EU SANCTIONS – FARC, DPRK, VENEZUELA; ANDORRA MONEYVAL REPORT

EU REMOVES FARC FROM TERRORISM SANCTIONS LISTS

From 15th November, EU Council Decision 2017/2072/CFSP and 2017/2073/CFSP; and Regulations 2017/2061/EU and 2017/2064/EU refer.

http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.L_.2017.295.01.0038.01.ENG&toc=OJ:L:2017:295:TOC

EU AMENDS THE LIST OF “LUXURY GOODS” SUBJECT TO NORTH KOREA SANCTIONS

EU Regulation 2017/2062 amends Regulation2017/1509 following a review of the list of luxury goods subject to an import and export ban.

http://eur-lex.europa.eu/legal-content/EN/AUTO/?uri=uriserv:OJ.L_.2017.295.01.0004.01.ENG&toc=OJ:L:2017:295:TOC

EU SANCTIONS ON VENEZUELA

EU Regulation 2017/2063/EU gives effect to sanctions on Venezuela that impose an embargo on the supply of military equipment, and equipment that might be used for internal repression – with a parallel ban on the financing, brokering etc of the same.  The ban also applies to certain software and technology, including that used to intercept or monitor the Internet or telecommunications. Financial sanctions against individuals and entities are provided for, but no persons are designated to date.  The measures have effect from 14th November.

See also EU Council Decision 2017/2074/CFSP.

http://eur-lex.europa.eu/legal-content/EN/TXT/?

uri=uriserv:OJ.L_.2017.295.01.0021.01.ENG&toc=OJ:L:2017:295:TOC

MONEYVAL PUBLISHES A REPORT ON AML/CFT IN ANDORRA

The Moneyval organisation, which reviews countries’ AML/CFT systems on behalf of the Council of Europe has published its mutual evaluation report on Andorra.  The report welcomed the reforms recently undertaken by the Andorran authorities to address the risks identified, but has called for a number of improvements, and calls for a clear political oversight to be put in place in order to monitor the implementation of the action plans adopted to mitigate those risks; also, as with other juridictions, the ratio between investigations and prosecutions, and subsequent convictions obtained appears to be modest.

https://www.coe.int/en/web/portal/-/moneyval-welcomes-reforms-in-andorra-to-combat-money-laundering-and-terrorist-financing-but-calls-for-some-improvements?src=ilaw

Please pass on the link to the blog to anyone you think might like or need it

EU FOREIGN MINISTERS APPROVE SANCTIONS ON VENEZUELA

On 13th November it was reported that EU foreign ministers had approved an arms embargo against Venezuela, and the legal framework for travel bans and asset freezes against those involved in human rights violations and non-respect for democracy or the rule of law; but held off listing any individuals for economic sanctions.

http://www.consilium.europa.eu/en/press/press-releases/2017/11/13/venezuela-eu-adopts-conclusions-and-targeted-sanctions/

LSE PODCAST: MILITARISATION AND THE ‘WAR ON CRIME’

LSE PODCAST: MILITARISATION AND THE ‘WAR ON CRIME’

Recording of a presentation and discussion that took place at the London School of Economics on 7th November, to launch a new (and expensive) book on the subject.  Speakers included the always excellent Misha Glenny.  Although over an hour long (if you include the Q&A session at the end), it is nevertheless fascinating and informative.

The LSE blurb includes the following – from the 70 year old “War on Drugs”, to the more recent “War on Human Smuggling”, politicians use militarised responses to look decisive on crime.  The deployment of armies, navies, military assets and militarised approaches can send a powerful message, but have produced mixed results. This debate will discuss 4 different areas of criminality – wildlife crime, piracy, human smuggling and drug trafficking – to see how effective a militarised response can really be, and what might be lost as collateral damage.

http://www.lse.ac.uk/website-archive/newsAndMedia/videoAndAudio/channels/publicLecturesAndEvents/player.aspx?id=3929

IN CASE YOU MISSED IT: HIGHLIGHTING ADDITIVE MANUFACTURING (AM), INC 3D PRINTING — AS A POTENTIAL PROLIFERATION RISK

On 27th October, the Center for Nonproliferation Studies at the Middlebury Institute of International Studies, Monterey USA published its Occasional Paper 33 which analyses a set of export-controlled items to understand the degree to which 3D printing might be used to produce — and thus represent a new pathway for proliferators to acquire — dual-use goods useful for the development of WMD. Additionally the study considers the degree to which communities using and promoting 3D printing may impact the risk of WMD proliferation.

Reassuringly perhaps, the study has found no evidence suggesting active pursuit or deployment of AM technology with a WMD proliferation aim in either relevant case study (North Korea and IS), but that claims to have produced 3D printers suggests North Korea’s intention is not merely to explore the use of 3D printing, but also to explore the production of AM equipment itself; and the widespread geographic distribution of AM technology etc has made the technology accessible by users in countries where the IS has been particularly active (and thus, if the IS leadership were to make the decision to vigorously explore AM as a potential pathway to WMD, the technology would be readily accessible, with little need to import from producer countries).

The report calls for further awareness-raising and, of course, more research.  In addition, export controls and nonproliferation efforts need to recognise the likely or potential risks involved with 3D printing, including in respect of professional 3D printing services and providers.

http://www.nonproliferation.org/op33-wmd-proliferation-risks-at-the-nexus-of-3d-printing-and-diy-communities/

STORIES YOU MAY MISSED – NOVEMBER 2017 (PART 1)

Don’t forget, if you want to follow the Blog and receive future updates please click on the button o the right

Here are the things that I have noted in the period 1st to 10th November…in no particular order, except for the date that I picked them up.

1st November 2017

CHALLENGES ASSOCIATED WITH PRIVATE ENTITIES INVESTIGATING MONEY LAUNDERING: INFORMATION SHARING

In a second awareness update, Anita Clifford of Bright Line Law considers the challenges that could arise as private entities are drawn further into the investigation of money laundering through the new information-sharing network such as that created under the Criminal Finances Act 2017.  It includes references to the Joint Money Laundering Intelligence Taskforce (JMILT), set up in May 2016 in the UK, an intelligence sharing pilot which brought together UK enforcement authorities, the British Bankers Association and more than 40 major banks.

https://www.brightlinelaw.co.uk/BLL-Portal/Challenges-associated-with-private-entities-investigating-money-laundering-information-sharing-1.html

Also see the links to the Fintel Alliance in Australia, set up in 217 –

http://www.austrac.gov.au/sites/default/files/fa-announcement-operations-hub-v1.pdf

http://www.austrac.gov.au/about-us/austrac/fintel-alliance

THINGS YOU DIDN’T KNOW: 1

Unearthing poison: Disposal of abandoned chemical weapons in China

Bulletin of Atomic Scientists, 12th October

For more than 2 decades, China and Japan have worked to eliminate the chemical weapons that Japan abandoned in China at the end of WW2. The process has involved numerous challenges, such as excavating corroded munitions that had been buried in the city of Beian along with sensitive explosives; working in the aftermath of an accident that sickened more than 40 people in Qiqihar; establishing innovative destruction technologies in Nanjing; and, at Haerbaling Mountain, embarking on the clean-up of the largest burial site for abandoned chemical weapons in China. Though bilateral tensions have sometimes strained the destruction process, Sino-Japanese cooperation has ultimately provided a useful model for nations elsewhere engaged in the disposal of abandoned chemical weapons.

http://www.tandfonline.com/doi/full/10.1080/00963402.2017.1388678

JIHADI CULTURE: AN INTERVIEW WITH THOMAS HEGGHAMMER

Thomas Hegghammer, a renowned specialist on violent Islamism, discusses one of the most underexplored terrains of research on political violence, the culture of jihadi groups.  Thomas Hegghammer is an academic specialist on violent Islamism. He is currently senior research fellow at the Norwegian Defence Research Establishment (FFI) and adjunct professor of political science at the University of Oslo.

