Panama Covid-19 update – new infection cases are still (to me) worringly high, with 656 added today to take the total to 17,889. 10 more people have died, taking the total to date to 413. News reports have highlighted that 3,000 new cases were reported in just one week (3 to 9 June) but, on the other hand, 86 new ICU beds have been created (this after a warning that occupancy of ICU had been up to 90%) – though if the number of new cases continue to rise as they do, with a proportion certain to be serious cases needing intensive care, how long with ICU resources hold out? Despite this, we saw car drivers organising a blockade in downtown Panama City today, protesting the quarantine restrictions…
10 June 2020
US PREPARING TO ADD AS MANY AS 50 TANKERS TO BLACKLIST FOR WORKING WITH VENEZUELA’S MADURO GOVERNMENT
On 9 June, the Wall Street Journal reported that OFAC is preparing sanctions against dozens of tankers while pressuring firms associated with those vessels.
OIL TANKERS TURN AWAY FROM VENEZUELA AS MORE SANCTIONS LOOM
On 10 June, Hellenic Shipping Report reported that tankers that were sailing toward Venezuela have turned around and others have left the country’s waters as the US considers blacklisting dozens of ships for transporting Venezuelan oil, according to shipping data and industry sources.
US: SOUTH KOREAN CHARGED WITH VIOLATING CHINA EXPORT CONTROLS
On 10 June, the EU Sanctions Blog reported that a US court has unsealed a grand jury indictment from 2017 charging South Korean national Jeoho Jung and his company, Eight Corporation.He is alleged to have unlawfully exported to China US-origin radiation hardened integrated circuits (RHIC), radio frequency amplifiers, and power amplifiers.
WHAT IS ANTIFA?
On 9 June, Defense One carried a short article explaining that the name Antifa comes from a short form of “anti-fascist,” which is about the only thing its members agree on.
CHINA BANKS FREEZE ACCOUNTS OF CROSS-BORDER TRADERS IN MYANMAR’S SHAN STATE
On 9 June, Radio Free Asia reported that Myanmar traders in northern Shan state have had their cross-border business hit by Chinese authorities who abruptly froze bank accounts at Chinese financial institutions after suspecting that some of their clients had engaged in illegal activities in Yunnan province. Many Myanmar traders have Chinese bank accounts to facilitate cross-border trade transactions. This has happened before. In 2017, 3 Chinese banks with local branches in Myanmar’s border area froze 132 bank accounts owned by Myanmar businesspeople who traded in the area, claiming that their funds were linked to illegal activities such as smuggling, gambling, and drug dealing.
ITALIAN POLICE FIND €15 MILLION IN DRUG PROCEEDS STASHED INSIDE A WALL
On 8 June, the Telegraph reported that Italian police discovered €15 million in bank notes stashed behind a false wall in an apartment in Milan, a flat belonging to the father of an alleged hashish trafficker, suspected of making millions importing the drugs from Morocco. Investigators believe the huge amount of money had been amassed as a sort of retirement fund for Massimiliano Cauchi.
WHAT ARE THE ENFORCEMENT PRIORITIES OF THE FCA?
On 5 June, Addleshaw Goddard published an article saying that in April the FCA published its 2020/21 Business Plan in which the FCA has incorporated its early thinking on the Covid-19 pandemic. The article considers what the Plan suggests about the FCA’s enforcement priorities for the coming years and identifies particular areas of enforcement risk for firms.
SPAIN REOPENS ARMS SALES TO SAUDI ARABIA WITH RESTRICTIONS
On 10 June, the blog of the Union City Journal says that exports are flowing again, although with “restrictions”, and with “lethal material”, i.e. firearms and ammunition, is not sold to Riyadh. Previously, sales to Saudi Arabia are said to have made up over 10% of military sales in Spain.
MEXICAN WOMAN SENTENCED IN SEA CUCUMBER SMUGGLING SCHEME
On 9 June, the Washington Post reported that a Mexican woman who smuggled endangered sea cucumbers into the US has been sentenced to 8 months in prison.
