OTHER THINGS YOU MAY HAVE MISSED – FEBRUARY 1

Panama Covid-19 update – while the local chamber of commerce warns that the economy cannot stand another lockdown, the current one continues – albeit with some additional businesses reopening today.

Meanwhile, some numbers continue to (slowly) drop – 724 new cases reported today, with 24 new fatalities. There are now 37,365 active cases, with 252 in ICU and 2,249 in other wards.

1 FEBRUARY 2021

MYANMAR MILITARY SEIZES POWER IN APPARENT COUP, DETAINS SUU KYI

On 1 February, Nikkei Asia reported that Myanmar’s military-owned TV has said that army commander-in-chief Min Aung Hlaing has taken over the country in what amounts to a military coup.  The military has declared a on1e-year state of emergency and detained State Counsellor Aung San Suu Kyi, leader of the ruling National League for Democracy.  This would be the first coup in the country since 1988, marking the collapse of civilian rule after only a decade since it took over the government in 2011.

https://asia.nikkei.com/Politics/Myanmar-military-seizes-power-in-apparent-coup-detains-Suu-Kyi

DATA SHOWS CHINESE SURVEY SHIPS STRAYING INTO OTHER NATIONS’ EEZ

On 1 February, Nikkei Asia reported that tensions are on the rise as Chinese research vessels crisscross the South and East China Sea.  Nikkei analyzed the automatic identification system data on 32 Chinese survey vessels from a database provided by ship tracking website Marine Traffic, and examined the ships’ voyages over the 12 months through late November 2020.

https://asia.nikkei.com/Politics/International-relations/South-China-Sea/Chinese-survey-ships-straying-into-other-nations-EEZs-data-shows

WORLD BANK INVESTIGATIONS ARM SETS ANTI-CORRUPTION PRIORITIES FOR 2021

On 21 December, Hogan Lovells publihed an article saying that in October the World Bank Group (WBG) published its third Sanctions System Annual Report FY20, which covers 1 July 2019 to 30 June 2020.  The report provides a detailed look at the recent activities of the 3 units of the WBG’s sanctions system, including that which debars companies for fraud and corruption in programmes and contracts financed by the World bank.  The report also provides important insight into priorities for fiscal year 2021 to 30 June 2021.  It says that the COVID-19 pandemic appears to have caused little disruption to the World bank’s sanctions system.  Its debarment section sanctioned 19 respondents via uncontested determinations. 

https://www.internationallawoffice.com/Newsletters/White-Collar-Crime/International/Hogan-Lovells/World-Bank-investigations-arm-sets-anti-corruption-priorities-for-2021

The guidelines that the World Bank uses are available at –

https://www.worldbank.org/content/dam/documents/sanctions/other-documents/osd/World%20Bank%20Group%20Sanctioning%20Guidelines%20January%202011.pdf

CYPRUS LAUNCHES UBO REGISTER

On 1 February, Elias Neocleous & Co LLC published an article saying that the Ultimate Beneficial Ownership register is a requirement emanating from the amended Fourth EU AML Directive (4AMLD).  According to a 21 December announcement by the Companies Registrar Department, as amended, relevant entities must submit information on their UBOs for inclusion in a newly created and centralised UBO register within 6 months of 22 February.

https://www.internationallawoffice.com/Newsletters/White-Collar-Crime/Cyprus/Elias-Neocleous-Co-LLC/Cyprus-launches-UBO-register

CHINA EXECUTES EX-BANKER LAI XIAOMIN IN CORRUPTION AND BIGAMY CASE

On 29 January, France 24 reported that China had executed a former top banker accused of taking $260 million worth of bribes, other forms of corruption and bigamy. Lai Xiaomin was the former chairman of Huarong — one of China’s largest state-controlled asset management firms. 

https://www.france24.com/en/asia-pacific/20210129-china-executes-ex-banker-lai-xiaomin-in-corruption-bigamy-case

HONG KONG PROPOSES MANDATORY REGISTRATION OF MOBILE PHONE NUMBERS TO TACKLE ORGANISED CRIME

On 29 January, the South China Morning Post reported that mobile phone users will be required to register their numbers under real identities in proposed overhaul of SIM-card rules.  All mobile phone users will have to provide their real name and personal details under proposals for compulsory SIM-card registration in the city, with officials blaming criminals for exploiting the current system.  Mandatory registration could be extended to users of prepaid SIM cards, requiring them to provide their full name, a copy of their identity document and date of birth.  The government has launched a 1-month public consultation on the proposals.

https://www.scmp.com/news/hong-kong/politics/article/3119755/hong-kong-proposes-mandatory-registration-all-new-mobile

BOUVIER AFFAIR: SWISS PROSECUTORS TO CLOSE LEGAL DISPUTE OVER ART

On 29 January, the Guardian reported that a long-running court case involving Yves Bouvier, an art dealer who was accused of swindling $1 billion from a Russian oligarch, Dmitry Rybolovlev, took a step closer to being resolved after Swiss prosecutors moved to close an action against him. The Russian alleges Bouvier overcharged him on several pieces of art he purchased over a 10-year period, and has taken legal action against him in several locations, including Monaco, Singapore and Switzerland.

https://www.theguardian.com/artanddesign/2021/jan/29/bouvier-affair-swiss-prosecutors-to-close-legal-dispute-over-art

ARE YOU A “FIT AND PROPER” PERSON? HMRC’S TEST FOR CHARITY TAX RELIEF

On 28 January, an article from Birketts LLP says that the Finance Act 2010 introduced the ‘fit and proper persons’ test which was defined for tax purposes of charities and other organisations entitled to UK charity tax reliefs.  The inclusion of the test is intended to make it harder for fraudsters or sham charities to abuse the charity tax reliefs available.  It also ensures that charities are not being managed or controlled by individuals who represent a risk to the charities tax position, and a charity can only claim charity tax reliefs if it meets the management condition.

https://www.birketts.co.uk/insights/legal-updates/are-you-a-fit-and-proper-person-hmrcs-charity-test

ISLE OF MAN CORRECTS 21 JANUARY TERRORISM SANCTIONS NOTICE

On 1 February, the Isle of Man advised that a news release released on 21 January had attached an incorrect Annex listing changes to the list of those affected by terrorism sanctions.  The correct Annex is attached.

