OTHER THINGS YOU MAY HAVE MISSED – JULY 15

The protests continue, but the workmen we had fitting new double glazing had problems getting to us… Meanwhile, as talks resume, the expanded package of essential items subject to price control takes effect from today. I noted the list of new additions includes sardines in tomato sauce, lentils, macaroni (spaghetti) and sausage. There are now 18 on the list. At the same time, the fuel freeze sees the maximum of $3.95 per gallon ($ 1.43 per litre) of gasoline of 91 and 95 octane and low sulphur diesel.

In other depressing news, total of 1,634 confirmed cases of dengue have been recorded so far this year nationwide.  At present, 1 case has the patient in a serious condition, and just 1 death has been recorded so far. Symptoms range from a moderate fever to a disabling high fever, with severe headache and behind the eyes, with associated muscle and joint pain (it is also known as “broken bone fever”), and rashes.

15 JULY 2022

BUSINESSES CONFRONTING NEW US BAN ON XINJIANG PRODUCTS SAY IT LEAVES THEM CONFUSED

On 12 July, the South China Morning Post reported that US companies fretted for months that a ban on imports from China’s Xinjiang Uygur autonomous region would disrupt business.  Now, the newspaper says, an early sign suggests they were right to worry.  It is said that authorities released little information beforehand, and companies did not know many of the details of what they must comply with until the date they had to comply.  It is also said that US Customs and Border Protection agency (CBP) does not disclose information on shipments, making it hard to determine how many the ban has already affected.  Meanwhile, Reuters reported demands that customs officials explain why 3 major Chinese solar energy companies were excluded from a list of importers whose products are banned under a new law aimed at cracking down on forced labour.

https://www.scmp.com/news/china/diplomacy/article/3184935/businesses-confronting-new-us-ban-xinjiang-products-say-it

https://www.reuters.com/legal/government/us-lawmakers-ask-biden-administration-why-some-china-solar-giants-left-off-slave-2022-07-12

NFT MARKETPLACE USED TO RAISE CRYPTOCURRENCY FOR RUSSIAN FORCES IN UKRAINE

On 14 July, Kharon reported that a supporter of a sanctioned Russian terrorist group – the Russian Imperial Movement (RIM) – listed an NFT for sale on OpenSea, the largest US-based NFT marketplace, attempting to raise cryptocurrency for the so-called Terricon Project to support Russian fighters in Ukraine.

https://brief.kharon.com/updates/nft-sale-linked-to-sanctioned-russian-terrorist-group-attempts-to-support-war-in-ukraine

BELGIUM AND IRELAND TO INTRODUCE NEW FDI SCREENING POWERS

On 13 July, an article from Covington& Burling LLP reported that Belgium’s federal and federated governments entered into an agreement over foreign direct investment (FDI) controls on 1 June, which has yet to pass the legislative process and may still be subject to change, with new screening powers intended to enter into force on 1 January 2023.  Flanders has had its own FDI control related to certain publicly-owned entities since 2019.  The firm also says that Ireland is another Member State currently preparing a new FDI regime.  The Minister of Enterprise, Trade and Employment has announced government approval to publish a new law which, for the first time, would put in place a process for the review of FDI into Ireland.

https://www.covingtonblogs.com/2022/07/13/belgium-and-ireland-to-introduce-new-fdi-screening-powers-european-parliament-calls-for-broader-reforms/

CANADA: PROVISION OF MANUFACTURING SERVICES TO THE RUSSIAN OIL, GAS, CHEMICAL AND MANUFACTURING INDUSTRIES

On 14 July, EU Sanctions blog reported that Canada had extended its sanctions measures to prohibit the provision of certain services to manufacturing, and added 7 additional manufacturing industries, as well as land transport and transport by pipeline, to those industries subject to controls.

https://www.europeansanctions.com/2022/07/canada-amends-russia-sanctions-to-prohibit-manufacturing-to-some-russian-industries/

