OTHER THINGS YOU MAY HAVE MISSED – MAY 12

Panama Covid-19 update – managed to get to the shops and secure my single bottle of seco rum I am allowed under the rules…though the biggest drama was the loss of wi-fi (and having to resort to mobile hotspot).  Meanwhile, the Government has published the guidelines for the partial relaxation of the lockdown – though still much tighter than in the UK or US, with more shops and businesses able to operate, but people still restricted to their 2 hours relative freedom a day, and the newly-freed businesses only allowed to operate online or somehow remotely (not sure how a car repair business does this).

167 new cases today, the third day in a row with roughly the same figure, for a total to date of 8,783, with only 3 more fatalities, taking us to 252 to date.  There are currently only 375 people hospitalised, of whom 80 are in ICU.

12 May 2020

CONTROL RISKS QUARTERLY REPORT – WAR, TERRORISM, VIOLENT CRIME

On 12 May, Control Risks published its latest quarterly report summarising a claimed 12.8% increase in incidents compared to the last quarter of 2019.

https://online.flippingbook.com/view/807705/6/

OFAC AMENDS SANCTIONS DESIGNATION TO RECLASSIFY A NUMBER AS HAVING “WEAK” ALIASES

A Notice from the US Treasury on 7 May advised that 11 SDN entries had been amended to refer to certain aliases as being “weak”.

https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20200507.aspx

INFLUENTIAL NORTH KOREAN OVERSEAS OFFICIAL RUNNING ILLEGAL FISHING PERMIT SCHEME

On 12 May, NK News reported that Choe Un Bok heads up influential General Association of Koreans, and is said to run operations out of DPRK’s Dandong consulate.

https://www.nknews.org/2020/05/influential-north-korean-overseas-official-running-illegal-fishing-permit-scheme/

MILLIONS OF DOLLARS’ WORTH OF EXPORTS TO CHINA LIKELY REROUTED TO NORTH KOREA

On 12 May, NK Pro reported that at least 20 countries selling goods to China last year likely had their exports shipped on to North Korea, NK Pro analysis of recent customs data from Beijing.  The goods include thousands of bottles of wine from Europe, more than a million dollars’ worth of materials for manufacturing cigarettes from South Korea, and refined petroleum from the Persian Gulf, among others.

https://www.nknews.org/pro/millions-of-dollars-worth-of-exports-to-china-likely-rerouted-to-north-korea/?t=1589275206876

INFORMATION MANAGEMENT COMPANY IN BOSTON HAS DISCLOSED THAT ONE OF ITS NON-US SUBSIDIARIES MAY HAVE BREACHED IRAN SANCTIONS

On 12 May, EU Sanctions Blog reported that Iron Mountain, an information management company, has disclosed to the SEC that one of its non-US subsidiaries has provided record storage and handling services to one entity owned by the Government of Iran and another Iranian entity.

https://www.europeansanctions.com/2020/05/iron-mountain-discloses-potential-breaches-of-iran-sanctions/

PREVENTING FOREIGN BRIBERY: WHAT ADEQUATE PROCEDURES SHOULD AUSTRALIAN COMPANIES FOLLOW?

On 11 May, Nyman Gibson Miralis published an article about a Bill published in December that proposes a new corporate offence for failure to prevent foreign bribery by an associate of a body corporate. However, the offence will not apply if the corporation can show it had adequate procedures in place designed to prevent the commission of foreign bribery. The article says that the Government published draft adequate procedures guidelines and invited comments on it, with a final version to be published before the Bill becomes law.  The article looks at the key information outlined in the guidance document.

https://ngm.com.au/preventing-foreign-bribery-adequate-procedures/

WHEN WILL REFERENCING A DOCUMENT IN A WITNESS STATEMENT WAIVE PRIVILEGE?