CYPRUS: CABINET APPROVES REGULATIONS TO TIGHTEN UP CITIZENSHIP PROGRAMME
On 10 June, the Cyprus Mail reported that the Cabinet has approved regulations to the citizenship by investment programme, which it says ties the scheme to AML legislation.
EUROPEAN CITIZENS’ ATTITUDES TO CORRUPTION
On 10 June, the EU published a Eurobarometer report which shows that corruption is unacceptable for a large majority of Europeans (69%). Just over 7 in 10 Europeans believe that corruption is widespread in their country and consider that corruption exists in the national public institutions (70%) and among political parties and politicians (53%). Since 2013, the proportion of respondents that consider corruption to be widespread has decreased in 18 Member States and only a minority of Europeans feel that corruption affects their daily lives (26%).
One of the results of the survey is –
MALTA’S CORRUPTION CRISIS: 89% NOW BELIEVE IT IS WIDESPREAD
On 10 June, Malta Today reported that 89% of Maltese believe corruption in Malta is “widespread” and this sentiment grew by 10 points in just 2 years.
DENMARK TOUGHENS DEMANDS FOR BANKS’ AML TEAMS
On 10 June, BNN Bloomberg reported that Denmark is proposing greater independence and tougher qualifications for bankers hired to prevent money laundering as part of efforts to prevent a repeat of the Danske Bank scandal, with a new report from the country’s Financial Supervisory Authority.
UK: INDEPENDENT REVIEW INTO THE POST OFFICE HORIZON IT SYSTEM
On 10 June, a news release from the Department for Business, Energy and Industrial Strategy reported that a review will consider whether Post Office Ltd has learned lessons from the Horizon dispute and court case. This is in the light of the scandal where sub-postmasters in the UK have been accused, and even jailed, for alleged theft which is believed to actually be a consequence of a faulty software system – which faults Post Office bosses allegedly knew about.
UK: APPLYING FOR CITES PERMITS AND CERTIFICATES TO MOVE OR TRADE ENDANGERED SPECIES
On 10 June, 3 news releases from DEFRA were concerned with how to apply to import, export or re-export endangered animal and plant species on the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) list; checking if you need an Article 10 certificate for commercial use of endangered species on the CITES list; and checking if your import, export or re-export needs a permit under CITES.
SYRIA SANCTIONS REGULATIONS ISSUED; MORE COMPREHENSIVE RULES TO COME LATER
On 10 June, Sandler Travis Rosenberg reported that the regulations include provisions on prohibited transactions, licenses, authorizations, statements of licensing policy, penalties, reports, and procedures. OFAC says that it intended to issue more comprehensive set of regulations that may include additional interpretive and definitional guidance, general licenses, and statements of licensing policy.
ILLEGAL STREAMING SERVICE WITH OVER 2 MILLION SUBSCRIBERS WORLDWIDE SWITCHED OFF
On 10 June, a news release from Europol advised that Spanish National Police have dismantled a large criminal network illegally distributing audio-visual content in Europe, Asia and the Middle East and laundering the criminal proceeds. On 3 June, law enforcement authorities across the EU carried out 15 house searches, arrested 11 individuals and interrogated 16 others for their possible involvement in the illegal scheme. The suspected leader of the criminal network is among the arrested individuals. Law enforcement authorities took down 50 IP addresses and part of the online criminal infrastructure while 11 bank accounts totalling €1.1 million were also frozen.
$761 MILLION WORTH OF COCAINE SEIZED IN FROZEN PINEAPPLE PULP IN POLAND
On 10 June, the Winnipeg Sun reported that Polish authorities have seized a record amount if more than 3 tonnes of cocaine hidden in barrels of frozen pineapple pulp and with a street value of around $760.9 million. The cocaine was discovered in barrels of frozen pineapple pulp in a warehouse in the northern port city of Gdynia, they said. It had been transported by ship to Hamburg from Ecuador before traveling to Gdynia by road.
