On 13 April, TeleSUR reported that Ecuador’s Attorney General has ordered the arrest of Comptroller General Pablo Celi and former Secretary of the Presidency of the Republic Jose Augusto Briones to be investigated in corruption cases. The investigation is linked to the “Las Torres” case, an investigation related to organised crime and corruption in the public company Petroecuador, the Comptroller’s Office, and the Secretariat of the Presidency.
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On 13 April, OFAC announced that it had removed 2 names from its Cuba sanctions list, while also adding a Mexican national to its drugs trafficking list.
Any modest contributions for my time and ongoing expenses are welcomed! I have a page, where contributions start as low as $3, athttps://www.buymeacoffee.com/KoIvM842y
Any modest contributions for my time and ongoing expenses are welcomed! I have a page, where contributions start as low as $3, athttps://www.buymeacoffee.com/KoIvM842y
Any modest contributions for my time and ongoing expenses are welcomed! I have a page, where contributions start as low as $3, athttps://www.buymeacoffee.com/KoIvM842y
Panama Covid-19 update – another 181 new cases reported today, together with 4 new fatalities. 4,071 active cases include 63 in ICU and 396 in other wards, with 210 more in so-called “hospital hotels”.
12 APRIL 2021
MYANMAR JUNTA REAPS MILLIONS IN GEM SALES AS ECONOMY CRUMBLES
On 10 April, Nikkei Asia reported heightened risks of soaring inflation, collapsing trade and increased poverty in Myanmar following the coup. However, it said that recent days have seen a remarkable display of the military’s grasp on Myanmar’s natural resources, with a multi-million dollar, 10-day auction of gems, jade and pearls in the capital. The regular gem auctions are organised by companies linked to military-controlled conglomerates Myanma Economic Holdings Limited and Myanmar Economic Corporation. Fitch warned of a 60%-plus annual fall in exports of general goods in the fiscal year to September, warning that even if global demand recovers, Myanmar will probably see exports in manufactured goods fall heavily this fiscal year.
PRESIDENT BIDEN’S BUDGET REQUEST INCLUDES FUNDS FOR CORPORATE OWNERSHIP REGISTRY
On 11 April, the Wall Street Journal reported that the White House has a request which seeks to provide an additional $64 million to FinCEN for the purpose of building the database, which is meant to help authorities combat anonymous shell companies and track the flow of illicit money.
The latest Suspicious Transaction podcast from RUSI says that aid organisations must navigate through tough circumstances to reach those most in need. The challenges are not solely physical; they also include compliance with a complex global sanctions and counter-terrorism finance regime, one that is often disconnected from realities on the ground.
UK: GAMBLEAWARE CHARITY CALLS FOR MANDATORY LEVY IN GAMBLING ACT REVIEW CONSULTATION
On 12 April, iGB reported that the independent charity GambleAware has published its submission to the Department of Digital Culture, Media and Sport’s (DCMS) Gambling Act review in the UK, specifying the need for a mandatory levy. GambleAware continued its advocacy for a mandatory levy to fund research, education and treatment (RET) related to gambling and gambling-related harm.
GERMAN COURT CASE AND THE CUM-EX SCANDAL: “DON’T ASK, DON’T TELL”
On 11 April, KYC 360 reported a Bloomberg article which refers to a 2008 memo at ICAP Plc informing employees not to enquire after the tax analysis of a German counterparty and says that the “dexterity” involved in its arrangements helped make the deals a profitable niche for ICAP: the transactions pulled in £28 million for the broker in 2006, or about 3% of the group total that year, according to another memo. The court filings in a case in Hamburg in which ICAP is being sued also flag potential pitfalls if the procedures weren’t followed, including the risk of being drawn into a German tax evasion investigation.
GARDAI EXPAND INVESTIGATION INTO FRAUD AT IRISH CHARITY BOTHAR
On 12 April, KYC 360 reported that Gardai investigating the alleged misappropriation of funds from the charity Bothar by its former chief executive are examining claims that other people might have been involved in fraud. The charity claimed that he had misappropriated at least €460,000.