Oxford Research Group, 27th October

https://sustainablesecurity.org/2017/10/27/jihadi-culture-an-interview-with-thomas-hegghammer/

AIRBUS – CORRUPTION SCANDAL EXTENDS TO US SALES

Airbus said it had uncovered problems involving the use of sales agents to sell US arms technology, potentially violating the International Traffic in Arms Regulations (ITAR), a part of US law, re the use of commissions to sell arms.

FINTECH AND CROSS-BORDER PAYMENTS

Speech by Dong He, Deputy Director, Monetary and Capital Markets Department, IMF at Central Bank Summit held in New York.  He discusses –

  • a sketch of the economic framework on how fintech applications will affect financial services and the market structure;
  • the current landscape of cross-border payments, and the possible evolution of cross-border payment systems; and
  • the role of central banks, themselves, and the possible reasons for them to issue their own digital currencies.

http://www.imf.org/en/News/Articles/2017/11/01/sp103017-fintech-and-cross-border-payments

INVESTIGATING THE FINANCES OF CRIMINALITY: THE RECORD SO FAR AND THE CHALLENGES AHEAD

Upon his retirement, one of Britain’s former senior policemen (Mick Creedon, Chief Constable of Derbyshire) reflects on the progress made in identifying and seizing the proceeds of crime, and offers suggestions for further improvement in this battle of wills, organisation and technology.

https://rusi.org/commentary/investigating-finances-criminality-record-so-far-and-challenges-ahead?src=ilaw

CONSULTATION: BETTING SLIPS AND JEWELS TO BE SEIZED FROM CRIMINALS

Consultation on revisions to UK proceeds of crime legislation that would allow the seizure of other things representing cash, such as betting slips or jewels, valuable postage stamps, casino chips and precious metals, from April 2018 under changes being made by the Criminal Finances Act 2017.

UPDATED LIST OF BUSINESSES ABLE TO USE UK LICENCE FOR MARITIME ANTI-PIRACY SECURITY WORK

Open general trade control licence (maritime anti-piracy): list of registered companies. Licence providing export licensing coverage for maritime anti-piracy services in the ‘high risk area’ in the Indian Ocean.  Notice to Exporters 2017/24 also issued to highlight reissue.

https://www.gov.uk/government/publications/open-general-trade-control-licence-maritime-anti-piracy-list-of-registered-companies/open-general-trade-control-licence-maritime-anti-piracy-list-of-registered-companies

PRIME MINISTER’S QUESTION TIME: FOCUS ON ISLE OF MAN AND TAX AVOIDANCE

Jeremy Corbyn called on the prime minister to give more resources to tackle the “scourge” of tax avoidance, following allegations leaked from a Bermuda-based law firm.  Among the leaks were allegations of 957 “business jets” imported to the Isle of Man.  Theresa May said HMRC takes the issue of tax avoidance “very seriously” and would take “where appropriate”.

http://www.bbc.co.uk/news/av/uk-politics-41834704/pmqs-corbyn-and-may-on-hmrc-staff-and-uk-tax-avoidance

OFAC UPDATES US OFFSHORE OIL SANCTIONS ON RUSSIA

OFAC has amended the Ukraine/Russia-Related Directive 4.  Unless licensed or authorised by OFAC, prohibitions apply to US-located and US persons – i.e. the provision, exportation, or re-export, directly or indirectly, of goods, services (except for financial services), or technology in support of exploration or production for deep water, Arctic offshore, or shale projects” that have the potential to produce oil in territories of, or claimed by, the Russian Federation – and involving any person listed under the Directive. The amendments add a ban on certain projects that are initiated on or after 29th January 2018.  Further prohibitions apply re transactions (including attempted transactions) that evade, avoid or violate anything prohibited by the Directive.

See OFAC FAQ https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_other.aspx#373

HOUSE OF LORDS EU SELECT COMMITTEE: POST-BREXIT SANCTIONS POLICY EVIDENCE

Transcript of the evidence from Sir John Sawers GCMG, Chairman, Macro Advisory Partners and Former Chief of the Secret Intelligence Service (MI6).

http://data.parliament.uk/writtenevidence/committeeevidence.svc/evidencedocument/eu-external-affairs-subcommittee/brexit-sanctions-policy/oral/71916.pdf

Transcript of evidence from Rt Hon Sir Alan Duncan MP (Minister for Europe and the Americas, FCO); Caroline Wilson CMG (Director Europe, FCO); Matthew Findlay, Deputy Head of International Organisations Department, (FCO).

http://data.parliament.uk/writtenevidence/committeeevidence.svc/evidencedocument/eu-external-affairs-subcommittee/brexit-sanctions-policy/oral/72304.pdf

FACILITATION PAYMENTS DECLARED ILLEGAL UNDER CANADIAN INTERNATIONAL CORRUPTION LAW

Canada has announced that the exception allowing for facilitation payments under the Corruption of Foreign Public Officials Act (CFPOA) will be eliminated w.e.f. 31st October.

CAYMAN ISLANDS AML LAW

This client briefing from law firm, Ogier, addresses recent changes to the Cayman AML framework – in particular those made by the Anti-Money Laundering Regulations, 2017, which came into force on 2nd October.

https://www.ogier.com/publications/cayman-islands-the-anti-money-laundering-regulations-2017

TRACE PODCAST: THE MCI ACCOUNTING SCANDAL

Walt Pavlo discusses the accounting fraud at MCI that led to his 2-year prison sentence, his book “Stolen Without a Gun: Confessions from inside history’s biggest accounting fraud,” and his second career with Prisonology.

For details of this, and other scandals such as Enron, see http://www.accounting-degree.org/scandals/

https://www.traceinternational.org/bribe_swindle_or_steal

ALLEGED HONG KONG TRIAD LEADER ARRESTED FOR LAUNDERING MORE THAN HK$100 MILLION

Alleged triad leader “Shanghai Boy” Kwok Wing-hung arrested on suspicion of laundering more than HK$100 million, with a source claiming he was accused of filtering the money from illegal bookmaking through 4 bank accounts in Hong Kong over 5 years

CIA RELEASES USAMA BIN LADIN MATERIALS

“In an effort to further enhance public understanding of al-Qa’ida”, the CIA on 1ST November released additional materials recovered in the 2011 raid on Usama Bin Ladin’s compound in Abbottabad, Pakistan.

https://www.cia.gov/library/abbottabad-compound/index.html

NCA DIRECTOR CRITICISES SOLICITORS

Donald Toon, director of prosperity (economic crime and cybercrime) at the NCA has told solicitors at the Solicitors Regulation Authority (SRA) COLP and COFA conference in Birmingham that the legal profession is worse than any other financial services sector in reporting money laundering suspicions.  He said solicitors were “absolutely at the front line of the detection mechanism for money laundering” but “something is not working effectively” and “There is a question over whether everyone in the legal profession understands the value of what is being asked for”.

