OTHER THINGS YOU MAY HAVE MISSED – OCTOBER 11

The latest Covid figures show 667 new cases were reported in the previous week, with 3 new fatalities. 4 persons are in ICU (down from 8 last week), with with 68 in other wards (69 last week). There are 872 active cases (down 200), but test results remain at 3.4%.

The passing Storm/Hurricane Julia claimed 4 lives in Central America from landslides and floods due to the direct or indirect effect of the storm; and in Panama 6 water treatment plants in Chiriquí Province stopped operating.

11 OCTOBER 2022

US WARNS HONG KONG OF SAFE HARBOUR OF RUSSIAN YACHTS

On 10 October, an update from Superyacht News from eSysman reported that the US authorities had complained to the Hong Kong authorities following the arrival of Russian-owned superyacht – the 465-foot Nord, owned by steel magnate Alexey Mordashov.  The authorities said that they enforced UN sanctions, but not those imposed by individual countries or groupings.

https://www.youtube.com/watch?v=PaMWtYRrRZg

https://www.wsj.com/articles/in-hong-kong-sanctioned-russian-tycoons-superyacht-prompts-china-u-s-barbs-11665393941

ISLE OF MAN: MALI AND IRAN SANCTIONS UPDATES

On 10 October, the Isle of Man issued 2 news releases, confirming changes to sanctions lists in line with those announced by the UK.  7 individuals and the Morality Police had been added to the Iran sanctions lists, and 3 existing entries on the Mali sanctions list had been amended.

https://www.gov.im/news/2022/oct/10/financial-sanctions-iran-human-rights/

https://www.gov.im/news/2022/oct/10/financial-sanctions-mali/

US: CFPB REPORT ON BUY NOW, PAY LATER

On 10 October, the Compliance and Enforcement blog from the Program on Corporate Compliance and Enforcement at the New York University School of Law published a post saying that the Consumer Financial Protection Bureau (CFPB) had published a report detailing the regulatory risks of Buy Now, Pay Later (BNPL) products in response to last December’s market monitoring orders to 5 BNPL companies.  The post provides a brief overview of some of the unique qualities of the BNPL industry, which has been experiencing significant growth over the past few years.  It then outlines the key risks to consumers posed by the BNPL industry as highlighted in the report as well as the Bureau’s stated next steps for increasing its oversight of the industry. The post outlines steps that BNPL lenders may wish to consider taking to mitigate the potential risks to consumers that the report identifies.

https://wp.nyu.edu/compliance_enforcement/2022/10/10/cfpbs-report-on-buy-now-pay-later/

CAYMAN ISLANDS ISSUES GENERAL SANCTIONS LICENCE FOR FUNDS INDUSTRY

On 6 October, Campbells published an article saying that, on 4 October, the Governor of the Cayman Islands issued a General Licence for the funds industry which provides relief from aspects of the financial sanctions imposed in the Cayman Islands by the Russia (Sanctions) (Overseas Territories) Order 2020.  The licence is concerned with the effect of sanctions on minority non-designated investors in funds who could not redeem their shares and the fact that an asset freeze also prohibited the frozen funds from complying with many of their statutory obligations such as the payment of registered office fees.  This, it is said, was clearly an unintended and unjust effect of the sanctions regime.

https://www.mondaq.com/caymanislands/export-controls-trade-investment-sanctions/1237796/cayman-islands-issues-general-sanctions-licence-for-funds-industry

EU: THE PROPOSED FORCED LABOUR PRODUCTS BAN

On 5 October the Hong Kong Trade Development Council published a brief guide to the proposal for a Regulation prohibiting products made with forced labour from entering the EU market. 

https://research.hktdc.com/en/article/MTE3NDQ5MjY4Ng

NEW ‘FAILURE TO PREVENT’ OFFENCES ON THE WAY, FORMER LORD CHANCELLOR PREDICTS

On 10 October, the Law Society Gazette reported that new corporate ‘failure to prevent’ offences are likely to be added to the government’s latest economic crime legislation as it passes through Parliament, a former Lord Chancellor predicted in a speech at a conference in London. 

