US – MANAGING INVESTIGATIONS: BEST PRACTICE IN GOVERNMENT AND INTERNAL INVESTIGATIONS

On 18 August, US law firm Crowell Moring has published the US chapter of the WorldECR Managing Investigations Global Guide.  It says that the Guide provides information about investigatory authorities in 21 countries responsible for sanctions, export control, anti-corruption, and AML enforcement, and answers questions on related policies, procedures, and best practices in each jurisdiction.  The US chapter, prepared by members of the firm, covers the US “enforcement landscape, and the key issues faced by those hoping to successfully navigate it”.

https://www.crowell.com/files/USA%20reprint%20(002).pdf

 

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UK FIU SAR REPORTER BOOKLET

In the UK, NCA has released the August edition of this publication for those submitting SAR, and produced in line with the NCA commitment to share perspectives on the SAR regime.  It contains a sanitised summary of feedback from law enforcement agencies on their use of SAR and includes pertinent information and updates from the FIU.  It includes a review of case studies.

https://nationalcrimeagency.gov.uk/who-we-are/publications/567-sars-reporter-booklet-august-2021/file

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THE SCALE OF ILLEGAL COLTAN TRAFFICKING IN COLOMBIA AND VENEZUELA

An article from Insight Crime on 18 August reported that seizures of coltan in Colombia have shown the complex networks used by armed groups to smuggle the valuable mineral from illegal mines across the border in Venezuela.  Coltan, also known as “blue gold” is rich in tantalum, a metal used in electronics, including cellphones and laptops. 

https://insightcrime.org/news/colombia-backdoor-for-venezuelan-coltan/

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LIVE ANIMAL EXPORTS ARE BEING USED AS COVER BY SMUGGLERS, SAY NGO

On 18 August, The Guardian reported that an NGO claims that the huge vessels used to transport farm animals are an attractive option for criminals smuggling drugs, arms and people.

https://www.theguardian.com/environment/2021/aug/18/live-animal-exports-are-being-used-as-cover-by-smugglers-say-ngos

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BRAZIL: CATTLE LINKED TO ACCUSED DRUG TRAFFICKER SOLD TO MAJOR COMPANIES

On 17 August, Insight Crime reported that João Soares Rocha, 64, (aka “Rochinha” or “Joãozinho Pé de Cobra” or “Lil’ Joe Snake Foot”) has been identified by the Brazilian police as the ringleader of an international cocaine trafficking network. He is said to have become a “narco-rancher” – a drug trafficker and a cattle breeder – active mainly in the northern state of Pará, where his family owns more than 10 rural estates. He is said to have reinvested part of the drugs profits in purchasing cattle that would later be sold to slaughterhouses – a practice said to be commonly employed to launder money, especially in cattle-rearing states.

https://insightcrime.org/news/brazil-cattle-linked-drug-trafficker-sold-to-major-companies/

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RENEWED APPEALS COURT COULD AFFECT FUTURE PROSECUTIONS OF FOREIGN EXECUTIVES UNDER THE FCPA

On 17 August, the Wall Street Journal reported that a second appeal is to reopen the long-running prosecution of a former British Alstom SA executive Lawrence Hoskins.  He was found guilty in late 2019 of helping to bribe Indonesian officials.  However, a district court judge partly overturned the conviction, ruling that federal prosecutors hadn’t shown sufficient evidence that Mr. Hoskins, a British citizen who worked in Paris, fell under the reach of US law.  The concern is that the government could find it more difficult to prosecute foreign nationals who allegedly play a role in arranging bribes for US-linked companies without ever setting foot in the US.

https://www.wsj.com/articles/dispute-over-agency-in-foreign-bribery-case-gets-second-hearing-11629240990

https://kyc360.riskscreen.com/news/feds-urge-2nd-circuit-to-revive-ex-alstom-execs-bribery-conviction/

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OTHER THINGS YOU MAY HAVE MISSED – AUGUST 17

Panama Covid-19 update – TV news reported tonight that Panama has the fastest vaccination rate in the whole of the Americas, and it is claimed to be now the fastest in the world. The current rate is 1.32 per every 100 inhabitants; only Chile at 1.01 per 100 shows a rate of over 1 in 100.

