Transparency International has published a report, saying that its Russian associate had discovered a laundering scheme using a bogus trading operation, with $820 million siphoned out of Russia in just 3 years. In 2015, in 2015 a company based in Moscow Oblast imported into Russia an injection moulding machine bought from a Latvian company. This type of machine is used to blow mould plastic bottles. The price of this machine stated in the income declaration was almost 800 times more than its market price. The machine itself never even crossed the border. A study of customs’ databases and public registers found out that it was not the only case of this kind. Deal after deal was used to siphon about $820 million from Russia in 3 years. The scheme involved about 130 companies from Russia and other countries. These companies had accounts in 28 Russian banks and 11 foreign banks. 11 of these Russian banks had their licenses revoked soon afterwards, mainly due to violations of AML legislation; some of the foreign banks taking part in the schemes were also involved in scandals with dirty money from post-Soviet countries. The scheme was extensive enough to include law enforcement officials, bankers, public officials and downright criminals.
On 7 July, Kharon carried a brief saying that the alleged use of prison labour in Xinjiang was a driving factor cited in the US Government’s passing of the Uyghur Forced Labor Prevention Act (UFLPA). Complex transnational supply chains create challenges in identifying and tracking the origin of source materials that may be tied to prison labour in Xinjiang. Kharon also offers a White Paper on the UFLPA.
On 8 July, EU Sanctions blog reported that a UN Special Rapporteur on Human Rights had issued the guidance. The Special Rapporteur says that over-compliance is a form of excessive avoidance of risk. It may involve blocking all financial transactions with a sanctioned country, entity or individual even when some transactions are authorized by humanitarian exemptions or fall outside of the sanctions’ scope. It may also take the form of deterring authorised transactions by requiring cumbersome, onerous documentation or certification, charging higher rates or additional fees, or imposing discouraging long delays. Over-compliance also occurs when banks decide to freeze assets that are not targeted by sanctions, or deny individuals the possibility to open or maintain bank accounts or to engage in transactions simply because they are nationals of a sanctioned country, even when the individuals are refugees from that country. The guidance provides recommendations to counter the above for banks and other service providers.
On 7 July, VICE News released an eye-opening video report (as good as, or better, than one might hope to see from larger news organisations) saying that China’s rapidly growing presence in South America has reached Guyana, and that it has gone undercover to expose allegations of corruption in business deals between the 2 countries. Rich in natural resources, like oil, gold and timber. China’s investment in Latin America and the Caribbean has four-fold since 2005, reaching over $16 billion, with $130 billion in loans by Chinese banks. Posing as a Chinese businessman and his PA, reporters went undercover to see if they would be offered, or would have accepted, any corrupt practices and to see how the Chinese do business with the Guyanese government. They were given “advice” by one timber exporter and told of the need to pay middlemen, and how money is moved using the informal “flying money” system. They also interview the Vice-President, and pointedly ask him if he takes bribes, as some of their undercover interviewees had alleged.