On 14 February, the Kharon Brief carried a post saying that the US State Department has imposed restrictions for 2 years on 13 individuals and entities supporting proliferation activities in Iran, North Korea and Syria. The restrictions were announced on 3 February and published in the Federal Register on 14 February. As a result of the listing, those named cannot supply US Government agencies with goods or services and they cannot receive Government funds or certain Government sales. Neither can they receive export licences for controlled items. Some of those listed were already subject to US sanctions. The entities include Russian and Chinese ones.
14 February 2020
HUAWEI “OPERATED A COMPANY TO OBTAIN GOODS AND TECHNOLOGY FROM THE US FOR USE IN IRAN”
On 13 February, the Wall Street Journal reported on new charges laid against the Chinese telecoms tech company in the US. These includes claims in the indictment that it unofficially operated a company called Skycom Tech Co. to obtain goods and technology from the US for use in Iran, and that it shipped Huawei goods and services to sanctioned countries, often using local affiliates and secret identifying codes for such places. 2 US subsidiaries of Huawei are also charged.
US DEFENCE CONTRACTOR FACING INVESTIGATION FOR MIDDLE EAST PAYMENTS
On 14 February, the Wall Street Journal reported that the US SEC has opened an inquiry into whether Raytheon or its partners made improper payments in the Middle East, and had received a subpoena concerning its joint venture with France’s Thales SA.
AUSTRALIA: WHISTLEBLOWER REVEALS THE ‘ALARMING’ SCALE OF MONEY LAUNDERING IN POKIES ROOMS AT LOCAL CLUBS AND PUBS
On KYC 360 reported on 14 February that a whistleblower and former employee of ClubsNSW has claimed that money laundering through poker machines is rife in pubs and clubs across the country. It says that the poker machine industry is one of the sectors of the economy most vulnerable to organised crime. Around $65-75 billion worth of cash goes through the pokies across Australia each year. The whistleblower claimed that criminals are willing to lose 20-30% of what they want to clean at the end of the day to get that winning cheque or that piece of paper that validates where they’ve got that money from.
AUSTRALIA: THE MULTI-MILLION-DOLLAR ‘DUMMY DIRECTOR’ SCAM SCAMMING THE TAX OFFICE
On 14 February, ABC News carried a report saying that an investigation by has uncovered the ease with which a small group of accountants spent years targeting drug users, homeless people and those down on their luck in order to help clients cheat the tax man and other creditors. The scheme is said to involve nearly 200 companies across almost every state in the country.
MONEY LAUNDERING MAFIA DISMANTLED IN CANARY ISLANDS
On 13 February, Euro Weekly reported that a mafia gang that laundered money illegally obtained in Italy has been busted in the Canary Islands.This investigation has led to the blocking and seizure of 37 properties and 19 companies worth approximately €14 million. It is said that Spanish, Italian and Austrian law enforcement have dismantled an international mafia gang that was laundering money obtained illegally in Italy and in the Canary Islands through real estate investments, and targeting a criminal organisation, called the “Banda dellaMagliana”.
BEHIND THE GROWTH MARKET IN COUNTER-DRONE TECHNOLOGY
On 14 February, World Politics Review published an article which starts by saying that decades of technological advances have made drones readily available not only to governments, but to non-state groups, commercial actors and hobbyists as well, for everything from military strikes to package deliveries. It then says that more and more research is now being devoted to counter-drone technology, the market for which is estimated to grow by 20% to 30% over the next few years. It refers to a new report from the the Center for the Study of the Drone identified over 230 counter-drone products produced by 155 manufacturers in 33 countries – even for individuals’ use. It explains that there are 3 general kinds of anti-drone action: kinetically (i.e. hit it or knock it down), electronically and by interception. Drones, it says, are also increasingly being used to fight other drones, and arms manufacturers are working hard to improve their drone detection capabilities – using radar, radio, IR, electro-optical and acoustic sensors.