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17 AUGUST 2021

CAYMAN ISLANDS: BUSINESSWOMAN SUES BUTTERFIELD BANK OVER CLOSING OF ACCOUNT DUE TO ONLINE ALLEGATIONS

On 16 August, the Royal Gazette in Bermuda reported that Sharon Lexa Lamb, self-described as a private director, fiduciary, trust and estate practitioner, is suing the Bank of Butterfield, claiming breach of contract after she said the bank closed out her accounts.  She alleges that the bank closed her accounts due to “negative blogs” alleging her involvement in a fraud involving losses made by a Cayman Islands bank and funds moved to or through Cuba.  She accuses Bank of Butterfield of breach of contract.

https://www.royalgazette.com/international-business/business/article/20210816/bank-faces-cayman-lawsuit/

UK: ARE THE NEW AML RULES FOR THE ART MARKET BEING ADHERED TO?

On 16 August, an article in art magazine Apollo posed this question, more than 18 months after new rules came into force.  The rules imposed new requirements on the art market and on “art-market participants” (a term which includes those who trade in, or act as an intermediary in, the sale and purchase of works of art with a value of €10,000 or more).  It points out that in June HMRC published new guidance providing some helpful clarity in terms of how some of the new AML laws should be applied and how the UK currently assesses the risks of money laundering in the UK art market.  The article stresses that the AML controls should not just be a box ticking exercise, but that a more holistic approach to AML controls is required for proper implementation.  It is argued that, generally, art businesses have put systems and procedures in place, and they have been willing (even if not necessarily keen) to understand their AML responsibilities.

https://www.apollo-magazine.com/anti-money-laundering-uk-art-market-impact/

https://www.gov.uk/government/publications/money-laundering-understanding-risks-and-taking-action-for-art-market-participants/understanding-money-laundering-risks-and-taking-action-for-art-market-participants

AFGHANISTAN’S ILLEGAL DRUG TRADE A BOON FOR THE TALIBAN

A timely article from Reuters on 16 August says that the US spent more than $8 billion over 15 years on efforts to deprive the Taliban of their profits from Afghanistan’s opium and heroin trade, from poppy eradication to airstrikes and raids on suspected labs – but that that strategy failed.  Afghanistan remains the world’s biggest illicit opiate supplier and some UN and US officials worry Afghanistan’s slide into chaos is creating conditions for even higher illicit opiate production, a potential boon to the Taliban.  While the Taliban banned poppy growing in 2000 as they sought international legitimacy, they faced a popular backlash and later mostly changed their stance, according to experts.

https://kyc360.riskscreen.com/news/profits-and-poppy-afghanistans-illegal-drug-trade-a-boon-for-taliban/

https://www.statista.com/chart/25545/afghanistan-deterioration

OFAC AND US DEPARTMENT OF COMMERCE’S BUREAU OF INDUSTRY AND SECURITY (BIS) FACTSHEET ON CUBA

On 13 August, Buckley LLP reported that the 2 US agencies have released a new factsheet intended to emphasise the US Government’s commitment to promoting the ability of the Cuban people “to seek, receive, and impart information” through access to the internet.  It notes that though most transactions between persons subject to US jurisdiction and Cuba are prohibited under the current embargo, the US Government permits certain activities to support the Cuban people’s access to information on the internet. 

https://buckleyfirm.com/blog/2021-08-13/treasury-issues-cuba-joint-fact-sheet#page=1

https://home.treasury.gov/system/files/126/cuba_fact_sheet_20210811.pdf

BELARUS: CANADA IMPOSES SECTORAL SANCTIONS

On 12 August, an article from McMillan LLP explained the expanded sanctions imposed on Belarus restricting activities related to transferable securities and money market instruments, debt financing, insurance and reinsurance, petroleum products, and potassium chloride. 

https://mcmillan.ca/insights/beware-of-petroleum-and-potassium-from-belarus-canada-imposes-new-sectoral-sanctions/

UK: THE COMPLIANCE CULTURE AFTER THE BRIBERY ACT

On 13 August, an article from Wilmer Hale says that, after a decade it seems that, at least in terms of prosecutions, the act falls far short of being draconian. The CPS and SFO have prosecuted a handful of individuals, and use of the corporate offence under section 7 (failure to prevent bribery) has almost exclusively been confined to deferred prosecution agreements (DPA), rather than convictions.  It asks if prosecutions are a true measure of the effectiveness of the Act, pointing out that when progressing through Parliament it was said that its aim was a change in culture, rather than numerous prosecutions.  It is said that the UK guidance can be at odds with other internationally recognised standards. The article says that the Law Commission has been asked by the UK Government to investigate the laws around corporate criminal liability and provide options for reform – with a possible reform being to introduce an offence of failure to prevent economic crime.

https://www.mondaq.com/uk/white-collar-crime-anti-corruption-fraud/1101670/compliance-culture-after-the-bribery-act

