C4ADS has produced a report claiming that companies involved in forced labour and human rights abuses in the Xinjiang Uyghur Autonomous Region of China are enmeshed in global trade and finance despite severe multilateral sanctions designed to cut them off from international markets. It uses the Xinjiang Production and Construction Corps (XPCC) — a regional governing body with a vast commercial network — as a test caseto better understand how companies in Xinjiang retain access to international markets.
A report from C4ADS explains that teak (tectona grandis) is a high-value tropical hardwood used for wood carving, furniture, and shipbuilding. For years, global markets have coveted teak for its durability, beauty, and strength. The teak trade, both licit and illicit, contributes to a variety of issues, including deforestation, environmental degradation, and displacement of wildlife in India, Myanmar, and other teak producing countries. However, the report says that C4ADS has found that millions of dollars-worth of teak is coming from a very unlikely source – South Sudan. South Sudan’s teak reserves are among the largest in Africa – but South Sudanese teak is also being exploited at an unsustainable rate. The report serves as the first comprehensive review of the regulatory and security environment surrounding this little-researched topic. It examines how conditions within South Sudan have made its teak sector more vulnerable to exploitation from illicit actors and contributed to the country’s instability. It includes a case study of a South Sudanese teak company, Lukiza Limited, which has seemingly been involved in teak logging and was beneficially owned by foreign political elites.
A Quick Guide from the Basel Institute on Governance considers what sort of crimes involve cryptocurrencies. It says that blockchain technology behind cryptocurrencies theoretically makes it easier for financial investigators to “follow the trail of the money” but what is tricky in all cases is attribution: linking transactions and addresses to real people in the real world.
On 10 August, Cision PR Newswire carried a release saying that a third of financial institutions are accelerating their AI and machine learning adoption for AML technology in response to COVID-19. Meanwhile, another 39% of compliance professionals said their AI/ML adoption plans will continue unabated, despite the pandemic’s disruption. These industry trends and others are explored in a new study by SAS, KPMG and the Association of Certified Anti-Money Laundering Specialists (ACAMS).
Panama Covid-19 update – another 523 new cases and 5 new fatalities reported today, with 11,914 active cases – 105 in ICU and 442 in other wards.
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9 AUGUST 2021
TRANSPORT UNDER EXCISE DUTY SUSPENSION ARRANGEMENT: MAJOR RISKS FOR CARRIER IN GOOD FAITH
On 23 July, an article from Ploum, a Rotterdam law firm, says that a recent European court case illustrates that moving goods under excise duty suspension can entail major risks for a carrier in good faith who transports excise goods to another Member State on behalf of and for the account of another party. A self-employed worker was transporting beer pallets destined for a company in the UK and assumed that the transport took place under this so-called duty suspension arrangement. However, that turned out not to be the case. The driver was stopped on arrival at Dover Docks and officers established that the e-AD being used could not be used for the transport of the pallets, because it had already been used for a separate delivery of beer under excise duty suspension for the same tax warehouse in the UK. He was faced with a large assessment of excise duty. It is said that the transport of excise goods therefore remains a risky affair for transporters. Although the customs authorities have the option of levying the excise duty on multiple parties, in practice customs authorities often choose the easy way and the person who has the goods on hand is addressed.
ITALIAN POLICE NAB WOMAN REPUTED TO BE NAPLES CRIME BOSS
On 7 August, AP reported that Maria Licciardi, 70, a reputed top Naples Camorra crime syndicate boss (aka “’a piccirella,” due to her petite build) was arrested as she was about to board a flight to Spain.
On 8 August, All Africa reported that the US State Department has named 2 of the leaders of the Islamist terrorists operating in the northern Mozambican province of Cabo Delgado – Bonomade Machude Omar (aka Abu Sulafya Muhammad and Ibn Omar) and Abu Yasir Hassan. The terrorists are known locally as Al-Shabaab, although they seem to have no organisational ties with the Somali terrorist group, but the State Department refers to it as a branch of ISIS.
UK: COURTS ALLOW NIRAV MODI APPEAL AGAINST EXTRADITION
On 9 August, Hindustan Times and others reported that Nirav Modi has been granted permission to appeal against his extradition from the UK to India to face charges in the Punjab National Bank (PNB) fraud case on mental health grounds. He has been at the Wandsworth Prison in south-west London since March 2019, when he was arrested on the basis of India’s extradition request.
UK: SFO LAUNCHES INVESTIGATION INTO ENTREPRENEUR GAVIN WOODHOUSE OVER SUSPECTED FRAUD
On 9 August, The Guardian reported that the SFO said it was investigating “suspected fraud and money laundering in relation to … Woodhouse and individuals and companies associated with him” and that “conduct currently under investigation by the SFO relates to investments offered in care homes and hotels between 2013 and 2019”. He raised over £80 million over several years to build care homes and buy and refurbish hotels, promising generous returns.