UK: CRIMINAL ATTACKS RISE AS GANGS TARGET PROPERTY COMPANIES

On 15 July, The Negotiator reported that new research shows that 1 in 5 property companies report increased threat of money laundering and other financial crimes.  18% have seen a rise in criminals attempting to launder money or commit financial crime through their businesses, and 6% had actually been victims of AML or other financial scams in the last 6 months.  However, up to 70% of agents had not changed their approach to AML requirements for new customers, and there were gaps in the way potential clients were authenticated.

https://thenegotiator.co.uk/criminal-attacks-on-rise-as-gangs-target-property-firms-aml/

https://www.estateagenttoday.co.uk/breaking-news/2022/7/aml-warning-financial-criminals-targeting-smaller-property-firms

FORMER US SENATOR CHARGED FOR ALLEGEDLY USING CAMPAIGN MONEY FOR GAMBLING

On 15 July, Gambling Industry News reported that former State Senator Karen Carter Peterson has been charged with wire fraud and using campaign money to fund gambling.

https://gamblingindustrynews.com/news/usa/former-senator-charged-using-campaign-money-gambling/

UK: CHARGEBACK FRAUD – ‘WORRYING TIME FOR MERCHANTS’ AS FRAUD CONTINUES TO RISE

On 15 July, Payment Expert reported that a new survey has found that 65% of merchants surveyed detailed an increase in chargeback fraud – a figure that could have significant consequences for an economy still reeling from inflation and supply-chain breakdowns.  According to the new report, the number of merchants taking steps to mitigate friendly fraud more than doubled over the past year, rising to over 75% from the previous year.

https://paymentexpert.com/2022/07/15/chargebacks911-reports-worrying-time-for-merchants-as-fraud-continues-to-rise/

UK: FIREARMS SAFETY CONSULTATION GOVERNMENT RESPONSE

On 15 July, the Home Office issued the Government response to the public consultation on firearms safety, a consultation published in November 2020.  The consultation invited comments on a range of firearms safety issues which were raised with the Government during the passage through Parliament of the Offensive Weapons Act 2019.  It sought views on proposals for how the law might be changed to mitigate the public safety risks potentially raised by these particular issues.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1090903/Firearms_Safety_Consultation_-_Government_Response_-_11072022.pdf

UK: NOTICE TO EXPORTERS 2022/21 – INDIAN OGEL UPDATED

On 15 July, the Department for International Trade issued this Notice which advised of an update to the Open General Export Licence (military goods and technology: India).  The conditions of use, in relation to exporting software or source code under this OGEL, have been updated.

https://www.gov.uk/government/publications/notice-to-exporters-202221-open-general-export-licence-updated/nte-202221-open-general-export-licence-updated

PODCAST – THE LAZARUS HEIST: INSIDE NORTH KOREA’S GLOBAL CYBER WAR

On 15 July, RUSI released this podcast in which investigative journalist Geoff White discusses his new book The Lazarus Heist – the story of how North Korea has harnessed cutting-edge technology to pursue a highly effective campaign of cyber-raids to fund its economy.  This has included the exploitation of central banks, cryptocurrency exchanges, Hollywood film studios and the UK National Health Service.

https://rusi.org/podcasts/financial-crime-insights/episode-32-lazarus-heist-inside-north-koreas-global-cyber-war

REPORT: IN CRIMEA AND THE DONBAS, ORGANISED CRIME REIGNS SUPREME

On 15 July, OCCRP carried an article about a new report from the Global Initiative Against Transnational Organized Crime which says that, since they first separated from Ukraine in 2014, a nexus of crime, corruption and rebellion has flourished in the Russian-backed Donetsk and Luhansk ‘People’s Republics’ (DNR and LNR) as well as Russian-occupied Crimea.  Even before the war, the Donetsk region was one of the most violent in Ukraine, with the most crimes and homicides in the country in 2012.

https://www.occrp.org/en/daily/16570-report-in-crimea-and-the-donbas-organized-crime-reigns-supreme