‘APHRODISIAC’ OF THE OCEAN: HOW SEA CUCUMBERS BECAME GOLD FOR ORGANISED CRIME
On 12 April, the Guardian reported that overfishing and smuggling of this crucial animal are affecting biodiversity and the livelihood of local fishers in Sri Lanka. Sea cucumbers are echinoderms with soft, tubular bodies. Sea cucumbers are in great demand in China and south-east Asian countries, where they are regarded as a culinary delicacy and used in traditional medicines. They are usually eaten in dried form – known as bêche-de-mer or trepang. They are also mistakenly considered to be an aphrodisiac by some, especially in China. Illicit sea cucumbers are therefore either caught in India and smuggled into Sri Lanka, where they are exported legally to south-east Asia, or exported from India under false labelling.
IRELAND: GARDAÍ PLANNING TO MAKE 700 ARRESTS OF MONEY MULES
On 12 April, the Irish Independent reported that up to one money mule on average is being arrested every day by fraud squad detectives investigating multiple different money laundering targets across the country, and officers from the Garda National Economic Crime Bureau (GNECB) plan to make 700 arrests in the coming months of people who have allowed their bank accounts to be used by criminal organisations.
COLOMBIA’S CARTELS TARGET EUROPE WITH COCAINE, CORRUPTION AND TORTURE
On 11 April, the Observer carried a report linked to the huge amounts of cocaine seized in Europe in recent months. It says that Europe has eclipsed the US as the Colombian cartels’ favoured market, because of higher prices and much lower risks posed by European governments in terms of interdiction, extradition and seizure of assets. It says that methods of operation being brought to Europe’s major ports, where Dutch and Belgian criminals are sub-contracted by Colombians to move the product onwards to Italian, Albanian, British and Irish organised crime networks, are bringing a level of corruption and violence never before seen in this part of the world.
On 8 April, an article from Osborne Clarke says that the CPS has now launched a new 5-year strategy aimed at increasing the resources for tackling economic crime. The key objectives include a renewed focus on digital capabilities: including more virtual hearings and the use of AI in disclosure. It is hoped that this will reduce the backlog in cases. It also supports the creation of the first ever Economic Crime court – currently cases are heard as part of the financial list in the criminal courts of England and Wales.
UK: PRE-PACK SALES TO CONNECTED PARTIES – THE NEW EVALUATOR PROCESS
On 6 April, an Alert from Squire Patton Boggs reminds that, from 30 April, an administrator will be unable to complete a sale of a substantial part of a company’s property to a connected person within the first 8 weeks of the administration without either the approval of creditors or an independent written opinion (positive or negative). The alert considers the impact of the new regulations in practice, which apply to both pre-packs and post-packs that take place within 8 weeks of an administrator’s appointment. The definition of connected person includes directors, shadow directors or other officers of the company, as well as “connected companies”.
NORTH KOREANS ARE STRANDED IN NIGERIA OR ILLEGALLY WORKING IN LOCAL CLINICS
On 12 April, NK News reported on the problems of workers abroad after a 2019 U.N. ban ordered all North Korean workers home – but with COVID-19 disruptions leaving some still waiting for deportation. These include football players in Europe, construction workers in Russia or healthcare staff in Nigeria.
IMF SAYS PHILIPPINES NEEDS AML REFORM ON CASINO SECTOR
On 12 April, GGR Asia reported that the Philippines will need to make further reforms to enhance its AML/CFT measures in relation to the country’s casino industry, The IMF reached the conclusion as part of its “Financial System Stability Assessment” of the country.
