LASHKAR-E-TAIBA SANCTIONS TERRORIST GROUP HAS CHANGED ITS NAME TO TRF – THE RESISTANCE FRONT

The Defence Aviation Post in India on 30 April reported the change of name, indicating that this might have been to circumvent UN and other sanctions, and thus help Pakistan avoid FATF blacklisting.

https://www.defenceaviationpost.com/2020/04/new-name-same-terror-group-let-becomes-trf-to-save-pak-from-fatf-axe/

 

 

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FATF: UAE AML/CFT ASSESSMENT MUTUAL EVALUATION REPORT

On 30 April, FATF published the mutual evaluation of AML/CFT systems in the UAE.  It says that the UAE recently strengthened its legal framework to fight money laundering and terrorist financing but, as a major global financial centre and trading hub, it must take urgent action to effectively stop the criminal financial flows that it attracts. The report also says that, with 39 different company registries – that helped the UAE grow its various free zones – the misuse of legal persons is a real risk. The UAE also faces a significant risk of exposure to proceeds of crimes conducted abroad, but authorities do not make sufficient use of formal international legal assistance processes to pursue money laundering or the financing of terrorism and proliferation, although they demonstrated better capacity in using informal processes.

On the measures of “effectiveness” of controls, Forbes noted that, of the 11 key areas rated in this respect, the UAE is deemed to have a “substantial level of effectiveness” in just one area: the investigation and prosecution of terrorist financing offences.  In the 10 other areas it is deemed to have only moderate or low levels of effectiveness, meaning major or fundamental improvements are needed.  The areas where it scored a low level of effectiveness include international cooperation, access to beneficial ownership information, the investigation and prosecution of money laundering offences, and the prevention of raising funds for the proliferation of WMD.

uae

http://www.fatf-gafi.org/media/fatf/documents/reports/mer4/Mutual-Evaluation-Report-United-Arab-Emirates-2020.pdf

https://www.marketscreener.com/news/United-Arab-Emirates-measures-to-combat-money-laundering-and-terrorist-financing–30502062/

https://www.forbes.com/sites/dominicdudley/2020/04/30/uae-needs-to-make-major-reforms-to-tackle-money-laundering-says-global-watchdog/#5bdf76d61e01

 

 

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NEW BREXIT LEGAL GUIDE: TRADE – THE NEW RELATIONSHIPS

Herbert Smith Freehills has published its latest updated Brexit legal guide which addresses a number of matters, including whether the extensive level-playing field provisions proposed by the EU may be incorporated in the type of trade relationship pursued by the parties; and the structure of the future relationship sought after by the UK that calls for a number of legally distinct agreements (and different dispute settlement mechanisms tailored to the agreement/ situation in question) is in line with CETA (Canada-EU Trade Agreement)-type trade relations.

https://hsfnotes.com/brexit/2020/04/28/new-brexit-legal-guide-section-available-trade-the-new-relationships/#page=1

 

 

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OTHER THINGS YOU MAY HAVE MISSED – APRIL 29

Panama Covid-19 update – 178 new cases reported, taking us to 6,278 total to date (around 0.14% of the population), with 2 additional fatalities (giving a total of 178). 1,187 people are isolated in requisitioned hotel rooms, 367 in hospital and 92 in ICU (4 more since yesterday).  In the daily news conference the government warned that the lockdown could be tightened if figures didn’t improve (relatively good as they may be) – though it is hard to see how tighter they can be made…

29 April 2020

 HONGKONGERS CONNED INTO ‘SPYING’ ON ‘MONEY LAUNDERERS’ ARRESTED IN PHONE FRAUD SCAM

On 29 April, KYC 360 reported that 2 people, a man, 23, and a woman, 25, who did not know each other, recruited by fraudsters posing as mainland officials to “spy” on people suspected of money laundering have been arrested for duping victims out of US$709,000.  They are said to have fallen victim to a gang who pretended to be mainland Chinese police.

https://www.riskscreen.com/kyc360/news/hongkongers-conned-into-spying-on-money-launderers-arrested-in-phone-fraud-scam/

