OTHER THINGS YOU MAY HAVE MISSED – OCTOBER 25

First the bad news. It is reported that Panama has, so far, recorded more cases of malaria than last year, twice as many, in fact. Up to 13 October, 4,684 cases were recorded, which represents 2,463 more than those for the same period in 2021.

In better news, in the week ending 22 October there were no deaths from Covid-19, which is likely the first time since Spring 2020. 603 news cases were reported during the week, with the number of active cases down by 110 to 819, with 2 patients in ICU (down 5 on last week) and 70 (up 5) in other wards.

25 OCTOBER 2022

ROTAX ENGINE FOUND IN IRANIAN MOHAJER-6 DRONE DOWNED OVER UKRAINE

On 24 October, The Drive reported that an engine designed by the Austrian company Rotax has been discovered installed in one of Russia’s Iranian-made Mohajer-6 drones.

https://www.msn.com/en-gb/news/techandscience/rotax-engine-found-in-iranian-mohajer-6-drone-downed-over-ukraine/ar-AA13kSKG

THE SEQUANA CASE AND THE CREDITOR DUTY: AN OFFSHORE PERSPECTIVE

On 20 October, Carey Olsen published an article about the UK Supreme Court judgment in the case of BTI 2014 LLC v Sequana SA & Ors.  It remarks that the judgment is a landmark decision of significant importance in the arena of company law and directors’ duties. It provides welcome clarification from the UK’s highest court on issues that are of key importance to directors of companies in financial difficulty, addressing the question of the existence and scope of the so-called “creditor duty”, as well as considering the circumstances in which the otherwise lawful approval of a distribution might give rise to liability, and the scope of the doctrine of shareholder ratification.  The article briefly summarises the decision and provides insight into its likely application in offshore jurisdictions.

https://www.careyolsen.com/briefings/sequana-and-creditor-duty-offshore-perspective

FRANCE: COURT OF APPEAL HAS ORDERED FRENCH CUSTOMS AUTHORITIES TO RELEASE EU-SANCTIONED ALEXEY KUZMICHEV’S IMPOUNDED YACHT 

On 25 October, the EU Sanctions blog reported that the yacht was moored in Antibes when it was raided by customs agents in March 2022, one day after Mr Kuzmichev, one of the main shareholders of Alfa Bank, was added to the EU’s Russia sanctions list. 

https://www.europeansanctions.com/2022/10/french-court-orders-release-of-yacht-owned-by-alexey-kuzmichev/

SOUTH KOREAN CHIP-MAKERS FACE CHINA DILEMMA FROM US EXPORT CONTROLS

On 25 October, Nikkei Asia reported that Samsung Electronics and SK Hynix remain under pressure to come up with a Plan B for producing memory chips in China after the US gave the companies a partial exemption from its latest crackdown on China’s tech ambitions.  The South Korean chipmakers obtained a 1-year waiver to continue to use semiconductor equipment containing US technology in China – one of the targets of US curbs.

https://asia.nikkei.com/Business/Tech/Semiconductors/Samsung-and-SK-Hynix-face-China-dilemma-from-U.S.-export-controls

BIOTECH CO-FOUNDER FACING MURDER-FOR-HIRE CHARGES AND ACCUSED OF FABRICATING DATA

On 24 October, the Wall Street Journal reported that a company has sued its co-founder Serhat Gumrukcu for contractual fraud, alleging that it paid him and his husband $25 million based on scientific data that Mr. Gumrukcu altered and fabricated.  He is currently in custody pending trial after being indicted earlier this year on charges that he conspired to hire a hit man to murder a business associate, but has pleaded not guilty to the charges.

https://www.wsj.com/articles/biotech-co-founder-facing-murder-for-hire-charges-accused-of-fabricating-data-11666634272

US SAYS 2 CHINESE INTELLIGENCE OFFICERS TRIED TO OBSTRUCT HUAWEI PROSECUTION

On 24 October, the Wall Street Journal reported that US authorities allege that 2 Chinese intelligence officers tried to bribe a US law-enforcement official to obtain what they believed was inside information about criminal case against Chinese telecommunications giant Huawei Technologies Co.

