The protests continue (as does the teachers’ strike), and things still confusing. For example, we were planning a (postponed) trip our of the city and reports said many road blocks had been opened or removed. However, then there was a report about an impromptu blockages – and this would have been on our route…
At least there were plenty of bananas in the supermarket today…
25 JULY 2022
US: DoJ CHARGES 6 INDIVIDUALS WITH NFT FRAUD
On 21 July, Sheppard Mullin published an article explaining that on 30 June, the DoJ charged 6 individuals in 4 separate cases for a fraudulent NFT trading scheme. It says that these enforcement actions should be viewed in light of the recent federal push to regulate blockchain and related technologies
BANKS START USING INFORMATION-SHARING TOOLS TO DETECT FINANCIAL CRIME
An article in the Wall Street Journal on 25 July reports on financial institutions and service providers in several countries creating information-sharing platforms and messaging tools with the potential to vastly improve the detection of money laundering and fraud. A research project supported by RUSI in the UK has identified at least 15 information-sharing initiatives around the world. Although most countries don’t allow banks to share information, the article says, several recent efforts have shown significant success in identifying crime, the research found.
ITALIAN AUTHORITIES HALT SALE OF ILLEGALLY EXPORTED MASTERPIECE IN AUSTRIA
On 25 July, Art Law & More from Boodle Hatfield reported that Italian authorities discovered the fraud by searching through auction catalogues and online offerings. They uncovered the sale in Austria of a painting by Artemisa Gentileschi (1593-1656) valued at €2 million. The Carabinieri art squad said 2 art dealers had fraudulently obtained export permission from Italian authorities in 2019 by describing the painting as by a follower of Gentileschi, and not the artist herself. The dealers then tried to illegally sell the painting through a prestigious auction house in Vienna.
APPLICATION OF RUSSIA (SANCTIONS) (EU EXIT) (AMENDMENT) (NO. 14) REGULATIONS 2022 IN THE ISLE OF MAN
On 25 July, a news release advised the application in the Island of these UK Regulations, which further expand sanctions against Russia, including in respect of oil and oil products, coal and coal products and gold.
UK: NCA SEIZED £27 MILLION OF CRYPTOCURRENCY IN YEAR ENDING 31 MARCH
On 25 July, Infosecurity reported that the NCA annual report revealed that, during the year to 31 March 2022, it had confiscated $26.9 million in cryptocurrency assets, at prices calculated in March this year. It confiscated no cryptocurrency in the previous year. In fact, more virtual currency was seized than physical assets (£7m) or fiat currency (£26m) over the 2021-22 report period – but with the caveat is that some of these assets “may still be liable to be returned,” according to the report.
RUSSIA: “UNFRIENDLY NATIONS” NOW INCLUDE THE ISLE OF MAN, BAHAMAS AND GUERNSEY
On 25 July, the BBC reported that Russia had added Guernsey to its list of “unfriendly countries and territories” – Jersey already being on the list. Reportedly, the Bahamas and the Isle of Man were also added to the list.
FINANCIAL SERVICES: EU COMMISSION EXTENDS EQUIVALENCE AND ADEQUACY OF US AUDIT COMPETENT AUTHORITIES
On 25 July, the EU announced that the Commission has adopted 2 new Decisions to grant the US competent authorities equivalence and adequacy in the area of statutory audit for a further 6 years. These Decisions will enable EU audit supervisors to continue to cooperate on audit oversight with their US counterparts, in line with the EU Audit Directive, and extend the current agreement, which was set to expire on 31 July, for a further 6 years until 31 July 2028.
LITHUANIA LIFTS BAN ON RAIL TRANSPORT OF GOODS INTO KALININGRAD
On 24 July, EurActiv reported that, according to the Russian news agency RIA, Lithuania has lifted a ban on the rail transport of sanctioned goods into and out of the Russian enclave of Kaliningrad. This came after the EUCommission said the transit ban only affected road, not rail, transit, and Lithuania should therefore allow Russia to ship concrete, wood and alcohol across EU territory to the exclave.