MIAMI MONEY LAUNDERING SAGA DEVELOPS EVEN DEEPER UKRAINE ROOTS
On 12 April, an article from Herald-Mail Media was concerned with a case involving a couple of Ukrainian oligarchs sanctioned for alleged money laundering, Florida-based businessmen who employed the husband of a prominent Democratic politician, and political connections tracing back to Rudy Giuliani, former Ukrainian presidents and even the Kremlin. It is said that the case demonstrates the magnetic pull of Miami when money laundering is alleged, and a lawsuit, Oleg Zhukovskiy v. National Bank of Ukraine, adds an extra layer onto an already complicated saga about alleged dirty money flowing through South Florida.
On 12 April, a report in Dominica News Online reported that, amid opposition calls for government to seek foreign assistance to investigate a recent money laundering matter involving the seizure of over $1 million from an apartment, the Minister for National Security has said he is confident in the Financial Services Unit’s (FIU) ability to handle the matter. 2 men were arrested in connection with the EC$1. 3 million discovery in late March.
On 9 April, Irish law firm A&L Goodbody published an article saying that the Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Act 2021 was signed into law by the President on 18 March. It amends the 2010 Act and transposes the EU Fifth Anti-Money Laundering Directive into Irish law – something which was required to be completed by 10 January 2020. While detailing the new Act’s provisions, the article says that overall, the Act has a limited impact on the country’s AML/CFT regime. The changes introduced are those required by the 5AMLD and there is no gold-plating. The key changes introduced by the Act are discussed in the article
AUSTRALIA: FINANCIAL SERVICES UPDATE INCLUDE CFD AND BINARY OPTION PRODUCT INTERVENTION ORDERS
On 8 April, Hall & Wilcox published issue 52 of its Financial Services in Focus. It looks at on regulator ASIC’s CFD and binary option product intervention orders (banning the issue and distribution of binary options to retail clients), its requirements for advice fee consents and independence disclosures, and its ‘no action’ position on virtual meetings and much more.
OPPORTUNITIES AND THREATS IN KAZAKHSTAN’S WILD LIQUORICE ROOT TRADE
On 7 April, the NGO TRAFFIC issued a report which finds that the intensive and unregulated harvesting of liquorice plants, which grow in the flat unforested grasslands (steppes) and mountain rivers banks of Kazakhstan, is a major direct pressure on this important resource. This is exacerbated by other factors such as desertification, changes in the hydrological flow of rivers caused by the construction of dams, and the ploughing up of liquorice stands for agricultural crops. It calls for improved regulations for liquorice root harvesting in Kazakhstan, improved data gathering, as well as the uptake of good practice standards by businesses.
UK: INSOLVENCY-RELATED LEGISLATION – WHAT ARE YOUR RIGHTS AS A SUPPLIER AND WHAT ARE EFFECTS ON SUPPLY CHAIN?
On 12 April, an article from Bird & Bird says that last year saw a wave of insolvency-related legislation introduced which was largely in response to the ongoing coronavirus pandemic but which also saw permanent reforms which have, and will continue to have, an impact on the logistics industry as well as supply-chains generally. One of the most significant permanent reforms are to suppliers’ rights when their customers enter into an insolvency process.
An article from Bird & Bird on 12 April says that there has been an increase in interest in the urban warehousing market in response to an increased demand for storage space. This presents major opportunities for the logistics sector. The article highlights the impact of some fundamental post-Brexit VAT developments, which may increase interest in warehouse fulfilment offerings but will also bring new responsibilities. It also refers to changes introduced to help HMRC deter and disrupt abuse by non-compliant overseas suppliers selling goods to UK customers, including through online marketplaces, under the fulfilment house due diligence scheme (FHDDS). It also warns that those looking to the construction sector for the development of new warehouse space should be aware of the new VAT reverse charge for construction and building services, which took effect on 1 March – this is an anti-fraud measure, and it is a major change in the way VAT will be accounted for on such services.
MALTA: POLICE QUESTION MP OVER ALLEGED CORRUPTION CASE
On 12 April, Malta Today reported that Nationalist MP Toni Bezzina has been summoned by the police financial crime unit for questioning over a case that goes back to 2012.
