On 21st February, OFAC announced that a US company, ZAG IP, LLC (formerly known as ZAG International, LLC) – a business focused on global sourcing and marketing of cement raw materials and providing strategic advisory services related to raw material selection for companies in the construction industry – had reached agreement to pay $506,250 in penalties for 5 self-reported, non-egregious apparent violations of the Iranian Transactions and Sanctions Regulations, for sourcing from Iran (via the UAE) alternative supplies to fulfil a contract. OFAC said that, whilst ZAG did exercise limited due diligence, it acted with reckless disregard for sanctions requirements by failing to substantively address the US sanctions prohibitions in place with respect to Iran despite contemporaneous risk indicators, that senior management knew what had happened, and that there had been considerable economic benefit to Iran as a result. Also, did not have an effective OFAC compliance programme in place at the time of the transactions commensurate with its level of risk, giving its status as an international trading company.
A news release on Ekklesia on 21st February reported that for 3 decades, the multi-million dollar international trade in Burmese teak has been riddled with crime and high-level corruption, driving conflict and human rights abuses in Myanmar. Now, a 2-year undercover investigation by the London-based Environmental Investigation Agency (EIA) has unearthed and exposed a near-mythic ‘Burmese teak kingpin’ at the centre of an international network, the so-called ‘Shadow President’ who conspired with and bribed the most senior military and Government officials in Myanmar. The report says that the late Cheng Pui Chee (in Thailand, aka Chetta Apipatana) – was able to establish a secret off-the-books system of fraudulent trade in the cream of the country’s teak logs, a trade run in parallel to, and within, the official legal trade administered by the State-owned Myanmar Timber Enterprise (MTE).
Insight Crime on 21st February published an article which presents a round-up of investigations or trials against prominent figures in Latin America and the Caribbean.
The Independent on 20th February reported that lucrative ship-scrapping trade sees poor Bangladeshi workers face ‘abhorrent conditions with abysmal environmental protections. The newspaper says that the St Christopher and Nevis International Ship Registry Ltd (Skanreg), based in Romford in east London, is the official seller of shipping flags for St Kitts and Nevis. A Panamanian corporate entity St Christopher Holdings & Investments SA owns 50% of Skanreg. New figures from the NGO Shipbreaking Platform showed that almost half the 532 ships broken on the beaches of south Asia in 2018 flew flags of just 3 tiny offshore tax havens – the Comoros islands, Palau in the Pacific and St Kitts and Nevis (whose flag was found on 29); and all 3 flags are blacklisted by the EU due to their poor enforcement of international conventions. In the past 3 years, 143 St Kitts and Nevis vessels have been scrapped on south Asia’s beaches. EU rules have banned ships from being exported from European ports to south Asia since 2006; and a new Regulation was added in January 2019 so that it is now also illegal for any ship carrying a European flag to be sent to the south Asian beaches – which has been avoided by short-term re-registration through Skanreg.
20th February 2019
AEO: CUSTOMS CLEARANCE ON FAST TRACK
HKTDC on 12th February published an article about the advantages of Authorised Economic Operation (AEO) status, specifically in Hong Kong, but equally applicable to several other countries. It describes it as a “quality mark” that lets exporters enjoy the trade clearance measures provided by different economies, with cross-border mutual recognition of the status as well as in-country benefits. It says that the WCO has been promoting the concept of AEO to strengthen international supply chain security and facilitate movement of legitimate goods. In Hong Kong, The 2-tiered programme requires participating companies to meet 10 or 12 preset criteria to enhance their security standards, covering cargo handling, premises control, conveyance monitoring, selection of business partners and so on – and see inspection rates fall by as much as 80%.
INDIAN BILLIONAIRE ANIL AMBANI ORDERED TO PAY ERICSSON OR FACE JAIL
Nikkei Asian Review on 20th February reported that Anil Ambani, chairman of Reliance Communications, has been ordered by India’s Supreme Court to pay 4.53 billion rupees to Swedish equipment maker Ericsson within 4 weeks or go to jail, after the billionaire was found guilty of contempt of court.