CALL FOR STRONGER ANTI-CORRUPTION EFFORTS IN THE PACIFIC

On 15 July, OCCRP reported that Transparency International has called for stronger measures to combat corruption in the region as well as a commitment to regional unity in anti-corruption efforts.  In 2021, Transparency International surveying 6,000 people across 10 countries and territories in the Pacific found that more than 3 in 5 people believed corruption to be a major problem in their government.

https://www.occrp.org/en/daily/16569-ti-calls-for-stronger-anti-corruption-efforts-in-the-pacific

HONG KONG: CUSTOMS BUST BIGGEST ILLICIT CIGARETTE CASE IN 21 YEARS

On 15 July, The Standard reported that Hong Kong Customs mounted a special operation combating illicit cigarette activities before the summer holidays, detecting a total of 20 relevant cases, with one of the cases being the largest cigarette smuggling case caught by authorities in the past 21 years – a case involving 78 million suspected illicit cigarettes, with an estimated market value was about HK$220 million with a duty potential of about HK$150 million.   

https://www.thestandard.com.hk/breaking-news/section/4/192321/Customs-bust-biggest-illicit-cigarette-case-in-21-years

QUARTERLY FINANCIAL CRIME HORIZON SCREENING FOR US AND UK

On 15 July, Eversheds Sutherland released the latest versions of its horizon screening newsletters.

https://www.eversheds-sutherland.com/global/en/what/articles/index.page?ArticleID=en/Fraud_and_financial_crime/Quarterly_FInancial_Crime_Horizon_Scanner_July_2022

FCA FINES THE TJM PARTNERSHIP LIMITED (IN LIQUIDATION) £2 MILLION FOR SERIOUS FINANCIAL CRIME CONTROL FAILINGS IN RELATION TO CUM-EX TRADING

On 15 July, a release on Mondo Visione advised that the FCA had fined The TJM Partnership Limited (in liquidation) £2,038,700 for failing to ensure it had effective systems and controls to identify and reduce the risk of financial crime and money laundering in its business.  This is the third case brought by the FCA in relation to cum-ex trading and the largest fine so far.  This reflects the multiple examples of serious misconduct over a lengthy period. 

https://mondovisione.com/media-and-resources/news/uk-financial-conduct-authority-fines-the-tjm-partnership-limited-in-liquidation/

EU CUSTOMS CONTROL MECHANISMS AND THEIR POTENTIAL IMPROVEMENT

On 15 July, the EU Parliament Research Service published a document about a workshop held on 15 June and which includes briefing document on potential improvements to customs controls in the EU.

https://www.europarl.europa.eu/RegData/etudes/STUD/2022/734922/IPOL_STU(2022)734922_EN.pdf

US: FINTECH EXECUTIVES CONVICTED IN US AFTER $160 MILLION SENT TO NIGERIA

 On 15 July, BNN Bloomberg reported that the operators of a Texan payments firm with ties to the UK pleaded guilty in the US to money laundering failures after their business facilitated the shipping of $160 million to Nigeria over about 3 years.  It names Anslem Oshionebo, 45, and Opeyemi Odeyale, 43, and the Dallas-based company they owned and operated — Ping Express US LLC.  Ping Express sent customers’ remittances to Nigeria, Kenya and other African countries.  The article notes that Odeyale also founded and controlled Payzen Ltd, a London-based payments company where Oshionebo has also been a shareholder.  The FCA granted Payzen approval to operate in January 2020, 2 months before federal prosecutors charged the 2 men and a number of others with money laundering crimes, according to US and UK filings.  The British business was not mentioned in the US case and has not been accused of any wrongdoing.  The article says that Payzen still holds an active licence as a payments company, with its website listed as ping-express.com, the FCA website shows. 

https://www.bnnbloomberg.ca/fintech-execs-convicted-in-us-after-160-million-sent-to-nigeria-1.1792314

