Panama Covid-19 update – still in lockdown, with another 4,135 new cases for a total of active cases now being 52,114. There have also been 38 new fatalities, meaning we have now seen over 4,300 deaths since March. 16,136 tests were carried out, with a positive rate of 25.6%. There are 226 people in ICU, 2,098 in other wards and 681 in hotel rooms.
As an aside, does it seem a good idea, in the middle of a pandemic, to be involved in mass crowds invading the Capitol building in Washington, all packed together – mostly with people without masks, and shouting (a news item said loudmouths presented a higher risk of spreading the virus), inside and out…
7 JANUARY 2021
OFAC: PUBLICATION OF COMMUNIST CHINESE MILITARY COMPANIES FAQ
On 7 January, OFAC issued a new FAQ related to Executive Order 13959 “Addressing the Threat from Securities Investments that Finance Communist Chinese Military Companies”. The question posed is – may market intermediaries and other participants facilitate divestment from publicly traded securities of Communist Chinese military companies, including divestment by investment fund managers?
On 7 January, KYC 360 reported that a tribunal report has laid bare how Deloitte and 2 of its former audit partners succumbed to pressure to help Autonomy, the sole FTSE 100 audit client of Deloitte’s Cambridge office in 2009, meet market expectations. Autonomy, founded in 1996, grew to become Britain’s largest software developer. Deloitte audited Autonomy’s accounts before the company’s sale to Hewlett-Packard for $11 billion in 2011. A year later $8.8 billion was written off the value of Autonomy, $5 billion of which was attributed to “accounting improprieties”. Deloitte was ordered to pay a record £15 million fine by the accounting watchdog for “serious and serial failures” in its audit of Autonomy in September, and the tribunal’s report into its investigations was published on 6 January.
CREDIT SUISSE CUTS TIES WITH SOME VENEZUELAN WEALTH CLIENTS
On 7 January, KYC 360 reported that Credit Suisse Group AG has cut relationships with a number of Venezuela’s wealthy as it weighs the risk of doing business with PEP clients in the sanctions-hit country. It is said to have cut assets it manages for the nation’s wealthy by more than half over the past few years, to about $2 billion.
UKRAINE PROBING WHETHER VACCINES SMUGGLED FROM ISRAEL AND GIVEN TO TOP OFFICIALS
On 6 January, the Times of Israel reported that Ukraine is investigating whether vaccines were smuggled from Israel and illegally used at a Kyiv clinic and senior Ukrainian officials and businessmen are among those believed to have received the vaccine, which hasn’t been approved by Ukraine.
ISLE OF MAN: DOUBTS THAT MONEYVAL WILL VISIT IN 2021
On 7 January, IOM Today reported that the head of the FSA has cast doubts on whether the AML body will be travelling to the island this year to conduct a follow-up review. She said she had expected officials from Moneyval to travel to the island because we are in a state of ’enhanced follow-up’.
UK: LUTON MONEY TRANSFER BUSINESS FINED RECORD £23.8 MILLION FOR SERIOUS MONEY LAUNDERING BREACHES
On 7 January, the Hertfordshire Mercury reported that MT Global Limited, a money transfer business in Luton, has been fined a record £23.8 million for breaching regulations. Between July 2017 and December 2019 it was found to have breached 7 AML regulations.
DANISH PROSECUTORS DROP MONEY LAUNDERING CHARGES AGAINST EX-DANSKE BANK STAFF
On 7 January, Market Screener reported that Danish prosecutors said that they had dropped charges against 6 former Danske Bank employees as part of an investigation into the bank’s involvement in one of the world’s biggest money laundering scandals – saying that it has not found gross negligence, and thus there is no basis for indictment for having violated the money laundering Act. Danske Bank is under investigation in several countries over some €200 billion of suspicious transactions that passed through the bank’s Estonian branch between 2007 and 2015.
UK CHEMICALS INDUSTRY FACES £1 BILLION BILL TO BUILD POST-BREXIT DATABASE
On 7 January, EurActiv reported that the UK is facing a £1 billion bill to replicate the EU’s chemical database after the government opted to leave the REACH system on 31 December. The UK has decided to build up its own chemicals database, a process that will take years to complete.
DENMARK CHARGES 2 BRITISH NATIONALS OVER ‘CUM-EX’ TRADING SCHEME
On 7 January, Reuters reported that Danish prosecutors said that they had charged 2 British nationals with unlawfully obtaining more than $1.5 billion via a sham trading scheme to make double tax reclaims. The fraud scheme, known as ‘cum-ex’ trading, involved submitting more than 3,000 applications to the Danish Treasury on behalf of investors and companies from several countries around the world in order to receive dividend tax refunds.