https://www.gov.im/media/1371642/annex-counter-terrorism-international-210121.pdf

ISLE OF MAN: 4 NAMES ADDED TO ZIMBABWE SANCTIONS

On 1 February, the Isle of Man advised that Owen NCUBE, Anselem Nhamo SANYATWE, Godwin MATANGA and Isaac MOYO have been added to the list of those affected by sanctions.  These are security officials, including State Security minister Owen Ncube.

https://www.gov.im/news/2021/feb/01/financial-sanctions-zimbabwe/

https://263chat.com/just-in-uk-imposes-sanctions-on-zimbabwe-security-chiefs/

COBALT RESERVES BY COUNTRY AS OF 2019 ACCORDING TO STATISTA

RUSSIAN OLIGARCH HAS $1.5 BILLION IN FOREIGN ASSETS FROZEN DUE TO SANCTIONS

On 1 February, the Moscow Times reported claims by Russian metals tycoon Viktor Vekselberg that he has had more than $1.5 billion worth of foreign assets frozen as a result of US sanctions.  He is the owner of the commodities and communications conglomerate Renova Group, Vekselberg was placed under US sanctions in April 2018.  Vekselberg is said to be worth more than $16 billion. 

https://www.themoscowtimes.com/2021/02/01/russian-oligarch-has-15bln-in-foreign-assets-frozen-due-to-sanctions-a72792

EU ADOPTS EXPORT AUTHORISATION SCHEME FOR COVID-19 VACCINES AND THEIR ACTIVE SUBSTANCES

On 30 January, Covington & Burlington LLP reported an EU Regulation establishing an export authorisation and notification scheme relating to COVID-19 vaccines and their active substances.  It applies “for a limited duration” to COVID-19 vaccines covered by Advanced Purchased Agreements (APA) concluded with the EU.   As regards APA contracted by third countries, “the Commission will endeavour that the expectations of these countries to obtain their deliveries will be met as much as possible”.   The post briefly outlines the key elements of the export authorisation and notification scheme that require further scrutiny.

https://www.insideeulifesciences.com/2021/01/30/eu-adopts-export-authorization-scheme-for-covid-19-vaccines-and-their-active-substances/#page=1

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv%3AOJ.LI.2021.031.01.0001.01.ENG&toc=OJ%3AL%3A2021%3A031I%3ATOC

https://www.euractiv.com/section/coronavirus/news/eu-tightens-controls-on-vaccine-exports-leaves-door-open-for-bans/

MALTA: FORMER DIAMOND MERCHANT LINKED TO A BIRD SMUGGLING RING

On 1 February, the Times of Malta reported that Albert Satariano, 68, who has been arrested in Italy as he was driving a van carrying more than 1,000 protected songbirds, had been linked to a major songbirds smuggling ring in 2018.  The birds were found in boxes stashed in secret compartments at the back of a van.  Satariano had featured heavily in wiretapped conversations played out in an Italian court case back in 2018, that saw an Italian bird trafficking ring dismantled.  

https://timesofmalta.com/articles/view/maltese-found-with-protected-birds-linked-in-2018-to-major-italian.848771

MALAYSIA: CUSTOMS BUST RING SMUGGLING ZAM ZAM WATER

On 1 February, Free Malaysia Today reported that 3 smuggling syndicates have been crippled in a space of 3 days by the Customs department, including one that was smuggling 25,000 litres of zam zam water.  The other 2 syndicates were smuggling cigarettes and tobacco.  Zam zam, which is water drawn from the Zamzam well in Mecca in Saudi Arabia, is classified as a prohibited item.  According to Islam, it is a miraculously generated source of water from God, which sprang spontaneously thousands of years ago.

https://www.freemalaysiatoday.com/category/nation/2021/02/01/customs-bust-ring-smuggling-25000-litres-of-zam-zam-water/

WORLD BANK: COVID-19 REMITTANCE FLOWS TO SHRINK 14% BY 2021

On 29 January, Fintech Times reported that, as the COVID-19 pandemic and economic crisis continues to spread, the amount of money migrant workers send home is projected to decline 14% by 2021 compared to the pre-COVID-19 levels in 2019, according to the latest estimates published in the World Bank’s Migration and Development Brief.  It also says that the declines in 2020 and 2021 will affect all regions, with the steepest drop expected in Europe and Central Asia (by 16% and 8%, respectively), followed by East Asia and the Pacific (11% and 4%), the Middle East and North Africa (8% and 8%), Sub-Saharan Africa (9% and 6%), South Asia (4% and 11%), and Latin America and the Caribbean (0.2% and 8%).

https://thefintechtimes.com/world-bank-covid-19-remittance-flows-to-shrink-14-by-2021/

HONG KONG: KEY POINTS IN CONSULTATION PAPER TO THE NEW LICENSING REGIME FOR VASP

On 29 January, an article from Tanner de Witt Solicitors said that the Financial Service and Treasury Bureau released a consultation paper on 3 November, proposing amendments to the Anti-Money Laundering and Counter-Terrorist Financing Ordinance to introduce a licensing regime for virtual asset services providers (VASP).

https://www.tannerdewitt.com/vasp-licensing-regime-fstb-consultation-paper/

BAHRAIN: JEWELLERY SHOPS TO FACE ACTION FOR ‘BREACHING MONEY LAUNDERING, TERRORISM FUNDING RULES’

On 1 February, GDN Online reported that 2 jewellery shops have been accused of failing to implement strict AML/CFT rules. The Industry, Commerce and Tourism Ministry announced that one shop sold jewellery without taking copies of identity cards besides failing to implement CDD, while the other shop sold jewellery for cash above limits.

https://www.gdnonline.com/Details/934650/Jewellery-shops-to-face-action-for-breaching-money-laundering,-terrorism-funding-rules

https://www.statista.com/chart/24060/the-worlds-biggest-sovereign-wealth-funds

BULGARIAN FRAUDSTERS USE FAKE STALLONE PASSPORT AS ADVERT

On 29 January, EurActiv reported that a Bulgarian criminal gang used a fake passport in the name of the Hollywood actor Sylvester Stallone to advertise its counterfeiting services to potential clients.  4 gang members were charged for counterfeiting-related crimes with 2 other men charged on other offences, prosecutors said in a statement.