5 PROBLEMS WITH ECONOMIC CRIME POLICING – AND HOW TO SOLVE THEM

On 11 July, RUSI published a Commentary saying that the policing response to economic crime is not fit for purpose, and money launderers and fraudsters operate with impunity – but evolution and not revolution is the answer.  It argues that the answer to the problems of economic crime policing lies in building from the foundations of activity currently in train. Rather than creating one agency, what is needed is to ‘one team’ – a strong central public-private data analytics capability building a strategic response to prevention and informing operational priorities, with operational delivery driven by a centrally-directed network of ring-fenced, multidisciplinary regional economic crime ‘superhubs’, with access to a range of capabilities and skills and working to a ‘disruption by any means’ mandate, while retaining a link to local policing.

https://rusi.org/explore-our-research/publications/commentary/five-problems-economic-crime-policing-and-how-solve-them

IN INDUSTRIAL-SCALE SCAM CENTRES TRAFFICKING VICTIMS ARE BEING FORCED TO STEAL BILLIONS

A report from Vice News on 13 July said that thousands of imprisoned and abused workers are propping up SE Asia’s an online fraud industry emptying bank accounts across the world.  It says that those running the centres have spent the pandemic perfecting an intricate romance-meets-investment fraud called Shāzhūpán (pig butchering scams).  Teams of scammers use sophisticated scripts to “fatten up” their targets, grooming individuals like Tsai and enticing them into investment schemes increasingly centred on cryptocurrency, before going in for the “slaughter” and stealing their money.  It also says that the industry depends on thousands of people trapped in a cycle of human trafficking, debt, forced labour, and violence; people from across the region lured by fake job adverts to scam centres in Laos, Myanmar, and Cambodia, where they’re forced to perpetrate the fraud.

https://www.vice.com/en/article/n7zb5d/pig-butchering-scam-cambodia-trafficking

NEW NORTH KOREAN HACKING GROUP EXTORTING SMALL BUSINESSES IN RANSOMWARE ATTACKS

On 15 July, NK Pro reported on warnings from Microsoft about H0lyGh0st hackers, who have been deploying increasingly sophisticated ransomware but have been unsuccessful so far.

https://www.nknews.org/pro/new-north-korean-hacking-group-extorting-small-businesses-in-ransomware-attacks/

Also –

HOW NORTH KOREAN CRYPTOCURRENCY ABUSE IS EXPANDING

On 14 July, RUSI published a Commentary warning of the growth and diversity of the North Korean hacking industry.

https://rusi.org/explore-our-research/publications/commentary/compliance-harmony-how-north-korean-cryptocurrency-abuse-expanding

EU COMMISSION ADOPTS A PROPOSAL FOR A NEW PACKAGE OF MEASURES TO MAINTAIN AND STRENGTHEN THE EFFECTIVENESS OF THE 6 EU WIDE-RANGING AND UNPRECEDENTED PACKAGES OF SANCTIONS AGAINST RUSSIA INCLUDING GOLD BAN

On 15 July, a news release from the EU advised that the “maintenance and alignment” package clarifies a number of provisions to strengthen legal certainty for operators and enforcement by Member States. It also further aligns the EU’s sanctions with those of allies and partners, in particular in the G7.  It also reiterates the Commission’s determined stance to protect food security around the globe. It introduces a new import ban on Russian gold, reiterates that EU sanctions do not target in any way the trade in agricultural products between third countries and Russia, and clarifies the exact scope of some financial and economic sanctions.  It is also proposed to extend the current EU sanctions for 6 months, until the next review at the end of January 2023. 

https://ec.europa.eu/commission/presscorner/detail/en/ip_22_4548

RUSSIA: TRAVEL BANS ON 384 MEMBERS OF THE HOUSE OF REPRESENTATIVES OF JAPAN

A news release from the Russian Foreign Ministry advised that the ban is because the 384 had taken an unfriendly anti-Russian position, with groundless accusations against it in the context of “a special military operation” in Ukraine.