UK: ILLICIT TOBACCO TRADE SEES BIGGEST RISE OF LAST 5 YEARS
On 25 July, trade news source KAM City reported on a KPMG study, commissioned by Philip Morris International, which shows the consumption of counterfeit and contraband cigarettes in the UK rose by 4.2% in 2021, the biggest annual rise of the last 5 years. This increase was fuelled by counterfeit cigarettes in particular – now the most prevalent form of illicit cigarette in the UK – the consumption of which grew 34.1% in 2021.
THE IMPLICATIONS OF EUROPE’S TURN TO MEDITERRANEAN GAS
On 25 July, a Commentary from RUSI says that, in the light of the war in Ukraine, Europe is increasingly looking to its southern neighbourhood – but this comes with its own set of geopolitical challenges. For example, it cites Israeli gas, to be turned into LNG in Egypt, and gas from Algeria. It points out that neither is a quick fix and both tie Europe more closely to complex and potentially explosive geopolitical contexts.
IRAN AND RUSSIA AFTER THE UKRAINE INVASION
A Commentary from RUSI on 22 July examined the relationship between the 2 countries, saying that, despite speculation around Russian President Vladimir Putin’s recent trip to Tehran, Russia–Iran relations remain firmly transactional – a relationship based on coordination on specific issues of shared interest but without deeper, longer-term strategic cooperation.
UK: GUIDANCE ON NATIONAL SECURITY AND INVESTMENT ACT 2021 AND FIRST TRANSACTION BARRED
On 25 July, an article from Eversheds Sutherland reported that the Act came into force on 4 January and established a new standalone statutory regime enabling the UK government to scrutinise and intervene in acquisitions and investments for the purposes of protecting national security in the UK. The UK Government has now issued a new set of guidance relating to the Act, and published an updated version of a set of its existing guidance. On 21 July, the Government announced its first prohibition of a transaction – this is against a backdrop of it announcing that it is undertaking a number of other high-profile investigations.
CHINESE COMPANIES ALLEGEDLY TRAFFICKING 40,000 CHILDREN IN CONGO – FORCING THEM TO WORK IN HAZARDOUS MINES
On 23 July, the Atlanta Black Star reported that human rights advocates have accused China of exploiting thousands of Congolese children to work in cobalt mines. It is said that the Democratic Republic of Congo produces more than 70% of the world’s cobalt, 15% to 30% of which is produced in smaller unregulated mines, and the small mines, known as artisanal mines, have been notorious for human rights violations, according to reports.
GUATEMALA’S FORMER ECONOMICS MINISTER PLEADS GUILTY TO USING MIAMI BANK ACCOUNTS TO PAY BRIBES
On 22 July, AOL reported that a former high-ranking government official in Guatemala, Acisclo Valladares Urruela, 46, the former economics minister, has pleaded guilty in Miami federal court to conspiring to commit money laundering while paying hundreds of thousands of dollars in bribes to Guatemalan politicians through the US banking system.
SINGAPORE: CHIEF MONEY MULE JAILED 14 YEARS OVER $40 MILLION SKILLSFUTURE SCAM
On 15 July, the Straits Times reported that a key player in what is believed to be the largest case of fraud against a government institution has been jailed for 14 years and 4 months. Sim Soon Lee, 46, had pleaded guilty. It is said that Sim joined months after the syndicate was formed, but “took it to a new dimension” as its chief money launderer and main recruiter.
UK: THE CHANCELLOR OF THE EXCHEQUER HAS BEEN SENDING THREATENING SOLICITORS’ LETTERS TO PEOPLE INVESTIGATING HIS TAX AFFAIRS
On 22 July, the Tax Policy Associates blog reported that Nadhim Zahawi, has been sending threatening letters, drafted by expensive lawyers, to people investigating his tax affairs. The letters are designed to intimidate, and say they are confidential and can’t be published – something that the post refutes, publishing examples.
