OTHER THINGS YOU MAY HAVE MISSED – AUGUST 10

Panama Covid-19 update – depressingly, 1,632 were reportedly arrested for breaking curfew over the weekend…including for “secret parties”.  Meanwhile, new infections numbers might b showing a slight downturn, at 857 more today, but (as might be expected, given the usual lag between the two sets of figures) fatalities remain stubbornly high at 25 more (taking the total to date to 1,664).  There are now 24,175 active cases, with 162 in ICU, 1,485 in other hospital wards, 622 in the isolation hotels and the rest at home.

10 August 2020

GERMAN PROSECUTORS THINK PAYMENTS PROVIDER WIRECARD WAS LOOTED PRIOR TO ITS COLLAPSE

On 9 August, the Financial Times reported that that the embezzlement allegedly took the form of unsecured loans for advance payments to merchants processing card transactions through its partners in Asia. Involved were said to be companies in Singapore, including one run by a former employee, and companies in Dubai, the Philippines and Singapore that Wirecard said it used to process credit card payments in jurisdictions where it did not have licences to operate.

https://www.ft.com/content/c8acf321-7bc7-4348-99f6-b17e01085238

SINGAPORE POLICE BRING FIRST CHARGES LINKED TO WIRECARD

On 10 August, KYC 360 reported that R Shanmugaratnam, 54, a Singaporean director and owner of Citadelle Corporate Services Pte Ltd, had been charged with falsifying papers that showed more than €100 million in 3 separate escrow accounts held on behalf of Wirecard. It says that Citadelle provides corporate management services, such as company formation and accounting services, and acted as a trustee in charge of bank accounts that supposedly held Wirecard funds from the fintech company’s business partners.

https://www.riskscreen.com/kyc360/news/singapore-police-bring-first-charges-linked-to-wirecard

FRAUDSTERS CREATE FAKE CANADIAN COMPANY, STEAL FOREIGN WEBSITE TO VICTIMISE JOB SEEKERS

On 8 August, CBC in Canada reported that as job-related fraud reports have gone up during the pandemic, the article tells the story of one job-seeker and a cryptocurrency scam that had her inadvertently involved in what appeared to be money laundering. It involved fraudsters hidden behind a duplicated website and an incorporated company that did not belong to them. It is said that such job scams are on the rise and becoming more sophisticated, and in 2019 the Canadian Anti-Fraud Centre received more than 2,400 job-related fraud reports, and the number of reports counted in 2020 is already more than 2,300.

https://www.cbc.ca/news/canada/toronto/fake-company-job-scam-gux-it-1.5677217

AUSTRALIA: DRUG TRAFFICKERS EXPLOIT INNOCENT GIG-WORK COURIERS

On 9 August, the Sydney Morning Herald reported that organised crime is using online on-demand courier services companies such as Airtasker to traffic drugs and stolen goods around the country. Criminal groups are also taking advantage of the coronavirus crisis to advertise “working from home” opportunities online, using innocent people to unwittingly move their stolen goods.

https://www.smh.com.au/politics/federal/drug-traffickers-exploit-innocent-gig-work-couriers-20200809-p55jxm.html

UBS SEVERS TIES WITH SOME WEALTHY VENEZUELANS DUE TO SANCTIONS

On 7 August, Bloomberg reported that UBS Group AG is severing ties with some Venezuelan clients it serves from the US as the Trump administration tightens sanctions on a country that’s mired in a power struggle. Involved are said to be a number of accounts with links to Venezuela’s government or to Petroleos de Venezuela SA.

https://www.bloomberg.com/news/articles/2020-08-07/ubs-severs-ties-with-some-wealthy-venezuelans-amid-sanctions?sref=ldCf194q

SHADOW AND DE FACTO DIRECTORS IN AUSTRALIA

On 25 May, Lipman Karas published an article about a recent High Court case which found that a person may be an “officer of a corporation” even if that person did not formally hold an office or position in that corporation; whether a person is an officer for the purposes of the Act is a question of fact and degree having regard to the actual role performed by that person, rather than the designation of some formal role or title; and definition of “officer” may extend to third party external consultants or advisors, such as banks, if that third party was in fact involved in the management of the corporation and thereby able to ensure that their advice will be implemented.

https://www.lipmankaras.com/2020/05/an-office-fit-for-a-king-shadow-and-de-facto-directors-in-australia/

WHAT IS THE COUNTRY OF ORIGIN IN US CUSTOMS LAW?