4 UK NEO-NAZIS JAILED FOR MEMBERSHIP OF NATIONAL ACTION
On 9 June, the Guardian reported that 3 men and a woman (a former “Miss Hitler” beauty pageant contestant) neo-Nazi “diehards” convicted of being members of the proscribed extreme right-wing terrorist group National Action have been jailed. They were convicted of membership of a terrorist group after a trial in March.
UK: SRA TO BEEF UP AML MONITORING OF LAW FIRMS
On 10 June, Legal Futures reported that the draft 2020/21 Business Plan from the Solicitors Regulation Authority (SRA) reveals plans to beef up monitoring of firms’ AML efforts and begin a review of continuing competence. The 2.5% of the SRA’s £70 million budget that is currently spent on AML activities will increase to 3%.
RETIRED AUSTRIAN ARMY COLONEL FOUND GUILTY OF SPYING FOR RUSSIA
On 10 June, Rferl reported that an Austrian court has sentenced an unnamed retired army colonel to 3 years in prison after convicting him of spying for Russia’s military intelligence service (GRU) for more than 25 years. The trial, held behind closed doors, resulted in the man being released for time served. Defence lawyers argued he had not revealed any government or military secrets but only passed on publicly available information, for which he received €220,000.
SEC HAS CHARGED A PENNY STOCK TRADER IN CALIFORNIA OVER A FRAUDULENT PUMP-AND-DUMP SCHEME IN THE STOCK OF A BIOTECHNOLOGY COMPANY CLAIMED TO HAVE DEVELOPED AN “APPROVED” COVID-19 BLOOD TEST
A release on Mondo Visione on 9 June reported that the SEC had charged a penny stock trader in Santa Cruz with conducting a fraudulent pump-and-dump scheme in the stock of a biotechnology company by making hundreds of misleading statements in an online investment forum, including a false assertion that the company had developed an “approved” COVID-19 blood test. Jason C. Nielsen is said to have attempted to drive the stock price of Arrayit Corporation securities higher using online posts.
MORE THAN 4,000 BANK ACCOUNTS BELONGING TO CRYPTO TRADERS FROZEN BY CHINESE AUTHORITIES
On 10 June, the Coin Journal reported that thousands of bank accounts of OTC crypto traders who hold cryptocurrencies, cash, and Tether (USDT) have been frozen by the police in China’s Guangdong province in a major crackdown against illicit activities including money laundering. Chinese police have ramped up efforts to crack down on scams related to cryptocurrency and gambling in the past few months.
US: IS THE SUPREME COURT ABOUT TO MAKE CHANGES AFFECTING WHISTLEBLOWERS?
A post on the always interesting FCPA Blog on 10 June is concerned with a case currently before the Court where petitioners are asking the Court to strike down or limit the SEC’s use of disgorgement and, if the Court does so, there would likely be fewer enforcement actions with recoveries of more than $1 million, and smaller recoveries overall. Hence, less funds for payments to whistleblowers. The post points out that this year the SEC has already awarded $114 million to whistleblowers, nearly twice the amount than for all of 2019, and with 3 awards in 2020 among the 10 biggest SEC payouts ever.
PODCAST: AN INTERNATIONAL ATM SKIMMING SCHEME
In the latest TRACE podcast, Paul Radu, co-founder and executive director of the Organized Crime and Corruption Reporting Project (OCCRP), describes his team’s work in uncovering an international team of cash machine skimmers that ultimately skimmed hundreds of millions of dollars, largely from tourist hot spots.
NEW SURVEY ON DEMURRAGE AND DETENTION (D&D) CHARGES SHOWS WORLD’S HIGHEST ARE AT LONG BEACH AND LOS ANGELES
On 10 June, Loadstar reported on new research from online container logistics platform Container xChange, which shows that there are huge variations in the levels of D&D charges around the world – not only between the major ports, but between different carriers in any given port.