See Legal Futures article https://www.legalfutures.co.uk/latest-news/economic-crime-chief-puts-solicitors-dock-money-laundering

A NEW DILEMMA FOR LAWYERS: WILL SANCTIONS RULES FORCE YOU TO REPORT YOUR CLIENTS? – CARTER-RUCK ON THE IMPLICATIONS FOR LAWYERS IN THE WIDENING OF THE SANCTIONS REPORTING REQUIREMENTS IN THE UK

Guy Martin, Carter-Ruck’s Head of International Law, follows up on his recent interview in The Times and answers some pressing questions. The European Union Financial Sanctions (Amendment of Information Provisions) Regulations 2017 require persons operating in the UK in any of 8 specified business sectors to inform HM Treasury, “as soon as practicable” if they know or have reasonable cause to suspect that a person either is a person designated under the various sanctions regulations or has contravened prohibitions set out in the sanctions regulations.  Previously, the reporting requirements have applied only to certain financial service providers, but they now extend to auditors, estate agents, external accountants, tax advisers and “independent legal professionals”.

https://www.carter-ruck.com/blog/read/a-new-dilemma-for-lawyers-will-sanctions-rules-force-you-to-report-clients

BRITISH BANKER FOUND GUILTY OF FRAUD IN NEW YORK

On 23rd October, Mark Johnson, the former head of global cash foreign exchange trading at HSBC, became the first person to be prosecuted and found guilty of fraud in relation to London-based foreign exchange manipulation.  His former employer, HSBC, is in settlement talks with US regulators and the DoJ over the issue, while former employees of Barclays, Citigroup and JP Morgan are awaiting trial in New York on similar charges concerning other alleged instances of foreign exchange manipulation in the London market.

https://www.corkerbinning.com/david-corker-comments-on-mark-johnson-fraud-conviction-in-crimeline/

2nd November 2017

 ALTERNATIVES TO PROSECUTION IN AN AGE OF GLOBAL ENFORCEMENT

Law firm, White & Case, provides article outlining Global alternatives to prosecution when a corporate is facing a criminal investigation: including non-prosecution and deferred prosecution agreements.

https://www.whitecase.com/publications/insight/alternatives-prosecution-age-global-enforcement

AUSTRALIA: 2 MEN JAILED FOR FOREIGN BRIBERY OFFENCES INVOLVING PUBLIC OFFICIAL IN IRAQ

3 men sentenced to 4 years jail after pleading guilty in Australia’s second foreign bribery prosecution.  They were also fined $250,000 each.  They were convicted of conspiracy to bribe a public official in Iraq with over $1 million to provide a company unfair access to contracts for large-scale infrastructure construction projects.

In a separate case, 5 subsidiaries of an Australian engineering company banned from participating in World Bank projects for up to 30 months, following allegations of improper payments made in connection with projects in Sri Lanka and Bangladesh.

RUGGIE PRINCIPLES – RESPECTING HUMAN RIGHTS: A SNAPSHOT OF THE FRENCH LAW ON THE CORPORATE DUTY OF VIGILANCE

The “Ruggie Principles” (aka the Guiding Principles on Business and Human Rights: Implementing the United Nations ‘Protect, Respect and Remedy) may be the next “big thing” for compliance staff to worry about.  This article from Herbert Smith Freehills dated 31st October outlines the relevant French law with a neat infographic.  The law has attracted the attention of a number of stakeholders, both in France and abroad. With its unique set of penalties, it stands out from other foreign laws that address similar issues but are often viewed as less stringent.

https://www.herbertsmithfreehills.com/latest-thinking/respecting-human-rights-a-snapshot-of-the-french-law-on-the-corporate-duty-of

FINTECH INCREASES THE RISK OF FAILURE IN BANK COMPLIANCE AND AML

Herbert Smith Freehills reports that the Basel Committee on Banking Supervision published in August a consultation paper which considered the rapid adoption of technology-driven innovation in financial services (FinTech) and enabling technologies and how they may affect the banking industry and attributes of bank supervision. It notes the risk FinTech poses for banks in meeting compliance requirements, particularly AML/CFT obligations. The paper also notes that new areas of vulnerability may develop in light of cryptocurrencies and new technologies. Key observations and related recommendations on specific supervisory issues for banks and bank supervisors are considered. Comments on the paper were requested by 31st October.

See the consultation document at https://www.bis.org/bcbs/publ/d415.pdf

NCA ANNUAL REPORT ON SAR

On 11th October, the NCA published the annual report for 2017 on suspicious activity reports (SAR), for the period of October 2015 to March 2017.  It is reported that 634,113 SAR were made with the NCA witnessing a yearly increase. The report also discusses the realigned resources and structure of the UK FIU to successfully manage the receipt and processing of the increasing volume of SAR, as well as the impact of the Criminal Finances Act 2017.

Report at http://nationalcrimeagency.gov.uk/publications/suspicious-activity-reports-sars/826-suspicious-activity-reports-annual-report-2017

THE FUTURE OF THE UN COUNTER-TERRORISM COMMITTEE AND ITS EXECUTIVE DIRECTORATE

The UN Security Council Counter-Terrorism Committee Executive Directorate (CTED) was established in 2004 (its mandate expires at the end of 2017 but is expected to be renewed).  Its core mission of supporting the Counter-Terrorism Committee (CTC) in monitoring the implementation of counterterrorism obligations required by UN SCR 1373 – the counter-terrorism measure passed following the 9/11 terrorist attacks on the US and was adopted under Chapter VII of the UN Charter, and therefore binding on all member states.  CTED facilitates technical assistance to member states to aid their implementation activities. Since 2004, its mandate has expanded considerably in response to the evolution of the threat and the increased number of stakeholders benefiting from CTED assessments and analyses, including UN member states in general, regional and functional organisations, and other counterterrorism-relevant entities inside and outside the UN system.

A brief from US-based think-tank, Global Center, looks at the role of the CTED in light of the need to maintain and strengthen its comparative advantage in assessing member states’ counterterrorism efforts while addressing emerging threats of terrorism and aligning its working methodologies with these developments. It also assesses what CTED and the CTC can do to enhance co-ordination with partners within and outside the UN system.  It then examines the benefits and limitations of CTED’s outputs in relation to its mandate, comparative advantage, capacity, and impact. It concludes by offering some ideas and recommendations for the UN Security Council, the CTC, and CTED to consider for the next 4 years and beyond.

http://www.globalcenter.org/publications/mission-critical-or-mission-creep-issues-to-consider-for-the-future-of-the-un-counter-terrorism-committee-and-its-executive-directorate/

MALTA: RELATIVES OF FORMER EU COMMISSIONER SAID TO BE FACING CHARGES OF MONEY LAUNDERING

Malta media report that former EU Commissioner John Dalli’s 2 daughters, along with 4 other foreign nationals, are expected to be arraigned in court, where they will face several charges related to money laundering.  Malta Independent reports that all 6 are to be charged with money laundering, misappropriation of funds, fraud, making a false declaration to a public authority, falsifications of documents and the use of said documents.

http://www.independent.com.mt/articles/2017-11-02/local-news/John-Dalli-s-daughters-four-others-to-be-charged-with-money-laundering-6736180973?src=ilaw

FINCEN PENALISES TEXAS BANK FOR VIOLATIONS OF AML LAWS FOCUSING ON DUE DILIGENCE VIOLATIONS

FinCEN announced the assessment of a $2 million civil money penalty against Lone Star National Bank of Pharr, Texas for willfully violating the Bank Secrecy Act (BSA). The action underscores the dangers that institutions face when taking on international correspondence activities without properly equipping themselves to manage such business. As noted in FinCEN’s assessment, among other lapses, Lone Star failed to comply with section 312 of the USA PATRIOT Act, which imposes specific due diligence obligations with respect to correspondent banking.

https://www.fincen.gov/news/news-releases/fincen-penalizes-texas-bank-violations-anti-money-laundering-laws-focusing

INSIGHT CRIME FEATURE ON PANAMA

Dating from July 2016, nevertheless this article provides a handy briefing on Panama and its connections to the drugs trade and trafficking (and of particular personal interest to me, for obvious reasons).  It has its own street gangs (pandillas), though nothing like that found in other Central American countries.

http://www.insightcrime.org/panama-organized-crime-news/panama

THE REVOLUTIONARY GUARD – IRAN’S “FOREIGN LEGION”

Article from Israel-based INSS (Institute for National Security Studies) re Iran’s military intervention in Syria saying that it offered Tehran another tool to promote its influence and interests in the region: the Shiite militias organized by the Iranian Quds Force and Revolutionary Guards.

