18 February 2020
BAHRAIN MONEY LAUNDERING CASE INVOLVING FUTURE BANK SET UP BY IRANIAN BANKS
On 18 February, the EU Sanctions Blog carried an article about the announcement by Bahrain of a case involving Future Bank, which is alleged to have facilitated financial transactions totalling $7 billion on behalf of Iranian people/entities subject to international and terrorist-financing sanctions.
GAO RECOMMENDS UPDATES TO IRS VIRTUAL CURRENCY GUIDANCE
On 14 February, Cadwalader Cabinet reported that the Government Accountability Office had made several recommendations to the IRS on guidance to improve compliance with virtual currency transaction reporting. This followed a GAO study a study examining the general knowledge of virtual currency tax compliance, how the IRS has mitigated virtual currency tax compliance risks and whether the IRS’s guidance on virtual currency tax compliance satisfies taxpayer questions or whether more information is needed. It says that the IRS has agreed to increase information reporting but did not agree to provide a “general information” disclaimer or issue a statement on virtual currency foreign reporting.
https://www.findknowdo.com/news/02/14/2020/gao-recommends-updates-irs-virtual-currency-guidance
https://www.gao.gov/products/gao-20-188
REBEL LIBYAN FORCES ATTACK TRIPOLI PORT AND TARGET TURKISH SHIP CARRYING MILITARY SUPPLIES
On 18 February, Reuters reported that the Libya National Army (LNA) faction, commanded by Khalifa Haftar have attacked the sea port of Libya’s capital to target a weapons depot, and had targeted a Turkish ship which had been delivering arms to the internationally-recognised government based in the capital. Since January, Turkey has sent several ships carrying arms and heavy trucks. In another article, Reuters reports that the combatants are readying for a long conflict, as foreign weapons flood in, eastern factions close oil ports and rival alliances wrangle over revenues from Africa’s largest petroleum reserves. It says that the LNA has the support of Egypt, UAE, Jordan and Russian mercenaries
THE INCONVENIENT TRUTH ABOUT ISIS
An article in Defense One on 16 February said that, despite its losses of men, territory and a leader, a Kurdish leader who witnessed the militant group’s rise and fall is warning that ISIS is putting itself back together and stressing an uncomfortable fact: that ISIS is bigger now than it was nearly 6 years ago, when it founded its self-styled caliphate.
https://www.defenseone.com/ideas/2020/02/inconvenient-truth-about-isis/163141/
THE US F-25 FIGHTER EMBARGO AGAINST TURKEY – SUCCESS OR FAILURE?
On 7 February, an article on War on the Rocks discussed the success, or otherwise, of the decision that followed the Turkish purchase of Russian surface-to-air missiles. It points out that the missile systems have already arrived in Turkey, and there’s no going back. By using the F-35 embargo to explicitly coerce Ankara, the US is far more likely to further damage relations with its NATO ally than find common ground, the article argues, and that the F-35 experience with Turkey provides valuable lessons for US policymakers. Amongst other things, the article points out that the current embargo is not the first that the US has imposed against Turkey. Following the Turkish takeover of northern Cyprus in the 70s the US imposed an embargo – and the Turks are still there and Cyprus remains divided. However, it is argued that the current embargo has accomplished the more immediate objective of helping to safeguard sensitive F-35 information from Russian espionage.
https://warontherocks.com/2020/02/washingtons-f-35-embargo-against-turkey-success-or-failure/
WHY DO THE US AND TAIWAN AGREE TO ARMS SALES?
On 12 February, an article in Security Assistance Monitor addresses this question. Over 20 years, it says, Taiwan has been one of the top 5 purchasers of US military technology. The article says that it is important to understand Taiwan’s case for arms acquisition in defiance of China’s diplomatic and military coercion and the impact of such exchanges on the US Indo-Pacific strategy. It concludes that US arms sales remain a crucial component of Taiwan’s security architecture and in preventing Cross-Strait conflict.
https://securityassistance.org/blog/why-us-and-taiwan-agree-arms-sales
PEOPLE’S BANK OF CHINA FINES 3 FINANCIAL INSTITUTIONS AND 24 OFFICERS FOR AML COMPLIANCE FAILURES
On 18 February, KYC 360 reported that PBOC has fined China Minsheng Bank, China Everbright Bank and Huatai Securities for failing to adequately guard against money laundering. It also reports that PBOC has published information on the people responsible for the violations, including their names, titles and why they were punished.
