On 11 February, a news release advised that the Security Council has extended the authorisation of measures against the illicit export of petroleum products, including crude oil and refined petroleum products, from Libya until 30 April 2021, including inspections by Member States of designated vessels on the high seas, adopting UN SCR 2509.
EU Regulation 2020/184/EU has followed the lead of the UN and added AMADOU KOUFA (who has numerous aliases) to its sanctions lists.
On 11 February, the Washington Post and German broadcaster ZDF published an article revealing claims about Crypto AG, a Swiss cryptographic communications gear company that got its big break building code-making gear for the US Army in World War II, and has been a provider of encryption systems for more than 120 countries. Apparently, it was owned secretly by the CIA and German intelligence, allowing access to the communications of many countries, excluding China and the USSR. The Germans backed out of the deal in the 90s, but CIA ownership continued to 2016. It is said that more than a dozen countries still use encryption systems from Crypto AG – but the Swiss government has now revoked the company’s export licence.
An article from Katten on 7 February reported that, on February 4, the UK Joint Money Laundering Steering Group (JMLSG) announced proposed amendments to its AML/CFT guidance, and explained that the JMLSG is a UK-focused group of trade bodies which produces AML/CFT guidance to assist the financial services industry. The JMLSG noted that the proposed amendments are a response to the updated regulations, which involve UK implementation of the EU 5th Money Laundering Directive. The consultation runs to 3 April.
Amongst the changes proposed are 4 more illustrative risk factors, updating guidance relating to electronic identification, digital identity and other electronic data sources; adding “anonymous safe-deposit boxes” to the list of prohibited anonymous products; and adding letting agents, antiquities and art market participants, cryptoassets exchange providers and custodian wallet providers to those caught by the regulations.
The proposed amendments are detailed here –
On 10 February, the Guardian carried an article saying that the EU is clamping down on 82 free ports or free zones after identifying that their special tariff and duty status has aided the financing of terrorism, money laundering and organised crime. Since 10 January EU Member States (including the UK until December…) have to take extra measures to identify and report suspicious activities at the ports and zones as a result of the “high incidence of corruption, tax evasion, criminal activity”, and the situation will be reviewed in a year’s time. The UK plans to open its first new free ports (they died a death in the UK years ago, largely as seen to be offering no real advantages over other forms of customs warehousing under EU law) in 2021. The EU identified problems with some existing free ports (or “free zones” as EU law refers to them), including high net worth individuals using them for the storage of art, precious stones, antiques, gold and wine as alternative assets to cash; allow counterfeiters to land consignments, tamper with loads or associated paperwork and re-export the products without customs intervention; disguising the true origin and nature of goods, and the identity of the original supplier; and use in narcotics trafficking, the illegal ivory trade, people smuggling, VAT fraud, corruption and money laundering.
10 February 2020
POST-BREXIT UK DATA PROTECTION AND SURVEILLANCE PRACTICES COULD SPELL BIG PROBLEMS FOR BUSINESS
An article in Fortune on 7 February says that, under EU law, Europeans’ personal data can only be sent to a country outside the bloc if the European Commission deems its privacy laws adequate. It points out that the Commission has granted “adequacy” status to a dozen countries — including Argentina, Canada, Israel, Japan, and New Zealand — but not the US. It says that the UK would require such a ruling post-Brexit, but the ECJ has repeatedly criticised UK personal data and data protection rules. Even if a “safe harbour” deal, such as with the US, is put in place this could be challenged in the courts.
US DoJ PRESSES AHEAD WITH “SPOOFING” PROSECUTIONS DESPITE SETBACKS
On 7 February, the Wall Street Journal reported that a crackdown on cheating in futures markets will continue, but that several trials to come will show whether the focus on a tactic known as “spoofing” is ultimately successful. 4 former traders are to face trial this year.
PANAMA PAPERS CASE TO NET FIRST US CONVICTION
On 7 February, the Wall Street Journal reported that Harald Joachim von der Goltz, who was charged with using the services of Panamanian law firm Mossack Fonseca to circumvent US tax laws, is to plead guilty in New York. He is a German national and former US resident and was indicted in 2018 after leaks from Mossack Fonseca.
