Panama Covid-19 update – in the Telemetro newspaper the news that the strain of coronavirus circulating here is more infectious (which might explain the consistently high number of cases) but less lethal than other strains (which may explain the relatively low fatality rate). With a fatality rate of 2% or less, Panama has one of the 2 lowest in the Americas – the US is up around 7% and, for some reason, Mexico is 12%.
Meanwhile, another 957 new cases have been added to the total, taking that total to over 40,000 (40,291), with just less than half said to be “recovered”. Another high figure for fatalities (29) takes us to 799 to date.
7 July 2020
UK GLOBAL HUMAN RIGHTS SANCTIONS: CONSIDERATION OF DESIGNATIONS
On 6 July, the FCO published a Policy Paper which aims to highlight factors relevant to whether a person may be designated under the Global Human Rights Sanctions Regulations 2020.
US EXPORT CONTROLS AND HONG KONG – CHANGES UNDERWAY
On 7 July, Crowell Moring published a briefing outlining changes that the US has made in respect of exports to Hong Kong, including the removal of Hong Kong’s special treatment for dual-use export controls.
FINANCIAL INSTITUTIONS AND REPUTATIONAL RISK
Thomson Reuters has published a White Paper on reputational risk. It says that there is an expectation that financial institutions will engage in perpetual scanning of reliable data for stories that are not only related to financial crime but also relate to their clients. It provides a broad definition of reputational risk to mean anything from “Do we want to be the bank that maintains relationships for this client?” to “What would it look like if this illicit client or the client’s activity were divulged in the media?”. It is said that the expectation is that once a match from media event to the client is established, this will cause a so-called trigger event – which would require a review process and audit trail for the decision-making around why a client was or was not retained, and the strength and depth of their exit. This straightforward as it pertains to money laundering, fraud, corruption, or other patently financial crime-related incidents, it is much less certain as it relates to reputational risk. A regulators expectation and practice around external environment monitoring then becomes even more ambiguous the further an incident gets from clearly criminal activity. The Paper provides illustrative case studies. The Paper provides a suggested template for exit risk management and auditability.
USE OF CUSTOMS INFORMATION IN RELATION TO PARALLEL IMPORTS
On 7 July, AKD Benelux Lawyers in the Netherlands published an article saying that, in a recent case before a court in the Netherlands, the court had to answer the question of whether information acquired during a customs seizure under the EU Anti-piracy Regulation (EU Regulation 608/2013) may be used for an unauthorised parallel import claim. In the EU, customs authorities must also, on request and where available, inform the rights-holder of the seizure of the names and addresses of the consignee, the consignor and the declarant or the holder of the goods of the customs procedure of the origin, provenance and destination of the goods whose release has been suspended or which have been detained. In this case, the importer stated that the information obtained by Armani through Customs should not be taken into consideration, since it was used for an unauthorised parallel import matter and the rights-holder was permitted to use the information only for a counterfeit matter. The court correctly rejected the importer’s argument.
UK: EXPORT LICENCE APPLICATIONS FOR MILITARY EXPORTS TO SAUDI ARABIA
On 7 July, the Department for International Trade published Notice to Exporters 2020/11. It appears that the Secretary of State has assessed that there is not a clear risk that the export of arms and military equipment to Saudi Arabia might be used in the commission of a serious violation of international humanitarian law. This followed a decision of the Court of Appeal in 2019 which had found the Department’s decision-making process involving exports to Saudi Arabia as irrational and therefore unlawful. The case involved had begun in 2015, as a challenge to UK export policies re military exports to Saudi Arabia in the light of that country’s involvement in the war in Yemen. The Secretary of State now says that, to address the Court of Appeal’s judgment, the Department has developed a revised methodology in respect of all allegations which it is assessed are likely to have occurred and to have been caused by fixed wing aircraft (the chief export to Saudi Arabia is of BAE Systems aircraft and related systems). In the light of the revised methodology, the Secretary of State is to withdraw the application to appeal the Court of Appeal decision to the Supreme Court.
As a result of the changes in methodology, it is said that the previous undertakings given to the Court re exports to Saudi Arabia and its coalition partners “fall away”. Further, the Notice to exporters says that the Government will now begin the process of clearing the backlog of licence applications for Saudi Arabia and its coalition partners that has built up since last year, to be carefully assessed against the EU and UK export licensing criteria – but that exporters should be aware that it may take some months to clear this backlog.
