Panama Covid-19 update – a bit more promising today after (for whatever reason) only 22 new cases reported, but with 8 new fatalities. There are now 5,200 active cases with 99 in ICU and 616 in other wards.
22 MARCH 2021
AUSTRALIA: AUSTRAC DEFENDS TAKING NO ACTION AGAINST BANKS IN DRUG CARTEL STING
On 19 March, the Australian Financial Review reported that the country’s financial intelligence regulator has defended taking no action against nine Australian banks that unwittingly laundered drug cartel money, saying their co-operation with law enforcement was vital to disrupting the network and other similar ones. It faced questioning at a parliamentary hearing about its methods and capabilities. There were also questions about the regulator’s handling of a series of high-profile cases, including engagements with Westpac, the Vatican and Crown Casino – and the regulator said it had compliance assessments under way with other casinos.
MEXICO PROBE LINKS BORDER GOVERNOR TO LUXURY PROPERTIES
On 19 March, AP reported that Mexico’s FIU has said that the governor of the northern border state of Tamaulipas owns a large number of luxury properties that it says does not match the income from his government jobs over the last 20 years. A report to Congress said that Francisco Garcia Cabeza de Vaca earned about $2 million in wages and $1 million in other income since 2000, but acquired properties worth many times that. It also mentioned properties owned by the governor or his relatives in Texas.
UK: DEALERS ARE USING FORTNITE TREATS TO GROOM CHILDREN AS DRUG MULES
On 22 March, KYC 360 relayed a story from The Times which says that criminals are using the video game Fortnite to groom children as young as 12 to become drug mules, youth workers have warned, using the game’s virtual currency, v-bucks. They are offered to children who want to buy extras for the game but cannot afford to do so and, after the child is used to receiving v-bucks, the drug dealers ask for something in return.
ABN AMRO BOARD BLOCKED RESEARCH INTO CLAIMS OF MONEY LAUNDERING IN 2014
On 20 March, the NL Times said that a report from investigative journalist organisation Follow the Money (FTM) and based on confidential emails and documents claimed that the ABN AMRO board of directors knew about problems with money laundering in 2014, but stopped a research project into it. In June 2014, ABN AMRO stopped a project to combat money laundering based on a big data study.
LONDON GALLERIES ISSUED WITH MONEY LAUNDERING ‘AMBER ALERT’ ON TOP ARTWORKS
On 19 March, the Evening Standard reported that the NCA fears tens and potentially hundreds of millions of pounds are being laundered through art sales and is concerned that lax checks are making it too easy for criminals to exploit the market. The director general of the NCA’s National Economic Crime Centre said there has been an inadequate response and that an official “amber alert” has been sent to dealers in the capital and elsewhere in Britain. It is also said that HMRC will be looking harder at art dealers” to counter the risk of sales being used to avoid inheritance or capital gains tax.
SRC: A TRIAL THAT BREACHES MALAYSIA’S LEGAL FRONTIERS
On 19 March, an article from Rajah & Tann Asia said that the High Court found former premier Datuk Seri Najib Razak guilty of abuse of power, criminal breach of trust and money laundering in relation to funds belonging to SRC International Sdn Bhd. He is the most senior member of the executive branch of the government to be charged in the Malaysian court in history, and the article discusses the legal position on how the offences are construed, and the key takeaways from this judgment.
HONG KONG: NOMINEE DIRECTORS AND SHADOW DIRECTORS
On 18 March, a briefing from RDG Fiduciary Services Ltd considers the concept of the “nominee director” and, by consequence, the concept of a “shadow director”.
UK: ACTION AGAINST PERSONAL MANAGEMENT LICENCE-HOLDERS OF CAESARS ENTERTAINMENT
On 17 March, an article from CMS Cameron McKenna Nabarro Olswang LLP said that the Gambling Commission had announced on 3 March that it has taken action against more than 30 Personal Management Licence holders in connection with Caesars Entertainment UK Limited, the land-based gambling business. Such persons are required to be held by individuals responsible for specific activities within a gambling operator’s business (such as, for strategy, financial planning, and regulatory compliance). This followed an investigation last year by the Commission into Caesars and the 11 casinos it operates across Britain, which revealed “serious systemic failures” in the decision-making processes involving VIP customers. The Commission found the Licensed Entities to be in breach of the Licence Conditions and Codes of Practice, referencing a “catalogue of social responsibility, money laundering and customer interaction failures”, and a regulatory settlement with Caesars in April 2020, which involved a record £13 million payment in lieu of a financial penalty.