On 12 May, RPC published an article on the International Law Office website which says that parties should tread carefully when considering whether and how to reference   It says that a recent case illustrates that in some scenarios it is possible to refer in limited detail to a document without waiving privilege – but that it will always be safer, if possible, to avoid going into detail in order to avoid a privilege dispute. Merely stating that privilege is not waived will not necessarily protect the document.

https://www.internationallawoffice.com/Newsletters/Litigation/United-Kingdom/RPC/When-will-referencing-a-document-in-a-witness-statement-waive-privilege

SWITZERLAND: FALCON PRIVATE BANK SIGNALS WIND DOWN WITH CLIENT TRANSFER TALKS AFTER 1MDB PROBLEMS

On 11 May, Reuters reported that Falcon Private Bank signalled its winding down, as the Swiss wealth manager involved in Malaysia’s 1MDB scandal said it was in advanced talks to transfer clients to another Swiss bank and exit private banking activities.  Reuters says that it seems the bank, owned by Abu Dhabi state fund Mubadala Investment Company, was preparing to go out of business.  In 2015 it was reported that investigators found nearly $700 million had been transferred from an account at the bank’s Singapore outpost to accounts in Malaysia linked to then Prime Minister Najib Razak.

https://www.reuters.com/article/falcon-swiss-banks/update-1-falcon-private-bank-signals-wind-down-with-client-transfer-talks-idUSL8N2CT59P

500-YEAR-OLD BIBLE FOUND IN NORTH-WESTERN TURKEY

On 12 May, Hurriyet in Turkey reported that 2 bibles believed to be 500 years old have been found in a police operation in a north-western province of Turkey.  An anti-smuggling team seized the bibles in a shoebox in a car driving towards the Greek border.  It says that thousands of anti-smuggling operations are carried out across the country every year to halt the illegal sale of historical artifacts and protect the country’s rich cultural heritage.  Several holy books that are believed to be hundreds of years old are seized every year during similar operations.

https://www.hurriyetdailynews.com/500-year-old-bible-found-in-northwestern-turkey-154692

HONG KONG: 2 HELD OVER 9 TONS OF SMUGGLED FROZEN MEAT

On 12 May, The Standard reported that Customs said that in a joint operation with the Marine Police to combat smuggling activities, they had seized 9 tons of smuggled frozen meat, on board a fishing vessel and arrested 2 men.

https://www.thestandard.com.hk/breaking-news/section/4/147150/Two-held-over-nine-tons-of-smuggled-frozen-meat

PROSECUTION OUTLINES CASE AGAINST MODI IN LONDON COURT
The Times of India on 11 May carried an article on the extradition hearing of Nirav Modi in a case linked to the PNB Bank scandal.  It reveals details of the alleged fraud and money laundering and how he allegedly circulated jewellery around companies he controlled.

https://timesofindia.indiatimes.com/world/uk/prosecution-outlines-fraud-and-money-laundering-charges-against-nirav-modi-in-london-courts/articleshow/75683392.cms

SECRET CHINESE CRIMINAL SOCIETIES MAKE MILLIONS POACHING ABALONE

On 12 May, Defence Web reported that between 2006 and 2016, 96 million of the molluscs were stolen from South African waters. This bounty is worth nearly $900 million, the conservation group TRAFFIC has reported.  In Hong Kong, the primary destination, abalone is a delicacy, prized for its buttery flavour, and the article claims the trade is dominated by the triads.  It also says that, as Chinese triads make inroads across Africa, abalone isn’t the only commodity they’re targeting. They have a hand in illegal logging, counterfeit goods, drug trafficking, prostitution, gambling and other rackets. It says that by the early 2000s there were four main triad societies in South Africa. They operated independently of one another and of Hong Kong leaders but had strong connections to the broader hierarchy, and there have been reports of triad-related criminals operating in Kenya, Tanzania, Zambia and Zimbabwe, as well as South Africa.  It says that has one triad kingpin dealing in illegal logging in central Africa has been arrested 8 times on wildlife charges but has never been prosecuted.

