A news release from the US DoJ on 8 June advised that a now-retired nun – Mary Margaret Kreuper, 79, of Los Angeles – who was the principal of a Catholic elementary school in Torrance has agreed to plead guilty to fraud and money laundering charges for stealing more than $835,000 in school funds to pay for personal expenses, including gambling trips.
On 8 June, the EU Commission announced a new public consultation ahead of a new initiative to fight the abusive use of shell companies, i.e. companies with no or minimal substantial presence, or real economic activity. It says that recent media investigations have brought the issue to the attention of the general public, and have been followed by calls for action from the European Parliament, from citizens, NGO, journalists and civil society in general. The consultation runs to 27 August.
On 8 June, a report from OCCRP alleges that the Sandesara family, on the run from over $700 million in fraud and money laundering charges in their homeland, have been protected by Albania and Nigeria. It says that family members were swiftly granted citizenship in Albania after pledging to invest over $33 million in construction projects with their local partner. Judges in Albania and Nigeria have rebuffed India’s attempts to extradite them, arguing the charges against them are politically motivated. However, Indian state companies continued to buy oil sourced from the Sandesaras’ Nigerian company after the family went on the run. The Sandersaras had been on the run since 2017, when authorities in India accused them of defrauding local banks out of loans worth over $700 million.
On 7 June, The Independent reported that the Council of Europe has said that the UK Government has ignored instructions to strengthen UK anti-corruption laws, in a scathing report published after series of scandals. The 42% compliance rate in the GRECO report represents a significant backsliding on the UK’s previous record, representing the worst rating the UK has ever achieved in a GRECO’s evaluation rounds, which started in 2000. Successive British governments have previously always met between 75% and 100% of previous recommendations. GRECO concludes that the UK had implemented satisfactorily or dealt satisfactorily with 5 of the 12 recommendations contained in the Fifth Round Evaluation Report of the UK. Of the remaining recommendations, 4 have been partly implemented and 3 have not been implemented. GRECO notes that further progress is necessary to demonstrate an acceptable level of compliance with the recommendations within the next 18 months, and the UK has to report back by 22 September 2022.
On 7 June, OCCRP reported that a new Human Right Watch report says that combination of corporate greed and government failures in relation to the expanding palm oil plantations in Western Indonesia harmed surrounding communities and caused mass environmental destruction. The report examined the conduct of PT Sintang Raya – a subsidiary of South Korean Deasang Corporation.
MANX CHARITIES TO BENEFIT FROM £657,000 STORED IN DORMANT BANK ACCOUNTS
On 7 June, a news release advised that charities are set to benefit from a windfall of £657,000 as a result of banks releasing money left in accounts untouched in the Isle of Man for at least 15 years. More than £4 million has been received following the introduction of new legislation, and the first payment has now been released for distribution. Proceeds of a bank account are considered dormant when it has been inactive for at least 15 years. During that period the account owner will not have made contact with the bank, or responded to any requests for information or notifications – though anyone whose money transfers into the fund retains the right to reclaim their money indefinitely.
COUPLE IN £14 MILLION ‘DIRTY MONEY’ CASE WIN TEMPORARY RIGHT TO SECRECY
On 3 June, the Evening Standard reported that the names of a couple accused of bringing £14 million of illicit money into the UK via the “Azerbaijan laundromat” will be kept secret for at least another week after a High Court judge give them a final chance to justify continuing anonymity. He rejected bid to obtain a judicial review to overturn a decision but said that, despite this, legal precedent meant that the couple’s lawyers should be given the chance to present their case again at an oral hearing.
PHILIPPINE INVESTIGATORS ACCUSE EX-WIRECARD COO OF FRAUD AND CYBERCRIME
On 7 June, France 24 reported that Philippine investigators have lodged criminal complaints against a former executive of collapsed German payments firm Wirecard and others for alleged bank fraud and cybercrime offences. The National Bureau of Investigation lodged complaints on 31 May against the company’s former chief operating officer Jan Marsalek, as well as a Manila lawyer and bank employees.
WIRECARD: GERMAN PARLIAMENT SLAMS SCHOLZ AND MERKEL
On 7 June, Deutsche Welle reported that a Bundestag committee has published its inquiry into the Wirecard fraud affair. The damaging report comes months before Germany’s general election. The report called out Olaf Scholz, who is also the chancellor candidate for the Social Democrats, for his oversight and mishandling of the biggest fraud scandal in postwar Germany. It said that Angela Merkel was naïve about lobbying on behalf of Wirecard.
AUSTRALIA EXPANDS MONEY LAUNDERING PROBE INTO CASINOS
On 7 June, the BBC reported that Australia is expanding an investigation into casinos over a potential breach of money laundering laws, with the owners of the main casinos in Australia’s 5 biggest cities now under formal investigation. National Australia Bank (NAB) and casino operators Crown Resorts, Star Entertainment Group and SkyCity Entertainment Group have all been included.
