Panama Covid-19 update – first day of relaxation of (some) rules today – allowed out all day to 1900, with nightly curfew from 1900 and still gender-based, though the me/women alternative day restrictions may be lifted too. The curfew continues, despite the Supreme Court agreeing to hear a claim against its constitutionality…
Meanwhile, 585 new cases, with 23,394 active cases – 153 in ICU and 1,506 in other wards. Another 14 fatalities take the total to date to 1,906.
24 August 2020
AUSTIN BILLIONAIRE ROBERT SMITH FACES US PROBE INTO POTENTIAL TAX CRIMES INVOLVING CARIBBEAN ENTITIES
On 21 August, the Dallas Morning News reported that federal authorities have spent 4 years examining whether Robert Smith failed to pay US taxes on about $200 million in assets that moved through offshore structures, some of those people said. Smith hasn’t been charged, and prosecutors may conclude he owes no taxes on those assets. The matter hinges largely on whether Smith was actually the beneficial owner of Caribbean entities that received proceeds from his company’s first private equity fund. A portion eventually flowed through the offshore entities into a US charitable foundation where Smith is president and founding director.
MEXICAN PRESIDENT DENYING CORRUPTION ALLEGATIONS VIDEOS EMERGED SHOWING HIS YOUNGER BROTHER ACCEPTING AN ENVELOPE AND A BROWN PAPER BAG STUFFED FULL OF CASH IN 2015
On 21 August, the Wall Street Journal reported that Mexican President Andrés Manuel López Obrador, who has made his political bones fighting corruption, found himself denying corruption allegations after 2 videos emerged showing his younger brother accepting an envelope and a brown paper bag stuffed full of cash in 2015 for the president’s political movement. The release of the videos comes just a day after graft allegations against 3 former presidents rocked Mexico’s political class.
GLOBALISATION AND US DEFENCE SPENDING DRIVE DEFENCE INDUSTRY GROWTH
On 17 August, Defense News reported that defence revenues of the top 100 defence companies in the world climbed for a fourth straight year, pushed upward by US defence spending growth combined with strong foreign military sales. It was $524 billion, up about 7% from $488 billion in fiscal 2018. The top 10 firms accounted for 50% of total defence revenue on this year’s list, and the top 25 companies accounted for about 75% of the total. The combined defence revenue of the 41 US companies in the Top 100 list comprised more than half of the total defence revenue, but China had 5 companies in the top 15 companies versus 6 last year.
INDIVIDUAL PROSECUTIONS UNDER THE FCPA
On 21 August, Hogan Lovells published an article which looks at individual prosecutions under the Foreign Corrupt Practices Act (FCPA). It says that prosecutions have markedly increased over the last 5 years, and this will better define local, regional, and international enforcement. It says that the number of individuals charged represents a clear shift from 2010-2014 when about 38% of all FCPA charges were against individuals that number rose to 53% over the past 5 years. This increased focus on individual prosecutions is a trend that is playing out worldwide, including in South and South-East Asia.
RUSSIAN EXPORT CONTROL OF DUAL-USE ITEMS 2020 FAQ
On 18 August, Baker McKenzie published this article which summarises the statutory requirements on the exportation of dual-use items from Russia – but not information on the exportation of military items. Questions dealt with include – What are the key competent authorities responsible for export control over dual-use items? What are the lists of controlled items? What types of export control licenses can be required?
UK: FCA INVESTIGATIONS INTO SANCTIONS MATTERS REDUCE
On 20 August, an article from MacFarlanes says that the number of open investigations into sanctions breaches by the FCA is down by almost 50%. It says that the reduced level activity by the FCA in this space is unusual given their wider priorities (as stated in their Business Plan), and perhaps a sign of the regulator’s preoccupation with Brexit preparations.
NORTH KOREAN PATROL BOAT FIRES ON CHINESE FISHING BOATS, KILLING 3
On 24 August, Daily NK reported that a North Korean patrol boat recently fired live rounds at a Chinese boat illegally fishing in North Korean waters, leading to multiple deaths. Illegal fishing in Korean waters has gained attention recently, partly for the effect caused to North Korea’s fishing waters, and as part of the concern over IUU fishing by Chinese vessels.