An article from Braumiller Law Group PLLC on 5 August says that the determining the country of origin of imported articles has become increasingly important in recent years. The country of origin determines applicable duty-rate, as well as eligibility for special duties or free trade agreements. However, the article warns that the easiest determinations of country of origin are for natural products, such as fruits, vegetables, timber and grains.  This category also includes other products taken from the natural resources of a single country, such as metals and minerals.  The country of origin of such products is the country in which they were grown or mined.   From this point on, it gets more complicated.

https://www.braumillerlaw.com/what-is-the-country-of-origin/

UK: DISCLOSURE OF DOCUMENTS SUBJECT TO IMPLIED UNDERTAKINGS

On 6 August, Kingsley Napley published an article about a recent High Court involving the interplay between insolvency related proceedings and criminal proceedings. It is said that the High Court considered the Official Receiver’s ability to disclose to the SFO documents which had been obtained by the Official Receiver during the course of disqualification proceedings. The article says that the case serves as a reminder of the restrictions contained in the Civil Procedure Rules and the common law regarding use of documents disclosed by a party in one set of proceedings.

https://www.kingsleynapley.co.uk/insights/blogs/criminal-law-blog/disclosure-of-documents-subject-to-implied-undertakings#page=1

UK: AML GUIDANCE FOR CRYPTOASSET EXCHANGES AND CUSTODIAN WALLET PROVIDERS

On 7 August, Baker McKenzie published an article saying that the Joint Money Laundering Steering Group (JMLSG) – which comprises UK financial services industry trade bodies – has published new guidance for cryptoasset exchange and custodian wallet providers regarding compliance with money laundering obligations. The Guidance provides an outline of the money laundering risks posed by cryptoassets and how cryptoasset firms can mitigate such risks. The article points out that courts will take into account compliance with the Guidance when determining if it has committed a money laundering offence. Moreover, for businesses regulated by the FCA, the regulator will take the Guidance into account when investigating breaches of its rules.

https://financialinstitutions.bakermckenzie.com/2020/08/07/new-jmlsg-industry-aml-guidance-for-cryptoasset-exchanges-and-custodian-wallet-providers/#page=1

The Guidance is at –

https://secureservercdn.net/160.153.138.163/a3a.8f7.myftpupload.com/wp-content/uploads/2020/07/Part-II_Sector-22_CE-and-CW-providers_July-2020.pdf

THE UK REACH REGIME FOR CHEMICALS

On 6 August, Dentons published an article saying that the UK has confirmed that it will not be seeking continued membership of or participation in the European Chemicals Agency (ECHA) or the EU regime for the Registration, Evaluation, Authorisation or Restriction of Chemicals (REACH). Instead, a new UK REACH system will be introduced from 1 January.  However, after reviewing the current situation, the article warns that those in the chemicals industry should watch out for further information on and potential updates to the UK regime as they prepare for the transition.

https://www.dentons.com/en/insights/articles/2020/august/6/approaching-the-uk-reach-regime

TO KEEP WEAPON SALES IN PLACE, US OFFERS NEW OPTIONS FOR PAYMENT

Defense News on 4 August reported that the US is developing new options for arms customers as a way to ensure allies and partners do not cancel planned procurement as the world economy remains in shock from the impacts of COVID-19. Options include allowing foreign countries to finance arms procurement through US bank loans and altering existing payment schedules to stretch the costs over time.

https://www.defensenews.com/pentagon/2020/08/04/to-keep-weapon-sales-in-place-us-offers-new-options-for-payment/

SPANISH ARISTOCRAT BEHIND A NORTH KOREA SYMPATHISER GROUP VIOLATED UN SANCTIONS

On 10 August, NK News reported that Alejandro Cao de Benos of the Korea Friendship Association allegedly brokered payments for a North Korean company by means of a joint venture in 2019.

https://www.nknews.org/2020/08/spanish-aristocrat-behind-a-north-korea-sympathizer-group-violated-un-sanctions/?t=1597049797816

APPLE IMPORTED CLOTHES FROM XINJIANG COMPANY FACING US FORCED LABOUR SANCTIONS

On 10 August, the Guardian reported that Apple has imported clothes – probably uniforms for staff in stores – from a company facing US sanctions over forced labour at a subsidiary firm in China. Apple had confirmed none of its suppliers currently source cotton from Xinjiang, but declined to comment on whether they had done so in the past.

https://www.theguardian.com/technology/2020/aug/10/apple-imported-clothes-from-xinjiang-firm-facing-us-forced-labour-sanctions

MOROCCO DEVELOPING A FREE ECONOMIC ZONE

On 10 August, the North Africa Post reported that Morocco has taken a series of measures to crackdown on smuggling, including by offering a free economic zone near the Spanish enclave of Ceuta. It is hoped that the free zone would also be conducive to creating jobs; attracting investments and help retailers leave the grey economy, which leaves them and their workers without social security.