TURKEY: DEUTSCHE WELLE JOURNALISTS INVESTIGATED OVER ARTICLE ON ‘SUSPICIOUS TRANSACTIONS’
On 7 January, Bianet reported that prosecutors have opened an investigation against a correspondent and a news manager for Deutsche Welle’s Turkish service because of a report about a Turkey-based bank’s activities revealed in the FinCEN files. DW Turkish article titled “Accusation by US banks: Aktif Bank facilitates suspicious transactions” had listed some activities by the bank, citing the FinCEN leak. The investigation started after a criminal complaint by the AktifBank and AktifBank is owned by Çalık Holding, which has close ties to the government.
FORMER CHINA DEVELOPMENT BANK CHAIRMAN HU HUAIBANG JAILED FOR LIFE FOR BRIBERY
On 7 January, the Globe & Mail reported that China Development Bank’s former chairman Hu Huaibang has been sentenced to life in prison for bribery. Hu, who was arrested last February, was convicted of receiving bribes totalling $13.24 million between 2009 and 2019.
MIDDLEMAN LINKED COLOMBIAN GANGS WITH ISRAELI AND, JAPANESE MAFIA
On 7 January, an article in Insight Crime saying that an Israeli national suspected of ties to Japanese and Israeli mafia groups is accused of drug trafficking and money laundering in Colombia, in a case that reveals further details about the logistical role foreign brokers play in the country’s criminal circles. In October, Gabriel was convicted of drug trafficking and money laundering. He was sentenced to 26 years in prison by a Colombian court. He also faces criminal proceedings outside Colombia, including in Israel and in the Netherlands, and in 1998, he was convicted in absentia in France for being part of an international drug trafficking syndicate and sentenced to 20 years in prison. The network smuggled cocaine, and other drugs, to Europe using contacts in Colombia and Ecuador. He also reportedly has ties to a hostel in Bogotá, which has for years been under investigation for suspected drug retail and sex tourism aimed at Israeli men visiting Colombia.
AT CENTRE OF SCANDAL, KYRGYZ TYCOON’S FAMILY LAWYER APPOINTED AS JUDGE
On 7 January, Rferl reported that a lawyer for the wealthy family of former deputy chief of Kyrgyzstan’s Customs Service, Raimbek Matraimov, who has been implicated in a high-profile case involving the illegal funnelling of hundreds of millions of dollars abroad, has been made a judge.Leila Baidaeva was appointed to the post at Bishkek’s Sverdlov district court. Baidaeva was one of the lawyers for Matraimov’s extended family and their Ismail Matraimov Public Foundation. She assisted them in filing a libel lawsuit in late 2019 against RFE/RL’s Kyrgyz Service.
UK BAN ON CRYPTOCURRENCY DERIVATIVES (ETN) COMES INTO FORCE
On 7 January, ZD Net reported that a ban on the sale of crypto derivatives has come into force today in the UK. The FCA has banned the sale of derivatives and exchange traded notes (ETN) “that reference certain types of crypto assets to retail consumers”. The article explains that crypto-based derivatives are often marketed as tradable securities that derive value from an underlying asset, such as an established cryptocurrency, whereas ETN are unsecured debt traded in a similar manner to the stock market. UK regulators believe the industry, as a whole, is too risky for retail consumers to enter without regulation.
On 5 January, RTHK reported that the gang were convicted of importing 23 tonnes of scales from pangolins – the world’s most trafficked mammal – from Nigeria between 2018 and 2019. 2 men identified as “masterminds behind the racket” were sentenced to between 13 and 14 years in prison. The others were given jail terms ranging from 15 months to 12 years.
COUNTDOWN TO LITHUANIA’S E-RESIDENCY SCHEME LAUNCH
On 6 January, The Mayor website reported that Lithuania is putting finishing touches to its first e-residency scheme which will help foreign nationals to do business in the country without even setting foot there. The e-residency scheme is scheduled to start operating as early as this month, allowing foreigners to establish companies, open bank accounts, and submit tax declarations online, among other things. A similar project operating in Estonia attracted 75 000 foreigners who set up 15 000 companies in 6 years.
FINANCIAL FRAUD ENFORCEMENT AND FCPA PRIORITIES FOR 2021 AND BEYOND
Law firm Greenberg Traurig has produced a series of “White Collar Insights”, seeking to predict trends and developments going forward. These include one on financial fraud developments and the key fraud areas that the firm expects governments to concentrate on.