WHY TANZANIA’S FISH EXPORTS HAVE RISEN 82% IN 4 YEARS
On 24 August, The Citizen reported that exports have risen due to a rise in production volumes and the scrapping of some “nuisance” taxes.
NORTH KOREA COMPANY IN BARTER DEAL FOUND TO BE UNDER SANCTIONS
On 24 August, UPI reported that Kaesong Koryo Ginseng Trading Co, a North Korean business contracted to exchange alcohol for South Korean sugar, has been found to be under US and international sanctions. It had planned to barter the sugar for North Korean liquor imports, including soju. But it has been identified as a department of Room 39, or Office 39 that manages Kim Jong Un’s foreign currency reserves through illicit activities.
CHANGE IN US EXPORT RULES RE HONG KONG
The Squire Patton Boggs export controls and sanctions update on 21 August includes answers to 2 questions about President Trump terminating export licensing suspensions for exports of defence articles to certain Hong Kong persons. The questions include –
- I have a previously approved export authorisation which names Hong Kong as a transfer territory. Is this authorisation still valid?
- Does this action apply to all end-users in Hong Kong, or just government entities?
SUDAN: 40% OF SUDANESE ECONOMY ‘SABOTAGED BY SMUGGLING’
On 21 August, All Africa reported that, according to Prime Minister Abdallah Hamdok, the biggest threat to the country’s economy is the widespread smuggling of goods, in particular gold. After investigations into the forex and gold trade, a number of people have been arrested, the Ministry of Finance reported. For years, the Central Bank of Sudan (CBoS) was the sole institution legally allowed to trade in gold. In January, Sudan decided to permit private traders to export gold, in a bid to stop the recurrent smuggling of gold, and to attract foreign currency.
BRITAIN TO GET FIRST COMMERCIAL REFINERY FOR EXTRACTING PRECIOUS METALS FROM E-WASTE
On 24 August, EurActiv reported that the UK is to get its first commercial refinery for extracting precious metals from electronic waste, which will also be the world’s first to use bacteria rather than cyanide-based processes. A New Zealand start-up plans to open the facility within 12 months in Cheshire after delays caused by the COVID-19 crisis.
ACTIVATION OF ALGERIA-EU TRADE DEAL RISKS UNRAVELLING AS POLITICAL AND BUSINESS LEADERS WARN IT WILL UNDERMINE ECONOMIC SOVEREIGNTY
On 24 August, EurActiv reported that the deal is meant to come into effect on 1 September, a decade and a half after the 2 sides initially agreed their Free Trade Agreement as part of a wider pact setting out economic, social, cultural and judicial cooperation. Concern has grown in Algiers about the economy’s ability to cope without tariffs on steel, textiles, electronics and vehicles – protective measures originally meant to end 3 years ago. The EU is Algeria’s largest trading partner, and Algeria is the EU’s third-largest supplier of natural gas after Russia and Norway. Algeria imported $320 billion in goods from the EU between 2005 and 2019.
SINGAPORE MAN FINED S$5,000 FOR SETTING UP SHELL COMPANY THAT WAS USED FOR MONEY LAUNDERING
On 24 August, Mothership reported that the man who set up the company — Beh Chuen Leng — was convicted for failing to exercise reasonable diligence in the discharge of his duties as a director. He was the resident director of a Singapore company that he had incorporated on behalf of a foreigner.
MAURITANIA RELEASES EX-PRESIDENT AMID CORRUPTION PROBE
On 24 August, the Anadolu Agency reported that Mauritanian authorities have released former President Mohamed Ould Abdel Aziz, a week after he was arrested on corruption-related charges. Several former officials suspected of corruption during Ould Abdel Aziz’s era had earlier been questioned by the authorities.
SERBIAN CRIMINAL “PINK PANTHER” CAUGHT ON MARIJUANA PLANTATION IN TENERIFE
The Telegraf in Serbia reported on 24 August that 5 more people were arrested together with the Serbian, accused of drug trafficking, money laundering and extortion, and said to be members of the motorcycle gang Hell’s Angels.