FORMER HEAD OF CHINA’S INTERNET POLICE WHO PROMOTED PROACTIVE POLICING FACES CORRUPTION PROBE
On 12 April, the South China Morning Post reported that Liu Xinyun, who ran the Network Security Bureau within the Ministry of Public Security from 2014 to 2018, is under investigation for suspected ‘severe violation’ laws. He was a champion of hi-tech policing, touting the use of ‘big data’ to monitor the public.
UKRAINE TARGETS SMUGGLING, AND WITH IT, AN UNLIKELY FOOTBALL SUCCESS STORY
On 12 April, Emerging Europe published article asking if revenue from smuggling used to finance the swift rise of a Ukrainian football team from obscurity to the country’s highest tier? A corruption scandal has hit Ukrainian football with the owner of FC Minaj having his assets frozen by Ukraine’s National Security and Defence Council for his role in a smuggling ring. On 2 April, the President announced that “sanctions” had been placed on the 10 biggest smugglers in Ukraine, along with 68 associated companies. The highest-profile among these is Valeriy Peresolyak, owner of Ukrainian Premier League side FC Minaj. As part of these sanctions, his assets and bank accounts have been frozen.
ITALIAN POLICE SEEK ARREST OF ITALIAN MIDDLEMAN IN VATICAN PROPERTY DEAL
On 12 April, Reuters reported that Italian magistrates have issued an arrest warrant for Gianluigi Torzi, a financial broker caught up in a scandal involving the Vatican’s purchase of a building in an upscale London area.
ONLY US AND GERMANY LOSE MORE REVENUE TO TAX HAVENS THAN BRAZIL
On 12 April, the Rio Times reported that Brazil is the third biggest revenue loser in the world in absolute terms with the transfer of profits of multinational companies to tax havens, behind only the US and Germany, according to Tax Justice Network, and is losing more revenue than any other country outside the group of rich nations
On 12 April, Manufacturing Net reported that federal prosecutors said that they have charged 3 Southern California women with using prison inmates’ names to bilk a state agency out of a combined nearly $1.25 million in coronavirus-related unemployment benefits, the latest allegations in an ongoing scandal that has cost hundreds of millions of dollars.
On 12 April, Allen & Overy published an article saying that the Pensions Regulator has new and far-reaching powers to investigate and prosecute those who put pension schemes at risk. The broad scope of the new offences and information gathering powers has caused a stir in the pensions industry and beyond. Alongside other reforms, the Act strengthens the Regulator’s existing sanctions regime by introducing new criminal offences for improper conduct in relation to defined benefit pension schemes, with penalties including an unlimited fine and/or up to 7 years’ imprisonment. The Regulator’s consultation on a draft policy on the investigation and prosecution of the new offences under the Act closes on 22 April; and the Government consultation on the new regulations published under the Act closes on 29 April.
SURVEY FINDS UK BANKS STRUGGLED WITH COVID-19 FINANCIAL CRIME SURGE
On 12 April, Fintech Times reported that 79% of respondents from UK banks said that working from home had a high or major impact on the effectiveness of their financial crime prevention.
OFAC: AMENDED FAQ FOR THE TRADE SANCTIONS REFORM AND EXPORT ENHANCEMENT ACT OF 2000 (TSRA) AND SUDAN PROGRAM AND DARFUR SANCTIONS
On 12 April, OFAC announced 4 amended FAQ about licence applications, the export or reexport agricultural commodities, medicines, or medical devices to Sudan, and the sanctions which remain applicable to Sudan and the Government of Sudan.
EU COUNCIL FORMALLY ADOPTS DAC7 ON ADMINISTRATIVE CO-OPERATION IN THE FIELD OF TAXATION
On 12 April, an article from Irish law firm Matheson advised that on 22 the EU Council unanimously approved the adoption of the so-called DAC7, the latest amendment to EU Directive 2011/16/EU on administrative co-operation in the field of taxation. The draft was previously agreed by Member States in November 2020. It outlines some of the key changes to be introduced by DAC7.