https://www.euractiv.com/section/justice-home-affairs/news/bulgarian-fraudsters-use-fake-stallone-passport-as-ad/

WARNING OVER USE OF RISK PROFILING TO DETECT CRIME, FRAUD AND DEBT

On 1 February, Dutch News reported that local authorities are increasingly using algorithms to try to identify potential lawbreakers such as criminal gangs and benefit fraudsters.  The tax office was criticised for using dual nationality as an indicator of risk in families suspected of fraud in the childcare benefits scandal, which led to the resignation of the cabinet last month.  A series of investigations found that many people were wrongly targeted and blacklisted because they made small administrative errors.

https://www.dutchnews.nl/news/2021/02/warning-over-use-of-risk-profiling-to-detect-crime-fraud-and-debt

MAN WHO LAUNDERED $13 MILLION IN BITCOIN PLEADS GUILTY

On 1 February, Finance Magnates reported that Hugo Sergio Mejia, 49, has pleaded guilty to charges of running an unlicensed company that illegally exchanged millions of dollars in Bitcoin for fiats and vice versa.  He admitted 2 charges against him for running an unlicensed money transmitting business and money laundering between May 2018 and September 2020. He is expected to plead guilty in court next month and is looking at a maximum of 25 years in prison.  He agreed to forfeit all assets gained from the illegal operation.  This includes $233,987 in seized cash and silver coins and bars, along with cryptocurrencies valued at around $95,587.

https://www.financemagnates.com/cryptocurrency/news/man-who-laundered-13-million-in-bitcoin-pleads-guilty

IRELAND: CENTRAL BANK OPENS NEW BENEFICIAL OWNERSHIP REGISTER

On 1 February, RTE reported that the Central Bank has opened its Beneficial Ownership Register to make available information on the owners of certain types of investments and funds.  Funds covered are Irish Collective Asset-Management Vehicles (ICAV), Unit Trusts and Credit Unions.  From September, it will also include Investment Limited Partnerships and Common Contractual Funds.  It is a separate register to existing company registers.

https://www.rte.ie/news/business/2021/0201/1194313-beneficial-ownership-register

CORRUPTION COMPLAINTS IN HONG KONG PLUNGE TO 40-YEAR LOW IN 2020 AMID CORONAVIRUS PANDEMIC

On 1 February, the South China Morning Post reported that complaints about corruption in Hong Kong dropped to a 40-year low last year, but advisers to the city’s anti-graft watchdog have urged vigilance, attributing the dip to the Covid-19 pandemic and possible new ways to avoid detection. 

https://www.scmp.com/news/hong-kong/law-and-crime/article/3120113/corruption-complaints-hong-kong-plunge-40-year-low

PREDICTION THAT US SPORTS BETTING TO BE LEGALISED IN 12 NEW STATES

On 1 February, Calvin Ayre said to expect the spread of sports betting across the US to continue in 2021.  Morgan Stanley Research believes as many as 12 states will get there, with much of it coming in the first half of the year.

https://calvinayre.com/2021/02/01/business/us-sports-betting-to-be-legalized-in-12-new-states-morgan-stanley/

FAR-RIGHT EXTREMISM IN THE US: A THREAT NO LONGER IGNORED

A Commentary from RUSI on 1 February says that the events at the US Capitol in Washington DC on 6 January have jolted the US national security system into action and forced an acknowledgement of the dangers posed by far-right extremism.

https://rusi.org/commentary/far-right-extremism-us-threat-no-longer-ignored

POST-BREXIT RED TAPE DISRUPTING UK-EU SUPPLY CHAINS

On 1 February, Lloyds Loading List carries an article seen in the UK since the end of the Brexit transition period on 31 December.  It says that complex customs paperwork and other administrative burdens are impacting imports or exports of most manufacturers, Make UK survey confirms – including those companies that thought they were prepared – as the body recommends mitigation measures to the government.

https://www.lloydsloadinglist.com/freight-directory/news/Post-Brexit-red-tape-disrupting-UK-EU-supply-chains/78372.htm#.YBgfq5eSmM8

UNODC LAUNCHES CENTRE OF EXCELLENCE TO FIGHT DRUG TRAFFICKING IN BRAZIL

On 1 February, the UN Office on Drugs & Crime reported that Brazil will benefit from UNODC’s latest research and data analysis.  In January, UNODC — in partnership with the Brazilian Ministry of Justice and Public Security and UN development Program — launched a pilot project to establish the Centre of Excellence for Illicit Drug Supply Reduction (CoE Brazil). It is said it will contribute with qualified information on drug supply throughout the country, based on the sharing of scientific evidence on illicit markets; and it will also continue to improve and strengthen the technical capacities of institutions responsible for generating statistical data on illicit drug supply and transnational organised crime.  Furthermore, the Centre will deliver strategic analyses in areas such as illicit financial flows, drug supply reduction and the influence of COVID-19 on drug trafficking in Brazil — the latter in partnership with the Research and Analysis Branch (RAB) of UNODC.

https://www.unodc.org/unodc/frontpage/2021/February/unodc-launches-centre-of-excellence-to-fight-drug-trafficking-in-brazil.html

SAUDI CUSTOMS SEIZE OVER 14 MILLION CAPTAGON PILLS

On 29 January, Arab News reported that more than 14.4 million Captagon pills found hidden inside a consignment have been seized by Saudi Customs at King Abdul Aziz Port in Dammam.  They were found hidden inside the recesses of wooden panels during an X-ray scan carried out as part of customs procedures.  Fenethylline (aka phenethylline, fenetylline, amphetaminoethyltheophylline and amfetyline) is an amphetamine  and was marketed for use as a psychostimulant under the brand names Captagon

https://www.arabnews.com/node/1800601/saudi-arabia

CHINESE CUSTOMS SEIZE MORE GOODS INFRINGING IP RIGHTS IN 2020

On 31 january, Macau Business reported that Chinese customs seized 61,900 batches of goods infringing intellectual property rights in 2020, up 20% year on year.  Customs nationwide approved 15,163 applications for IPR protection, up 16% from one year earlier, the General Administration of Customs said.