THE FINANCIAL SERVICES SECTOR AND ESG
On 18 March, an article from Covington & Burling LLP discusses the position of environmental, social and governance disclosure requirements in UK and the EU. It says that some companies already view voluntary comprehensive ESG disclosure as a way of marking them out from their peers and competitors and thus creating investor value. The article says that it is not only a recognition of its potential market value that has driven ESG disclosure, but also a determination on the part of regulators (including the FCA and the ESMA) to prevent ‘greenwashing’ – re-labelling of existing or ‘normal’ financial products to make them seem ‘green’.
LIBYA ARMS EMBARGO ‘TOTALLY INEFFECTIVE’: UN
On 17 March, Al Jazeera reported that the UN panel of experts says violations of arms embargo are ‘extensive, blatant and with complete disregard for sanctions’.
WHAT IS CUCKOO SMURFING IN MONEY LAUNDERING?
On 20 March, a blog post from Astor Legal in Australia says that the technique has been used by a number of criminal organisations including drug traffickers, terrorist financiers and in complex frauds. It allows money obtained through illegal activities to be washed by hiding the transactions as international legal activities of non-doubtful bank customers. Cuckoo smurfing involves the money launderer splitting large transactions into multiple small transactions to avoid detection. The article considers the legal position under Australian law.
CHINA BLACKLISTS EU FIGURES IN RETALIATION ON UIGHUR SANCTIONS
On 22 March, EU Observer reported that China has blacklisted 5 MEP, 3 European national MP, 2 European scholars, and 4 entities, including the “Political and Security Committee of the Council of the European Union”. The individuals, plus their families, were put under an asset-freeze and visa-ban.
INTELLECTUAL PROPERTY: NEW ADVICE SERVICE FOR SME LAUNCHED BY EU
On 22 March, the EU announced that the Commission has launched the Horizon Intellectual property (IP) Scan’ service. This tailored, first-line and free IP support service is designed to help small and medium-sized enterprises (SME) to efficiently manage and valorise IP in collaborative research and innovation efforts.
SWITZERLAND: JULIUS BAER TO CLAW BACK BONUSES OVER LATIN AMERICA SCANDAL
On 22 March, BNN Bloomberg reported that Julius Baer Group AG has moved to claw back bonuses for bankers involved in a Latin America money laundering scandal that prompted a regulatory probe, the second Swiss bank in less than a week to announce such a step, after Credit Suisse Group AG did so.
SINGAPORE BUSINESSMAN LINKED TO ALLEGED FRAUD OF RECORD $1 BILLION IS CHARGED
On 22 March, the Straits Times reported that Ng Yu Zhi, 33, is the director of 2 companies and is said to have raised the money from investors, purportedly to finance nickel trading. The alleged victims were promised varying returns averaging 15 per cent over 3 months.
RUSSIA: SHIPYARD DIRECTOR ARRESTED IN AIRCRAFT CARRIER FRAUD CASE
On 22 March, the Barent Observer reported that the director of Shipyard No. 10 in Polyarny had been arrested under suspicion of the theft of funds allocated to the repair of the Northern Fleet’s aircraft carrier “Admiral Kuznetsov“.
UK GOVERNMENT RESPONSE TO LAW COMMISSION REPORT ON TECHNICAL ISSUES IN CHARITY LAW
On 22 March, the Department for Digital, Culture, Media and Sport published a news release saying that the government has accepted the majority of the Law Commission’s recommendations. The proposed reforms, it is said, will make charity regulation more effective and make the legal framework easier to navigate. This would enable charities to use their money and resources more effectively to promote their charitable causes. It is also said that the government will look to bring forward legislation to implement these recommendations when Parliamentary time allows.
HONG KONG CUSTOMS OFFICERS ARREST BUSINESSMAN AFTER SEIZING HK$5.3 MILLION WORTH OF FAKE CLOTHING
On 22 March, the South China Morning Post reported that more han 9,000 counterfeit items of clothing were found during customs raids an importer’s warehouse and shop.
LITHUANIA: ALCOHOL SMUGGLING SURGES IN 2020
On 21 March, Delfi reported that Customs officers seized 14.5 tons of illegal alcohol last year, up from 2.5 tons in the previous year.