UK: GRANT THORNTON SUED FOR £200 MILLION OVER PATISSERIE VALERIE AUDITS
On 7 January, the Irish Times reported that the liquidators are suing accounting firm Grant Thornton for £200 million over alleged negligence in its audits of the cafe chain that collapsed following a suspected significant accounting fraud. The firm audited Patisserie Valerie for 12 years but failed to spot an alleged manipulation of its books.
4 THINGS YOU NEED TO KNOW ABOUT THE EXTENDED LIMITATIONS PERIOD FOR SEC DISGORGEMENT
On 7 January, an article from Winstead Attorneys says that the recently-passed National Defense Authorization Act doubled the statute of limitations for some disgorgement actions from 5 years to 10. The article provides 4 things the firm says that one needs to know about what it describes as a significant legislative development. Disgorgement is a remedy available to the SEC under which a party that was unjustly enriched can be forced to pay back its ill-gotten gains.
UK: LARGE CAR ‘CHOP SHOP’ GANG ORDERED TO PAY BACK £1 MILLION
On 7 January, Asian Image reported that a gang behind one of the UK’s largest car “chop shop” scams have been ordered to pay back more than £1 million of their ill-gotten gains. They were part of a stolen car racket involving 117 cars which were stolen from around the and stripped for parts.
BOEING TO PAY $2.5 BILLION FINE LINKED TO 737MAX PROGRAM FRAUD CHARGES
On 7 January, The Street reported that Boeing has agreed to pay a $2.5 billion fine to the US DoJ over fraud and conspiracy charges linked to its 737 MAX jet programme. Boeing said the settlement involves a criminal penalty of $243.6 million, based on the conduct of 2 former MAX program technical pilots, and set up a $500 million fund to provide compensation for families of the victims of the Lion Air and Ethiopian Airlines accidents
REGULATOR: LATVIAN BANKS HAVE TAKEN “SUBSTANTIAL STEPS” TO COUNTER MONEY LAUNDERING
On 7 January, LSM reported that Latvia’s financial regulator, the Financial and Capital Market Commission (FKTK) has that it carried out 12 inspections of banks related to money laundering issues in 2020 and found “only a few cases” meriting punitive action. FKTK said it had “significantly changed its approach in carrying out full-scope inspections, focusing on in-depth review of elements of internal control system,” and promised this would continue in 2021. In 2020, the regulator imposed fines totalling just over €2 million – the Regional Investment Bank (€473,000), Signet Bank (€906,000) and Citadele Bank (€647,070).
On 7 January, an article from Baker Donelson refers to advisories on the regulatory considerations financial institutions should take into account when processing ransom payments. This comes in the light of substantial increase in ransomware attacks during the COVID-19 pandemic and anticipate that they will continue in 2021. OFAC and FinCEN warn financial institutions and payment intermediaries of potential sanctions risks involved in making ransom payments as well as provide information on requirements for SAR under AML regulations. After examining the situation, the firm says that the new advisories reinforce the importance of financial institutions doing tabletop exercises to simulate what to do in the event of a ransomware attack and/or how to respond when a suspicious transaction is identified involving a customer that may be paying a ransom.
On 7 January, KPMG reported that the US was suspending the additional customs duties on certain French imports, that should have come into effect from 6 January as a response to the digital tax imposed in France. KPMG says the planned duties have been suspended in light of an ongoing investigation of similar digital services taxes adopted or under consideration in 10 other jurisdictions, including the EU and UK, and is said to be intended to allow a coordinated response in all ongoing digital services tax investigations.
On 7 January, Gowling WLG published a briefing that sets out to explain the key takeaways from the Code, although in the view of the firm the Code formalises current practices that have already adopted when advising on data-sharing agreements and requirements, and does not add anything unusual or new.
On 6 January, a news release from AUSTRAC in Australia says that, in trade-based money laundering (TBML), criminals take advantage of the size and complexity of international trade to transfer money between parties and evade authorities. Techniques include mismatching the value of the goods and payment (over- or under-pricing relative to market value, quantity or quality), issuing multiple invoices for a single shipment or sending no goods at all; and developing countries are particularly vulnerable. Acknowledging that no single body can tackle such challenges, AUSTRAC has been taking a collaborative approach. It established the Fintel Alliance in 2017, the world’s first private-public partnership of its kind, with 28 members which include experts from financial industry, intelligence agencies, law enforcement, and academic and research institutions. Along with improved operational outcomes, members’ capability increases as partners learn from one another and synthesise knowledge. Fintel Alliance has now formed a TBML working group that includes front line experts from industry and law enforcement to develop indicators and typologies that can be broadened to other jurisdictions and trade types. The article also mentions that a joint FATF-Egmont Group project on TBML included AUSTRAC-led input and there were substantial contributions from private and public Fintel Alliance members to the development of the project’s final report.
