12 February 2020
US COUNTERINTELLIGENCE CHIEF WARNS OF THREAT TO DEMOCRACY FROM FOREIGN HACKERS AND SPIES
On 10 February, NBC carried an article about a report from the National Counterintelligence and Security Center, or NCSC, which is part of the Office of the Director of National Intelligence, detailing national strategy. The strategy document, serves as a guide for US intelligence budgets and priorities, was issued hours after the DoJ announced an indictment against 4 Chinese military hackers accused of hacking Equifax credit reporting company in 2017 and stealing the personal information of nearly 150 million Americans. It says that China’s foreign intelligence organisations in particular are engaged in a sweeping effort to steal IP, high-tech research, data and other vital economic information.
ALPHA AND OMEGA SEMICONDUCTOR UNDER INVESTIGATION FOR EXPORT CONTROL VIOLATIONS LINKED TO HUAWEI
On 12 February, the EU Sanctions blog reported that the company had told the SEC that the DoJ has commenced an investigation into the company’s compliance with export control regulations relating to transactions with Huawei.
PUERTO RICO BANK TO PAY $1 MILLION TO RESOLVE INVESTIGATION RELATED TO PDVSA TRANSACTIONS
On 12 February, KYC 360 reported that the Bank of San Juan Internacional Inc agreed to pay $1 million to resolve a federal investigation into allegations that it laundered millions of dollars related to transactions and loan agreements with Venezuela’s state-owned oil giant, Petróleos de Venezuela SA. This followed a civil forfeiture of $53 million and close to five months of civil litigation between the bank and federal prosecutors. However, the DoJ has agreed to return $53 million in seized funds to the bank and end its investigation into the bank and its officials.
HONG KONG: BMI SECURITIES FINED FOR AML BREACHES
On 12 February, KYC 360 reported that Hong Kong’s SFC (Securities and Futures Commission) has reprimanded and fined BMI Securities US$477,000 for failures in complying with AML/CFT regulatory requirements dating from 2016.
JHO LOW AND PETROSAUDI DIRECTORS FACE NEW 1MDB CHARGES IN MALAYSIA
On 10 February, Bloomberg reported that fugitive financier Low Taek Jho faces new charges in Malaysia along with PetroSaudi International directors Tarek Obaid and Patrick Mahony. They are accused of engaging in criminal conspiracy with Malaysia’s former Prime Minister Najib Razak, while Mahony and Obaid face additional money laundering charges for allegedly receiving $300 million from 1MDB.
GATS: NEW GLOBAL AIRCRAFT TRADING SYSTEM E-PLATFORM
On 6 February, Mason Hayes & Curran in Ireland published an article about a new voluntary electronic e-ledger system called the Global Aircraft Trading System (GATS) which proposes to revolutionise current practices by allowing the electronic trading of aircraft in an efficient, secure and predictable manner. It is due to go live on 31 March and there will be a ‘simulated transaction period’ where interested parties can become familiar with the new digital platform. The article says that it is still unclear as to the overall level of participation and engagement by lessors, lessees and financiers in the GATS system in 2020. In late 2019, SMBC Aviation Capital was the first aircraft leasing company to sign a lease through GATS.
DEFERRED PROSECUTION AGREEMENTS: CANADA PROVIDES SOME CLARITY, BUT MANY QUESTIONS REMAIN
In the February edition of its Litigation Bulletin, Canadian law firm McMillan said that in a previous Bulletin it had remarked on a lack of clear statutory guidance and had suggested that Canada might follow the French example by issuing guidelines to ensure a predictable approach for future DPA. Such guidelines were issued in January and outlines the criteria applied when determining whether to consent to DPA negotiation. The article compares the new Canadian guidelines to guidance issued in the UK and US. Commenting on continued shortcomings, it concludes that Canadians must wait for the country’s first formalised DPA as proof of how the regime will work in practice.