UK: BANK VICARIOUSLY LIABLE FOR DISHONEST ASSISTANCE AND FRAUDULENT TRADING

On 27 April, an article from Allen & Overy says that the case demonstrates the breadth of the concept of dishonest assistance – the traders were found to have “assisted” fraud at the other end of a chain of transactions, despite lacking actual knowledge of the fraud.  The claimants were a group of UK companies, all in liquidation as a result of their directors’ participation in a VAT “carousel fraud”.  The article says that the case provides a good illustration of how the concepts of dishonesty and assistance can impact liability of the participants in a chain of commercial transactions, and judgment illustrates how those involved in trading can become liable in relation to a fraud of an unrelated, and even unknown, party at the far end of a chain of transactions. Companies must encourage employees to flag suspicious activity and make enquiries where they suspect that the transactions they are involved in may be linked, even indirectly, to fraud.  There may also, of course, be an obligation to report suspected money laundering.

https://www.allenovery.com/en-gb/global/news-and-insights/publications/bank-vicariously-liable-for-dishonest-assistance-and-fraudulent-trading

HOW BANKS ARE USING BEHAVIOURAL SCIENCE TO PREVENT SCANDALS

On 28 April, the Havard Business Review published an article saying that some of Europe’s largest banks have created behavioural risk teams composed of professionals trained in organizational psychology, anthropology, forensics, and other disciplines.  Each team has a direct reporting line to the chief audit, compliance, or risk executive.  It says that, in the case of one of the banks, behavioural risk team is part of the bank’s audit function, its findings are considered “audit” points that need to be addressed.  The article says that the key to preventing ethical scandals is identifying risky behaviour before it’s too late.

https://hbr.org/2020/04/how-banks-are-using-behavioral-science-to-prevent-scandals

SWISS OIL TRADERS AND BANKS BURNED BY VENEZUELA TIES

On 29 April, Swissinfo reported that several Swiss companies and banks have found themselves in the line of fire as the US ramps up pressure on the Venezuelan government.

https://www.swissinfo.ch/eng/us-sanctions-_swiss-oil-traders-and-banks-burned-by-venezuela-ties/45722290

‘ONE OF WORLD’S BIGGEST WILDLIFE CRIMES’: GLASS EEL SMUGGLING AND HOW HONG KONG SUPERMARKETS COMMONLY SELL ENDANGERED EUROPEAN EELS

The South China Morning Post on 29 April carried an article saying that almost half of retail eel products in Hong Kong supermarkets and convenience stores contain endangered European eels and more than 300 million glass eels are trafficked from Europe to Asia each year, estimates say, with 1 kg fetching at least US$6,450 on the black market.

https://www.scmp.com/lifestyle/food-drink/article/3081913/one-worlds-biggest-wildlife-crimes-glass-eel-smuggling-and-how

EU SPLIT OVER HALTING BAILOUTS FOR TAX HAVEN FIRMS

On 29 April, Deutsche Welle reported that France, Denmark and Poland are refusing to let companies registered in offshore tax havens access financial aid from coronavirus bailout packages (and Italy may soon join them). But Ireland, the UK, Luxembourg and the Netherlands have other ideas.  The European Commission has confirmed that its existing rules allow individual EU countries to block aid going to businesses based in tax havens.

https://www.dw.com/en/eu-split-over-halting-bailouts-for-tax-haven-firms/a-53278756

MONGOLIA: CRIMINALISATION OF DEFAMATION THREATENING ANTI-CORRUPTION EFFORTS

On 29 April, Transparency International reported calls on the Mongolian government to take urgent legislative action to address an increasingly dangerous environment for independent media in the country.  A new law that took effect in January says that disseminating false information can be punished by fines or restriction of the right to travel for 1 to 3 months.  Mongolian press freedom and anti-corruption activists are concerned that the law does not define the term ‘false information’.  Under the previous law it is said that over 100 journalists were brought to court, many by politicians.

https://www.transparency.org/news/pressrelease/mongolia_criminalization_of_defamation_is_another_disturbing_attack_on_medi

GERMANY STILL TARGETING ONLINE GAMBLING PAYMENT PROCESSORS

On 29 April, Calvin Ayre reported that the Ministry of Interior and Sport in the state of Lower Saxony announced that it had “once again prohibited an unnamed internationally active payment service provider (said to be widely thought to be PayPal) from participating in payment transactions in connection with illegal gaming in Germany”.

https://calvinayre.com/2020/04/28/business/germany-targeting-online-casino-payments/