On 5 January, Reuters reported that a civil court in El Salvador has found former President Elias Antonio Saca and his wife Ana Mixco guilty of “illicit enrichment” and ordered them to return $4.4 million to state coffers. Prosecutors had found irregularities in the couple’s wealth declaration and accused both of transferring public money to their personal bank accounts and to those of broadcasting companies they owned during Saca’s presidency.
Panama Covid-19 update – things could be worse, I guess, as we watch events in Washington; but things are bad enough here – with another record of 5,185 new cases (despite the Rt rate now said to be below 1, but there’s is an obvious time lag) and 45 new fatalities. There are 229 cases in the ICU now and 2,128 in other wards.
6 JANUARY 2021
KYRGYZ LAWMAKERS BACK CONTROVERSIAL ECONOMIC AMNESTY FOR INDIVIDUALS WITH ILLEGALLY OBTAINED FINANCIAL ASSETS
On 4 January, BNE Intellinews reported that Kyrgyz MPs have approved an economic amnesty bill that allows individuals who obtained financial assets through illegal means to avoid prosecution by surrendering the assets to the State Treasury. The move will do nothing to allay concerns that organised crime is posing a growing threat to democracy in Kyrgyzstan. Critics say the legislation was proposed and hastily prepared to avoid a conviction for the former deputy chief of the Customs Service, implicated in a high-profile case involving the illegal funnelling of hundreds of millions of dollars abroad.
ESTONIA: SUSPECTS IN LARGE-SCALE MONEY LAUNDERING CASE PLEAD NOT GUILTY
On 5 January, The Baltic Times reported that the trial of entrepreneur Tiiu Jarviste and her 2 fellow accused in a large-scale money laundering case began at the Harju County Court with all of the accused pleading not guilty to the charges. According to the charges lodged by the Office of the Prosecutor General, large-scale money laundering offenses had been committed by the trio through AS GFC Good Finance Company, a payment institution enabling predominantly non-resident customers to open accounts as well as make and mediate payments, since May 2018.
EUROPEAN COMMISSION URGED TO PRESSURE UK OVER MONEY LAUNDERING COMMITMENTS
On 6 January, KYC 360 reported a n FT article which claims that MEPs are asking the Commission to withhold permits granting UK financial services companies’ easy access to the bloc’s market pending a stronger commitment from London to do more on money laundering and tax avoidance. AML and taxation rules have been excluded from the Brexit deal “rebalancing” provisions, which are intended to mitigate regulatory differences between the jurisdictions.
PANAMA: ODEBRECHT LAGS IN PAYMENT OF $220 MILLION FINE
On 5 January, Newsroom Panama reported that the Odebrecht company has breached the penalty agreement that was imposed on it, according to the Attorney General and “has not paid what was due” for the years 2019 and 2020.
US SLAPS NEW SANCTIONS ON KEY IRANIAN METALS INDUSTRY
On 6 January, Rferl reported that the US has blacklisted 16 companies and an individual linked to Iran’s metals industry as part of continued efforts by the outgoing Trump administration. The US Treasury said that it was targeting the Iranian metals sector because it is an “important revenue source” for the Iranian leadership. The new designations include Kaifeng Pingmei New Carbon Materials Technology, a China-based company that it said makes elements for steel production and provided thousands of metric tons of materials to Iranian steel companies between December 2019 and June 2020.
On 6 January, Splash 247 reported that Hafez Darya Arya Shipping Company (HDASCO), a subsidiary of the Islamic Republic of Iran Shipping Lines (IRISL), and Majid Sajdeh, a principal executive officer of HDASCO, are among those hit with the new sanctions. In the previous sanctions against Iran, National Iranian Tanker Company (NITC) and IRISL were both targeted.
LOUIS VUITTON, NIKE, MICHAEL KORS AMONG BRANDS LINKED TO US IP SEIZURES
On 6 January, an article in The Fashion Law was concerned with the Annual Intellectual Property Report that US Intellectual Property Enforcement Coordinator (IPEC). The report says that 2020 saw opportunistic criminals taking advantage of the coronavirus health crisis, which led to an influx of counterfeit PPE and medicines, as well as the proliferation of online scams. It says that merchandise exports of US IP industries grew to $842 billion in 2014, up from $775 billion in 2010; an 8.6% increase – but estimates are that counterfeit goods, pirated software, and theft of trade secrets, which includes cyber-enabled trade secrets, directly cost the US economy $225 to $600 billion annually, and the trade in counterfeit and pirated goods stands at 3.3% of global trade. In Fiscal Year 2019, US Customs & Border Protection seized counterfeit goods with a total manufacturer’s suggested retail price of up to $1.5 billion had the goods been authentic. The report highlights a number of significant large-scale piracy and counterfeiting prosecutions, a handful of which involve the trafficking and sale of counterfeit luxury and/or fashion/apparel goods, with Louis Vuitton, Nike, and Michael Kors wares among some of the most heavily cited. The article also highlights a number of leading cases.
