On 9 June, OFAC advised that 4 new names had been added to its SDN List in connection with Nicaragua. They are said to have been designated for supporting the Ortega regime’s efforts to undermine democracy, human rights, and the economy. They are are –
· Camila Antonia Ortega Murillo, the Coordinator of the Creative Economy Commission and daughter of Nicaraguan President Daniel Ortega;
· Leonardo Ovidio Reyes Ramirez, President of the Central Bank of Nicaragua (BCN);
· Edwin Ramon Castro Rivera, a deputy of the Nicaraguan National Assembly (NNA); and
· Julio Modesto Rodriguez Balladares, a Brigadier General of the Nicaraguan Army and Executive Director of the Military Social Welfare Institute (IPSM).
The CTC Sentinel in the US has produced a report saying that a close review of US sanctions designations reveals the organised character of Iran’s illicit currency laundering operations and the role of the Islamic Revolutionary Guard Corps (IRGC) in their orchestration. It also shows that Iran relies on a diverse network of illicit commercial entrepreneurs to covertly access foreign currencies abroad. It says that actors operate under the cover of legitimate commerce and exploit the vulnerabilities of regional economic centres — such as the UAE.
A March 2021 report from GRECO, the anti-corruption arm of the Council of Europe, says that GRECO adopted 6 evaluation reports, 28 compliance reports and 1 ad hoc follow-up report in 2020. However, since the beginning of the Covid pandemic, no on-site visit could be carried out. It highlights good anti-corruption practices in central government and law enforcement.
A news release from WCO on 9 June advised that, from 1 July, VAT rules on cross-border business-to-consumer (B2C) e-commerce activities in the EU will change. The new rules will have major impact on customs matters –
VAT will now have to be applied on all goods that are sold online in the EU regardless of their price – the de minimis threshold of €22 will no longer be applied.
an electronic portal – Import One Stop Shop (IOSS) – is introduced to facilitate and simplify the declaration and payment of VAT for online sales of goods imported in the EU with a value not exceeding €150
consumers that buy from a non-EU seller or platform that is registered in the IOSS will find that VAT will be included as part of the price that has to be paid to the seller – meaning no more calls from Customs or courier services asking for an extra payment when the goods arrive in the buyer’s home country
special provisions provide that online marketplaces/platforms facilitating supplies of goods are deemed for VAT purposes to have received and supplied the goods themselves – as a “deemed supplier”
new record keeping requirements for online marketplaces/platforms facilitating supplies of goods and services, including where such online marketplaces/platform are not a deemed supplier
special arrangements for postal operators and couriers to manage sales done by sellers or marketplaces/platforms that have not registered in and do not use the IOSS – with VAT due upon import will be collected from the buyer upon delivery of the parcel
On 9 June, an article in Mirage News reported on a new report from the Council of Europe AML/CFT body which states that authorities have a generally good high-level understanding of their money laundering and financing of terrorism threats and vulnerabilities. The Herald Malaysia carried an interview from Vatican News with the President of ASIF (the Supervisory and Financial Information Authority), Carmelo Barbagallo, who led the Vatican delegation during the evaluation process.
Effectiveness ratings can be high (HE), substantial (SE), moderate (ME), or low (LE) levels of effectiveness. Technical compliance ratings can be compliant (C), largely compliant (LC), partially compliant (PC), or non-compliant (NC). Recommendations can be not appliable (N/A).
A news release from the BVI on 3 June advised that the National AML/CFT Policy has been developed to ensure compliance with Recommendation 2, which calls for countries to have national AML/CFT policies which are informed by a risk assessment. A national risk assessment was concluded in 2016.
Panama Covid-19 update – after missing yesterday’s figures (376 new cases and only 1 fatality), the weekly news conference today revealed more worrying figures – 882 new cases and 4 new fatalities. Active case numbers are also up at 8,052, with 63 in ICU, 373 in other wards and 349 in “hospital hotel” rooms. The Rt rate is down, but still over 1, at 1.08.
US STATE DEPARTMENT DEBARS 7 PEOPLE FOR VIOLATING, OR CONSPIRING TO VIOLATE, THE ARMS EXPORT CONTROL ACT
On 4 June, a news release from the State Department gave notice of 7 persons statutorily debarred for having been convicted of violating, or conspiring to violate, the Arms Export Control Act. They are barred from any brokering activities and any export from or temporary import into the US of defence articles, related technical data, or defence services in any situation covered by the International Traffic in Arms Regulations.
