23 SEPTEMBER 2022
SPOTLIGHT ON THE WIRECARD SCANDAL
On 23 September, KYC 360 published an article saying that a new documentary has thrown fresh light on one of the biggest financial scandals of recent times. It says that the Wirecard debacle was the result of a perfect storm of money laundering, fraud, inaction by regulatory authorities, and auditing failures by one of the big accountancy firms.
PROTON CEO IS SHUTTING DOWN INDIA VPN SERVERS
On 22 September, the Wall Street Journal reported that the Swiss company behind well-known Proton VPN is pulling its servers from India, the latest provider to do so in response to new government rules that companies and rights groups say threaten users’ privacy. India’s agency overseeing computer security will require VPN operators in the country to collect information such as customers’ names, email addresses and the IP addresses they use to connect to the internet. The companies must maintain the data for at least 5 years and furnish it to authorities when asked.
US REGULATORS HAVE STARTED INSPECTING CHINA-BASED AUDITS IN HONG KONG
On 22 September, the Wall Street Journal reported that the inspection, which is set to last 8 to 10 weeks in Hong Kong, would allow the US PCAOB to decide by the end of this year whether China is honouring an agreement to give US accounting inspectors full access to audit working papers of New York-listed Chinese companies.
US DOJ PUSHING AHEAD WITH CORPORATE SETTLEMENT POLICY THAT COULD MAKE EXECUTIVES LIABLE
On 22 September, the Wall Street Journal reported that the DoJ isn’t backing away from a policy, criticised by some in the corporate sector, of having compliance officers sign off on the effectiveness of their programs as part of settlements, as it tries to hold individuals accountable for their role in corporate wrongdoing.
US DoJ LAUNCHES ENFORCEMENT INITIATIVE AGAINST “INTERLOCKING DIRECTORATES”
On 23 September, an article from Wilson Sonsini says that the DoJ has issued letters to multiple public companies, investors, and individuals this week, stating it may bring lawsuits against them for maintaining “interlocking directorates” in violation of section 8 of the Clayton Antitrust Act. It explains that an “interlocking directorate” occurs when the same individual or entity sits on the board of 2 competitors. The interlock can be direct, such as when the same individual sits on the board of 2 competing companies. The interlock can also be indirect, such as when the same private equity firm appoints different representatives to sit on the boards of competing companies. It also says that the DoJ has begun to proactively search for potential section 8 violations outside of a merger review, following through on statements it made earlier this year.
INTERPOL RED NOTICES AND CRYPTOCURRENCY RELATED CHARGES: WHY ARE THESE CASES EMERGING IN SOUTH KOREA, CHINA, THE US, AND OTHER FINANCIAL HUBS?
On 23 September, an article from Estlund Law PS posed this question in the light of recent cases, such as the Red Notice for the founder of TerraUSD. It observes that criminal charges in cases involving cryptocurrency can involve jurisdictions which don’t always know how – or have not yet agreed on a common scheme – to regulate the financial transactions related to cryptocurrency. Accordingly, a person may be wanted for and detained for a Red Notice even if it eventually will not be honoured by INTERPOL’s other member countries.
US FCC SUPPLEMENTS LIST OF EQUIPMENT AND SERVICES DEEMED A THREAT TO NATIONAL SECURITY
On 22 September, an article from ArentFox Schiff says that the Secure and Trusted Communications Networks Act requires the Federal Communications Commission to publish and maintain a list of communications equipment and services that pose an unacceptable risk to national security or the security and safety of US persons, and that the FCC has added equipment and services from 3 entities to its “Covered List”. The FCC has added AO Kaspersky Lab, China Telecom (Americas) Corp, and China Mobile International USA Inc, and their subsidiaries and affiliates.
UK: THE GROWTH PLAN 2022 – FACTSHEET ON INVESTMENT ZONES
On 23 September, as part of the tax and investment programme announced in Parliament, HM Treasury issued this factsheet which provides a summary of Investment Zones including which areas the government is in early discussions with and how they will work. They involve lowering taxes and liberalising planning frameworks to (it is hoped) encourage rapid development and business investment.
Other related documents for the Plan are at –
SWISS-BASED AOG FUND POURED CASH INTO JOINT ACCOUNTS WITH AFRICAN POLITICIANS
On 22 September, as part of its “Suisse Secrets” project, OCCRP published an article saying that, in the 1990s, executives at an obscure energy company bribed Nigerian officials to obtain spectacularly profitable oil mining licenses. Now, the Suisse Secrets project reveals that the company’s parent firm poured money into Swiss bank accounts held jointly by its employees and African elites, including a Nigerian spy chief.
CANADA IS LAUNCHING A REVIEW OF ITS CANNABIS REGULATIONS
On 23 September, TJI reported that the review will see an expert panel research the impact legalisation has had on people especially youths and Indigenous groups. According to government data, 9.5 million Canadians or 25% of the population used cannabis in 2021, down slightly from the previous year.
CORRUPTION PUTS MILITARY AMMUNITION INTO THE HANDS OF PARAGUAY’S CRIMINALS
On 22 September, an article from Insight Crime says that ammunition manufactured for Paraguay’s military is ending up in the hands of organized crime groups as a crippling lack of traceability ensures gangs can fill their arsenals with ease. It says that the inability to stem ammunition trafficking lie shortcomings not only in munitions tracing but in the ability of the Directorate of War Material (Dirección de Material Bélico – Dimabel) to resist corruption.