CANADA ANNOUNCES COMPLETION OF PROGRAMME WITH SPENT NUCLEAR FUEL SHIPPED TO US
On 11 February, a news release announced that Canada’s Department of Energy’s National Nuclear Security Administration and Atomic Energy of Canada Limited had announced the completion of a multi-year campaign to move spent highly enriched uranium (HEU) from Canada to the US. It involved moving HEU from 2 Canadian research to the Savannah River Site in Aiken, South Carolina, and began in 2015 and finished in 2019, and involving 200 kg of material. It is reported to be the largest removal of spent nuclear fuel to the US ever completed under the Nuclear Material Removal Program. The US-Origin Foreign Research Reactor Spent Nuclear Fuel Acceptance Program, which was established in 1996 with the mission to repatriate US-origin spent nuclear fuel and other weapons-grade nuclear material from civilian sites worldwide.
QATAR BANS CRYPTOCURRENCIES AFTER UPDATING ITS AML LAWS
A post on the FCPA Blog on 12 February said that Qatar joined a number of countries that are implementing stricter laws to combat the illicit use of cryptocurrencies in terrorist financing and money laundering, with new laws introduced by the Central Bank in December; and the Qatar Financial Center Regulatory Authority (QFCRA) via twitter announced that all services involving cryptocurrencies have been banned throughout the Qatar Financial Center until further notice.
CAYMAN ISLANDS DEVELOPS ONLINE AML LEARNING TOOL
On 11 February, the Cayman News Service reported that Cayman Finance, has developed online learning modules relating to AML/CFT and countering proliferation financing. The free, self-paced, on-demand lessons are available for people in the financial services industry and in designated non-financial businesses and professions, such as lawyers and realtors.
COUNCIL OF EUROPE MOVES TOWARDS A RECOMMENDATION TO BAN THE TRADE IN GOODS USED FOR TORTURE AND THE DEATH PENALTY
On 12 February, the Council of Europe reported that the Committee of Ministers has given its green light to the preparation of a recommendation concerning the trade in goods used for torture and other cruel, inhuman or degrading treatment or punishment and the death penalty, following a feasibility study which highlights the current situation of this type of trade and the existing national and international legal responses. A draft recommendation is by June.
The study can be accessed at –
FinCEN PREPARING ‘SIGNIFICANT’ CRYPTO RULES
On 12 February, Coindesk reported warnings by the US Treasury Secretary that FinCEN is preparing to unveil new rules concerned with cryptocurrencies, although be refused to give further details.
OECD RELEASES TRANSFER PRICING GUIDANCE ON FINANCIAL TRANSACTIONS
On 12 February, Accountancy Daily reported that for the first time the OECD Transfer Pricing Guidelines include guidance on the transfer pricing aspects of financial transactions.
UK: MONEY LAUNDERING GUIDANCE FOR TCSP UPDATED
On 12 February, Accountancy Daily reported that updated guidance from HMRC stresses that, from 10 January this year, a trust or company service providers must not trade until HMRC have confirmed the application has been successful.
LEGITIMATE ACADEMIC PURSUITS OR ILLEGAL ESPIONAGE?
An article from Holland & Knight on 12 February examined the US federal government’s concern about academic espionage, particularly regarding China’s efforts through its “foreign talent programs,” to further its economic prosperity, national security and IP portfolio. This follows Charles Lieber, chair of the Harvard Chemistry Department, being arrested on 28 January, but says that the issue is not limited to China. It says that it is vital for academic institutions to address the government’s concerns about disclosure by awareness, training and monitoring.
LAS VEGAS GAMBLERS PLEAD GUILTY TO USING “VANCOUVER MODEL” FRAUD SCHEME
On 12 February, Calvin Ayre reported that the model involves Chinese high-rollers, Chinese banks’ involvement, and facilitators in Canada (and now the US, it seems). The lender of cash to the gambler also takes a cut to clean the money and present it to the client.