See also BBC podcast below

http://www.inss.org.il/publication/?ptype=401

HOW NORTH KOREA WAS ARMED – ANALYSIS

Eurasia article analysing how DPRK got its missiles and propellants etc, its smuggling network, the connections with Pakistan and Burma/Myanmar.  By a Senior Fellow at the Institute for Defence Studies and Analyses in India, which also published the analysis-

https://idsa.in/issuebrief/how-north-korea-was-armed_prao_301017

See also –

THE SECRET TO NORTH KOREA’S ICBM SUCCESS

14th August: article from the International Institute for Strategic Studies re the “astounding strides” made by DPRK missile programme in the previous 2 years.

http://www.iiss.org/en/iiss%20voices/blogsections/iiss-voices-2017-adeb/august-2b48/north-korea-icbm-success-3abb

RISKY BUSINESS: A SYSTEM-LEVEL ANALYSIS OF THE NORTH KOREAN PROLIFERATION FINANCING SYSTEM

June 2017 report from C4ADS, a US-based non-profit organisation providing data-driven analysis and evidence-based reporting on global conflict and transnational security issues.  It is follow-up investigation to C4ADS’ August 2016 report, “In China’s Shadow”. Using actual example cases, with diagrams, it aims to demonstrate the effectiveness of using open data to continue to map and expose North Korean overseas networks.

https://c4ads.org/risky-business/

“In China’s Shadow” – This 2016 report is the product of a 6-month long collaboration between the C4ADS and the Asian Institute for Policy Studies to identify financial vulnerabilities of the DPRK by using cutting edge data mining methodology and network-centric analysis.  Overseas networks are vital conduits of hard currency for the North Korean regime that remain exposed and vulnerable. Overseas North Korean agents and entities depend on a range of third-party facilitators for core business operations.

https://raytoddblog.files.wordpress.com/2017/11/841b6-inchina27sshadow.pdf

 

3rd November 2017

 COUNCIL OF EUROPE REPORT ON CORRUPTION IN ANDORRA

Council of Europe’s anti-corruption body (GRECO) concludes that Andorra’s framework to prevent corruption amongst members of parliament, judges and prosecutors is generally satisfactory, but calls for a number of improvements.  The implementation of the 13 recommendations addressed to the Principality of Andorra will be assessed by GRECO through its compliance procedure, during the first semester of 2019.

https://search.coe.int/directorate_of_communications/Pages/result_details.aspx?ObjectId=0900001680763029

CHINA TO BAN IMPORTS OF PLASTIC WASTE

What happens when an unstoppable force meets an immovable object? With EU production of plastic waste showing no sign of slowing down and China – the world’s biggest importer of plastic waste – set to ban imports, we’re about to find out, argues Meadhbh Bolger, a member of the Rethink Plastic Alliance.  A EurActiv article says that plastic recycling rates in the EU are on the rise – jumping to 30% in 2015 from 19% in 2007 but 40% of plastics collected for recycling in the EU are exported, mainly to Asian countries where they are often recycled under at lower standards.  Exports increased by a massive 413% between 2002 and 2015, with the vast majority (87% in 2012) ending up in China. The Chinese government announced in July 2017 that it will ban plastic waste imports from 2018, saying it would to reduce waste smuggling and strengthen recycling of their domestic waste.

http://www.euractiv.com/section/circular-economy/opinion/china-is-no-longer-the-eus-plastic-dumping-ground-whats-next/

US BANS CHINESE BANK OVER NORTH KOREA TIES

The US has excluded China’s Bank of Dandong from its financial system on 2nd November, alleging that it has helped North Korea evade financial sanctions to launder funds. Washington had alerted other businesses in June that it planned to take the action, the South China Morning Post reports.

https://www.fincen.gov/news/news-releases/fincen-further-restricts-north-koreas-access-us-financial-system-and-warns-us

BBC VIDEO: SUDANESE INNOVATIONS UNDER US SANCTIONS

The US has recently lifted most of the economic sanctions imposed on Sudan in the 1990s, which have made it difficult for some businesses to function.  But over the past 2 decades, the absence of international companies has prompted innovations at home as Sudanese come up with their own solutions to meet the local demand.

http://www.bbc.co.uk/news/av/world-africa-41845206/sudanese-innovations-under-us-sanctions?src=ilaw

BBC PODCAST: HOW POWERFUL IS THE IRANIAN REVOLUTIONARY GUARD CORPS?

Radio 4 “The Inquiry” – The group started as an army to protect the values of the Iranian revolution of 1979, but their role in fighting a long and brutal war with Iraq strengthened their military clout considerably. Today their forces work beyond their borders and have played a key role in the fight against so-called Islamic State. But they are no longer just an army, they run construction projects, run most of the telecommunications industry and even have a news agency. So how powerful is the Islamic Revolutionary Guard Corps?

http://www.bbc.co.uk/programmes/w3csvsy7#play

UK MINISTRY OF JUSTICE BLOG: INCREASING TRUST IN CRIMINAL EVIDENCE WITH BLOCKCHAINS

As digital evidence such as documents, emails, and video footage becomes more and more important, there is a need need to make sure that procedures and mechanisms for verifying the integrity of this evidence are kept up to date and appropriate for a modern digital society.

Consider a near future in which every police officer carries a video camera that records evidence throughout their shift. If this were rolled out nationally, this could easily produce around a petabyte (1 quadrillion short scale bytes, or 1 billiard long scale bytes) of data per day.

All this data would need to be stored, managed, catalogued, and made retrievable. In a world where the majority of people have high-quality video editing software available on their phone, maintaining trust in the integrity of this data is a complex and extremely important problem.

https://mojdigital.blog.gov.uk/2017/11/02/increasing-trust-in-criminal-evidence-with-blockchains/

THE UN CONVENTION ON THE LAW OF THE SEA (UNCLOS) AND THE LEGAL STATUS OF AREAS OF SEA

Taken from the UK MoD Joint Doctrine Publication 0-10: UK maritime power (fifth edition)

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/656618/doctrine_uk_maritime_power_jdp_0_10.pdf

DOUGHNUT PIONEER CHARGED WITH $30M TAX FRAUD OVER FUNDS ALLEGEDLY HIDDEN IN JERSEY

Bailiwick Express reports that 76-year-old businessman John Kinghorn, behind the Krispy Kreme Donut franchise to Australia and founded RAMS Home Loans, was charged in Australia with tax fraud and deceiving a commonwealth public official, involving use of 2 Jersey companies – Kalomo Corporation and Kalomo Pacific Leasing.

28 YEAR SENTENCES FOR NETWORK THAT USED CORRUPT BANKER TO LAUNDER MILLIONS

5 men have been jailed for a total of 28 years for their roles in a network responsible for laundering at least £6.9 million stolen by international cyber criminals, following an investigation by NCA.  Iurie Mereacre, a 37-year-old Moldovan national, ran the money laundering service from his home in London, along with his.  Over a 3-year period, the group set up and controlled around 400 bank accounts in a conspiracy which involved receiving stolen funds into one account, then dispersing it in smaller amounts to a number of other accounts. This process would be repeated several times to disguise the source of the money before it was transferred back to cyber criminals in Eastern Europe.  Nilesh Sheth, 53, a personal banking manager at Barclays, was instrumental in the opening of a large number of these accounts, known as ‘mule’ accounts, using false ID and address documents.

http://www.nationalcrimeagency.gov.uk/news/1192-crime-group-used-corrupt-banking-insider-to-launder-16million

PANAMA CONVICTION IN CASE LINKED TO MOSSACK FONSECA

An unnamed Panama City banker has apparently agreed to plead guilty, and receive a 5-year sentence. The case involved is part of the Petroecuador corruption scandal. Petroecuador is a state-owned oil company and the national oil company of Ecuador.