https://northafricapost.com/42977-a-free-zone-to-end-smuggling-in-moroccos-north.html

ALBANIAN GANGS INVOLVED IN LIBYAN DRUG AND FUEL SMUGGLING SCANDAL

On 10 August, Exit News reported that while a company owned by a Libyan national and incorporated in Malta are suspected of smuggling drugs and fuel from Libya to Malta, it is reported that they worked in collaboration with criminals from Albania and Montenegro as well. The US Treasury said the Libyan national and his cargo vessel had been smuggling fuel and narcotics between North Africa and Europe, using Malta as a gateway.

https://exit.al/en/2020/08/10/albanian-gangs-involved-in-libyan-drug-and-fuel-smuggling-scandal/

GLOBAL SURVEY FINDS VALUE OF AML FINES FALLING

On 10 August, the Law Society Gazette reported that while UK fines for money-laundering breaches totalled £36.6 million in the first 6 months of 2020, the level of fines have declined globally. In 2019, the UK total was £98.2 million. In 2019, the US imposed the highest total value of AML fines 45% of the global total. In 2018, it accounted for 58% of total global AML fines, 72% in 2017 and 97% in 2016.

https://www.lawgazette.co.uk/practice/aml-fines-falling-global-survey-suggests/5105306.article

EU: TURKEY’S RESUMED SEARCH FOR OIL AND GAS IN THE EASTERN MEDITERRANEAN IS “EXTREMELY WORRYING”

On 10 August, EurActiv reported that the discovery of vast gas reserves in the region in recent years has sparked a prospecting scramble by Greece, Turkey and Egypt as well as Cyprus and Israel. Meanwhile, Greece and Egypt have signed an agreement to set up an exclusive economic zone in the region.

https://www.euractiv.com/section/global-europe/news/turkey-navy-ops-in-eastern-med-extremely-worrying-eu/

FOOTBALLERS TO SUE OVER USE OF PLAYING DATA

On 29 July, Media Writes reported that a group of over 400 current and former football players have reportedly joined a group action to target “gaming, betting and data processing companies” that use player-related data for their own products, targeting third party operators who use and monetise the data.

https://mediawrites.law/footballers-to-sue-over-use-of-their-playing-data/

TRUMP ADMINISTRATION OVERSEES ALL-TIME LOW IN WHITE COLLAR CRIME ENFORCEMENT

On 10 August, BNN Bloomberg reported that the Trump Administration has overseen a significant decline in enforcement. The prosecution of securities fraud, antitrust violations and other such crimes has hit a record low as the pandemic slows the courts, according to one tracking service. But, the article says, even before the coronavirus, the numbers were falling under the Trump administration. The average annual number of white-collar defendants was down 26% to 30% for Trump’s first 3 years in office from the average under President Barack Obama. It says that prosecutions have been declining for the past decade but have never been so low.

https://www.bnnbloomberg.ca/trump-oversees-all-time-low-in-white-collar-crime-enforcement-1.1477860

US JUDGE ORDERS LEE ELBAZ TO PAY $28 MILLION IN RESTITUTION OVER BINARY OPTIONS FRAUD

On 10 August, Finance Magnates reported that Lee Elbaz (aka Lena Green), the former CEO of Yukom Communications, will have to pay restitution of $28 million to victims of a binary options scam – an alleged $145 million fraud scheme carried out by Israeli-run binary options websites.

https://www.financemagnates.com/binary-options/regulation/us-judge-orders-lee-elbaz-to-pay-28-million-in-restitution

MALTA: NEW LAW REGULATING USE OF CASH IN SOME SECTORS TO BE FINALISED IN COMING MONTHS

On 10 August, the Malta Independent reported that a new law to regulate the use of cash in certain sectors of the economy is planned to be finalised in the coming months. The new law to regulate the use of cash in certain sectors of the economy was initiated in April 2020 and is planned to be finalised in the coming months.

https://www.independent.com.mt/articles/2020-08-10/local-news/New-law-regulating-use-of-cash-in-some-sectors-to-be-finalised-in-coming-months-FIAU-6736225980

CORONAVIRUS (COVID-19) TAX DEVELOPMENTS

On 10 August, KPMG provided the latest news of tax developments in response to the coronavirus.

https://home.kpmg/us/en/home/insights/2020/04/taxnewsflash-coronavirus-covid-19-developments.html