CRYPTO FRAUD AND ASSET RECOVERY LEGAL COMMUNITY LAUNCHES IN THE UK
On 9 August, Being Crypto and others reported that legal industry professionals in the UK have come together to target a growing area of legal need: crypto disputes. The CFAAR community consists of lawyers, barristers, forensic accountants, corporate intelligence, and asset recovery experts. It intends to develop and share the best practices to deal with such disputes, and the ultimate goal being crypto dispute resolution.
UK ADDS 1 NAME TO BELARUS SANCTIONS AND AMEND OTHER ENTRIES
On 9 August, a Notice from HM Treasury advised that Russian businessman Mikhail Safarbekovich GUTSERIEV had been added to the sanctions lists, and that entries for 7 other individuals (including President Lukashenko) are amended.
DOCUMENT LEAK APPEARS TO CONFIRM THAT QATAR IS CONTINUING TO PROVIDE FINANCIAL SUPPORT TO HEZBOLLAH
On 7 August, a blog post from Kenneth Rijock says that a leak from government files in the State of Qatar (the “Qatar Papers”) reportedly confirm that Qatar is continuing to provide financial support to the Lebanese terrorist group Hezbollah.
THE GOLDEN FRIENDS AND NEIGHBOURS OF CYPRIOT PRESIDENT NICOS ANASTASIADES
On 9 August, a report from OCCRP says that Cyprus’s “golden passport” programme is considered a corrupt free-for-all that gave kleptocrats, oligarchs, and criminals access to EU citizenship – Cyprus approved 6,679 golden passports between 2008, when the program began, and August 2020. It says that Cyprus stopped taking new applications last October following an Al Jazeera news undercover sting that caught politicians offering to help get a passport for a fictitious criminal from China, and that the EU has also moved to hold Cyprus accountable for its investor citizenship scheme. However, it says, despite promised reforms, questions remain about corruption among its political class. It cites the relationship between President Nicos Anastasiades –– whose family law firm was deeply involved in procuring golden passports for clients –– and Saudi businessman Abdulrahman bin Khalid bin Mahfouz.
IRAN: RAISI CHOOSES HEAD OF SANCTIONED CONGLOMERATE TO BE HIS FIRST VICE-PRESIDENT
On 9 August, Eurasia Review reported that Iranian President Ebrahim Raisi has named the chairman of a powerful state-owned conglomerate – Mohammad Mokhber, who has headed the conglomerate known as Setad since 2007 – sanctioned by the US as his first vice president.
UK: NEW CPS GUIDANCE ON SECTION 330 PROCEEDS OF CRIME ACT 200
On 9 August, a blog post from Corker Bining argues that the position of criminal law enforcement authorities across the board is that it is legally irrelevant whether money laundering occurred; all that is required to prove this offence is that an individual in the regulated sector received information that caused them to suspect, or that provided reasonable grounds for suspicion, that another was engaged in money laundering. The post asks if the CPS is correct to contend, as a matter of law, that section 330 does not require a prosecutor to prove money laundering?
UK: TOP TORY DONOR’S FAILED PROPERTY FIRM LEFT HUNDREDS OUT OF POCKET IN INDIA
On 7 August, Open Democracy published claim involving Indian businessman Sam Singh. In India, hundreds blame the company he founded for losing their life savings, after the online estate agency he built collapsed, prompting accusations of fraud.
CHARGES DROPPED AGAINST CHILDREN OF AUSTRALIAN COUPLE WANTED OVER ALLEGED FREMANTLE PORTS CORRUPTION
On 9 August, ABC News reported that Paolo and Tiziana Merolla, the children of a Perth couple who are wanted by Western Australia Police over alleged corruption at Fremantle Ports, have walked free from court after charges against them were dropped. It is believed the couple left Australia last year amid an investigation into alleged corrupt business practices at Fremantle Ports between 2014 and 2020.
FORMER HONG KONG IPO VETTING CHIEF PLEADS NOT GUILTY AS TRIAL BEGINS
On 9 August, Bloomberg Quint reported that Eugene Yeoh Kim-loong, a former Hong Kong Exchanges and Clearing Ltd. executive in charge of vetting initial public offerings, has pleaded not guilty in the Hong Kong District Court to allegations of bribery. He is accused of bribery in order to give companies an easier path to being approved to list on the bourse 2017-19. IPO consultant Richard Lum Chor-wah is named as the alleged giver of bribes. Yeoh and Lum pleaded not guilty to all charges and will remain on bail.
