Panama Covid-19 update – “only” 2 fatalities reported in the previous 24 hours, with 246 new cases. There are now said to be 4,295 active cases, of whom 93 are in ICU and 504 in other wards.
29 MARCH 2021
GAMBLING CONTRIBUTED £7.7 BILLION TO BRITISH ECONOMY IN 2019 – BUT DECLINE IN FIRST 2 MONTHS OF 2021
On 29 March, 2 articles from iGB reported that, while an EY report has shown that the gambling sector contributed £7.7 billion to the economy of Great Britain in 2019, in the first 2 months of 2021 data released by the Gambling Commission shows a decline over previous years, with gross gaming yield (GGY) down 19% in December-February.
SPOTLIGHT ON MIAMI AS CAPITAL OF COVID-19 FRAUD, FROM BUSINESS TO EMPLOYEE BENEFITS
On 26 March, the Miami Herald reported that, as the nation’s number 1 fraud capital, South Florida led the financial crime wave that followed the passage of the CARES Act, a group of federal law enforcement officials have acknowledged. Over the past year, South Florida’s federal prosecutors have filed 38 criminal cases with $75 million in fraudulent COVID-19 relief claims — the highest number of any region in the country.
WORLD BANK BLACKLISTS SCOTTISH LIMITED PARTNERSHIP AFTER EXPOSING “FRAUDULENT PRACTICES” IN AN EMERGENCY MEDICAL AID PROGRAMME
On 29 March, KYC 360 reported that the World Bank has banned Edinburgh-registered NovoLine Resources LP from bidding in its procurement processes for 3½ years. This came after an investigation into deals it won to supply Uzbekistan’s health ministry. It was found that NovoLine Resources had submitted fake documents to supply similar kit.
LAS VEGAS SANDS INVESTIGATION INTO POTENTIAL BREACHES OF AML PROCEDURES AT ITS SINGAPORE CASINO
On 29 March, the US company announced that it had set up a special committee to look into potential breaches of AML procedures at its Singapore casino, which has already been the target of probes by US officials and local police. The investigation follows a court case (settled out of court) in which a former patron complained that the Marina Bay Sands transferred S$9.1 million from his casino account to other gamblers without his knowledge.
CHINA RETALIATORY SANCTIONS ON US AND CANADIAN OFFICIALS
On 29 March, the EU Sanctions blog reported that China had imposed further sanctions measures in retaliation for those imposed by Western countries over the alleged human rights abuses in Xinjiang. It imposed sanctions on the Chair of the US Commission on International Religious Freedom and the Vice-Chair, a Canadian MP and a Canadian parliamentary subcommittee on international human rights.
MAJOR CHANGES IN SIGHT FOR THE UK’S AUDIT AND CORPORATE GOVERNANCE REGIMES
On 25 March, Reed Smith published an article saying that the UK government is consulting on far-reaching changes to the UK’s audit and corporate governance regimes, with significant consequences for the UK’s largest companies and their directors and auditors, as well as for audit firms and the audit regulator. The consultation runs to 8 July. It is said that most of the changes are targeted at public interest entities (PIE), a category which currently includes listed companies, banks and insurance companies, but is likely to be expanded to take in large AIM-quoted and private companies.
THE LLC – A PROPOSED NEW VEHICLE IN GUERNSEY
On 25 March, an article from Mourant said that the parliament in Guernsey has approved proposals to introduce a new type of vehicle to Guernsey’s existing range of business structures, namely the Limited Liability Company (LLC). It explains that an LLC is a flexible hybrid structure combining the features of a company and a partnership, i.e. limited liability and separate legal personality (akin to a company) and tax transparency (similar to a partnership). An LLC is not dissimilar to a limited liability partnership (LLP), sharing some of the same key features, and it is already available in a number of other jurisdictions such as the Isle of Man, Cayman Islands, Bermuda and Jersey.
NON-FUNGIBLE TOKENS (NFT)
On 25 March, an article from O’Melveny & Myers LLP in the US explains what an NFT is, and saying that businesses and their lawyers have been scrambling to understand the legal issues surrounding NFT, not to mention the meaning and value proposition of this novel class of digital assets for online marketplaces and digital content developers. Among the aspects considered are the potential AML implications.
SINGAPORE: MAS OFFERS NEW AML/CFT GUIDANCE FOR VASP
On 29 March, Regulation Asia reported that the Monetary Authority of Singapore has published a new infographic setting out its supervisory expectations on AML/CFT controls for the Digital Payment Token (DPT) sector. It is intended to raise industry awareness among DPT service providers of sectoral money laundering and terrorism financing risks, and provide additional information to support their implementation of effective controls.
SAUDI AUTHORITIES SEIZE 1.3 MILLION CAPTOGON PILLS SMUGGLED FROM TURKEY
On 29 March, Arab News reported that the pills were discovered by X-ray stitched into the linings of a consignment of fur clothing and that Customs thwarted over 12.5 million pills shipped from the same port since last year.
