Panama Covid-19 update – evidence of why the longer curfew (from tomorrow night) and Christmas/New Year lockdowns are needed in the 2,960 new infections reported today, along with another 28 fatalities. There are now 29,908 active cases, with 183 in ICU and 1,370 in other hospital wards.
16 DECEMBER 2020
SEC SCHEDULES VOTE ON CONTROVERSIAL EXTRACTIVE INDUSTRY RULE
On 16 December, KYC 360 reported that the SEC has scheduled to vote on a rule mandating the disclosure of payments made by oil, gas and mining companies to foreign governments. This is said to be the latest attempt to enact a controversial provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act that was designed to help stave off corruption by companies in resource extraction industries, and a first version of the rule, adopted by the SEC in 2012.
SEC FINAL RULES THAT WILL REQUIRE RESOURCE EXTRACTION ISSUERS TO REPORT PAYMENTS MADE TO GOVERNMENTS FOR THE COMMERCIAL DEVELOPMENT OF OIL, NATURAL GAS, OR MINERALS
On 16 December, a release on Mondo Visione advised that the rules will require a domestic or foreign reporting issuer to disclose payments made by the issuer or a subsidiary or entity controlled by the issuer to the US federal government or a foreign government if the issuer engages in the commercial development of oil, natural gas, or minerals. The rules implement Section 13(q) of the Exchange Act, which was added by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”).
MEXICO PASSES LAW CURBING OPERATIONS OF LAW ENFORCEMENT AGENTS
On 15 December, the Wall Street Journal reported that the Mexican ruling party has pushed through a new law curbing the role of foreign law-enforcement officers in Mexico, a move the US believes will cripple bilateral efforts to battle powerful drug cartels. The legislation follows the arrest in the US of Mexico’s former defence minister on drug trafficking and corruption charges, seen as running roughshod over Mexican sovereignty.
SEC ENFORCEMENT HIGHLIGHTS THE RISKS OF NOT PRESERVING TEXT/CHAT MESSAGES
On 15 December, a post on the Compliance & Enforcement blog from the Program on Corporate Compliance & Enforcement at the New York University School of Law sets out to provide practical tips for aligning policies with practices to reduce risk. It says that recent SEC action highlights the risks that these communications pose more broadly for companies, and the need to consider adopting technologies and policies that reduce these risks.
CONSULTATION ON A NEW INSOLVENCY REGIME FOR UK-AUTHORISED PAYMENT INSTITUTIONS AND ELECTRONIC MONEY INSTITUTIONS
On 14 December, Bird & Bird published an article saying that HM Treasury has issued a consultation setting out a proposal to implement a new “special administration regime” (the SAR) which it is proposed would apply to any insolvency of an authorised payment institution or electronic money institution (an EMI). The consultation identifies a concern that the normal regime for dealing with company insolvencies (which is frequently an “administration”) does not adequately address the particular nature of the sector.
UK PRE-PACK REFORMS – MANDATORY CONTROLS ON ADMINISTRATION SALES TO CONNECTED PERSONS
On 10 December, Taylor Messing published an article saying that the UK government has published new draft regulations to require mandatory scrutiny of administration sales to connected parties (such as the insolvent company’s existing directors or shareholders). In the UK, a “pre-pack” is an arrangement under which the sale of all or part of a company’s business or assets is agreed with a purchaser prior to the appointment of administrators. The sale is carried out by the administrators immediately on, or shortly after, their appointment. Administrators must be licensed insolvency practitioners. The article highlights the key points and says that the government plans to enact the regulations as soon as Parliamentary time allows, and in any event before the end of June 2021.
DIRECTED ENERGY WEAPONS DEW: ANOTHER WEAPON PROLIFERATION HAZARD
On 16 December, The Nation in Pakistan says that Directed Energy Weapons (DEW) is an umbrella term used to describe the weapons which use highly focused energy, including lasers, microwave, and particle beams, to inflict damage upon its target. The article is linked to claimed use by China in its dispute with India.