IMPORTANT BREXIT-RELATED CHANGES TO UK EXPORT CONTROL AND SANCTIONS LAWS
On 5 January, an article from Pillsbury Winthrop Shaw Pitman LLP is concerned what it describes as significant and important changes to UK export control and sanctions laws of which those doing business connected to the UK need to be aware. Some of the key changes brought about to UK export control and sanctions laws as a result of Brexit are summarised, including the role of the EU Blocking Regulation in respect of Cuba and Iran.
On 6 January, the Times of Malta reported that a confidential Moneyval report that will assess Malta’s efforts to step up its fight against money laundering will be handed to the government later this month. 2 years ago, Malta failed an exhaustive test of its AML regime and now risks being put on a list of untrustworthy countries, better known as the ‘grey list’. Moneyval will give its feedback in the confidential report which will detail whether the country’s efforts have met the Council of Europe’s expectations. Once the report is delivered, Malta will have until the Summer to finish implementing further changes. The decision on whether or not Malta is grey-listed will actually be taken by FATF, and Malta will begin engaging with the FATF later this month. The grey list does not imply any economic sanctions but serves as a signal to the global financial and banking system about heightened risks from transactions with the country in question.
ALBANIA: BENEFICIAL OWNER LAW ENTERS INTO FORCE, COMPANIES MUST REGISTER OWNERS
On 6 January, Exit News reported that all companies and NGO will be required to register their beneficial owners, board members, and ultimate beneficial owners with the National Business Centre. In July 2020, Parliament approved the law on “beneficial owners” which aims to bring transparency to companies and their owners that operate in and from Albania. The law will apply to all businesses and companies as well as NGO that are in Albania or have a branch in the country.
EGYPT: EX-POLICE OFFICER GETS JAIL AND $3 MILLION FINE FOR MONEY LAUNDERING
On 6 January, Gulf News reported that a former Egyptian police officer, Mohsin Al Sukkari, previously convicted in the murder of a Lebanese singer in Dubai more than a decade ago, was found guilty of money laundering and given 3 years in jail. The former state security officer had committed a crime of money laundering estimated at $1.9 million, including $300,000 he had deposited in a bank in the Egyptian resort town of Sharm Al Sheikh, and had $1.4 million in his residence in a Cairo suburb.
NETHERLAND COURT RULING THAT POKERSTARS IS LOCATED IN ISLE OF MAN AND NOT IN THE EU’S MALTA
On 6 January, the Times of Malta reported that the Dutch Supreme Court has upheld the ruling of a lower court that gaming company PokerStars is located in the Isle of Man and not Malta. However, in a different case, the Supreme Court had ruled that a judge who ruled that PokerStars is based in Malta also had made no mistakes – so the actual tax decision is unclear. If PokerStars.eu is considered to be based in Malta, Dutch poker players are free from paying the gambling tax; but otherwise online poker players in the Netherlands would be obliged to pay a 30.1% gambling tax on their net winnings on a per month basis with no option to deduct losing months.
MICROSOFT SUBSIDIARY GitHub INC – OFAC LICENCE TO OFFER SERVICES TO DEVELOPERS IN IRAN
On 6 January, the EU Sanctions blog reported that GitHub Inc, a US-based Microsoft subsidiary which provides hosting for software development, has announced that OFAC has granted it a licence to offer services to developers in Iran.
On 6 January, OFAC announced that it had released 2 new FAQ concerned with EO 13959 “Addressing the Threat from Securities Investments that Finance Communist Chinese Military Companies”. The 2 questions addressed include – can US persons custody, offer for sale, serve as a transfer agent, and trade in covered securities?
HONG KONG ARRESTS 53 FOR PLOT TO ‘OVERTHROW’ GOVERNMENT IN LATEST CRACKDOWN ON DISSENT
On 6 January, EurActiv reported that Hong Kong police have arrested 53 people in dawn raids on democracy activists in the biggest crackdown since China last year imposed a new security law which opponents say is aimed at quashing dissent. Hong Kong’s most prominent pro-democracy advocates were arrested in raids on 72 premises as the authorities said last year’s unofficial vote to choose opposition candidates in city elections was part of a plan to “overthrow” the government.