SHIP AND RIG RECYLING: FAQ
On 20th February, Wikborg Rein published a briefing which says that international conventions and local regulations combine to create a complex legal regime, which is often overlooked. The sale of a ship or rig to an intermediate buyer, which then sells the asset on to a shipbreaking facility, will not necessarily insulate the original owner from future liability or reputational damage. Against this background, the briefing provides some advice for owners and other parties involved in cross-boundary movements of marine assets for recycling. The international framework is under the Basel Convention 1989 – the Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal – which was introduced to regulate (and to some extent discourage) the international movement of hazardous wastes, by subjecting each such movement to the prior informed consent of the competent regulators in the state of export of the waste, the intended state of import and any transit states. The movement of hazardous waste undertaken without such consent constitute illegal traffic under the Convention.
ALL THAT YOU SHOULD KNOW ABOUT THE NEW AML LAW IN UAE
On 4th January, Dr Hassan Elhais published an article outlining the key points of the new AML law in UAE.
EU: BETTER SECURITY FOR ID DOCUMENTS
On 20th February, an EU news release said that the EU is introducing tighter security for ID cards in order to reduce identity fraud. The proposed new rules will improve the security of these documents by introducing minimum standards both for the information contained in them and for security features common to all Member States that issue them. It is expected that the new rules will enter into force 2 years after adoption and, in general, existing identity cards which do not meet the requirements will stop being valid 10 years after the date of application of the new rules or at their expiry, whichever is earlier.
TANZANIA: CHINESE “IVORY QUEEN” SENTENCED TO 15 YEARS FOR SMUGGLING
On 20th February, Defence Web reported that a Tanzanian court sentenced a prominent Chinese businesswoman, Yang Feng Glan, dubbed the “Ivory Queen” to 15 years in prison for smuggling the tusks of more than 350 elephants to Asia.
FORMER TOP CHINESE GENERAL SENTENCED TO LIFE FOR CORRUPTION
ABC News reported on 20th February that Fang Fenghui, a former top Chinese general has been given a life sentence for taking and distributing bribes and possessing a large amount of unaccounted-for property.
SWISS BANK TURNS TABLES ON GERMAN LAWYER IN TAX EVASION CASE
Handelsblatt on 19th February reported that Eckart Seith, who helped to uncover one of Germany’s biggest tax avoidance scandals now faces prosecution in Switzerland, home to the bank he identified as an alleged culprit, on a charge of industrial espionage. His testimony was crucial in a case involving so-called dividend stripping with €12 billion of unwarranted tax refunds – until 2011, when authorities closed the loophole.
SWEDBANK NOW LINKED TO DANSKE BANK AML CASE
On 20th February, ERR reported that the case is now linked to Swedish lender Swedbank, according to Swedish public broadcaster, SVT. Around €3.8 billion is said to have moved between Swedbank and the Baltic units of Danske Bank, over around a 10 year period.
MALAYSIA: FORMER MEDIA ADVISER TO PRIME MINISTER CHARGED IN ABSENTIA FOR MONEY LAUNDERING
On 20th February, Bernama reported that Paul Stadlen, who was a media advisor to former prime minister Datuk Seri Najib Razak has been charged in absentia in the Kuala Lumpur Court Complex here today with money laundering.
LARGE-SCALE SCAM IN KYIV: COURT RULES TO SEIZE 14 CONSTRUCTION SITES BELONGING TO UKOGROUP
UNIAN on 20th February reported that a district court has ruled to seize 14 construction sites belonging to the Ukogroup construction firm reportedly affiliated with real estate developer Anatoliy Voitsekhovsky. The allegations include evaded taxes, arbitrarily seized land plots on which residential complexes, shopping malls and office centres were built.
723 NIGERIANS DEPORTED FROM GHANA OVER CYBERCRIME, PROSTITUTION 2018-19
The Sahara Reporter carried this story, alongside comments by the Nigerian High Commissioner to Ghana, describing the deportation of Nigerians by the Ghana Immigration Service as an “improper act”, and that it could strain the brotherly relationship both countries share.
