DUE DILIGENCE IN THE AGE OF CORONAVIRUS

On 26 April, a post on the Compliance & Enforcement blog from the New York University School of Law was concerned with the significant challenges involved in continuing to comply with due diligence requirements, especially where applying “enhanced” reviews to higher-risk scenarios necessarily requires direct human involvement.  It says that the specific challenges to conducting due diligence in a mostly virtual environment generally relate to trust, credibility, and the ability to verify information, due to the inability to obtain original documentation, conduct onsite visits and/or meet people in person, together with a greater risk of abuse by third parties.  The post goes on to suggest some ideas and procedures, including a need to make “nimble” use of personnel, technology, and outside partners to fulfill their diligence requirements.  It also says that companies should document any new risks that arise due to the use of alternative diligence methods, engage in appropriate mitigation measures both now and after the crisis, and consider whether there is a need to communicate any specific diligence challenges to regulators.

https://wp.nyu.edu/compliance_enforcement/2020/04/24/due-diligence-in-the-age-of-coronavirus/

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THE IMF MALTA MISSION REPORT

On 26 April, an article in the Times of Malta by the Chief Officer, Supervision at the Malta Financial Services Authority was concerned with the IMF’s Malta Mission Report, released the week before. The article says that the recognises the progress achieved in the light of criticism from the IMF and EU.  It says that the MFSA has placed the prevention of money laundering and terrorist financing as one of its strategic priorities, and that significant work has been carried out on this front and outlines what has been done and is currently ongoing at the MFSA, said to focus mainly on governance of supervision; supervisory programmes; due diligence; and resources.

https://timesofmalta.com/articles/view/new-generation-of-financial-supervision.788132

https://www.imf.org/~/media/Files/Publications/CR/2020/English/1MLTEA2020001.ashx

 

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MALTA: 5 MEN CHARGED WITH BREACHING EU SANCTIONS ON LIBYA

On 25 April, the Times of Malta and others reported that the investigation was launched when the police received information that a company registered in Malta exported 2 vessels – Rigid Hull Inflatable Boats (RHIB) – to Libya without authorisation. One of the men is described as a Maltese arms dealer James Fenech, 41, and the other 4 as employees. The export took place in June 2019 and involved a contract was reached involving a Maltese company and another in the UAE.  The vessels were sent to Libya to be used for evacuation purposes by the UAE company. Investigators established that the boats belonged to Standard Charterers, a vessel chartering company based in Malta and part of a web of companies under Unified Global Services Group, owned by Fenech.  Fenech’s Fieldsports Ltd is an arms-dealing company.

https://www.independent.com.mt/articles/2020-04-25/local-news/Five-men-charged-with-breaching-EU-sanctions-on-Libya-6736222466

https://timesofmalta.com/articles/view/maltese-arms-dealer-charged-with-violating-libya-sanctions.787967

https://www.maltatoday.com.mt/news/court_and_police/101932/five_maltese_james_fenech_libya_sanctions_busting#.XqWFvEBFyM8

 

 

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OTHER THINGS YOU MAY HAVE MISSED – APRIL 25

25 April 2020

ISRAELI “LOITERING MUNITION” DRONE IN LIBYA HIGHLIGHT EXPORT CONTROL GAPS

On 24 April, Shephard Media reported that Israel may have to tighten its defence equipment export controls, after evidence emerged that the Libyan National Army claimed to have found wreckage of a Harop loitering munition system, supplied by Turkey to the Government of National Accord (GNA).  Harop is a system developed in Israel by a division of Israel Aerospace Industries (IAI). The drone loiters over the battlefield and identifies and attacks targets in “kamikaze” style. Turkey is reported to have been the launch customer of the expendable unmanned combat air vehicle (UCAV) in 2005.

https://www.shephardmedia.com/news/air-warfare/premium-loitering-munition-finds-libya-highlight-e/

LIBYA BECOMING EXPERIMENTAL ARMS FIELD

Meanwhile, on 24 April, Defence Web reported that, according to a UN envoy, Libya is turning into “an experimental field for all types of new weapons systems”, with foreign supporters of the warring parties shipping in arms and fighters in violation of an embargo.

https://www.defenceweb.co.za/security/national-security/libya-becoming-experimental-arms-field/

CAN LAWYERS EVER DISCLOSE THEIR CLIENTS’ PRIVILEGED DOCUMENTS?

On 24 April, HFW published a briefing saying that legal advice privilege can protect the confidentiality of lawyer/client communications where legal advice is being sought – but a recent decision has confirmed the principle that such privilege does not attach to communications between lawyer and client if the lawyer is instructed for the purpose of furthering crime, fraud or iniquity. The article looks at Addlesee v Dentons Europe LLP, which concerned a fraudulent investment scheme in which 240 claimants collectively lost €6.5 million. The article says that the judgment goes a long way to clarifying the standard of proof applicable to the fraud exception.

https://www.hfw.com/downloads/002057-HFW-Can-Lawyers-ever-disclose-their-clients-privileged-documents-April-2020.pdf

US: NORTH KOREAN CYBERATTACKS POSE ‘SIGNIFICANT THREAT’ TO GLOBAL FINANCIAL SYSTEM

An article on World ECR on 24 April says that a joint advisory from the US State Department, the Treasury, Department of Homeland Security and the FBI advises that North Korea is engaged in an array of ‘malicious cyber activities’ that threaten the US, the international community, and the global financial system.

https://www.worldecr.com/news/us-north-korean-cyberattacks-pose-significant-threat-to-global-financial-system/

ARE NORTH KOREAN FERTILIZER FACTORIES PRODUCING URANIUM FOR BOMBS?