RUSSIA ANNOUNCES CANCELLATION OF CYPRUS DTA

On 10 August, STEP reported that Russia has announced it is unilaterally cancelling its double taxation agreement (DTA) with Cyprus, following the failure of negotiations to amend the treaty in line with Moscow’s new anti-offshoring business tax regime. It is said that some 34% of the cumulative direct foreign investment in the Russian economy comes from Cyprus, according to the Russian government.

https://www.step.org/industry-news/russia-announces-cancellation-cyprus-dta

UK: FRAUD CASES HIT HIGH

On 10 August, Professional Security Magazine reported that last year saw the highest ever number of cases of fraudulent conduct recorded to the database run by Cifas, the UK fraud prevention trade association – a 13% rise when compared to 2018.  Cifas reports 3 areas of the greatest rise – identity fraud, misuse of facility and facility takeover, which all recorded the highest cases over the last 5 years.

https://www.professionalsecurity.co.uk/news/case-studies/fraud-cases-hit-high/

INDIA: CUSTOMS SEIZES 740 TONNES OF CHEMICAL THAT CAUSED BEIRUT BLAST

On 7 August, Livemint reported that Chennai customs authorities have seized a container with 740 tonnes of ammonium nitrate, the chemical that caused the deadly blast in Beirut.  A large consignment of the chemical had been stored at a site about 20 km from Chennai.

https://www.livemint.com/news/india/chennai-customs-seizes-740-tonnes-of-chemical-that-caused-beirut-blast-11596791644980.html

WHAT IS A ‘FIT AND PROPER PERSON’ TO RUN A FOOTBALL CLUB?

An article from the chambers at 25 Bedford Row examines the flaws in the process that scrutinises the suitability of football club owners and proposes a 10-point plan of revisions.

https://www.25bedfordrow.com/site/news/what-is-a-fit-and-proper-person-simon-pentol

INDIA TO BAN IMPORTS OF 101 DEFENCE PRODUCTS

On 10 August, Janes.com reported that India, one of the world’s biggest defence importers, has announced a ban on procuring more than 100 military products from foreign suppliers, as part of a government campaign to achieve self-reliance and is intended to apprise India’s defence industry about anticipated requirements. The  emphasis mainly on land and sea-based equipment including artillery, armoured vehicles, destroyers, submarines, and a range of related components.

https://www.janes.com/defence-news/news-detail/india-to-ban-imports-of-101-defence-products

BREXIT: PART 2 OF POLICY ON MOVING GOODS UNDER THE NORTHERN IRELAND PROTOCOL

On 10 August, CILT reported that the government has published Section 2 of its Northern Ireland Protocol policy paper, outlining the impacts of moving good from Great Britain to Northern Ireland. While claiming that no new customs facilities (or barriers) are intended, it also mentions a number of cases where, in fact, licensing etc would be required – such as for chemicals, waste, drugs precursors, CITES flora and fauna etc.

https://ciltuk.org.uk/News/Latest-News/ArtMID/6887/ArticleID/30752/Moving-goods-under-the-Northern-Ireland-Protocol-section-two

The Policy Paper is at –

https://ciltuk.org.uk/LinkClick.aspx?link=https%3a%2f%2fwww.gov.uk%2fgovernment%2fpublications%2fmoving-goods-under-the-northern-ireland-protocol%2fmoving-goods-under-the-northern-ireland-protocol-section-two-moving-goods-from-great-britain-to-northern-ireland&tabid=235&portalid=0&mid=6887

$800 MILLION DEAL FOR ONE OF DRC’S FLAGSHIP COPPER MINES RISKS LEAVING THE COUNTRY SHORT-CHANGED

On 10 August, Global Witness claims that, in violation of DRC’s mining law, key details of the deal signed between DRC’s state-owned miner, Gécamines, and the China Nonferrous Metal Mining Group (CNMC) remain unpublished.  Meanwhile, it says, the scant information that is available raises more questions than answers about the financial value of the project for DRC, Global Witness’s analysis has found. The deal for the potentially huge Deziwa copper and cobalt mine in DRC’s southern Copperbelt in 2015 is part of an even larger $2 billion accord for 5 different projects.

https://www.globalwitness.org/en/press-releases/mega-deal-between-g%C3%A9camines-and-chinese-state-owned-company-cnmc-for-one-of-drcs-flagship-copper-mines-could-be-leaving-the-country-short-changed/