BENEFICIAL OWNERSHIP OF IRISH TRUSTS – WHAT HAS HAPPENED?
On 19th February, Matheson published an article about the European Union (Anti-Money Laundering: Beneficial Ownership of Trusts) Regulations 2019 in Ireland, adopted on 29th January and saying that trustees should act now to ensure that they comply with the new measures. It says that designated persons are required to seek professional advice about their duties, to seek and obtain information from beneficial owners of trusts and to establish beneficial ownership local registers as required.
THE BASICS: RESPONDING TO A WINDING UP PETITION
On 19th February, Gowling WLG published a briefing asking: what should your company do if faced with a statutory demand or a winding up petition?
EUROPEAN COMMISSION EXAMINES F1 DEALS WITH TOBACCO COMPANIES
On 19th February, TJI reported that the European Commission will be investigating the recent deals between Formula One racing teams and tobacco companies, and said to involve not advertising tobacco products but rather concentrate on science to find less harmful solutions for smoking (PMI) and “potentially reduced risk products” (BAT).
MALTA: CUSTOMS OFFICIALS SEIZE 15.3 MILLION CIGARETTES AT FREEPORT
Malta Today on 19th February reported that the cigarettes were found in 2 containers on their way to Croatia from Vietnam.
FRANCE: UBS IN COURT FOR AIDING TAX EVASION
On 19th February, Banking Tech reported that a Paris court will make a decision on whether UBS helped French clients hide billions of Euros from French tax authorities. If found guilty, charges could see the bank face penalties of up to €5.3 billion. The trial opened last year after 7 years of investigations, launched when former employees came forward with claims of unlawful conduct.
UBS FINED €4.5 BILLION IN FRENCH TAX FRAUD TRIAL
On 20th February, City AM reported that UBS had been fined €4.5 billion by the French court after being found guilty of laundering the proceeds of tax evasion.
POTENTIAL BIOTERRORIST USE OF SMALLPOX SHOULD PUT WORLD ON NOTICE, EXPERTS SAY
Homeland Preparedness News on 19th February carried this worrying article saying that smallpox, although eradicated, has joined the growing list of potential biosecurity threats, according to experts, who say preparedness for the possible return of the virus should be prioritised around the world. Samples of the smallpox virus have been kept for research purposes, according to the clinic, which has led to concerns that smallpox could someday be used as a biological warfare agent.
IMB LAUNCHES INITIATIVE TO CURB BILLS OF LADING FRAUD
Hellenic Shipping News on 20th February reported on the new initiative launched by the International Maritime Bureau (IMB) aimed at curbing bills of lading (B/L) fraud carried out by non-vessel owning common carriers (NVOCC).
VENEZUELA SHUTS SEA, AIR LINKS TO DUTCH ISLANDS
The Miami Herald on 20th February reported that Venezuelan officials said that the country is banning air and sea trips to and from 3 Dutch Caribbean islands – Curacao, Aruba and Bonaire – a region that has been linked to efforts to undermine President Nicolas Maduro by sending emergency aid. Airspace in the border region was also indefinitely closed to private and commercial flights.
UK AMENDS 2 ENTRIES ON ITS AFGHANISTAN SANCTIONS LIST
On 20th February, a Notice from HM Treasury advised amendment of 2 entries on its Consolidated List. This followed the enactment of EU Regulation 2019/279/EU.
ISLE OF MAN “SUGAR TAX”
On 20th February, a news release from the Treasury advised that, from 1st April, the Soft Drinks Industry Levy will be introduced in the Isle of Man. It mirrors that already in place in the UK and is aimed at producers and importers on the Island of soft drinks containing added sugar.
SANCTIONS (OVERSEAS TERRITORIES) (AMENDMENT) ORDER 2019 AND BERMUDA
This SI 2019/185 provides that UK sanctions relating to Lebanon, Syria and Libya, imposed by means of an order in council, will no longer extend to Bermuda, given that they now have the force of law in Bermuda by virtue of the International Sanctions Regulations 2013.