https://www.wsj.com/articles/u-s-says-chinese-tried-to-obstruct-huawei-prosecution-11666633408

https://www.jurist.org/news/2022/10/us-justice-departments-says-china-attempted-to-undermine-us-judicial-system-announces-criminal-charges-against-actors/

https://www.justice.gov/usao-edny/pr/two-chinese-intelligence-officers-charged-obstruction-justice-scheme-bribe-us

ZIMBABWE SANCTIONS: AFRICAN LEADERS HAVE STRONGLY CONDEMNED SANCTIONS AGAINST ZIMBABWE BUT RARELY CONDEMN ITS DEPLORABLE HUMAN RIGHTS ABUSES

On 25 October, the Institute for Strategic Studies published an article which starts by saying that the Southern African Development Community (SADC) designated 25 October as a day for solidarity against sanctions imposed on Zimbabwe by the EU, US and UK nearly 20 years ago.  The targeted sanctions were applied in response to human rights violations, government policies and actions that impede democracy, rule of law and respect for human and property rights. The SADC’s anti-sanctions day follows a major show of solidarity by the African Union (AU) and African leaders at the UN General Assembly in September.

https://issafrica.org/iss-today/the-curious-case-of-zimbabwe-sanctions

DUTCH GOVERNMENT PROPOSES THE LONG-AWAITED AMENDMENTS TO THE ANTI-MONEY LAUNDERING AND ANTI-TERRORISM FINANCING ACT

On 24 October, an article from Stibbe says that the draft proposal was subject to criticism over the past years from the Dutch Council of State.  A short summary of this proposal is set out in the article and addresses 3 subjects – ban on cash transactions of €3,000 or more for traders in high value goods; banks will be allowed to jointly monitor transactions; and parties qualifying as the same institution  will be obliged to share specific data with each other relating to AML/CFT risks. 

https://www.stibbe.com/publications-and-insights/dutch-government-proposes-the-long-awaited-amendments-to-the-dutch-anti

THE STEPSON AND HUSBAND OF MARBELLA’S MAYOR PROSECUTED FOR MONEY LAUNDERING AND DRUG TRAFFICKING

On 25 October, Euro Weekly reported that he has been prosecuted after a criminal investigation is said to have found him to be involved in the movement of cannabis from Andalusia to the Nordic countries.

https://euroweeklynews.com/2022/10/25/the-stepson-and-husband-of-marbellas-mayor-prosecuted-for-money-laundering-and-drug-trafficking/

SOUTH KOREAN REGULATOR PLANS TO LOOK AT STABLECOINS’ ROLE IN MONEY LAUNDERING

On 24 October, Yahoo reported that the Financial Services Commission (FSC) intends to look into the proportion of stablecoins being used on crypto exchanges to prevent money laundering.  It said in a report that financial authorities consider stablecoins to be highly susceptible to money laundering.

https://uk.sports.yahoo.com/news/south-korean-regulator-plans-look-133837859.html

AUSTRALIA: LAWYER CHARGED OVER ALLEGED INVOLVEMENT IN $4.5 MILLION MONEY LAUNDERING SYNDICATE

On 24 October, ABC News reported that high-profile Queensland lawyer Michael Bosscher has been charged over his alleged involvement in a $4.5 million money laundering operation, over the alleged involvement in a syndicate dating back to February 2021. 

https://www.abc.net.au/news/2022-10-25/qld-court-michael-bosscher-charged-money-laundering-syndicate/101573222

UK MPs SLAM “SHORT-SIGHTED AND DAMAGING” MOVE TO AXE VISITOR TAX FREE SHOPPING

On 25 October, the Moodie Davitt Report said that in a House of Commons Committee report, MPs hit out at the decision to reinstate tax-free shopping (including VAT-free shopping airside) – in the abandoned “mini-Budget” of short-lived UK PM Liz Truss – and then remove it again – in the announcement of the new Chancellor.