CRYPTOCURRENCY SCAMS TOOK IN MORE THAN $4 BILLION IN 2019
On 8 February, the Wall Street Journal reported on analysis by Chainalysis, pointing out that this would be a bigger haul than the combined $3 billion in 2017 and 2018. It says that, after a boom in dubious ICO in 2017 and a number of hacks in 2018, Ponzi schemes have become again among the most popular vehicles for fraud. The head of research at Chainalysis says that there’s been huge growth in ones that mimic investing opportunities, becoming more sophisticated, larger in size and reaching into the mainstream.
ASX OIL FIRM MIRED IN $15 MILLION PAPUA NEW GUINEA BRIBERY SCANDAL
On 10 February, KYC 360 reported that Australian-listed Horizon Oil, 9 years ago, after it repeatedly ignored corruption warnings, paid US$10.3 million to an unknown shell company. Lawyers had warned of links to the then petroleum minister William Duma of PNG and warned an investigation by the US DoJ or SEC was “likely”. The payment came up again late last year after Spanish oil giant Repsol sought to sell out of its PNG joint venture with Horizon, as the Australian government proposed a $300 million loan to PNG, which has raised concerns around graft as PNG has been consistently ranked “highly corrupt” by Transparency International, and with a leak of emails, faxes etc.
AUSTRALIA: CROWN CASINO’S ‘MR CHINATOWN’ ARRESTED AND DEPORTED TO CHINA
On 7 February, The Age reported that Tom Zhou, a high-roller and junket partner known as “Mr Chinatown” – who is also a business partner of the Chinese president’s cousin – has been arrested and extradited to China for suspected money laundering and corruption. The casino paid him tens of millions of dollars to lure high-rollers from China to Australia, despite concerns about this alleged links to crime and criminals. He was detained in Vanuatu late last year but then flew to Japan and onto Fiji where he was detained again before being deported to China.
LATVIAN COURT UPHOLDS BAN ON 9 TV CHANNELS OWNED BY SANCTIONED RUSSIAN
On 10 February, EU Sanctions Blog reported that a court in Riga has upheld a ban issued by Latvia’s National Electronic Mass Media Council on the broadcasting of 9 Russian TV channels due to the designation by the EU of their co-owner, Yuriy Kovalchuck under its Ukraine sanctions.
PIRATES ATTACK 2 MORE VESSELS IN SINGAPORE STRAIT
On 10 February, Seatrade Maritime News reported that ships were targeted by pirates in the eastbound lane of the Singapore Strait with the stealing of engine spares the target. It says that this brings to 6 the number of incidents in the eastbound lane in the Singapore Strait this year. There 16 similar incidents in the area in 2019, 12 in November and December, and it is believed the attackers were targeting to steal engine spares.
ISRAEL SPYWARE FIRM NSO GROUP MAINTAINS ITS PRODUCTS ‘BATTLE TERRORISM’ ALONE
An article in The Wire on 10 February says that the Israeli company NSO Group insists that its products are licensed for export for the sole purpose of fighting serious crime, combating terrorism and assisting in emergency search and rescue operations and 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. However, even in Israel, NSO Group is the target of legal action launched by 30 citizens, including members of the human rights community there, in a case aimed at revoking the company’s export licence, which is granted by the Israeli Defense Ministry. Facebook filed a lawsuit against NSO Group in October, accusing the Israeli company of providing foreign governments with the means to hack into 1,400 mobile phones across 20 countries.
GREEK AUTHORITIES REPORT OVER $13 BILLION IN TAX EVASION AND MONEY LAUNDERING IN 4 YEARS
On 10 February, an article in Urdu point reported that Greece’s Independent Authority for Public Revenue has revealed that from 2016 to 2019, more than 7,400 cases of tax evasion, money laundering and the non-payment of debts cost the government €12 billion. More than 6,400 cases involving suspected money laundering were opened, and information on more than 4,500 taxpayers were passed to relevant authorities for suspicion of money laundering.
BaFIN PROVIDES GUIDANCE ON THE GERMAN ANTI-MONEY LAUNDERING ACT WITH SPECIAL FOCUS ON INSURANCE COMPANIES
On 7 February, CMS Law published an article saying that, in December, the German Federal Financial Supervisory Authority published its general guidance on the construction and application of the new German Anti-Money Laundering Act and, on 31 January it published further guidance with special focus on insurance undertakings.