MISDECLARED CONTAINER WEIGHTS STILL A CONCERN, SAYS UK MARINE ACCIDENT REPORT

On 29 April, Lloyds Loading List reported that the introduction of verified gross mass rules in 2016 was supposed to put an end to misdeclared container weights. But a new MAIB investigation has found that correct weights are still not making their way into stowage plans.  The report was into an incident when a UK-flagged vessel suffered a 20º roll in heavy weather, leading to the loss of 137 containers overboard and damage to another 85. Under the rules on the verification of gross mass (VGM) of containers, shippers must either weigh a packed container using certified equipment or weigh all the content of a container, along with the containers tare weight, to calculate a single mass. This VGM is then submitted for the preparation of the ship’s stowage plan.

https://www.lloydsloadinglist.com/freight-directory/news/Misdeclared-container-weights-still-a-concern-says-UK-marine-accident-report/76492.htm#.XqmGrUBFyM8

US: FEDERAL COURT DISMISSES CHALLENGE TO TEXAS BAN ON BOYCOTTING ISRAEL

On 29 April, Jurist reported that a US Court of Appeals has decided that a case challenging the Texas prohibition of government entities from contracting with companies who boycott Israel cannot be heard as the plaintiffs are sole proprietors and such are exempt from the “No Boycott of Israel” rule.

https://www.jurist.org/news/2020/04/federal-appeals-court-throws-out-challenge-to-texas-ban-on-boycotting-israel/

UK: BANK RECOVERY OF FOREIGN JUDGMENT BEFORE APPEAL PERIOD ENDED WAS UNLAWFUL

On 29 April, an article from Out-Law concerned a Court of Appeal case in which it has been held that an Icelandic Bank should not have taken action to recover a debt before a 1 month period of appeal under the Lugano Convention had expired.  It reports that enforcement measures during a debtor’s period of appeal is unlawful, and unlawful enforcement measures is not execution for a bankruptcy petition. The Lugano Convention enables the registration of a foreign judgment in England and Wales, and the Convention is intended to facilitate recognition, and to introduce an expeditious procedure for securing the enforcement of judgments, authentic instruments and court settlements. The Lugano Convention is incorporated into UK law by the Civil Jurisdiction and Judgments Regulations 2009

https://www.pinsentmasons.com/out-law/legal-updates/bank-recovery-foreign-judgment-unlawful

UAE: THE ONGOING COMMITMENT TO COMBATING FINANCIAL CRIME AND PROTECTING ITS ECONOMY

An article from Eversheds Sutherland in Financial Crime of April 2020 says that the focus on combating financial crime in the UAE has significantly increased over the last few years and that last year’s mutual evaluation visit from FATF had its own positive role to play in this development. It details the developments implemented. At the end it says that FATF feedback will be instrumental for future enhancements to the AML/CFT framework, which was (pre-Covid-19) expected in April.

https://www.eversheds-sutherland.com/documents/global/middle-east/The_fight_against_fraud.pdf

HMRC ISSUES DRAFT GUIDANCE ON DAC6

On 29 April, Eversheds Sutherland reported that Directive 2011/16/EU (commonly known as DAC6) will soon require taxpayers and intermediaries across the EU to start reporting information in relation to certain cross-border arrangements to their respective tax authorities.  The rules were only formally implemented into UK law in January and HMRC have finally now shared draft guidance on how the rules are expected to be interpreted in the UK context.  There have been increasing calls for DAC6 to be delayed across Europe in light of the COVID-19 situation, but the article details the new guidance.  It does say that ambiguity continues to persist in relation to exactly how DAC6 will apply in the UK (in the light of Brexit) and the approach to be taken in respect of some of the reporting triggers and hallmarks.

https://www.eversheds-sutherland.com/global/en/what/articles/index.page?ArticleID=en/Tax_planning_and_consultancy/UK-tax-authorities-issue-draft-guidance-on-DAC6_280420

IS THE SFO ABLE TO MEET THE CHALLENGE OF COVID-19?

