On 12 August, KPMG reported that US Customs and Border Protection has announced that it will detain imported merchandise containing garments produced by certain Chinese entities “based on information that reasonably indicated the use of prison labour in the production of those garments”. It will detain imported merchandise containing garments produced by the Hero Vast Group (including Shanghai Hero Vast International Trading Co., Ltd.; Henan Hero Vast Garment Co., Ltd.; Yuexi Hero Vast Garment Co., Ltd.; Ying Han International Co., Ltd.; and Hero Vast Canada Inc.).
On 11 August, Armament Research Services (ARES) reported on a year-long investigation into the manufacture and supply of 3D-printed firearms to criminals where police seized 3D-printed firearms parts and 5 3D-printed pistols. The pistols appear to be of the widely distributed PM422 Songbird design, published in 2015 by developer James R. Patrick – an almost entirely 3D-printed single-shot pistol with an internal hammer powered by an elastic band, and which uses a nail or screw to act as a firing pin.
On 12 August, Sandler Travis Rosenberg reported that US Customs and Border Protection had lifted restrictions imposed in November 2019 on Lime Leaf Tobacco Company Ltd on the grounds that there had been reasonable suspicion that this tobacco is produced using forced labour and child labour. This follows a rigorous evaluation of the company’s social compliance programme and efforts to identify and minimize the risks of forced labour from its supply chain. However, it is said that order continues to require the detention of tobacco from Malawi by any company that has not demonstrated to CBP that there is no forced labour in its supply chain.
On 12 August, EurActiv reported that the EU has reimposed customs duties on many of Cambodia’s exports, suspending its trade arrangement over concerns about human rights. Cambodia has lost its access to the EU’s “Everything But Arms” trade arrangement for least developed countries, which will hit typical exports such as garments, footwear and travel goods. These products represent around 20% of Cambodia’s exports to the EU and will now be subject to the general tariffs applied under WTO rules.
A report from ENACT Africa says that ports and airports across Africa continue to be targeted by organised crime groups to traffic illicit goods. The report set out to assess how organised crime exploits ports and airports in Africa. It aims at identifying and analysing the latest transportation trends and methods used on the continent by organised crime, to further their sphere of operations. This includes detailed explanation of the criminals involved, trafficking routes and specific modus operandi, and recommendations to identify and disrupt these organised crime groups. It says that organised crime groups are involved in trafficking at ports and airports on the African continent and are almost certainly connected across borders. They are active in all types of illicit goods trafficking, including drugs, wildlife, natural resources, cigarettes, stolen motor vehicles, weapons, pharmaceuticals, cash and counterfeit goods. The report found that large international airports with limited or poor screening procedures and with many connecting flights are at the highest risk to be exploited, with close collaboration with transnational crime groups that target the continent specifically to maximize illicit gains. It says that corruption is likely a major facilitator of the trafficking chain in Africa, involving airline and shipping crew members, customs, police, and airport and port authorities and staff.
On 10 August, Radio Free Asia reported that in an ongoing investigation into the foreign real estate accumulated by the family of Cambodian Prime Minister Hun Sen and his cronies, London has come up time and again. Relatives of the Cambodian leader and those with deep connections with his security state are said to have taken advantage of lax UK regulations to park their wealth in London real estate with few questions asked.
On 11 August, the Times of Malta reported that Fimbank has been fined €168,943 by the FIAU for “serious shortcomings” in its AML obligations following a 2018 inspection of the bank, when the FIAU found Fimbank’s risk assessment tools did not account for all the countries its clients were dealing with.
On 10 August, ICIJ reported that a US law that would crack down on anonymous shell companies has been slowed by gridlock in Congress, leaving its fate to be decided in crucial negotiations between the Senate and House of Representatives. The article says that, if the U.S. passes the Anti-Money Laundering Act, it will still provide less transparency on company ownership than the UK or Europe. Beneficial ownership information for UScompanies would be controlled by FinCEN and available only to law enforcement agencies.
On 10 August, an article from the Macau News Agency reported on a statement by the Chairman of Delta Asia Financial Group, Stanley Au that sanctions imposed by US authorities on Delta Asia Bank had been lifted. The US Treasury has decided to rescind the sanctions and restrictions imposed on local bank Delta Asia (Banco Delta Asia or BDA). In On 2005 the US Treasury designated BDA as a primary money laundering concern under the USA Patriot Act due to possible involvement with North Korean money laundering and other illegal financial activities, and 2 years later officially sanctioned BDA and blocked it from the country’s financial system.
