On 30 July, the World Customs Organisation published its Illicit Trade Report for 2019 which offers a comprehensive study of illicit trade flows through an in-depth analysis of seizure data and case studies voluntarily submitted by 137 customs administrations worldwide. The report consists of 6 sections: cultural heritage; drugs; environment; IP rights, health and safety; revenue and security.
On 30 July, the Hong Kong Monetary Authority issued a Circular to share observations and industry practices to assist Authorized Institutions in developing sustained efforts to cope with the evolving COVID-19 situation and support operational responses which are consistent with the risk-based approach. Key observations and practices are highlighted in the Circular and further details are summarised in an Annex. It covers CDD under social distancing and travel restrictions, pressure on AML/CFT resources, and emerging threats and changes in customers’ behaviour.
An article in The Diplomat on 31 July says that the Chinese government has been both lenient on North Korea sanctions and reluctant to tackle illegal fishing by its distant water fleet. It says that a study found more than 900 Chinese vessels fishing in these waters in 2017, and 700 in 2018, said to be roughly one-third of China’s entire distant-water fishing fleet, and that further research has shown similar levels of Chinese fleet activity in 2019. The article says that the evidence is indicative of a larger problem of illegal, unreported, and unregulated (IUU) fishing and other illicit activities, especially by distant water fishing (DWF) fleets, which threaten the long-term sustainability of fisheries resources and the economic, food, and environmental security of coastal countries, and not just North Korea. It says that China is currently the top DWF nation, comprising about 40% of global DWF operations. China continues expanding its DWF fleets across West Africa, South America, and the South China Sea and, while not all of China’s DWF operations are engaged in IUU, these fleets have often been seen fishing illegally in another countries’ EEZ or right up to the line, and have been caught exceeding fish catch quotas.
On 1 August, an article from Baker McKenzie says that the Alien Tort Statute has been the subject of several US Supreme Court decisions over the past decade. The ATS is a statute that gives US federal courts jurisdiction to hear lawsuits filed by non-US citizens for torts committed in violation of international law. In recent years, plaintiffs have tried to use the ATS as a vehicle to hold multinational corporations liable for human rights violations and labour abuses committed abroad by their subsidiaries, suppliers, and other third-party business partners. However, cases have established a presumption that the ATS does not apply extraterritorially. But in 2019 a new case challenged precedent by seemingly widening the scope of potential ATS liability, and this case is poised to reach the Supreme Court. The case in question is centred on financial support provided by the defendants to the cocoa farms in Ivory Coast where child labour is said to be used.
On 27 July, this Factsheet was issued by the US State Department. It says that, despite the policy change announced by the Trump Administration on 24 July, 5 primary objectives with respect to UAS transfers remain unaltered –
- To increases trade opportunities for U.S. companies;
- To bolster partner security and counterterrorism capabilities;
- To strengthen bilateral relationships;
- To preserve U.S. military advantage; and
- To prevent the proliferation of WMD delivery systems.
All potential military UAS transfers will continue to be subject to Department of State-led assessment and Department of Defense (DoD)-led assessment regarding technology security, as applicable. All UAS transfers, including military UAS transfers, will be reviewed consistent with US international non-proliferation commitments, including under the Missile Technology Control Regime (MTCR).
The statement on the change in US UAS export policy is at –
Affected are UAS with a maximum airspeed less than 800 kmh and discretion over the strong presumption of denial for transfers involving such types.
On 31 July, an article from Clifford Chance reported on what it says is the first appellate court decision to affirm a bank fraud conviction in the context of a scheme to evade US sanctions – involving Halkbank, a Turkish state-owned bank. In the case, Mehmet Hakan Atilla and his co-conspirators helped to steer billions of US dollars to Iran by disguising Iranian oil proceeds as permissible payments and humanitarian assistance. The article points out that, since bank fraud charges carry a longer statute of limitations and do not require the same proof of willfulness as other potential offences, the practice of charging bank fraud heralds a significant expansion of potential criminal liability
On 30 July, an article from Clifford Chance said that OFAC announced a settlement with Whitford Worldwide Company LLC, a cookware coating manufacturer based in the US, relating to sales by its non-US subsidiaries to Iran that occurred between 2012 and 2015, and allegedly caused by the company’s failure to identify and adequately manage its OFAC risk. The article says that, while the conduct is more than 5 years old, the settlement provides important reminders for those focused on OFAC compliance and managing related compliance risks.