KUWAIT CROWN PRINCE VOWS TO FIGHT CORRUPTION: NO ONE, INCLUDING ROYAL FAMILY, IS ABOVE THE LAW
On 24 August, Asharq al Awsat reported that he had said that he urged the need for government and parliament unity in tackling corruption, following the leak of videos that he deemed were an “encroachment on people’s freedoms and privacy”.
GERMAN ART DEALER AND SOCIALITE ARRESTED IN LISBON AND FACES BEING EXTRADITED TO UK
On 24 August, the Daily Mail reported that a German art collector and socialite accused of carrying out a £1 million fraud is facing extradition to the UK after being arrested in Lisbon. Angela Gulbenkian, 38, allegedly pocketed the money in payment for a piece called the ‘Kusama pumpkin’ by Yayoi Kusama but never handed over the item.
UK – EXPORT GOODS TO COUNTRIES OUTSIDE THE EU: STEP BY STEP
On 24 August, the Department for International Trade published a checklist on how to move goods from the UK to countries outside the EU, including any special rules you’ll need to follow for your goods in the UK and the destination country.
RARE DoJ OPINION OFFERS ANTI-BRIBERY LESSONS FOR TRANSACTIONS INVOLVING FOREIGN GOVERNMENT-OWNED ASSETS
On 20 August, an article from Perkins Coie said that an opinion letter from the US DoJ stated that it does not intend to take enforcement action under the Foreign Corrupt Practices Act (FCPA) against a US-based investment advisor planning to pay something akin to a “finder’s fee” to a foreign state-owned investment bank. It is said that the opinion is noteworthy not only because it offers a rare insight into how the DOJ interprets business transactions with foreign government entities, but also because there are compliance takeaways that can be gleaned for other companies contemplating merger or acquisition activity involving assets owned by a foreign government.
UK: MONEY LAUNDERING AND TERRORIST FINANCING (AMENDMENT) (EU EXIT) REGULATIONS 2020
These Regulations were published by HM Treasury on 24 August. They amend the 2017 Regulations and the main changes are made in order to transpose provisions introduced by the 5th AML Directive concerning the UK’s register of express trusts: in particular, expanding the scope of the register, and requiring that information on the register is made available in certain circumstances to those with a legitimate interest. The other changes concern correspondent banking, reporting of discrepancies in beneficial ownership information, customer due diligence on publicly listed companies, the use of confidential information, registration deadlines for some firms and directions to cryptoasset businesses. With effect from the end of the Brexit Transition Period on 31 December, there are changes to some references in the Regulations to EEA countries and third countries which will no longer be appropriate.
US AND COLOMBIA LAUNCH NEW ANTI-DRUG TRAFFICKING PLAN
On 24 August, OCCRP reported that the US and Colombia announced a new plan, “Colombia Growth”, to combat drug trafficking by helping the economic development of poor areas of Colombia which would allow the population to make money legally and turn its back to organised crime. Colombia’s president described the plan as a “new chapter” of Plan Colombia – a US initiative conceived in 1999 by former Colombian President Andres Pastrana and President Bill Clinton.
SFO CHARGES 3 MEN OVER AXIOM FUND COLLAPSE
On 24 August, Legal Futures reported that 2 former solicitors and a former independent financial adviser have been charged with multiple offences in connection with the collapse of the Axiom Legal Financing Fund, a Cayman Islands fund. The fund lent money to several law firms to pay for disbursements, mainly for personal injury cases – closed in October 2012 in the wake of allegations of fraud, and went into receivership in February 2013 owing investors around £120 million.
HMRC SCRUTINISES AML COMPLIANCE BY ESTATE AGENTS
On 21 August, Out-Law published an article saying that a recent fine issued by HMRC against Purplebricks has highlighted the increased scrutiny estate agency businesses are coming under in the UK for their compliance with AML regulations. It is said that it is clear from the various developments that HMRC is using its regulatory powers to continue to take action against what it considers to be inadequate AML controls and processes and that estate agency businesses need to review and enhance their existing AML governance framework.
FIJI JOINS THE UNODC-WCO CONTAINER CONTROL PROGRAMME (CCP) AND TO IMPLEMENT THE WCO CARGO TARGETING SYSTEM (CTS)
A news release from the WCO on 24 August advised that Fiji’s participation in the CCP and the installation of the WCO CTS is funded by the Australian Government.