https://www.defenceweb.co.za/security/maritime-security/secret-chinese-criminal-societies-make-millions-poaching-abalone/

UNEXPLAINED WEALTH ORDERS STRUGGLE TO LIVE UP TO THE HYPE

On 12 May, an article on the International Bar Association website, in the light of the recent dismissal of a number of UWO by a UK court, says that, although much heralded, UWO have rarely been used so far.  It is said that only a handful have been obtained and as yet, none have reached their natural conclusion: the making of a civil recovery order. It says that the appeal of UWO was the reversal of the burden of proof, but that many have argued that when it comes to real estate, a public register revealing the ultimate owners of the overseas companies seeking to purchase property in the UK would be more helpful in exposing corruption.

https://www.ibanet.org/Article/NewDetail.aspx?src=ilaw&ArticleUid=744063A6-DE55-44C4-A74F-EDFF07173EC4

ARMENIAN PRESIDENT SIGNS BILL ON ASSET SEIZURES

On 12 May, Azatutyun reported that President Armen Sarkissian has signed into law a controversial government Bill allowing the confiscation of private properties and other assets deemed to have been acquired illegally, while warning against its “unscrupulous enforcement” by the authorities. The Bill allows prosecutors to investigate individuals in case of having “sufficient grounds to suspect” that the market value of their assets exceeds their “legal incomes” by at least $103,000.  It allows for seizure of those assets even if their owners are not found guilty of corruption or other criminal offenses, and owners will have to prove the legality of their holdings if they are to retain them, though they will also be given the option of reaching an out-of-court settlement with the prosecutors.

https://www.azatutyun.am/a/30607904.html

MALTA: CASH, SPEEDBOAT AND CARPETS SEIZED FROM CRIMINALS IN LAST 2 YEARS

On 12 May, Malta Today reported that a speedboat, 70 oriental carpets and almost €400,000 in cash were among the things confiscated from criminals by the Asset Recovery Bureau in the past 2 years.

https://www.maltatoday.com.mt/news/national/102294/cash_speedboat_and_carpets_seized_from_criminals

UK LAND REGISTRY: BE FRAUD AWARE DURING CORONAVIRUS

On 12 May, a blog post from HM Land Registry was concerned with the risk of fraud including include fraudulent attempts at selling or mortgaging property they do not own.  It contains information which outlines some of the common questions about this type of fraud.

https://hmlandregistry.blog.gov.uk/2020/05/12/be-fraud-aware-during-coronavirus/

ISABEL DOS SANTOS CLAIMS ANGOLA FAKED EVIDENCE TO FREEZE ASSETS

On 12 May, the Mail Online reported that Isabel dos Santos, the billionaire daughter of Angola’s ex-president Jose Eduardo dos Santos, has accused the government of resorting to forgery to freeze her assets last year.  The 47-year-old tycoon and her Congolese husband Sindika Dokolo are accused of syphoning off more than $1 billion from Angolan state companies.

https://www.dailymail.co.uk/wires/afp/article-8311637/Isabel-dos-Santos-says-Angola-faked-evidence-freeze-assets.html

STANDARD OF PROOF IN DISHONESTY CASES CONSIDERED BY THE COURT OF APPEAL

On 10 May, an article from Hardwicke says that, in English law, the standard of proof in dishonesty cases: simple to state, but difficult to apply.  It says that this the difficulty led the Court of Appeal to reverse an experienced High Court judge’s dismissal of a counterclaim.  The article considers the implications.  The standard, as stated by Lady Hale is the “simple balance of probabilities, neither more nor less”.  However, the article says that the case reviewed is a valuable lesson as to the difficulty of applying a proposition that is so easily stated. 

https://hardwicke.co.uk/rights-wrongs-standard-of-proof-in-dishonesty-cases-considered-by-the-court-of-appeal/

WHY IS THE “ILLEGALITY” DEFENCE BACK IN THE SPOTLIGHT?