https://www.moodiedavittreport.com/uk-mps-slam-short-sighted-and-damaging-move-to-axe-visitor-tax-free-shopping/

EU COUNCIL ADOPTED EU SINGLE WINDOW FOR CUSTOMS

On 24 October, a news release advised that the EU Council adopted new rules which set the appropriate conditions for digital collaboration between customs and partner competent authorities.  This means that the EU Regulation can now be signed at the European Parliament’s November II plenary and then be published in the Official Journal of the European Union.

https://www.consilium.europa.eu/en/press/press-releases/2022/10/24/council-adopted-eu-single-window-for-customs/

UK ECONOMIC CRIME AND CORPORATE TRANSPARENCY BILL 2022: IMPACT ASSESSMENTS

On 25 October, the Home Office published Impact Assessments concerned with provisions in the Bill, with the Regulatory Policy Committee opinion: Economic Crime and Corporate Transparency Bill 2022 (Home Office measures) updated.

https://www.gov.uk/government/publications/economic-crime-and-corporate-transparency-bill-2022-impact-assessments#full-publication-update-history

NOTORIOUS NIGERIAN WEAPONS BROKER LANDS SECRET ARMS DEAL IN SENEGAL

On 25 October, OCCRP reported that a contract seen by OCCRP shows how Aboubakar Hima, who allegedly skimmed millions from $240 million in corrupt arms deals in his native Niger, may be up to his old tricks further from home.  Hima, who is often known by the nickname “Petit Boubé,” is no stranger to controversy. He has had some of his millions seized by the US and South African authorities over illicit arms deals, and is wanted in Nigeria for his alleged role in making fraudulent arms deals with the government.

https://www.occrp.org/en/investigations/notorious-nigerien-weapons-broker-lands-secret-arms-deal-in-senegal

UKRAINE ARMS MANUFACTURER CHARGED WITH TREASON OVER BUGGED PHONE CALLS

On 25 October, the Guardian reported that alleged recordings of the head of a major Ukrainian aircraft manufacturer accused of aiding the Russian military – saying he “completely understands” why a Russian missile was fired at his factory – have been released by security services after his arrest.  Vyacheslav Boguslaev is the president of aero-engine maker Motor Sich.

https://www.theguardian.com/world/2022/oct/25/ukraine-arms-manufacturer-charged-with-treason-over-bugged-phone-calls

HONG KONG: NEW GUIDANCE NOTE ON COOPERATION AND UPDATED SANCTIONS STATEMENT

On 25 October, a release on Mondo Visione advised that a new Guidance Note on Cooperation from the Stock Exchange of Hong Kong Limited clarifies expectations regarding cooperation, including the importance of timely engagement with the Exchange; and the updated Sanctions Statement provides additional detailed guidance on a listed issuer’s internal controls.

https://mondovisione.com/media-and-resources/news/hkex-exchange-publishes-new-guidance-note-on-cooperation-and-updated-sanctions/

UK FCA PROPOSES NEW RULES TO TACKLE GREENWASHING

On 25 October, a release from Mondo Visione advised that the FCA is proposing a package of new measures including investment product sustainability labels and restrictions on how terms like ‘ESG’, ‘green’ or ‘sustainable’ can be used.

https://mondovisione.com/media-and-resources/news/uk-financial-conduct-authority-proposes-new-rules-to-tackle-greenwashing/

VIETNAMESE COURT TO HEAR THE COUNTRY’S BIGGEST GASOLINE SMUGGLING CASE

On 24 October, RFA reported that a court in south-east Vietnam is about to start hearing the largest gasoline smuggling case in the country.  It involves the smuggling of 200 million litres (52.8 million gallons) of counterfeit gasoline, worth $116.6 billion.  It involves 74 defendants and also 53 individuals and organisations with related interests and obligations.