ALL ABOUT S-400: US WARNING TO INDIA AND SANCTIONS AGAINST TURKEY
On 16 December, Zee News in India reported that the US has imposed sanctions on Turkey for acquiring S-400 air defence systems from Russia. It may be recalled that the system was acquired by Turkey from Russia in mid-2019. At that time Turkey had said that the acquisition posed no threat to NATO allies. It points out that India has also signed similar deal with Russia and is set to receive S-400 air defence system in 2021. The sanctions imposed by the US on Turkey has made India cautious and it is closely monitoring the decision taken by US administration.
UGANDA: FINANCIAL INTELLIGENCE AUTHORITY AMENDS AML ACT TO REGULATE VIRTUAL ASSET SERVICE PROVIDERS (VASP)
On 16 December, BitcoinKE reported that the FIA has amended a 2013 Act to include VASP as Accountable Persons. This means that cryptocurrency exchanges and virtual assets providers are now subject to the supervision and monitoring by the FIA.
PODCAST: “BIG DIRTY MONEY”
In the latest TRACE podcast, Jennifer Taub, author, legal scholar, professor and advocate, joins the podcast to talk about her latest book, “Big Dirty Money, The Shocking Injustice and Unseen Cost of White Collar Crime”. Jennifer focuses, in particular, on how much more gently we treat corporate financial crime than we do very petty financial crime, in spite of the fact that the former costs taxpayers far more money.
LIECHTENSTEIN: PUBLICATION OF 2 REPORTS ON THE FIGHT AGAINST CORRUPTION
On 16 December, the Council of Europe advised that its anti-corruption body GRECO has published a report on incriminations and transparency of party funding and a report on the prevention of corruption in respect of members of parliaments, judges and prosecutors. GRECO makes a series of recommendations and invites the authorities of Liechtenstein to report on progress made by the end of March 2022.
MONEY LAUNDERING AND FINANCING OF TERRORISM: WARSAW CONVENTION REPORT ASSESSES THE MONITORING OF BANKING OPERATIONS
On 16 December, the Council of Europe advises that the Warsaw Convention 2005 is the first international treaty covering both the prevention and the control of money laundering and the financing of terrorism. The text addresses the fact that quick access to financial information or information on assets held by criminal organisations, including terrorist groups, is the key to successful preventive and repressive measures, and, ultimately, is the best way to stop them. The Convention has published a report assessing the way parties to the Convention monitor banking operationsto prevent money launderingand the financing of terrorism. The report concludes that the majority of states parties – although with significant differences – apply articles which provide a specific tool to competent authorities to monitor, during a specified period, the banking operations that are being carried out through one or more identified accounts. The report also issues a number of general and country specific recommendations, inviting states parties to ensure their implementation in practice.
BREXIT: EUROPEAN FIREARM MOVEMENT REQUIREMENTS FROM 1 JANUARY
On 16 December, a news release from the Home Office advised that GB residents will no longer be able to use a European Firearms Pass (EFP) and GB residents who want to travel to the EU with their firearms or shotguns will no longer be able to apply for an EFP from 1 January. Instead, you need to check the firearms licensing requirements of the EU country you are travelling to or through, ahead of travelling. You will need to apply for consent in line with these requirements and applicable import/export controls. These requirements will also apply if you will already be in an EU country with your firearm, covered by an EFP, from 1 January. The situation will be different in Northern Ireland where, in line with the Northern Ireland Protocol, and certificate holders will still be able to obtain and use EFP.
UK: SMALL LAW FIRMS SHOULD NOT ESCAPE FINANCIAL CRIME LEVY
On 16 December, the Law Society Gazette reported that the Solicitors Regulation Authority has issued its response to UK consultation on the new levy to fight money laundering , saying that small firms should also be liable to the levy, and that the charge should be based on turnover or revenue, ideally only of activity that is in scope.
50 YEARS OF TAX CUTS FOR RICH DID NOT TRICKLE DOWN
On 16 December, the London Economic reported that a study of fiscal policies in 18 countries over 50 years has concluded that tax cuts for the rich do not trickle down and only really benefit individuals who are directly affected.
FRENCH TAX AUTHORITIES SEIZE ASSETS WORTH €13 MILLION FROM CARLOS GHOSN
On 16 December, Car Dealer Magazine reported that property and other assets worth €13 million have been seized from Carlos Ghosn by French tax authorities because the French authorities believe he fraudulently claimed to have lived in the Netherlands. The former Renault-Nissan boss is suspected of having avoided French taxes by claiming that he was domiciled in Amsterdam from 2012 until his 2018 arrest in Japan.
