Panama Covid-19 update – another victim of the virus, Panama has reportedly turned down the chance of hosting the 2021 Under-20 Football World Cup, citing effects or after effects of the pandemic. It is also said to have rejected plans to host the 2022 Central American and Caribbean Games for the same reason. Even more depressing, were the quoted words of a local doctor that a Panamanian is dying every 50 minutes.
Meanwhile, more importantly, a new record set, sadly, with 41 fatalities in the last 25 hours and 1,176 new cases. To date, 1,250 have died. Today, 3 more people have been taken into ICU (155 now in total) and 74 to wards (1,243 now in hospital wards, other than ICU).
24 July 2020
HOW THE GOLDEN VISA SCHEME LET RUSSIAN MONEY POUR INTO THE UK
On 23 July, Wired carried a feature following the recent UK parliamentary report on Russian interference in the UK. The feature focuses on Russian citizens, who came to the UK between 2008 and 2015, and had benefited from the Tier 1 visa programme – a route to residency – also known as “golden visas” – for wealthy foreigners willing to invest millions of pounds in the UK. The Intelligence and Security Committee’s report says that it turned London into a “laundromat” for corrupt foreign money, and cemented Russian influence in the UK’s business and social scene as the “new normal”. The golden visa programme was introduced in 2008, along with other reforms to the immigration system – foreign nationals had to invest a minimum of £1 million (raised to £2 million in November 2014) in the UK – in bonds, share capital or companies. With a £2million investment, they could apply to settle within 5 years; with £5 million, the wait reduced to 3 years; with £10 million, it was just 2 years. Between 2008 and 2015, just over 3,000 individuals came through the scheme.
TRADE COURT LIMITS US PRESIDENT’S POWER TO IMPOSE TARIFFS FOR NATIONAL SECURITY PURPOSES
On 15 July, Arent Fox published an article saying that on 14 July the US Court of International Trade granted judgment in favour of an importer of steel from Turkey, ruling that there are limits on the president’s power to impose tariffs for national security purposes. In March 2018, President Trump issued a proclamation which imposed 25% ad valorem tariffs on US imports of certain steel products and, 5 months later, the administration doubled the Turkish steel tariff to 50% before eventually lowering the tariffs back to 25%. The legislation used allows the President to adjust tariffs to protect national security only within a certain period and following the recommendation of a report from the Department of Commerce finding a threat. The court agreed that the president had acted outside the prescribed period and without a proper report. The article concludes that the judgment means the provision should be narrowly applied to remedy true national security issues. It must be applied consistent with the statute and US constitutional norms and is not a ‘blank check’ for presidential discretion.
FRENCH FASHION AND RETAIL GOODS FACE 25% DUTIES STARTING JANUARY 2021
On 24 July, and article from Arent Fox advised that, following a disagreement over how to tax US tech companies in France, the US Trade Representative (USTR) has imposed additional duties of 25% on French goods, effective 6 January 2021 – a cost that importers and retailers will have to absorb or pass on to their customers.
CANADIAN COMPANIES CAN FACE CLAIMS IN CANADA FOR HUMAN RIGHTS VIOLATIONS THAT OCCUR IN FOREIGN COUNTRIES
On 21 July, an article from Harper Grey LLP is concerned with a Canadian Supreme Court decision which represents a significant shift in Canadian law regarding the potential liability of Canadian corporations who operate internationally. The case involved 3 Eritrean workers, alleged they were forced into a labour regime and were subject to violent, cruel, inhuman and degrading treatment in a mine operated in Eritrea. This mine was run by Nevsun Resources Ltd.
HMRC CROWN PREFERENCE RESTORED FROM 1 DECEMBER – WHAT IS THE IMPACT ON LENDERS AND UK CORPORATES?
An article on Restructuring Global View on22 July said that, from 1 December HMRC’s claim will sit ahead of floating charge holders and unsecured creditors reducing the monies available for distribution to both when a corporate files for insolvency. The HMRC claim is limited to claims for unpaid employer NIC, PAYE and VAT, those claims are often significant.