https://www.macaubusiness.com/chinese-customs-seize-more-goods-infringing-ipr-in-2020/

NEW EU RULES SPEED UP CONFISCATION AND FREEZING OF CRIMINAL ASSETS

On 1 February, CMS Law was concerned with EU Regulation 2018/1805 on the mutual recognition of freezing and confiscation orders went into force, applying to all freezing and confiscation certificates and representing the first mutually recognised regulation for criminal matters in the EU.  Coming into force on 19 December, the Regulation replaced Framework Decisions 2003/577/JHA on freezing property and 2006/783/JHA on confiscation orders.  It mentions that, according to Europol estimates, only about 2% of criminal proceeds in the EU are frozen and only 1% are confiscated, which amounts to about €1.2 billion.

https://www.cms-lawnow.com/ealerts/2021/02/new-eu-rules-speed-up-confiscation-and-freezing-of-criminal-assets

UK GOVERNMENT USE OF “HENRY VIII CLAUSES” TO BE CHALLENGED IN COURT

On 1 February, the Guardian reported that a UK Government move to change state aid rules after Brexit without a vote in Parliament is being challenged in court, with a legal campaign group warning the manoeuvre could lead to a similar lack of scrutiny in areas such as workers’ rights and environmental protections.  A pressure group is seeking judicial review on the powers, named after the 1539 law which allowed Henry VIII to rule by decree, permit ministers to amend or repeal laws without full scrutiny from parliament using secondary legislation, primarily via something called a statutory instrument.

https://www.theguardian.com/politics/2021/feb/01/uk-government-use-of-henry-viii-clauses-to-be-challenged-in-court

ISLE OF MAN: UPDATED LICENSING POLICY FOR REGULATED ACTIVITIES UNDER THE FINANCIAL SERVICES ACT 2008

On 1 February, a news release from the FSA advised of changes to its licening policy.  The chief change deals with situations where a licenceholder ceases to undertake a class of regulated activity for which it holds a licence, or ceases to employ persons competent to undertake that activity. Other changes include updating references to legislation and guidance which has been amended or revoked, reflecting improvements to the procedure for applying for a licence and providing further detail to what is meant by ‘real presence’.

https://www.iomfsa.im/fsa-news/2021/feb/updated-licensing-policy-for-regulated-activities-under-the-financial-services-act-2008/

NEW EU APPROACH TO UNILATERAL SANCTIONS WITH EXTRATERRITORIAL EFFECT

On 1 February, Dentons published a briefing saying that the effects of US secondary sanctions are particularly invasive, given that in response to non-compliance the US can cut access to US dollar transactions and business.  To counter these effects and shield EU businesses, on 19 January, the EU Commission released a 3-pillar strategy for dealing with sanctions having extraterritorial effects –

·         Strengthening the international role of the euro – a green euro, followed by a digital euro;

·         Increasing the resilience of the EU financial market; and

·         Strengthening the implementation and enforcement of EU sanctions

https://www.dentons.com/en/insights/alerts/2021/february/1/new-eu-approach-to-unilateral-sanctions-with-extra-territorial-effect

KEY MEMBER OF INTERNATIONAL COCAINE CONSPIRACY INVOLVING CORRUPT AIR TRAFFIC CONTROLLERS AND CLANDESTINE AIRSTRIPS EXTRADITED TO US

On 28 January, a news release from the US DoJ advised that a Mexican national charged with coordinating shipments for an international drug trafficking organisation that planned to smuggle tens of millions of dollars’ worth of cocaine from Colombia to Mexico for eventual sale in the US has been extradited from Canada.  He is one of 15 defendants charged in an indictment that describes an organization that smuggled large quantities of cocaine on aircraft, using clandestine airstrips and corrupt air traffic control officials in Colombia to avoid detection.

https://www.justice.gov/usao-cdca/pr/key-member-international-cocaine-conspiracy-involving-corrupt-air-traffic-controllers

US: INDIVIDUAL SENTENCED FOR $400,000 POSTAGE STAMP SCHEME

A news release from the US DoJ on 28 January advised that Edward Morgan (49), aka Edward Croce and Edward Carrera, had been sentenced to 6½ years in federal prison for theft of government funds.  As part of his sentence, the court also entered a money judgment of $405,935.76, the proceeds of the theft.  He stole more than $400,000 in stamps and other services from the United States Post Office.

https://www.justice.gov/usao-mdfl/pr/individual-sentenced-postage-stamp-scheme

VISA FRAUD IN THE COMMERCIAL SEX MARKET IN THE US: AN OVERVIEW

A paper in the Dignity journal issue 1/2021 describes various fraudulent visas used by criminals operating in the US sex market.  It says that studies show that many foreign women exploited through commercial sex rely on visa brokers to enter the US.  It aims to provide an overview of the different types of fraudulent visas and criminal techniques used in the US sex market; and discusses the current issues with combating visa fraud in the US sex market and provides recommendations to fight the problem more effectively.

https://digitalcommons.uri.edu/cgi/viewcontent.cgi?article=1204&context=dignity

FRENCH BILLIONAIRE PUTS MOZAMBIQUE LEADER AT HEART OF DEBT SCAM

On 31 January, an article from Bloomberg says that Privinvest Shipbuilding SAL and its billionaire founder Iskandar Safa have placed Mozambican President Filipe Nyusi at the centre of the nation’s $2 billion debt scandal.  It says that court documents filed in London reveal that they made payments to Nyusi and other senior officials after negotiating contracts for government maritime projects.  They denied the remittances were bribes or illegal, and said they were understood to be campaign donations or for investments.  Mozambique’s case in the High Court in London seeks to annul a government guarantee on a $622 million loan arranged by Credit Suisse, claiming that the debt along with the rest of the $2 billion loans were all part of a “fraudulent scheme”.

https://www.bloomberg.com/news/articles/2021-01-31/french-billionaire-puts-mozambique-leader-at-heart-of-debt-scam

