Sanctions, proliferation, money laundering, export and trade control news etc
Chartered Legal Executive and former senior manager with Isle of Man Customs and Excise, where I was (amongst other things) Sanctions Officer (for UN/EU sanctions), Export Licensing Officer and Manager of the Legal-Library & Collectorate Support Section
On 30 September, OFAC announced the addition of a large number of new individuals and entities on its Russia sanctions list, with a number of others amended, plus new FAQ 1091. The new names comprise 14 persons in Russia’s military-industrial complex, including 2 international suppliers, 3 key leaders of Russia’s financial infrastructure, immediate family members of some of senior Russian officials; and 278 members of Russia’s legislature. OFAC also warned of the heightened sanctions risk that international actors outside of Russia would face for providing political or economic support to Russia as a result of its illegal attempts to change the status of Ukrainian territory.
On 28 September, the Wildlife Justice Commission published a report on the rise and fall of one of Vietnam’s biggest wildlife traffickers, Nguyen Van Nam (referred to in the report as Ah Nam). He was arrested in Hanoi on 30 September 2019 in connection with the illegal trade of ivory; on 16 July 2020 he was convicted and sentenced to 11 years in prison. Now that the investigation into one of his connections has been concluded, the full extent of efforts to bring Ah Nam to justice can be disclosed.
On 28 September, a news release from FINTRAC advised of the latest Operational Alert, Laundering of Proceeds from Illicit Cannabis, in support of Project Legion. This Operational Alert is meant to assist businesses subject to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act in better identifying and reporting to FINTRAC financial transactions related to the laundering of proceeds from illicit cannabis activities. It was developed in collaboration with law enforcement and Canada’s largest banks to advance and facilitate Project Legion, Canada’s most recent public-private partnership. The Alert includes an overview of FINTRAC’s analysis of suspicious transaction reports related to illicit cannabis; “red flags” in indicators of illicit cannabis in relation to online unlicensed dispensaries; and possibly related to illicit cannabis in relation to the cultivation, processing and preparation
On 30 September, an Insight from RUSI asks if ‘failure to prevent’ offences had an impact on the criminal liability for corporate entities? It explains that the basis of a failure to prevent offence is simple – to have any defence, an organisation needs to prove that it had ‘reasonable’ or ‘adequate’ procedures in place to prevent an individual associated with it from carrying out a criminal activity. The first failure to prevent offence was introduced in relation to bribery in 2010; 2 further failure to prevent offences followed in the Criminal Finances Act 2017 related to the facilitation of tax evasion.
NEW ZEALAND: CRIMINAL PROCEEDS (RECOVERY) AMENDMENT BILL INTRODUCED
On 23 September, Wolter Kluwer New Zealand published an article saying that this Bill was introduced into Parliament on 6 September, and that it would enable the High Court to make a disclosure of source order, in relation to property to which a restraining order applies if the respondent is overseas – if satisfied that there are reasonable grounds to believe that the property concerned is “tainted” property. It also closes an unintended loophole in the 2009 Act re the KiwiSaver scheme.
On 27 September, Browne Jacobson LLP reported that, hidden in the recent “mini-Budget”, was news that the off-payroll working rules (known as “IR35”) put in place for public and private sector businesses from 2017 and 2021 will be scrapped from April 2023. From April 2023, the rules will be reversed and the contractor (and the business engaging the contractor) will be responsible for determining the tax status of an engagement.
RUSSIA IS WEAPONISING ITS DATA LAWS AGAINST FOREIGN OPPONENTS
On 27 September, Tech Stream carried an article saying that a move against the Jewish Agency for Israel is the latest example of the Kremlin using laws governing online life in Russia to cement power offline, and its deployment against a group with little to no meaningful technology operation illustrates how those laws are being weaponised against groups viewed as a threat to the governing regime. Its growing frequency underscores that Moscow’s use of online laws to rein in civil society shows no sign of relenting, and, if anything, is only growing more creative.
On 29 September, Nikkei Asia reported that this rise is fuelled by the country’s ability to tailor its offering to the threat the customer country is facing. Defence sales doubled to $7 billion in 2021 and are expected to exceed $10 billion this year.