US FILES COMPLAINT TO FORFEIT MORE THAN $2.37 MILLION FROM COMPANIES ACCUSED OF LAUNDERING FUNDS TO BENEFIT SANCTIONED NORTH KOREAN ENTITIES
A news release from the US DoJ on 23 July advised that a complaint alleges that 4 companies laundered US dollars on behalf of sanctioned North Korean banks. According to the complaint, the North Korean banks used these laundered funds as part of a scheme to procure goods for the North Korean regime, as well as to illegally access the US financial market.
CHINESE SHIPS CATCH $440 MILLION WORTH OF SQUID IN NORTH KOREAN WATERS
On 24 July, Dong-A Ilbo reported that analysis of satellite images has been revealed to show that Chinese “dark fleets” have illegally caught $440 million worth of squid in North Korea’s East Sea, which is under the UN sanctions, in about 2 years. “Dark fleets” are illegal and unlicensed ships that do not send their locations nor appear on a public monitoring system.
CALL FOR GOVERNMENT TO DO MORE ON BRAND MISUSE AND AD FRAUD ON SOCIAL MEDIA AS REPORT REVEALS SCALE OF PROBLEM
On 22 July, World Trademark Review says that a new report has revealed the extent of fraudulent and infringing advertisements on social media platforms targeting major brands, providing an action plan to clamp down on illicit activity. The study identifies 70 major international brands that have been the target of fraudulent and infringing advertisements on social media platforms, some of which receive up to a quarter of a million views before they are detected. The article says that the real value of the report is by shining a light on the tactics employed by fraudsters and what it deems to be the inherent systemic weaknesses on social media and e-commerce platforms that are exploited by criminals to sell counterfeit and illegal goods.
The report from by the Transnational Alliance to Combat Illicit Trade (TRACIT) is available at –
The Report highlights dangers as including –
- Fraudulent adverts give innocent consumers a false impression of authenticity. Counterfeit goods are generally of poor quality, will not last, are not guaranteed, and may be dangerous;
- IP theft in the form of trademark counterfeiting and copyright piracy stifles economic growth and job creation by discouraging innovation, reducing incentives for companies to invest in R&D and inhibiting creative industries from realizing their full potential;
- Most fraudulent websites show a disregard for data privacy of any type, including customer data, security, and financial information. Since these websites rarely use any form of security, consumers are often also exposed to credit card fraud, identify theft, and other cybercrimes; and
- The fraudulent and infringing adverts discovered on Facebook often share similar characteristics and suggest that organized crime groups or organized illicit networks are operating these fraudulent ad campaigns.
ISLE OF MAN CONFIRMS ADDITION TO ISIL/AL-QAIDA SANCTIONS LISTS
On 23 July, a news release from the Isle of Man confirmed that Noor Wali MEHSUD had been added to the ISIL/Al-Qaida sanctions lists.
INDIA: PROVINCE GOVERNOR’S BROTHER CAUGHT UP IN SEARCHES OVER FERTILISER SCAM
The Indian Express on 24 July reported that the Enforcement Directorate has conducted nationwide raids, including at properties of Rajasthan Chief Minister Ashok Gehlot’s brother Agrasen, in connection with an alleged fertiliser scam. It is said that the scam concerns alleged illegal export of Muriate of Potash, which is imported by Indian Potash Limited (IPL) and distributed to farmers, through companies, at subsidised rates.
INDIA GOLD SMUGGLING CASE: POLITICAL INTERFERENCE SUSPECTED AS 78 CUSTOMS OFFICERS GET TRANSFER ORDERS
On 24 July, various media reported that a large number of Customs officers, including some of the top officials have been given transfer orders in the midst of the investigation into the diplomatic baggage gold smuggling case.