UNCOVERING COLOMBIA’S ILLEGAL TIMBER TRADE
On 21 March, an article from Insight Crime reported that more than half of Colombia is covered in forests, but rampant illegal logging is decimating the country’s woodlands. InSight Crime has teamed up with the WWF and others to investigate the criminal activities driving deforestation, forest degradation and biodiversity loss in Colombia. Corruption facilitates every step of the process: from falsifying documents to ensure the timber’s smooth transit, to laundering illegally sourced wood for legal resale. As a result, it is often highly difficult to determine whether legally commercialized wood came from a licit source or not.
ELECTRONIC EVIDENCE IN CRIMINAL MATTERS
A briefing paper from the EU Parliament Research Service on 22 March is concerned with proposed new rules which would allow law enforcement and judicial authorities to directly request (or temporarily secure) electronic data needed for investigating and prosecuting crime from electronic service providers operating in the EU (wherever the data is stored), and would impose an obligation on these service providers to appoint a legal representative for the purpose of gathering evidence and answering competent authorities’ requests. The briefing refers to a draft EU Regulation and EU Directive, including in respect of a European Production and Preservation Orders for electronic evidence in criminal matters.
EU: CONTROL OF EXPORTS, TRANSFER, BROKERING, TECHNICAL ASSISTANCE AND TRANSIT OF DUAL-USE ITEMS
On 22 March, the EU Parliament Research Service publishing a briefing paper saying that the EU control regime is now being revised, mainly to take account of significant technological developments, increase transparency and create a more level playing field among EU Member States. A proposal would place new limits on the export of cyber-surveillance items and strengthen human rights considerations. The European Parliament is expected to vote on the agreed text resulting from interinstitutional negotiations during the March plenary session.
THE GREAT RUSSIAN OIL HEIST
On 22 March, a feature from Rferl says that Russian law enforcement officers play a key role in the industrial-scale theft of oil from the country’s network of pipelines, an illicit business that robs the public coffers of hundreds of millions of dollars in revenue and wreaks damage on the environment. The investigation focuses on the energy-rich Khanty-Mansi Autonomous District in western Siberia, although it is said that multiple sources said that oil-theft schemes in other Russian regions operate in a similar fashion. It is said that organised crime groups siphon off untold amounts of oil using illegal taps and hoses to pump the liquid loot from pipelines into waiting tanker trucks or river barges, while police and security officers provide protection and logistical assistance in exchange for a cut of the illicit profits, the investigation found.
UK: POLICE TOLD NOT TO FOCUS ON COVID-19 BOUNCE BACK LOANS FRAUD
On 21 March, The Times reported that police have been told to investigate Covid loan fraud only when there is evidence of links to organised crime – although up to a third of the £45 billion lent through the bounce back loan scheme (BBLS) for small businesses, which can borrow up to £50,000, is thought to have been subject to fraud. The City of London Police is said to have written to police forces to say that officers should be called in only on cases that “involve clear links to serious organised crime and core policing business”.
NFT AND THE LAW
On 15 March, Coindesk published an article about Non-Fungible Tokens (NFT) which seeks to explain them and provides some legal considerations.
AD FRAUD IS SO NORMALISED, YOU DON’T EVEN SEE IT WHILE STARING RIGHT AT IT
On 21 March, an article in Forbes magazine says that digital ads are just bits and bytes – there’s no physical product to move. There’s no human labour needed to stand on Fifth Ave, sell the products, and take cash payments from buyers. The humans behind the ad fraud or facilitating it are sitting comfortably behind computer screens, never even have to look at the counterfeit products they are profiting from. It says that despite the occasional press releases from fraud detection companies touting their discoveries of the “largest-ever” fraud scheme, the ad fraud continues — most of it in plain sight.
PIRATES HIJACK IRAQI SHIP STRANDED OFF IRANIAN COAST
On 22 March, Helelnic Shipping News reported that pirates have hijacked an Iraqi ship that was stranded outside the country’s waters and took it to an unknown location.
CZECHIA: REGISTER OF BENEFICIAL OWNERS – BACK IN A NEW FORM
On 22 March, Taylor Wessing published an article saying that on 1 June, a new Act implementing the EU Fifth Anti-Money Laundering Directive will come into force. The new Act (replacing the existing legislation) is designed to “again” increase the transparency of legal entities and to help resolve and clarify the relationships between and the structure of legal entities recorded in the commercial register. The change was made because the existing legislation was insufficient in this regard.