GUIDANCE ON UK SANCTIONS REGIME RELATING TO UNAUTHORISED DRILLING ACTIVITIES IN THE EASTERN MEDITERRANEAN
On 16 December, HM Treasury issued guidance on the application of these sanctions from 1 January, i.e. when the Brexit transition period ends. These sanctions sanctions are intended to discourage any hydrocarbon exploration, production or extraction activities which:
UK: PROLIFIC MONEY LAUNDERER FOR FRAUDSTERS HIT WITH CONFISCATION ORDER
On 16 December, a news release from NCA advised that Kazeem Akinwale, 45, a prolific money launderer who processed more than £6 million has been ordered to hand over nearly £215,000 after an NCA investigation. He was arrested in April 2016 after Christie’s auction house reported an attempted diversion fraud, trying to divert a payment for a customer invoice into a new bank account.
US: FORCED AND CHILD LABOUR – THE DEPARTMENT OF LABOR’S BUREAU OF INTERNATIONAL LABOR AFFAIRS IS REQUESTING COMMENTS AND INFORMATION
On 16 December, Sandler Travis Rosenberg reported that the Department is seeking comments by 18 January, to be used in the preparation of certain lists and reports regarding forced and child labour in foreign countries.
US e-ALLEGATIONS PROGRAM TO REPORT SUSPECTED TRADE VIOLATIONS
US Customs & Border Protection advises that the e-Allegations programme provides an electronic portal through which the trade community and the general public can report suspected trade violations to CBP. The e-Allegations process enables CBP, in collaboration with partners, to protect the US economy from the effects of unfair trade practices and guard against the entry of products that could pose a threat to health and safety.
UK: FCA TEMPORARY REGISTRATION REGIME TO ALLOW EXISTING CRYPTOASSET FIRMS TO CONTINUE TRADING
A release on Mondo Visione on 16 December advised that the FCA has established a Temporary Registration Regime to allow existing cryptoasset firms, who have applied to be registered with the FCA, to continue trading. It is advising customers of cryptoasset firms which should have applied to the FCA, but have not done so, to withdraw their cryptoassets or money before 10 January. Since 10 January 2020 such firms have had to comply with the Money Laundering Regulations; and were required to be registered with the FCA by 10 January 2021. New businesses (who began operating after 10 January 2020), are required to obtain full registration with the FCA before conducting business.
MILLIONS IN ASSETS OF ENCRYPTED TELECOMMUNICATIONS CRIMINAL ENTERPRISE SEIZED IN SINGAPORE AND REPATRIATED TO THE US
A news release from the US DoJ on 14 December advised that 4 bank accounts containing $3,971,468.40 in illicit funds generated from Phantom Secure, an encrypted telecommunications network used by transnational organised criminal syndicates, were seized by authorities in Singapore and repatriated to the US. Vincent Ramos, CEO of Canada-based Phantom Secure, and 4 of his associates were indicted by a federal grand jury in March 2018 on charges that they operated a criminal enterprise that facilitated the transnational importation and distribution of narcotics through the sale and service of encrypted telecommunications devices and services. This had been the first time the US Government targeted a company and its principals for conspiring with criminal organizations by providing them with the technological tools to evade law enforcement and obstruct justice while committing transnational drug trafficking. As part of his guilty plea, Ramos agreed to an $80 million forfeiture money judgment as well as the forfeiture of tens of millions of dollars in identified assets, ranging from bank accounts worldwide, to houses, to a Lamborghini, to cryptocurrency accounts, to gold coins. The money repatriated from Singapore was among the assets identified by investigators to be forfeited. Ramos was sentenced to 108 months in prison.
BRAZIL PURSUES CRIMINAL PROBE OF TOP TRAFIGURA EXECUTIVES
On 16 December, Reuters reported that Brazilian investigators are said to be pursuing the first criminal probe of current executives at commodities trading company Trafigura on allegations they approved the bribery of employees at state-controlled oil producer Petrobras. The investigation has focused on 2 of the 3 top Trafigura directors. The criminal probe is advancing alongside a civil lawsuit against the same executives and others disclosed earlier this month.