VIETNAM SEIZES OVER 8 TONS OF SMUGGLED STRAWBERRIES
On 24 July, Saigon Online reported that police had discovered 2 consignments at Lien Khuong Airport over 2 days and totalling some 8 tons.
GOLDMAN SACHS REACHES $3.9 BILLION SETTLEMENT IN 1MDB MONEY LAUNDERING CASE
Fox Business has reported that Goldman Sachs had reached agreement with Malaysia over the 1MDB sovereign wealth fund that was used to launder money. It is said that said Goldman Sachs had agreed to pay the government of Malaysia $2.5 billion and to guarantee that it gets at least $1.4 billion in proceeds from assets that have since been seized around the globe.
PANGOLINS: INACCURATE RECORD-KEEPING AND LOOPHOLES THAT ALLOWED THE COMMERCIAL TRADE TO CONTINUE BEYOND AN INTERNATIONAL BAN
Unearthed reported that although CITES members agreed an international ban on the commercial trade in pangolins in 2016, an Unearthed investigation has found apparent loopholes and reporting errors since then. Although the ban came into force on 2 January 2017, data held by the CITES Secretariat states that China and Hong Kong, which are both signatories to the treaty, legally imported almost 13 tonnes of pangolin scales – i.e. equivalent to over 16,000 pangolins – in that year. There was a loophole which permitted the commercial sale of specimens caught before the ban came into force – but this was closed last year. While China has usually been accused of being the destination for pangolin scales, the report details US imports – where pangolin leather has been used in the fashion trade. US imports can involve small, supposedly “non-commercial” imports – a loophole which continues to exist.
EUROPEAN COMMISSION HAS APPOINTED FIRST CHIEF TRADE ENFORCEMENT OFFICER (CTEO)
A news release from the EU on 24 July advised that the appointment of the CTEO is an important step in strengthening the EU’s implementation and enforcement agenda, both inside the EU and globally. The CTEO will also help EU exporters gain more value from partner markets and will also strengthen the enforcement of sustainable development commitments, notably in relation to the climate agenda and labour rights.
More information on trade enforcement –
EU: REVIEW OF PASSENGER NAME RECORD (PNR) DIRECTIVE SHOWS IT DELIVERED RESULTS IN THE FIGHT AGAINST TERRORISM AND SERIOUS CRIMES
On 24 July, a report from the EU on the use of the Directive which regulates the collection and processing of PNR data by the EU Member States. This data is composed of the information provided by passengers and gathered by airlines in the normal course of their business. The review concludes that the processing of PNR data has delivered results in the fight against terrorism and serious crimes, such as drug trafficking, human trafficking, child sexual abuse, child abduction and participation in organised crime groups.
IRELAND: FORMER MEMBER OF THE DEFENCE FORCES ACCUSED OF BEING A MEMBER OF THE ISLAMIST TERRORIST ORGANISATION AND FUNDING TERRORISM
On 24 July, RTE reported that an additional charge of financing terrorism has been brought against Lisa Smith, 38, is accused of being a member of ISIS 2015-19.
GIBRALTAR: £5,000 FINE FOR LOCAL REAL ESTATE AGENT’S FAILURE TO MEET MONEY LAUNDERING OBLIGATIONS
A news release from Gibraltar on 24 July announced that the Office of Fair Trading (OFT) has issued a £5,000 financial penalty to a local real estate agent for failing to submit documents to the OFT. Local real estate agents are required to submit various documents to the OFT under AML/CFT laws.
TOP SWISS PROSECUTOR OFFERS RESIGNATION OVER FIFA CASE FALLOUT
On 24 July, Al Jazeera reported that Switzerland’s Attorney General Michael Lauber has offered to resign, after a court largely upheld a ruling against him over his bungled corruption investigation against global football body FIFA.
US FUGITIVE WORKING AS PORN ACTOR ARRESTED IN BALI
On 24 July, the South China Morning Post reported that Marcus Beam, accused of misappropriating about $500,000 from investors, was arrested with his American girlfriend. He had been making and selling sex videos to support his living expenses in Bali.
