On 15 October, FinCEN published a financial trend analysis on ransomware trends in Bank Secrecy Act reporting filed between January 2021 and June 2021. The report, issued pursuant to the Anti-Money Laundering Act 2020, focuses on pattern and trend information pertaining to ransomware, in line with FinCEN’s issuance of government-wide priorities for AML/CFT policy. It further establishes that ransomware is a significant threat to the US financial sector, businesses, and the public. FinCEN’s analysis of ransomware-related SAR highlights average ransomware payment amounts, prevalent ransomware variants, and prominent ransomware money laundering typologies: FinCEN identified 68 different ransomware variants. FinCEN also identified several typologies common among ransomware variants in 2021, including threat actors increasingly requesting payments in Anonymity-Enhanced Cryptocurrencies such as Monero, and avoiding reusing wallet addresses, “chain hopping” and cashing out at centralised exchanges, and using mixing services and decentralised exchanges to convert proceeds.
On 15 October, OFAC released an industry-specific brochure as a resource to help members of the virtual currency industry navigate and comply with OFAC sanctions. This brochure provides an overview of OFAC sanctions requirements and procedures, including licensing and enforcement processes, and highlights sanctions compliance best practices tailored for the virtual currency industry. It has also released 2 FAQ –
For purposes of OFAC sanctions programs, what do the terms “digital currency,” “digital currency wallet,” “digital currency address,” and “virtual currency” mean?
On 15 October, Reuters reported that South Africa’s economic woes are being compounded by the theft of massive amounts of copper from state companies Eskom and Transnet, much of which is smuggled overseas. Transnet Freight Rail said copper thefts had climbed 177% over the past 5 years and had risen particularly sharply during the COVID-19 pandemic, and hundreds of thousands of metres of cables were stolen in 2020, leading to about 20 trains being cancelled a day. Some South African scrap dealers buy stolen copper, melt it down, turn it into ingots and granules, which do not require scrap export permits, or remove identifying markers. It is said that smugglers typically sent scrap to Asian markets, often using export codes for shoes or textiles to avoid detection.
Panama Covid-19 update -it has been reported that the health ministry is considering plans for a possible relaxation of the use of masks in open places and where there are few people. However, the minister also recommended continued use of face masks, even if the mandatory use of them ends. panama has also said that it has agreed to donate 243,000 doses of AstraZeneca vaccine to the Pan American Health Organisation (PAHO) for distribution in Central America and the Caribbean.
Meanwhile, as a reminder that the pandemic is still with us (and why a face mask remains a sensible precaution), today 227 new cases and 1 new fatality have been reported. There are now 2,440 active cases, with 42 in ICU and 170 in other wards.
14 OCTOBER 2021
THE PIRATE STOCK EXCHANGE IN SOMALIA
On 14 October, an article from Dryad Global said that The Wall Street Journal has reported over 70 distinct maritime operations are listed on the Harardheere Pirate Stock Exchange. Similar to the days of the Dutch East India Company, when a pirate mission is successful, the investors who bankrolled said pirate mission earns a share of the total profits. When suitable targets offer themselves the Pirate Stock Exchange can fund the operation, and anyone can sponsor the journey with anything from food, kerosene, weapons, information, or cash. The investors get a return from the “profit”, i.e. the insurance paid out for the return of a hostage. However, the article does remark on the considerable drop in the number of attacks in the region in recent years.
AN OVERVIEW OF THE USE OF CRYPTOCURRENCIES IN TERRORIST FINANCING
On 21 September, Coinbase published a post containing its findings from a study which is said to provide a holistic overview of terror funding using cryptocurrencies. It says that the team involved focused its research on the largest terrorism financed-related organisations’ fundraising efforts over the past few years. It found that that Hamas has raised the most funds, by far; and that this is likely because Hamas actively solicits such donations on their website and related Telegram channels.