UK: FCA IDENTIFIES 30,000 INSTANCES OF UNREGULATED ACTIVITY IN LAST 12 MONTHS
On 6 January, Professional Adviser reported that the UK regulator identified 30,000 instances of unregulated activity in the last year and says that it needs more investment to better tackle pension scams. In respect to pension scams, the FCA received 10,000 investment fraud-related cases reported to its contact centre in the last 12 months. It is said that, despite the FCA trying to be more proactive with tackling pension scammers through campaigns such as ScamSmart, the importance is stressed of needing more investment into preventing consumers from handing over their pension money to scammers in the first place.
CANADA: FORMER LIBERAL MP RAJ GREWAL HAS FRAUD CASE ADJOURNED TO FEBRUARY
On 6 January, the Toronto Star reported that a former Liberal MP facing charges of fraud and breach of trust related to his time in office has had his case adjourned until next month. RCMP charged Grewal in September with counts of breach of trust and 1 count of fraud and allege Grewal tried to use his political position to land millions in personal loans.
CHINA STATE-SPONSORED HACKERS TARGET ONLINE GAMBLING WITH RANSOMWARE
On 6 January, Calvin Ayre reported that online gambling operators are being targeted with ransomware by Chinese state-sponsored hackers in what may be a dramatic shift in priorities. Israeli cybersecurity firms Profero and Security Joes has detailed a series of ransomware attacks against 5 unidentified online gambling companies by a group alternately known as Advanced Persistent Threat 27 (APT27) or Emissary Panda.
On 5 January, a Commentary from RUSI started with the news that Serbian President Aleksandar Vučić had attended Cooperation 2020, a Serbian military exercise, which involved the Chinese drone model CH-92A, delivered to Serbia in June. It says that China has transferred not only new weaponry but more fundamental knowledge and technology to Serbia, and China’s shipment of drones to Serbia was its first export of military aviation equipment into Europe. It looks at the reason for China wanting to export drones to Europe, and why Serbia would want them.
URUGUAY CRACKING DOWN ON CATTLE RUSTLING FROM BRAZIL
On 5 January, Insight Crime reported that a surge in cattle and horse rustling is plaguing ranchers along the Uruguay-Brazil border, but a new specialized unit dedicated to tackling the crime may be showing signs of success. It says that cattle rustling has emerged as a major policy agenda item in Uruguay and, in 2019, a total of 2,075 complaints were recorded, a 16% increase from 2018. In Uruguay, the National Rural Security Directorate (Dirección Nacional de Seguridad Rural – DNSR) may seek to collaborate with its Brazilian counterpart, the Specialized Police Stations for Combating Rural Crimes and Cattle Rustling (Delegacias de Polícia Especializadas na Repressão aos Crimes Rurais e de Abigeato – DECRAB), which was created in 2018 and has had success in tackling rising cattle rustling in Brazil’s south-west.
On 6 January, an article from Insight Crime said that a string of judicial officials connected to drug trafficking organisations in Costa Rica has raised concerns about institutional corruption. 16 people who were allegedly involved in a criminal organisation dedicated to international drug trafficking and money laundering have been arrested, including a judge and a member of Costa Rica’s national police force. Furthermore, a judge and judicial assistant, from the Pacific town of Golfito, Puntarenas, were also reportedly being investigated for allegedly collaborating with drug gangs. In the 2020 annual working report from the nation’s judiciary, the Supreme Court President admitted that he was not surprised organised criminal groups have aimed to penetrate Costa Rica’s judicial institutions to gain insider information.
On 6 January, an article from Eversheds Sutherland was concerned with the post-Brexit sanctions regime sin the UK under the Sanctions and Anti-money Laundering Act 2018. The article says that the introduction of the new UK sanctions regimes increases the sanctions compliance burden for organisations carrying out activities within or involving the UK. Whilst the new regulations broadly mirror those imposed by the EU, there are differences which organisations must be aware of (beyond simply different lists existing) and there is room for further potential divergence between the UK and the other key sanctions regimes, namely the EU and US, in the future.
SYRIA’S INITIAL DECLARATION ON CHEMICAL WEAPONS STOCKPILES NOT ‘ACCURATE AND COMPLETE’
On 5 January, a news release from the UN advised that outstanding issues related to Syria’s initial declaration of its chemical weapons stockpile and programme still cannot be considered “accurate and complete”, the High Representative for Disarmament Affairs told the Security Council, during her regular monthly briefing on the implementation of resolution UN SCR 2118 (2013). Due to “identified gaps, inconsistencies and discrepancies that remain unresolved”, in accordance with the Chemical Weapons Convention. The international community cannot yet have full confidence that Syria’s chemical weapons programme has been eliminated, she added.