CHINA CRACKS DOWN ON OIL PRODUCT SMUGGLING
On 29 March, Argus Media reported that China has launched a ‘Yangtze clean up’ campaign to clamp down on oil smuggling in coastal areas as part of tougher scrutiny of environmental violations and tax evasion. This month has seen 171 people arrested who they accused of smuggling almost 1 million tons of oil products.
PROMINENT RACEHORSE OWNER PLEADS GUILTY TO IMPORTING 38 KG OF COCAINE INTO AUSTRALIA THROUGH A NETWORK OF BAGGAGE HANDLERS
On 29 March, the Daily Mail reported that high-profile racehorse owner Damion Flower, 48, has pleaded guilty to importing significant amounts of cocaine into Australia. He was arrested in May 2019 accused of importing 38 kg of cocaine into the country through a network of baggage handlers.
FATF MOVES TO PROTECT CIVIL SOCIETY – UN SHOULD FOLLOW
On 23 March, an opinion article from Just security in the US said that FATF will form a new work stream on unintended consequences of poorly implemented AML/CFT measures – from financial exclusion to the abuse of counterterrorism measures that suppress civil societies and hamper their crucial work. This, the article says, is a potentially transformative move in putting civil society freedoms and financial inclusion at the heart of the fight against terrorism and money laundering. It says that FATF has increasingly demonstrated capacity and willingness to recognise and act to mitigate the unintended consequences of its recommendations for civil society. This includes institutional changes in engaging with civil society and clearly addressing misuse and misapplication of its standards.
UK – INDEPENDENT REVIEW OF CRIMINAL LEGAL AID: CALL FOR EVIDENCE
On 29 March, the Ministry of Justice announced that the Independent Review of Criminal Legal Aid has launched a Call for Evidence, opening on 29 March and closing on 7 May. It is inviting interested parties at the heart of the Criminal Legal Aid System to submit evidence on how the system as a whole can be improved and placed on a sustainable footing for the future.
UK – NEW BUSINESS SUPPORT MEASURES: CORPORATE INSOLVENCY AND GOVERNANCE ACT 2020
On 29 March, the House of Commons Library published a briefing paper about the Act which received Royal Assent on 25 June 2020. The Act consists of 8 measures which conveniently fall into 2 categories – permanent and temporary. Almost all its provisions commence on 26 June 2020, save that most of the temporary business protection measures it enacts have retrospective effect from 1 March 2020.
61 KG OF THC EXTRACT SEIZED BY US CUSTOMS
On 26 March, a news release from US Customs & Border Protection advised that its Office of Field Operations officers at the Pembina Port of Entry seized a shipment of THC extract totalling 61 kg. The shipment was sent to the US on an express consignment carrier and was manifested as non-alcohol disinfectant.
IRELAND: ILLEGAL BOOZE HAUL SEIZED AT ROSSLARE EUROPORT ‘WAS DESTINED FOR SHEBEENS’
On 26 March, the Irish Mirror reported that Customs officials have seized 17,000 litres of beer at Rosslare Europort and it is said that this haul of intercepted illegal booze was destined for Covid-busting shebeens (illegal drinking dens) all over Ireland, it has emerged.
9 MILLION FAKE SEDATIVE PILLS REMOVED FROM CIRCULATION BY HUNGARIAN AND NORWEGIAN POLICE
On 29 March, a news release from Europol advised that over 9 million counterfeit sedative tablets have been seized as a result of a joint operation between the Hungarian National Police and the Norwegian Police with the support of Europol and Eurojust. Criminals in Hungary were producing counterfeit Clonazepam tablets in an underground laboratory. Some 250 kg and 300 litres of various precursors were found on-the-spot. Clonazepam is prescribed for a range of health issues, including panic disorders and seizures. The counterfeit pills were sold across Europe, with Norway being one of the main destinations.
EU ANTI-MONEY-LAUNDERING PACKAGE 2021
On 29 March, a briefing paper from the EU Parliament Research Service is one in a series of ‘implementation appraisals’, produced by the EPRS, on the operation of existing EU legislation in practice. They are provided to assist parliamentary committees in their consideration of new European Commission proposals, once tabled. It says that, despite constant improvements, the existing AML/CFT framework still suffers from some shortcomings. In 2020, the European Commission therefore presented an action plan for a new single EU AML system, outlining areas for future proposals that the European Commission will present as a package in spring 2021.
NEW ZEALAND AN ‘EASY TARGET’ FOR MONEY LAUNDERERS
On 27 March, an article in Stuff says that the New Zealand Government has recognised the need to tighten the net against these activities, implementing its Anti-Money Laundering and Countering Financing of Terrorism Act in 2009. According to the Department of Justice, around $1.35 billion is laundered through ordinary New Zealand businesses annually, as a result of fraud, illegal drugs, tax evasion and other crimes.