Panama Covid-19 update – a breakdown of the Rt infection rate country-wide showed wide discrepancies, with the average still over 1 (more than 1 means infections increasing, below 1 means decreasing), though our area is only 0.79. Another 1,115 new cases have been added to the statistics, with 25,839 active cases – 162 in ICU and 1,485 in other wards. The new hospital in the older convention centre is due to receive its first patient on Friday 14 August, and meanwhile it it proposed that the new modular hospital built at the start of the crisis is to become an all-ICU facility. 16 more fatalities were notified today, taking the total to date to 1,680.
11 August 2020
PAKISTAN COURT INDICTS EX-PRESIDENT ZARDARI IN GRAFT CASE
On 11 August, KYC 360 reported that Pakistan’s anti-graft court has indicted former President Asif Ali Zardari on charges of corruption for buying assets overseas from undeclared sources.
BANKS SCRUTINISE ACCOUNTS OF SANCTIONED HONG KONG OFFICIALS
On 11 August, KYC 360 reported that Citigroup and Standard Chartered are stepping up scrutiny of banking clients in Hong Kong, aiming to avoid violating US sanctions on officials. It is said that Citigroup is already taking steps to suspend accounts linked to some of the 11 targeted individuals.
CHINA SANCTIONS 11 AMERICANS OVER US MOVES AGAINST HONG KONG
On 10 August, the Wall Street Journal reported that the 11 include several US senators, among them Marco Rubio and Ted Cruz.
US SECRETARY OF STATE POMPEO ‘CLEARED OF WRONGDOING’ OVER ARMS SALES TO SAUDI AND UAE
On 11 August, Al Jazeera reported that a yet-unpublished internal report is said to have cleared Pompeo, saying that he acted in ‘complete accordance’ with law in using an obscure emergency procedure to ram through $8.1 billion in arms sales to Saudi Arabia, UAE and Jordan in May 2019. At the time, members of Congress had been blocking weapons sales to Saudi Arabia and UAE, angry about the huge civilian toll from their air campaign in Yemen, as well as human rights abuses such as the murder of Saudi journalist Jamal Khashoggi at a Saudi consulate in Turkey.
US: PUBLIC CONSULTATION ON WHETHER TO MAINTAIN EXISTING OR IMPOSE NEW EXPORT CONTROLS IN THE FORM OF LICENSING REQUIREMENTS ON CERTAIN “CRIME CONTROL AND DETECTION” ITEMS AND RELATED TECHNOLOGY AND SOFTWARE
On 20 July, Akin Gump published an article saying that the US Commerce Department was seeking public comments on whether to maintain existing or impose new export controls in the form of licensing requirements on certain goods and related technology and software. The Bureau of Industry and Security BIS is examining controls out of concern that these items are being used by foreign governments and others to engage in mass surveillance, censorship, privacy violations or to otherwise facilitate the abuse of human rights around the world, particularly with respect to minority religious groups in China. The consultation covers existing items and technology, as well as new technology, such as facial recognition. Responses are due by 15 September.
AFRICAN FATF-STYLE BODY HOLDS REGIONAL VIRTUAL TRAINING ON BENEFICIAL OWNERSHIP INFORMATION REQUIREMENTS
On 11 August, Modern Ghana reported that the Inter-Governmental Action Group against Money Laundering in West Africa (GIABA) has organised a virtual Regional workshop on the implementation of beneficial ownership information requirements for relevant officials on AML/CFT measures.
US: CANADIAN CITIZEN EXTRADITED FROM THAILAND SENTENCED FOR INTERNATIONAL FRAUD AND INVOLVEMENT IN MONEY LAUNDERING RING
A news release from US Immigration and Customs Enforcement on 7 August advised that a Canadian citizen has been sentenced to 10 years and 1 month in federal prison for conspiracy to commit wire fraud. Brooks Thomas Nesbitt, 37, was also ordered to forfeit various assets, and entered a money judgment of $500,000, representing the proceeds of the charged criminal conduct. In addition, he was ordered to pay $14,511,754.05 in restitution to the victims. Nesbitt had pleaded guilty in February 2020. He was a member of a large, international fraud and money-laundering ring, led by Mary Kathryn Marr. Between at least 2014 and 2019, Nesbitt operated boiler rooms located outside of the US. In total, Nesbitt, Marr, and their co-conspirators unlawfully obtained approximately $14.5 million from victims through various boiler room fraud schemes. In 2019, Thai authorities provisionally arrested Nesbitt and he was subsequently extradited to the US for prosecution.