DDOS-GUARD – WHICH HOSTS CONSPIRACY THEORY MOVEMENTS QANON AND 8CHAN – RELIES ON DATA CENTRES IN US WHICH COULD BE EXPOSED TO CIVIL AND CRIMINAL LIABILITIES AS A RESULT OF DDOS-GUARD’S BUSINESS WITH HAMAS
A post from Krebs on Security on 5 January says that in October 2020, the website looked at how a web of sites connected to conspiracy theory movements QAnon and 8chan were being kept online by DDoS-Guard, a Russian operation that also hosts the official site for the terrorist group Hamas. It now says that new research shows DDoS-Guard relies on data centres provided by a US-based publicly traded company, which experts say could be exposed to civil and criminal liabilities as a result of DDoS-Guard’s business with Hamas.
COLOMBIA’S LARGEST BANKING AND CONSTRUCTION CORPORATION FINED OVER CORRUPTION
On 5 January, Colombia Reports that a Colombia regulator has fined the banking and construction corporation of the country’s richest man, claiming its corruption violated free market principles. The fine imposed on Grupo Aval came 6 weeks after one of its subsidiaries, Banco de Bogata, was fined by the banking watchdog for evading money laundering regulations. The new fine is because 2 other subsidiaries, Corficolombiana and Episol, bribed officials together with Brazilian engineering company Odebrecht in order to be granted the construction of one of Colombia’s biggest road infrastructure projects in history, the Ruta del Sol II. The participants in the corruption scheme were fined $95 million for the 2009 bribery of a former vice-Minister of Transport, Gabriel Garcia.
UAE: THE ROLE OF NOMINEE SHAREHOLDERS IN SANCTIONED IRANIAN NETWORKS
On 5 January, Sayari carried an article about an investigation into a UAE company and its UAE-based local agent which illustrates the importance of identifying local agents acting as nominee shareholders when looking into foreign entity registration and hidden ownership ties of illicit actors. It identified a common local agent across multiple sanctioned UAE-based networks operating in discrete industries — and says that this finding highlights that local agents and their associates deserve attention and consideration in Middle East-focused due diligence investigations. It also found nearly 200 individual foreign shareholders, 136 of whom are Iranian nationals, connected to the company’s UAE-based affiliates, and says that this further demonstrates the difficulty in conducting effective due diligence when dealing with complicated local ownership structures.
AUSTRALIAN FORMER EXECUTIVE RETURNS FROM FRENCH ‘CASTLE’ TO QUARANTINE AND A CRIMINAL INVESTIGATION
On 4 January, the Sydney Morning Herald carried an article saying that David Savage, the millionaire owner of a French castle had flown into Sydney with his wife and prepared to quarantine for 2 weeks in an airport hotel. It is said that Australian Federal Police have suspicions about Savage’s time with a company which won many of Australia’s largest infrastructure projects while aggressively expanding into Asia and the Middle East. However, the AFP thinks this was not the success story it once seemed, and that while he was chief operating officer, he helped conceal and alter company documents that threatened to reveal the company’s corruption. His case is linked to that of Russell Waugh, another former executive of the company, and Unaoil, the Monaco company. Court documents allege that Savage provided false information to the board in order to disguise the bribery plot led by Mr Waugh. It is also said that US authorities working with the AFP are also seeking to take action against CIMIC (as the company was renamed after the corruption scandal broke) that could result in fines worth hundreds of millions of dollars.
PODCAST: PREDICTIONS FOR US SANCTIONS POLICY UNDER THE BIDEN ADMINISTRATION
In the latest TRACE podcast, Tom Best, a partner in Paul Hastings’ Washington office, joins the podcast to review sanctions policy under the Trump Administration and then makes some predictions about what we should expect from President Biden in 2021.
TRUMP ADMINISTRATION CONTINUES SUSPENSION OF IMMIGRATION AND WORK VISAS
A Client Alert from Wilmer Hale on 6 January advised that President Trump has extended 2 controversial Presidential proclamations that would prohibit many immigrant and non-immigrant visa holders from entering the US until months after his term expires. According to the White House, the purpose of the extension is to help shield American workers from the continuing impacts of the coronavirus pandemic.