SOMALI PIRACY LULL PROMPTS REDUCTION IN  “HIGH RISK AREA”

On 17 August, Seatrade Maritime News reported that the High Risk Area (HRA) was introduced to counter the threat of Somali piracy around 2010, and vessels entering the HRA were advised to take extra security precautions.  Now a change has been triggered by a continued decline in piracy off the coast of Somalia, and comes as the responsible organisations work on broader, global maritime security risk assessment guidelines, and the reduction in the HRA will apply from 1 September.   The new HRA boundaries will cover Yemeni and Somali Territorial Seas and Exclusive Economic Zones in its eastern and southern reaches.

https://www.seatrade-maritime.com/piracy/somali-piracy-lull-prompts-high-risk-area-trim

A PRIMER ON CANADIAN SANCTIONS LEGISLATION

On 17 August, an article from Blake, Cassels and Graydon LLP says that Canada has a broad range of economic and financial sanctions targeting foreign states and their nationals, as well as various terrorist organisations.  Canadian sanctions laws apply to all individuals and businesses in Canada and to all Canadian citizens and Canadian-incorporated businesses operating outside Canada.  It provides a primer on Canadian sanctions, providing an overview of key requirements under Canadian sanctions legislation as of April 2021.

https://www.mondaq.com/canada/export-controls-trade-investment-sanctions/1101970/a-primer-on-canadian-sanctions-legislation

CONSTRUCTION WORK ON SINO-NORTH KOREAN OIL PIPELINE UNDERWAY

On 17 August, the Daily NK reported that it has obtained photographs of a construction site in China where work on a replacement pipeline facility bringing oil to North Korea is underway.  There is speculation that China is already preparing to expand support to North Korea with the relaxation of international sanctions on Pyongyang in mind. The pipeline-related construction work has been underway since June.  The original pipeline — completed in 1975 — is old and deteriorated, it has long been criticized for excessive leaks and poor oil quality.

https://www.dailynk.com/english/construction-work-sino-north-korean-oil-pipeline-underway/

IRAN AND SWITZERLAND TRADE INCREASES

On 17 August, an article from Trend in Azerbaijan reported that Iran-Switzerland trade relations have been growing in recent years despite unilateral sanctions imposed by the US on Iran.  Switzerland is said to be the fifth biggest exporter to Iran after the UAE with 4 million tons of goods worth $4.7 billion.  A bilateral trade agreement has been in force since 2017 – said to be an example of Switzerland’s efforts to keep up its good economic and diplomatic relations with Iran.  Under the “Swiss Humanitarian Trade Arrangement”, Swiss businesses in the food, pharmaceutical and medical sectors have a secure payment channel with a Swiss bank for their exports to Iran.

https://financialtribune.com/articles/domestic-economy/109762/irans-trade-ties-with-switzerland-flourishing-under-sanctions

https://en.trend.az/business/economy/3470505.html

THE RISE AND FALL OF THE OLIGARCH-MAKER

A lengthy article from Al Jazeera on 17 August concerned a man caught by its investigative unit on secret camera apparently agreeing to sell an English football club to a convicted Chinese criminal, in breach of football regulations.  Who was this man, it asks, and how deep did his business connections go?  It names Christopher Samuelson, who it says has been described as a “company administrator”, “fiduciary”, “trust manager”, as well as “money manager”, “businessman”, and “financier” – saying that you need to add the word “offshore” to those titles.  From his bases in Bermuda, Geneva, and Gibraltar, Samuelson ran Valmet, one of the biggest offshore trust companies in the world and later known as Mutual Trust Management (MTM). 

https://www.aljazeera.com/features/2021/8/17/the-rise-and-fall-of-the-man-who-helped-to-create-the-oligarchs

EML PAYMENTS SAYS IT IS RESOLVING IRISH MONEY LAUNDERING CONCERNS

On 17 August, the Financial Review reported that Australia-based EML Payments said a remediation plan offered to the Central Bank of Ireland to allay its concerns about AML lapses will be “substantially” completed by the end of this calendar year with all issues to be resolved by the end of March 2022.  EML said the costs of the Irish investigation, including remediation and advisory expenses, was $11.4 million. It is said that over a quarter of its turnover comes from its Irish business operations – having acquired Irish fintech Prepaid Financial Services in 2019 – after it shifted its non-UK business out of the UK after Brexit.  It is reported that the CBI had not uncovered evidence of any actual money laundering or terrorism financing using EML products but wants to lift governance standards.

https://www.afr.com/companies/financial-services/eml-says-irish-aml-concerns-to-be-allayed-by-march-20210817-p58je5