CALIFORNIA FAILED TO HEED WARNINGS OF UNEMPLOYMENT BENEFIT FRAUD FOR MONTHS, STATE AUDIT SAYS

On 28 January, the Los Angeles Times reported that California officials in charge of the state’s unemployment benefits system failed for months to heed warnings of widespread claims fraud during the COVID-19 pandemic, resulting in billions of dollars paid out on fraudulent claims.  A report by a State Auditor said at least $10.4 billion in fraud has been identified on the first $112 billion in benefits paid since the pandemic began.

https://www.latimes.com/california/story/2021-01-28/audit-california-warnings-unemployment-benefit-fraud-covid-19

CENTRAL BANK DIGITAL CURRENCIES (CBDC) RISK BECOMING A GIGANTIC FLOP

On 1 February, an article from VOX from the Centre for Economic Policy Research says that CBDC are increasingly being discussed, mainly in relation to monetary policy and financial stability, but with less focus on their fundamentals.  The article provides a comprehensive taxonomy for categorising CBDC design options, and evaluates these options based on their allocative efficiency and attractiveness for users.  The analysis shows that digital cash substitutes cannot be justified from either perspective.  Instead, there is huge potential for CBDC in a retail payment system organised by the central bank, but without a new, independent payment object.

https://voxeu.org/article/central-bank-digital-currencies-risk-becoming-gigantic-flop

UK ARREST IN ‘SMS BANDITS’ PHISHING SERVICE CASE

A post from Krebs on Security on 1 February said that authorities in the UK have arrested a 20-year-old man for allegedly operating an online service for sending high-volume phishing campaigns via mobile text messages.  The service, marketed in the underground under the name “SMS Bandits,” has been responsible for blasting out huge volumes of phishing lures spoofing everything from COVID-19 pandemic relief efforts to PayPal, telecommunications providers and tax revenue agencies.  It also says that the volume of SMS-based phishing skyrocketed in 2020 — by more than 328% — according to a recent report.

https://krebsonsecurity.com/2021/02/u-k-arrest-in-sms-bandits-phishing-service/

DON’T OVER FOCUS ON BRIBERY AND CORRUPTION AND LET ‘NON-BRIBERY’ RISKS GO UNNOTICED

A post on the FCPA Blog on 1 February gave this advice, asking if there a danger that compliance professionals could face a “Maginot Line” problem in how they assess risk in their respective companies?  It stresses that there can be a myriad of risks, and a comprehensive risk assessment is required, and one must avoid ignoring or missing a less obvious risk.

https://fcpablog.com/2021/02/01/dont-over-focus-on-abac-and-let-non-bribery-risks-go-unnoticed/

US TO SPEND $4 MILLION ON PROJECTS TARGETING NORTH KOREAN WEAPONS TRADE

On 1 February, NK Pro reported that the US State Department has announced $4 million grant for illicit WMD and ballistic missiles non-proliferation in general, announcing that it will fund organisations working to counter North Korea’s weapons proliferation and sanctions evasion.

https://www.nknews.org/pro/us-to-spend-4-million-on-projects-targeting-north-korean-weapons-trade/

NORTH KOREA LIKELY CONTINUED SMUGGLING COAL IN JANUARY DESPITE BORDER LOCKDOWN

On 1 February, NK Pro reported that known North Korean vessels, which frequented a coal-smuggling hotspot in summer 2020, reappeared last month.

https://www.nknews.org/pro/north-korea-likely-continued-smuggling-coal-in-january-despite-border-lockdown/

ITALY PERMANENTLY HALTS ARMS SALES TO SAUDI ARABIA AND UAE

On 29 January, Al Jazeera reported that Italy has halted the sale of thousands of missiles to Saudi Arabia and UAE due to their involvement in the Yemen conflict, making permanent an 18-month temporary suspension.  The blocked sales were part of a total allotment of 20,000 missiles worth more than €400 million agreed in 2016. 

https://www.aljazeera.com/news/2021/1/29/italy-makes-permanent-arms-sale-freeze-to-saudi-arabia

CHINESE SMARTPHONE MANUFACTURER HAS FILED AN APPEAL AGAINST ITS US DESIGNATION AS A COMMUNIST CHINESE MILITARY COMPANY (CCMC)

On 29 January, the Xiaomi Corporation filed a complaint against the US DoD and US Treasury following its designation as a Communist Chinese Military Company (CCMC) on 14 January.  The listing is due to take effect on 15 March.  The company argues that it is not owned by the Chinese government or military, or any entities affiliated with the Chinese defence industrial base.

https://www.courtlistener.com/recap/gov.uscourts.dcd.226816/gov.uscourts.dcd.226816.1.0.pdf

PODCAST SERIES – THE IMPACT: CORONAVIRUS AND ORGANISED CRIME

The Global Initiative to Transnational Organized Crime has produced a 12-part podcast series which looks at how the ongoing Coronavirus is impacting organised crime around the world – and how the illicit economy may affect the ability to respond to the virus.  Episodes include those on wildlife trafficking, the cocaine trade, corruption and organised crime in Brazil.

https://globalinitiative.net/analysis/a-pandemic-and-organized-crime/

COUNTERPIRACY EFFORTS STEPPED UP AS ANOTHER MAJOR KIDNAPPING OCCURS IN GULF OF GUINEA

On 26 January, Homeland Security Today reported that a Maritime Intelligence Unit was recently established by the Nigerian Maritime Administration and Safety Agency (NIMASA) to help in the identification of early warning signs in order to prevent security breaches in the littoral areas.  NIMASA is also planning to introduce educational, entrepreneurship training, and skills acquisition programs in the areas of fishing, clearing and forwarding, and legal bunkering, for people in the coastal communities as a way of empowering them and discouraging criminal tendencies. 

https://www.hstoday.us/subject-matter-areas/transportation/counterpiracy-efforts-stepped-up-as-another-major-kidnapping-occurs-in-gulf-of-guinea/

ISIS AND FOREIGN FIGHTERS: ASSESSING THE THREAT AND POTENTIAL REPATRIATION, REHABILITATION, AND REINTEGRATION

On 25 January, an article in Homeland Security Today said that concerns over ISIS returnees remain pressing for many western governments, as does apprehension over domestic actors potentially spreading violent extremist ideology or carrying out terrorist attacks under the banner of ISIS or other terrorist groups.  It says that questions over whether returning foreign fighters will opt at all costs for violence once back in their home countries of origin will likely continue to linger. Hundreds of detainees and prisoners linked to terrorism and radicalization remain housed in European prisons.  The article concludes that Foreign Terrorist Fighters (FTF) who fought in Iraq and Syria are likely to remain a key security concern for many western countries for years to come, but it is essential to further explore aforementioned considerations that can lead to effective repatriation, rehabilitation, and reintegration solutions of FTF and their family members.

https://www.hstoday.us/subject-matter-areas/counterterrorism/isis-and-foreign-fighters-assessing-the-threat-and-potential-repatriation-rehabilitation-and-reintegration/

TSA’S FIREARM DETECTION RATE DOUBLED IN 2020 – BUT WHY?