https://www.rfa.org/english/news/vietnam/viet-gas-smuggling-10242022235000.html

SOUTH AFRICA: TV PRODUCERS ALLEGEDLY BRIBED SABC OFFICIALS TO SECURE CONTRACTS

On 23 October, My Broadband reported that the South African Broadcasting Corporation (SABC) is investigating reports that programming officials solicited bribes from production companies in return for securing contracts.

https://mybroadband.co.za/news/broadcasting/465717-tv-producers-allegedly-bribed-sabc-officials-to-secure-contracts.html

IRELAND: IMF TECHNICAL NOTE ON AML/CFT

On 21 October, the IMF published a Technical Note saying that while domestic money laundering threats are well understood by the authorities, Ireland faces significant and increasing threats from foreign criminal proceeds.  The risks facing Ireland include illicit proceeds from foreign crimes (e.g., corruption, tax crimes).  Retail and international banks, trust and company service providers (TCSP),2 lawyers, and accountants are medium to high-risk, while virtual asset service providers (VASP) pose emerging risks. 

https://www.imf.org/-/media/Files/Publications/CR/2022/English/1IRLEA2022012.ashx

NFT CAN BE CONSIDERED PROPERTY, SINGAPORE HIGH COURT RULES

On 24 October, the Straits Times reported that the Singapore High Court has ruled that non-fungible tokens (NFT) can be considered as property, in its first written judgment on a case involving an NFT.

https://www.straitstimes.com/singapore/nfts-can-be-considered-property-singapore-high-court-rules

CHILD LABOUR, STRUGGLING FARMERS FOUND ON ‘ETHICALLY’ CERTIFIED COFFEE FARMS IN SOUTHERN MEXICO

On 21 October, ABC News reported that it had been discovered that a group of children working on a Rainforest Alliance-certified farm in Chiapas, Mexico in 2021, with some as young as 6-years-old.  One boy told the team he was 12-years-old and had been working the harvest for 2 months without access to a school.  At the time of the team’s visit in late 2021, the farm’s most recent publicly available audit said it was in compliance with most Rainforest Alliance policies, including the prohibition of hiring child labour.

https://abcnews.go.com/US/caffeine-jungle-child-labor-struggling-farmers-found-ethically/story?id=91735230

LATVIAN APPROACH TO US OVER ABLV BANK PROVES INEFFECTIVE

On 24 October, LSM reported that there has been no visible progress in negotiations between the Latvian Ministry of Finance with colleagues from the US Treasury regarding the withdrawal of some statements which were presented in the 2018 sanctions decision against ABLV bank.

https://eng.lsm.lv/article/economy/banks/latvian-approach-to-us-over-ablv-bank-proves-ineffective.a479319/

PACIFIC ISLANDS INCREASINGLY USED AS CRIME TRANSIT POINT

On 25 October, VoA reported that the Pacific islands are increasingly being used as a transit point for transnational crime, including drug trafficking and money laundering, experts say.  Criminal organisations from Asia and the Americas are exploiting limited law enforcement resources on these islands, and drug problems are rising on these tourist paradise locations.

https://www.voanews.com/a/pacific-islands-increasingly-used-as-crime-transit-point-experts-say-/6804371.html

SPAIN MOVES YACHT LINKED TO RUSSIAN OLIGARCH AFTER PAYMENTS STOP

On 24 October, Insurance Marine News reported that Spanish authorities have moved a Russia-linked luxury yacht after the shipyard where it was berthed stopped receiving payments for its repairs.  Spanish authorities had frozen the vessel, meaning that it could neither be used nor sold, in March, as part of EU sanctions.  The yacht has been linked to Sergei Chemezov, an ally of Russian President Vladimir Putin.

https://insurancemarinenews.com/insurance-marine-news/spain-moves-yacht-linked-to-russian-oligarch-after-payments-stop-report/

EU COMMISSION UPDATED RUSSIA SANCTIONS FAQ ON BUSINESS SERVICES, ADDING AN OVERVIEW TABLE OF THE EU RESTRICTIONS ON SERVICES

On 25 October, EU Sanctions blog reported that the FAQ includes legal services.