EXTRADITION UNDER THE EU-UK TRADE AND COOPERATION AGREEMENT (TCA)
On 10 March, 5 St Andrews Hill chambers published an article which starts by setting out how the European Arrest Warrant (EAW) was implemented in the UK prior to 1 January, before turning to the TCA itself and what it means for extradition or ‘surrender’ between EU Member States and the UK. The EAW system no longer applies. It sets out how the TCA provides a degree of continuity, now under the watchful eye of the UK–EU ‘Specialised Committee on Law Enforcement and Judicial Cooperation’. There are notable departures from the EAW system, in both practical and legal terms, that open the door to increased scrutiny of extradition requests. It explores the impact these changes may have on the future of extradition with the EU27, to or from the UK.
LATIN AMERICAN AIRLINE GROUP AVIANCA NOTIFIES US AUTHORITIES OF FOREIGN BRIBERY INVESTIGATION
The Wall Street Journal reported that Avianca Holdings said the potentially illegal business practices may have involved senior management and certain board members. However, the SEC has closed its probe into whether the group’s past practice of providing travel benefits to government officials may have violated a US anti-bribery law. Nevertheless, the group has now launched its own internal investigation.
UK: CONTRA MUNDUM INJUNCTION GRANTED BY THE HIGH COURT
On 3 June, an article from CMS Law was concerned with a final contra mundum (against the world) injunction which prohibits the publication of the new identities of a police informant and his relatives. This effectively grants the claimants lifetime anonymity and derogates from the ordinary rule that the media is entitled to report everything that takes place in open court. It is said that the court noted that such injunctions had been issued only “a handful of times” in the past 20 years. That is true, but they appear to have become more frequent in recent years, with a significant proportion of that handful taking place since 2018.
415 SMUGGLED HISTORICAL ARTIFACTS SEIZED IN ISTANBUL
On 7 June, Xinhua reported that Turkish police had seized 415 smuggled historical artifacts in Istanbul, and detained 6 suspects. It is said that Istanbul’s anti-smuggling units recently received a tip-off that many historical artifacts were illegally collected and would be sold to various museums.
ORGANISED CRIME HAS INFILTRATED AUSTRALIA’S AIRPORTS AND AIRLINES TO SMUGGLE DRUGS INTO THE COUNTRY
On 6 June, the Daily Mail reported that alleged drug smuggling by criminals who are reportedly infiltrating Australian airlines and airports has prompted calls for an urgent security review. The allegations include that a Comanchero bikie gang affiliate is working as a Qantas manager at Sydney Airport, recruiting criminals to help import narcotics.
JUVENTUS COACH MASSIMILIANO ALLEGRI IS BEING INVESTIGATED FOR MONEY LAUNDERING
On 6 June, the Times of Malta and others reported that the newly-appointed coach of Italian football club Juventus allegedly received some payments in his account from a Maltese betting company and another one from Slovenia.
EU Regulation 2021/907/EU of 4 June amends Regulation 765/2006 banning any air transport undertaking holding a valid operating licence or equivalent issued by the competent authorities of Belarus, including as a marketing carrier in code-sharing or blocked-space arrangements, from landing in, taking off from or overflying the territory of the EU. There is an exemption for emergencies.
BULGARIA’S LEADER MAKES NEW PUSH TO FIGHT ENDEMIC CORRUPTION
ABC News reported on 7 June reported that the interim prime minister is urging the government to redouble its efforts to fight endemic graft, calling for changes in prosecutors’ offices, the judiciary and all law enforcement agencies. This followed recent US sanctions on Bulgarian officials and businessmen for their allegedly “extensive” roles in corruption.
UK NOTICE TO EXPORTERS 2021/04: OPEN GENERAL LICENCES (OGEL) AMENDED
On 7 June, the Department for International Trade published a new Notice to Exporters advising of the amendment of 8 OGEL which reflects the changes to the list of defence-related products. 2 OGEL are also amended to correct an error in the list of goods covered by these licences.
UK: INDEPENDENT EXPERT REVIEW OF THE REGULATION OF BETINDEX LIMITED, OPERATORS OF THE FOOTBALL INDEX
On 7 June, a news release from the Department of Digital, Culture, Media and Sport advised that the review will report on the period from the granting of BetIndex’s gambling operating licence in September 2015 to its suspension in March 2021; and will focus on the role of the Gambling Commission and other relevant regulatory bodies in this case to provide an objective account of their actions, identify any lessons, and inform the government’s Review of the Gambling Act 2005. Football Index was a UK-licensed and regulated gambling product that allowed customers to gamble by purchasing imaginary shares in players for the chance to win daily pay-outs calculated based on player performance.