US IMPOSES SANCTIONS ON TURKEY UNDER CAATSA FOR PURCHASE OF RUSSIAN MISSILE SYSTEM
A post on 6 January from the Compliance & Enforcement blog from the Program on Corporate Compliance & Enforcement at the New York University School of Law deals with sanctions imposed pursuant to section 231 of the Countering America’s Adversaries Through Sanctions Act (CAATSA), which mandates the imposition of sanctions against non-US persons who conduct “significant” transactions with Russia’s defence or intelligence sectors. The US State Department determined that acquisition of a Russian S-400 surface-to-air missile from Rosoboronexport qualified as a significant transaction under section 231. This marks the first time that the US has imposed CAATSA sanctions against a NATO ally and is also only the second implementation of section 231 sanctions.
MANAGER USED £80,000 VAT SCAM TO PAY BILLINGHAM TOWN FOOTBALL CLUB PLAYERS
On 6 January, the Northern Echo reported that John Barry Oliver, 55, failed to register his company, JBO Plumbing and Heating North East, for VAT but continued to issue invoices with a made-up registration number for bills totalling more than £420,000 2014-19. It is said that the majority of the money accrued was passed on to Billingham Town Football Club and wasn’t held in his personal account for long.
FRANCE’S HIGHEST COURT ORDERS RETRIAL OF ART-DEALING WILDENSTEIN FAMILY
On 6 January, the Guardian reported that France’s highest court has ordered a retrial of members of the art-dealing Wildenstein family who were acquitted of tax fraud in 2018. Guy Wildenstein, a close friend of former president Nicolas Sarkozy, and other family members were cleared. The trial collapsed after the judge ruled there was insufficient evidence that the accused knowingly committed tax fraud and ruled that there had been failings in the investigation. In 2018 an appeal court upheld the acquittal.
PHILIPPINES: COMMUNIST GUERRILLAS SAY THEY WILL REVIVE URBAN HIT SQUADS
On 6 January, Eurasia Review reported that Philippine communist guerrillas have announced that they would revive their urban hit squads, warning of attacks against groups and officers who they said had committed “crimes against the people”. The NPA’s hit squads, known as Special Partisan Units (Sparus) or “sparrow units” for their swift assassinations in the 1980s, were active during the dictatorship of former President Ferdinand Marcos.
WHAT ARE SOURCES OF IRAN’S FINANCING OF TERRORIST GROUPS?
On 6 January, an Op Ed piece in Eurasia Review posed this question after Mohammad Reza Naghdi, deputy coordinator of the IRGC, admitted that Iran has spent billions of dollars in the region over the past 30 years. It is said that the main income of the IRGC, in addition to its dedicated official budget by the government, is provided from both domestic and foreign sources. The IRGC is currently involved in all economic and financial affairs in Iran and is the owner or shareholder of the largest commercial and economic sectors of the country, while it is exempt from paying taxes, and even the government does not supervise the IRGC’s financial affairs. For example, it controls several berths in the Persian Gulf ports and exports and imports from these berths without customs control, including oil. Recently, some Hezbollah and Hamas officials announced huge financial contributions from the IRGC to them. The article says that it seems the IRGC and its affiliated forces, including the Lebanese Hezbollah, despite their idealistic slogans, do not shy away from anything, and the income from this drug-related work probably goes a long way towards being able to cover the massive expenses of interventions in other countries.
HOW WILL US MONEY LAUNDERING CRACKDOWN ACTUALLY IMPACT THE ART MARKET?
On 6 January, The Art Newspaper carried an article saying that the US Congress is increasing its regulation of antiquities trade and while its powers are limited for now, change will come so the art industry must prepare. A lawyer explains the likely effects and implications.
GUATEMALAN POLICE SECURE ARRESTS IN MONEY LAUNDERING PROBE
On 6 January, OCCRP reported that authorities in Guatemala have detained 7 people in raids on 20 properties as part of an investigation into a conspiracy to launder more than $7 million in drug money. The raids, conducted in December, were related to a probe into allegations of illicit financial activity at now-defunct lender Banco de Credito, involving further entities in Switzerland, the United States and Ecuador. Authorities are also investigating an NGO, the Saba School of Medicine Foundation, for allegedly facilitating transfers as part of the scheme.
CLIMATE CHANGE AND CORPORATE VALUE: WHAT COMPANIES REALLY THINK
KPMG and Eversheds Sutherland have surveyed the opinions of business leaders from more than 500 global companies about the risks and opportunities that climate change poses to their organisations. The survey found that corporate leaders are well aware of the risks associated with climate change and that climate risks equate to financial risks. At the same time, most leaders felt they were not yet equipped to deal with the challenges of creating a net zero-carbon business. Nevertheless, facing internal and external pressures, a majority indicated that they will need to take more aggressive steps toward decarbonisation, recognising that such a strategy is not only good for the environment but also good for business.