See also article on arrest of Marcelo Reyes Lopez, 53, a former contracts executive with state-owned Petroecuador, in South Florida; Federal prosecutors are seeking to seize 4 homes, an apartment building and a motel in Miami-Dade and Broward counties following the indictment

http://www.riskandcompliancehub.com/money-laundering-indictment-of-former-ecuadorian-oil-executive-targets-six-south-florida-properties/

UN GENERAL ASSEMBLY VOTE CALLS FOR END TO US EMBARGO ON CUBA

The UN General Assembly has adopted a resolution calling for an end to the US trade embargo on Cuba.  191 member states approved the non-binding resolution, with the US and Israel voted against it.

UK INVESTIGATIONS INTO LINKS TO SOUTH AFRIACN GUPTA SCANDAL

The FCA and NCA have opened an investigation into whether certain banks had been exposed to transactions involving individuals and funds linked to the Gupta family and South African President Jacob Zuma.  President Zuma and the Guptas are the subject of an anti-corruption inquiry in South Africa, due to allegations that the Guptas had bought influence over the government.

BOMBARDIER EMPLOYEE IN SWEDEN CLEARED IN CORRUPTION CASE

On October 11th, a Swedish court acquitted Evgeny Pavlov, a Russian employee of Bombardier Transportation Sweden AB.  He had been accused of aggravated bribery for allegedly bribing a government official in Azerbaijan in 2013 to win a contract for a train.

FORMER HEAD OF KOREAN AIRCRAFT COMPANY CHARGED IN CORRUPTION CASE

Ha Seong-yong, ex- CEO of aircraft manufacturer, Korea Aerospace Industries (KAI), arrested and charged with accounting fraud, embezzlement and bribery.

CHINA’S ANTI-CORRUPTION CRACKDOWN AND THE FOREIGN CORRUPT PRACTICES ACT

 

Paper by Daniel C. K. Chow of the Ohio State University College of Law considers if the highly publicized crackdown on corruption in China may affect the type and number of cases in China that arise under the US Foreign Corrupt Practices Act (FCPA), and says that it should not be assumed that the crackdown will lead to fewer FCPA prosecutions. Although there is some overlap of the goals of China’s crackdown and the FCPA, China’s crackdown also serves other important goals of the ruling Communist Party.

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3055688

FINCEN ADVISORY ON NORTH KOREA’S USE OF THE INTERNATIONAL FINANCIAL SYSTEM

North Korea uses front and trade companies to disguise, move, and launder funds to finance its nuclear and ballistic missile programmes.  This Advisory provides some “red flags” that might indicate DPRK activity, and what requirements and potential offences affect US financial institutions.

https://www.fincen.gov/sites/default/files/advisory/2017-11-02/DPRK%20Advisory%20FINAL%20508%20C.pdf

Advisory includes the following diagram outlining the use of front companies by DPRK –

It refers to the UN Panel of experts Report of 2016 UN Report which notes that North Korean state-owned enterprises typically orchestrate elaborate trade-based payment schemes.  It does this, for example by:

(1)  The Sale/Export of Natural Resources:  The DPRK sells/exports natural resources (e.g., coal, iron ore, and minerals) to China-based companies, often located near the North Korean border, such as in Liaoning province. (UN SCR 2371 prohibits imports of North Korean coal, iron and iron ore, lead and lead ore, and seafood.  UN SCR 2375 prohibits imports of textiles, among other new measures).   The Chinese companies, in turn, sell such natural resources to the Asian market.

(2)  Indirect Payment for Natural Resources:  Rather than directly paying the DPRK, China-based companies divide their payments into smaller outflows in a complex layering scheme directed to front companies, shell companies, shipping or trade businesses based in Asia (often registered in Hong Kong), and other companies based in various offshore jurisdictions (e.g., BVI, Marshall Islands, and the Seychelles).  Various financial representatives and corporate service providers may establish the front or shell companies or serve as representatives of the various involved entities.

(3)  The Import/Smuggling of Goods:  The front or shell companies then use the received payments to purchase and ship commodities to the DPRK.  These commodity shipments in turn may be used to smuggle goods that the North Korean government uses to build its WMD and ballistic missile programmes.

BURUNDI WITHDRAWS FROM THE INTERNATIONAL CRIMINAL COURT

On October 27th, Burundi became the first State Party to withdraw from the Rome Treaty creating the International Criminal Court (ICC), in accordance with the provisions of Article 127.  See article on Jurist –

http://www.jurist.org/forum/2017/11/the-icc-post-withdrawal-jurisdiction-on-burundi.php

PRIVY COUNCIL CAUTIONS ON ATTEMPTS TO PIERCE THE “CORPORATE VEIL”

In a case referred to the Judicial Committee of the Privy Council from Trinidad & Tobago, the court ruled that the sole director’s actions could not justify ‘piercing corporate veil’; and Lord Neuberger said that the ability to look beyond the company’s legal status and to hold a director personally liable needed more than to merely claim that the company was a ‘front’.

https://www.out-law.com/en/articles/2017/october/sole-directors-actions-could-not-justify-piercing-corporate-veil-privy-council-rules/

STARTLING MAPS SHOW EVERY TERRORIST ATTACK WORLDWIDE OVER THE LAST 20 YEARS

Data from the Global Terrorism Database compiled into a stunning data visualisation puts 2 decades of terrorist activity into startling perspective.  See Independent article –

http://www.independent.co.uk/news/world/terror-attacks-map-worldwide-last-20-years-a8033261.html

WOMAN IN IRELAND OPENED 7 CREDIT UNION ACCOUNTS TO WITHDRAW MONEY LODGED FROM UK USING ‘COMPROMISED’ CARDS

A mother-of-6 has received a th3-ee year suspended sentence for her role in a complex money laundering operation involving her home country of Nigeria, Ireland and the UK.

Oyindamola Ojo (37) opened 7 credit union accounts in 3 Irish counties to withdraw money lodged from the UK using “compromised” debit and credit cards.  She claimed an ex-partner got her involved in the operation and that she had acted out of fear for the safety of her 3 Nigeria-based children.

https://www.irishtimes.com/news/crime-and-law/courts/circuit-court/woman-37-involved-in-money-laundering-gets-suspended-sentence-1.3277005

GANGSTER TOMMY ADAMS JAILED FOR 7 YEARS FOR MONEY LAUNDERING

Tommy Adams, the youngest of 3 brothers who headed the infamous Adams family in London, was caught after police bugged a cafe where he discussed his crimes with associates.  The case, in which cash was ferried around the UK in taxis and trains.

DEVASTATING IMPACT OF AN UNPRECEDENTED OFAC DESIGNATION – OFAC AND THE LISTING OF PACNET

Last year, without warning, filed charges or arrests, prominent payment processor and Ifrah Law client PacNet was targeted by the Treasury Department’s Office of Foreign Assets Control, which placed the company on the same list it uses to designate terrorist or organized crime entities like MS-13. An article in The American Lawyer, The Feds Destroyed His Client’s Company—And for What?, describes the case as one of clear government overreach, showing “an ominous willingness by the feds to use this new tool in a way that seems to take it far beyond the original intent, with devastating consequences for the target.”

https://www.ifrahlaw.com/news/american-lawyer-quotes-jeff-ifrah-devastating-impact-unprecedented-ofac-designation/

CONSULTATION ON NEW DRAFT RULES FOR DISCLOSURE IN CIVIL COURT CASES

Master of the Rolls, Sir Terence Etherton, has announced the publication of a new draft rule for disclosure in civil proceedings in England and Wales. This follows the formation, in May 2016, of a Disclosure Working Group in response to widespread concerns expressed by court users and the profession regarding the perceived excessive costs, scale and complexity of disclosure.

http://www.elexica.com/en/legal-topics/dispute-resolution-commercial/011117-new-draft-rule-on-disclosure-unveiled

AUDITORS WARNED DANSKE BANK ABOUT DODGY CLIENTS, MONEY LAUNDERING

OCCRP (Organized Crime and Reporting Project) reports that Danish newspaper Berlingske claims Denmark’s biggest bank, Danske Bank, is alleged to have actively and knowingly helped highly questionable clients to elude the scrutiny of authorities.  Reporters at Berlingske obtained a letter sent in February 2014 by Danske Bank’s internal auditors to two members of the bank’s executive board. The letter reportedly states that the Estonian branch of the Danske Bank had acted in clear breach of money-laundering regulations.  The letter comes on the heels of the Azerbaijani Laundromat investigation by OCCRP and media partners.