https://www.lawgazette.co.uk/law/new-failure-to-prevent-offences-on-the-way-former-lc-predicts/5113908.article

INDIA DEMANDS $244 MILLION FROM PERNOD RICARD IN TAX DISPUTE

On 11 October, Foodbev reported that Indian authorities have demanded that Pernod Ricard pay $244 million for reportedly undervaluing concentrate imports for over a decade. 

https://www.foodbev.com/news/india-demands-244m-from-pernod-ricard-in-tax-dispute-reuters/

BURKINA FASO: SECOND COUP OF 2022

On 10 October, the House of Commons Library published a briefing paper explaining the background to the coup on 30 September.

https://researchbriefings.files.parliament.uk/documents/CBP-9633/CBP-9633.pdf

BREXIT: TRADE AND COOPERATION AGREEMENT – TEMPORARY BUSINESS TRAVEL

On 10 October, the House of Commons Library published a briefing paper which explains what’s changed for UK and EU businesses and people who travel to sell services in each other’s market.

https://researchbriefings.files.parliament.uk/documents/CBP-9130/CBP-9130.pdf

ISRAEL AND LEBANON REACH ‘HISTORIC’ MARITIME BORDER AND GAS FIELDS DEAL

On 11 October, the Guardian reported that Israel and Lebanon have reportedly agreed a deal in a dispute over gas fields and the countries’ maritime border, a ground-breaking diplomatic achievement that could boost natural gas production in the Mediterranean before the European winter begins.

https://www.theguardian.com/world/2022/oct/11/israel-lebanon-historic-maritime-border-deal

REPORT: UK COMPANIES USING LEGAL MUSCLE TO FACILITATE HUMAN RIGHTS AND CLIMATE ABUSES 

On 11 October, the Guardian reported that a report from the Transform Trade charity says that UK companies operating overseas are afforded far greater legal protections than the citizens of the countries they invest in, leading to corporations getting away with human rights and climate change abuses.  It found the UK is playing a key role in the rise of cases where corporations sue states in private courts, for lost profits. 

https://www.theguardian.com/business/2022/oct/11/uk-firms-legal-muscle-human-rights-climate-abuses-report

3 CRIMINAL REVELATIONS FROM MEXICO’S DEFENSE MINISTRY LEAKS

On 10 October, an article from Insight Crime says that 6 terabytes of leaked information from SEDENA by a hacker collective have spilled plenty of well-kept secrets concerning the state of Mexico’s fight against organised crime.  From allegations of collusion between high-ranking government officials and major cartels to Army weapons being sold off to criminals and even a threat against the life of the Mexican President, InSight Crime explores the revelations to date from the SEDENA leaks.

https://insightcrime.org/news/three-criminal-revelations-from-mexico-defense-ministry-leaks/

NORWAY: PRISON SENTENCE FOR ATTEMPTED ILLEGAL EXPORT OF SHIP FOR SCRAPPING REVEALS RECKLESS ACTIONS BY ALL PARTIES INVOLVED

On 11 October, Hellenic Shipping News reported that, in March, the Norwegian Court of Appeal convicted a shipowner for complicity in an attempt to export the end-of-life vessel for scrapping in Pakistan, and fixed the sentence, as the District Court did on the first instance, to 6 months imprisonment.  A second attempt to appeal was subsequently rejected by the Norwegian Supreme Court in June, therefore confirming the prison sentence.

https://www.hellenicshippingnews.com/prison-sentence-for-attempted-illegal-export-of-the-harrier-reveals-reckless-actions-by-all-parties-involved/