UK NOTICE TO EXPORTERS 2021/05: EXPORT CONTROL ORDER 2008 AMENDMENT
On 8 June, the Department for International Trade published this Notice to Exporters saying that a new Order came into force on 7 June which implements changes to the list of defence-related products. These reflect changes to the Wassenaar Arrangement list. The Order also fixes minor drafting errors.
PRIVATE EQUITY FUND MANAGER ACCUSED OF $95 MILLION BANK FRAUD
On 6 June, the Palm Beach Post reported that, in what federal prosecutors call a “brazen fraud,” a 52-year-old private equity manager – Elliot Smerling, who operates JES Global Capital – is accused in New York of persuading a bank to loan him $95 million by forging documents, including the names of top business and university endowment officials. Smerling allegedly falsified bank records, an audit letter and other documents to convince the bank that at least four institutions had invested millions in his fund.
GLOBAL CRACKDOWN ON ORGANISED CRIME AFTER HIGH-TECH US-AUSTRALIA STING
On 8 June, KYC 360 reported that US and Australian authorities hacked into an app used by criminals to read millions of encrypted messages, leading to hundreds of arrests of suspected organised crime figures in 18 countries. Australia said it had arrested 224 people, including members of outlawed motorcycle gangs, while New Zealand said it had detained 35 people.
COUNCIL OF EUROPE: FIFA TRANSFER SYSTEM REFORM TO ‘SIGNIFICANTLY IMPROVE’ FOOTBALL
On 7 June, a news release from FIA said that the Council of Europe has published a report and recognised FIFA’s ongoing efforts to reform the transfer system, stating that the soon‑to‑be‑operational FIFA Clearing House “will represent a milestone in achieving comprehensiveness, transparency and integrity of the transfer system for football players around the world”. It also said that the FIFA Football Agent Regulations, due to enter into force in July 2022, are an “important step in the right direction”. The Council of Europe’s report also tackles other key areas of FIFA’s transfer system reform, including the transfer of minors, squad sizes, home-grown players and transfer windows.
UK: NEW CPS GUIDANCE MAY INDICATE A GREATER APPETITE TO PROSECUTE SECTION 330 POCA
On 7 June, an article from Ropes & Gray said that on 2 June, the CPS updated its guidance, which will be applied to all alleged offences after that date, so that it will now consider prosecution of an offence of failure to disclose in the regulated sector, under section 330 POCA, “even though there is insufficient evidence to establish that money laundering was planned or has taken place“.
US ADDS 7 CHINESE PARTIES INVOLVED IN SUPERCOMPUTING TO THE ENTITY LIST
On 5 June, Baker McKenzie reported that, in April, the US Commerce Department’s Bureau of Industry and Security (BIS) cited the 7 entities for having procured US-origin items for use in building supercomputers that are used to support China’s military actors and military activities.
HOW TO CONDUCT AN ‘INDEPENDENT AML AUDIT’ UNDER REGULATION 21 OF THE MONEY LAUNDERING REGULATIONS
On 4 June, Jonathan Bray Ltd reported that requirements of the UK Money Laundering Regulations include requirements for an ‘Independent Audit’. The article sets out to provide a template for such an audit.
STOBART AIRLINE BUYER REFERS TAKEOVER PAPERWORK ISSUE TO POLICE IN ISLE OF MAN
On 8 June, the Irish Independent and others reported that the company behind a bid for Stobart Air has alerted police in the Isle of Man to concerns it has about documents supplied by one of the possible backers of the acquisition. It is said that start-up virtual airline Ettyl confirmed that it “raised concerns with the Isle of Man Constabulary as soon as it became aware of an issue with the paperwork”. The planned sale of Dublin-based Stobart Air, which operates the Aer Lingus Regional service on a franchise basis, had already been thrown into doubt last month over Ettyl’s ability to fund the deal.
UK: ART MARKET DEADLINE FOR REGISTERING UNDER AML REGULATIONS APPROACHES
On 7 June, Charles Russell Speechlys published a post saying that art market participants are obliged to register with HMRC for AML supervision by 10 June. The Regulations apply mainly to those who by way of business trade in works of art where the value of any given transaction (or series of linked transactions) is €10,000 or more, and to operators of freeports used to store art. Artists selling their own works are excluded from the scope of the Regulations, but the majority of art dealers, auction houses, and galleries will be caught, and also caught will be interior designers and antiques dealers who deal in paintings or sculptures priced at €10,000 or more.