UK: CONSULTATION ON A POWER TO BLOCK LISTINGS ON NATIONAL SECURITY GROUNDS
On 7 June, HM treasury launched a consultation which asks for views on the scope of a proposed power to block a company listing if there is a risk to national security. The consultation ends on 27 August.
PANAMA: PITCH TRAINING FOR CULTURAL OBJECTS UNDER THE WCO-UNODC CONTAINER CONTROL PROGRAMME
A news release from the WCO on 7 June advised that training for the Air Cargo Control Unit (ACCU) Tocumen International Airport and for the Port Control Units (PCU) in Panama had been undertaken. 32 Customs officers participated in the courses, delivered by the WCO trainer in cooperation with the external experts from INTERPOL, the Ministry of Culture of Peru, the Ministry of Culture of Panama, Spanish National Police, UK Border Force and US Customs and Border Protection (CBP). PITCH training included modules on the identification and documentation of cultural objects, the use of international and national databases, inter-agency cooperation, and Customs techniques for smuggling identification and prevention. Panama is the second country in the Americas region after Cuba that received the training.
IRISH SECURITY SERVICES TIP-OFF LEADS TO €220 MILLION DRUGS SEIZURE OFF CANARY ISLANDS
On 4 June, the Irish Times reported that the biggest consignment of hashish seized in European waters for years has been discovered in a trawler on the basis of intelligence from Irish authorities. 22 tonnes of hashish valued at €220 million was found in the industrial-sized fishing vessel off the coast of the Canaries. Personnel from the Irish Naval Service first flagged the vessel as suspicious, and the European Maritime Analysis Operations Centre (Maoc) developed the information within the EU anti-drugs agency.
IMF: PROGRAMMES THAT OFFER PASSPORTS IN RETURN FOR INVESTMENT HAVE FINANCIAL INTEGRITY RISKS THAT MUST BE MANAGED
An article from the IMF says that while not a new phenomenon — several countries have adopted “golden passport” programs over the years — the onset of the pandemic generated renewed interest. Antigua and Barbuda, Cyprus, Grenada, Jordan, Malta, St Kitts and Nevis, and Vanuatu are among the many countries that have offered such deals. It warns that a new citizenship can disguise a higher risk profile. Criminals and terrorists may shop around for a country that offers a safe haven from law enforcement or extradition, to gain access to financial products or evade sanctions and watch lists. Citizenship by investment can also lead to corruption. The IMF is working with members on policy advice to highlight the risks of these arrangements, with an eye to properly balancing risks and benefits and avoiding a long-term negative economic impact. It says that countries should clearly understand the risks before launching or continuing with citizenship-by-investment programmes; authorities should ensure that there is robust vetting of applicants; authorities should consider enhanced measures for transparency and oversight; and countries could consider a regional approach to level the playing field.
LARGE-SCALE RUSSIAN ARMS TRAFFICKING SCHEME BUSTED IN LITHUANIA
On 4 June, LRT reported that officers have detained 4 people and seized 319 Russian rifles and semi-automatic carbines Saiga, and 12,000 pieces of ammunition during raids in the capital and the districts of Vilnius and Svenčionys. Those arrested are suspected of creating and taking part in a scheme to circumvent international sanctions imposed on Russian arms manufacturers since 2014. Officers searched the premises of one company involved in wholesale and retail trade in arms and ammunition. The company’s executive and another 3 persons were detained – all Lithuanian citizens. Officers say the company has been importing large quantities of new arms produced in Russia, but via an unnamed Central Asian country since 2019.
On 4 June, the Environmental Investigation Agency said that it had launched the Tracker, which is free to use, open to all and has been developed during the past 12 months by EIA’s Intelligence Team, with help from numerous volunteers who have given their technical expertise to make it happen. It is said that while other platforms make similar data available, EIA’s is the first to offer interactivity to users, allowing them to zero in on precisely the information that they are after. It features interactive dashboards and live mapping of incidents, allowing the user to filter and tailor the information to their requirements.
On 7 June, a post from Krebs on Security recounting how the blog recently had occasion to contact the Russian Federal Security Service (FSB), the Russian equivalent of the FBI. In the process of doing so, it is said to have encountered a small snag: The FSB’s website said in order to communicate with them securely, I needed to download and install an encryption and virtual private networking (VPN) appliance that is flagged by at least 20 antivirus products as malware.
NEW RUSI TASKFORCE ON A TRANS-ATLANTIC RESPONSE TO ILLICIT FINANCE (TARIF)
On 7 June, RUSI announced that it has established a ‘Track 2’ (non-government) Task Force on the Trans-Atlantic Response to Illicit Finance (TARIF) to run for 12 months. The TARIF aims to strengthen global democracy by identifying viable ways in which the UK and US can combine efforts in tackling illicit finance. The group of experts and practitioners from both sides of the Atlantic will examine the illicit finance threats affecting both countries and the international community; and consider the tools and responses that a transatlantic partnership could most effectively facilitate.