The WCO Cargo Targeting System (CTS) is a cargo manifest risk assessment solution developed by the WCO to enable members to carry out international best practice cargo risk assessment to manage risk and facilitate trade and thus implement key parts of the WCO’s SAFE Framework of Standards and Kyoto Convention.
The Container Control Programme (CCP) is used to assist Governments in establishing effective container selections and controls to prevent drug trafficking and other illicit cross-border activities. At the heart of this innovative approach is the creation of inter-agency Port Control Units (PCU), consisting of risk analysts and physical inspection teams from different law enforcement agencies (e.g., Customs, Police and other law enforcement agencies), who are trained and equipped in the framework of the CCP to work together to systematically target high-risk containers for professional law enforcement scrutiny, using risk analysis and other proactive techniques with minimum disruption to the free flow of legitimate trade.
FCA INVESTIGATES OVER 150 SCAMS DURING COVID-19 OUTBREAK
On 24 August, The Commentator reported that the FCA is investigating more than 150 Coronavirus-related scams since the outbreak began, according to official data. The data, obtained under a Freedom of Information (FOI) request reveals the extent to which financial services organisations and banks have been targeted by financial criminals during the pandemic. The total number of suspected scams reported to the FCA over the last 5 months is 165. The types of scams that have been circulated during this time include email, phone calls, text messages, letters, and social media.
A BUSINESS THAT WORKS PRIMARILY WITH BITCOINERS TO OBTAIN LEGAL RESIDENCY STATUS IN THEIR CHOICE OF 6 TAX-HAVEN NATIONS
On 20 August, Coindesk carried a feature about a company which offers information on “how to legally optimise” one’s tax strategies by moving lives, possessions or assets to the “best jurisdictions,” according to its website. It says that those involved can get as many passports as necessary or obtain legal permanent residence status in tax haven nations, offering them the chance to shuffle capital and business documentation around. It is said that the businesses work with government’s “citizenship by investment” units, so people can pay a fee, fill out a few forms and claim their benefits. While the process varies by nation, in most cases, citizenship can be bought for 6 figures.
AUSTRIA AND RUSSIA EXPEL DIPLOMATS IN ‘ECONOMIC SPYING’ CASE
ON 24 August, Rferl reported that Austria has announced the expulsion of a Russian diplomat reported to be involved in economic espionage; but Russia hit back, announcing that a diplomat with the Austrian Embassy in Moscow had been declared persona non grata. It is said that the Russian diplomat had spied with the help of an Austrian citizen at a technology company for years.
SPECIAL COLLECTION ON ARTIFICIAL INTELLIGENCE (AI) FOR LAW ENFORCEMENT, LEGAL PROFESSIONALS, THE COURT SYSTEM AND PENAL SYSTEM
UN agency UNICRI has published the UNICRI Special Collection on Artificial Intelligence, which contains a selection of articles from innovative minds in academia to stimulate discussion and promote solutions to the challenges faced in this emerging domain on how to shape the design of the policies and legal frameworks of the future and provide guidance to those who will build the AI-based tools and techniques.
QUICK GUIDE TO MOBILE MONEY AND FINANCIAL CRIMES
On 28 July, the Basel Institute on Governance published an article saying that the amount of money flowing through mobile payment systems such as M-Pesa, MTN Mobile Money and Orange Money has exploded, in part due to covid-19 lockdowns. It provides the basics of how mobile money systems could be abused for corruption and money laundering. Drawing on on-the-ground experience in Sub-Saharan Africa, it also outlines how law enforcement officers can take advantage of this widespread payment method to catch corruption and money laundering schemes and prove them in court.
WEBINAR: RELIANCE ON OBLIGED PERSONS
On 19 August, the Jersey FSC published a webinar, a 30-minute session which provided an overview on why reliance is important, what FSC supervisory data collections reveals, a summary of the main findings from its reliance thematic examination and what the next steps are for industry.