An article from 4 New Square Chambers on 4 May posed this question, saying that it is not uncommon for defendants to professional negligence claims to argue that the claimant should be barred from recovering damages because his or her cause of action is tarred by illegality. However, over recent years, the law has taken a variety of approaches to when illegality will provide a defence.  With the issue about to come before the UK Supreme Court again the article explains the issues involved.  It points out that, until 2016, the defence only worked if the defendant could show that the claimant had to rely on the illegality in order to bring the claim, then the Supreme Court established a new framework for deciding when illegality will prevent a claim. The article highlights potential problem with the new definition, and what the Supreme Court is set to decide upon in a case coming before it.

https://www.4newsquare.com/publications/why-is-the-illegality-defence-back-in-the-spotlight/

RANSOMWARE HIT ATM GIANT DIEBOLD NIXDORF

On 11 May, the Krebs on Security blog reported that Diebold Nixdorf, a major provider of ATM and payment technology to banks and retailers, recently suffered a ransomware attack that disrupted some operations. The company says the hackers never touched its ATM or customer networks, and that the intrusion only affected its corporate network.  The company is the largest ATM provider in the US, and has an estimated 35% of the cash machine market worldwide.

https://krebsonsecurity.com/2020/05/ransomware-hit-atm-giant-diebold-nixdorf/

DESPITE US SANCTIONS, IRAN EXPANDS ITS NUCLEAR STOCKPILE

An article in Foreign policy on 8 May reported that, 2 years after Trump withdrew from the JCPOA Iran nuclear deal, Tehran has cut in half the time it would need to produce enough weapons-grade fuel for a nuclear bomb.  It says that, while there is no evidence Iran is preparing a dash for a nuclear weapon, the Iranian advances raise questions about the success of the White House’s so-called “maximum pressure” campaign.

https://foreignpolicy.com/2020/05/08/iran-advances-nuclear-program-withdrawal-jcpoa

LUCKIN COFFEE FIRES CEO AND COO AFTER ACCOUNTING SCANDAL

On 12 May, CNN reported that the company had fired its CEO after the Chinese homegrown rival to Starbucks was found to have fabricated sales.

https://edition.cnn.com/2020/05/12/investing/luckin-coffee-ceo-fired/index.html

CAMPAIGN TO RAISE AWARENESS OF INVESTMENT SCAMS AND PYRAMID SCHEMES AMONG PACIFIC COMMUNITIES IN NEW ZEALAND

A release on Mondo Visione on 12 May advised that the Financial Markets Authority (FMA) and Commerce Commission have launched a campaign to raise awareness of investment scams and pyramid schemes among Pacific communities in New Zealand and following concerns about scams targeting Pacific communities and now also a rise in COVID-19 scams.  The Director of Regulation at the FMA is quoted as saying that it saw the OneCoin pyramid scheme proliferate through Pacific social and community groups, and last year the FMA also reiterated its warning that Skyway Group (or SWIG) may be involved in a scam and was targeting Pacific groups.  The campaign material includes a OneCoin case study.

https://mondovisione.com/media-and-resources/news/new-zealands-financial-markets-authority-campaign-to-raise-scam-awareness-amon/

SEC APPOINTMENT OF A RECEIVER OVER FLORIDA-BASED INVESTMENT ADVISER TCA FUND MANAGEMENT GROUP TO PROTECT INVESTORS FROM A FRAUDULENT SCHEME ALLEGEDLY CONDUCTED BY TCA

A release on Mondo Visione on 12 May advised that the SEC had announced that it had obtained the appointment of a receiver over Florida-based investment adviser TCA Fund Management Group Corp., its affiliate TCA Global Credit Fund GP Ltd. (TCA-GP), and several funds managed by TCA to protect investors from a fraudulent scheme allegedly conducted by TCA.

https://mondovisione.com/media-and-resources/news/sec-obtains-receiver-over-florida-investment-adviser-charged-with-fraud/