UK NOTICE TO EXPORTERS 2021/06: MoD F680 EXPRESS APPLICATIONS
On 8 June, the Department for International Trade published a new Notice about the process for Ministry of Defence clearance for exports. It says that the MoD considers requests for express clearance when an ‘exceptional’ circumstance arises. Applications must provide a compelling reason for consideration on an express basis.
On 8 June, Defence Web reported that the Senegalese navy has intercepted a boat smuggling over 8 tonnes of cannabis resin. The vessel, flying a Togolese flag, was stopped 140 km from the capital of Dakar with 7 crew members on board.
APPROVING A CBI PASSPORT APPLICATION WITHOUT CONDUCTING A FACIAL RECOGNITION SOFTWARE CHECK CONSTITUTES COMPLIANCE MALPRACTICE
On 8 June, Kenneth Rijock in his blog put forward this proposition. It is said that, unfortunately, most CBI programmes deliberately omit the use of facial recognition, as a component of their due diligence investigation, for they do not want to know the hard truth; they only want to collect the high fees. No wonder we keep reading about white-collar criminals arrested with CBI passports. Until these countries bulletproof their due diligence with facial recognition, they will fail every time.
THOUSANDS OF FAKE ONLINE PHARMACIES SHUT DOWN IN INTERPOL OPERATION
On 8 June, a news release from Interpol advised that a record number of fake online pharmacies have been shut down under Operation Pangea XIV targeting the sale of counterfeit and illicit medicines and medical products. It involved police, customs and health regulatory authorities from 92 countries. It resulted in 113,020 web links including websites and online marketplaces being closed down or removed, the highest number since the first Operation Pangea in 2008. In the UK, in addition to the seizure of some three million fake medicines and devices worth more than $13 million, authorities also removed more than 3,100 advertising links for the illegal sale and supply of unlicensed medicines, and shut down 43 websites. Fake and unauthorized COVID-19 testing kits accounted for more than half of all medical devices seized during the week of action in May.
UN WELCOMES CREATION OF GlobE NETWORK TO END CROSS-BORDER CORRUPTION
On 3 June, UNODC said that the first-ever UN General Assembly special session against corruption welcomed the launch of a new global network. The Global Operational Network of Anti-Corruption Law Enforcement Authorities (GlobE Network) offers UN Member States and States parties to the UN Convention Against Corruption (UNCAC) the ability to connect anti-corruption practitioners with their counterparts in different countries. It provides channels for secure and informal information exchange on specific cases, legislation, intelligence and anti-corruption tools.
COUP DE GRÂCE FOR EL SALVADOR’S ANTI-CORRUPTION COMMISSION
On 7 June, Insight Crime said that the announcement of the end of El Salvador’s anti-graft commission, which had been backed by the Organization of American States, could be the nail in the coffin for international investigative bodies in the region. The OAS Secretary General confirmed the dissolution of the International Commission against Impunity in El Salvador, launched jointly by the OAS and El Salvador’s government in 2019.
On 7 June, an article in Insight Crime reported that China’s distant-water fishing fleet is once again engaging in suspicious and potentially illegal fishing near Argentine waters. Some 350 Chinese-flagged vessels have been seen off the Argentine coast since December, depleting fishing stocks and extending their stay via unregulated transshipments.
US DoJ HAS SEIZED 63.7 BITCOINS CURRENTLY VALUED AT APPROXIMATELY $2.3 MILLION – THE PROCEEDS OF A RANSOM PAYMENT AFTER HACKERS HAD TARGETED COLONIAL PIPELINE
A release on Mondo Visione on 7 June advised that the DoJ had announced that it had seized 63.7 bitcoins currently valued at approximately $2.3 million. These funds allegedly represent the proceeds of a ransom payment to individuals in a group known as DarkSide, which had targeted Colonial Pipeline, resulting in critical infrastructure being taken out of operation. The seizure warrant was authorised by a judge in California.
COINSEED: COURT ORDER CONTINUES A MANDATED PAUSE ON THE ILLEGAL AND FRAUDULENT OPERATIONS OF THE CRYPTOCURRENCY TRADING PLATFORM AND PUTS IN PLACE A RECEIVER TO ENSURE THE PROTECTION OF INVESTORS’ MONEY GOING FORWARD
A release on Mondo Visione on 7 June advised that the court order appoints a receiver to oversee all assets traded through Coinseed in an effort to safeguard investments as the New York Attorney General’s lawsuit proceeds.