UK: NCA CALLS FOR MORE FUNDING TO TACKLE RUSSIAN KLEPTOCRACY
On 21 July, the Guardian reported that the NCA has complained it is struggling to tackle Russian kleptocracy and sanctions evasion because it is given only a third of the funding per officer handed to the FBI. It is said that the UK had been slower to seize sanctioned Russian oligarchs’ assets than the US because it could not rely on the same “substantial level of investment” that the US has poured into tackling international corruption and sanctions busting.
UK ESTABLISHES NEW UNIT TO COMBAT KLEPTOCRATS & MONEY LAUNDERING
On 25 July, OCCRP reported that the National Crime Agency (NCA) has established a new unit with a mandate to investigate corrupt elites, sanction evaders, and enablers of money laundering. The Combating Kleptocracy Cell (CKC) was formed in part as a result of the surge in money laundering activity from Russia, Ukraine, and Belarus ever since Russian president Vladimir Putin relaunched his invasion on Ukraine.
COCAINE POLITICS IN WEST AFRICA: GUINEA-BISSAU’S PROTECTION NETWORKS
On 22 July, the Global Initiative Against Transnational Organised Crime published this report, saying that the country is a key entry point for cocaine into West Africa, a region that operates as a transit point on international cocaine trafficking routes between cultivation countries in Latin America and consumer end-markets in Europe. It claims that profits from the cocaine market have bankrolled a remarkably resilient elite protection network composed of elements of the state infrastructure. The report explores the role, past and present, of the cocaine trade both as a driver of political instability in the country and as a source of resilience for elite power-sharing arrangements.
THE DARK WEB: AN OVERVIEW
On 22 July, the US Congressional Research Service published a briefing on the Dark Web, navigating and using it and investigations etc.
A BRIBE THAT’S OFFERED BUT DOESN’T HAPPEN AND DOESN’T CHANGE ANYTHING COMMERCIALLY CAN STILL BE A CRIME
A post on the FCPA Blog on 25 July involved a personal story explaining how the above can happen under the FCPA.
DON’T COUNT ON A THAW IN US-VENEZUELA RELATIONS
On 25 July, an article in World Politics Review reported that energy companies have been acting as if US sanctions on Venezuela’s oil industry are likely to end soon. The apparent belief that sanctions will be lifted is a response to several recent moves by Washington that suggest its relations with Caracas may be warming up.
PHILIPPINES CENTRAL BANK ISSUES GUIDANCE ON CONDUCTING INSTITUTIONAL RISK ASSESSMENTS
Comply Advantage reported that the Bangko Sentral ng Pilipinas (BSP) has issued guidance for central bank-supervised financial institutions on conducting institutional risk assessments, and offers practical guidance on identifying, analysing, and understanding the money laundering, terrorist financing, and proliferation financing risks that can arise from BSFI business activities and relationships.
EL SALVADOR AND BITCOIN
On 22 July, The Intercept published an article about experiences in El Salvador, saying that to date embracing Bitcoin has not brought prosperity, but the ostensible anti-gang crackdown has seen violence and repression (noting that El Salvador’s government was reportedly a customer of NSO Group, the Israeli spyware vendor. A year after President Bukele’s bitcoin law was passed, foreign investment was actually down in the country.
US FREEZES SECURITY AID TO RWANDA AS CIVILIAN DEATHS MOUNT IN CONGO
On 25 July, the Globe & Mail in Canada reported that the block on aid was because of Rwandan support for the M23 militia group that has captured a series of Congolese towns and villages in recent weeks. It reports that a group of UN experts said in a report last month that it had “aerial footage and photographic evidence” of men in Rwandan military uniforms at M23 camps in eastern Congo. The US Secretary of State has accused Rwanda of fomenting “rebellion and violence” in eastern Congo by using a “proxy militia” to kill Congolese civilians and UN peacekeepers; and also cited many other human rights violations by the Kagame government, including attacks on exiled Rwandan dissidents and the jailing or killing of dozens of journalists, activists and opposition politicians.