MORMON IN $470 MILLION FRAUD CASE BOUGHT HOMES AND SUPERCARS
On 18 February, KYC 360 reported that a California businessman – Lev Dermen, the owner of a chain of Californian truck stops – teamed up with a senior member of a secretive polygamist sect called The Order to defraud the US government of $470 million which he then used to buy fast cars and luxury homes, a court was told.
https://www.riskscreen.com/kyc360/news/mormon-in-470m-fraud-bought-homes-and-supercars/
NEW YORK GOVERNOR PROPOSES SIGNIFICANT EXPANSION OF POWERS OF NEW YORK DEPARTMENT OF FINANCIAL SERVICES (DFS)
On 18 February, a briefing from Wilmer Hale said that New York Governor Andrew M. Cuomo proposes to significantly expand the powers of the DFS, the state’s banking and insurance regulator, adding substantial enforcement powers over consumer products and services, business to business arrangements, and securities and investment advice.
https://wilmerhalecommunications.com/e/1ieanksqa4fldyq/10b373d3-2178-4d63-9104-d9da92bf1002
BIMCO RELEASES FRESH SANCTIONS CLAUSES FOR TIME AND VOYAGE CHARTER PARTIES
On 17 February, law firm Reed Smith published an article saying that the new clauses attempt to respond, in particular, to the more aggressive sanctions US regimes for Iran and Venezuela, which have strained the previous clauses’ language. It also says that the updates are designed to address the high risk of violation, incidental to the “complex, imprecisely drafted, often changing” sanctions rules.
https://www.reedsmith.com/en/perspectives/2020/02/managing-sanctions-risk-in-2020
DUAL CRIMINALITY IN EXTRADITION PROCEEDINGS
On 17 February, an article from 5 St Andrews Hill Chambers in London, in its Extradition and International Update for February, is concerned with 3 recent High Court decisions in England which highlight however that the issue of dual criminality is one which is highly fact-dependent and cannot be taken for granted in relation to any set of offences. In essence, under the Extradition Act 2003, there is a need for the conduct described within the extradition warrant to amount to an offence within the UK. The article concludes that the cases show just some of the range of different issues that can arise within the context of dual criminality and the need to be alert to which section of the Extradition Act governs the facts in each European Arrest Warrant. As is demonstrated by these cases, it says, this is an area which is not decided by the label given to the offence in either jurisdiction but the specific facts of each request.
ISLE OF MAN CONFIRMS 10 NEW ENTRIES ON SYRIAN SANCTIONS LIST AND AMENDMENT OF SOMALIA SANCTIONS
On 18 February, the Isle of Man confirmed that it had followed the UK and EU in adding 10 new names to the list of those subject to Syrian sanctions. It also advised that changes have been made to permit domestic sanctions legislation involved in the Somalia sanctions regime to conform with changes made by the UN and EU.
https://www.gov.im/news/2020/feb/18/financial-sanctions-syria/
VATICAN CITY TO UNDERGO MONEYVAL AML/CFT AUDIT IN APRIL
On 18 February, FSSPX News reported that MONEYVAL is to return to audit the Vatican City’s AML/CFT controls in April, and will report on them in December.
https://fsspx.news/en/news-events/news/vatican-moneyval-will-return-audit-accounts-april-2020-55186
Meanwhile –
VATICAN POLICE MAKE NEW RAID IN INVESTIGATION OF LONDON PROPERTY DEAL
On 18 February, Swissinfo reported that Vatican police had raided the home and office of Monsignor Alberto Perlasca, a senior Catholic Church official, seizing documents and computers in the latest phase of an investigation into the purchase of luxury London real estate.
AUSTRALIA A SAFE HAVEN FOR ILLICIT FUNDS, BUT CAYMAN ISLANDS LABELLED THE WORLD’S WORST
On 18 February, ABC News in Australia reported on the recent release of the latest bi-annual Tax Justice Network Financial Secrecy Index (FSI). In the FSI, the Cayman Islands ranked as the world’s biggest contributor to financial secrecy. In second place was the US, overtaking Switzerland (now ranked 3rd) – Australia is 48th (down 4 places over its position 2 years ago).