OFAC: NEW SUDAN PROGRAM AND DARFUR SANCTIONS GUIDANCE AND FAQ AS WELL AS FAQ UPDATES AND REMOVALS
On 11 August, OFAC announced the publication of new Guidance and FAQ. It also removed 11 Sudan-related FAQ – which directs one to the Guidance. It also amended FAQ relating to the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA) as it applies to Sudan and 5 general and compliance FAQ to reflect that Sudan has not been a comprehensively sanctioned country since October 2017.
UK DEFENCE INDUSTRY EXPORTS
On 11 August, the House of Commons Library published a briefing paper which provides an overview of UK defence industry exports covering the 3 main sources of data on the subject. The paper looks at trends over time, the regions of the world where UK defence exports are going, and the type of goods that are being exported. A section specifically on arms exports to Saudi Arabia is also provided as the export of weapons to Saudi Arabis has proven particularly controversial in recent years. A separate briefing paper provides more detailed information on the UK’s policy towards arms exports, the controls in place, how licences are generated and who can impose arms embargoes.
CORONAVIRUS ‘TRACK AND TRACE’ EFFORTS REPRESENT A MAJOR ESCALATION IN HOW GOVERNMENTS ANALYSE PERSONAL DATA AND THE FINANCIAL CRIME WORLD SHOULD PAY ATTENTION
A Commentary from RUSI on 11 August says that coronavirus infection tracing apps have brought the formerly obscure and specialist topic of ‘centralised’ versus ‘decentralised’ data analysis into the spotlight. The debate it has engendered may have implications beyond the immediate focus on public health, to include the field of financial crime detection and prevention. It explains how privacy enhancing technologies (PET) allows analysis without any underlying sensitive data ever being disclosed or shared through the analytical process. It says that PET can allow data to be made more useable and less accessible at the same time; information sharing can be increased and at the same time privacy guarantees can be strengthened.
MAN WANTED IN MALTA FOR FRAUD ARRESTED IN FRANCE
On 11 August, the Malta Independent reported that a man who was wanted in Malta in connection with a fraud case dating back 7 years has been arrested in France on a European arrest warrant. He is linked to a case where a Maltese jeweller had reported that he had paid €75,000 for gold items which resulted to be fake.
UK: HIGH ST BANKS ACCUSED OVER FRAUD COMPENSATION RECORD
On 11 August, Proactive Investors reported that consumer group Which? Has found many fraud victims were treated unfairly by high street banks and only 6% had received full reimbursement for any losses suffered. This was despite high street banks having agreed to a voluntary code in May 2019 to repay fraud victims except in circumstances where the customer had either been “grossly negligent” or had ignored warnings from the bank. It is said that analysis found that one bank had only fully refunded 1% of victims while another had given 59% of victims all of their money back.
CYPRUS SEC BLACKLISTS 7 DIGITAL TRADING SITES
On 11 August, the Being Crypto website reported that the SEC has blacklisted 7 unregistered websites, and had advised would-be customers to consult its website before conducting business with investment firms, in order to ascertain the entities which are licensed to provide investment services and/or investment activities.
OECD PUBLISHES PAPER ON REGRESSIVITY OF VAT
On 10 August, Accountancy Daily reported that the OECD had published a paper which reassesses the often-made conclusion that the VAT is regressive, drawing on tax microsimulation models constructed for 27 OECD countries.
CITY OF LONDON POLICE RECOUP £3 MILLION FROM PONZI FRAUDSTER
On 11 August, International Adviser reported that City of London Police has recovered part of the money that investors lost to a Ponzi scheme run by a former financial adviser, Freddy Davies. He is said to have stolen $14.5 million from 55 clients – money which he said was being held in a high-interest bank account in his company HBFS Financial Services, bust was used instead to fund his gambling. He was sentenced to 6 years in prison in 2018, and banned from holding a directorship for 10 years.
US: IMPORTS OF ILLEGAL DISINFECTANTS ARE TARGET OF EPA ACTIONS
On 11 August, Sandler Travis Rosenberg reported that the Environmental Protection Agency had reported recently that since 1 April it has issued 14 notice of refusal of admission orders to stop illegal disinfectants and devices, including those advertised for use on the coronavirus causing COVID-19 and issued 17 advisory letters addressing pesticide products and devices that are marketed with false or misleading claims of efficacy against the novel coronavirus and other pathogens.
LEBANON: OFFSHORE COMPANIES OWNED BY THE GOVERNOR OF THE CENTRAL BANK HAVE QUIETLY INVESTED IN OVERSEAS ASSETS WORTH NEARLY $100 MILLION IN RECENT YEARS, EVEN AS HE HAS ENCOURAGED OTHERS TO INVEST IN HIS ECONOMICALLY DEVASTATED COUNTRY
On 11 August, OCCRP published an article saying that overseas investments included multiple real estate deals in the UK, Germany, and Belgium, made over the course of a decade. Company accounts suggest the investments were often financed by borrowing, with tens of millions of euros in credit sometimes secured without collateral. Much of his money went to the UK.