An article in World ECR on 24 April poses this question, following a recent paper from a researcher at the Middlebury Institute of International Studies at Monterey in California.  That study says the plants may be dual-use facilities that DPRK is utilising to secretly extract uranium for its nuclear weapons programme, and says that several states have succeeded in extracting “yellowcake” uranium from phosphoric acid as part of the phosphate fertilizer production process.

https://www.worldecr.com/news/are-north-korean-fertilizer-factories-producing-uranium-for-bombs/

TRUSTS AND INSOLVENCY – A JERSEY AND GUERNSEY GUIDE

On 22 April, Ogier published an article saying that private wealth structures are not immune from insolvency. The article examines the Jersey and Guernsey position from the trustee’s perspective and considers the issues with which a trustee needs to be familiar.

https://www.ogier.com/publications/trusts-and-insolvency-a-guide

SLAFKA – PROTOTYPE FOR SAFEGUARDING NUCLEAR MATERIAL BASED ON DISTRIBUTED LEDGER TECHNOLOGY (DLT) – BLOCKCHAIN

The Stimson Center has published information about the world’s first blockchain platform for nuclear material accountancy developed for a nuclear regulator. SLAKFA is a joint project with the University of New South Wales (UNSW), Finland’s Radiation and Nuclear Safety Authority (STUK) and Stimson’s Blockchain in Practice Program.  It is the first DLT prototype developed for a nuclear regulator to test the technology’s potential to solve challenges related to the management of nuclear safeguards information.

https://www.stimson.org/2020/launching-slafka/

PARTNERSHIPS IN PROLIFERATION PREVENTION PROGRAM

The Stimson Center in the US hosts this programme which seeks to empower those who try to reduce the risk of WMD proliferation.  The programme has collected into one online resource the laws and regulations designed to secure dangerous chemicals and radiological sources, has fostered new international standards for chemical and radiological security, and provides training and technical help for states seeking assistance.

https://www.stimson.org/program/partnerships-in-proliferation-prevention/

THE OIL TRADE AND MAKESHIFT REFINING IN NORTH-WEST SYRIA

On 24 April, the investigative website Bellingcat carried a report saying that in Syria fuel for heating, cooking, and transportation is difficult to access and comes at huge financial and environmental costs. The rise of makeshift refining, as crude oil could still be pumped up and exported, has become a viable source of income for local civilians. The website’s visual investigation aims to identify the vast number of makeshift refineries that at one point or continue to be used in Syria.

https://www.bellingcat.com/news/2020/04/24/dying-to-keep-warm-oil-trade-and-makeshift-refining-in-north-west-syria/

DO WE NOW HAVE CRYPTO CERTAINTY UNDER ENGLISH LAW?

A brief from Clifford Chance poses this question and says that cryptoassets are capable of being property which can be owned and smart contracts can be legally enforceable, according to a Legal Statement published by the UK Jurisdiction Taskforce of the LawTech Delivery Panel (UKJT) in November.  While the Legal Statement is not binding, the article says, it will give market participants greater certainty around crypto transactions.

https://www.cliffordchance.com/content/dam/cliffordchance/briefings/2019/11/do-we-now-have-crypto-certainty-under-english-law.pdf

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Notable chart on illicit North Korean coal exports included in the latest UN Panel of Experts report

CHEMICAL WEAPON USE IN SYRIA: ATROCITIES, ATTRIBUTION, AND ACCOUNTABILITY

On 17 February, The Nonproliferation Review published an article which reviews recent efforts to attribute chemical attacks in Syria, describes what is known about the 9 incidents to be investigated, summarises what is known about the Syrian government officials, military commanders, and chemical-warfare scientists suspected of being responsible for these attacks, discusses what to expect during the next phase of the attribution process, and offers insights into how the international community can move beyond attribution to accountability. Accountability is said to be necessary to provide justice for victims and to prevent future incidents by demonstrating that perpetrators of chemical attacks will be identified and punished.

https://www.tandfonline.com/doi/pdf/10.1080/10736700.2019.1718336?needAccess=true

UNPROVEN CORONAVIRUS THERAPY PROVES CASH COW FOR SHADOW PHARMACIES

On 24 April, the Krebs on Security blog published a post says that many of the same shadowy organisations that pay people to promote male erectile dysfunction drugs via spam and hacked websites recently have enjoyed a surge in demand for medicines used to fight malaria, lupus and arthritis, thanks largely to unfounded suggestions that these therapies can help combat the COVID-19 pandemic.

https://krebsonsecurity.com/2020/04/unproven-coronavirus-therapy-proves-cash-cow-for-shadow-pharmacies/

THE FIRST 3 WEEKS OF APRIL HAVE SEEN A HIGH NUMBER OF PIRACY ATTACKS ON OFFSHORE SUPPORT VESSELS IN THE GULF OF MEXICO

On 25 April, Insurance Maritime News reported that Norway-based marine insurer Gard has noted that the first 3 weeks of April had seen a high number of piracy attacks on offshore support vessels in the southern rim of the Gulf of Mexico, and is therefore advising ships to exercise caution when operating in the region. Its latest 5-year statistics for South and Central America and the Caribbean waters are shown in the chart.

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https://insurancemarinenews.com/insurance-marine-news/gard-piracy-in-gulf-of-mexico/

http://www.gard.no/web/updates/content/29569448/piracy-in-the-gulf-of-mexico

COMPANIES ACQUISITION AND EXPORT CONTROL: THE IMPORTANCE OF DUE DILIGENCE AND ICP

The University of Liege has published this paper by the Export Control Manager – Corporate at Rolls Royce UK. It examines 3 matters – why conduct due diligence; Which aspects are verified by effective due diligence; and What are the advantages and the burdens of performing an effective due diligence?

http://local.droit.ulg.ac.be/jcms/service/49/pdf/Introduction_to_Due_Diligence_System_of_Internal_and_External_Controls.pdf

 

 

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