19 February 2020
JAPAN CUSTOMS LOOKS TO AI FOR ANTI-SMUGGLING ENFORCEMENT AS CONTROLS TIGHTENED AS OLYMPICS LOOM
On 18 February, Nikkei Asian Review carried an article saying that Japan will lean on artificial intelligence to identify illegal items hidden in the growing tide of parcels being shipped to the country. The system will be introduced as early as this spring at 6 locations where the annual handling volume of international parcels totals about 100 million pieces, including Haneda, Narita and Kansai international airports. Plans are to expand use to all 9 customs locations and 68 branches next year and beyond, making all parcels arriving by air and sea subject to AI screening. Customs screening is to be uprated ahead of the Tokyo Olympics, which begins in July.
ALSTOM AND MARUBENI COMPANY OFFICIALS INDICTED FOR ALLEGED INDONESIAN BRIBERY
On 18 February, the Wall Street Journal reported an indictment in the US has charged two former executives of French transportation company Alstom SA and a former executive of Japanese trading company Marubeni Corporation with bribing high-ranking Indonesian officials in exchange for help securing the $118 million contract in 2002-2009. The US DoJ had previously charged 6 other people in connection with the same case, including British citizen, Laurence Hoskins, who failed in his challenge to his conviction.
FCA STEEPING UP REGULATION OF DIGITAL WALLETS
On 19 February, the Wall Street Journal reported that the UK financial services regulator has said that it is placing additional scrutiny on companies that offer digital wallets because of what it views as insufficient consumer safeguards.
THE SEARCH FOR FABIO CASTALDI – LONDON-BASED ITALIAN “TAX CONSULTANT” AND COMPANY FORMATION AGENT
On 19 February, KYC 360 reported a OCCRP story about an Italian who allegedly used London and UK-based companies in alleged VAT fraud and asset stripping to avoid tax, and it also refers to a 2019 official Italian government report that says how the UK has become a problem jurisdiction for Italian investigators trying to track the movement of money across borders. The article says that Fabio Castaldi is surprisingly hard to find in London for a man who has registered hundreds of companies there, and that he supposedly runs a tax consultancy out of a co-working space in Moorgate, in the city’s central business district, but nobody there had ever heard of him.
A SPRING CLEAN FOR THE UK WASTE INDUSTRY?
On 17 February, an article from Bright Line Law reflected on the possible effects of the recently-formed Joint Unit for Waste Crime, designed to reduce serious crime in the UK waste sector. The article contends that details on the funding and operation of the new taskforce are scant, and there is a long way to go to clean up what is, at present, a problematic industry. In 2015 waste crime was estimated to have cost £600 million in the UK alone – but, the article says, it is also a global problem, with fraud and dumping affecting both developed and developing countries, and the sending of misdescribed toxic or hazardous waste to other countries less capable of handling it (and, in the case of Vietnam and Indonesia at least, having it returned to sender when discovered). The article also says that in the UK the waste sector is used for tax evasion and money laundering.
YEMEN’S HOUTHIS NOW SPORTING DEADLIER DRONES
On 19 February, Al Monitor reported that drones used by Iran-backed Houthi rebels in Yemen are becoming deadlier and more accurate over long ranges, according to a new report, and newer models discharge explosives and shrapnel, such as in an attack on a Yemeni military parade last year that killed 6 people and wounded several more.
PENNSYLVANIA ARMS DEALER SENTENCED TO PRISON FOR SHIPPING RIFLE SCOPES TO RUSSIA
On 19 February, The Citizen’s Voice reported that Mark Komoroski, an arms dealer who admitted he illegally shipped two rifle scopes bound for Russia has been sentenced to serve 7 months in federal prison. He failed to obtain the required export licence before sending the scopes — which had a total value of less than $2,500 — to undercover agents. However, he avoided a higher sentence because the Export Control Classification Number for the scopes was associated with crime control and not national security.
MEXICAN FROM SINGAPORE ARRESTED FOR ACTING FOR RUSSIA IN ACQUIRING PROPERTY IN US
On 19 February, All on Georgia reported that Hector Alejandro Cabrera Fuentes was arrested for acting within the US on behalf of a foreign government without notifying the Attorney General, and conspiracy to do the same. It is alleged that a Russian government official recruited Fuentes in 2019 and directed Fuentes to rent a specific property in Florida. The arrangements included Fuentes travelling to Russia twice, and visiting the US from Mexico.
US INDICTS 5 FOR CONSPIRACY TO ACQUIRE GOODS FOR PAKISTAN’S DEFENCE PLANS
On 18 February, Live Mint in India reported that 5 men associated with a Rawalpindi-based company called “Business World” were indicted by a US federal grand jury for conspiracy to procure goods for possible use in Pakistan’s strategic defence programmes, but none have been detained. One is said to reside in the UK, one in Canada and another in Hong Kong. It is alleged that they operated an international procurement network of front companies that existed to acquire goods for the Advanced Engineering Research Organization (AERO) and the Pakistan Atomic Energy Commission (PAEC), both of which are on the US Commerce Department’s Entity List.
US CLASS ACTION SUITS PILE UP AGAINST AUSTRALIA’S WESTPAC AMID MONEY LAUNDERING SCANDAL
On 14 February, ACFCS reported that Westpac Banking Corp was hit with yet another US class-action lawsuit in less than a week this month, again, related to financial crime monitoring gaps identified amid a broader money laundering scandal – bringing the grand total of legal probes to more than a half-dozen. AUSTRAC sued Westpac in November for 23 million alleged breaches of AML laws, including payments between known child exploiters.