WIRECARD WAS FOCUS OF ‘LAUNDERING’ WARNING TO MASTERCARD EXECUTIVES IN 2016
On 7 July, KYC 360 reports an article from The Times claiming that Mastercard was warned about Wirecard’s links to an alleged laundering network in 2016 and details of its alleged links to a scheme that used bogus online stores to disguise the processing of high-risk payments.
MOZAMBIQUE IS EMERGING AS THE NEXT ISLAMIC EXTREMIST HOTSPOT
On 6 July, an article in defense One said that an Islamist terror group in Mozambique – Al Sunnah wa Jama’ah – is staging increasingly sophisticated and destructive attacks on oil facilities and government targets this year. Its connections with Islamic State may be growing tighter, the article warns. Already, 447 people have died in attacks in 2020, compared to 660 deaths in 309 attacks in 2019. The northern Cabo Ligado province is a resource-rich region, and Mozambique is notorious for smuggling links involving drugs, endangered species, timber etc, as well as having a poor record on corruption.
HEMP BANKING – FINCEN ISSUES NEW GUIDANCE REGARDING AML/BSA OBLIGATIONS
On 7 July, Bradley Arant Boult Cummings LLP published an article saying that, on 29 June, FinCEN issued guidance to address questions related to Bank Secrecy Act/Anti-Money Laundering (BSA/AML) regulatory requirements for providing banking services to hemp businesses. The article considers the guidance, saying that many financial institutions have remained hesitant to provide services to the hemp industry in the 18+ months since the 2018 Farm Bill, due in large part to the perceived burden of incorporating hemp-specific procedures into their AML Compliance Programmes, but that the new guidance might alleviate these concerns.
INCOTERMS 2020: HANDY CHART OF RESPONSIBILITIES OF PARTIES
On 2 July, Sheppard Mullin provided a handy reference to the revised terms introduced by changes announced by the International Chamber of Commerce to its Incoterms in early 2020. It explains that Incoterms (short for “international commercial terms”) are pre-defined commercial terms designed to designate the actions, costs, and risks borne by each party in an agreement for the sale and international delivery of goods. The 2020 version changes the name of one of the old terms: DAT (Delivered at Terminal) is now known as DAP (Delivered at Place), with a couple other changes.
HOW ESG PROVIDES INVESTORS USEFUL INFORMATION
On 23 June, ACC.com published an article saying that Environmental, Social, and Governance (ESG) indicators can provide investors with useful information about a company’s strength and crisis preparedness. For ESG standards, guidance for reporting ESG performance includes that from the Sustainability Accounting Standards Board (SASB), which models its standards after the Financial Accounting Standards Board (FASB) and its guidance for financial statement reporting. The article says that ESG has been receiving lately as a useful investing tool that augments financial reporting, and it provides examples that illustrate how ESG overlaps with practices that holistically strengthen a company (including recovering from a pandemic…).
LUXEMBOURG REGISTER FOR FIDUCIARIES AND TRUSTS BENEFICIAL OWNERS
On 6 July, Arendt & Medernach published a Newsflash article about a new law of 1 July which provides for the establishment of a register under the supervision of fiduciaries and trusts, and connected to implementation of the 4th and 5th EU AML Directives. The article explains the extent and effect of the new law.
EU: CROSS-BORDER RECOVERY OF TAX DEBTS THROUGH SET-OFF
On 26 June, the European Tax Blog published a post reminding one that, if one EU Member State requests assistance from another Member State in respect of the recovery of a debt under the Mutual Assistance Recovery Directive (MARD), the requesting state’s claim is treated is if it was a claim of the requested state. The post considers a recent case in which the CJEU (the EU court) clarified what this means and discussed how far the requested state is required to go in recovering the debt. The case involved both a VAT debt and a VAT refund, which one might normally expect to see set off against one another. However, in this instance, the debt was in one state and the refund was due in another.