MALTA MUST PROSECUTE MORE MONEY LAUNDERING CASES
On 16 December, Malta Today reported that Moneyval has called upon Malta to apply its monitoring measures more frequently and to prosecute the cases. It said that Malta had already implemented most legal provisions that establish sufficient power to obtain information on account holders, including the beneficial owner, and to obtain the “historic” banking information. However, it is said that the statistics provided by the Maltese authorities indicated that the powers available are not being used regularly in investigations of proceeds generating crimes and that no monitoring orders have been issued by the courts, and the Maltese authorities are encouraged to further raise awareness of the practical possibilities for law enforcement of these powers.
THE FOREIGN FIGHTERS PHENOMENON IN THE EU: PROFILES, THREATS & POLICIES
Volume 1 of the report “Evolutions in Counter-Terrorism” from the International Centre for Counter-Terrorism in The Hague includes this study, which says that despite the widespread media attention for foreign fighters in Europe, very little is known about the phenomenon itself, something also evidenced by the lack of a single foreign fighter definition across the EU. The study analyses not only the numbers and characteristics of foreign fighters across the EU, but also how the EU and Member States assess the threat of foreign fighters as well as their policy responses regarding security, preventive and legislative measures. It also outlines a series of policy options aimed both at the EU and its Member States.
GUIDELINES FOR AN ADEQUATE AML TRANSACTION MONITORING (PART 3)
On 16 December, Marcos Tinedo published the third instalment of his guide on transaction monitoring, looking at AML investigations and making SAR reports.
DRONES ARE DESTABILISING GLOBAL POLITICS
An article in Foreign Affairs on 16 December argues that such “simple” vehicles make conflict tempting and cheap. It reflects that, in 4 major wars in the last 5 years — in Libya, Nagorno-Karabakh, Syria, and Ukraine — armed drones played a dominant, perhaps decisive, role. And yet the debates about drones still centre on their use against non-state actors, such as the Taliban, or speculation about their potential role in wars between the US and near competitors, such as China. The 4 recent conflicts in which drones have appeared show that even modest vehicles can help win military victories and reshape geopolitics. It ends by warning that, of the next 10 countries predicted to acquire armed drones, 9 are trapped in long-running territorial disputes or fighting internal wars, and that the international system may soon face a new round of conflicts propelled by the proliferation of armed drones.
10 YEARS AFTER THE “ARAB SPRING”, THE STRUGGLE NEVER ENDED
In its January/February edition, Foreign Affairs carried an article saying that they are few, if any, celebrations planned for the 10th anniversary of the uprisings that swept the Arab world in late 2010 and early 2011. It says that early hopes for revolutionary change crashed into the blunt force of military coups, civil wars, and fractured states and, in 2021, there may be few beliefs more universally shared than that the Arab uprisings failed. It argues that the consensus that the Arab uprisings ended in failure is similarly premature and as likely to prove wrong in time. It says that the movement was engaged in a generations-long struggle that rejected a regional order that had delivered nothing but corruption, disastrous governance, and economic failure.
RUSSIA AND ONGOING CHALLENGES TO THE CHEMICAL WEAPONS CONVENTION: SYRIA, NAVALNY ETC
On 30 November, an article from the Middlebury Institute of International Studies at Monterey says that concerns over unprecedented institutional stresses at the Organisation for the Prohibition of Chemical Weapons (OPCW) stand particularly acute as Chemical Weapons Convention (CWC) states parties gather for their 25th anniversary. Problems include use of novichok and Syrian noncompliance.
US AND THE UK SIGN THE CUSTOMS MUTUAL ASSISTANCE AGREEMENT
A news release from US Immigration & Customs Enforcement on 16 December advised that the bilateral agreement provides the legal framework for the exchange of information and evidence to assist countries in the enforcement of customs laws, including duty evasion, trafficking, proliferation, money laundering and terrorism-related activities.
OECD TRANSFER PRICING COUNTRY PROFILES
On 16 December, OECD updated its schedule of country profiles – in particular the information on legislation and administrative practices applicable to transactions involving hard-to-value intangibles (HTVI). This is provided in addition to more general country profiles that detail countries’ domestic legislation regarding key transfer pricing principles, including the arm’s length principle, transfer pricing methods, comparability analysis, intangible property, intra-group services, cost contribution agreements, transfer pricing documentation, administrative approaches to avoiding and resolving disputes, safe harbours and other implementation measures.