For an explanation of D&D charges, and what they are, see –
EU BUSINESS ATTITUDE TO CHINA AND DOING BUSINESS WITH CHINA
On 10 June, an article from CSIS says that it appears that the vast majority of companies from the US – and the broader West – are not heeding the call to “decouple” from China – restricting high-tech exports to China, expanding investment limits, and efforts to have US companies move production out of China. Instead, it argues, there is a growing gap – or decoupling – between Trump administration aims and Western business behaviour. The latest evidence of this, it says, is contained in the European Union Chamber of Commerce in China and its 2020 Business Confidence Survey. This revealed that only 11% of respondents are considering shifting current or planned investments from China to other markets, which is lower than a year ago. For those who are considering moving, 45% are considering somewhere in Asia, followed by 27% looking at Europe, and only 11% North America. The survey also seems to show that the COVID-19 pandemic has harmed companies’ business, but not their overall strategy.
US FOREIGN MILITARY SALES (FMS): STRATEGIC INTERESTS AND THE SUPPLY CHAIN
Breaking Defense in the US has produced a SITREP briefing explaining the background and use of FMS. It says that, since the mid-1970s, FMS has become arguably the preeminent tool for the US in building and solidifying relationships with foreign nations, facilitating training and interoperability with coalition partners, and promulgating US strategic priorities while at the same time helping to shape and influence the actions of allied nation states. It includes such high-profile deals and relationships as those involving Taiwan and Turkey. It points out that FMS are a huge benefit for allied nations, as the US government offers favourable terms, including financing, as well as access to some of the best military technology in the world. This is why many nations turn to the FMS programme to supply much of their military hardware. It says that there are about 14,000 open FMS cases with approximately 179 countries and international organisations—accounting for relationships with about 92% of all the world’s countries. The majority of those sales are made through American companies, some of them well known like Boeing, Lockheed Martin, and Raytheon Technologies. However, many US subsidiaries of foreign companies also sell their products and services through the programme, meaning that nations frequently have 2 purchasing options: a direct commercial sale from the foreign company, or a US government-endorsed and -financed buy from the foreign company’s US subsidiary. FMS are one of 2 methods through which a country can purchase new military equipment from the US, the other is Direct Commercial Sales (DCS).
MANAGING RISK IN COMPLIANCE STAFFING DECISIONS
On 10 June, a post on the Compliance & Enforcement blog from the New York University of Law reported that recent reports have indicated that downsizing of compliance departments may continue in tandem with broader budget cuts as companies take stock of their prospects in a post-pandemic world. It also said that the changing risk landscape and implementation of new programmes related to addressing the pandemic or its economic impact translate into additional demands on compliance functions. The post goes on to address some common issues that chief compliance officers, executive management and board compliance or audit committees might wish to consider when assessing proposed changes to staffing levels, technology resources and budgets in compliance risk management functions, the timing of such changes, and whether new risk mitigations are necessary.
FEDERAL JUDGE IN PILATUS BANK CASE EXPRESSES SERIOUS CONCERNS ABOUT THE CONDUCT OF THE US GOVERNMENT
In his blog on 10 June, Kenneth Rijock said that when the Ali Sadr Hasheminejad sanctions evasion case was going away, the trial judge, has issued a 4-page order, has slammed both the US Attorney’s Office in Manhatten for “serious concerns about the conduct of the Government, from the actions that led the Court to suppress material pre-trial, … to a conceded Brady violation during the course of the trial…”. Ali Sadr Hasheminejad was the Iranian-born owner and chairman of the Pilatus Bank in Malta, but the US government has applied to have the sanctions-busting case against him dropped. The judge has ordered the government to “list all material in the case that was potentially improperly withheld from the defense,” indicate which lawyers were personally responsible for the disclosure failures, including supervisors, and for each item, whether the Government agrees that the withholding was intentional. The Brady Rule dates from the 60s and requires that the prosecution must turn over all exculpatory evidence to the defence, and which must be material to the case; this is evidence that is favourable to the defendant and, therefore, might exonerate him, or impeach the credibility of a state witness. A violation occurs even if the state is not aware that the evidence exists, e.g. because law enforcement has not turned it over to the prosecutor.