A post from the always interesting blog from law firm Corker Bining poses this question, in the light of an Economist article which warned that the economic crisis resulting from the covid-19 pandemic will expose a decade’s worth of corporate fraud.  It says that much of the crime directly arising from covid-19 is unlikely to fall within the statutory remit of the SFO of investigating serious or complex fraud. Smaller retail scams concerning, for example, small volumes of fake pharmaceuticals, PPE or testing kits will properly fall outside its remit and fall to others to investigate. The article warns that the portents for the SFO being able to cope are not favourable.

https://www.corkerbinning.com/is-the-sfo-able-to-meet-the-challenge-of-covid-19/

DEALING WITH DEMAND FOR CHINA’S GLOBAL SURVEILLANCE EXPORTS

A report from the Brookings Institute says that countries and cities worldwide now employ public security and surveillance technology platforms from the China, with Chinese technology an attractive choice despite security and privacy concerns.  It says that major questions remain about the implications and advantages that China could derive from these developments, including how dominance in this sector and access to data could shape the contours of strategic competition between China and the US, but that understanding the impacts of these technologies will be important for crafting effective policy.  It advises that the US must address Chinese technology companies’ ongoing efforts to shape the global regulatory environment.

https://www.brookings.edu/research/dealing-with-demand-for-chinas-global-surveillance-exports/

PIRATES ARE EXPANDING IN WEST AFRICA, THREATENING OFFSHORE OIL STORAGE

On 29 April, Hellenic Shipping News reported that, as international oil companies grapple with a historic plunge in crude prices, a rise in piracy is also poised to threaten supply chains.  The first quarter of 2020 saw a spike in piracy around the world.  The Gulf of Guinea, a key production hub surrounded by eight oil exporting countries in West Africa, has emerged as a global hot spot, accounting for 21 attacks so far this year and 90% of all kidnappings at sea in 2019.  Piracy is expected to rise in 2020 and 2021 and expand further from Nigerian waters into neighbouring states.

https://www.hellenicshippingnews.com/pirates-are-expanding-in-west-africa-threatening-offshore-oil-storage/

PODCAST: RISK, TELECOM AND 5G

In the latest TRACE podcast, Barnard College professor Alex Cooley and Wiley partner Kevin Muhlendorf discuss telecommunications scandals and the risk of corruption in 5G telecom implementation. They are the authors of chapters on these 2 subjects in TRACE’s new book, “Corrosive: Corruption and its Consequences”.

https://traceinternational.org/resources-podcast

LOS ANGELES-AREA LAWYER AGREES TO PLEAD GUILTY TO CRIMES INCLUDING PAYING BRIBES TO ICE AND FBI SPECIAL AGENTS

A news release from US Immigration and Customs Enforcement on 28 April advised that Edgar Sargsyan had agreed to plead guilty to 5 federal offences – one related to a credit card bust-out scheme, and the others related to more than $250,000 in bribes he paid to 2 federal agents for assistance that included sensitive law enforcement information.  Sargsyan paid the HSI agent at least $32,000 in cheques and at least $45,000 to $50,000 in cash in return for assistance, and he also admitted he paid the FBI agent monthly cash bribes of up to $10,000 beginning in 2015 in exchange for the agent providing protection, which included running queries on law enforcement databases.

https://www.ice.gov/news/releases/los-angeles-area-lawyer-agrees-plead-guilty-string-crimes-including-paying-bribes-ice

HOW IS COVID-19 AFFECTING THE ILLEGAL DRUGS TRADE?

The Global Initiative Against Transnational Organized Crime has been producing regular newsletters exploring existing and emerging interactions between the virus pandemic and the illicit economy.  The latest edition looks at one of the mainstays of the global criminal economy: drugs.

https://globalinitiative.net/covidcrimewatch-n6/

HUMAN SMUGGLING IN THE TIME OF COVID-19: THE IMPACT OF THE PANDEMIC ON HUMAN-SMUGGLING DYNAMICS AND MIGRANT-PROTECTION RISKS

The Global Initiative Against Transnational Organized Crime has produced a briefing paper saying that efforts to counter the pandemic have seen unprecedented restrictions on movement being imposed in many countries, both at borders and within countries. Some communities and policymakers have adopted increasingly hostile attitudes towards migrants, whom they perceive as contagion risks – barriers to movement are therefore not only state-imposed but can also be community led.  It warns that, as the policy environment becomes more hostile to migration, the operating risks and prices of smuggling look set to rise – and that this may drive out operators with a lower risk appetite and attract organised crime groups, which are more likely to exploit migrants for ever greater profit. The paper makes the important distinction between ‘the smuggling of migrants’ (involving willing – at least to some extent – “victims”) and ‘human trafficking’ (which may involve abduction, threats or use of force, or other forms of coercion).  The paper ends by looking at likely short-, medium- and long-term impacts.