THE THREAT OF WHITE SUPREMACIST FOREIGN FIGHTERS TO US NATIONAL SECURITY

On 28 July, the Georgetown Public Policy Review published a paper saying that a growing movement of foreign fighters to Ukraine has attracted considerable numbers of white supremacist group members, many from the US What does this mean for US national security? It is said that at least 35 Americans have travelled to Ukraine to fight on either side of the ongoing Russo-Ukrainian War.  The paper explores the threat of White supremacist foreign fighters to the US in the context of the increasingly transnational character of White supremacist groups and provides policy recommendations. The paper argues that White supremacist foreign fighter movement differ from the threat jihadis posed in several important way – jihadi foreign fighters, especially those who joined IS, did not plan on to return home; they are often members of militias that provide them with the militant infrastructure to quickly return to organised violence on return; and, perhaps most importantly, White supremacists’ prime target is the US government, not a foreign entity. It is noted that, so as to “harden” their members and expand their international ties, White supremacist groups have urged their followers to join foreign paramilitary groups, with Ukraine becoming a hotspot for these extremists.

http://gppreview.com/2020/07/28/threat-white-supremacist-foreign-fighters-u-s-national-security/

US: NEW EXECUTIVE ORDERS TARGET CHINESE APPS 

A Client Alert from Wilmer Hale on 10 August about 2 recent near parallel Presidential Executive Orders targeting the enormously popular apps TikTok and WeChat. They are due take effect from 20 September. Perhaps tongue in cheek, the Alert says that the EO are not a model of clarity.

https://www.wilmerhale.com/en/insights/client-alerts/20200810-new-executive-orders-target-chinese-apps

BANK OF IRELAND HAS DONE A U-TURN BY SAYING IT WILL NOW REIMBURSE CUSTOMERS IMPACTED BY THE RECENTLY EXPOSED ‘SMISHING’ SCAM

On 10 August, Breaking News reported that the Irish Central Bank made contact with Bank of Ireland over payments to customers defrauded by scammers. The scam has been targeting consumers via text messages which are passed off as official bank communications and aim to trick customers into parting with account details. The Bank of Ireland had recently suggested affected customers were liable for their own losses, having voluntarily given their account details.  It is said that, in the Bank of Ireland’s case, the fraudulent text was embedded within genuine communications from the bank. The article notes that AIB and Permanent TSB customers have also been targeted by smishing attacks.

https://www.breakingnews.ie/business/central-bank-engaged-with-bank-of-ireland-as-lender-decides-to-pay-out-over-smishing-scam-1013699.html

UK: FCA LAUNCHES 2-YEAR CRACKDOWN ON ROGUE ADVISERS

On 10 August, This is Money reported that more than 100 financial advice firms are being investigated by the FCA as part of a sector-wide crackdown. The campaign to stop unsuitable advice, investment scams and excessive fees began with a warning to firms earlier this year. It is suggested that the FCA is ramping up pressure on financial advisers.

https://www.thisismoney.co.uk/money/news/article-8612701/FCA-launches-crackdown-rogue-advisers.html

NEW ZEALAND: REPORTING OF POTENTIAL TERRORIST FINANCING MORE THAN DOUBLES

On 10 August, Radio New Zealand reported that the FIU has said that, in the 15 months after the 15 March attack in Christchurch, 15,918 reports were sent to the FIU about suspicious financial activity that could relate to crime and, of those, 188 reports were specifically indicated as relating to terrorist financing. By comparison, in the 15 months before the Christchurch attacks, only 74 reports of possible terrorist financing were sent to police.

https://www.rnz.co.nz/news/national/423219/reporting-of-potential-terrorist-financing-more-than-doubles-in-nz

3 MEN ALLEGEDLY USED EXISTING SHELL COMPANIES AND PRIOR FRAUD EXPERIENCE TO EXPLOIT COVID-19 RELIEF PROGRAMMES

A news release from the US DoJ on 10 August advised that federal prosecutors have charged a Florida man and 2 Massachusetts men for their alleged participation in a fraud and money laundering ring established in 2019 to carry out business email compromise-schemes and that defendants used, most recently, to steal close to $2 million from Covid-19 relief programmes.  It is alleged that the defendants hacked and took control of a business email account and using it tricked a separate business into wiring over $900,000 into an account that defendants allegedly controlled.  They then sought to conceal its origin transferring it among the bank accounts of various shell companies that defendants are said to have controlled. When the coronavirus pandemic hit the US in 2020, the defendants allegedly initiated a new fraud scheme using existing shell companies from the email compromise scheme, as well as newly created and reactivated shell companies.

https://www.justice.gov/usao-sdfl/pr/three-men-who-allegedly-used-existing-shell-companies-and-prior-fraud-experience

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Author: raytodd2017

Chartered Legal Executive and former senior manager with Isle of Man Customs and Excise, where I was (amongst other things) Sanctions Officer (for UN/EU sanctions), Export Licensing Officer and Manager of the Legal-Library & Collectorate Support Section

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