IRAN CONTINUES TO STOCKPILE URANIUM AND DEVELOP ADVANCED CENTRIFUGES
Arms Control Today reports that Iran’s stockpile of low-enriched uranium (LEU) continues to grow in violation of the limits imposed by the 2015 JCPOA, but the country is abiding by the monitoring and verification mechanisms put in place by the accord, the IAEA. However, the article (based on a 5 June IAEA report) says that Iran now has enough LEU that, if enriched to weapons grade, is sufficient for one nuclear bomb, and hat Iran continues to breach limitations put in place by the JCPOA on research and development of advanced centrifuge machines.
OVER 30,000 ILLEGAL FIREARMS AND AMMUNITION DESTROYED BY SOUTH AFRICAN POLICE
On 7 July, The South African and others reported that over 30 000 illegal firearms confiscated by the South African Police Service (SAPS) are currently being melted down at an Arcelor Mittal steel factory in Vereeniging.
CHINA CONCLUDES ALL LEGAL PROCEDURES OF ACCESSION TO UN ARMS TRADE TREATY (ATT)
In its 8 July edition, the Big News Network quotes a Chinese government spokesperson as saying that accession to the ATT is an important step in China’s active participation in global arms trade governance to safeguard world and regional peace and stability. The treaty will enter into force for China 90 days after the deposit of the instrument of accession.
DUBAI’S ROLE IN FACILITATING CORRUPTION AND GLOBAL ILLICIT FINANCIAL FLOWS
On 7 July, the Carnegie Center published an e-book saying that Dubai is just one of many enablers of global corruption, crime, and illicit financial flows, but addressing its role presents anti-corruption practitioners, law enforcement agencies, and policymakers with particularly complex challenges. It says that there is a fleeting opportunity to elevate and address widespread concerns about Dubai’s role in enabling global corruption and its many destabilising effects. But doing so will require a fine understanding of why and how corruption has become such a central element of Dubai’s political economy. It will also require anti-corruption practitioners to recognise that traditional — and largely punitive — policy instruments will not succeed absent a more affirmative and sustained effort by Emirati leaders to ensure that Dubai’s economy remains competitive and attractive over the long term.
WHY STOPPING ENVIRONMENTAL CRIME IS A MATTER FOR NATIONAL SECURITY
An article in World Political Review on 7 July follows the new German presidency of FATF making combating illicit financial flows through environmental crime a priority. It says that wildlife crime, illegal logging, mining etc provide a valuable source of revenue for illicit state and non-state actors. However, it warns that curtailing such crime will require long-term investment.
SWITZERLAND ADDS 11 VENEZUELAN OFFICIALS TO SANCTIONS LIST
On 7 July, Swissinfo reported that Swiss authorities have added 11 leading Venezuelan officials because of their alleged role in undermining human rights and democracy. The sanctions include an entry and transit ban and a freeze on any assets held in Swiss banks. The names added to the sanctions first imposed in 2018 include José Adelino Ornelas Ferreira, secretary general of Venezuela’s National Defence Council and Néstor Luis Reverol Torres, Minister for Interior, Justice and Peace.
INDIA: GOLD SMUGGLING – HIGH-PROFILE, POLITICALLY-CONNECTED IT CONSULTANT PRIME SUSPECT
On 7 July, Gulf News reported that the seizure of 30 kg of gold from a diplomatic consignment has snowballed into a major political controversy, as the prime suspect – Swapna Suresh – is a woman who appears to be close to the ruling Left Democratic Front government in Kerala state.
59% OF CIGARETTES SOLD IN MALAYSIA ARE ILLEGAL
On 7 July, The Rakyat Post said that a new report claims that 59% of the cigarettes sold in Malaysia are from the illicit cigarette trade – with 75% made up of smuggled “whites”, i.e. cigarettes that were produced legally in other countries for the purpose of being smuggled. It is claimed that the presence of a large proportion of illegal cigarettes drives underage smoking.
INTERVIEW WITH CEO AND FOUNDER OF THE INTERNATIONAL ASSOCIATION OF MONEY TRANSFER NETWORKS ON REMITTANCES ETC
On 7 July, The Paypers carried an exclusive interview with Veronica Studsgaard, CEO and Founder of The International Association of Money Transfer Networks (IAMTA). In the interview, she shares insights about the challenges specific to cross-border remittances, how COVID-19 affects migrants and international money transfers, and the future of this industry. She says that one important challenge affecting the industry is bank de-risking, with banks withdrawing – or failing to offer – their facilities to specific customers in greater numbers than ever before. She says that IAMTN and its members have been working in this matter with FATF, US Treasury, HM Treasury and FSB, among others, on the action plan to assess and address the decline in correspondent banking relationships and remittance firms’ access to banking services.