https://globalinitiative.net/wp-content/uploads/2020/04/GIATOC-Policy-Brief-003-Smuggling-COVID-28Apr0930-proof-4.pdf

COMPARATIVE GUIDE TO BLOCKCHAIN AROUND THE WORLD

Available via Mondaq is a comparative guide provided by Dentons which provides an overview of some of the key points of law and practice concerning blockchain and allows one to compare regulatory environments and laws across multiple jurisdictions.  This guide provides answers to a set of questions on the legal and regulatory framework, cryptocurrencies, smart contracts, data and privacy, cybersecurity, IP, trends, tips and predictions – covering a number of countries, including the UK, Gibraltar, Malta, Singapore and Switzerland.

https://www.mondaq.com/guides/14

US: ICE REMOVES LIBERIAN SECURITY FORCES COMMANDER

A news release from US Immigration & Customs Enforcement on 29 April advised that Alexander Mentol Zinnah, 56, a member of the Liberian security forces under the regime of President Charles Taylor had been removed and had arrived in Liberia on board an ICE charter removal flight and was turned over to Liberian law enforcement authorities.  Zinnah was a member of the National Patriotic Front of Liberia (NPFL), a rebel group led by Charles Taylor that engaged in a wide range of human rights abuses including massacres, torture, and kidnapping.  He had been arrested in the US in 2017 for immigration violations and violating the terms of his parole into the US.

https://www.ice.gov/news/releases/ice-removes-liberian-security-forces-commander

UK: NEW OPEN GENERAL IMPORT LICENCE

On 21 April, the UK Department for International Trade published a new, revised Open general Import Licence (OGIL).  As with the previous one it replaces, the OGIL essentially permits the importation of all goods into the UK, subject to the various exceptions set out in the OGIL.  The DIT also issued a new Notice to Importers 2020.  This Notice pointedly says that membership of the EU, particularly since the introduction of the EU Single Market in 1992, placed limitations upon the ability of the UK to introduce purely national import control measures.  Wording in the OGIL itself confirmed that its terms are subject to EU restrictions. These restrictions continue during the Brexit transition period to 31 December (at least).

Among the controls imposed concern the importation of certain nuclear materials.  In the UK, the Office for Nuclear Regulation (ONR) is responsible for the licensing of imports of nuclear materials and currently (i.e. until, at least, the end of the Brexit transition period) licences to import certain nuclear materials are required from outside of the EU, and a licence to import nuclear materials from a country that is not a state party to the Convention on the Physical Protection of Nuclear Materials is unlikely to be issued.

Another function of the OGIL is to deal with controls on the import of goods from Iran, North Korea, Libya, Syria and all territory which is comprised within the Russian Federation.

One of the new provisions deals with the import of firearms, including any relevant component part (whether part of a firearm or not), manufactured on or after 14 September 2018 or which were imported into the EU on or after that date, unless in either case those goods are marked so as to comply with EU Marking Requirements.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/881600/Explanatory-Note-for-Open-General-Import-Licence.pdf

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/881592/UK-Open-General-Import-Licence-OGIL.pdf

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/881605/Notice-to-Importers-2934-Open-General-Import-Licence-update-April-2020.pdf

TOP AIDE TO DR CONGO PRESIDENT TO BE ARRAIGNED IN COURT OVER GRAFT

In its 30 April edition, CGTN in China reported that a key ally of DRC President Felix Tshisekedi will appear in court on 11 May over alleged fraud totalling $51 million.  Vital Kamerhe, a veteran politician who became the president’s chief of staff after helping him to secure election victory in 2018, has been in detention since 8 April.

https://newsaf.cgtn.com/news/2020-04-30/Top-aide-to-DR-Congo-president-to-be-arraigned-in-court-over-graft-Q5Uw5cjvHi/index.html

TAIWAN: MINISTRY OF CULTURE OFFICIAL QUESTIONED OVER BRIBERY CLAIMS

In its 30 April edition, the Taipei Times reported that prosecutors at the Ministry of Justice’s Agency Against Corruption have summoned Ministry of Culture official Chen Ching-hua and 8 others for questioning over an alleged case of bribery.