PHARMACY OWNERS SENTENCED TO PRISON FOR CONSPIRACY TO COMMIT HEALTH CARE FRAUD, MONEY LAUNDERING AND TAX EVASION IN $200 MILLION COMPOUNDING PHARMACY SCHEME
On 23 July, a news release from the US DoJ was concerned with allegations that the owners of Advantage Pharmacy and compound prescription distributor for Advantage Pharmacy. Those accused were involved in a scheme to defraud health care benefit programs, including TRICARE, by dispensing, distributing, and marketing medications known as compounded medications, which ordinarily are medications that are specially combined or formulated to meet the individual needs of patients.
THE ROLE OF THE LEGAL ENTITY IDENTIFIER IN THE EUROPEAN COMMISSION’S ILLICIT MONEY CLAMPDOWN
A post from Finextra on 24 July reported on the crucial role of the LEI in the EC’s AML/CFT legislative reforms. The LEI is an internationally-recognised standard that harnesses precisely the kind of technological innovation referenced in the EU Action Plan. The LEI is a 20-character, alpha-numeric code, based on the ISO 17442 standard, that connects digitally to key reference information to enable clear and unique identification of legally registered persons, companies and organizations collectively known as legal entities. The article provides an example of how the LEI could be used to combat e-commerce fraud. Using LEI their identity could have been automatically verified prior to their engagement with consumers and, as a result, their capacity to trade without the required supervision would have been removed entirely.
SFO DEFENDS CHARGING DECISIONS IN ANNUAL REPORT AS CASELOAD DROPS
On 24 July, the Law Society Gazette reported that the SFO has defended its charging decisions following a year of ‘high profile acquittals’, saying it has ‘fulfilled its duty in pursuing the matters that have been prosecuted’. The number of individuals and organisations charged by the SFO rose to 9 in 2019-20, up from 8 the previous year but significantly down on 2017-18 when 28 charges were brought.
The annual report is at –
ITALIAN AUTHORITIES HAVE DELAYED THE APPLICATION OF A NEW VAT SYSTEM ON YACHT CHARTERS UNTIL NOVEMBER 2020
On 24 July, Superyacht News reported that, in 2019, the European Commission announced that the application of VAT on charters as practised in Italy, France, Malta, Cyprus and Greece would no longer be applicable in 2020. The rules should have been applied to superyacht charter contracts in Italy executed after 15 June, but the Italian authorities have announced that the new system will be applicable to all contracts executed after 1 November.
FRAUDSTER ARRESTED FOR $15 MILLION PONZI SCHEME THAT TARGETED AFGHAN BANK NYC OFFICE
In his blog on 24 July, Kenneth Rijock reported that NAIM ISMAIL, an Afghan-American businessman wanted for perpetrating a $15 million Ponzi scheme has been arrested pursuant to an indictment issued in the Southern District of New York. One of the victims was the New York office of an unnamed Afghanistan bank.
US CUSTOMS SEIZES COUNTERFEIT AND ALTERED AFRICAN PASSPORTS DESTINED TO FLORIDA
A news release from US Customs & Border Protection on 24 July advised that officers intercepted 7 counterfeit and altered African passports in Philadelphia that were destined to an address in Palm Beach County, Florida.
MALAYSIA: CUSTOMS FOIL ATTEMPT TO SMUGGLE IN 23 MILLION WHITE AND KRETEK CIGARETTES
On 24 July, the Edge Markets reported that the Royal Customs Department has foiled an attempt to smuggle in about 23 million white and kretek cigarettes in Port Klang. Early investigations are said to have found that the smuggling syndicate was believed to have brought the cigarettes in from Vietnam by declaring the containers as consolidated cargo to dupe the authorities. Kretek are apparently cigarettes of Indonesian origin, made with a blend of tobacco, cloves and other flavours.