SUDAN: DARFUR MILITIA LEADER ALI KUSHAYB TRANSFERRED TO THE INTERNATIONAL CRIMINAL COURT TO FACE ALLEGATIONS OF WAR CRIMES AND CRIMES AGAINST HUMANITY
On 10 June, Defence Web reported that he had surrendered in DRC after the ICC issued an arrest warrant 2007, accusing him of persecution, murder and rape in the western Sudanese region of Darfur between 2003 and 2004.
US: GOVERNMENT CONTRACTOR RESOLVES SETTLES FRAUD CHARGES RELATING TO CONTRACT TO MODERNISE STATE DEPARTMENT BUILDING
A news release from the DoJ on 10 June advised that Alutiiq International Solutions LLC, a subsidiary of Afognak Native Corporation (Afognak), has entered into a non-prosecution agreement (NPA) and has agreed to pay over $1.25 million to resolve the DoJ investigation into a kickback and fraud scheme perpetrated by a former AIS manager on a US Government contract to modernise the Harry S Truman Federal Building in Washington DC.
SOUTH KOREAN ENGINEERING COMPANY PLEADS GUILTY TO DEFRAUDING US ARMY – TO PAY $68.4 MILLION
A news release from the DoJ on 10 June advised that SK Engineering & Construction Co Ltd (SK), one of the largest engineering firms in Korea, has pleaded guilty to wire fraud, in connection with a fraudulent scheme to obtain US Army contracts through payments to a DoD contracting official and the submission of false claims to the US government. In 2018, 2 SK employees, Hyeong-won Lee and Dong-Guel Lee, were indicted by a federal grand jury on charges of conspiracy, major fraud against the United States, wire fraud, money laundering conspiracy, and obstruction of justice for their alleged roles in the scheme.
2 RETIRED US NAVY OFFICIALS PLEAD GUILTY IN CONTINUING ‘FAT LEONARD’ CORRUPTION SCANDAL
On 10 June, the Daily Mail CPO Petty Officer Brooks Alonzo Parks, 46, pleaded to federal charges of conspiracy to commit bribery in a case linked to the longstanding ‘Fat Leonard’ corruption case that rocked the US Navy – a scheme involved a Malaysian defence contractor nicknamed ‘Fat Leonard’ for his 350 lb frame. Haas was a captain on the USS Blue Ridge command and control ship and admitted receiving $91,000 worth of bribes that included luxury hotel stays and parties with prostitutes. Parks leaked information to help Francis win bids for contracts in exchange for $25,000 in bribes.
OPERATORS OF CALIFORNIA CHARITY GUILTY TO MAIL FRAUD CONSPIRACY AND TAX EVASION HAVING SOLD OVER $1 MILLION IN DONATED CLOTHES FOR THEIR PERSONAL BENEFIT
A news release from the DoJ on 10 June reported that a California couple Geraldine Hill and Clayton Hill pleaded guilty to the charges. They had operated On Your Feet (OYF), aka Family Resource Center, a tax-exempt charitable organisation whose stated mission was to provide assistance to low income families and individuals in need. In 2011-16, the Hills fraudulently obtained more than $1.35 million in donated clothing and other items by falsely representing to the donors that the items would be given to needy recipients. In fact, the Hills made charitable donations of only about $13,000, sold the remaining donated items, and used the proceeds to financially enrich themselves and others.
AL-SHABAAB MAY LOOK TO ACQUIRE EXPLOSIVE MATERIALS THROUGH ILLICIT SMUGGLING
A news release from the UN on 10 June advised that the Chair of the relevant UN Security Council Committee has warned that, if the current chemicals used for Al-Shabaab’s homemade explosives become scarce, the group would shift to other sources of explosive materials or precursors, possibly through illicit smuggling. It is said that the effort to clear mines and unexploded war remnants across Somalia has reduced Al-Shabaab’s access to military grade explosives, apparently triggering a shift away from such explosives for its IED.
PEP SCREENING REQUIREMENTS AROUND THE WORLD
Comply Advantage has published an article saying that while Politically Exposed Person (PEP) status is not an indication of criminal activity or involvement, it does confer important compliance obligations in almost every part of the world due to potential risk. It goes on to usefully summarise PEP reporting requirements in a number of countries.
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