On 27 January, Homeland Security Today reported that Transportation Security Administration (TSA) officers in the US detected twice as many firearms per million passengers screened at airport security checkpoints nationwide in 2020 compared to 2019, and at a significantly higher rate than any other year since the agency’s inception.  Throughout 2020, TSA caught approximately 10 firearms per million passengers screened as compared to about 5 firearms per million passengers screened in 2019.  TSA officers discovered a total of 3,257 firearms on passengers or in their carry-on bags at checkpoints, although total passengers screened in 2020 fell by 500 million versus 2019 due to the pandemic.

https://www.hstoday.us/subject-matter-areas/airport-aviation-security/tsas-firearm-detection-rate-doubled-in-2020-but-why/

ISLE OF MAN FOLLOWS UK LEAD ON VARIOUS SANCTIONS CHANGES

On 1 February, the Isle of Man issued a number of news releases which show that the Isle of Man has followed with many updates to various mutual sanctions regimes.  These are in addition to the listing of 4 new names under Zimbabwe sanctions.

https://www.gov.im/news/2021/feb/01/financial-sanctions-central-african-republic/

https://www.gov.im/news/2021/feb/01/financial-sanctions-russia/

https://www.gov.im/news/2021/feb/01/financial-sanctions-libya/

https://www.gov.im/news/2021/feb/01/financial-sanctions-chemical-weapons/

https://www.gov.im/news/2021/feb/01/financial-sanctions-syria/

https://www.gov.im/news/2021/feb/01/financial-sanctions-yemen/

https://www.gov.im/news/2021/feb/01/financial-sanctions-iran-nuclear-proliferation/

https://www.gov.im/news/2021/feb/01/financial-sanctions-afghanistan/

ENGLAND WAS THE APPROPRIATE FORUM FOR WORLDWIDE MALICIOUS FALSEHOOD COURT CASE CLAIM BY QATAR AIRWAYS

On 1 February, an article from Bird & Bird was concerned with a case in which the the High Court dismissed a jurisdiction challenge and held that England was the appropriate forum for a malicious falsehood claim brought by Qatar Airways against media companies incorporated in Dubai, which were alleged to have connections to the Arabic channel Al Arabiya.  The article says that, as social media allows rapid and trans-jurisdictional publication, this judgment will be of interest to many international companies who may be the subject of false or misleading claims. It starts by explaining that a malicious falsehood claim is a type of defamation claim which is usually made to protect economic interests against malicious publications that refer to the claimant, their property or their business.  The claimant has to prove that the defendant published the false statement with improper motive or malice, that the statement was false and that it has caused the claimant financial loss.  However, contrary to a defamation claim there is no need to prove damage to reputation.

https://www.twobirds.com/en/news/articles/2021/uae/england-was-appropriate-forum-for-worldwide-malicious-falsehood-claim

BULGARIA: PRESIDENT’S ANTI-CORRUPTION SECRETARY PLAMEN UZUNOV – OLAF ALLEGES CORRUPTION

On 1 February, Bulgarian National TV reported that the European Anti-Fraud Office (OLAF) has alleged fraud against President’s Anti-Corruption Secretary Plamen Uzunov.  The investigation refers to a contract concluded by Uzunov in March 2017 for the purchase of police cars with EU funds.  At the time, Plamen Uzunov was acting Minister of Interior in a caretaker government 

https://bnt.bg/news/olaf-alleges-president’s-anti-corruption-secretary-plamen-uzunov-of-corruption-291408news.html

DENMARK: 2 MEN CONVICTED OF MULTI-MILLION KRONER LEGO FRAUD

On 1 February, On 1 February, Norway Today reported that 2 men have been sentenced to prison in Denmark for defrauding the toy giant Lego for several million kroner over several years.  One was a Lego employee.  According to the prosecution, the fraud took place when the defendants overbilled Lego.

https://norwaytoday.info/news/denmark-two-men-convicted-of-multi-million-kroner-lego-fraud

QUEBEC MAN CHARGED IN US WITH CONSPIRACY TO COMMIT WIRE FRAUD, MAIL FRAUD AND INTERNATIONAL MONEY LAUNDERING

On 1 February, Global News reported that Martin Hogan is believed to have headed a network of fraudsters that would place phone calls to victims in the US and advise them they had won a lottery in Canada, but before collecting their winnings, they had to first pay the taxes, brokerage fees, and/or custom fees.  According to court documents, he allegedly defrauded approximately 37 victims, over the age of 55 years old, between 2015 and 2020, totalling around $1.5 million.

https://globalnews.ca/news/7612416/quebecer-faces-fraud-charges-united-states

THE US FALSE CLAIMS ACT IN 2020: A GOVERNMENT ENFORCEMENT UPDATE

On 1 February, an article from Bradley Arrant Boult Cummings LLP says that the False Claims Act continued to serve as one of the primary tools utilised by the federal government against government contractors in 2020.  The firm says it has produced its 9th annual review of the use of the Act.  It says that 2020 saw substantial activity in FCA settlements and litigated court cases.  Although no single case or development dominated the discourse this year, several important court decisions were issued, including 2 that may warrant Supreme Court attention in 2021.  Multiple settlements demonstrated that notwithstanding the investigatory challenges presented by the global pandemic, DoJ and other authorities continue their focus on FCA enforcement.  The cases and other developments reviewed include those relating to Covid-19 relief frauds.