UK ERITREA SANCTIONS FOR BRITISH OVERSEAS TERRITORIES FORMALLY REVOKED
The Eritrea (Sanctions) (Overseas Territories) (Revocation) Order 2019 has formally revoked the UK sanctions imposed in respect of Eritrea by means of an order in council.
GERMANY SEIZES MILLIONS IN RUSSIAN MONEY LAUNDERING PROBE
ABC News on 20th February reported that German authorities say they’ve seized properties worth €40 million and millions more in cash in an investigation linked to a high-profile Russian money laundering scheme.
VICTIMS OF ALLEN STANFORD’S PONZI SCHEME SAY THEY HAVE BEEN SHORT-CHANGED
CNBC on 20th February reported that, unlike victims of Bernie Madoff, who have gotten back large chunks of their principal, 18,000 customers of fraudster R. Allen Stanford have recovered practically nothing.
LIBYAN ANTI-CORRUPTION AUTHORITIES SAID TO BE INVESTIGATING 121 COMPANIES OPERATING IN TUNISIA
The Libyan Express on 20th February reported that the Commission has requested from its Tunisian counterpart to provide data of 121 Libyan companies operating in Tunisia, suspected to be implicated in laundering money.
EU EXTENDS BELARUS ARMS EMBARGO AND SANCTIONS FOR ANOTHER YEAR
Rferl on 20th February reported that the EU had extended for another year an arms embargo against Belarus and sanctions on 4 Belarusian citizens.
ITALY: 5 BANKS INVESTIGATED AND €700 MILLION SEIZED OVER DIAMOND SCAM
The Corriere della Sera reported that savers, who bought precious stones on the advice and encouragement of bank staff, little knowing that if they then tried to sell them, they would lose up to 50% of their investment. Investigations into the scam by prosecutors in Milan are focusing on 75 suspects, 5 banks and 2 companies, and have led to the seizure of over €700 million, with alleged victims including celebrities such as singer Vasco Rossi. It says that the major players in this market were Intermarket Diamond Business Spa in Milan, which operated through UniCredit, Banco BPM and Banca Aletti, and Diamond Private Investment di Roma Spa, which relied on MPS and Banca Intesa Sanpaolo.
BAHRAIN: 90% OF JEWELLERS ‘COMPLIED WITH DIRECTIVE TO FIGHT MONEY LAUNDERING’
GDN Online on 20th February reported that nearly 90% of Bahrain’s jewellers have complied with a government directive to fight money laundering and terrorism financing, it has emerged. That is the equivalent of almost 900 firms, said Industry, Commerce and Tourism Ministry assistant under-secretary for commercial registration and companies Ali Makki. Of course, the figures suggest 10% did not follow the Directive…
On 20th February, the US Treasury reported that OFAC had identified Indian national Jasmeet Hakimzada as a Significant Foreign Narcotics Trafficker. OFAC also designated 2 Indian nationals – Harmohan Hakimzada, Jasmeet’s father, is his primary partner in the drug trafficking and money laundering operation; and Eljeet Kaur, Jasmeet’s mother, who serves as an officer in 2 front companies in India. 4 entities registered in India or the UAE that form part of the narcotics trafficking organization run by Jasmeet Hakimzada were also designated.
On 20th February, a Client Alert from Baker McKenzie clarifies and summarises the US sanctions that apply to CITGO Holding Inc (and its subsidiaries), PDV Holding Inc (and its subsidiaries), Nynas AB (and its subsidiaries) and all other PdVSA subsidiaries. It points out that the designation of PDVSA as an SDN added to an already complex sanctions compliance landscape where entities owned by the Government of Venezuela or by PdVSA are concerned. Although entities 50% or more owned by PdVSA would normally be subject to the same SDN restrictions as PdVSA itself, the current US restrictions on dealings with direct and indirect PdVSA subsidiaries are not so straightforward due to the various Executive Orders, authorisations, general licences, and published guidance from OFAC.