The journalists found that from 2012 to 2014, Azerbaijan ran a secret US$ 2.9 billion slush fund through 4 shell companies registered in the UK, using the cash to pay off influential Europeans to burnish the image of Azerbaijan’s ruling regime.

Danske Bank’s Estonian branch had merely registered the accounts of all 4 companies as belonging to British shell companies, which the auditors considered “inadequate” documentation under the AML regulations.

https://www.occrp.org/en/azerbaijanilaundromat/auditors-warned-danske-bank-about-dodgy-clients-money-laundering

CANADA HAS IMPOSED NEW SANCTIONS AGAINST OFFICIALS FROM RUSSIA, VENEZUELA AND SOUTH SUDAN.

BBC reports that Canada has designated 52 individuals for human rights violations or “significant corruption”.  30 Russian officials represent the first sanctions imposed under Canada’s so-called Magnitsky Act, named for the Russian lawyer Canada says were linked to the prison death of Russian whistleblower Sergei Magnitsky in 2009.

See the BBC Q&A on the Magnitsky affair –

http://www.bbc.co.uk/news/world-europe-20626960

19 Venezuelans, including President Nicolás Maduro, were also designated, together with 3 senior officials from South Sudan, including the country’s former army chief Paul Malong.

http://www.bbc.co.uk/news/world-us-canada-41838832?src=ilaw

CHEATSHEET: WHAT YOU NEED TO KNOW ABOUT “INFLUENCER FRAUD

Influencer marketing fraud is a growing problem in an industry valued at over $1 billion. Influencers — essentially social media stars with large followings — are attractive to marketers for the notion they’re more “authentic” than regular ad buys. But some of that authenticity is fake.

https://digiday.com/marketing/cheatsheet-need-know-influencer-fraud/

MONEY LAUNDERER’S FAMILY CLAIM: “WE WON THE LOTTO…123 TIMES”

The father of a convicted money launderer bought a £412,000 house with money he claimed he won with 123 prize-winning tickets in the Pakistan lottery.  Malik Abdullah Farooq, 81, said he enjoyed the incredible run of fortune on the Pakistan Prize Bond Draw between July 2012 and February 2013.  NCA employed an expert statistician who said Farooq’s good luck was as likely as winning the UK National Lottery jackpot 40 weeks running.  Farooq and his son, Kashaf Ali Khan, 44, both made the claims when they were arrested in September and October 2014.

Khan, from Birmingham, later admitted money laundering by using criminal money to buy the house.  He also admitted a second money laundering count in relation to paying a £175,000 confiscation order – given after an earlier money laundering conviction in 2010 – with criminal cash.

http://www.nationalcrimeagency.gov.uk/news/1235-nca-how-did-you-buy-the-400k-house-money-launderer-s-family-we-won-the-lotto-123-times

ANALYSIS OF THE TELIA FCPA CASE

The recent settlement by Telia Company AB, the first reached with the DoJ under the Trump administration and one of the largest FCPA enforcement actions to date, has been touted by some as a sign that enforcement will remain tough.   Law firm, Orrick, analyses the case –

https://www.jdsupra.com/legalnews/breaking-down-telia-one-of-the-largest-44774/

FRAUD MAY JUSTIFY ‘COLLATERAL USE’ OF DOCUMENTS IN MULTIPLE SETS OF CIVIL PROCEEDINGS, HIGH COURT RULES

The “strong public interest” in pursuing claims for fraud, bribery and corruption may justify allowing the use of documents obtained in one set of legal proceedings in a different set of proceedings, the High Court in England has ruled in the Libyan Investment Authority cases.

The Civil Procedure Rules (CPR) restrict what is known as the ‘collateral use’ of documents without the consent of the other party to cases in which the court gives permission, which it will only do in “special circumstances”. Parties can therefore come up against a tricky procedural hurdle where they consider that documents disclosed by other parties could be useful in establishing or progressing proceedings against another party.

https://www.out-law.com/en/articles/2017/november/fraud-may-justify-collateral-use-of-documents-in-multiple-sets-of-civil-proceedings-court-rules/

HISTORIC AGREEMENT BETWEEN COLOMBIA AND UNODC CAN HELP FARMERS EMBRACE ALTERNATIVES TO COCA CULTIVATION

Colombia and the UN Office on Drugs and Crime (UNODC) have signed a historic agreement, valued at around US$315 million, to monitor the country’s policy to reduce illicit crops and to strengthen rural development, as a crucial part of the country’s ongoing peace-building efforts.

THE SHADOWY WORLD OF TIMBER SMUGGLING BETWEEN MYANMAR & CHINA

Along Myanmar’s restive border with China in Northern Shan State, timber smuggling law enforcement officers employ mobile checkpoints to seize illegal wood from untold numbers of smugglers.

China is the world’s largest importer of logs and wood pulp, it imported 48.7 million cubic meters of logs in 2016 – an increase of 9% over 2015, with most logs coming from Russia, USA, New Zealand and Canada, according to the official China Customs statistics website.  A MoU was signed between Myanmar and China in April 2017..

https://news.mongabay.com/2017/10/checkpoint-china-the-shadowy-world-of-timber-smuggling/

DRAFT REPORT PRESENTS EU COMMITTEE’S FINDINGS ON DISCREPANCIES BETWEEN THE PRACTICES REVEALED IN THE PANAMA PAPERS AND EU LAW

The draft inquiry report published on 19th October presents findings of the EU PANA Committee on money laundering, tax avoidance and tax evasion on discrepancies between the practices revealed in the Panama Papers and EU law, notably the Directives on Anti-money Laundering (AMLD) and on Administrative Co-operation in the field of Taxation (DAC). This report includes a factual part collecting and analysing the evidence taken into account by the Committee to arrive at its findings as well as the conclusions identifying contraventions of EU law and instances of maladministration.

http://www.europarl.europa.eu/committees/en/pana/publications.html#

CRIME GANG SMUGGLED AFRICANS INTO FINLAND FROM RUSSIA

Finnish authorities believe that a Russian crime syndicate took advantage of a wave of asylum seekers entering Finland in late 2015 and early 2016 to smuggle in Africans who paid more than €2,500 each for the service.

https://yle.fi/uutiset/osasto/news/border_guard_crime_gang_smuggled_africans_into_finland_from_russia/9915684

ITALIAN MAFIA AND IS COLLABORATE TO TRAFFIC DRUGS: MILLIONS OF OPIOD TABLETS BOUND FOR LIBYA ARE SEIZED

IBT Times reports that Italian police have seized more than 24 million opioid tablets destined for Isis militants.  A local prosecutor believes the Ndrangheta may be connected to the €50 million drug deal.

Tramadol is a popular drug with jihadi fighters as it suppresses fear and hunger.  The pills have a face value of around €2, making the batch worth almost €50 million, Italian court documents claimed.