SINGAPORE: PARADISE PAPERS TRUST COMPANY FINED $793,000 FOR ‘SERIOUS BREACHES’
An article from ICIJ on 24 July was concerned with the Monetary Authority of Singapore (MAS) fining Asiaciti Trust US$793,000 for “serious breaches” of requirements relating to secretive offshore trusts. The infractions occurred over more than a decade between 2007 and 2018. Asiaciti did not adequately identify and monitor risks associated with high-profile, political clients, according to MAS. ICIJ also exposed Asiaciti’s efforts in the Paradise Papers, including its chasing US clients for Cook Island trusts – hard-to-pierce safe holdings used to manage wealth and assets.
FATF CONSULTS ON UPDATING GUIDANCE FOR PROLIFERATION FINANCING RISKS
On 24 July, an article from Shearman & Sterling LLP reported that FATF has opened a consultation on amendments to Recommendation 1 and its Interpretive Note. Recommendation 1 provides guidance on assessing risks and applying a risk-based approach to money laundering and terrorist financing risks. Responses are due by 31 August.
FINANCIAL CRIME ASSESSMENT OF ETHIOPIA
On 24 July, Financial Crime News published a short and long version of its assessment of Ethiopia.
UK: NHS PROVIDES JUST 18 PRESCRIPTIONS FOR CANNABIS-BASED MEDICAL PRODUCTS IN 2019
On 23 July, the Pharmaceutical Journal reported that only 6.5% of the total number of cannabis-based medical products prescribed in 2019 were prescribed through the NHS. The medical use of cannabis was legalised in November 2018, but patients have repeatedly complained about a lack of NHS prescriptions for the drug.
BULGARIA DITCHES GAMBLING COMMISSION IN FAVOUR OF TAXMAN
On 24 July, Gambling Insider reported that Bulgaria’s National Assembly has approved the 2nd reading of a Bill amending the Gambling Act, dismantling the State Gambling Commission (SGC) and transferring oversight of all gambling activities to the National Revenue Agency. The SGC will be shut down over a period of 3 months. The Bill includes allocating 10% of all gambling proceeds towards cultural development. Other amendments will impose stiffer financial capital requirements for launching new gambling operations.
EUROPEAN COMMISSION HAS ANNOUNCED PLANS FOR A NEW DIRECTIVE ON ADMINISTRATIVE TAX COOPERATION
On 24 July, Tax News reported that the new Directive on Administrative Cooperation (DAC 7) will deal with the exchange of information on online platforms’ sales, and a new Communication on Tax Good Governance. It will set out a framework for member states to automatically exchange the information they receive on the taxable activities of business users of online platforms.
FORMER KYRGYZ DIPLOMAT IMPLICATED IN CUSTOMS-FRAUD CASE FREED
On 24 July, Rferl reported that Erkin Sopokov, the former consul-general in Istanbul, whose statements to reporters led to a corruption scandal that shook the country in November, has been fined and released from custody. He was ordered to pay $3,920 but given no jail time when the verdict and sentence were announced on 10 July. It is reported that Sopokov made a deal with investigators and pleaded guilty to abuse of office and illegal enrichment – no more details were provided.
FBI ARREST FORMER AMAZON AND MICROSOFT EXECUTIVE OVER $5.5 MILLION CORONAVIRUS RELIEF FUND FRAUD
On 24 July, the Daily Mail reported that Mukund Mohan, 48, a Washington technology executive has been taken into custody and charged. He is accused of handing in fake documents and incorporation records to claim money from the Paycheck Protection Program (PPP) – which was set up to help businesses keep staff employed during coronavirus.
GERMANY: LAWYER AT CUM-EX TAX SCANDAL PROSECUTOR’S OFFICE ARRESTED IN BRIBERY PROBE
On 24 July, BNN Bloomberg reported that a member of the Frankfurt General Prosecutors’ Office, one of the agencies investigating the Cum-Ex scandal in Germany, was arrested over allegations he accepted kickbacks from a businessman who ran a company that provided expert evaluations for the prosecutors.