BILLIONAIRE SAMSUNG SCION CONVICTED FOR CORRUPTION TO BE RELEASED ON PAROLE
On 9 August, Manufacturing.net and others reported that South Korea will release billionaire Samsung scion Lee Jae-yong on parole after he spent 18 months in prison for his role in a massive corruption scandal that triggered nationwide protests and led to the ouster of the country’s previous president. The Justice Minister said Lee will be released with about 800 other convicts, ahead of a national holiday celebrating Korea’s liberation from Japanese colonial rule at the end of WW2.
PORTUGAL: POLICE BRING DOWN INSURANCE PYRAMID SCHEME
On 9 August, Portugal News reported that police had detained a foreign citizen suspected of several crimes involving fraud, document falsification, money laundering and illegal insurance operations amounting to a total of €3 million. The suspect is said to have convinced countless victims that he was the supervisor of a Spanish insurance brokerage company and that he was authorised to market a financial product with high profitability and guaranteed capital. However, it is said to have been a ‘pyramid scheme’ or ‘ponzi’, with non-existent and simulated profitability.
THE ART MARKET AND MONEY LAUNDERING: THE UK FIRST YEAR REPORT
On 9 August, Arts & Collections reminded one that, in January 2020, art galleries, dealers, intermediaries and other art market participants (AMP) dealing in works valued at €10,000 or more became subject to UK AML Regulations (applying the EU 5th Money Laundering Directive). In June 2021, HMRC published its first risk assessment which identifies key areas for AMP to consider when carrying out regulated activities. HMRC views the art market as being at ‘high risk’ of money laundering. The HMRC report identifies key risk indicators for AMP across the UK art sector – unusual sales or purchase activity, anonymity, face-to-face sales, dealing with clients or counterparties in high-risk jurisdictions and off-record sales. It also highlights other risks, including relying on CDD undertaken by others.
US JUDGE SETS BAIL FOR FORMER BOLIVIAN MINISTER ARTURO MURILLO
On 9 August, TeleSUR reported that a court has set bail at $25,000 for the former Bolivian minister of the de facto government, despite an extradition request from Bolivia and postponed a hearing on corruption and money laundering charges until 9 September. Murillo was Minister of Government during the mandate of the self-proclaimed de facto president Jeanine Áñez (2019-2020) and was arrested in May, as were 4 other co-defendants.
On 2 August, Global Financial Integrity produced a report which is said to demonstrate the ease with which kleptocrats, criminals, sanctions evaders, and corrupt government officials choose the US real estate market as their preferred destination to hide and launder proceeds from illicit activities. GFI built a database of more than 100 real estate money laundering cases from the US, UK, and Canada, reported between 2015 – 2020. The database and accompanying regulatory analysis in this report provide conclusive evidence that the current US regulatory approach, using temporary and location- specific Geographic Targeting Orders (GTO), has critical shortcomings. It also proposes the key recommendations for the sector in line with international best practices and regulatory developments seen elsewhere in the G7.
The FATF-style regional body for the Middle East and North Africa, MENA-FATF, has produced this publication, which says that it has been found that international and regional ad-hoc reports issued clearly highlight the steady rise in the crimes at the regional and international level. The report pays especial attention to the effects of the Corona virus – the COVID 19 pandemic which coincided with the period for the implementation of this project. It says that the methods and techniques used to commit human trafficking and migrant smuggling crimes represent a challenge to combat them and pose many challenges for competent authorities. Its contents include –
International and regional efforts to combat the human trafficking and migrant smuggling crimes;
The legal and institutional framework for combating the human trafficking and migrant smuggling crimes and the laundering of their proceeds in the MENA Region;
National risk assessment, methods and techniques used to launder money resulting from human trafficking and migrant smuggling;
Most important traits and characteristics of money laundering crimes resulting from human trafficking and migrant smuggling in the MENA Region;
International cooperation to combat money laundering crimes resulting from human trafficking and migrant smuggling in the MENA Region; and
On 3 August, the US-based Institute of International Banking Law and Practice (IIBLP) produced an article which focuses on trade-based money laundering (TBML) which FATF has defined as “the process of disguising the proceeds of crime and moving value through the use of trade transactions in an attempt to legitimise their illegal origins or finance their activities”. It explains that, according to FATF, that which distinguishes TBML from other trade-related crimes (e.g. smuggling) is that TBML’s aim is the movement of money rather than goods. The primary objective of any TBML scheme is the deliberate movement of illicit funds proceeds by exploiting trade transactions. It considers current recommended mitigation methods for TBML risk and identifies additional TBML resources.