WEBINAR: CROSS-BORDER FRAUD: DUBAI TO BVI VIA LONDON
On 27 September, HFW released this hour-long video in which a panel of litigation experts focus on the increase of cross-border fraud in Dubai, the BVI and London, the far-reaching impact of cross-border fraud, as well as the role each region plays. Taking aspects from real world case studies, the team considers the systemic nature of this type of fraud, how it is so easily conducted and the repercussion in relation to litigation proceedings.
PANAMA: ODEBRECHT CORRUPTION HEARING ENDS – JUDGE HAS 30 DAYS TO RULE
On 29 September, Newsroom Panama reported that the huge corruption hearing, involving scores of defendants, including 2 ex-Presidents, has ended. The judge will now have up to 30 days to decide if the 49 defendants are to be prosecuted.
FRANCE ORDERS JAIL TIME FOR 2 MEN CHARGED WITH FUNDING TERRORISM IN SYRIA WITH CRYPTO
On 19 September, Coindesk reported that French authorities had finalised prison sentences for 2 men who were arrested on charges of funding terrorism in Syria via cryptocurrencies. Arrested in 2020, they were part of a network that was accused of having financed “jihadists” in Syria using crypto between 2018 and 2020, with the amount transferred via crypto estimated to be around €280,000.
MALI SAYS IT WILL NOT RESPECT REGIONAL SANCTIONS ON GUINEA
On 29 September, Devdiscourse reported that ECOWAS has imposed sanctions on Guinea’s ruling junta for taking too long to organise elections and restore democracy after seizing power last year. The measures include freezing junta members’ financial assets and barring them from travelling to other countries in the region. However, Mali does not respect and will not apply sanctions imposed on its neighbour – and would, if necessary, take measures to assist in order to counteract the effect of the sanctions.
HONG KONG: COUPLE ARRESTED FOR SMUGGLING MARK SIX LOTTERY TICKETS TO CHINA AND MACAU
On 29 September, The Standard reported that Customs officers had arrested a couple on suspicion of smuggling HK$330,000 worth of Mark Six lottery tickets. They seized 16,000 tickets suspected of being smuggled to China and Macau.
INDIA: DOES THE ENFORCEMENT DIRECTORATE HAVE TOO MUCH POWER?
On 29 September, an article in the India Business Law Journal asked this question, saying that fears of raids and asset seizures have turned the Directorate of Enforcement into a veritable bogeyman for “India Inc”.
CZECH REPUBLIC: AMENDMENT TO THE ACT ON REGISTRATION OF ULTIMATE BENEFICIAL OWNERS (UBO)
On 28 September, an article from Bird & Bird said that, on 1 October, an amendment to the Act on Registration of UBO will come into force; and asks what does this mean and how can it affect your business?
IRELAND MUST STEP UP ITS FIGHT AGAINST HUMAN TRAFFICKING
On 28 September, a news release from the Council of Europe advised that its Group of Experts on Action against Trafficking in Human Beings (GRETA), in its latest evaluation report, had urged authorities in Ireland to take further action against human trafficking, notably by improving prosecution of human traffickers and providing specialised shelters and compensation for victims. On the other hand, the report shows that the total number of presumed trafficking victims in Ireland fell from 103 in 2017 to 44 in 2021.
12 CHARGED AS PART OF NCA INVESTIGATION INTO CASH SMUGGLING FROM THE UK TO DUBAI
A news release from NCA on 28 September advised that 12 people have been charged as part of a major NCA investigation into the smuggling of millions of pounds in criminal cash out of the UK. All 12 are suspected of being cash couriers, responsible for transporting large amounts of money in suitcases on flights from the UK to Dubai.
AUSTRALIA: BILL INTRODUCED TO FORM A NATIONAL ANTI-CORRUPTION COMMISSION
On 29 September, Jurist reported that the commission will be able to investigate ministers, parliamentarians, parliamentary staff, statutory office holders and all government employees and contractors for criminal as well as non-criminal corruption offences. The Bill will include protections for whistleblowers and journalists who refer cases to the commission.