INDIA: MINISTRY OF DEFENCE AMENDMENTS TO ITS EXPORT CONTROL REGULATIONS
On 10 February, the EU Sanctions Blog reported that the amendments result from the “Make in India” initiative, established to “achieve substantive self-reliance in defence production”. The post lists briefly the chief changes, including that applications for export licences will be processed and issued via a new online portal.
EUROPEAN COMMISSION PUBLISHES EVALUATION ON THE TAXATION OF TOBACCO IN THE EU
On 10 February, the EU released a news release saying that the Commission had published an evaluation of EU rules on the taxation of tobacco which highlights that while the current rules work well in terms of predictability and stability for Member State fiscal revenue, it is no longer as effective in deterring consumption. The high number of smokers in the EU is still a matter of significant concern with 26% of the overall EU adult population, and 29% of young Europeans aged 15-24, smoking. Price gaps between Member States – the average price of a pack of cigarettes can range from €2.57 to €11.37 – represent a sufficient economic incentive for unintended high levels of cross-border shopping. It also highlights that the emergence of new products, such as e-cigarettes, heated tobacco products and new addictive products reveal the limits of the current legal framework.
US GOVERNMENT CONTRACTOR SENTENCED TO 57 MONTHS IN PRISON FOR $3.7 MILLION PROCUREMENT FRAUD SCHEME
A news release from the DoJ on 10 February advised that Chester L. Neal Jr., 45, of Missouri, had been sentenced for his role in carrying out a $3.7 million scheme to defraud at least 35 subcontractors located across the US. He also ordered to pay restitution in the amount of $3,734,927.50. Neal established and controlled several companies through which he bid on and won at least 105 government contracts to provide goods and services to federal agencies including the Department of Interior, US Army and US Air Force.
ALGERIAN MILITARY COURT UPHOLDS JAIL SENTENCES OF FORMER INTELLIGENCE CHIEFS
On 10 February, Reuters reported that a court had confirmed 15-year jail sentences against 2 former intelligence chiefs and a brother of former President Abdelaziz Bouteflika for “conspiring against the army and the state authority”. Mohamed Mediene and Athmane Tartag, along with Said Bouteflika, have been in detention since May, weeks after mass protests broke out demanding the departure of the ruling elite and the prosecution of people involved in corruption.
IMPORTANT AMENDMENTS TO AML RULES NOW IN FORCE IN CAYMAN ISLANDS
On 10 February, STEP reported that further key changes to the Cayman Islands AML regulations were gazetted on 5 February and address some shortcomings reported on by the FATF-style regional body, CFATF. It says that 11 Bills were presented to the Legislative Assembly in July 2019 but, with the CFATF’s February 2020 deadline now imminent the new measures are being rushed into force. The article goes on to list the new amendments, including a 10% beneficial ownership test.
ECUADOR’S EX-PRESIDENT CORREA ON TRIAL FOR KICK-BACK SCHEME
On 10 February, the Havana Times blog reported that Rafael Correa, the former president of Ecuador 2007-2017, is set to be tried in absentia, with prosecutors accusing him and other high-ranking politicians and business people of running a bribery operation. Correa is currently living in self-imposed exile in Belgium.
A CLOSER LOOK AT CORRUPTION RISK IN THE WESTERN BALKANS
On 10 February, BNE Intellinews published an article about a report that takes a closer look at corruption risks in the Western Balkans. It refers to the generally lacklustre performance of the Western Balkans in the 2019 edition of Transparency International’s Corruption Perceptions Index.
The report is at –
UK: TORY MP AND MINISTER “LOBBIED FOR OIL COMPANY ACCUSED OF BRIBERY”
On 10 February, OCCRP reported a Guardian article claiming that Liam Fox, who was serving as the international trade secretary from 2016 until 2019, and was acting on behalf of a company whose leadership have been major donors to his party. It is claimed that he lobbied Bahraini royal family members to secure a $5 billion contract with Petrofac, an oilfield services provider that was being investigated by the SFO for alleged bribery, corruption and money laundering.
