A new Public Holiday here today, the first year it has been held, commemorating the US invasion in 1989. A lot of shops and offices closed (the cynical saying it is because they don’t want to pay the extra wages to work a holiday), traffic much reduced and, most noticeable, sales of alcohol banned (see photo below of the booze lanes in the local supermarket cordoned off).
Meanwhile, the number of migrants crossing the border through the Darien, on the border with Colombia, increased sharply compared to last year. Figures from the National Migration Service indicate that, by mid-December , 236,000 migrants have crossed over.
20 DECEMBER 2022
US WATCHDOG GETS FULL ACCESS TO AUDIT CHINESE FIRMS
On 15 December, Al Jazeera reported that the US Public Company Accounting Oversight Board (PCAOB) says it has full access to inspect and investigate accounting firms in China for the first time ever, removing the risk that around 200 Chinese companies could be removed from US stock exchanges. This, it says, marks a victory for US regulators and a relief for Chinese companies, including Alibaba.
WHAT DOES KENYA’S MUTUAL EVALUATION REPORT MEAN, AND HOW SHOULD IT BE USED?
On 16 December, a Commentary from RUSI reflected on the FATF Mutual Evaluation Report on Kenya. It says that Kenya faces significant challenges – for example, it is estimated that bad governance and corruption rob Kenya of around $2.5 billion a year. The MER is said to highlights good results on confiscating proceeds of crime and the use of financial intelligence. However, there is still a need for improvement in understanding terrorist financing risks, risk-based supervision of regulated entities such as banks and non-financial businesses and professions, and further enhancing financial investigations.
ART AND NEGLIGENCE
On 15 December, Field Fisher published an update, saying that the High Court in London had handed down 2 highly anticipated judgments in December involving claims of negligence arising out of high-end sales of art or antiquities.
WHISTLEBLOWER IN HEALTHCARE BRIBERY CASE WON THE LARGEST SEC AWARD THIS YEAR
On 19 December, the Wall Street Journal reported that the SEC has awarded more than $37 million to an individual for reporting information about a bribery scheme at a large European healthcare company. The sum is the highest award paid out to a single whistleblower so far this calendar year and one of the top 10 largest awards ever paid out by the SEC’s whistleblower program to an individual.
ATAD 3 – EU DIRECTIVE DESIGNED TO PREVENT THE MISUSE OF SHELL ENTITIES FOR IMPROPER TAX PURPOSES AND HARMONISE SUBSTANCE REQUIREMENTS ACROSS EU
On 16 December, MacFarlanes LLP published an article about ATAD 3 saying that, in December, the European Council issued a report providing an overview of progress made under the Czech Presidency. It could only be reported that negotiations had “advanced”, and that “important technical work” was needed before approval by Council members. Reading between the lines, the article says, this highlights the challenge the Directive faces. The article outlines ATAD 3, which is designed to tackle the use of EU based shell entities with minimal substance that have been used for improper tax purposes and does so by introducing a newly-devised minimum substance test. If an undertaking has been classified as a “shell” entity, several tax consequences are laid out in the Directive – the most significant is that the undertaking will not be entitled to the tax benefits of the EU Directives, potentially, double tax treaties. Plans are for ATAD 3 to come into effect from 1 January 2025.
CANADA TO IMPOSE NEW SANCTIONS ON 2 FORMER HAITIAN MINISTERS
On 20 December, FMT reported that Canada will impose new sanctions on 2 former Haitian government ministers accused of corruption and protecting criminal gangs – Berto Dorce and Liszt Quitel, the latest in a string of sanctions against Haitian politicians and business leaders.
AFGHAN GOVERNMENT OFFICIALS HELPED SMUGGLERS SNEAK ALMOST $1 BILLION IN CASH AND GOLD OUT OF AFGHANISTAN AS THE US-BACKED GOVERNMENT NEARED COLLAPSE
On 20 December, Business Insider said that during the final months of the Islamic Republic of Afghanistan, as the Taliban advanced on the capital, the elected government struggled to reassure its US patrons that it could maintain control. Yet at the same time, smugglers were illegally carrying hundreds of millions of dollars in cash and gold out of the country with the assistance of officials from within the Afghan government, according to internal government documents and former Afghan officials.