INDIA: ANOTHER BIG MONEY LAUNDERING CASE INVOLVING MUMBAI AIRPORT COMPANY
On 7 July, The Hindu reported that the Enforcement Directorate has registered a money laundering case against G.V.K. Reddy, promoter of GVK Group and whole-time director of Mumbai International Airport Limited (MIAL), and others, and based on the corruption case lodged by the Central Bureau of Investigation last month. It is also said that unnamed officials of the Airports Authority of India (AAI) have also been accused of deliberately ignoring the alleged financial irregularities committed from 2012 to 2018. The case is apparently linked to contracts for the for the modernisation, upgrade and maintenance of the Mumbai airport.
DEUTSCHE BANK REACHES $150 MILLION SETTLEMENT LINKED TO JEFFREY EPSTEIN
On 7 July, Yahoo Finance reported that the bank had has agreed to pay $150 million in the US to settle investigations into compliance failings in part linked to dealings with Jeffrey Epstein, although the penalty also covers AML failings linked to Danske Bank Estonia and Cyprus-based bank FBME. However, it is said to be the first enforcement action by a financial regulator linked to the Epstein case.
BRITISH COLUMBIA LOTTERY FINALLY REVEALS REASON FOR $700,000 PENALTY IN 2010
On 7 July, the Vancouver Sun reported that, after a decade-long court battle, the B.C. Lottery Corporation has revealed why FINTRAC fined it close to $700,000 for violating AML/CFT laws after on-site reviews of 6 land-based casinos. However, BCLC appealed the $penalty and the Federal Court set it aside in 2017, with the court making confidentiality orders in 2012 and 2014 barring the release of records related to the appeal. It is now revealed that that FINTRAC found 7 deficiencies in, including failures to mitigate high-risk gambling, obtain ID from people making large buy-ins, report large cash transactions and keep adequate records.
US: MILLIONS FROM PPP COVID-19 RELIEF FUNDS WENT TO COMPANY IDENTIFIED IN UKRAINE MONEY LAUNDERING CASE
On 7 July, Crains in Cleveland reported claims that a company accused of helping launder millions of dollars from Ukraine a decade ago is among the apparent recipients of US coronavirus relief funds, according to federal disclosures. It is reported that Optima 777 received at least $2 million in loans from the Paycheck Protection Program. It is said to be unclear who owns the company now.
INDIA: WHERE WILL “BLACK MONEY” GO NOW – AS REAL ESTATE BECOMES MORE TRANSPARENT
On 7 July, the Financial Express asked where illicit funds would go now that the Modi administration has reduced the appeal of one of its former favourites – the real estate sector. It says that, with the amendment in the Prevention of Money Laundering Act (PMLA), transparency in India’s real estate sector has significantly improved. However, it is said that the sector still needs to address issues around corporate governance and regulatory enforcement to progress into the ‘transparent’ tier from ‘semi-transparent tier’.
DANISH PERMIT HELPS RUSSIA TO EVADE US PIPELINE SANCTIONS
On 7 July, EU Observer reported that a Russian vessel can lay the last 160 km of the Nord Stream 2 gas pipeline after the Danish Energy Agency gave the go-ahead having decided that there were no old WW2-era chemical munitions in the area. US sanctions had previously forced a Swiss pipe-laying company to abandon the project.
EU: FRONTEX TRAINS NEW BORDER GUARDS ONLINE
On 7 July, EU Observer reported that the EU border agency is in the process of training 265 new border guards to be deployed in January. The e-learning phase will be followed by physical training. The recruits are part of the agency’s new standing corps, which may reach 10,000 personnel.
ZIMBABWE’S HEALTH MINISTER ACCUSED OF CORRUPTION AND SACKED
On 7 July, Reuters reported that Zimbabwe’s President Emmerson Mnangagwa has sacked health minister Obadiah Moyo with immediate effect for inappropriate conduct. Moyo was arrested in June over allegations of corruption related to the government’s procurement of $60 million worth of medical equipment for the country’s fight against the coronavirus.