SWITZERLAND AND LUXEMBOURG TO RETURN ILLICITLY ACQUIRED ASSETS TO PERU
A news release from the Swiss Government on 16 December advised that, in line with its policy for the repatriation of illicitly acquired assets, Switzerland is returning approximately $16.3 million to Peru. The funds are destined for Peruvian projects to strengthen the rule of law and fight corruption. It is said that the agreement shows that Switzerland is taking consistent action in its financial centre against illicit assets of PEP. The assets originate from acts of corruption in Peru.
CORRUPTION, WEAK INSTITUTIONS AND NATURAL DISASTERS: IS THERE HOPE FOR HONDURAS TO REBUILD?
An article from Univision on 16 December poses this question, saying that, after a cataclysmic year marked by the mismanagement of a global pandemic and 2 devastating hurricanes, there are serious doubts about the Honduran government’s ability to reconstruct the country’s infrastructure and restore delivery of public services such as housing, water and electricity to thousands of displaced citizens. Though Honduran corruption is the hot topic, the government’s lack of effectiveness and ability to provide basic necessities is an underlying, but equally worrisome issue.
SEC CHARGED CHINA-BASED COMPANY LUCKIN COFFEE INC WITH DEFRAUDING INVESTORS BY MATERIALLY MISSTATING THE COMPANY’S REVENUE, EXPENSES, AND NET OPERATING LOSS AND IT HAS AGREED TO PAY A $180 MILLION PENALTY TO RESOLVE THE CHARGES
A release on Mondo Visione on 16 December advised that the SEC has charged the China-based company with defrauding investors by materially misstating the company’s revenue, expenses, and net operating loss in an effort to falsely appear to achieve rapid growth and increased profitability and to meet the company’s earnings estimates. Luckin, whose American Depositary Shares traded on Nasdaq until July 2020, has agreed to pay a $180 million penalty to resolve the charges.
UK: INSIDER DEALING CONVICTIONS UPHELD AT COURT OF APPEAL
A release on Mondo Visione on 16 December advised that the Court of Appeal (Criminal Division) has upheld the convictions of Fabiana Abdel-Malek and Walid Choucair for insider dealing. In June 2019, Fabiana Abdel-Malek and Walid Choucair were each convicted of 5 offences of insider dealing in 2013-14 and were sentenced to 3 years imprisonment. They appealed their convictions alleging insufficient disclosure by the FCA before, during and after the trial made their convictions unsafe and they were released on bail pending the decision.
FORMER VENEZUELAN NATIONAL TREASURER AND HER SPOUSE CHARGED IN CONNECTION WITH INTERNATIONAL BRIBERY AND MONEY LAUNDERING SCHEME
A news release from the US DoJ on 16 December advised that a former Venezuelan National Treasurer and her spouse were charged in a superseding indictment for their alleged participation in a previously indicted billion-dollar currency exchange and money laundering scheme. An alleged co-conspirator was previously charged in the original indictment. Claudia Patricia Diaz Guillen, 47, and her spouse, Adrian Jose Velasquez Figueroa, 41, Venezuelan citizens who reside in Madrid, Spain, were charged with 1 count of conspiracy to commit money laundering and 2 counts of money laundering. Raul Gorrin Belisario, 52, a Venezuelan billionaire businessman who owns Globovision news network, was charged by indictment in August 2018 and remains charged in the superseding indictment as a co-conspirator in the same money laundering conspiracy and money laundering counts. He is currently a fugitive residing in Venezuela.
COMBATTING HUMAN RIGHTS ABUSES IN XINJIANG
An article from the Center for Strategic and International Studies says that concerns about widespread human rights abuses and crimes against humanity, including forced labour, in Xinjiang, China have escalated in recent years. The US has unilaterally imposed sanctions and seized imports, yet China has doubled down on its approach. This report explores a broad range of existing policy options for the US and its allies, while recognising that China’s economic and political clout and capacity to retaliate necessitate new approaches that require further definition.
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