https://www.taipeitimes.com/News/taiwan/archives/2020/04/30/2003735557

 

 

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6 COMPLIANCE LESSONS FOR NON-BANKS FROM RECENT OFAC ENFORCEMENT ACTIONS

On 29 April, an article from the Executive Director at Association of Certified Sanctions Specialists on LinkedIn sets out what she says are 6 important lessons to be drawn from OFAC compliance efforts involving non-financial institutions, and which are uncertain of how to navigate and implement OFAC requirements.  The headings are –

  1. Conduct due diligence on customers and counter-parties;
  2. Contractual clauses won’t protect you when OFAC comes knocking;
  3. OFAC expects full spectrum supply chain due diligence when sourcing products in risky regions;
  4. Irregular monitoring of foreign subsidiaries can spell trouble;
  5. Don’t prematurely stop post-M&A diligence; and
  6. There are higher expectations for maritime shipping

https://www.linkedin.com/pulse/six-compliance-lessons-non-banks-from-recent-ofac-rietbroek-css/

 

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ONLINE GAME LAUNCHED TO EDUCATE SAVERS ON PENSION SCAMS

On 29 April, Investment Adviser reported that 4 of the UK’s digital pension platforms AgeWage, Smart Pension and Nutmeg have worked alongside PensionBee with technology partner Jman Group – have collaborated to create an online game that aims to educate consumers about pension scams.  The 5-minute game, Scam Man & Robbin‘ has the player in the role of ‘Scam Man’, a vigilante whose main objective is to protect people’s pensions from scams.

https://international-adviser.com/online-game-launched-to-educate-savers-on-pension-scams/

https://www.scam-man.com/

 

 

If you’d like to help to contribute to the cost of the new laptop and desktop I have had to acquire, now that I am 5,000 miles away from my originals – https://www.buymeacoffee.com/KoIvM842y

COMPARATIVE GUIDE TO BLOCKCHAIN AROUND THE WORLD

Available via Mondaq is a comparative guide provided by Dentons which provides an overview of some of the key points of law and practice concerning blockchain and allows one to compare regulatory environments and laws across multiple jurisdictions.  This guide provides answers to a set of questions on the legal and regulatory framework, cryptocurrencies, smart contracts, data and privacy, cybersecurity, IP, trends, tips and predictions – covering a number of countries, including the UK, Gibraltar, Malta, Singapore and Switzerland.

https://www.mondaq.com/guides/14

 

If you’d like to help to contribute to the cost of the new laptop and desktop I have had to acquire, now that I am 5,000 miles away from my originals – https://www.buymeacoffee.com/KoIvM842y

History of the Incoterms rules

The Incoterms are the internationally-accepted terms used in international trade to explain the terms of the supply.  When you saw”EXW” (ex-works), “FOB” (free on board) or “CIF” (carriage, insurance and freight costs included), these were Incoterms.  In January, the latest set of terms, produced by the International Chamber of Commerce, entered into use.  The ICC website provides information on, and access to, the new terms, and also an interesting infographic charting the history of the Incoterms.

https://iccwbo.org/resources-for-business/incoterms-rules/incoterms-rules-history/

ICC-Incoterms-Timeline-graphic

UK AND ISLE OF MAN: ONE ENTRY ON CENTRAL AFRICAN REPUBLIC SANCTIONS LIST AMENDED

A Notice from HM Treasury on 29 April advised that the entry for Martin KOUMTAMADJI had been amended following changes made to UN and EU lists. The Isle of Man followed suit.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/881937/Notice_CAR_2020_582.pdf

https://eur-lex.europa.eu/legal-content/EN/AUTO/?uri=uriserv:OJ.L_.2020.137.01.0001.01.ENG&toc=OJ:L:2020:137:TOC

https://eur-lex.europa.eu/legal-content/EN/AUTO/?uri=uriserv:OJ.L_.2020.137.01.0005.01.ENG&toc=OJ:L:2020:137:TOC

https://www.gov.im/news/2020/apr/29/financial-sanctions-central-african-republic/

 

 

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SUMMARY OF ANNUAL UN PANEL OF EXPERTS REPORT ON NORTH KOREA SANCTIONS RE SHIPPING AND MARITIME ACTIVITIES

SUMMARY OF ANNUAL UN PANEL OF EXPERTS REPORT ON NORTH KOREA SANCTIONS RE SHIPPING AND MARITIME ACTIVITIES

APRIL 2019

On 26 February, the Panel of Experts established pursuant to UN Security Council Resolution 1874 (2009) submitted its annual report to the President of the Security Council[1].