IMPLICATIONS OF THE ECJ RECOGNITION OF THE RIGHT TO SILENCE IN IRISH ADMINISTRATIVE PROCEEDINGS
On 12 April, Matheson reported that,earlier this year, the European Court of Justice issued a landmark judgment in which it confirmed that natural persons have the right to silence under EU law, particularly in administrative proceedings of a criminal nature. The case related to insider dealing. It is said that this Ruling affirms that the protection of human rights under EU law aligns with well-established international standards, in particular the European Convention on Human Rights. It is said that the Ruling could have broad implications for regulators and individuals participating in administrative proceedings based on the EU regulatory frameworks, including financial services, competition law, money laundering and environmental regulation. The article considers the implications of the judgment which are relevant in a number of Irish regulatory contexts.
ARE CARTELS CONNECTED TO BOOMING TRUCK THEFT IN MEXICO?
On 12 April, Insight Crime posed this question, saying that tens of thousands of trucks on Mexico’s highways are being hijacked for their cargo each year – around 36 trucks are hijacked or stolen every day in Mexico, with criminal gangs becoming more daring, sophisticated and violent in carrying out these assaults. A report has stated that Mexico’s major cartels are involved in the massive number of highway robberies.
UK: 2 ONLINE OPERATORS GIVEN SUBSTANTIAL PENALTY PACKAGES BY GAMBLING COMMISSION
On 12 April, an article from CMS Law advised that the Gambling Commission had recently announced that it has taken further regulatory action against 2 gambling operators, with both operators being required to undergo extensive auditing and pay multi-million pound fines. Between the two companies the fines total £9.405 million and come as a result of the Commission’s findings that they each failed to put in place effective safeguards to prevent money laundering and to keep consumers safe from gambling-related harm.
UK: SOLICITORS WHO MISUSED £1 MILLION RAISED FROM LOAN NOTES STRUCK OFF
On 12 April, Legal Futures reported that 2 solicitors who issued £1 million in loan notes to prop up their firm have been struck off for misusing the money and leaving their investors nursing huge losses.
On 12 April, an article from Eversheds Sutherland explores how the future of US sanctions policy may shape up under the Biden Administration. It is expected that we can expect less volatility in this area under Biden, but any relaxation of sanctions policies are likely to be incremental in nature and tied to specific diplomatic or policy gains.
WWF HIGHLIGHTS ILLEGAL FISHING, TRADE IN STURGEON IN BULGARIA, ROMANIA, SERBIA, UKRAINE
On 12 April, Rferl reported that the charity has published a survey that it says shows that illegal fishing and trade in wild sturgeon is happening in the lower Danube region on a “rather serious scale”. Poaching and the illegal trade of meat and caviar are often cited as major threats to many sturgeon populations worldwide. It highlights the threats in the lower Danube, specifically in Bulgaria, Romania, Serbia, and Ukraine.
TRADE MISINVOICING AND EXPORTS OF TROPICAL TIMBER FROM COLOMBIA
On 8 April, a Trade Brief from the Global Financial Integrity website says that issues with informality and illegality in the timber sector have been well documented. However, the article says that one thing that may not be readily apparent is the need to identify and curtail trade misinvoicing involving the export of Colombian timber products. This Trade Brief provides an analysis of Colombia’s tropical wood exports between 2009-2018, assessing the level of trade misinvoicing and providing recommendations on how to address related gaps in policy and enforcement. It says that addressing trade misinvoicing is a critical step towards safeguarding Colombia’s forests and overall biodiversity.