US: AUTHORITIES IN FORT LAUDERDALE DETAIN OUTBOUND AIRCRAFT LOADED WITH WEAPONS AND CASH
On 18 August, a news release from US Customs & Border Protection announced that customs and other officials had conducted an outbound investigation of a suspicious aircraft, locating a weapons stockpile along with a large amount of US currency. 2 Venezuelan nationals were arrested, and officers seized 18 assault/bolt action rifles with optics, 6 shotguns, 58 semi-automatic pistols, $20,312 in US currency, and $2,618.53 in endorsed checks.
SCHREMS II COULD DISRUPT US COURTS’ COMMON GROUND ON E-DISCOVERY AND DATA TRANSFERS FROM EUROPE
On 24 August, an article from Morgan Lewis says that the European Court decision may force companies obliged to produce EU personal data to the task of determining whether to comply with US discovery obligation rules that risk fines under the GDPR for illegal data transfers or to defy the US courts. The article looks at recent case law that specifically considers whether the GDPR can prevent or restrict the production of personal data to the US in support of domestic litigation, and the potential impact the Schrems II ruling will have on those transfers. US courts usually reject any argument that such a foreign law ruling should be followed, relying on established Supreme Court precedent of more than 30 years. The article says that recent US court decisions ruled that the GDPR is not a bar to the production of documents in discovery. It warns that while Article 49 of the GDPR allows such data exchanges to take place when it is “necessary for the establishment, exercise or defence of legal claims” the European Data Protection Board clarified in its May 2018 guidance that this exception was not an absolute allowance and the article suggests that the CJEU judgment in Schrems II will therefore probably lead to a narrow interpretation of Article 49 by the regulators in the EU.
TEXAS PROFESSOR AND NASA RESEARCHER ARRESTED ON CHARGES RELATED TO CHINA’S TALENTS PROGRAMME
A news release from the US DoJ on 24 August advised that Texas A&M University (TAMU) Professor Zhengdong Cheng, 53, who led a team conducting research for NASA allegedly, for several years, willfully took steps to obscure his affiliations and collaboration with a Chinese University and at least one Chinese-owned company.
MAJOR YEARS-LONG IMMIGRATION FRAUD OPERATION IN VIRGINIA
On 24 August, the Center for Immigration Studies in the US reported that a large-scale, at least 5-years-long, H-1B fraud conspiracy in Northern Virginia has been broken up by federal officials who revealed that an indictment has been handed down against Ashish Sawhney, a green-card holding Indian national. He and his 4 companies are said to have grossed $21 million in illicit profits.
US COMMODITY FUTURES TRADING COMMISSION ADDS 22 UNREGISTERED FOREIGN ENTITIES TO ITS REGISTRATION DEFICIENT LIST (RED LIST)
A release on Mondo Visione on 24 August advised that, as part of the CFTC ongoing efforts to help protect Americans from fraud, the CFTC added 22 unregistered foreign entities to its RED List, which now contains 168 names. A name is added to the RED List when the CFTC determines, from investigative leads and questions from the public, that it is not registered with the Commission and appears to be acting in a capacity that requires registration, such as trading binary options, foreign currency (forex), or other products.
RISE OF THE CENTRAL BANK DIGITAL CURRENCIES: DRIVERS, APPROACHES AND TECHNOLOGIES
The Bank for International Settlements has published a Working Paper which says that central bank digital currencies (CBDC) are receiving more attention than ever before. Yet the motivations for issuance vary across countries, as do the policy approaches and technical designs. The paper investigates the economic and institutional drivers of CBDC development and take stock of design efforts. It then sets out a comprehensive database of technical approaches and policy stances on issuance, relying on central bank speeches and technical reports. It concludes with an in-depth description of 3 distinct CBDC approaches by the central banks of China, Sweden and Canada.
“HIJACK” OF SHIP OFF SOMALIA ACTUALLY INVOLVED POLICE
On 24 August, Insurance Marine News reported that the apparent hijacking of a products tanker by pirates off the Horn of Africa actually to have involved a boarding by “pirates” who were policemen and it appeared that the vessel had been boarded by local maritime police off the coast of Bereeda. One comment was that the men appeared to have links to a local militia that functioned as a police unit in the Bari region, and it appeared that a group of men wearing police uniforms had boarded the ship, robbed the crew and taken the weapons of a private security team on board.