US: THE NORMALISATION OF TRADE SECURITY EXCEPTIONALISM

An article in Lawfare on 11 May is concerned with the fact that the Trump administration regularly uses security-premised authorities to impose restrictions on trade and has done so since long before the Covid-19 pandemic came along.  For example, it refers to the 1 May Executive Order re “the unrestricted foreign supply of bulk-power system electric equipment constitutes an unusual and extraordinary threat to national security”.  It comments that, in the past 2 years, US trade law exceptions have been normalised not just in government action but largely in public consciousness.

https://www.lawfareblog.com/normalization-trade-security-exceptionalism

 

 

 

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FORMER MICRONESIA OFFICIAL ALLEGEDLY AIDED FAKE VESSEL REGISTRATION AND MONEY LAUNDERING SCHEME

In its April Financial Crime Digest, Asperio reported that the Federated States of Micronesia (FSM) has announced criminal charges against 4 individuals who allegedly conspired from 2015 to falsely register foreign ships as FSM vessels through the bogus Micronesia International Ship Registry (MISR) and then laundered the proceeds.  It is reported that more than 100 foreign-flagged ships, including fishing vessels and oil tankers, reportedly paid between $2,000 and $14,000 for an FSM registration through the MISR.

https://www.aperio-intelligence.com/wp-content/uploads/2020/05/Financial-Crime-Digest-April-2020.pdf

 

 

 

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US: COUNTERING TRADE-BASED MONEY LAUNDERING IS FOCUS OF NEW WHITE PAPER

On 11 May, Homeland Security Today reported that, calling Trade Based Money Laundering (TBML) a “poorly understood and greatly underappreciated” threat to US National Security, a new Intelligence and National Security (INSA) white paper advocates for the creation of a joint public-private TBML Fusion Center to combat this growing national security threat.  INSA is described as the leading organisation for advancing public-private partnerships to address US national security challenges.  The article says that TBML proceeds are estimated at more than $1 trillion annually and help fund terrorist and transnational organized criminal syndicates; undercut US foreign policy objectives; enable capital flight; and undermine the integrity of product supply chains, harming both legitimate businesses and consumers.  It also says that there is a lack of a formalised information-sharing process between affected industries and government intelligence agencies and law enforcement.  It is said that the paper finds that no mechanism exists for manufacturers to share relevant business intelligence with federal intelligence and law enforcement agencies and concludes that effectively countering TBML requires moving to a more unified, collaborative approach.

https://www.hstoday.us/subject-matter-areas/intelligence/countering-trade-based-money-laundering-is-focus-of-new-insa-white-paper/

The White Paper itself is at –

https://www.insaonline.org/wp-content/uploads/2020/05/INSA_WP_TBML.pdf

 

 

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EU NEW IMPORT CONTROL SYSTEM FROM MARCH 2021

The EU plans to introduce its new Import Control System 2 (ICS2) from March 2021 – in a 3-year phased transitional period to March 2024.  ICS2 will directly affect all economic operators involved in handling, shipping and transporting of cargo, express or postal consignments, including –

  • postal operators within and beyond EU;
  • express delivery services;
  • air cargo carriers;
  • freight forwarding logistics companies;
  • ultimate consignees established in EU (for goods received via maritime transport);
  • maritime, railway and road carriers; and
  • representatives of all of the above.

These will need to provide the safety and security data to ICS2.