CANADIAN ALLEGED SWEEPSTAKE SCAM FRAUDTER TO BE EXTRADITED TO US
On 7 July, City News reported that, In upholding an earlier ruling, the Ontario Court of Appeal rejected arguments from Harry Cole (aka Akintomide Ayoola Bolu and John King, and by other names) that his identity as the man wanted on fraud and money-laundering charges was not proven. According to the US indictment, Cole and others would send letters to older victims indicating they had won millions of dollars in a sweepstakes or lottery. The letter included a bogus cheque and instructed targets to deposit the cheque in a personal bank account, immediately withdraw thousands of dollars in cash or money orders, and send the money to a “sweepstakes representative” in the US to collect on their prize.
UK FINANCIAL SANCTIONS TARGETS BY REGIME
On 7 July, HM Treasury published an updated page providing lists of all financial sanctions imposed in the UK by country, administration or terrorist group.
ITALY AND ROMANIA TAKE DOWN CYBER FRAUD RING GENERATING €20 MILLION PER YEAR IN CRIMINAL PROFITS
A news release from Europol on 7 July advised that the criminal group was using a large network of money mules in Italy to launder their criminal profits from a variety of cybercrime activities. The criminal group was involved in financial frauds and cyber scams such as rental fraud (fraud through the advertisement of non-existent properties to rent) and CEO fraud (impersonating a company official to trigger large transfers to bogus accounts).
LARGE-SCALE COUNTERFEIT MONEY RING BUSTED IN SOUTHERN VIETNAM
On 4 July, Tuoi Tre News reported that police have broken up a large-scale ring of making, storing and using counterfeit money that operates across several southern provinces and cities.
THE ‘GO-TO’ SOLICITOR FOR CRIMINALS IS STRUCK OFF WHILE IN JAIL
On 7 July, Legal Futures reported that Ross Ian McKay, 41, a solicitor who was the ‘go to’ lawyer for a gang of criminals because he would not ask too many questions about where their money came has been struck off while serving 7 years in jail. He was convicted in 2018 on 3 counts under the Proceeds of Crime Act 2002.
EU-IRAN: CAN THE JCPOA SURVIVE THE TRUMP PRESIDENCY?
On 7 July, the EU Parliament Research Service published a briefing paper which reviews the situation, saying that, with Iran continuing uranium enrichment to levels far exceeding the levels permitted under the JCPOA, and with the US threatening to trigger the re-imposition of UN sanctions against Iran, further escalation is likely. It says that security in the EU is linked to the security situation in western Asia. For that reason, Europe should maintain efforts to preserve the JCPOA and seek to reduce tension between Iran and the US.
10 KEY TAKEAWAYS FROM THE EUROPEAN COMMISSION’S REVIEW OF THE GENERAL DATA PROTECTION REGULATION (GDPR)
On 25 June, a post from Field Fisher identified 10 key takeaways from the report on the first review of the GDPR by the EU Commission, 2 years on from its introduction. The article sums up the review as saying – “some notable achievements, shows good potential but needs to pull up its socks in various areas”.
UK HOUSE OF LORDS CALLS FOR LOOT BOXES TO FALL WITHIN THE SCOPE OF GAMBLING LEGISLATION
On 3 July, a post from Field Fisher was concerned with a report from the House of Lords Gambling Committee on 2 July covering “the social and economic impact of the gambling industry”. It is said that the report specifically addresses the topic of loot boxes in video games, and the Committee calls on the Government to act immediately to bring loot boxes with the remit of gambling legislation and regulation and makes 2 specific recommendations in relation to loot boxes in games. It notes that the UK Government has announced that a call for evidence in relation to the impact of ‘loot boxes’ would take place later this year.
TURKEY: SALE OF HAND-ROLLED CIGARETTES BANNED
On 3 July, TJI reported that ban aims to curb the country’s illegal cigarette trade and sellers will be punished with prison sentences of up to 6 years. It says that since cigarette prices have been on the rise, more people have been turning to the hand-rolled alternative sold in tobacco shops, according to the Daily Sabah.
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