The Global Initiative Against Transnational Organised Crime has produced a report saying that illegally harvested wood is used for construction and to manufacture luxury furniture, but, with China’s own forest reserves being protected, the environmental cost of such profitable economic activity is borne by its southern neighbour. It also says that Myanmar has been too heavily dependent on revenues from timber exports, especially teak, to be able to resist the Chinese market – or that of the EU. The report identifies the routes and various actors that play a role in these illicit flows and the transformation process as the product moves through the supply chain from source to end markets.
On 19 October, an article from McCarthy Tétrault LLP considers the recent FATF follow-up report. It says that 8 FATF Recommendations were re-rated, 7 of which saw ratings increase. One FATF Recommendation pertaining to non-profit organisations saw its rating decrease from “Compliant” to “Partially Compliant”. Canada is no longer Non-Compliant with any FATF Recommendation.
On 13 October, an article from BCL Solicitors LLP noted that NatWest has pleaded guilty to failures under the UK’s money laundering regulations, but asks if it is it right to call this a ‘failure to prevent’ on its part? It points out that the same sort of offence (in bribery) has been the basis of several DPA in recent years, in which companies have (in effect) made admissions to the SFO about the guilt of ‘associated persons’. It explains that, while no criticism seems to be made about the bank’s initial CDD, it then failed to institute ongoing monitoring, or to conduct enhanced CDD as it should have done in later years. It is noted that it is important to note that the FCA did not have to prove that any offence under the Proceeds of Crime Act occurred, but that nevertheless, the money laundering regulations provided a route to prosecute NatWest for its failure in ongoing monitoring with respect to the customer. The article argues that a comparison with the offence under section 7 of the Bribery Act is instructive.
On 20 October, 5 St Andrew’s Hill chambers published an article about the recent decision whereby Petrofac Limited was sentenced following guilty pleas to 7 counts of failing to prevent bribery, contrary to section 7 of the Bribery Act 2010, after a 4-year corruption and money laundering investigation by the SFO and the earlier guilty pleas of David Lufkin, its former Global Head of Sales. Bribes totalling $81 million were made to win contracts worth $7.5 billion in 3 Middle East countries. It is said that the case appears to be a departure from the SFO’s recent strategy of negotiating DPA, and the company avoiding any criminal conviction – but the article outlines factors specific to this case made it unlikely the SFO and Petrofac could reach a DPA, including that Petrofac began cooperating relatively late on in the investigation. The article goes on to examine lessons learned from a compliance standpoint. The article concludes that the case stands as a stark reminder to corporations, especially those operating internationally to have robust procedures in place to prevent bribery and corruption and the necessary safeguards to handle any allegations of wrongdoing when or if they arise.