EUROPOL: HUNGARIAN SEX TRAFFICKING GANG DISMANTLED IN BERLIN
On 29 September, an article from OCCRP reported that German and Hungarian authorities had arrested the alleged kingpins of a Hungarian gang of traffickers for sexual exploitation, dismantling the criminal network. 3 of the gang members were arrested in both cities, including a Hungarian couple in Berlin – the suspected heads of the criminal operation. According to the EU police authority, the criminal gang had been active since 2017, recruiting young Hungarian women from vulnerable socioeconomic backgrounds to be exploited sexually in various streets of Berlin which were controlled by the criminal circle.
FRENCH LAW ENFORCEMENT DISMANTLE AN ORGANISED CRIME GROUP AND SEIZE ILLEGAL MEDICINES AS WELL AS FAKE PRESCRIPTIONS
A news release from Europol on 29 September advised that the organised crime group had specialised in acquiring psychotropic drugs containing the Pregabalin agent by using stolen or faked prescriptions in various EU Member States. Authorities seized fake Belgian identity documents, illegal medicines, fake prescriptions and cash.
FIGHTING ILLEGAL LOGGERS ON THE GUATEMALA-MEXICO BORDER
On 29 September, Insight Crime published a report from the jungles of Petén, a department in the extreme north of Guatemala. InSight Crime joined the convoy of park rangers on both sides of the border, spending 2 weeks deep inside the Mayan jungle to document the incursions of criminal groups. It explains that Granadillo, used for furniture and other luxury products despite being a protected species, is native to Mexico and Central America and can grow up 35 meters in height.
STRATEGIC LAWSUITS AGAINST PUBLIC PARTICIPATION (SLAPP)
On 29 September, a briefing from the EU Parliament Research Service explains that a SLAPP is an abusive or meritless lawsuit filed against someone for exercising their political rights or freedom of expression in relation to matters of public interest. The purpose of a SLAPP is not to seek justice but to intimidate, silence and drain the financial and physical resources of the targeted victims. On 27 April, the European Commission put forward a proposal for a Directive aimed at protecting persons who engage in public participation against manifestly unfounded or abusive civil court proceedings with cross-border implications, which is now being analysed by the co legislators. The proposal is accompanied by a recommendation to the Member States setting out guidance to address purely domestic cases of SLAPPs.
US DoJ ANNOUNCES TOTAL DISTRIBUTION OF OVER $4 BILLION TO VICTIMS OF MADOFF PONZI SCHEME
A release on Mondo Visione on 28 September advised that the DoJ had announced that the Madoff Victim Fund (MVF) began its eighth distribution of approximately $372 million in funds forfeited to the US Government in connection with the Bernard L Madoff Investment Securities LLC (BLMIS) fraud scheme.
JAPAN BANS CHEMICAL WEAPONS-RELATED GOODS TO RUSSIA
On 25 September, Yahoo Finance reported that Japan has decided to ban exports of chemical weapons-related goods to Russia in an additional sanction over its invasion of Ukraine. It also added 21 Russian organisations such as science labs as the target of existing export bans.
TORNADO CASH SANCTIONS ARE UNDULY “CREATIVE” WITH THE FIRST AMENDMENT
On 29 September, a post on Lawfare made this argument, saying that OFAC sanctioning of autonomous code controlled by no legal person ran headlong into the established precedent that code is speech and protected by the First Amendment. It is argued that OFAC is on firm ground when it sanctions people or property, including cryptocurrency, involved in criminal enterprises like the North Korean Lazarus Group – but that OFAC went too far in sanctioning code.
On 29 September, a post on the always interesting FCPA Blog reported that, so far this year, 2 FCPA enforcement actions have involved companies that resolved previous FCPA violations, and that the number of FCPA recidivists rises to 15. It calculates that, with 15 repeat offenders, the recidivism rate for all corporate FCPA defendants is now about 6.1%.
ECOWAS HAS ANNOUNCED THE IMPOSITION OF DIPLOMATIC, ECONOMIC AND FINANCIAL SANCTIONS ON GUINEA
On 29 September, the EU Sanctions blog reported on sanctions imposed by the Economic Community of West African States (ECOWAS), and it has given the Guinean authorities 1 month to accept a reasonable transition period. If this is not met, more severe sanctions will be imposed.