UKRAINE: STATE-OWNED UKROBORONPROM WINS COURT CASE OVER RETURN OF MONEY FOR DUAL-USE GOODS ORDERED BY RUSSIAN COMPANY
On 14 February, Interfax Ukraine reported that the state defence manufacturer had won a legal case brought against it by Russian company Avia-FED-Service, which had demanded repayment of $2.3 million related to contracts for the manufacture of dual-use goods.
NORWAY CLAIMS CHINESE INTELLIGENCE HAS REPEATEDLY ACQUIRED ITS SPACE TECHNOLOGY
On 13 February, Space Daily reported that Norway plays an important role in space exploration for key military space facilities used by the US, but that in recent years, the Chinese intelligence service has succeeded in obtaining advanced Norwegian technology several times. A new threat assessment includes Norwegian space research facilities among the main targets for the Chinese intelligence service, which, it claims, has shown a high interest in dual-use technology.
US: NEW CFIUS FOREIGN INVESTMENT RULES TAKE EFFECT
On 14 February, an article from Vinson & Elkins LLP reported that the Committee on Foreign Investment in the United States took effect from 14 February, providing links to the relevant Rules. CFIUS reviews foreign investment for national security concerns, and a 2018 Act introduced significant reforms, including an expanded jurisdiction, mandatory filing requirements, and other important changes – which are what have come into effect on 14 February. The article then provides a brief summary of the key reforms to the CFIUS process. The extension includes non-controlling foreign investment, certain sensitive real estate (e.g. airports and seaports), and restricts the “white list” of exempt countries to just the UK and Australia.
UBS SEEKS RETURN OF BANK-OWNED PRIVATE JETS SEIZED IN RUSSIA
Swissinfo on 14 February reported that UBS Group AG has sought to reverse a Moscow court decision allowing the seizure of 2 Bombardier Challenger 650 business jets leased to brothers Dmitry and Alexey Ananiev, the former co-owners of Promsvyazbank PJSC. Promsvyazbank took control of the aircraft — along with a dozen paintings, real estate and other assets belonging to the Ananievs — to help compensate for estimated losses made by the bank, and the Ananievs lost control of Promsvyazbank in 2017.
EGYPT POST EMPLOYEES CHARGED IN MONEY LAUNDERING CASE
The Middle East Monitor on 14 February reported that public prosecutors in Egypt have ordered the detention of 25 people, including employees of the postal service, following allegations of money laundering and transfers, in a case described as the largest of its kind. The accused are alleged to have created postal accounts for other persons for transferring and depositing money with the aim of using this money in illegal activities that “harm the country’s interests and security.
UK: 9 IN 10 ESTATE AGENTS ‘RELY ON THEIR OWN INSTINCTS’ TO SNIFF OUT MONEY LAUNDERING
On 14 February, Property Industry Eye reported that a new survey of 150 agents revealed that almost 6 out of 10 estate agents believe that money laundering is not a problem in their area – and almost 9 in 10 say it is enough to rely on their instincts. The research also found that 42% of agents would not continue with a full AML check if speed were essential to the sale, if they knew the buyer, or if the agent did not think it necessary.
CORONAVIRUS OUTBREAK: TIME TO REVIEW FORCE MAJEURE PROVISIONS IN INTERNATIONAL COMMERCIAL CONTRACTS
On 13 February, an article from Crowell Moring notes that a number of manufacturing facilities and distributors in China have been shut down, and many companies based in the US have also suspended or limited their operations in China. It says that one important step companies should consider is to review their contracts to determine whether “force majeure” provisions in the relevant contracts may apply. It says that such clauses may cover several categories of events including natural disasters, human threats, acts of God, or acts of government; but warns that US courts tend to construe force majeure clauses narrowly.