Tramadol – an opioid painkiller – is sometimes referred to as the “fighter drug” because it represses fear and hunger. It becomes a potent amphetamine when mixed with caffeine.

http://www.ibtimes.co.uk/italian-mafia-isis-collaborate-traffic-drugs-millions-opioid-tablets-bound-libya-seized-1645871

WILDLIFE TRAFFIKCING IN THE AIR TRANSPORT SECTOR

Wildlife trafficking is one of the most prominent forms of international organized crime in the world, ranking just behind drugs, human, and arms trafficking.  A May 2017 report from C4ADS examines wildlife trafficking through the air transport sector, and is designed to support law enforcement and the private sector’s efforts to stem the hidden flow of illegal wildlife through their jurisdictions and supply chains.  The report is divided into 3 main section s-

  • Trends and Totals examines the overall conclusions that can be drawn from the seizure data contained within the C4ADS Air Seizure Database, such as the changes in seizure sizes over time, a Country Enforcement Index for countries involved in 20 or more trafficking instances, and an analysis of the number of trafficking instances per country.
  • Airports and Routes maps out the international and domestic transit routes that appear in our data, evaluates countries’ roles in different illicit wildlife supply chains, and assesses airport seizure numbers.
  • Modus Operandi details the common methods used by traffickers, as well as methods that seem to be specific to one category of wildlife and wildlife products.

https://c4ads.org/routes

CATALAN CASE MAY PROMPT REVIEW OF EUROPEAN ARREST WARRANTS

Politico reports that attempts to use a European Arrest Warrant to return the departed Catalan leader to Spain may run into delays or even be rejected, and that appeals may still be ongoing when a fresh Catalan referendum is taking place.

https://www.politico.eu/article/carles-puigdemont-brussels-stay-spanish-arrest-warrant/?utm_source=POLITICO.EU&utm_campaign=bc95021834-EMAIL_CAMPAIGN_2017_11_04&utm_medium=email&utm_term=0_10959edeb5-bc95021834-190081609

For information on the European Arrest Warrant system see –

http://ec.europa.eu/justice/criminal/recognition-decision/european-arrest-warrant/index_en.htm?utm_source=POLITICO.EU&utm_campaign=bc95021834-EMAIL_CAMPAIGN_2017_11_04&utm_medium=email&utm_term=0_10959edeb5-bc95021834-190081609

OUTCOMES OF JOINT FATF/GAFILAT PLENARY

On 1st to 3rd November FATF and GAFILAT (formerly known as Financial Action Task Force of South America or GAFISUD) held a joint plenary in Argentina.  The outcomes included –

  • approval of a statement about the proliferation financing risk emanating from the Democratic People’s Republic of Korea, stressing global obligations and the importance of robust implementation of the FATF standards and relevant UN Security Council Resolutions;
  • adoption of a report on the financing of recruitment for terrorist purposes – the Plenary discussed and adopted a report, The Financing of Recruitment for Terrorist Purposes.  The report sets out how terrorist organisations fund the recruitment of new members. Following a period of direct engagement with selected stakeholders, the FATF will publish the report;
  • adoption of revisions to Recommendations 18 and 21 on information sharing, and the adoption of guidance on private sector information sharing – FATF has agreed on revisions to the Interpretive Note on Recommendation 18 to clarify the requirements on sharing of information related to unusual or suspicious transactions within financial groups. This also includes providing this information to branches and subsidiaries when necessary for AML/CFT risk management.  The FATF also adopted revisions to Recommendation 21 to clarify the interaction of these requirements with tipping-off provisions.  The FATF adopted Guidance on Private Sector Information Sharing, which identifies the key challenges that inhibit sharing of information to manage AML/CFT risks, both group-wide within financial groups, and between financial institutions which are not part of the same group. It articulates how the FATF standards on information sharing apply and highlights examples of how authorities can facilitate the sharing of information, as well as examples of constructive engagement between the public and the private sectors;
  • adoption of a supplement to the 2013 FATF Guidance on AML/CFT Measures and Financial Inclusion;
  • call for Brazil to fulfil its FATF membership commitment by taking further action to fully address its identified shortcomings. As the next step in its follow-up process, Brazil has committed to an action plan for addressing the remaining deficiencies in its regime for implementing targeted financial sanctions. Should Brazil continue to fail to adequately rectify these deficiencies, in line with its action plan, the FATF will consider further steps in its follow-up process;
  • considered progress on the 2016 Action Plan agreed with Iran (with the suspension of countermeasures against Iran being renewed in June 2017) and the FATF urged Iran to proceed swiftly in the reform path to ensure full and accurate implementation of the Action Plan, addressing all remaining AML/CFT deficiencies, in particular those related to terrorist financing. At its February 2018 meeting, FATF will assess progress made by Iran and take all appropriate action

http://www.fatf-gafi.org/publications/high-riskandnon-cooperativejurisdictions/documents/public-statement-november-2017.html

  • adopted revisions to the Methodology for assessing compliance with the FATF Recommendations.  These revisions clarify how assessors should determine whether legal arrangements have a similar structure or function as trusts and are, therefore, within the scope of the FATF standards on legal arrangements (Recommendation 25), and update the assessment criteria for proliferation-related targeted financial sanctions to bring the Methodology fully into line with the recent revisions to the FATF standards in this area (Recommendation 7).

http://www.fatf-gafi.org/publications/fatfgeneral/documents/outcomes-plenary-november-2017.html

Update on high-risk and on-cooperative jurisdictions-

Jurisdictions with strategic deficiencies Jurisdictions no longer subject to the FATF’s on-going global AML/CFT compliance process
Bosnia and Herzegovina Ethiopia Iraq Sri Lanka Syria Trinidad and Tobago Tunisia Vanuatu Yemen Uganda

http://www.fatf-gafi.org/publications/high-riskandnon-cooperativejurisdictions/documents/fatf-compliance-november-2017.html

 NEW FATF GUIDANCE ON INFORMATION-SHARING

The finalised guidance aims to improve effective information sharing, one of the cornerstones of the FATF Recommendations.  It contains a number of country examples, including examples of collaboration with authorities responsible for data protection and privacy.

http://www.fatf-gafi.org/publications/fatfrecommendations/documents/guidance-information-sharing.html

UPDATED FATF GUIDANCE ON AML/CFT MEASURES AND FINANCIAL INCLUSION, WITH A SUPPLEMENT ON CUSTOMER DUE DILIGENCE

This 2017 supplement to the 2013 guidance provides country examples of customer due diligence measures adapted to the context of financial inclusion. Those examples illustrate how a simplified set of CDD measures or alternative forms of identity verification, for example the use of e-identity tools, can support financial inclusion, while appropriately mitigating the ML/TF risks.

The objective of this updated report is to encourage countries to make use of FATF Recommendations’ flexibility to provide sound financial services to the financially excluded.

http://www.fatf-gafi.org/publications/financialinclusion/documents/financial-inclusion-cdd-2017.html

FATF STATEMENT ON NORTH KOREA (DPRK)

http://www.fatf-gafi.org/publications/high-riskandnon-cooperativejurisdictions/documents/statement-dprk-nov-2017.html

Full statement on DPRK and Iran –

http://www.fatf-gafi.org/publications/high-riskandnon-cooperativejurisdictions/documents/public-statement-november-2017.html

US WITHDRAWS FROM EXTRACTIVE INDUSTRIES ANTI-CORRUPTION INITIATIVE (EITI)

Ekklesia reports that the US Department of Interior has announced that the US will withdraw from implementing the Extractive Industries Transparency Initiative (EITI), a global anti-corruption programme for the oil, gas and mining sector.   Founded in 2003, EITI is a multi-stakeholder programme that sets reporting standards for governments and companies to crack down on corruption linked to state-owned oil, gas, and mining assets. It currently has 52 implementing countries, including resource-rich nations in sub-Saharan Africa, Latin America, and Asia. The initiative also has 16 supporting countries, mainly from the global north.