CHINA TO AMEND WILDLIFE PROTECTION LAW FOLLOWING THE CORONAVIRUS OUTBREAK
On 12 February, Jurist reported that the recent coronavirus outbreak is suspected to be related to wildlife, and the amendment to the law will be an attempt to fight the outbreak.
UNODC TRAINS TUNISIAN OFFICERS IN STRATEGIC TRADE AND EXPORT CONTROL
On 12 February, the UN Office of Drugs and Crime reported that the UNODC Container Control Programme (CCP) organised a 1-week training on Strategic Trade and Export Control (STEC) for officials in Tunisia. It exaplains that the intense training explores the relationship between good profiling of containers and its implications for the economy. The training focused on Tunisian officers’ capacity in terms of profiling, targeting and dealing with strategic goods and chemical, biological, radiological, nuclear, and explosive (CBRNE) materials.
SEIZED ILLEGAL DRUGS IN JAPAN HIT RECORD HIGH IN 2019
Nippon.com on 12 February reported that Japan’s customs authorities seized a record 3,318 kg of illegal drugs in 2019, 2.2 times more than in 2018. This is the first time that seized illegal drugs have topped 3 tons a year.
FDA COULD LOSE TOBACCO REGULATORY AUTHORITY ROLE IN THE US
On 11 February, TJI reported that it is claimed that the Trump administration has revealed plans to create a new agency which would take tobacco control away from the responsibility of the FDA.
UK: HIGH COURT ADDS 255 COLOMBIAN FARMER CLAIMANTS TO GROUP FREEZING ORDER TARGETING OIL COMPANY
On 12 February, Out-Law published an article saying that the Court allowed the amendment despite there being an interim freezing order against the Amerisur Resources for over £3 million already being in place. The Court said it would be a waste of time and resources to require them to make a completely new application.
IRISH REVENUE SEIZE MACHINERY AND MATERIALS ASSOCIATED WITH ILLICIT CIGARETTE MANUFACTURING
On 12 February, the Irish authorities reported that Revenue officers discovered and seized machinery and materials such as cigarette filters, foil and carton paper, associated with illicit cigarette manufacturing following a search, under warrant, of commercial premises in the Dublin 3 area. There was no illicit manufacturing in operation on the premises, but officers did seize 240 kg of processed tobacco and approximately 60,000 cigarettes which were concealed in wooden crates.
IRISH REVENUE SEIZE HERBAL CANNABIS WORTH €400,000 AT DUBLIN AIRPORT
On 12 February, a news release advised that, as a result of routine operations and with the assistance of detector dog Scooby, Revenue officers at Dublin Airport seized approximately 20 kg of herbal cannabis with an estimated street value of almost €400,000. The drugs were concealed in parcels which originated in Spain.
‘MAJOR’ HUMAN TRAFFICKING RING BUSTED IN KUWAIT
On 12 February, the Kuwait Times reported that 3 Bangladeshi suspects formed a major network in human trafficking and money laundering. One was arrested and 2 left the country. Sources said the 3 had high-ranking and sensitive jobs in 3 major companies and brought in more than 20,000 Bangladeshi laborers on government contracts in exchange for “huge” amounts of money.
EU TAKES LEGAL ACTION AGAINST 8 MEMBER STATES OVER FAILURE TO IMPLEMENT AML DIRECTIVE
On 12 February, Global Witness commented on reports that the European Commission has put Cyprus, Hungary, the Netherlands, Portugal, Romania, Slovakia, Slovenia and Spain on formal notice over implementation of the EU’s 5th AML Directive, the deadline for which was this January.
VENEZUELAN MARITIME AUTHORITY TO REQUIRE PORT PAYMENTS IN SANCTIONED PETRO CURRENCY
Insurance Marine News on 10 February reported that the P+I Club, Standard Club has said that the Venezuelan Maritime Authority has required port payments to be in its own digital Petro Currency, which is subject to US sanctions. Standard Club observed that this was not the first time that payment for maritime services in Petros had been proposed in Venezuela, preciously without success.