RUSSIAN AGENT’S BEVERLY HILLS CONDOMINIUMS SUBJECT TO FORFEITURE
On 19 December, an article from Ballard Spahr LLP reported an indictment naming a “Kremlin-backed Ukrainian politician and oligarch” who attempted to “influence the 2020 US Presidential election on behalf of the Russian Intelligence Services”. The investigation was coordinated through the DoJ Task Force KleptoCapture. The DoJ is requesting forfeiture of 2 Beverly Hills condominiums at issue in the indictment.
FRAUD AND FINANCIAL CRIMES: 5 TRENDS TO WATCH IN 2023
On 20 December, a post from Finextra suggested 5 trends to be aware of in 2023.
HAITI (SANCTIONS) (OVERSEAS TERRITORIES) ORDER 2022
This Order extends with modifications the UK’s Haiti (Sanctions) Regulations 2022, as amended from time to time, to all British Overseas Territories except Bermuda and Gibraltar (which implement sanctions under their own legislative arrangements).
CHURCH OF ENGLAND FRAUDSTER WHO STOLE £5.2 MILLION
On 20 December, The Independent reported that an official who defrauded the Church of England out of £5.2million to spend on lavish holidays, flights, and designer clothes has been jailed for 5 years. Ex-prisoner Martin Sargeant, 53, was given a “second chance” after stealing from previous employers in the 1990s and landed an £86,000-a-year job with the Archdeaconry of London.
EU WHISTLEBLOWER DIRECTIVE UPDATE
On 20 December, an article from Eversheds Sutherland published a newsletter which details changes to various EU Directives affecting employers. This includes a Directive that aims to strengthen whistleblower protections by imposing new duties on employers to introduce effective and secure reporting channels, reinforced by significant legal safeguards for whistleblowers. Although the deadline for Member States to transpose the Directive into national law has now passed, several countries have not yet implemented the Directive.
ISLE OF MAN: UPCOMING TRUST AND CORPORATE SERVICE PROVIDERS AML/CFT THEMATIC PROJECT
On 20 December, the FSA published a news release saying that it is currently planning a thematic project involving Trust and Corporate Service Providers (TCSP), which is intended to run during 2023 and beyond.
HOW BIG OIL HELPED RUSSIA
On 15 December, a report from Global Witness said that 30 years after arriving in post-Soviet Russia, the oil majors appeared to be retreating from one of the world’s top fossil fuel producers. It says that it is a pattern seen before, where corporations or banks do business with dictatorial regimes for decades despite mounting evidence of their horrific human rights records. It is a pattern in which it takes blood – not just a few deaths, but sustained bloodshed, somewhere that matters to western media – to push corporations to say ‘that’s enough’. It concludes that loopholes need closing and sanctions need strengthening – but the bigger picture is demand, which will always make sanctions leaky.
INSIDE THE WORLD’S LEADING LOW-COST SURROGACY AGENCY: ETHICAL CONCERNS, SHELL COMPANIES AND EXPLOITATION FEARS
On 18 December, a report from Finance Uncovered says that one of the world’s most successful low-cost surrogacy agencies, New Life, presents itself as a dream solution to the nightmare of infertility suffered by desperate would-be parents across the globe. However, it says that a major investigation – labelled “The Baby Broker project” – by an international team of journalists from 4 continents has reportedly unearthed evidence of suspected ethical violations regarding the company’s recruitment and treatment of surrogates, and an opaque company structure that issues what some lawyers argue are worthless contracts, which could leave potentially vulnerable women and commissioning parents legally exposed.
ISRAELI COURT RULES AUTHORITIES CAN SEIZE CRYPTO IN 150 BLACKLISTED WALLETS
On 19 December, Coin Telegraph reported that over 150 crypto wallets blacklisted for alleged links to the funding of terror groups can now be drained of all funds following a ruling by an Israeli court.