NEW INTERPOL TOOLKIT SHOWS THAT EVEN AFTER A VICTIM’S MONEY HAS BEEN TRANSFERRED FROM THEIR ACCOUNT, IT COULD STILL BE POSSIBLE TO INTERCEPT THE FUNDS
A news release from INTERPOL on 11 August advised that “Take Action: Urgent Stop-Payment Requests and Provisional Money-Freezing Orders” is visible to law enforcement only, with the toolkit is being shared across INTERPOL’s network of 194 member countries. A webinar on the same subject was held on 29 July for over 500 representatives of law enforcement, national FIU and international AML bodies, with more than 100 countries represented.
THE NEW UK IMMIGRATION SYSTEM – KEY POINTS FOR THE LIFE SCIENCES AND TECHNOLOGY SECTORS
Mills & Reeve have published a briefing saying that the UK Government has published further details about the new immigration system that is due to be implemented from 1 January and identifies key points for the life sciences and technology sectors. It is crucial that despite Covid-19 life sciences and technology businesses take steps in good time to prepare for the new system.
US INDICTMENT OF FORMER MINISTER REKINDLES STALLED GUATEMALA INVESTIGATIONS
On 10 August, Insight Crime said that the indictment of Acisclo Valladares Urruela, a former economics minister in Guatemala for money laundering — some of the very same charges he faced in his home country — shows how US prosecutors have been willing to pick up cases after local investigations have been stymied. He is accused of laundering “close to $10 million of illegal drug proceeds and other ill-gotten money” used to bribe politicians between 2014 and 2018.
UK: MPs URGE ACTION ON LAWYERS WHO FACILITATE “AGGRESSIVE TAX AVOIDANCE”
On 11 August, Legal Futures reported that lawyers and others who devise and market ineffective tax avoidance schemes are often breaking the law and a few legislative tweaks will make it easier to prosecute them, MPs have claimed. The All-Party Parliamentary Group (APPG) on Anti-Corruption and Responsible Tax called for new measures. A policy paper proposes a streamlined dishonesty test for criminal prosecutions of tax avoidance and a lower threshold for civil penalties.
NETHERLANDS OPENS DOOR TO ONLINE GAMBLING PROVIDERS FROM 1 JANUARY
An article from Dentons on 10 August says that offering online gambling services is currently prohibited in the Netherlands. The Dutch government has now decided to modernise its gambling legislation by regulating the providers of online gambling services. Providers of online gambling services may apply for a permit to offer their services related to betting games for sports or horse races and casino games legally in the Netherlands as of 1 January and to take effect from 1 July. The article considers the background to the new legislation to put the changes into perspective; what’s new and the tax and regulatory impact and opportunities for the providers of online gambling services; the impact for payment service providers; and key takeaways.
‘GIFTS AND ENTERTAINMENT’ IN THE AGE OF REMOTE WORK
A post on the always useful FCPA Blog on 11 August considered FINRA guidance in the US, which its says haven’t always contemplated remote working and meeting practices, at least not explicitly. It considers the question of whether meals and beverages paid for by a FINRA member during a virtual meet-up would be subject to the customary $100 gift limit for anything of value per year, and the response to a hypothetical FAQ on the subject.
MOLDOVA: ASSETS OF BANK INVOLVED IN BANKING FRAUD SEQUESTRATED
On 11 August, the IPN News Agency reported that assets of Victoriabank, a commercial bank involved in the banking fraud have been sequestrated The assets include 54 cars, 24 buildings and 4 special vehicles and state securities. Victoriabank says it was surprised to learn about its inclusion in this case that concerns events that happened in Moldova’s banking system 6 years ago
GERMAN POLICE SWOOP IN RUSSIA MONEY LAUNDERING PROBE
On 11 August, Deutsche Welle reported that German police have carried out raids at a business and the home of a unnamed man suspected of laundering money for Russian criminals, and thought to have been part of the so-called “Troika Laundromat”.
INDIA: INCOME TAX OFFICIALS RAID PREMISES OF CHINESE ENTITIES AND TARGETS HAWALA DEALS WITH INDIAN AFFILIATES
On 11 August, Live Mint and others reported that the Income Tax Department has said it conducted search operations at various Chinese entities following information that a few Chinese individuals and their Indian associates were involved in money laundering and hawala transactions through a series of shell companies. It is said that a subsidiary of a Chinese company and its related entities have taken bogus advances from shell entities to open retail showrooms in India – with hawala transactions and laundering of money and the active involvement of bank employees and chartered accountants.