On 8 June, a post from the LSE Business Forum says that, in the 14 months since April 2020, as the planet reeled from the COVID crisis, the number of world billionaires increased by 660 to 2,755 (24 new ones in the UK alone). The author of the post writes that billionaires can and should be doing much more to help solve the humanitarian crisis of hunger and poverty exacerbated by the pandemic. He classifies billionaires by the type of reaction they may have when asked to share more of their wealth.
VENEZUELAN OIL MASQUERADING AS MALAYSIAN FOR CHINA
On 3 June, an article from Reuters reported that traders are racing to deliver record volumes of Venezuelan crude oil masked as Malaysian bitumen blend to China, ahead of new fuel taxes. It is said that China has over the past 12 months bought an estimated $3.5 billion worth of Venezuelan oil relabelled as Malaysian fuel. Much of it has come in as bitumen blend, a mix of tar-like heavy crudes and refinery residue fuels that doesn’t attract consumption tax like fuel oil and also isn’t subject to China’s quotas on oil imports. However, new fuel taxes extend to such oil from 12 June.
COURT IN EL SALVADOR SENTENCES FORMER FIRST LADY TO 10 YEARS
On 4 June, AP reported that a court in El Salvador sentenced the wife of former President Tony Saca to 10 years in prison for money laundering and ordered her to repay $17.6 million to the government. Ana Ligia de Saca got the same sentence as her brother, Oscar Edgardo Sol Mixco, received and Tony Saca is already serving a 10-year prison sentence for corruption and has been ordered to return some $260 million to the state.
On 7 June, the Bank of England published a Discussion Paper which sets out the Bank’s emerging thoughts on new forms of digital money, which include both systemic stablecoins and a UK CBDC. It says that the Bank has not yet made a decision on its detailed regulatory approach to stablecoins, or on whether to introduce a CBDC in the UK.
DUTCH POLICE ARREST 3 IN PUMP-AND-DUMP SCHEME INVOLVING SELF-MADE CRYPTOCURRENCY
On 7 June, Coindesk reported that Dutch police had arrested 3 men in the industrial town of Deventer for attempting to defraud investors by selling them a self-made cryptocurrency and then intentionally sinking its price.
On 5 June, RUSI published an article saying that sharks are vanishing from the oceans. For every 10 sharks in the open sea in the 1970s, today there is only 3. An 18-fold increase in fishing pressure in the past 50 years has been largely responsible for a 70% decline of the global shark population. This is despite fishing prohibitions and precautionary science-based catch limits. In the Pacific criminal networks have turned sharks into one of the most relentlessly targeted preys. The post explores the criminogenic and laundering dynamics currently draining the Pacific of one of its oldest tenants.
WHISTLEBLOWER REVEALS BP LINK WITH INTERNATIONAL NETWORK OF CORRUPTION
The Daily Telegraph has reported that a British whistleblower has claimed how BP paid $100 million to cancel an order for oil platforms in Angola only for a third of the money to be promised by the recipient to an offshore company run by an allegedly corrupt official. The disclosures from Jonathan Taylor, a former oil industry lawyer who is currently fighting extradition from Croatia, have led to calls for a full investigation by the SFO.
HUMAN TRAFFICKING’S HIDDEN TOLL – WORSE THAN A CRIME, A SYSTEMIC THREAT
An article in The Conversation on 8 June says that 2 decades after the Palermo Protocol, the scourge of human trafficking persists. It says that human trafficking is a truly global phenomenon; it occurs in almost every country, including the US, fuelled by poverty, social marginalization, and weak criminal justice systems. The scale of the problem is only growing, exacerbated by the upheavals of migration and conflict and by the economic desperation wrought by the COVID-19 pandemic. The article argues that trafficking is more than a mere crime. It bolsters abusive regimes and criminal, terrorist, and armed groups; weakens global supply chains; fuels corruption; and undermines good governance. The article says that the US needs to see trafficking for the systemic threat that it is and act accordingly.
THE NEW STANDARD CONTRACTUAL CLAUSES (SCC) FOR TRANSFERS OF PERSONAL DATA FROM THE EU
On 7 June, an article from Crowell & Moring says that the publication of the SCC on 4 June is an important moment for the global business community because they allow companies to meet the requirements of the EU GDPR when transferring personal data from the EU to non-EU countries.
US AMENDS EXPORT ADMINISTRATION REGULATIONS (EAR) REFLECTING UAE TERMINATION OF BOYCOTT OF ISRAEL
On 8 June, KPMG reported that the Bureau of Industry and Security of the US Commerce Department released for publication in the Federal Register a final rule amending the EAR to reflect the formal termination by the UAE of its participation in a boycott of Israel.