As far as the nuclear and missile programmes were concerned, during 2019, the Democratic People’s Republic of Korea (DPRK) continued maintenance and construction of nuclear facilities, though it declared no nuclear tests and carried out no intercontinental ballistic missile launches.  However, it did carry out 13 other launch tests, launching at least 25 missiles, including new types of short-range ballistic missile and a new submarine-launched ballistic missile.  At the same time, it continued to develop infrastructure and capacity for its missile programme.

Some of the funding and support for the proliferation programmes involving missiles and nuclear weapons and facilities, as well as for the ruling regime as a whole, comes from maritime-related activities.

It is reported that DPRK violates UN Security Council Resolutions (UN SCR) through illicit imports of petroleum, by means of ship-to-ship transfers and through direct deliveries by foreign-flagged vessels[2].  It is said that there was a notable increase in the number of these larger foreign-flagged tankers directly delivering to the country on multiple occasions[3]. One foreign-flag vessel is said to have made up to 15 times over a 7-month period during 2019.

The DPRK and foreign-flagged vessels and their owners are said to continue to employ what are described as elaborate evasion practices. For example, the companies listed as the vessels’ registered owners were dissolved or had been struck off company registers or had not had their information updated in a specialised maritime database[4].  Some of the vessels involved appeared to be falsely flagged based on International Maritime Organisation (IMO) historical data.

The evasion techniques to avoid the detection, identification and monitoring of activities includes –

  • a relatively new practice which involves vessels (both DPRK- and foreign-flagged) seeking to avoid tracking by moving into the territorial waters, knowing that they cannot be followed;
  • the export of banned commodities transported on self-propelled barges over 100 metres in length undertaking ocean-going voyages – the barges being said to be almost certainly Chinese-owned and operated;
  • the suspected acquisition by the DPRK of a bulk carrier, destined for scrap, to illicitly export coal;
  • indirect routing, detours, loitering and the use of false documentation when transporting commodities originating in the DPRK – to obfuscate actual routes, conceal port calls and give the impression that the banned commodities were loaded in ports outside the country.

It is also reported that the DPRK continued to flout UN SCR through illicit maritime exports of commodities, notably coal and sand.  The Panel says that it received imagery and information showing numerous direct deliveries and ship-to-ship transfers of illicit coal and sand from the DPRK on self-propelled ocean-going barges and DPRK vessels also conducted ship-to-ship transfers of coal to larger bulk carriers.  The Panel also observed that the purchase of a vessel that was meant to be scrapped was instead used to export coal.  It is estimated that the DPRK exported 3.7 million tons of coal between January and August 2019, with an estimated value of $370 million.

The Report details what is described as a substantial sand-export operation from the DPRK to China has been carried out since May 2019, with over 100 illicit shipments of sand.

The DPRK also continued to earn income from the illicit sale of fishing rights, with transfers of fishing rights being in violation of UN sanctions.  It has been estimated that the revenue earned by the DPRK in this way was $120 million in 2018.  Sample evidence included images of Chinese fishing vessels displaying fishing permit number plates of DPRK, or with documents or interim certificates of registry of the DPRK, observed in mid-2019.

The DPRK continued to import luxury goods and other sanctioned items, including luxury vehicles, alcohol and robotic machinery. The country’s trading corporations continued to participate in trade fairs within the country. These fairs may be used to expand networks for procurement and other prohibited trade related to WMD.

The DPRK continues to access international banking channels in violation of UN sanctions, mainly by using third-party intermediaries.

The DPRK has continued illegally to acquire virtual currencies and has continued to conduct cyberattacks against global banks. Designated entities are actively seeking to obtain fiat currencies and virtual assets by illicit means, the former through hacking and the latter by illicitly dispatching information technology workers abroad.

UN SCR 2397 (2017) required the repatriation to the DPRK by 22 December 2019 of any nationals of the DPRK who were earning income overseas. These would include those involved in maritime-related activities, both ashore and at sea, as well as in fishing and fish and other food processing.  All Member States were required to submit final reports on the implementation this requirement by 22 March 2020.