ORGANISED CRIME AND ILLICIT ECONOMIES IN THE LEVANT
On 22 March, a report from the Global Initiative Against Transnational Organised Crime says that the region’s location on the Mediterranean Sea and at the intersection between Europe, Africa and Asia make this area particularly well placed to facilitate the transnational movement of commodities and people (both formally and informally). The report analyses organised-crime economies in the political-economic context of Lebanon, Jordan and Iraq, and their links to the current Syrian conflict and amid the pandemic.
An article for Kluwer Law says that constantly changing regulatory framework and recent restrictions render it more important than ever for private companies and for research institutions to dedicate more attention and to invest in trade compliance. This article aims to provide insight into the current legislative measures applicable in Italy to the export of dual-use items. It provides both in-depth analysis on different aspects of export compliance, as well as clarification of some basic terms.
On 12 April, an article from Field Fisher outlines the impact of Brexit on UK solicitors in relation to EU legal professional privilege, saying that is particularly relevant to those providing advice on cross-border EU operations who are based in the UK.
US: ENVIRONMENTAL CRIME ENFORCEMENT: INCREASE IN CRIMINAL INVESTIGATIONS AND COMPLIANCE DEMANDS?
On 12 April, an article from Michael Volkov says that, while not listed as a primary objective, the DoJ and the EPA can be expected to increase criminal enforcement of environmental laws. The DoJ Environmental Crimes Section (ECS) has had a steady enforcement record but has suffered political ups and downs depending on the political leanings of the administration in power. The critical issue is usually the budget resources allocated for EPA staffing and DoJ resources.
NEW TAX TRANSPARENCY RULES FOR DIGITAL PLATFORMS IN EU INTRODUCED BY DAC 7
An article from Bird & Bird says that “DAC 7” (EU Directive 2021/514), which was adopted on 22 March by the EU Council, introduces specific reporting obligations for digital platforms. The overall aim of this Directive is to improve administrative cooperation in the field of taxation and address the challenges posed by the digital platform economy. It implements at EU level concepts already developed by the OECD and its Base Erosion and Profit Shifting Project (BEPS). In general, DAC 7 involves reporting obligations for digital platforms in order to help Member States in the fight against tax evasion. These reporting of activities would cover a wide range and type of earnings from, inter alia, the rental of real estate, the provision of personal services, the sale of goods and the rental of any means of transport. DAC 7 requires Member States to adopt and publish, by 31 December 2022, the laws, regulations and administrative provisions necessary to comply with the Directive, with the new rules due to enter into effect on 1 January 2023.
HOW IT BROKE THE STORY OF ALLEGED COVID-19 CORRUPTION IN SOUTH SUDAN
An article in The New Humanitarian on 12 April follows an 8-month investigation into alleged COVID-19 corruption and profiteering in South Sudan, and the increasing tensions between the government and international aid organisations. The investigation was done in conjunction with Al Jazeera.
CHINA: LEECO (FORMERLY LESHI INTERNET FORMATION AND TECHNOLOGY CORP) FINED $36.67M FOR FRAUD OVER 10 YEARS
On 12 April, the Global Times reported that LeEco has said it was fined by the Beijing municipal securities watchdog for financial fraud conducted in the 10 consecutive years from 2007-16. Its founder fled to the US in late 2017, and was banned from China’s security markets for life, with LeEco delisted in July 2020. A California court froze Jia’s stake in California-based FF and issued a protection order for the luxury house he owns in California in 2018.
LATVIAN EXTRADITED TO PITTSBURGH TO FACE MONEY LAUNDERING CHARGE
On 12 April, the Pittsbugh Post-Gazette reported that a Latvian national extradited to Pittsburgh to face money laundering charges appeared briefly in federal court by video. Arturs Zaharevics was one of 5 Latvians charged in September 2019 with providing money laundering services for cybercriminals as part of a transnational organised crime group called QQAAZZ. 15 more defendants, all from Russia and Eastern Europe, have since been charged with similar offences. Zaharevics is a former taxi driver and warehouse worker in London, and was extradited from the UK.
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