CANADA MULLS PUBLICLY ACCESSIBLE BENEFICIAL OWNERSHIP REGISTRY
On 19 February, International Investment reported that the Canadian government has launched consultations on strengthening transparency rules around corporate beneficial ownership, while it examines the possibility of a publicly accessible beneficial ownership registry of corporations. New rules came into effect in June 2019 requiring corporations to maintain a database of individuals who have significant control of their company, and to update it regularly, and information would be provided to government authorities on request. Under the consultation, this would be extended to a publicly accessible registry or registries: either a single, centralised registry, or a network of provincial and territorial registries accessible through a single portal.
INDONESIA: POOR LAW ENFORCEMENT ON MONEY LAUNDERING
On 19 February, Tempo reported that Indonesia Corruption Watch has highlighted the government’s poor law enforcement on the money laundering cases, with only 3 graft cases were subject to money laundering or only 1.1% of the total 271 cases throughout 2019.
CHINA: CURRENCY CLEANING ON DEMAND (NOT TO BE CONFUSED WITH MONEY LAUNDERING) DUE TO CORONAVIRUS
On 16 February, the South China Morning Post reported that China’s central bank has orders to destroy banknotes from coronavirus-hit sectors. Paper currency collected from hospitals and buses among those targeted by the People’s Bank of China’s (PBOC) in a public health push; and other notes will be disinfected and stored for 14 days before going back into circulation.
PODCAST: THE MASSIVE, MULTI-COUNTRY AIRBUS SETTLEMENT
In the latest TRACE podcast, Aisling O’Shea of Sullivan & Cromwell describes the Airbus settlement that resulted in penalties totalling almost $4 billion and involved resolutions with US, UK and French authorities.
PENTAGON LOST TRACK OF $715 MILLION IN WEAPONS AND GEAR FUNNELLED TO ANTI-ISIS ALLIES IN SYRIA
On 18 February, Task Purpose carried an article about a new report from the DoD Inspector General, which says that the DoD failed to effectively account for nearly $715.8 million in weapons and equipment allocated to Syrian partners as part of the multinational counter-ISIS struggle, and did not maintain comprehensive lists of all equipment purchased and received to equip Syrian allies.
MAN AGREES TO PLEAD GUILTY TO CONSPIRACY AND TAX EVASION CHARGES IN $147 MILLION MINING AND DIGITAL CURRENCY FRAUD
On 19 February, a news release from the US DA in Central California advised that Steve Chen, 62, (aka “Li Chen” and “Boss”) has admitted that he falsely promised profits to more than 70,000 victim investors worldwide in a scheme where a multinational company issued a sham digital currency purportedly asset-backed by billions of dollars’ worth of amber and other precious gemstones.
US STATE DEPARTMENT EXPORT CONTROLS ON ENTITIES AND PERSONS ON NON-PROLIFERATION GROUNDS
A Notice from the State Department on 3 February advised that a number of entities and persons have been made subject to restrictions for involvement in supplies of controlled items, including dual-use goods, to Iran, Syria and North Korea. The restrictions applied to Chinese, Turkish, Russian, Iraq and other companies and individuals include a ban on the granting of US export licences or receiving contracts from US government departments or agencies for goods or services.
US TRADE REPRESENTATIVE ISSUES REPORT ON WTO APPELLATE BODY
On 19 February, a blog post from Baker McKenzie says that it is claimed that the report is the first comprehensive study of the Appellate Body’s record and it provides an in-depth assessment of the “Appellate Body’s failure to comply with WTO rules and interpret WTO agreements as written”. The report says that the Body has strayed far from the limited role that WTO Members assigned to it. Through persistent overreaching, the Appellate Body has increased its own power, at the expense of the authority of the US and other WTO Members.
The report is at –
COUNTERFEIT RAIL TICKET GANG LEADERS JAILED FOR TOTAL OF 24 YEARS BY UK COURT
On 19 February, illicit Trade reported that the ringleaders of a UK-based organised crime network behind a multimillion-pound fake rail ticket conspiracy have been handed jail sentences totalling 24 years at Inner London Crown Court. The gang sold the tickets, which appeared to be genuine and worked when used at ticket barriers at railway stations, at half the price of their face value. It is estimated that the gang cost rail companies approximately £8 million from 2016 to 2019, through the sale of counterfeit weekly and monthly rail season tickets.
PROPOSED EU VAT CHANGES AND CUSTOMS LEGISLATION FOR LOW-COST ITEMS COULD STOP CONSUMERS BUYING FROM CHINA AND HIT E-COMMERCE
On 18 February, Parcel & Post Technology reported on the results of a survey in which participants were asked in anticipation of changes to VAT and customs, and possible higher postal delivery costs for future Chinese purchases. 36% said they would stop buying from China altogether, 41% would reduce purchases and 13% would not change their activity.
ISLE OF MAN GAMBLING SUPERVISION COMMISSION UPDATED PRACTICE NOTE ON THE USE OF VIRTUAL CURRENCIES
On 19 February, the GSC released its further updated Practice Note GSC.85.
PODCAST: HOW WILL THE UK USE FINANCIAL SANCTIONS IN A POST-BREXIT WORLD?
On 18 February, a Brookings Institute podcast consisted of an interview of Tom Keatinge, director of the Centre for Financial Crime and Security Studies at the Royal United Services Institute (RUSI). Keatinge explains how London currently cooperates with other major financial sectors around the world – like France, New York, and Hong Kong – in financial regulations and creating sanctions regimes, and how that relationship may change during the Brexit transition period between now and December 31.
The transcript of the interview is also available, at –