https://mid.ru/ru/foreign_policy/news/1822249/

SETTLEMENT AGREEMENT BETWEEN OFAC AND AMERICAN EXPRESS NATIONAL BANK

On 15 July, OFAC advised a settlement with American Express National Bank, a subsidiary of American Express Company.  It agreed to remit $430,500 to settle its potential civil liability for 214 apparent violations of OFAC Kingpin sanctions.  It is said that a combination of human error and sanctions compliance program deficiencies enabled an account to engage in $155,189.42 worth of transactions. 

https://content.govdelivery.com/accounts/USTREAS/bulletins/3217a2a

RUSSIA SANCTIONS: JAPAN TELLS MITSUI AND MITSUBISHI TO HANG ON TO SAKHALIN-2 STAKES

In its 16 July edition, Nikkei Asia reported that the Japanese Government has urged trading houses Mitsui & Co and Mitsubishi Corporation to maintain their stakes in Russia’s Sakhalin-2 LNG project under its new operator.  It is said that the project is too big to simply pull out of, accounting for roughly 10% of Japan’s total imports.  This news followed President Putin signing a a decree that would see Russia seize full control of the gas and oil project in its far east, a move that could force out Shell and Japanese investors.

https://asia.nikkei.com/Business/Energy/Japan-tells-Mitsui-Mitsubishi-to-hang-on-to-Sakhalin-2-stakes

EMPACT: TACKLING THE MOST IMPORTANT THREATS POSED BY ORGANISED AND SERIOUS INTERNATIONAL CRIME AFFECTING THE EU

On 15 July, a news release from the EU said that the European multi-disciplinary platform against criminal threats (EMPACT) closed its 2018-2021 cycle with tangible results in the fight against organised crime.  It produced an infographic which highlights some of the results of EMPACT operations between 2018 and 2021, as the EU flagship initiative in the fight against serious and organised crime.  The 10 priorities for the 2018-2021 period were cybercrime, drugs trafficking, facilitation of illegal immigration, organised theft and burglary, trafficking in human beings, excise and missing trader intra community fraud, firearms trafficking, environmental crime, criminal finances and document fraud.

https://www.consilium.europa.eu/en/press/press-releases/2022/07/15/fighting-organised-crime-coordinated-action-on-10-priorities-leads-to-31-000-arrests-between-2018-2021/

A MAJOR OVERHAUL OF US AML LAWS IS ANOTHER STEP CLOSER

On 15 July, ICIJ reported that the US House of Representatives had passed a Bill that would force middlemen like trust companies and lawyers to more closely scrutinise the source of money and assets flowing into the country’s financial system.  The bipartisan Establishing New Authorities for Businesses Laundering and Enabling Risks to Security (ENABLERS) Act as passed as part of the annual national defense Act.  It now passes to the Senate.

https://www.icij.org/investigations/pandora-papers/major-anti-money-laundering-reform-passes-us-house/

TURKISH BUSINESSMAN EXTRADITED FROM AUSTRIA TO US TO FACE MONEY LAUNDERING AND WIRE FRAUD CHARGES

A news release from US DoJ on 15 July advised that Sezgin Baran Korkmaz had arrived in the US, having been indicted on charges of laundering more than $133 million in illegal proceeds through bank accounts he controlled in Turkey and Luxembourg.  Korkmaz and his co-conspirators allegedly used the biofuel fraud proceeds to acquire luxury homes and assets, as well as businesses such as Biofarma, the Turkish airline Borajet, a yacht named the Queen Anne, a hotel in Turkey and a villa and apartment on the Bosporus in Istanbul.  They are said to have filed false claims for more than $1 billion in tax credits allegedly for the production and sale of biodiesel by their company, Washakie Renewable Energy LLC.

https://www.justice.gov/opa/pr/turkish-businessman-extradited-austria-face-money-laundering-and-wire-fraud-charges

https://www.usnews.com/news/world/articles/2022-07-15/u-s-says-turkish-businessman-extradited-to-utah-to-face-money-laundering-fraud-charges