https://www.europeansanctions.com/2022/10/eu-commission-issues-guidance-on-russia-service-bans-including-on-legal-services/

THE US HAS RENEWED THE EXPORT DENIAL ORDER AGAINST RUSSIAN CARGO AIRLINES AVIASTAR-TU FOR ANOTHER 180 DAYS

On 25 October, the EU Sanctions blog reported that the export denial order to April 2023.  It is alleged that the airline has continued to operate controlled aircraft on flights into, out of and within Russia since April.

https://efoia.bis.doc.gov/index.php/documents/export-violations/export-violations-2022/1417-e2760/file

 

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REFERENCE GUIDE FOR PRACTITIONERS TO ASSIST IN IMPROVING AWARENESS OF TRADE-BASED FINANCIAL CRIME RISKS – TRADE-BASED FINANCIAL CRIME – MIDDLE EAST AND NORTH AFRICA

On 25 October, the Global Coalition to Fight Financial Crime advised that a new report had been published (in English and Arabic).  It has been put together by the Trade-Based Financial Crime Working Group of the Global Coalition to Fight Financial Crime MENA Chapter, a public-private coalition that aims to enhancing the fight against financial crime globally.

https://www.gcffc.org/global-coalition-to-fight-financial-crime-gcffc-middle-east-and-north-africa-mena-chapter-and-the-mena-financial-crime-compliance-group-mena-fccg-launch-the-trade-based-financial-crime-tbfc-reference/

https://www.gcffc.org/wp-content/uploads/2022/10/TRADE-1.pdf (English version)

 

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HOW SHAPE-SHIFTING ‘MONEY LAUNDERERS’ INFILTRATED SOUTH AFRICAN BANKS

On 25 October, the Daily Maverick published Part 1 of a report, saying that over the past decade South African banks have been fair game for a group of alleged money launderers tied to luminaries in the gold and tobacco sectors.  The cash flow was enough to transform a small bank’s balance sheet overnight, yet no one raised the alarm.  The article asks why it was so easy and where was the Reserve Bank?  The article claims that the “shape shifting” involved opening accounts for the same players in different guises after they had been previously rejected.  It says that the AmaBhungane Centre for Investigative Journalism has pulled on this and many other threads to piece together a picture of the alleged money laundering operations that seemingly revolve around Baker and his associates in the tobacco and gold businesses.  The newspaper says that it will share what was found in Part 2.

https://www.dailymaverick.co.za/article/2022-10-25-the-laundry-part-one-how-shape-shifting-money-launderers-infiltrated-sa-banks/

 

 

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FATF: REVISION OF R25 AND ITS INTERPRETIVE NOTE – PUBLIC CONSULTATION

On 25 October, FATF advised that it is conducting a review of Recommendation 25 and its Interpretive Note (R.25/INR.25) on the transparency and beneficial ownership (BO) of legal arrangements.  FATF is also considering amendment of the definition of beneficial ownership in the glossary to provide more clarity regarding legal arrangements.  The objective is to improve R.25 and its Interpretive Note to better meet its stated objective to prevent the misuse of legal arrangements for money laundering or terrorist financing.  In particular, FATF would welcome comments on the following:

  1. Are FATF proposals adequate to mitigate the risk of misuse of legal arrangements and to ensure access to BO information?
  2. Are proposals clear and are there any issues which need further clarification or that should be addressed in guidance?
  3. What is the expected impact of the proposals on legitimate activity? In particular, what are the challenges for implementation?

https://www.fatf-gafi.org/publications/fatfrecommendations/documents/r25-public-consultation-oct22.html

 

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FATF GUIDANCE ON BENEFICIAL OWNERSHIP (RECOMMENDATION 24) – PUBLIC CONSULTATION