DONBAS AND LUHANSK LEADERS’ GIRKIN AND PLOTNITSKY’S COVER IDENTITIES
An article from Bellingcat on 18 July reported on Igor Girkin, better known by his nom de guerre Igor Strelkov, military leader of the ‘Donetsk People’s Republic’ (DNR) in 2014, and Igor Plotnitsky, head of the ‘Luhansk People’s Republic’ (LNR) from 2014 to 2017. It said that it appeared that these men had travelled using false identities on Russian internal passports. It also said that the passport numbers were only digits away from what appeared to be other fictitious identities — some of which had also appeared in joint bookings alongside alleged agents of the FSB and GRU, Russia’s main security services.
ISLE OF MAN: NEW RUSSIA SANCTIONS GENERAL LICENCE
On 25 July, the Isle of Man granted a further General Licence concerned with investment in Russia.
US CUSTOMS COULD IMPROVE NON-CONTAINERISED MARITIME CARGO SECURITY
On 23 July, Homeland Security Today reported that a Government Accountability Office report says that US Customs and Border Protection (CBP) should improve its guidance and identify additional actions its personnel could take to reduce crated cargo risks. It says that non-containerised cargo — like oil or goods in individual crates or pallets — can present inspection challenges for CBP officials because crates can hide contraband and may include additional barriers to examination. In 2020, non-containerised cargo accounted for about 32% of the $1.5 trillion total maritime cargo value. It is said that challenges facing CBP include staffing levels, the allocation of non-intrusive inspection equipment, and the adequacy of inspection facilities at seaports this on top of the actual type, quantity and risk factor of particular cargoes. It is said that the Department of Homeland Security agreed with the recommendations and said CBP plans to enhance existing risk mitigation strategies for crated break bulk cargo to include identifying additional recommended measures, such as the use of canine resources and non-intrusive inspection technology to detect radiation, among other things.
US EXPORT CONTROL: FEDEX HELD LIABLE FOR ACT DONE UNWITTINGLY AND UNKNOWINGLY
On 25 July, Bass Berry & Sims published an article about a decision earlier in July, by which Fedex remained liable for violating the Export Control Reform Act of 2018 (ECRA) even though the common carrier had been completely unaware of its violation. It had argued that the Department of Commerce’s strict liability interpretation of the relevant regulations was ultra vires – and a clear overstep of statutory authority. In part, the court reasoned that Commerce’s interpretation is within its authority because Congress had expressly omitted mens rea for the civil violation from the statutory text. The article warns that even companies who unknowingly and unwittingly “cause or aid, abet, counsel, command, induce, procure, permit, or approve the doing of any act prohibited, or the omission of any act required by” export controls, can be held civilly liable and exposed to severe penalties.
CROSS-BORDER FINANCIAL CENTRES THAT CATER FOR NON-RESIDENTS
This Working Paper by the Monetary and Economic Department of the Bank for International Settlements is concerned with financial centres that cater predominantly to non-residents – which it refers to as cross-border financial centres. The paper’s methodology identifies a core set of 12 countries over the 1995-2020 period, but the countries vary with time and different measures of activity. Until the 1970s, international financial intermediation was concentrated in a few major cities that also served as centres of domestic intermediation, notably London and New York, but since then, financial centres in smaller economies have emerged as important intermediaries of cross-border financial flows.
UK: UPPER TRIBUNAL NOT SATISFIED THAT CRYPTOASSET EXCHANGE PROVIDER WOULD COMPLY WITH AML REGULATIONS
On 25 July, Mishcon de Reya reported that the Upper Tribunal had published its judgment in Vladamir Consulting Limited v FCA, the second decision to be released on the topic of cryptoasset exchange. The appeal involved an FCA Decision Notice refusing the application to register and, consequently, VCL’s temporary registration ceased to have effect.
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