The Panel of Experts noted significant progress in reducing the processing time for humanitarian exemption requests submitted to the Sanctions Committee.

The Report recommends that Member States should encourage ship owners, operators and charterers to incorporate into their due diligence practices available data from organisations that provide data such as ship location, ship registry information and ship flagging information, along with available information from the Sanctions Committee (such as in the Report itself).

For ship registries, the Report recommends that Member States should require beneficial ownership information related to all legal entities seeking to register vessels be provided to the ship registry.

Those Member States with open registries should endeavour to collect identifying and contact information for each individual that owns or exerts control over the foreign entity to which each vessel belongs, whether as a controlling shareholder, a financier of the enterprise, or a senior manager or decision-maker.  They should also endeavour to collect identifying and contact information on vessel owners represented by a resident agent national, should there be no legal entity within its jurisdiction.

The Report recommends that flag States and the maritime industry should consider developing and adopting electronic document management systems to enable rapid, on-site checks for authenticity, validity or cancellation (for sanctions reasons), using a mobile phone application or by accessing the flag State website online.

Another recommendation of the Report would fit in with the ideal of full-scope due diligence across the whole supply chain – saying that Member States should consider adopting guidance measures for commodity traders, suppliers and brokering companies relating to certificates of ultimate origin and destination being required for commodities being sold, in order to be able to apply “know your customer’s customer” due diligence measures.

The Report said that South Korea had shared the list of vessels it has placed under port entry ban due to their confirmed involvement in activities prohibited under Korean law –

Hammer (formerly Sky Angel) 9168441 Vanuatu (formerly Panama) 11 August 2018
Chen Yang (formerly Rich Glory) 8649905 Sierra Leone 11 August 2018
Ga Hong (formerly Shinning Rich) 9596923 Togo (formerly Belize) 11 August 2018
Jin Long 8730986 Belize 11 August 2018
Yu Yuana 9358694 Togo 18 August 2018
An Quan Zhou 66 8742240 Unknown (formerly Panama) 28 December 2018
Tai Xin 9088598 Unknown (formerly Togo) 28 December 2018
Xin Yang 688 8657809 China (formerly Belize) 28 December 2018
Lucky Star 9015278 Unknown (formerly Togo) 28 December 2018
East River 9109952 Panama 28 February 2019

The report recommended the designating of a number of vessels for apparent breaches of UN sanctions –

Bonvoy 3 (IMO No. 8978784), flag unknown

Diamond 8 (IMO No. 9132612), Sierra Leone-flagged

Hokong (IMO No. 9006758), formerly Sierra Leone-flagged

Sen Lin 01 (IMO No.8910378), formerly Sierra Leone-flagged

Subblic (IMO No. 8126082), formerly Togo-flagged

Tianyou (IMO No. 8817007), formerly Sierra Leone-flagged

Unica (IMO No. 8514306), formerly Sierra Leone-flagged

Viet Tin 01 (IMO No. 8508838), Viet Nam-flagged

Vifine also known as Tealway FV (IMO No. 9045962), formerly Sierra Leone-flagged

Yun Hong 8 (maritime mobile service identity No. 413459380), Chinese-flagged

Rui Hong 916 (IMO No. 9058866), formerly Sierra Leone-flagged

Sea Prima (IMO No. 8617524), formerly Saint Kitts and Nevis-flagged

Bok Un 1/Myong Ryu 1 (IMO No. 8532413), Democratic People’s Republic of Korea-flagged

Mu Bong 1 (IMO No. 8610461), Democratic People’s Republic of Korea-flagged

 

 

Ray Todd

Panama City

28 April 2020

[1]  https://undocs.org/S/2020/151

[2]  The Marine Import Terminal at Nampo is the primary port to which foreign-flagged vessels deliver refined petroleum. It has substantial refined petroleum product storage facilities and is serviced by rail lines that enable the transit of refined petroleum products to petroleum demand centres throughout DPRK.

[3]  It is said to have been calculated that, in the first 10 months of 2019, foreign-flagged tankers alone had made a total of 64 deliveries, amounting to between 560,000 and 1.531 million barrels of refined petroleum products.

[4]  The IMO Unique Company and Registered Owner Identification Number Scheme.