GLOBAL CONCERN GROWS AS GULF OF GUINEA PIRACY ATTACKS INCREASE IN NUMBER AND VIOLENCE
On 8 February, Homeland Security Today reported that the number of crewmembers being kidnapped in the Gulf of Guinea increased by more than 50% in 2019 and this year has begun with a further escalation of violence, armed robbery and kidnapping. In August 2019, the Nigerian Maritime Administration and Safety Agency (NIMASA) opened the Deep Blue Project’s Command, Control, Computer Communication and Information Centre, which operates 24 hours a day. The project will liaise with international security networks. A representative of a shipowners’ trade body said that the European shipping industry calls for the EU and its Member States to take concrete action, as the circumstances are becoming dire; and that the EU should put maritime security high on the agenda of partnership and trade agreements, as well as other forms of cooperation with African partners in the region.
WHY YOU CAN’T BANK ON BACKUPS TO FIGHT RANSOMWARE ANYMORE
On 2 February, Ars Technica reported that ransomware operators are stealing data before it can be encrypted means back-ups are not enough. Discussing the threat from ransomware, it says that having good backups and responding quickly to the execution of ransomware malware can help limit the damage done by an attack, but ransomware operators are beginning to adapt as well — in ways that fundamentally change the model of ransomware attacks.
OFAC HAS EXPLAINED THE BASIS FOR OLEG DERIPASKA’S SANCTIONS LISTING
On 14 February, the EU Sanctions Blog reported a Financial Times article saying that a letter sent to his lawyers explained that the grounds for listing Deripaska were based on reports in which he is “reportedly identified as one of the individuals holding assets and laundering funds on behalf of President Vladimir Putin”, and that he cancelled the IPO of a Gaz, an automaker, to conceal Mr Putin’s money laundering.
EU COMMISSION OUTLINES PLAN TO CREATE SINGLE EU DATA SPACE BY 2030
On 14 February, EurActiv reported on a leaked EU draft strategy document that says that the EU wants to create by the end of the decade a genuine single market for data that corresponds to its economic power, prioritising nine “strategic sectors” including health, climate, agriculture and energy, and dedicating up to €6 billion to investment in data centres.
FATF WEEK OF MEETINGS, 16-21 FEBRUARY
On 14 February, FATF announced that more than 800 representatives from 205 countries and jurisdictions around the world, the IMF, UN, World Bank and other organisations, will arrive for FATF Week in Paris involving 6 days of meetings will focus on global action to follow the money that fuels crime and terrorism and reduce the harm caused to people and society. This will in include a progress report on the FATF’s 12-month review of the activities and operations covered by the FATF’s standards on virtual assets; an assessment of measures by South Korea and UAE to combat money laundering and terrorist financing ; progress made by Iran and Pakistan; progress of an FATF initiative to combat financial flows from the illegal wildlife trade; adoption of guidance on a digital ID; and discussions on developments in the financing of ISIL, Al-Qaeda and affiliates.
UK: INFORMATION AND BEST PRACTICE GUIDANCE TO HELP YOU IF YOUR ORGANISATION NEEDS TO PUBLISH A MODERN SLAVERY STATEMENT
On 14 February, the Home Office published updated information and guidance. The information is designed to help one determine if your company or partnership needs to publish a statement. The best practice guidance is on how to produce such a statement. The criteria for those who need to make such a statement is an organisation with a turnover of £36 million or more.
UK POLICE DETENTION POWERS
On 14 February, the House of Commons Library published a briefing paper about police detention powers and outlines a recent history of their reform. It also describes the police custody estate and current concerns with pre-charge bail. This is as the UK Government holds a consultation on pre-charge bail, which has been subject to stricter time limits (due to concerns over potential misuse) since 2017.
HEDGE FUND MANAGER TO SPEND OVER A DECADE IN PRISON FOR MULTIMILLION-DOLLAR INVESTMENT FRAUD
Finance Feeds on 14 February reported that Nicholas Genovese, a founder of Willow Creek Investments LP, is to spent over 10 years in prison following a multimillion-dollar fraudulent securities scheme. He induced more than $11.2 million in investments in his hedge fund by misrepresenting his qualifications and professional background and concealing that he had prior felony convictions for fraud-related crimes.