On 25 October, FATF advised that, at the March 2022 Plenary, FATF adopted amendments to Recommendation 24, and agreed to immediately start the work to update guidance on beneficial ownership, with a view to help support the implementation of the new requirements.  FATF now welcomes comments to its updated Guidance paper to Recommendation 24 on the transparency and beneficial ownership of legal persons. The draft text of the Guidance is available online.  It seeks views from companies and other legal persons, financial institutions, designated non-financial businesses and professions (DNFBP), and non-profit organisations (NPO).  However, contributions from other interested stakeholders are also solicited. In particular, comments are welcome on the following specific issues:

  1. Whether the Guidance is clear or are there any issues which need further clarification.
  2. Are there case examples of registries and alternative mechanisms for holding of accurate, adequate and up-to-date beneficial ownership information?
  3. Are there case examples of mechanisms to verify beneficial ownership information in low-risk scenarios?
  4. Are there case examples of the use of information held by stock exchanges for listed companies to meet beneficial ownership information obligations?

https://www.fatf-gafi.org/media/fatf/documents/publicconsultation/R24%20Guidance%20for%20Public%20Consultation.pdf

https://www.fatf-gafi.org/publications/fatfrecommendations/documents/r24-public-consultation-oct-2022.html

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RUSSIAN OLIGARCHS OBSCURE THEIR WEALTH THROUGH SECRETIVE ISLE OF MAN NETWORK

On 25 October, the Wall Street Journal reported that a web of shell companies and middlemen managed by services firm Bridgewaters makes it hard for authorities to track assets and enforce sanctions.  It refers to a deal involving a Silicon Valley start-up, routed through a series of offshore companies and a venture fund, which let the oligarch, Alisher Usmanov, move more of his vast wealth into the West.  The fund’s stake at the IPO was valued at $175 million.

https://www.wsj.com/articles/russian-oligarch-bridgewaters-sanctions-offshore-network-11665767178

 

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A DEEP DIVE INTO CHINESE UNDERGROUND BANKING

On 17 October, an article from the Law Society Gazette in the UK says that modern Chinese underground banks are a new iteration of an age-old institution, rediscovering and re-purposing traditional informal value transfer techniques for the modern world.

https://communities.lawsociety.org.uk/october-2022/underground-banking/6002469.article

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CONFISCATING RUSSIAN SOVEREIGN ASSETS TO FUND UKRAINE’S RECONSTRUCTION: MISSION IMPOSSIBLE?

On 25 October, the EU Parliament Research Service published a briefing paper saying that the Russian invasion has caused huge destruction of life and property in Ukraine. Reconstruction will be a long and costly process, and the EU and others are already marshalling funds for this effort.  Some EU leaders have expressed support for using frozen Russian central bank (RCB) funds towards reconstruction, but it is unclear if this will actually happen.  There are recent examples of sovereign assets being confiscated and used to compensate victims of injustice, but the confiscation of Russia’s sovereign funds raises complex legal and political issues that are unlikely to be resolved quickly or easily.

https://www.europarl.europa.eu/RegData/etudes/ATAG/2022/738180/EPRS_ATA(2022)738180_EN.pdf

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EU: 3 PERSONS REMOVED FROM BURUNDI SANCTIONS LIST

EU Regulation 2022/2043/EU of 24 October removed Godefroid BIZIMANA; Gervais NDIRAKOBUCA (aka NDAKUGARIKA); and Léonard NGENDAKUMANA from the sanctions list.

https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32022R2043&from=EN

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GUIDEBOOK ON CYBER THREATS: IDENTIFYING AND COMBATTING RISKS TO PUBLIC AND PRIVATE SECTOR USERS AND CITIZENS

On 18 October, the Geneva Centre for Security Sector Governance (DCAF) said that, to help public and private users and citizens protect their data, in the face of the rising threats of breaches, this guide introduces various cyberthreats.  It covers, in particular: social engineering attacks, phishing attacks, drive by downloads, Man-in-the-Middle (MITM) attacks, USB drop attacks and malware.  It explains how cybersecurity threats that affect an individual can in turn affect an entire organisation or government, and in doing so helps the users protect themselves, their personal data and the systems in which they work.

https://dcaf.ch/guidebook-cyber-threats

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