ICS2 will also indirectly affect all manufacturers, exporters, and individuals from outside the EU, wishing to send goods to or through the EU. They will have to provide the necessary information to the directly affected stakeholders.

https://ec.europa.eu/taxation_customs/general-information-customs/customs-security/ics2_en

ics2

 

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TRACKING AND DISRUPTING THE ILLICIT ANTIQUITIES TRADE WITH OPEN SOURCE DATA

On 12 May, the RAND Corporation in the US published a research report which begins by saying that the illicit antiquities market has become an area of concern for policymakers. It is fuelled by a well-documented rise in looting at archaeological sites and a fear that the proceeds of such looting may be financing terrorism or rogue states.  The key findings are that the market size is smaller than often reported; the market structure varies widely, but it often appears ad hoc and opportunistic; the West is not the only end market for looted antiquities; and technology used in the looted antiquities trade is mostly unsophisticated.  The report makes a number of recommendations, including increasing the perceived threat of surveillance on messaging and transaction platforms.

https://www.rand.org/content/dam/rand/pubs/research_reports/RR2700/RR2706/RAND_RR2706.pdf

 

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BRITISH COLUMBIA: MONEY LAUNDERING THROUGH LUXURY MOTOR VEHICLES

Kenneth Rijock in his blog provided a link to a Canadian report on the abuse of luxury vehicle sales in British Columbia by Chinese nationals, who use straw buyers to purchase luxury cars, which are then shipped to China, defrauding Canada of important tax revenue. It seems that many of the “sales” are done in cash, taking advantage of a reporting loophole enjoyed by automobile dealers.  The report also says that money laundering through automobiles is an international problem, which typically involves the purchase of vehicles in cash with the proceeds of crime, thereby converting the illicit cash into an asset, which will serve to disguise the origin of the money and can later be sold – and provides examples.

https://news.gov.bc.ca/files/German_Report_luxury_cars.pdf

 

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EBA PUBLISHES ITS INQUIRY INTO DIVIDEND ARBITRAGE TRADING SCHEMES (“CUM-EX/CUM-CUM”)

On 12 May, the European Banking Authority published a news release and report following an investigation which looked into the actions of prudential and AML/CFT supervisors in dealing with such schemes, saying that its inquiry had shown that national authorities do not share the same understanding of dividend arbitrage trading schemes, due to differences in Member States’ domestic tax law.  The inquiry concluded that facilitating, or handling proceeds from tax crimes undermines the integrity of the EU’s financial system and, therefore, sets out a number of expectations of credit institutions and national authorities under the current regulatory framework.  It also sets out a 10-point action plan for 2020/21 to enhance the future framework of prudential and anti-money laundering requirements covering such schemes.

The article explains that dividend arbitrage trading schemes involve the strategic placement of shares in different tax jurisdictions with a view to minimising withholding taxes, i.e. a levy deducted at source from income, for example dividends, which is paid by the company that generates the income or dividends. Where a withholding tax is imposed on dividends generated in one tax jurisdiction, shareholders in another tax jurisdiction can claim back a part of this tax if both jurisdictions have concluded a double taxation agreement.  It says that multiple claims of the same withholding tax could amount to a tax crime. This gives rise to questions about the role of the financial institutions that were involved in facilitating those transactions, and in handling the proceeds from such transactions both from a governance and internal control perspective and from an AML perspective.

https://eba.europa.eu/eba-publishes-its-inquiry-dividend-arbitrage-trading-schemes-“cum-excum-cum”-and-announces-10-point

The report is at –

https://eba.europa.eu/sites/default/documents/files/document_library/News%20and%20Press/Press%20Room/Press%20Releases/2020/EBA%20publishes%20its%20inquiry%20into%20dividend%20arbitrage%20trading%20schemes%20%28“Cum-Ex/Cum-Cum”%29/883566/EBA%20Report%20on%20inquiry%20into%20Cum-Ex.pdf.pdf

The Action Plan is at –

https://eba.europa.eu/sites/default/documents/files/document_library/News%20and%20Press/Press%20Room/Press%20Releases/2020/EBA%20publishes%20its%20inquiry%20into%20dividend%20arbitrage%20trading%20schemes%20%28“Cum-Ex/Cum-Cum”%29/883567/EBA%20Action%20Plan%20on%20Dividend%20Arbitrage%20Trading%20Schemes.pdf

 

 

 

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