On 21 September, Nagaland Post reported that a Bill before the parliament is expected to introduce the criminal offence of “planning or preparation for a terrorist act”, a change which has been long recommended to plug up a loophole in New Zealand’s legislation to help prevent terrorist attacks. The Counter-Terrorism Legislation Bill also extends terrorism finance offences to also criminalise providing wider forms of support to terrorist individuals or groups, such as goods and services.
US: $1.8 MILLION SETTLEMENT WITH VTA TELECOM OVER ALLEGED EXPORT CONTROL VIOLATIONS INVOLVING VIETNAM
A news release from the US Department of Commerce Bureau of Industrial and Security advised that BIS had reached a settlement with the VTA Telecom Corporation of California – a subsidiary of a state-owned company in Vietnam – over alleged violations by VTA of the Export Administration Regulations (EAR). It is said that, between July 2015 and until October 2016, VTA, on several occasions, provided false information to BIS officials and officials of other US agencies in connection with export licence applications and other export activities to conceal the defence purposes of some of its exports to Vietnam.
EVALUATION OF THE ROLE OF COMPLIANCE TEAMS IN ORGANISATIONAL AND BUSINESS CHALLENGES
Ethic Intelligence has published a white paper following a survey of global compliance professionals It says that the main takeaway was that, regardless of the size of a company, or its industry or location, not enough resources are being provided to compliance departments. It also found that organisations were still relying on compliance to guide their business strategies; the responsibilities of organisations’ compliance teams are continuing to grow; and interest in management systems and certifications has increased significantly.
PAKISTAN: FEDERAL INVESTIGATION AGENCY (FIA) TRACING THOSE INVOLVED IN HOARDING OF $163 MILLION IN US DOLLARS
On 12 October, Dunya News reported that, in an attempt to curb rising dollar rate against local currency, the FIA launched a crackdown against those involved in hoarding of dollars; including traders of hawala/hundi. The FIA said the sale and purchase of US dollars had been deliberately kept below $35,000 and that and several money exchange companies had also been involved.
POLICE IN CHINA BUST A $124 MILLION CRYPTO-BASED MONEY LAUNDERING SCAM
On 13 October, Coindesk reported that police in China’s south-west region had busted a group that was using cryptocurrencies to launder stolen money, which involved $124 million, arresting 100 suspects. The accused pretended to be recruiting personnel for a company, and opened trading accounts on crypto exchanges Binance, Huobi and OKEx using the information collected, and laundered stolen funds through telecom fraud etc. It is said that the gang was able to conceal its actions for a while by using up to 500 bank cards and only transacting in small amounts.
PODCAST: THEIMPACT OF CRYPTO ON SANCTIONS AND AML LAWS IN THE US
On 12 October, Herbert Smith Freehills released a podcast, a joint effort with the Bettor’s Verdict, which discusses the significant impact that the rise of crypto has had, and is likely to have going forward, on sanctions and AML laws in the US
US: NATIONAL NUCLEAR SECURITY ADMINISTRATION HOPES NEW ONLINE PORTAL WILL MAKE NUCLEAR NON-PROLIFERATION EASIER TO UNDERSTAND
On 13 October, the Federal News Network published a podcast, with transcript, saying that the NNSA wants to make it easier for people in the nuclear industry to understand the complexities of non-proliferation; and has brought all of the information together in an online portal called US Nuclear Nexus. In the podcast, Argonne National Laboratory principal systems engineer Allison Bennett Irion and NNSA Associate Assistant Deputy Administrator Jeff Chamberlin are interviewed about the development.
AUSTRALIA IS CASHING IN ON MUNITIONS SALES TO AFRICA
On 13 October, SBS published an article saying that documents obtained under Freedom of Information laws show the Australian government has approved military sales to at least 18 countries in Africa since 2015. It also says that worldwide, defence officials approved the sale of an estimated $5 billion worth of military equipment in 2019/20 – more than the typical yearly export value of Australian wine, wool or wheat. Export destinations are said to include includes Burkina Faso, where state forces are accused of executing hundreds of prisoners, and Uganda, where the government is accused of secretly diverting weapons to South Sudan., as well as Zimbabwe and Eritrea. The Defence Department says it considers human rights and regional security before allowing Australian companies to sell weapons and military equipment overseas.