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CHINESE COMPANIES ARE SELLING RUSSIA GOODS ITS MILITARY NEEDS TO KEEP FIGHTING IN UKRAINE

On 15 July, the Wall Street Journal and a C4ADS report highlighted rising exports of microchips, aluminium oxide, and other dual-use items undermine Western push to stall Russian war effort.  For example, chip shipments from China to Russia more than doubled to about $50 million in the first 5 months of 2022 compared with a year earlier.

https://www.wsj.com/articles/chinese-firms-are-selling-russia-goods-its-military-needs-to-keep-fighting-in-ukraine-11657877403

https://c4ads.org/trade-secrets

https://raytoddblog.files.wordpress.com/2022/07/e6b78-tradesecrets.pdf

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ARUBA: AML/CFT MUTUAL EVALUATION REPORT

On 15 July, FATF-style regional body CFATF published the MER on Aruba which was approved at a June Plenary.  The on-site visit took place in August 2021.  The report analyses the level of compliance with the FATF 40 Recommendations, the level of effectiveness of Grenada’s AML/CFT system and provides recommendations on how the system could be strengthened.

https://www.cfatf-gafic.org/home/cfatf-news/752-4th-round-mutual-evaluation-report-of-aruba

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GRENADA: AML/CFT MUTUAL EVALUATION REPORT

On 15 July, FATF-style regional body CFATF published the MER on Grenada which was approved at a June Plenary.  The on-site visit took place in June 2021.  The report analyses the level of compliance with the FATF 40 Recommendations, the level of effectiveness of Grenada’s AML/CFT system and provides recommendations on how the system could be strengthened.

https://www.cfatf-gafic.org/home/cfatf-news/753-cfatf-4th-round-mutual-evaluation-report-of-grenada

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UK: RUSSIA SANCTIONS AMENDMENTS – INCLUDING 2 NAMES REMOVED

On 15 July, a Notice from HM Treasury advised that Didier CASIMIRO and Zeljko RUNJE had been removed from the sanctions list.  3 other existing entries have been amended, and 1 other corrected.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1090981/Notice_Russia_140722.pdf

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UK AMENDS ITS CRITERIA FOR ARMS EXPORTS

On 15 July, the House of Commons Library published a briefing paper that briefly explains how the criteria fits into the UK’s strategic export controls system and how the criteria have evolved, before comparing each criterion in turn with the 2014 version.

https://researchbriefings.files.parliament.uk/documents/CBP-9494/CBP-9494.pdf

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RUSSIA (SANCTIONS) (EU EXIT) (AMENDMENT) (NO. 11) REGULATIONS 2022

These new UK Regulations amend Part 5 (Trade) of the 2019 Regulations, which contains trade sanctions measures, and makes related consequential amendments. The amendments provide for a number of trade restrictions involving –

  • making available and the transfer of technology with the potential for the production and development of chemical and biological weapons (as well as related technical assistance, financial services, funds, and brokering services) – again existing controls already apply as well;
  • technology with potential use for internal repression (although many such goods with potential for misuse are already export-controlled);
  • expanding existing controls on chemical and biological goods and technology the export, supply and delivery, making available or acquiring of military goods and the transfer, making available or acquiring of technology, dual-use goods and technology, and critical industry goods and technology;
  • maritime goods and the making available and transfer of related technology;
  • Sterling- or EU-denominated banknotes;
  • jet fuel and fuel additives, including related technical assistance, financial services, funds, and brokering services;
  • the adding of further products to existing prohibitions relating to oil refining goods, and technology;
  • the import, acquisition or supply and delivery of revenue generating goods that originate in or are consigned from Russia (as well as related technical assistance, financial services, funds, and brokering services); and
  • the provision of technical assistance, and financial services, funds, and brokering services relating to iron and steel imports.

https://www.legislation.gov.uk/uksi/2022/792/contents/made

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