https://www.bradley.com/-/media/files/insights/publications/2021/01/fca-2020-yearinreview-report_january_2021.pdf?la=en

Meanwhile, Arent Fox said that despite a decrease in 2020 False Claims Act recoveries, investigations and litigation expected to rise under the Biden Administration.

https://www.jdsupra.com/legalnews/investigations-newsletter-despite-2277738/

US: HOSPITAL RESEARCHER SENTENCED TO PRISON FOR CONSPIRING TO STEAL TRADE SECRETS AND SELL THEM IN CHINA

A news release from the US DoJ on 1 February advised that Li Chen, 47, a former Ohio woman has been sentenced to 30 months in prison for conspiring to steal trade secrets concerning the research, identification and treatment of a range of pediatric medical conditions.  Chen admitted in her guilty plea in July 2020 to stealing scientific trade secrets related to exosomes and exosome isolation from Nationwide Children’s Hospital’s Research Institute for her own personal financial gain.

https://www.justice.gov/usao-sdoh/pr/hospital-researcher-sentenced-prison-conspiring-steal-trade-secrets-sell-them-china

SEC CHARGES 3 INDIVIDUALS WITH DEFRAUDING HUNDREDS OF RETAIL INVESTORS OUT OF MORE THAN $11 MILLION THROUGH 2 FRAUDULENT AND UNREGISTERED DIGITAL ASSET SECURITIES OFFERINGS

A release on Mondo Visione on 1 February advised that, according to the SEC’s complaint, from approximately December 2017 through May 2018, Kristijan Krstic, founder of Start Options and Bitcoiin2Gen, and John DeMarr, the primary US-based promoter for these companies, fraudulently induced investors to buy digital asset securities. The SEC also alleges that, starting in January 2018, Krstic and DeMarr promoted Bitcoiin2Gen’s unregistered initial coin offering (ICO) of digital asset securities known as B2G tokens. According to the complaint, another individual, Robin Enos, working with DeMarr, drafted fraudulent promotional materials that Enos knew would be disseminated to the investing public. 

https://mondovisione.com/media-and-resources/news/sec-charges-three-individuals-in-digital-asset-frauds/

ANOTHER PIRATE ATTACK REPORTED IN GULF OF GUINEA

On 1 February, Insurance Marine News reported that a cargo ship was attacked by pirates at around before dawn on 30 January in the Gulf of Guinea, south of Lome, Togo.

https://insurancemarinenews.com/insurance-marine-news/another-pirate-attack-reported-in-gulf-of-guinea/

IRAN MP SAYS UNFREEZING FUNDS MAY HELP RELEASE OF SOUTH KOREAN SHIP

On 1 February, Insurance Marine News reported that any move by South Korea towards releasing $7 billion in frozen Iranian funds might help encourage the Iranian judiciary to resolve the seizure of South Korean-flagged chemical tanker which, along with its crew, has been held for alleged environmental pollution, a senior Iranian parliamentary member has said.

https://insurancemarinenews.com/insurance-marine-news/iran-mp-says-unfreezing-funds-may-help-release-of-south-korean-ship/

RESULTS OF THE THIRD BIS SURVEY ON CENTRAL BANK DIGITAL CURRENCY (CBDC)

The Bank for International Settlements has produced its latest report saying that most central banks are exploring CBDC, and their work continues apace amid the Covid-19 pandemic. As a whole, central banks are moving into more advanced stages of CBDC engagement, progressing from conceptual research to practical experimentation.  This report presents the results of a survey carried out among more than 60 central banks in late 2020 about their engagement in CBDC work, their motivations and their intentions regarding CBDC issuance. Central banks also provided their views on legal frameworks for CBDCs and their assessment of the use of cryptocurrencies and stablecoins in their jurisdictions.

https://www.bis.org/publ/bppdf/bispap114.pdf

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GLOBAL ANTI-BRIBERY YEAR-IN-REVIEW: 2020 DEVELOPMENTS AND PREDICTIONS FOR 2021

On 1 February, Wilmer Hale published a report saying that, as was true in many areas of the law, FCPA enforcement in 2020 – and anti-corruption enforcement more generally – was affected by the COVID-19 pandemic, but perhaps not as much as was initially expected. Although the number of DoJ and SEC enforcement actions was down in 2020 compared to recent years, they both remained active in enforcing the FCPA, bringing major cases that set new records and issuing new updates to longstanding FCPA guidance. 

https://www.jdsupra.com/legalnews/global-anti-bribery-year-in-review-2020-4631196/

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UK SANCTIONS CHANGES – RUSSIA, SYRIA, YEMEN, LIBYA, IRAN, CENTRAL AFRICAN REPUBLIC, AFGHANISTAN – NEW NAMES ADDED TO SANCTIONS LIST APPLYING TO ZIMBABWE (ALSO NOTED IN ISLE OF MAN)

On 1 February, Notices from HM Treasury advised that –

  • the entry for Viktor YANUKOVYCH had been amended;
  • 5 entries listed under Syrian sanctions have been amended;
  • 5 entries listed under Yemen sanctions have been amended;
  • the entry for Abdullah AL-SENUSSI under Libyan sanctions has been amended;
  • the entry for STEP STANDART TEKNIK PARCA SAN VE TIC A.S. under Iran sanctions has been amended
  • the entry for Alexander Yevgeniyevich MISHKIN under the chemical weapons sanctions has been amended;
  • 9 entries subject to the Central African Republic sanctions have been amended;
  • 140 entries listed under Afghanistan sanctions have been amended; and
  • 4 new names added to Zimbabwe sanctions lists

ISLE OF MAN: 4 NAMES ADDED TO ZIMBABWE SANCTIONS

On 1 February, the Isle of Man advised that Owen NCUBE, Anselem Nhamo SANYATWE, Godwin MATANGA and Isaac MOYO have been added to the list of those affected by sanctions.  These are security officials, including State Security minister Owen Ncube.

https://www.gov.im/news/2021/feb/01/financial-sanctions-zimbabwe/

https://263chat.com/just-in-uk-imposes-sanctions-on-zimbabwe-security-chiefs/

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/957467/Notice_Russia_010221.pdf

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/957463/Notice_Yemen_010221.pdf