CRANFIELD UNIVERSITY AWARDED £200,000 TO LEAD ON EXPORT CONTROL TRAINING IN UK HIGHER EDUCATION
On 14 October, Cranfield University reported that it has received, with project partners the University of Edinburgh and Universities UK (UUK), an award to help UK higher education to identify and manage risks arising from international collaborations. The money will fund development of a free, virtual learning tool specific to the higher education sector and centred around its needs, including real-life case studies looking at what happens when things go wrong.
On 14 October, The Barbados Advocate reported that a study by the FIU shows that there were fewer reports of fraudulent activity occurring in this country during the first 12 months of the COVID-19 pandemic. During the period the FIU identified 65 matters with a value of $4.8 million as attempts to gain money through fraud.
These new Regulations amend the 2019 regulations to update (and correct) the existing sanctions requirements. It is said that amendments are a response to the escalation of serious human rights violations in Belarus, the Belarusian authorities’ continued violent oppression of civil society, democratic opposition leaders and supporters, independent media and journalists, and continued undermining of democratic principles and the rule of law.
BELGIANS CLOSE TAX LOOPHOLE AND TARGET €30 MILLION IN FOOTBALL PLAYER SOCIAL SECURITY PAYMENTS
On 14 October, Inside World Football reported that the government has revised the fiscal regime for domestic clubs, targeting capped social security contributions with the aim of bringing in €30 million. Belgian football clubs and players have long enjoyed fiscal benefits, with social security contributions capped at €900 a month per player, irrespective of the player’s salary.
On 14 October, Yahoo Finance reported that the SFO in the UK has closed a 5-year criminal investigation into Speciality Steels, a company owned by Indian-British steel magnate Sanjeev Gupta’s GFG Alliance, without bringing any charges. The investigation dated back to when it was owned by Tata Steel UK Ltd, and is separate from the SFO’s fraud, fraudulent trading and money laundering inquiry into the financing and conduct of companies within the Gupta Family Group Alliance (GFG) – including its financing arrangements with Greensill Capital – which was launched in May.
SFO ENDS INVESTIGATION INTO THE FORMER CLAIMS COMPANY QUINDELL AFTER 6 YEARS
On 14 October, the Law Society Gazette reported that the SFO has concluded its 6-year investigation into the former claims company Quindell, with no further action being taken. The successor company Watchstone Group PLC said that it had been informed that the SFO had formally discontinued its remaining investigation into people associated with the business. In August 2015, the SFO opened an investigation over the accounting and business practices of Quindell after it overstated profits.
On 14 October, the UK House of Commons Library published a research paper. Amongst other things, it says that Iran continues to maintain that its nuclear programme is for peaceful purposes and that all activities initiated in the last 2 years are reversible if sanctions are lifted.
US: ARRANGING TRANSPORTATION OF COUNTERFEIT GOODS DOESN’T MAKE NVOCC LIABLE
On 14 October, Sandler Travis & Rosenberg reported that a US federal court has ruled that a non-vessel-operating common carrier (NVOCC) is not strictly liable for direct trademark infringement by counterfeit goods whose transportation it arranged but could be liable for contributory infringement. NVOCC do not operate ships directly but arrange for the shipment of goods with vessel carriers.
GANG RAIDS SHIP FOR SEIZED €40 MILLION COCAINE HAUL IN DUNKIRK
On 13 October, The Times reported that drug traffickers have broken new ground in France by detaining the crew of a cargo ship that had been seized by customs with €40 million worth of cocaine aboard. A 7-strong armed gang broke into the Liberian-registered vessel Trudy despite what was supposed to be tight security in Dunkirk.