RIGHT TO WORK CHECK REQUIREMENTS STIFFENED IN THE UK
On 22 September, Out-Law reported that employers in the UK are faced with having to choose between engaging a commercial provider or returning to in-person right to work checks to comply with new guidance that takes effect on 1 October. In the case of non-British or non-Irish workers, employers are obliged to carry out remote checks via the Home Office online checking service: this system has been mandatory for employers since April 2022. British or Irish workers can have their current passport or Irish ID card checked using an online system, with manual checks as an option or alternative.
NEW US COMPANY OWNER DATABASE ‘TAKING WAY TOO LONG’ TO IMPLEMENT
On 20 September, ICIJ reported that experts say that the US Treasury is badly behind schedule in implementing the law mandating the government to collect ownership data from companies operating in the US. Transparency advocates who cheered the new law now worry that the delays are so severe that the all-important registry could remain unfinished by the next Presidential election, and that a new administration might have less interest in implementing and defending the law.
PAKISTANI COURT DROPS TERRORISM CHARGES AGAINST FORMER-PM IMRAN KHAN
On 21 September, OCCRP reported that Pakistan’s high court has dismissed the terrorism charges brought against Imran Khan, the country’s former prime minister, who appears to have escaped the latest of legal challenges brought against him since he was ousted from power last month. The court determined that Khan’s actions didn’t amount to a violation of the country’s anti-terrorism Act.
TRANSPORT COMPANY DX TOOK “INSUFFICIENT” ACTION ON BRIBERY ALLEGATIONS AND “CURTAILED” INVESTIGATION
On 20 September, the Motor Transport website reported that the DX Group failed to take sufficient disciplinary action against employees who had offered a bribe for confidential competitor information and “curtailed” a probe into the bribery allegations, according to the findings of an internal investigation which found that competitor information had been obtained illegitimately.
IDENTIFYING THE ENABLERS HELPING BUILD VIOLENT KLEPTOCRATS
A briefing from The Sentry website says that its investigations have exposed numerous enablers operating in East and Central Africa, and, in the process, commonalities and characteristics have emerged that are likely applicable to other kleptocratic regimes. These traits include the ability to target countries with vast unexploited wealth, weak government structures, underlying corrupt practices, and conflict. Enablers often bring unscrupulous practices aimed at the enrichment of leadership and themselves, with little to no regard for the people. This report looks beyond borders and reviews how enablers — including banks, financial institutions, and professionals, as well as less recognised international operators and insiders — help operate a “successful” kleptocratic regime. It highlights the importance of these enablers and their links to illicit financial flows and associated conflict and human rights abuses, and it provides a checklist for governments and financial institutions to apply when using financial tools of pressure
UK: BIG RISE IN CASH FINES FOR ESTATE AGENCIES FLOUTING AML REGULATIONS
On 23 September, Letting Agents Today reported that the good news is that the overall number of AML fines have declined by almost 19% in the past year, but the bad news is that the sum of fines being issued to estate agents has increased by 980%, totalling £772,618 in 2021/22.
THAI POLICE ARREST MYANMAR JUNTA CHIEF’S ASSOCIATE IN DRUG RAID
On 23 September, BNN Bloomberg reported that Tun Min Latt, a Myanmar businessman with close links to the junta, was among the 4 people arrested in Bangkok for drug-related offences and money laundering, a move that could test ties between the 2 governments.
VENEZUELA: DRUG SMUGGLING EXECUTIVE JET DESTROYED
On 22 September, the Latin American Historical Aviation Society reported that a Sabreliner executive jet had been destroyed on an illegal airstrip, having departed Mexico en route for Aruba – but changed direction and entered Venezuelan airspace.
UKRAINE WAR RISKS REPERCUSSIONS FOR TRANSNISTRIA
On 23 September, the Carnegie Endowment for International Peace published an article saying that destabilisation in Moldova incited by Russia could prompt Ukraine and its allies to deprive Russia of all its levers of influence there once and for all by purging the self-proclaimed Transnistria republic of Russia’s military presence there.
TOYOTA TO EXIT RUSSIA
On 23 September, Nikkei Asia reported that Toyota had announced that it would exit Russia, terminating auto production and sales. It cited difficulties in sourcing the necessary parts and materials due to the war in Ukraine.
NORTH KOREA’S ILLICIT MEANS OF GENERATING FOREIGN REVENUE
On 21 September, RUSI released this video, the last of a series, in which a researcher at RUSI explores North Korea’s history of generating foreign revenue by illicit means, and what sort of threat the country poses as it engages in more criminal activities.
THE ILLICIT FINANCE THREAT TO DEMOCRACIES: A TRANSATLANTIC RESPONSE
On 21 September, RUSI published a Policy Brief containing recommendations which it says are grounded in 3 underlying principles which should be the foundation of any future transatlantic response to illicit finance: honesty; cross-border collaboration; and ambition. These come from a taskforce that set out to create a set of principles and actions that US and UK governments must implement to better detect and disrupt illicit finance linked to corruption and kleptocracy.
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