WORSENING US SCORE IN 2020 CORRUPTION PERCEPTION REPORT UNDERSCORES URGENT NEED FOR REFORM
On 4 March, a blog post from FACT (Financial Accountability & Corporate Transparency) Coalition says that the annual Transparency International Corruption Perceptions Index is a survey of country-level corruption experts and business executives on perceived corruption in 180 countries. The upward trend in perceived US corruption shows that US citizens are losing faith in their elected leaders to operate transparently and ethically: chiefly, due to the previous Administration’s attacks on a landmark anti-bribery law, whistleblowers who expose fraud and corruption, oversight of pandemic relief funding, and the nation’s electoral process. The increased perception of corruption has further eroded the credibility of the US Government at a crucial time when it has needed to respond to an historic public health and economic crisis.
UK: RARE SUMMARY JUDGMENT CLAIM IN SUBSTANTIAL BANKING TECH FRAUD – AND ANALYSIS OF A BANKING TECH FRAUD
On 22 March, law firm Field Fisher reported in a news release that it has succeeded in obtaining summary judgment for a client in excess of €3.5 million in a complex multi-jurisdictional fraud claim. It is said that this is striking in that summary judgment was given on the merits against each of the respondent Defendants, the court holding that there was no reasonable prospect of their establishing a defence at trial and that there was no other compelling reason for a trial to be held. Separately, an article explains how the case unfolded. It says that key to the success of the case was the technical evidence provided by the claimant’s legal team, gathered using a series of third party disclosure orders; and the key evidence involved the use of burner phones, faked emails and cell tower call triangulation. In the scam, fraudulent telephone calls were made to the Cayman bank and a fraudulent fax was sent, resulting in €15 million of the claimant’s money being sent to a bank account held in England and much of the money was then rapidly paid away. On learning of the fraud, the claimant made a series of urgent applications to the Commercial Court in London – initially using the ‘Persons Unknown’ jurisdiction – which resulted in Worldwide Freezing Injunctions, Proprietary Freezing Orders and disclosure orders being made against several of the defendants. Further non-party disclosure orders were made against banks and financial institutions to trace the destination of the claimant’s monies.
TRACKING CHINESE INFLUENCE IN THE WESTERN BALKANS
This “Red Flags” project is run by the Center for Strategic and International Studies which tracked Chinese economic influence and political leverage in the Western Balkans. Over 18 months, CSIS collected data on China’s activities in the region and produced a series of reports to visualize regional and sectoral trends, connect economic and political developments, and provide recommendations for US and partner responses. The project culminated in a Red Flags Checklist — a tool for policymakers and other stakeholders to evaluate risks at the project level.
AFTER LANDMARK EXTRADITION, NORTH KOREAN IN US COURT ON MONEY LAUNDERING CHARGES
On 22 March, radio Free Asia reported that the first North Korean national to be extradited to the US appeared in court to face money laundering charges in Washington. Mun Chol Myong, 55, was extradited from Malaysia in a decision that led North Korea to cut diplomatic ties with Malaysia. Mun, who had lived in Malaysia since 2008, was arrested in May 2019 after the US accused him of supplying prohibited luxury goods to North Korea, in violation of UN sanctions, imposed to curb the regime’s access to hard currency to fund its nuclear and missile programmes.
COMMUNIST CHINESE MILITARY COMPANIES BLACKLISTING BY THE US: A PRIMER
An article from lawfare on 22 March provides background on section 1237 of the National Defense Authorization Act (NDAA) 1999, examines the current state of play, and assesses the ongoing legal battle between the US Government and the companies over the “Communist Chinese military companies” (CCMC) label and its accompanying consequences.
MAKING SENSE OF IRAN AND AL-QAEDA’S RELATIONSHIP
On 22 March, an article on Lawfare says that Al-Qaeda and Iran are strange bedfellows. Iran’s allies and proxies are often at war with al-Qaeda affiliates, but at the same time Iran hosts senior al-Qaeda leaders. The post unpacks this odd relationship, tracing its history and identifying the advantages for Tehran and al-Qaeda.
PODCAST: MODERN SLAVERY IN THE CORPORATE WORLD (PART 1)
Half-hour podcast from Get Legally Speaking in the UK on 22 March in which host Hatti Suvari talks to barrister Felicity Gerry QC about exploitation in the fashion, food, construction and other sectors and explore what global companies are doing to rid their supply chains unethical practices. They also look at how the law deals with corporate slavery and forced labour to encourage greater corporate responsibility.
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