NETHERLANDS: AUTHORITIES TOO WEAK IN FIGHT AGAINST MONEY LAUNDERING
On 10 February, the NL Times reported claims by the Dutch association of tax advisers NOB and the register of tax advisers RB. According to the NOB and RB, only a fraction of suspicious transactions reported were actually investigated due to under-staffing at the Public Prosecution Service (OM) and the Tax Authority’s investigative service.
GERMANY SEEKS BRITISH MAN’S ARREST IN CARBON TRADING SCAM
On 10 February, the Daily Mail reported that prosecutors in Frankfurt said the 46-year-old man, unnamed but known by nickname “Batman”, “substantially organised and directed” a so-called system carousel, which involved a chain of transactions with carbon dioxide emissions certificates designed to confuse tax authorities, the crimes taking place around 2009-2010. He was arrested in Britain several years ago but later released, but now the German authorities have applied for a new European arrest warrant.
UK: GOVERNMENT CONFIRMS PLANS TO INTRODUCE IMPORT CONTROLS ON EU GOODS AT BORDER
On 10 February, a news release from the Cabinet Office announced that the UK government has confirmed plans to introduce import controls on EU goods at the border after the transition period ends on 31 December.
FRAUD IN EMERGENCY MANAGEMENT AND RECOVERY – PRINCIPLES FOR EFFECTIVE FRAUD CONTROL
On 10 February, the Cabinet Office in the UK published on behalf of the International Public Sector Fraud Forum, which currently consists of representatives from organisations in the governments of Australia, Canada, New Zealand, UK and US. The collective aim of the Forum is to come together to share best and leading practice in fraud management and control across public borders. This guidance is said to be designed to help those leading and working on the administration of emergency management situations to understand the practical way to deal with fraud and reduce risk. One thing that the Forum agreed upon is that there were 5 principles for public sector fraud –
UKRAINIAN BUSTED CARRYING OVER 100 ANTIQUE ITEMS ACROSS BORDER WITH POLAND
On 10 February, 112 UA in Ukraine reported that the antiques were seized at the Rava-Ruska-Hrebenne checkpoint. A citizen of Ukraine, as a car passenger, was crossing the border by the lane of “green corridor” simplified customs control. During a customs check, the customs workers found an icon, coins, banknotes, books, a picture, and medals; over a hundred items altogether.
REPORT: THE TRAFFICKING OF PANGOLIN SCALES MUST BE TACKLED AS A TRANSNATIONAL ORGANISED CRIME
On 10 February, a news release from the NGO Wildlife Justice Commission referred to its new report – Scaling Up: The Rapid Growth in the Industrial Scale Trafficking of Pangolin Scales (2016-2019) – in the run-up to World Pangolin Day. The report highlights that this large-scale trafficking, which is driving the species to the brink of extinction.
The report is at –
UK: PLANS TO TRIPLE THE POLICE BAIL TIME LIMIT
On 7 February, an article from charity Each Other is concerned with proposals by the Home Office to increase bail time limits from 28 to 90 days. Officers would be advised to apply these restrictions in cases where suspects are deemed to be a risk to victims, witnesses and the public. The article explains what pre-charge bail is, and that a 28-day limit on the police’s use of pre-charge bail was introduced to bring “an end to the injustice of people being left to languish on very lengthy periods”. After 28 days, only an inspector can authorise an extension of up to 3 months. Thereafter, the police must apply to the Magistrates’ Court for a further extension.
CANARY ISLANDS – A “CONVENIENT HAVEN FOR DRUG TRAFFICKING, MONEY LAUNDERING”
On 10 February, Insight Crime carried an article saying that an international drug trafficking network used an often-overlooked set of Spanish islands as a crucial thoroughfare along a key drug transit route for traffickers to capture the European market. 11 Spanish nationals and one Colombian national awaiting extradition to Spain were arrested to culminate the 2-year investigation.
TAXING THE DIGITAL ECONOMY – ARE WE NEARLY THERE YET?
On 10 February, Eversheds Sutherland published a briefing saying that, on 31 January, the OECD issued a further update on its work on the taxation of the digital economy. The briefing sets out to provide a summary of the key developments since the issue of the public consultation document on the Unified Approach in October 2019. It says that the summary assumes a basic understanding of the original Unified Approach proposal, which is summarised in a previous briefing on the consultation document.