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/957459/Notice_Libya_010221.pdf

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/957461/Notice_Syria_010221.pdf

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/957455/Notice_Iran__Nuclear__010221.pdf

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/957453/Notice_Chemical_Weapons_010221.pdf

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/957501/Notice_Central_African_Republic_010221.pdf

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/957423/Notice_Afghanistan_010221.pdf

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/957465/Notice_Zimbabwe_010221.pdf

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CHANGES TO UK SANCTIONS REGIMES

On 31 December, HM Treasury published a Notice notifying changes made to UK sanctions regimes following the end of the Brexit transition period on 31 December.  The changes included 113 names (109 individuals and 4 entities) no longer subject to an asset freeze (and listed in the Notice), the addition of 11 new aliases of existing entries, and other assorted changes.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/949055/Notice_Consolidated_List_Changes__31_December_2020.pdf

The current UK Sanctions List, including 3 new Zimbabwe sanctions entries added on 1 February, is available at –

https://www.gov.uk/government/publications/the-uk-sanctions-list#history

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JERSEY-REGISTERED ‘CITIZENSHIP’ FIRM AIDED JHO LOW’S FUGITIVE LIFE FOR MASSIVE PAYMENTS

On 1 February, Sarawak Reports carried an article saying that it and OCCRP have examined how, at the height of the 1MDB scandal, the Malaysian fraudster Jho Low utilised a network of services accessed through a company which describes itself as the “The Global Leader in Residence and Citizenship Planning to continue to move himself and his money around the world.  Henley & Partners Holdings Limited is based in the Channel Islands and operates a web of mainly offshore companies.  The group has repeatedly denied it ever signed up Jho Low as a client or received ‘direct payment’ from him.  However, extensive evidence reviewed in the investigation, and ultimately admitted to by the company, shows that the firm nonetheless referred the wealthy Malaysian fugitive to an established network of close business partners in return for at least 75% of the massive fees paid by Jho Low to obtain one such citizenship.

https://www.sarawakreport.org/2021/02/jersey-registered-citizenship-firm-aided-jho-lows-fugitive-life-for-massive-payments-special-investigation/

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EU COMMISSION PUBLISHES PUBLIC CONSULTATION ON THE TAXATION OF CROSS-BORDER ALCOHOL AND TOBACCO PURCHASES IN THE EU

On 1 February, the EU Commission launched a public consultation on the taxation of cross-border alcohol and tobacco purchases in the EU.  The consultation aims to ensure that all relevant stakeholders have an opportunity to express their views on the current rules and how they might work in the future.  It includes questions on the effects of the current system, along with possible changes. The consultation remains open until 23 April.

https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/12650-Alcohol-tobacco-bought-abroad-review-of-tax-rules/public-consultation

Meanwhile –

UK: PASSENGER PURCHASES OF ALCOHOL AND TOBACCO

On 1 February, the House of Commons published a Research Paper.  In the 2020 Budget the UK Government launched a consultation on the “potential approach to duty- and tax-free goods policy after the transition period following the UK’s departure from the EU”.  Following this, in September 2020 the Government announced a series of reforms to these rules, to apply from 1 January with the end of the transition period and the UK’s exit from the Single Market.

https://commonslibrary.parliament.uk/research-briefings/sn01223/

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EU: STRICTER RULES ON EXPLOSIVE PRECURSORS TO MAKE IT HARDER FOR TERRORISTS TO BUILD HOMEMADE EXPLOSIVES

On 1 February, the EU advised that new rules restricting access to explosive precursors start applying throughout the EU.  The rules contain stronger safeguards and controls on the sale and marketing of dangerous chemicals, which have been misused to produce homemade explosives in a number of terrorist attacks in Europe.  Under the new rules, suspicious transactions – whether online or offline – should be reported, including by online marketplaces.  Sellers have to verify their customers’ identity and their need for buying a restricted substance.  Before issuing a licence for buying restricted substances, Member States need to carry out security screening, including a criminal background check.  The new rules also restrict 2 additional chemicals: sulphuric acid and ammonium nitrate.  The new EU Regulation strengthens and updates existing rules on explosive precursors, and contributes to denying terrorists the means to act.

https://ec.europa.eu/commission/presscorner/detail/en/MEX_21_345

The new rules are in the Regulation at –

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A32019R1148

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EUROPOL WARNING ON THE ILLICIT SALE OF FALSE NEGATIVE COVID-19 TEST CERTIFICATES

On 1 February, a news release from Europol advised that, as long as travel restrictions remain in place due to the pandemic, it is very likely that criminals will seize the opportunity of producing and selling fake COVID-19 test certificates, warns a Europol Early Warning Notification.  Several cases have already emerged of fraudulent COVID-19 test certificates being sold to travellers.

https://www.europol.europa.eu/newsroom/news/europol-warning-illicit-sale-of-false-negative-covid-19-test-certificates

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CHINESE INVESTOR IN MOTOR SICH CRITICISES UKRAINE’S SANCTIONS

On 1 February, Interfax Ukraine reported that a Chinese shareholder in Ukraine aero-engine maker Motor Sich PJSC, has said that it considers the sanctions imposed by Ukraine against it and related persons for 3 years to be unreasonable and calls them the main goal of preventing investments in Motor Sich.  Skyrizon Aviation Industry Investment Company is also on the US Military End-User (MEU) List and subject to US export controls.  On 29 January, it was reported that Ukraine had imposed sanctions on the Chinese aviation company, which had sought to acquire control of Motor Sich.

https://en.interfax.com.ua/news/investments/720373.html

Meanwhile –

UKRAINIAN SECURITY SERVICE RAIDS AERONAUTICS COMPANY’S BOARD MEETING

On 31 January, Rferl reported that Ukraine’s state security service (SBU) is investigating a shareholder meeting of Motor Sich, the maker of jet engines for the defence industry, after the government had imposed sanctions against Chinese investors seeking to purchase a stake in the company.  Law enforcement raided Motor Sich as a board meeting was scheduled.  The US had been pressuring Ukraine to block the sale of the defence company to companies in China.

https://www.rferl.org/a/ukraine-raids-motor-sich-board-meeting-chinese-investors-sanctions/31078973.html

 

 

 

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