INDIA PLANS $1 BILLION TRANSHIPMENT PORT ON NICOBAR ISLANDS
On 11 August, Lloyds List reported that India proposes to establish a terminal at Great Nicobar Island on the southern edge of the Bay of Bengal and will provide Indian shippers an alternative to Colombo, Singapore and Port Klang.
NORTH KOREAN EXPLOITATION OF FIJIAN AND CAMBODIAN FLAGS AT SEA
A post on the Arms Control Wonk website on 11 August says that North Korean ships continue to engage in global trade, often using deceptive techniques to obscure their true national affiliation and that North Korean linked-entities have exploited the flags of the Republic of Fiji and the Kingdom of Cambodia. Despite the efforts of Cambodia and Fiji, North Korean vessels have continued to exploit their flags by manipulating their AIS transponders. The post is illustrated by 3 cases based on AIS data from IHS Markit. It says that Cambodia and Fiji have both historically taken strong actions to protect their maritime interests, but they have not been wholly effective at preventing flag exploitation. The post recommends that all states should continually monitor AIS information for false MMSI numbers, not only to constrain North Korea’s illicit maritime activity, but to protect their reputations as well.
TAXATION OF THE DIGITAL ECONOMY
On 11 August, KPMG published a developments summary on taxation of the digital economy, direct and indirect, worldwide, with tax laws enacted or proposed.
CROSS-BORDER LINKS BETWEEN TERRORISM AND ORGANISED CRIME HIGHLIGHT NEED FOR COHERENT GLOBAL RESPONSE
On 8 August, Homeland Security Today reported on a 6 August UN report, with experts raising fresh concerns over opportunistic alliances emerging among belligerents who share a hostility towards national authorities, and seek to exploit vulnerabilities created by the COVID-19 crisis. The UN Secretary-General’s report on actions taken by Member States to address the links between terrorism and organised crime is mandated by UN Resolution 2482 (2019). Member States highlighted a range of links, often in connection with the financing of terrorism.
CONDUCTING FCPA INVESTIGATIONS DURING THE PANDEMIC
A Client Alert from Wilmer Hale on 11 August says that, despite challenges, effective internal investigations remain central to a robust FCPA compliance programme, as underscored by the recently released FCPA 2020 Resource Guide. The DoJ has announced that it does not expect any slowdown in its FCPA enforcement actions during the pandemic. The Client Alert sets out 10 key tips for conducting effective Latin America-focused FCPA investigations under pandemic conditions.
TRADE SECRET PROTECTION IN CHINA AFTER THE US-CHINA PHASE ONE TRADE DEAL
On 10 July, Global Trade Magazine published an article saying that the US-China Phase One trade deal, signed in January 2020, was viewed by many as a game-changer in causing China to upgrade its enforcement regime against trade secret misappropriation. It asks how much impact will the deal actually have for US companies trying to prevent trade secret theft in China? This article explains that, while there will likely be an impact, it may be less consequential than anticipated. It concludes that, other things aside, much depends on the commitment by China’s courts to reliably implement and enforce the laws. Finally, it reminds one that trade secret enforcement alternatives may be available in US federal courts, even for acts of misappropriation in China.
ALLEGED FRAUD IN THE HBOS BRISTOL BRANCH
On 11 August, This is Money reported that a scandal is threatening to engulf Lloyds Bank boss Antonio Horta-Osorio before he stands down next year. The CEO has admitted he knew of an alleged fraud in the HBOS Bristol branch which may have affected hundreds of small business customers. Over 200 customers claim to have been the victims of a complex corporate fraud, and have supplied evidence to the police
FDA PROVIDES PLAYBOOK FOR DEVELOPING CANNABIS DRUGS
An article from Baker Hostetler on 11 August is concerned with new guidance issued by the FDA in the US, saying that while the FDA defers to the DEA for products that fall under the DEA’s jurisdiction, it does provide several useful pieces of information for sponsors and investigators developing drugs derived from cannabis. The article says that the draft guidance provides sponsors and investigators with much-needed insight regarding developing cannabis and cannabis-derived compounds. While this guidance pertains only to drugs, the firm says that it anticipates that we may see future guidance or regulation on cannabis and cannabis-derived compounds marketed as dietary supplements.
RURAL CRIME IN THE UK
The National farmers Union has published a report claiming that rural crime cost the UK £54 million in 2019, an increase of almost 9% on the previous year.