HOW CORRUPTION CRIPPLES BUSINESS AT AFRICA’S SEAPORTS

On 11 October, an article from Helelnic Shipping News reported that a clearing agent at Lagos Port in Nigeria, one of Africa’s busiest ports, says it is challenging to clear goods without paying a bribe to the customs officials.  The article also looks at the situation elsewhere, and, for example, says that a joint report by the Maritime Anti-Corruption Network (MACN), a global sea trade and shipping group, and the Lagos Chamber of Commerce and Industry said that Nigeria loses $7 billion annually to corruption and inefficiency.  It also mentioned that the Mombasa Port in Kenya has been dogged by corruption and poor management.  Traders complain of syndicated corruption from the top administration to the lower officials.

https://www.hellenicshippingnews.com/how-corruption-cripples-business-at-africas-seaports/

CAMBODIA: THOUSANDS OF PEOPLE FROM TAIWAN, VIETNAM AND THAILAND TRICKED INTO SLAVERY AND ARE UNABLE TO LEAVE A ‘LIVING HELL’

On 10 October, a report by the Guardian was concerned with the thousands of victims who have been trapped in work in Cambodia, where scam operations proliferated during the pandemic.  The issue became so acute that, in August, the US downgraded Cambodia to the worst level possible in its Trafficking In Persons annual report.  The prisoners’ role was to scour the internet for victims she could trick into investing in an online scam.

https://www.theguardian.com/world/2022/oct/10/sold-to-gangs-forced-to-run-online-scams-inside-cambodias-cybercrime-crisis

THE COMING CHINESE WEAPONS BOOM – CHINA IS POISED TO DOMINATE THE LOW END OF THE ARMS MARKET

An article from Foreign Affairs on 11 October predicted that revenues from Russian arms exports in 2022 would be down 26% from last year, and Russia remains the world’s second-largest arms exporter after the US, according to SIPRI.  Russia has carved out a place for itself as the world’s leading supplier of the capable and cost-effective but lower-tech weapons that are sometimes described as “value arms”, and US companies do not compete in that end of the market.  It says that Russia’s difficulties have created a vacuum, and the country poised to fill it is China.  If left unchecked, Beijing could use defence equipment sales to build stronger relationships with ruling elites and to secure foreign basing.

https://www.foreignaffairs.com/china/coming-chinese-weapons-boom

PUBLIC OPEN SOURCE ANALYSIS AND INTELLIGENCE: PRACTICE, TERMINOLOGY, AND ETHICAL CONSIDERATIONS

A Paper from the Stanley Center explains that open source intelligence (OSINT) is an established discipline within the US and UK national security intelligence communities.  However, the term is also regularly applied to the activities of a heterogenous ecosystem of actors in the public sphere who use information available in open sources to produce intelligence.  The paper examines the ethical implications of the use of the same term to refer to these different activities.  It draws out ethically relevant differences between government intelligence practices and the practices of public open source analysts.  These differences, it says, often centre on the lack of accountability around public open source analysis.  The paper argues for greater rigour in the use of the term “intelligence” as part of a broader effort to articulate the values and objectives of public open source analysis.

https://stanleycenter.org/wp-content/uploads/2022/10/NWAB-Ashdown-Public-Open-Source-Analysis-Intelligence-1022.pdf

RUSSIA SANCTIONS: BVI COURT DELAYS ALFA BANK CASE

On 11 October, EU Sanctions blog reported that Alfa-Bank applied for a freezing order in the BVI in 2021.  When Alfa-Bank was sanctioned in 2022 its lawyers applied for a licence to receive legal fees in the UK and the BVI.  The BVI granted the licence within 4 months, but OFSI had not granted it 6 months later.  The post says that the question of OFSI’s liability for wasted costs over the delay may need to be considered at some point.

https://www.europeansanctions.com/2022/10/bvi-court-partially-adjourns-alfa-bank-case-and-discusses-ofsis-delay-in-granting-legal-expenses-licence/

