies on trade-based money laundering, resulting in enhanced pressure on financial institutions to do more to combat financial crime through the physical trade of goods. The article goes on to consider 3 common challenges faced by financial institutions when processing trade finance transactions, in the form of 3 case studies.
8 February 2020
ITAR FIREARMS AMENDMENTS – 6 IMPORTANT POINTS YOU NEED TO KNOW
On 7 February, Williams Mullen published an article saying that on 23 January the US State and Commerce Departments published their long-awaited final regulations on the transfer of certain firearms, ammunition, components and accessories from controls under the International Traffic in Arms Regulations (ITAR) to the Export Administration Regulations (EAR). The change affects certain firearms, including non-automatic and semi-automatic firearms up to .50 calibre (12.7mm) inclusive, from the US Military List (USML) to the Commerce Control List (CCL) under the EAR along with certain ammunition, parts, accessories and attachments. The article lists a number of important points to remember about the amendments, including that firearms and related products will still be heavily regulated under the US export laws; the changes take effect from 9 March; brokering rules still apply; and the Commerce Department has more compliance staff than the State Department.
WALLONIA, HOME TO THE FN HERSTAL AND CMI ARMS PLANTS, SAID IT HAD HALTED WEAPONS SALES TO SAUDI ARABIA’S DEFENCE MINISTRY BECAUSE OF THE WAR IN YEMEN
On 6 February, Expatica reported that the Belgian region, and in Belgium licences for arms sales are issued by regional governments has imposed the restriction after human rights groups lobbied Wallonia to halt shipments to the Saudis.
UN SANCTIONS THE LEADER OF ARMED GROUP IN DEMOCRATIC REPUBLIC OF CONGO
On 7 February, a post on the Kharon Brief reported that Seka Baluku, the overall leader of the Allied Democratic Forces (ADF), an armed group active in the DRC had been listed by the UN. The ADF was made subject to sanctions by the US and the UN in 2014 for targeting children in armed conflict, through forced displacement, abduction, and recruitment, with OFAC listing Seka Balaku in December.
EXPOSING MALTA’S DARK SIDE: ‘DAPHNE CARUANA’S STORY IS FAR FROM OVER’
On 8 February, The Guardian carried an article telling the story of its collaborative reporting on Daphne Caruana Galizia, the Maltese journalist whose 2017 murder plunged her country into turmoil, by interviewing the Guardian’s investigative reporter Juliette Garside about her role in exposing the truth about what happened.
A DARK WEB TYCOON PLEADS GUILTY. BUT HOW WAS HE CAUGHT?
On 8 February, the MIT Technology Review said that the FBI found Eric Marques by breaking the famed anonymity service Tor, and officials won’t reveal if a vulnerability was used. That, it is said, has activists and lawyers concerned. He faces up to 30 years in prison after a 7-year investigation into his role in running Freedom Hosting, which temporarily existed beyond reach of the law and ended up being used to host drug markets, money laundering operations, hacking groups, and millions of images of child abuse.
ATTORNEY GENERAL BELIEVES TRINIDAD & TOBAGO WILL BE REMOVED FROM FATF BLACKLIST
The Trinidad & Tobago Guardian on 7 February reported an address by the Attorney General at an AML/CFT conference in which he claimed that he was optimistic about returning from the FATF Plenary this month with good news.
ISRAELI POSTAL SERVICE IMPORTS TO GO THROUGH CUSTOMS CLEARANCE
On 3 February, HKTDC reported that, from 15 February, all packages valued at more than $75 imported into Israel through Israel Post will be required to undergo individual customs screening, similar to that required for parcels shipped through private courier companies. This follows a Supreme Court ruling after applications by a trade association and the chamber of commerce. However, the article suggests that given that the post handles vast majority of such imported goods, many industry experts believe it is unlikely to be able to meet the tight deadline or absorb the massive increase in costs that will result. Consequently, the service is likely to need to outsource substantial operations to the private sector. Foreign online vendors may find themselves facing higher delivery costs in future as a result.