The Top 10 are –
Cayman Islands
US
Switzerland
Hong Kong
Singapore
Luxembourg
Japan
Netherlands
BVI
UAE
https://www.abc.net.au/news/2020-02-19/australia-still-a-safe-haven-for-illicit-funds/11977994
CEO OF DropBit CRYPTO-WALLET INDICTED FOR MONEY LAUNDERING OF $311 MILLION
On 18 February, Cryptocurrency Market reported that Larry Dean Harmon is suspected of having operated a money transfer business in the US without a licence and selling drugs during the period 2014-2017.
https://currencymarket24.com/the-ceo-of-dropbit-indicted-for-money-laundering-of-311-million-in-btc/
ARAB WORLD’S FIRST NUCLEAR REACTOR CLEARED FOR START-UP
On 17 February, Bloomberg reported that the UAE has taken a final step toward switching on the Arab world’s first commercial nuclear power plant, as its regulatory watchdog gave long-awaited approval to the operator of the Barakah reactor.
UK PRECURSOR CHEMICAL LICENSING
On 18 February, the Home Office published updated information on licence and registration applications for companies that deal in precursor chemicals, i.e. chemicals used in the illicit manufacture of narcotic drugs and psychotropic substances.
https://www.gov.uk/guidance/precursor-chemical-licensing
EU UPDATES INFORMATION FOR 2 ENTRIES ON ISIL/AL-QAIDA SANCTIONS LISTS
EU Regulation 2020/218/EU on 18 February announced updated detail information for 2 persons on the sanctions lists
EU REGULATIONS AMENDS ZIMBABWE SANCTIONS – 1 ASSET FREEZE RETAINED, ASSET FREEZE FOR 4 INDIVIDUALS REMAIN SUSPENDED
EU Regulations 2020/213/EU and 2020/219/EU confirmed the reported amendments to the EU Zimbabwe sanctions regime, with the asset freeze for Zimbabwe Defence Industries remaining in force.
FRANCE: WHAT TO DO WITH FUNDS SEIZED FROM CORRUPT FOREIGNERS?
On 18 February, OCCRP carried an interesting article asking what should, or could, be done with any cash realised from the conviction of the son of the president of Equatorial Guinea, saying that under French law assets seized in corruption cases must be returned to the French people. That, it says, wouldn’t be fair in this case as the money belonged to the people of Equatorial Guinea, and that France has now drafted a new law to cover such cases, and its lawmakers are reviewing it.
https://www.occrp.org/en/daily/11636-france-what-to-do-with-funds-seized-from-corrupt-foreigners
HOW US CUSTOMS IS PARTNERING WITH INDUSTRY TO FIGHT FURNITURE COUNTERFEITS AND SAVE JOBS
An article from the Frontline magazine of US Customs & Border Protection is concerned with cases where US Customs worked with industry specialists to combat counterfeits of classic furniture designs, particularly mid-20th Century modern designs. It notes that, during fiscal year 2016, CBP seized 42 shipments of counterfeit furniture nationwide, valued at $4.2 million.
https://www.cbp.gov/frontline/protecting-america-s-mid-century-modern-masterpieces
MAFIA BOSS FROM NAPLES FLED TO CARAVAN PARK NEAR LIVERPOOL
On 18 February, the Liverpool Echo carried the story of Gennaro Panzuto, once a key player in Naples’ Camorra clan, who was picked up by a Rolls-Royce at Liverpool Airport and taken to hide out in a caravan park in rural Lancashire in 2006 – the Six Acres Caravan Park between Lancaster and Preston. He continued to conduct operations in Naples, but was arrested and extradited back to Italy in 2007.
https://www.liverpoolecho.co.uk/news/liverpool-news/mafia-boss-picked-up-liverpool-17763866
https://www.lancs.live/news/lancashire-news/mafia-boss-fled-naples-hid-17769091
COURT DISMISSES LEGAL CHALLENGE TO HONG KONG REGULATOR’S INVESTIGATIVE POWERS
On 18 February, a release on Mondo Visione reported that the Court of First Instance has dismissed judicial review applications against the Hong Kong Securities and Futures Commission (SFC) in connection with a search operation it conducted for ongoing investigations into suspected breaches of the Securities and Futures Ordinance (SFO).
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