NORTH KOREA “EXPORTED TECHNOLOGY ON TUNNEL DIGGING TO HEZBOLLAH”

On 17 August, KBS World in South Korea reported that an Israeli research centre – the Alma Research and Education Center – said North Korea exported technology on digging a network of regional tunnels extending tens of kilometres to Lebanese Shiite militant group Hezbollah.  The report said in 2014, Hezbollah signed a $13 million deal with the North’s Korea Mining Development Trading Corporation (KOMID) for the supply of materials to excavate tunnels on the border and for the transfer of North Korean technology to Hezbollah. 

https://world.kbs.co.kr/service/news_view.htm?lang=e&id=Po&Seq_Code=163608

UK NATIONAL DRUGS CONTROL SYSTEM (NDS) – LICENCE APPLICATIONS FOR THE IMPORT AND EXPORT OF CONTROLLED DRUGS AND PRECURSOR CHEMICALS

On 17 August, the Home Office issued updated guidance, saying that the NDS allows you to make online applications for licences for the import and export of controlled drugs and precursor chemicals.

https://www.gov.uk/government/publications/national-drugs-control-system-user-guide

UK SUPREME COURT TO TEST LIMITS OF ECONOMIC DURESS

On 17 August, the Law Society Gazette reported that a Supreme Court judgment examining what constitutes economic duress is due to be published and the decision in the case involving Pakistan International Airline Corporation could have major ramifications for commercial negotiations and reset the boundaries of duress. 

https://www.lawgazette.co.uk/news/supreme-court-to-test-limits-of-economic-duress/5109537.article

MALAYSIAN PM RESIGNS AND SAYS HE WON’T WORK WITH KLEPTOCRATS

On 17 August, OCCRP reported that, after only 17 months into office, Malaysian Prime Minister Muhyiddin Yassin has announced his resignation after losing majority support in parliament following months of political turmoil and apparent pressure from current and former officials accused of graft.  He is quoted as saying that he would never work with kleptocrats, interfere with the independence of the judiciary, and turn his back against the Federal Constitution just to stay in power.  This comment has been interpreted as a dig at a group of high-ranking government officials, several of whom are facing graft charges.

https://www.occrp.org/en/daily/15007-malaysian-pm-resigns-says-he-won-t-work-with-kleptocrats

BALKAN GANGS SUPERVISE COCAINE TRADE FROM COLOMBIA AND ACROSS EUROPE

On 17 August, Insight Crime reported that a cell within a notorious Montenegrin cocaine – members of the Skaljari clan – trafficking group has been dismantled on Spain’s Canary Islands, demonstrating how Balkan drug smugglers may be utilising Latin American connections to re-position themselves within European markets. 

https://insightcrime.org/news/balkan-gangs-supervise-cocaine-trade-from-colombia-and-across-europe/

LAWYERS “MUST CONTACT NCA IMMEDIATELY” BEFORE DISCLOSING SAR

On 17 August, Legal Futures in the UK reported that lawyers compelled by the Civil Procedure Rules or court order to reveal the content or existence of suspicious activity reports (SAR) must contact the NCA at the “first opportunity”, the Home Office has said.

https://www.legalfutures.co.uk/latest-news/lawyers-must-contact-nca-immediately-before-disclosing-sars

AN INTERACTIVE INFOGRAPHIC ON SMALL ARMS AND LIGHT WEAPONS AND TERRORIST FINANCING

On 16 August, the International Centre for Counter-Terrorism in The Hague has published an interactive infographic highlighting some of the key trends and issues in Small Arms and Light Weapons (SALW) as a source of terrorist financing.

https://salw.icct.nl/

THE FALL OF AFGHANISTAN – THE PAST IS PROLOGUE, A PREVIEW OF TERROR 3.0

On 15 August, an article from ACFCS says that the situation has put US and foreign intelligence agencies on high alert and is developing into a high-risk scenario for AML financial crime compliance teams around the world.It says that AML professionals must be on high alert with a fluid, unstable and rapidly deteriorating situation.

https://www.acfcs.org/acfcs-exclusive-report-the-fall-of-afghanistan-the-past-is-prologue-a-preview-of-terror-3-0/

PROPERTY AGENTS FINED AFTER HMRC AML CHECKS

On 17 August, Propertymark reported that HMRC has published a detailed list of businesses which have failed to comply with AML rules between 2020 and 2021, including property agents failing to comply with regulatory needs to register with HMRC at the required time.  It lists a number of such cases, involving penalties of a few thousand pounds.