GLOBAL SHIPPING: THE WORLD’S MOST OPAQUE INDUSTRY
On 27 March, The Independent published an article saying that the blockage in the Suez Canal has shone a spotlight on a major international industry where there is often a drought of accountability and transparency. In the Suez Canal incident the ship is registered in Panama, but it is operated by a Taiwanese shipping company. However, the “technical manager” of the vessel is based in Hamburg. So who owns the vessel? That turns out to be a Japanese company, which is itself a subsidiary of a Japanese shipbuilding company. The 25-strong crew are not Panamanians, Taiwanese, or Germans or Japanese but Indian nationals. It is said that the intricate web of registration, ownership and operation responsibilities does raise questions about accountability. Alexandra Wrage, the founder of the anti-bribery group TRACE, says the shipping industry, by its nature, faces more corruption challenges than most other industries, because ships are moving from jurisdiction to jurisdiction all the time. The fragmented nature of the industry also contributes to this risk that shipping firms do not follow best practice.
FinCEN NNOVATION HOURS PROGRAM: EMERGING THEMES AND FUTURE ROLE IN AML ACT IMPLEMENTATION
A report from FinCEN says that in May 2019 FinCEN launched the Program to better understand financial services sector innovation related to AML/CFT compliance, and to learn of new financial services offerings and related technologies. It provides a monthly forum for users and providers of regulatory and financial technology to share information about, and discuss potential opportunities and challenges of, their innovative products and services, to the benefit of both the private sector and government. It supports FinCEN’s broader Innovation Initiative, which was launched in December 2018 in conjunction with the release of the Joint Statement on Innovative Efforts to Combat Money Laundering and Terrorist Financing. The report details the findings and outcomes of the Program. It has provided important insight into opportunities for financial services innovation and how to overcome impediments to adopting that innovation. Prior to the Program, FinCEN’s understanding of these issues was largely based on interactions with financial institutions. The interagency cooperation between FinCEN and OCC in hosting this event produced valuable insight into four key areas related to AML/CFT and sanctions regulatory and supervisory technology efforts: identity resolution, information sharing, risk assessment and mitigation, and transaction monitoring/sanctions filtering.
MERCHANT CRYPTO PAYMENTS: A NEW NATIONAL SECURITY FRONTIER
On 24 March, an article on Lawfare starts by reference to an OFAC settlement with settlement with cryptocurrency payment processor BitPay. OFAC had been investigating BitPay for allegedly processing payments to merchants from customers in sanctioned jurisdictions. It says that the case points to how illicit actors might adjust their strategies to circumvent anti-money laundering, combatting the AML/CFT and sanctions compliance requirements. As people’s lives become more digital and businesses become more open to cryptocurrencies, it says, US law enforcement and national security personnel may find that illicit financial activity increasingly involves crypto payments. It warns that there are aspects of cryptocurrency technology that offer loopholes to these sanctions compliance systems, which illicit actors are likely to exploit – and that there are certain types of online merchants that are increasingly likely to prefer crypto payments, which may exacerbate these loopholes. Making some recommendations, the article says that US national security and law enforcement personnel must prepare for illicit actors’ adaptive behaviour, think through the potential illicit scenarios and close the loopholes.
US HAS TAKEN CONTROL OF 2 WEBSITES SAID TO HAVE BEEN UNLAWFULLY UTILISED BY A SPECIALLY DESIGNATED NATIONAL AND FOREIGN TERRORIST ORGANISATION
On 25 March, a news release from US DoJ advised that the US had seized “r-m-n.net” and “Almaalomah.com”, 2 websites that were unlawfully utilised by Kata’ib Hizballah, a Specially Designated National and a Foreign Terrorist Organization.
US: NEXT STEPS IN INVESTIGATIONS OF DIGITAL SERVICE TAXES ADOPTED OR UNDER CONSIDERATION BY CERTAIN US TRADING PARTNERS.
On 26 March, KPMG reported that the Office of the US Trade Representative (USTR) has announced the next steps in its investigations of digital service taxes adopted or under consideration by certain US trading partners – with 6 countries remaining subject to potential action while broader international tax negotiations continue. In January, the USTR found that the digital services taxes adopted by Austria, India, Italy, Spain, Turkey, and UK were subject to action because they discriminated against US digital companies, were inconsistent with principles of international taxation, and burdened US companies. However, Brazil, Czech Republic, the EU and Indonesia had not adopted or not implemented the digital services taxes under consideration when the USTR investigations were initiated, and investigations into these had been ended.
US COMMERCE DEPARTMENT EASES ENCRYPTION EXPORT CONTROLS, REPORTING REQUIREMENTS
On 29 March, an article from Wiley Rein LLP said that the Department of Commerce’s Bureau of Industry and Security (BIS) has a final rule implementing certain changes in the Export Administration Regulations (EAR) agreed upon in December 2019 by governments participating in the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies. The rule eases BIS encryption controls, including eliminating certain reporting requirements for mass market products. These encryption-related changes follow the US government’s trend of slowly and steadily loosening controls on encryption products and reducing the regulatory burden for encryption exporters.
FRAUDSTERS ARE LAUNDERING MILLIONS IN COVID RELIEF THROUGH ONLINE INVESTMENT PLATFORMS
On 29 March, NBC News reported that “tech savvy” criminals are opening accounts with at least 4 online investment platforms, law enforcement officials in the US have said. The digital platforms, investigators said, are easy to dump the money into by setting up accounts with stolen identities. More than $100 million in fraudulent funds passed through investment accounts since Congress passed the CARES Act last March, according to authorities.
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