UK: SRA SENDS POLICE MONEY LAUNDERING REPORTS LINKED TO £180 MILLION OF FUNDS
On 14 October, Legal Futures reported that the Solicitors Regulation Authority (SRA) has almost quadrupled the number of suspicious activity reports (SAR) it sends to the NCA about possible money laundering by law firms. It said many of the SAR related to conveyancing, fraud, tax evasion and bogus investment schemes; and other problems were clients or funds from high-risk jurisdictions, high-risk commodities such as precious metals or complex offshore company structures or trusts.
THE INTIMATE RELATIONSHIP BETWEEN COCAINE AND ILLEGAL TIMBER IN BRAZIL’S AMAZON
On 14 October, an article from Insight Crime referred to research which has highlighted the significant volume of illegal logging in the Brazilian timber market and its relationship to deforestation in the Amazon rainforest, and now the growing overlap between the routes used by drug trafficking groups and illegal logging groups. It I said that the main product from the rainforest used to conceal the export of drugs to Europe is timber. It is said that weak environmental legislation attracts the drugs gangs.
CLIMATE CHANGE TO AFFECT UK TRADE REMEDIES DECISIONS
A news release from Field Fisher on 14 October advised that the recently formed Trade Remedies Authority (TRA) has the remit to investigate allegations of unlawful trade practices and further, to recommend trade remedies to the Secretary of State for International Trade. It is said that the new UK regime allows the TRA to take into account climate considerations as part of its economic interest consideration, and similarly for the Secretary of State in the public interest assessment, but the TRA can only recommend a trade remedy measure when it is in the economic interest of the UK.
US: NETWORK OF UNDERGROUND GAMBLING ESTABLISHMENTS USED TO PROP UP A CRIMINAL ENTERPRISE
On 14 October, a news release from US DoJ advised that ABDURAMAN ISENI, aka “Diamond,” had pleaded guilty to 8 counts of criminal conduct, including overseeing a multi-year racketeering enterprise, interstate threats, money laundering, bank fraud conspiracy, false statements to a bank, and 2 gambling conspiracy offences. He is said to have led a network of underground gambling establishments to prop up a criminal enterprise under his control.
SEIZED CRYPTO PROBLEM FOR LUXEMBOURG CRIME CASH LAW
On 7 October, the Luxembourg Times reported that the parliament is considering a law on managing assets that have been seized but where a court has not yet decided that they can be confiscated because they come from criminal profits. The EU Commission has criticised Luxembourg in 2019 for its delay in fully implementing a 2014 EU Directive in this respect. One problem is that seized cryptocurrencies could quickly soar or plummet in value. It had been proposed that authorities would sell virtual assets and convert them into euros as soon as they are impounded, but it has been suggested that the country risked being held accountable for financial losses suffered by someone whom courts determined should have his assets restored only to find that cryptocurrencies were sold at a loss.
3 ARRESTS IN NETHERLANDS IN BELGIAN CRYPTOCURRENCY FRAUD INVESTIGATION
On 12 October, NL Times reported that 3 people had been arrested in the Netherlands in a Belgian investigation into a criminal organization engaged in cryptocurrency fraud. The criminals targeted people on higher-end real estate platforms and arranged to meet them in Amsterdam, Maastricht, Brussels, Paris, Barcelona, or Milan, and asked to do a side deal involving cryptocurrencies in addition to the real estate purchase. If the victim a agrees, an exchange trick is performed in which the victim loses his cash, gold, or cryptocurrency and is saddled with counterfeit money.
UK: ICAEW – CURRENT AML LAWS FAIL TO RECOGNISE SECTOR’S ROLE AS ‘GATEKEEPER’
On 14 October, Accountancy Today reported on the Institute of Chartered Accountants in England and Wales response to HM Treasury’s recent ‘Call for Evidence: Review of the UK’s AML/CFT regulatory and supervisory regime’ consultation document. It has warned that the current supervisory regime and regulations surrounding AML fail to recognise the accountancy sector as a “gatekeeper” in preventing financial crime in the UK.