‘AMAZON PRIME’ FRAUD GANG NET THEMSELVES MORE THAN £1 MILLION BY CLAIMING TO REPRESENT THE ONLINE SUBSCRIPTION SERVICE
The Daily Mail on 14 February reported that Action Fraud said that the fraud first appeared in October 2019. An automated phone call targets the victim, and when the victim responds, a fraudster masquerading as a customer service agent takes over.
MIAMI EYE DOCTOR APPEALS CONVICTION FOR $73 MILLION MEDICARE FRAUD
On 14 February, Courthouse News reported that Saloman Melgen is appealing his $73 million Medicare fraud conviction for which he was handed a 17-year sentence at the low-security Miami Federal Correctional Institute. He had, amongst other things, billed Medicare more than 90 times for diagnostic testing on a patient’s prosthetic eye.
UK LETTING AGENTS: AML REQUIREMENTS
On 14 February, an article from Bryan Cave Leighton Paisner said that letting agents are now supervised by HMRC for AML/CTF purposes if they rent out residential or commercial property for one month or more and at a rent which, during at least part of the term, is or is equivalent to a monthly rent of €10,000. Online registration will open in May, and businesses must register by 10 January 2021. The article points out that estate agents who also arrange lettings have been required to register with HMRC for AML/CTF purposes since the Money Laundering Regulations 2017 came into force.
UK: ONE OF “EUROPE’S MOST WANTED” EXTRADITED BACK TO ROMANIA AFTER NCA OPERATION
A news release from the NCA on 14 February announced that Florin Ghinea, 45, the suspected head of a major organised crime network has been extradited back to Romania to face trial. He was wanted by the Romanian authorities for human trafficking, conspiracy to murder, blackmail and money laundering. He is accused of being involved with a trafficking ring which saw Romanian women sent to Ireland, Finland and Dubai for the purposes of sexual exploitation, as well as conspiring to kill a criminal rival. He was detained under a European arrest warrant.
VENEZUELA REQUESTS THE INTERNATIONAL CRIMINAL COURT (ICC) INVESTIGATE US SANCTIONS IMPOSED ON VENEZUELA AS CRIMES AGAINST HUMANITY
On 14 February, Jurist reported that the Venezuela foreign minister made the request, saying that US sanctions had allegedly affected people’s rights to health, food and economic development. Meanwhile, the ICC has an ongoing investigation into alleged crimes committed by the Venezuelan government, having decided to investigate after 6 countries filed a request alleging crimes committed in the context of demonstrations and political unrest.
INTERPOL CALLS FOR GLOBAL ACTION TO PREVENT MATCH MANIPULATION AND BET RIGGING IN ESPORTS
On 14 February, Illicit Trade reported that Interpol has called for increased international action to guarantee the integrity of esports competitions after a global team of sports manipulation investigators who work to prevent corruption in a range of sports disciplines focused in particular on esports. It also mentions that in 2019 detectives in Australia made arrests after investigating suspicious betting activity linked to a tournament involving the competitive first-person shooter Counter-Strike: Global Offensive (CS:GO). Competitors were said to have been placing large bets on matches before intentionally losing them.
UK: NCA AMBER ALERT – THE MSB SECTOR AND REPORTING SUSPICIOUS ACTIVITY
In February 2020, the NCA issued an Amber Alert, as HMRC and the City of London Police visit money service businesses across London. The Alert sets out to warn MSB of dangers and threats they face from serious organised criminals who may try and access the services they offer.
On 14 February, Out-Law published an article about draft guidance published by the Joint Money Laundering Steering Group (JMLSG), an influential body that brings together a number of trade associations active in the UK financial services sector. It says that existing JMLSG guidance already recognises the potential role for digital ID checks in AML compliance, and the proposed amendments that have been opened up to consultation elaborate this further. In particular, they set out criteria firms should refer to when engaging digital identity verification providers.