LITTLE HAS CHANGED IN POST-MUGABE ZIMBABWE
A Commentary from Chatham House on 7 February says that Mugabe’s successor and former vice-president, Emmerson Mnangagwa, promised a break from Mugabe’s authoritarian rule and economic mismanagement. The article asks, after 2 years in power, to what extent has Mnangagwa delivered on his promises? In short, the article says, it’s bleak. It refers to a RAND study by the same author. The study is said to assesses 5 main reform areas, including elections, legislation, the security sector, judiciary, and repression – revealing that very few tangible steps toward reconfiguring Zimbabwe’s autocratic system. Repression has increased and the military is ascendant.
ISRAELI SPYWARE FIRM THREATENS TO ‘SHUT DOWN’ ABUSERS
On 9 February, Deutsche Welle reported that an Israeli firm known for its controversial spyware has been accused of turning a blind eye to the misuse of its technology. However, the company told Deutsche Welle that it has “shut down” systems in the past for violating rights. NSO Group executives are believed to have served in Israel’s elite signal intelligence-gathering Unit 8200. Rights groups, press freedom advocates and even research hubs have accused the Herzliya-based company of turning a blind eye to misuse of its systems, including alleged involvement in the Khashoggi murder. It is said that NSO Group’s products are licensed for the sole purpose of fighting serious crime, combating terrorism and assisting in emergency search and rescue operations. The company said that it had taken steps to prevent and discipline the misuse of its products, including putting in place a human rights policy and harmonising its governance structure in line with the UN Guiding Principles on Business and Human Rights.
EXPORTERS ASSOCIATION URGES UK GOVERNMENT TO RETHINK RUMOURED MERGER OF GOVERNMENT DEPARTMENTS
On 5 February, an article in Global Trade Review said that rumours about the future of the Department for International Trade (DIT) have left many fearing for what is to come. A potential reorganisation of government Departments is said to be on the cards, and the DIT may be subsumed into the Department for Business, Energy and Industry Strategy (BEIS) to bring ministers and officials working on related issues together under one roof. The article, however, quotes the co-chair of the British Exporters Association as saying that diluting the focus on trade through a merger with BEIS sends out the wrong message – that we are no longer serious about trade – to the UK’s exporter community, to our overseas buyers and to foreign governments.
BRAZIL: SAVINGS FROM ANTI-FRAUD OPERATIONS MORE THAN DOUBLED IN 2019
On 9 February, the Rio Times reported that savings generated from special anti-fraud operations more than doubled in 2019, to $225 million last year. This includes the funds that the government will no longer pay following the dismantling of criminal schemes by the Social Welfare and Labor Task Force.
9 February 2020
IMPROVING JAMAICA’S AML/CFT FRAMEWORK
On 9 February, the Gleaner carried an article by Dr Nigel Clarke, Minister of Finance and the Public Service, saying that Jamaica has engaged in structural reform of its fiscal and monetary institutions, laws and policies with much success. He explains that the strength of Jamaica’s AML/CFT framework was assessed in 2005 and again in 2015, through mutual evaluation exercises spearheaded by the Caribbean Financial Action Task force (CFATF), a FATF-style regional body, and substantial deficiencies were identified. He says that now Jamaica’s framework has again been assessed and, though progress has been made in the enactment of laws and in operational effectiveness, a significant amount of work remains to be done. He mentions some of the progress, including new legislation enacted, as well as the additional training provided to law enforcement staff. He also mentions problems encountered, such as the opposition by local lawyers to their inclusion under the proceeds of crime law, the local Bar Association initiated legal action in 2014 that was only finally dismissed in 2017 – only to see a further appeal, and a temporary injunction imposed, which has further delayed the move to include lawyers in the regime. He also mentions that a new, better national risk assessment is necessary, including all designated non-financial institutions and designated non-financial businesses and professions in the AML/CFT regime (including the legal profession – subject to the courts’ decision), bring the microfinance sector under AML/CFT requirements, improving the use of financial information and international cooperation in investigations, updating company law in respect of beneficial ownership information, extending AML/CFT controls to trusts and non-profits, and remedying deficiencies in implementing UN sanctions.