SWEDEN LIFTS EXPORT RESTRICTIONS ON MILITARY EQUIPMENT TO TURKEY

On 4 October, Overt Defense reported that Sweden has lifted the export restrictions on military equipment to Turkey that had been in place since October 2019.  According to the Swedish Inspectorate of Strategic Products (ISP), the changing attitude toward Turkey is due to Sweden’s NATO membership process. 

https://www.overtdefense.com/2022/10/04/sweden-lifts-export-restrictions-on-military-equipment-to-turkey-on-the-way-to-becoming-a-nato-member/

COMMERCIAL BAIL INDUSTRY SAID TO EXPLOIT THE US LEGAL SYSTEM

On 7 October, The Crime Report reported that the commercial bail bond industry exploits the US legal system to earn billions of dollars in profits while providing little benefit to the public, according to a report from the Prison Policy Initiative (PPI).  The report says that, instead of trying to ‘fix’ a broken money bail system, or continuing to subsidise private bail companies, counties should implement alternatives to money bail.

https://thecrimereport.org/2022/10/07/commercial-bail-industry-exploits-u-s-legal-system-paper/

https://www.prisonpolicy.org/reports/bail.html

FinCEN PUBLISHES FINAL RULE ON BENEFICIAL OWNERSHIP

On 11 October, a post from the Compliance & Enforcement blog at the program on Corporate Compliance and Enforcement at the New York University School of Law explains the final rule, which goes into effect on 1 January and establishes the requirements for reporting companies to submit their beneficial ownership and company applicant information to the agency, with minimal changes from the proposed rule.

https://wp.nyu.edu/compliance_enforcement/2022/10/11/fincen-publishes-final-rule-on-beneficial-ownership/

THE AUDITOR’S RESPONSIBILITY FOR FRAUD DETECTION

On 11 October, Mondo Visione published an article by the Acting Chief Accountant at the SEC, who starts by saying that the Association of Certified Fraud Examiners estimates that organizations lose 5% of revenue to fraud each year, an estimated loss of $4.7 trillion on a global scale; going on to say that independent auditors play an important gatekeeper role in supporting high-quality financial reporting and the protection of investors.  He goes on to discuss the auditor’s responsibilities with respect to fraud, including observations of some auditor shortcomings; highlights how the auditor’s responsibilities are incorporated currently in the PCAOB standards, including the PCAOB’s quality control standards; and provides reminders on good practices.

https://mondovisione.com/media-and-resources/news/the-auditors-responsibility-for-fraud-detection-paul-munter-sec-acting-chief/

“IRAN COULD NOT INDEPENDENTLY MAKE “SHAHED” KAMIKAZE DRONES”

https://twitter.com/i_army_org/status/1579891856837865478?s=20&t=r9SixLKcK3bq2VcYVTGyNw

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US VIRTUAL CURRENCY EXCHANGE AGREES TO SETTLE VIOLATIONS OF SANCTIONS AND AML OBLIGATIONS

On 11 October, OFAC announced a settlement with Bittrex Inc, a private company based in Bellevue, Washington State, that provides an online virtual currency exchange and hosted wallet services.  Bittrex agreed to remit $24,280,829.20 to settle its potential civil liability for apparent violations of sanctions against Cuba, Ukraine-related, Iran, Sudan, and Syria, due to deficiencies in its compliance systems.

https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions/20221011

https://home.treasury.gov/system/files/126/20221011_bittrex.pdf

https://home.kpmg/us/en/home/insights/2022/10/tnf-us-virtual-currency-exchange-settle-violations-sanctions-anti-money-laundering-obligations.html

https://www.fincen.gov/sites/default/files/enforcement_action/2022-10-11/Bittrex%20Consent%20Order%2010.11.2022.pdf