US VISA RESTRICTIONS ON PERSONS BELIEVED TO BE RESPONSIBLE FOR, OR COMPLICIT IN, UNDERMINING THE PEACEFUL RESOLUTION OF CONFLICT IN CAMEROON’S ANGLOPHONE REGIONS
On 7 June, a news release from the US State Department advised of a new policy imposing visa restrictions on individuals who are believed to be responsible for, or complicit in, undermining the peaceful resolution of the crisis in the Anglophone regions of Cameroon. This decision is said to reflect commitment to advance a dialogue to peacefully resolve the Anglophone crisis and support respect for human rights.
HOW CHINA STEALS US TECH TO CATCH UP IN UNDERWATER WARFARE
On 8 June, Defense One reported that open-source documents provide an illuminating trail demonstrating how a court case in Massachusetts is just one part of a long trail of open-source evidence that illustrates a larger issue: US technology being used to advance Chinese military ends.
On 8 June, Caplin & Drysdale published an article cautioning US residents moving state to seek tax advantage. It says that very careful consideration needs to be given to what it means to change domicile and residency. The exodus from high federal and state tax jurisdictions means significant shifts in revenue collection and, with potential revenue loss, the IRS and state authorities are working hard to ensure any moves are legitimate in fact and substance. Taxpayers should expect any residency transition to be audited at the federal and state level.
On 8 June, the Kyiv Post reported that the head of the European Commission for Democracy through Law (aka the Venice Commission) has criticised Ukraine’s 2 main judicial reform Bills and called for a bigger role for foreign experts. The remarks came at a conference organised by the Anti-Corruption Action Center and other civil society groups. The Bills aim to reform the judiciary’s 2 discredited governing bodies, but critics say they would fail to reform the courts, nullify foreign experts’ role in judicial reform and break Ukraine’s commitments to the IMF.
On 8 June, an article from Littler says that a little over 6 months after the Brazilian Data Protection Law (LGPD) came into effect, there seems to be real progress in its implementation. It points out that, although the Brazilian authorities had 2 years since the law was passed in 2018 to create a national data protection agency (ANPD), the government did not take action until the law came into effect last September – but, despite the late start and the pandemic, in just a few months of existence, the ANPD has made reasonable progress. The article outlines the agenda and proposed timeline for implementation, and refers to the guidance issued, and possible implications
CENTRAL BANK DIGITAL CURRENCIES (CBDC): THE SEARCH FOR MINIMALLY INVASIVE TECHNOLOGY
A BIS Working Paper in the US asks what is the rationale for issuing a CBDC is and how these objectives shape its economic design, as well as the architecture of the underlying technical systems? It finds that technological developments inspired by popular cryptocurrency systems – based on anonymity and lacking a central authority – do not meet the requirements for a retail CBDC, but that a range of different operational arrangements is possible.
BANK OF ENGLAND EXPLORES THE FINANCIAL RISKS POSED BY CLIMATE CHANGE FOR THE LARGEST UK BANKS AND INSURERS
On 8 June, a release on Mondo Visione said that the Bank had published the Climate Biennial Exploratory Scenario (CBES) to explore the financial risks posed by climate change for the largest UK banks and insurers. The CBES uses 3 scenarios of early, late and no additional action to explore the 2 key risks from climate change: the risks arising from the significant structural changes to the economy needed to achieve net zero emissions. The Bank expects to publish the CBES results in May 2022.
AN APPROACH TO THE JUDICIAL EVALUATION OF EVIDENCE FROM COMPUTERS AND COMPUTER SYSTEMS IN ENGLAND & WALES
A paper in the Digital Evidence and Electronic Signature Law Review in May says that, by default, computer evidence in courts in England & Wales is treated as reliable and if the evidence is contested, the burden of rebutting the presumption falls entirely on the party who denies its reliability. The Paper explores this position and some of the difficulties that can arise. This is in the light of the Post Office scandal, which centred on the reliability of the Horizon software that was in use.
EXPERTS DIVIDED OVER EL SALVADOR’S PLAN TO ADOPT BITCOIN
On 8 June, an article from the Anadolu Agency says that experts are divided on El Salvador’s plan to adopt Bitcoin and make it a legal tender as observers cite its use in money laundering and illicit transactions against a long-term opportunity against current macroeconomic conditions.