The previous briefing is at –
The new briefing is at –
ICO IMPOSES MAXIMUM PRE-GDPR FINE ON MAJOR UK RETAILER
On 10 February, Dentons reported that, in January, the Information Commissioner’s Office (ICO), the UK data protection regulator, imposed a monetary penalty notice of £500,000 on electronics retailer DSG Retail Limited (DSG), a company better known by its trading brands, such as Currys PC World and Dixons Travel. DSG is a subsidiary of Dixons Carphone plc. The data breaches occurred in 2017-18. The article looks at cybersecurity lessons for retailers (and other organisations). It also says that the ICO’s decision to impose the maximum penalty is another clear example of the fact that the ICO is determined to use its fining powers when it considers it appropriate and to impose high fines for what it considers to be serious failures.
US: PILOT PROJECT TO COLLECT DNA FROM CERTAIN TRAVELLERS
On 10 February, Dentons reported that the US Department of Homeland Security had announced a pilot project to collect DNA samples from certain travellers, which commenced on 6 January. The article says that, although privacy advocates are concerned about this mandatory collection of DNA, the pilot project, as it presently stands, may not be a significant departure from current practices. The 5-phase pilot project over the next 3 years will see any DNA that is collected will be sent to the FBI for inclusion in its DNA databases. The article explains the project and who is to be required to provide samples.
CS TEAR GAS IN HONG KONG AND ELSEWHERE: ASSESSING THE HAZARDS
On 10 February, Bellingcat published a post saying that numerous allegations about tear gas have been made, and misinformation, half-truths, myth, and suppositions have been passed around on social media. Yet, it says, there is actually a wealth of information about tear gas available in the technical literature. The purpose of this post is said to be to dig into the health and safety concerns behind tear gas usage. It starts off with the basics: generally, the term “tear gas” refers to a substance known as CS. CS, in turn, is a nickname for chemical substance 2-chlorobenzalmalononitrile. It is not a gas in normal situations for very long. CS is generally a solid, and is used in many forms. It also notes that there are other riot control agents that have been used, either historically, or in modern times. CA, CN, CR, OC (aka “Pepper Spray”), and various other compounds have been used at various points – such as in Iraq, where hexachloroethane (HC) smoke grenades were used. However, it says, none of these other products have been reportedly used in Hong Kong.
VIOLATIONS OF LIBYAN ARMS EMBARGO “NOTHING SHORT OF A SCANDAL”
On 8 February, a UN news release reported a speech given by the UN Secretary General to an African Union Peace and Security Council session on Libya and the Sahel. He said that arms continue to flow into the country, and military operations have recommenced, further compounding an already difficult humanitarian situation. The continued violations of the arms embargo are nothing short of a scandal, he said.
OFAC PUBLISHES REMOVAL OF TURKISH OFFICIALS FROM SDN LIST
On 10 February, American Shipper reported that, more than 3 months after President Trump directed the removal of sanctions against the Turkish defence and energy ministries from the sanctions lists, OFAC has got around to formally publishing in the Federal Register the lifting of economic sanctions. The Turkish Ministry of National Defense and Ministry of Energy and Natural Resources, along with National Defense Minister Hulisi Akar, Interior Minister Suleyman Soylu and Energy Minister Fatih Donmez, were listed on 14 October.
UK FLEXES EXTRATERRITORIAL REACH WITH AIRBUS SETTLEMENT
A post on the FCPA Blog on 10 February examines the use of section 7 of the Bribery Act 2010 and whether the overseas arms of Airbus involved could realistically have been affected by control deficiencies in Airbus in the UK. Only time will tell, it says, with further cases and judicial decisions, whether there are limits to the extraterritorial reach of section 7, or whether the simple fact of having a subsidiary in the UK is enough to legally subject any global company to UK investigations and prosecution.
A 36-minute podcast from the Small Arms Survey on 18 December focused on illicit arms trafficking from North Korea, including sources of arms, routes and modes of transport, concealment methods, and ways to curb such trafficking.
Then on 7 February it released a further podcast which focused on North Korea’s illicit maritime activities in violation of UN sanctions. It discusses what these activities are; how they relate to the UN sanctions regime on North Korea in general as well as the arms embargo in particular; how North Korea tries to circumvent these restrictions; and the tools available to monitor and address the situation.