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NEW WAYS TO DRIVE FIU EFFECTIVENESS IN A RISK-BASED ENVIRONMENT

The Egmont Group of FIU has said that a recent Plenary’s Thematic Discussion explored alternative ways to drive FIU effectiveness, including enhancing multilateral information sharing, prioritizing domestic & international cooperation, & enhancing FIUs’ role in the domestic AML/CFT system.

https://egmontgroup.org/wp-content/uploads/2022/10/New-Ways-to-Drive-FIU-Effectiveness-in-a-Risk-Based-Environment_Thematic-Discussion-Outcomes.pdf

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TRANSPARENCY UK WARNS OF WIDESPREAD USE OF LLP FOR FINANCIAL CRIME

On 10 October, OCCRP reported that the UK branch of Transparency International had warned that more than 1 in 10 of all Limited Liability Partnerships (LLP) ever registered in Britain bear the “hallmarks of shell companies used for serious financial crimes”.

https://www.occrp.org/en/daily/16869-transparency-uk-warns-of-widespread-use-of-llps-for-financial-crime

https://www.transparency.org.uk/partners-in-crime-UK-LLP-Limited-Liability-Partnership-money-laundering

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HOW A CHINESE AMERICAN GANGSTER TRANSFORMED MONEY LAUNDERING FOR DRUG CARTELS

On 11 October, ProPublica published an article which was Part 1 of an investigation into a money laundering system involving Chinese organised crime, Latin American drug cartels and Chinese officials, and how one major figure in the scheme managed to meet former President Donald Trump.  It features a Chinese American gangster named Xizhi Li.  It says that, operating with the acumen of a financier and the tradecraft of a spy, he had helped devise an innovative system that revolutionised the drug underworld and fortified the cartels.

https://www.propublica.org/article/china-cartels-xizhi-li-money-laundering

See also Part 2 –

https://www.propublica.org/article/liu-tao-trump-meeting-china-investigation

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NEW ZEALAND: RUSSIAN OLIGARCH ALEXANDER ABRAMOV TARGETED IN LATEST SANCTIONS RUSSIAN SANCTIONS

On 10 October, the New Zealand Herald reported that the Government is targeting New Zealand-linked Russian billionaire oligarch Alexander Abramov in its latest raft of sanctions.  51 oligarchs, including Abramov, have been targeted through the new sanctions, alongside 24 Russian-backed office holders in newly annexed areas of Ukraine.  There were also new bans on exports and imports of luxury goods like New Zealand wine and seafood and Russian vodka and caviar, as well as products like oil and gas.

https://www.nzherald.co.nz/nz/russia-ukraine-war-nz-linked-russian-oligarch-alexander-abramov-targeted-in-latest-sanctions/PHGLBNT5UP4I6CMHKYLXEOILJA/

https://www.stuff.co.nz/national/politics/130134919/government-places-travel-ban-on-nzlinked-russian-businessman-alexander-abramov

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HMRC CRACK DOWN ON UNLAWFUL ESTATE AGENTS

A news release from HMRC on 10 October said that dozens of estate agents have been fined more than £500,000 for breaching AML requirements.  It hasnamed 68 estate agents that have been fined for not complying with rules designed to stop criminals laundering money from illegal activity.  The fines followed the first prosecution of an estate agent for trading despite not registering with HMRC, to ensure compliance with money laundering regulations.

https://www.mynewsdesk.com/uk/hm-revenue-customs-hmrc/pressreleases/hmrc-crack-down-on-unlawful-estate-agents-3209944

UK: THERE HAS BEEN A NOTABLE RISE IN AML FINES IMPOSED ON ESTATE AGENTS

On 10 October, an article from Rahman Ravelli made this point, saying that recently-published figures show that AML fines declined by 19% overall in the 2021-22 financial year, but that fines imposed on estate agents rose by 980%, to reach a total of £772,618.

https://www.mondaq.com/uk/white-collar-crime-anti-corruption-fraud/1239020/there-has-been-a-notable-rise-in-anti-money-laundering-fines-imposed-on-uk-estate-agents

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