NORWAY-BASED SHIPOWNER HAS WON A SIGNIFICANT HIGH COURT RULING IN LONDON IN A LONG-RUNNING BATTLE TO EXTRACT ITS COASTAL CRUISE SHIPS FROM THE PROBLEMS CAUSED BY FINANCIAL SANCTIONS ON RUSSIA
On 19 December, an article in Insurance Marine News reported that Norway-based shipowner Havila Kystruten had financing deals with divisions of Russian financial company GTLK, a specialist in ship financing. The High Court ruled in favour of Havila, which should enable the company to take ownership of the vessels. The Court had previously protected Havila’s rights for 2 ships which were under construction, and has now concurred that the debt it owed to GTLK in connection with the construction financing and the planned leasing financing of completed ships should be released by settlement. This settlement of debt to GTLK will be completed by payment to a frozen account, thus remaining in compliance with sanctioning regulations.
IRELAND: TAXI SCAM GAINS €300,000 DEFEATING FACIAL RECOGNITION SOFTWARE ON MOBILE PHONES WHICH THEY USE TO EMPTY THEIR TARGETS’ BANK ACCOUNTS
On 19 December, the Irish Independent reported that a bogus-taxi scam which allows criminals to target the online bank accounts of unsuspecting passengers has hit victims for hundreds of thousands of euro. As part of their investigation into the gang, gardaí have made at least 2 arrests and seized a number of cars which were being used as bogus taxis.
RUSSIAN COURT HAS ORDERED THE SEIZURE OF A BILLION-DOLLAR LUXURY RESORT BELONGING TO OLEG DERIPASKA
On 20 December, the FT and others reported a court order to seize the Imeretinskiy hotel and marina in Sochi.
US: IPR CENTER PARTNERS WITH PHARMACEUTICAL SECURITY INSTITUTE TO PREVENT FAKE DRUGS FROM REACHING PATIENTS
A news release from the US Immigration & Customs Enforcement on 20 December advised that the National Intellectual Property Rights Coordination Center (IPR Center) announced a new partnership between Homeland Security Investigations (HSI) and the Pharmaceutical Security Institute (PSI) to combat illicit pharmaceutical trade and protect patients from the health and safety threats posed by counterfeit medications. PSI represents pharmaceutical companies around the world.
BREXIT COSTS UK GOVERNMENT £40 BILLION A YEAR IN LOST TAX REVENUE
On 20 December, ITV reported that, since 2018, John Springford at the Centre for European Reform (CER) has been modelling the economic performance of a UK that remained in the EU – using data from countries like the US, Germany, New Zealand, Norway and Australia, whose performance was similar to the UK’s before Brexit. His latest update estimates that Brexit reduced Britain’s GDP by 5.5% by the second quarter of 2022.
UKRAINE: THE LATEST GLOBAL SANCTIONS AND EXPORT CONTROLS
On 19 December, Clifford Chance published a briefing that provides an overview of the sanctions and export controls imposed by the US, EU, UK, Poland, Japan, Singapore, Australia, and Ukraine; as well as measures adopted in response by Russia.
WINDFALL: HOW RUSSIA MANAGED OIL AND GAS INCOME AFTER INVADING UKRAINE, AND HOW IT WILL HAVE TO MAKE DO WITH LESS
On 30 November, the Atlantic Council published an Issue Brief saying that Russia’s economy has demonstrated impressive resilience in the face of Western sanctions, so far. It was hoped that the financial sanctions and the blocking of the Central Bank’s reserves would be so disruptive that Russia just might reconsider. However, the factors that have spared Russia an immediate financial crisis and allowed it to finance the war are relatively few, and not guaranteed to remain in place. Though largely enabled by one dominant factor – oil and gas export income – Russia’s response to sanctions and the exodus of Western firms has been competent. But risks for Russia remain, largely on the downside.