US: FORMER CEO AND FOUNDER OF TECHNOLOGY COMPANY CHARGED IN INVESTMENT FRAUD SCHEME
A news release from the US DoJ on 24 July advised that Daniel Boice, 41, the CEO and co-founder of Trustify Inc, a privately-held technology company founded in 2015 and based in Arlington, Virginia, was charged in an indictment for his alleged role in a fraud scheme resulting in millions of dollars of losses to investors. The indictment alleges that, beginning in 2015, he fraudulently solicited investments in Trustify, a privately-held technology start-up company that connected customers with private investigators. He allegedly raised approximately $18.5 million from over 90 investors by, among other things, falsely overstating Trustify’s financial performance.
PRIVATBANK, THE UKRAINIAN LENDER NATIONALISED BY THE STATE IN 2016 NOW CLAIMS ITS FORMER OWNERS LAUNDERED NEARLY $800 MILLION IN THE US
On 24 July, Rferl reported that Privatbank has filed an amended complaint in a Delaware court against tycoons Ihor Kolomoyskiy and Hennadiy Boholyubov, claiming the men laundered $660 million through a group of U.S. companies called Optima and an additional $100 million through other US entities. The bank is seeking hundreds of millions of dollars in compensation from the tycoons.
UN: THOSE INCITING VIOLENCE, UNDERMINING PEACE IN CENTRAL AFRICAN REPUBLIC COULD MEET SANCTIONS CRITERIA
On 24 July, a news release from the UN advised that the UN Security Council Committee Established pursuant to resolution 2127 (2013) concerning the Central African Republic has said in its report that individuals who commit acts of incitement to violence and then engage in or provide support for acts that undermine the peace, stability or security of the Central African Republic could meet the sanctions criteria specified in Security Council resolutions.
PAKISTAN: NATIONAL ACCOUNTABILITY BUREAU TELLS HIGH COURT THAT LEADERS OF THE PAKISTAN MUSLIM LEAGUE-QUAID (PML-Q) INVOLVED IN MONEY LAUNDERING
On 24 July, Pakistan Today reported that NAB has told the Lahore High Court (LHC) that Pakistan Muslim League-Quaid (PML-Q) leaders Chaudhry Shujaat Hussain and Chaudhry Pervaiz Elahi were involved in laundering money through fictitious accounts. This was stated so in a reply by NAB to a petition filed by the Chaudhry brothers in the court to restrict the anti-corruption watchdog from reopening an old inquiry against them for owning assets beyond means.
HOW CRIMINALS ARE USING PPE AS A MONEY LAUNDERING TOOL
On 24 July, Data Breach Today reported claims that money launderers are devising new tactics during the pandemic. For example, some are coming up with ways to use personal protective equipment, or PPE, as a form of currency.
3 TAKES ON THE SAME CORRUPTION ALLEGATIONS – THE SWISS, FRENCH AND UK COURTS AND ALSTOM
On 23 July, an article from Global Arbitration Review argues that the Swiss, French and UK courts’ different treatment of an award against Alstom highlights the need for more uniformity in the approach to corruption allegations in international arbitration. It is said that all the courts through which the case passed, in the UK, France and Switzerland, are all arbitration-friendly. However, the case’s various incarnations show how difficult it is to realise the international consensus against corruption. When every jurisdiction has its own standards to prove illegality on a case-by-case basis, the result is less uniformity and predictability. The litigation, which started in 2013, was brought against Alstom, a French rail transport group, before a Geneva-seated International Chamber of Commerce (ICC) arbitral tribunal. The arbitral award governed by Swiss law was rendered in 2016. The article concludes that develop a common approach to dealing with such allegations of corruption. Differences in case law concerning issues of illegality should not stymie joint efforts to combat corruption, money laundering and other illegal conduct.