https://www.propertymark.co.uk/resource/property-agents-fined-after-hmrc-aml-checks.html

DATA PROTECTION IN THE WORKPLACE – PART 1

The Jersey Office of the Information Commissioner has published the first of a 3-part planned series of blog posts, in which the Information Commissioner discusses the fundamental principles of the Data Protection (Jersey) Law 2018 and how workplace culture should play a part in every organisation’s data protection regime.  The second part is due on 23 August.

https://jerseyoic.org/blogs/data-protection-in-the-workplace-part-1/

UK: OVERTURNED CONVICTIONS OF SUB-POSTMASTERS MOUNT UP, BUT 555 VICTIMS NO CLOSER TO JUSTICE

On 17 August, Computer Weekly provided an update on the case of former sub-postmasters who were blamed and punished by the Post Office for accounting losses caused by its own computer system – described as one of the biggest miscarriages of justice in UK history, and it has no match in terms of number wrongfully prosecuted.  63 convictions so far have been overturned, with many more expected out of a total of 736 convicted based on computer evidence.  However, the magazine now reports that, while the government says that the compensation of £57.75 million awarded to the 555 sub-postmasters after a High Court battle was a full and final payment. What it does not publicise is that after the they have paid their legal costs, which were ramped up by the Post Office’s attempts to avoid defeat, they were left with just £11 million – and the government is refusing to pay the £46m legal costs for the sub-postmasters.  It is said that, in many cases, the payment does not even cover the sums paid to the Post Office by the claimants covering unexplained shortfalls, and in some cases the travel costs that individuals have amassed during their campaigns for justice.

https://www.computerweekly.com/news/252505410/Overturned-convictions-of-subpostmasters-mount-up-but-555-victims-no-closer-justice

OWNERS/MANAGERS OF FLORIDA LABOUR-STAFFING COMPANIES INDICTED FOR IMMIGRATION FRAUD AND MONEY LAUNDERING

A news release from US DoJ on 17 August advised that an indictment charges 3 men who operated labour-staffing companies in Florida with conspiracy to harbour non-resident aliens and induce them to remain in the country and with conspiracy to commit money laundering.  A series of labour-staffing companies in southern Florida, including Paradise Choice LLC, Paradise Choice Cleaning LLC, Tropical City Services LLC, and Tropical City Group LLC, are named, operating between August 2007 and July 2021.  It is alleged that the defendants, through these staffing companies, facilitated the employment in the hospitality industry of non-resident aliens who were not authorized to work in the US.

https://www.justice.gov/opa/pr/ownersmanagers-florida-labor-staffing-companies-indicted-immigration-fraud-and-money

UAE: 8 COMPANIES AND 40 PERSONS CHARGED WITH MONEY LAUNDERING CRIMES

On 17 August, Gulf Today reported that Abu Dhabi Criminal Court had convicted a gang of 40 members of different nationalities and 8 companies on charges of fraud and money laundering.  They reportedly practised economic activity without a licence using information technology means through which they committed fraud and money laundering.  The individuals included 17 Emiratis, 16 Iranians, 2 Indians, a Saudi, a Mauritanian, an American, a Greek, and a Comorian.  They offered profits ranging between 16% and 18%, saying that they were investing the victims’ money into a fake cryptocurrency.

https://www.gulftoday.ae/news/2021/08/17/8-companies-gang-of-40-charged-with-money-laundering-crimes-fined-dhs860-million

COMMON FRAUD IN THE US PHARMACEUTICAL SECTOR

On 5 August, the CRI Group published an article saying that the fraud involves activities that result in false claims to insurers or programmes such as Medicare or equivalent state programmes for financial gain to a pharmaceutical company. Several different schemes are used to defraud the health care system, and it goes on to list common types of fraud in the sector.

https://crigroup.com/pharmaceutical-industry-fraud/

UK: FCA LETTER TO HOUSE OF COMMONS TREASURY COMMITTEE ON FROZEN BANK ACCOUNTS

On 16 August, Norton Rose Fulbright reproduced a letter sent by the FCA to the House of Commons treasury Committee.  In the letter the FCA explains, among other things, what customer service standards it expects from banks when they move to freeze bank accounts.  Among other things, the letter says that banks should, where possible, communicate with customers, acknowledging that they may need to take care to avoid alerting individuals in a manner that could undermine further action taken in the future under the Proceeds of Crime Act 2002 – with a consequence of this is that it may be difficult to explain to a customer the reason for imposing restrictions on an account.

https://www.regulationtomorrow.com/eu/fca-letter-to-house-of-commons-treasury-committee-on-frozen-bank-accounts

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