MONTENEGRO INVESTIGATES RUSSIANS AND MONTENEGRINS ON SUSPICION OF SPYING
On 29 September, EurActiv reported that authorities in Montenegro have launched an investigation against an unspecified number of people on charges of espionage. They have detained 6 Russian diplomats, 30 Russian nationals with temporary residence permits, and 2 Montenegrins on suspicion of espionage.
SEC CHARGES MAN FOR DEFRAUDING INVESTORS OUT OF MILLIONS OF DOLLARS BY POSING AS HEDGE FUND BILLIONAIRE
On 29 September, a release on Mondo Visione advised that the SEC had charged Justin Costello for using a false persona, as a Harvard-educated military veteran and hedge fund billionaire, to defraud investors out of millions of dollars. The SEC also charged Costello and David Ferraro, an associate of Costello’s, for promoting the stock of several microcap companies on social media without disclosing their own simultaneous stock sales as market prices rose.
SEC: DELOITTE’S CHINESE AFFILIATE TO PAY $20 MILLION PENALTY FOR ASKING AUDIT CLIENTS TO CONDUCT THEIR OWN AUDIT WORK
On 29 September, a release on Mondo Visione advised that the SEC has charged Deloitte Touche Tohmatsu Certified Public Accountants, the Chinese affiliate of the Deloitte global network of accounting firms, with failing to comply with fundamental US auditing requirements in its component audits of US issuers and its audits of foreign companies listed on US exchanges. Deloitte-China agreed to settle the charges by paying a $20 million penalty and agreeing to extensive remedial measures. The SEC order finds that, in the course of numerous audits over multiple years, Deloitte-China personnel asked clients to select their own samples for testing and to prepare audit documentation purporting to show that Deloitte-China had obtained and assessed the supporting evidence for certain clients’ accounting entries. This created the appearance that Deloitte-China had conducted the required testing of clients’ financial statements and internal controls when there was no evidence in the audit file that it had in fact done so.
On 29 September, the Wall Street Journal reported that the Financial Industry Regulatory Authority, Wall Street’s self-regulator, has for the first time provided guidance to its member broker-dealers on the potential penalties it could impose for violating rules intended to prevent money laundering.
On 29 September, the Guardian reported that Oleg Deripaska, 54, one of Russia’s most powerful oligarchs, who previously had deep links to British establishment figures, has been indicted by the US DoJ for criminal sanctions violations. The allegations include an elaborate and failed attempt by Deripaska and his associates to shuttle his pregnant girlfriend to the US so that she could give birth there and secure American citizenship for their second child. It is alleged that Deripaska evaded sanctions in a variety of ways, using corporate shell companies to hide his activities.
On 29 September, EurActiv reported that the European Commission has formally taken Malta to the EU’s highest court for its cash-for-passports scheme that endows Maltese citizenship on wealthy third-country citizens in return for money and investments.The Commission said it considers the scheme a violation of EU law and has long called on Malta to withdraw the scheme over fears of money laundering and citizenship being granted to high-risk individuals. It notes that, in March, the Commission issued a recommendation saying that EU Member States “still operating investor citizenship schemes need to terminate them immediately”.
On 29 September, OFAC announced that it has sanctioned an international network of companies involved in the sale of hundreds of millions of dollars’ worth of Iranian petrochemicals and petroleum products to end-users in South and East Asia. This action targets Iranian brokers and several front companies in the UAE, Hong Kong, and India that have facilitated financial transfers and shipping of Iranian petroleum and petrochemical products. The listing includes one vessel, the Gas Allure.
On 29 September, the EU Sanctions blog reported on the announced details of a further sanctions package following the “sham referenda” organised in occupied territories of Ukraine and movement toward annexation of occupied regions. It includes additional import and export bans; a ban on EU nationals sitting on governing bodies of Russian state-owned enterprises; a “legal basis” for the price cap on Russian oil; provision to list people who have circumvented EU sanctions; the extension of current restrictions on Crimea, Donetsk and Luhansk to all non-government-controlled areas of Ukraine; and further targeted sanctions on persons and entities.