IRANIAN WARSHIP THOUGHT TO BE HEADED TO VENEZUELA WITH 7 HIGH-SPEED MISSILE BOATS ABOARD
On 1 June, USNI reported that an Iranian Navy ship thought to be bound for Venezuela left its port in late April with 7 high-speed missile-attack craft strapped to its deck. The boats seen in the satellite images match the characteristics of the Peykaap family of medium-sized fast attack craft (FAC) operated by the Islamic Revolutionary Guard Corps Navy (IRGCN).
EU: RELEASE OF FROZEN SANCTIONS FUNDS BY AN EU-INCORPORATED INSTITUTION TO ENFORCE A PRE-EXISTING GUARANTEE PROVIDED BY A SANCTIONED PERSON
On 2 June, the EU Commission published an Opinion concerned with funds frozen pursuant to the Central African Republic sanctions regime, for which the relevant Regulation allows a derogation which permits national competent authorities to authorise the release of frozen funds/resources where a “payment” by a sanctioned person is due under a contract/agreement that predates the designation, provided that certain conditions are met. The Opinion says that the consent of the sanctioned person is not necessary to satisfy the execution of such a payment (in this case, to a co-contractor or third party). The national competent authority can allow the payment if the conditions are met and the restrictions imposed under the sanctions regime are not being frustrated.
On 7 June, the Council on Foreign Relations published an article saying that more than 2 million people are estimated to have left El Salvador, Guatemala, and Honduras since 2014, many fleeing poverty, violence, and other hardships; the region’s governments have tried various development-centric, tough-on-crime interventions with little success; and US governments have sought to stem the Northern Triangle’s exodus by reducing economic insecurity, violence, and irregular migration. It also points out that endemic corruption has long been a drag on the region’s economies, but that all 3 countries have backslid on their progress on corruption.
DEFERRED PROSECUTION AGREEMENTS: A SOLUTION TO THE PROSECUTION BACKLOG IN SOUTH AFRICA?
On 7 June, an article from FTI Consulting poses this question, saying that itand Corruption Watch recently co-authored an article titled ‘Addressing Corruption in South Africa’ in which they argued, inter alia, that consideration should be given to allowing criminal offenders to self-disclose and subject themselves to an administrative penalty to avoid criminal prosecution through the mechanism of deferred prosecution agreements (DPA).
IN GUATEMALA, THE US VICE-PRESIDENT CONFIRMS CREATION OF REGIONAL ANTI-CORRUPTION TASK FORCE
On 7 June, the Rio Times reported that Kamala Harris has confirmed o the creation of a regional Anti-Corruption Task Force, supported by the US Departments of State, Justice, and Treasury and will support prosecutors in Central America.
NORTH CAROLINA ENGINEERING COMPANY PLEADS GUILTY TO DECADE-LONG BID RIGGING AND FRAUD SCHEME
A news release from the US DoJ on 7 June advised that Contech Engineered Solutions LLC had pleaded guilty to long lasting conspiracies to rig bids and defraud the North Carolina Department of Transportation (NCDOT). Conspiracies started at least as early as 2009 and continued at least until March 2018. Former Contech executive Brent Brewbaker was charged as a co-defendant in the same indictment, and he remains under indictment. The company has been ordered to pay $7 million in criminal fine and over $1.5 million in restitution.
UK FRAUD WATCHDOG SEIZES DIRTY MONEY TIED TO NEARLY £500 MILLION GLOBAL METAL SCAM
On 7 June, City AM reported that the SFO has seized £247,000 from an account linked to Virendra Rastogi, described as a “puppeteer” in an around £493 million global fraud case. Once one of the UK’s richest men, Rastogi was one of 3 former directors of RGB Resources convicted of running an international metal trading scam.
WHEN THE SEC ASKS ABOUT TERRORISM, IT MISSES FINANCIAL MISREPORTING
An article in Lawfare on 7 June argues that the SEC’s focus on terrorism has made it more likely to miss more traditional financial misreporting. In the years following the 9/11 attacks, the US Congress instructed the SEC to review firm disclosures regarding activities in or with nations designated as “state sponsors of terrorism” (SST) by the State Department. It is said that the implementation of this congressional mandate has been difficult and has led to questions about the boundaries of financial reporting regulation. The article refers to a new study which investigated whether the SEC focus on SST limits its ability to effectively review registrants’ compliance with accounting standards – saying that the short answer is yes, and it is costly for American investors. It is said that in 2005, only 2% of comment letters from the SEC focused on SST disclosures; but by 2018, 12% of comment letters referenced SST, making SST the seventh most frequent type of question. In many cases, it appears that the SEC is monitoring news releases or web traffic to identify potential activities with SST nations.