On 12 October, RUSI updated its Tracker of the UK’s Economic Crime Plan (2019-2022), which was launched in July 2019 and sets out the UK government’s response to a range of economic crimes impacting the UK, including money laundering, fraud, market abuse and bribery.
FORMER BOEING 737 MAX CHIEF TECHNICAL PILOT INDICTED FOR FRAUD
A news release from the US DoJ on 14 October advised that Mark A Forkner, 46, has been charged with deceiving the Federal Aviation Administration’s Aircraft Evaluation Group in connection with their evaluation of Boeing’s 737 MAX, and scheming to defraud Boeing’s US-based airline customers to obtain tens of millions of dollars for Boeing. He allegedly deceived the FAA AEG during the agency’s evaluation and certification of the type. The alleged fraud involved a new part of the flight controls for the Boeing 737 MAX called the Maneuvering Characteristics Augmentation System (MCAS).
NORTHERN IRELAND: NEW IRA MONEY LAUNDERING INVESTIGATION LEADS TO ARRESTS
Belfast Live on 14 October advised that police investigating suspected fraud and money laundering linked to the New IRA have made a number of arrests. The police said that searches had resulted in “a significant quantity of suspected counterfeit cigarettes, small quantities of suspected Class A and Class B drugs and quantity of cash” being seized.
CAMBRIDGE UNIVERSITY HALTS £400 MILLION DEAL WITH UAE OVER PEGASUS SPYWARE CLAIMS
On 14 October, the Guardian reported that the University has broken off talks with the UAE over a record collaboration after claims about the UAE use of controversial Pegasus hacking software. The principal government responsible for selecting hundreds of UK numbers appeared to be the UAE.
On 14 October, an article from Thomson Reuters reported on developments concerning crowdfunding P2P sites, including 2 communications from the FCA on investment programmes and loan-based crowdfunding. At the same time, the High Court had been considering applications for directions concerning asset realisations in the case of a loans-based P2P platform which had been placed in administration by the FCA. That firm had used a website facilitating crowdfunded loans which were used to fund the purchase and development of property. The case also involves claims that 2 directors made 73 payments out of the company’s bank account, purportedly in discharge of sums owed to 3 companies incorporated in the Marshall Islands.
BORIS JOHNSON’S HOLIDAY VILLA LINKED TO OFFSHORE TAX HAVENS
On 14 October, the Guardian reported that the Marbella villa was lent to the Prime Minister by Zac Goldsmith. It says that documents seen by the Guardian indicate the luxurious villa, lent to him, has been held by an opaque offshore structure based in multiple tax havens. The Pandora Papers suggest that the minister and his family may have owned the property through a Maltese company held by companies in the Turks and Caicos Islands and administered by a wealth planning firm based in Switzerland.
DOCUMENTS EXPOSE ROMANIAN OFFICIAL’S OFFSHORE NETWORKS AND SUGGEST HE EMBEZZLED PUBLIC FUNDS
On 13 October, OCCRP reported that a powerful local official in Bucharest has been entangled in tax fraud and corruption investigations for more than a decade, stretching back to his time as a member of parliament, yet has never faced trial. It says that leaked corporate data and prosecution files from the Pandora Papers obtained by OCCRP shed light on the business schemes that may yet land the influential politician, Robert Negoiță, in hot water with Romanian authorities.
IN LIGHT OF THE PANDORA PAPERS – THE NUTS AND BOLTS OF CLOUD SECURITY
On 8 October, a podcast from “War on the Rocks” sets out to provide listeners with a better understanding of how cloud security works; and help them better to understand the context in which events like the release of the Pandora Papers, hack and leak operations, and even cloud-based attacks on computer control and data acquisition systems all take place.