The move was described as an inevitable result of the insistence of major US oil companies ExxonMobil and Chevron on keeping their US tax payments secret. In addition, earlier this year, these companies led the attack on a related US regulation that required extractive companies to publish their payments to governments around the world.

A key provision of EITI required companies to disclose payments made to foreign governments and in 2010, the US Congress passed a financial-reform law that required oil and gas companies listed on US stock exchanges to reveal all such payments.

http://www.ekklesia.co.uk/node/24560?src=ilaw

https://www.rferl.org/a/us-withdraws-global-anticorruption-initiative/28834084.html?src=ilaw

On 7th November, devex.com published an article looking at what the US exit from EITI meant for developing countries.

https://www.devex.com/news/what-does-the-us-exit-from-eiti-mean-for-developing-countries-91458?src=ilaw

ARGENTINA FORMER VICE-PRESIDENT ARRESTED

BBC reports 4th November that Argentine police have arrested a second high-level official in the administration of former President Cristina Fernandez on suspicion of corruption.  Amado Boudou was her economy minister and vice-president and faces three charges of “illicit enrichment” dating back to 2009.  Last month Mrs Fernandez’s former planning minister was arrested.  Amado Boudou has denied any wrong-doing.

http://www.bbc.co.uk/news/world-latin-america-41867239?src=ilaw

FIFA TRIAL TO SHOW REACH OF US GOVERNMENT IN CORRUPTION PROBES

3 former South American soccer officials go on trial in Brooklyn in the US government’s sprawling FIFA corruption probe, a trial that the sports world should watch closely for hints about how far the US is willing to go to root out corruption in sports leagues.

US TAX REFORM PROPOSAL INCLUDES PROVISIONS ON CROSS-BORDER BUSINESS

Sandler Travis Rosenberg reports that a tax reform proposal unveiled by the US House of Representatives on November 2nd includes several provisions that would affect the international trade community.

http://www.strtrade.com/news-publications-tax-reform-cross-border-business-110617.html

CAN CHINESE BANKS IDENTIFY NORTH KOREAN SANCTIONS EVADERS?

Bulletin of Atomic Scientists article from 4th October, analysing the situation but saying that evading sanctions is easy; identifying sanctions-evaders is tough, and North Korea has developed expertise in understanding sanctions-evasion techniques, as well as locating the gaps in banking compliance and due diligence—items which it has continuously used to its advantage.  While a risk-based approach is meant to be flexible, banks generally perceive national authorities to take a zero-tolerance approach to sanctions compliance especially the United States. Political rhetoric and non-specific guidance about the use of secondary sanctions only serve to stoke these fears

https://thebulletin.org/can-chinese-banks-identify-north-korean-sanctions-evaders11161

 

4th November 2017

 RED CROSS LOST $6 MILLION TO FRAUD DURING EBOLA OUTBREAK

The Red Cross has uncovered several cases of fraud by officials during efforts to combat the Ebola outbreak that struck West Africa in 2014-2016, estimating losses of $6 million.

Sierra Leone – found evidence of “likely collusion” between former employees and a bank, leading to a potential loss of $2.1 million.

Guinea – overbilling and fake invoices by a provider of customs clearance services cost organisation $1.2 million – 2 other investigations in the country are under way.

Liberia – inflated prices for relief items and payroll costs cost it $2.7 million.

http://www.sbs.com.au/news/article/2017/11/05/red-cross-admits-six-million-dollars-lost-fraud-during-ebola-crisis?src=ilaw

LIBYAN SMUGGLING: ITALY SEIZES LIBYAN SHIP

On 26th October Italian police seized more than 100 tonnes of contraband diesel from a ship flying a Togolese flag which set sail from Libya. The fuel was contained in several hidden cisterns, together with some 11 tonnes of contraband cigarettes, The 25-year-old Indonesian captain was arrested.  The ship was intercepted in Sicilian waters and prosecutors are still investigating exactly where the fuel was taken from and where it was intended to be sold.

Last month Sicilian police arrested 6 people, including a suspected mobster, and issued warrants for 3 others for running a Libyan fuel-smuggling ring in which at least €30 million of diesel was sold in gas stations in Italy and Europe.

SHIPPING CONTAINER FULL OF FAKE DESIGNER TRAINERS UNCOVERED IN FACTORY IN GREATER MANCHESTER

Manchester Evening News reports that a counterfeit goods factory full of counterfeit designer trainers uncovered in Tameside on 3rd November.  The huge haul, which includes fake Nike and Adidas shoes, was discovered in a warehouse in Hyde, together with a printing press, and equipment for adding false labels.

US CUSTOMS SEIZES HALF MILLION COUNTERFEIT CURRENCY AT ATLANTA AIRPORT

US Customs and Border Protection (CBP) officers at Hartsfield-Jackson Atlanta International Airport intercepted $509,700 in counterfeit US $100 bills that a 62-year-old US Citizen arriving from Peru attempted to hide in his luggage.

DUTCH PENSIONERS ARRESTED SMUGGLING 100 KG OF HASHISH INTO NORWAY

A Dutch retired couple have been arrested in Norway for trying to smuggle 100 kg of cannabis into the country, according to Norwegian media reports. The couple, a man aged 68 and a woman aged 75, had hidden the drugs throughout their car. They were caught following a tip-off trying to enter Norway after travelling by ferry from Denmark. Customs officials found 55 kg hidden in the boot and further packages containing 20 and 25 kg in secret compartments under the floor.  The haul is the biggest cannabis find ever made in Bergen with a street value of up to €11m, Norwegian media said. The arrests were made on September 5th but have only now been made public.

 

5th November 2017

 SAUDI BILLIONAIRE AMONGST PRINCES AND OFFICIALS ARRESTED IN ANTI-CORRUPTION DRIVE

Billionaire investor Prince Alwaleed bin Talal among 11 princes and 38 current or former senior officials were arrested as part of a corruption probe in Saudi Arabia.

Alwaleed is one of the world’s richest men and has an extensive portfolio that includes a stake in Citigroup. Kingdom Holding, in which Alwaleed owns 95%, is also an investor in News Corp., Twitter Inc., JD.com Inc., the Four Seasons hotel chain and Accor Hotels.

Politico on “What the Hell Just Happened in Saudi Arabia” article at –

https://www.politico.eu/article/mohammed-bin-salman-what-the-hell-just-happened-in-saudi-arabia/?utm_source=POLITICO.EU&utm_campaign=b1674c097a-EMAIL_CAMPAIGN_2017_11_07&utm_medium=email&utm_term=0_10959edeb5-b1674c097a-190081609

Canada’s Globe & Mail reported on 7th November that Saudi Arabian banks have frozen more than 1,200 accounts belonging to individuals and companies in the kingdom as part of the government’s anti-corruption purge.  The number was said to be expected to rise.  It added that the number is continuing to rise.

KINAHAN CARTEL MEMBERS IMPLICATED IN INTERNATIONAL DRUGS CASE

The Journal in Ireland reports that the net is closing in on Irish drug dealers who were supplied cocaine through a Chilean distributor “El Rico” who has been arrested in Chile, and approximately 60% of Ireland’s cocaine had been coming through El Rico and his distributors, according to sources.  The arrest of El Rico and seizure of his electronic devices is the main reason for the international arrests. He had been using a German IT protection system and leading members of the Kinahan cartel in Ireland said to have talked with El Rico by using this system.  The seizure of the phones now means that police have access to El Rico’s records which go back to 2011.  The main gang leaders of the Kinahan cartel have fled Ireland in the last six months.  Leading members of the Irish cartel, including Daniel Kinahan, have fled in recent weeks with many arriving in Dubai in recent days.

http://www.thejournal.ie/kinahan-cartel-drugs-el-rico-3673707-Nov2017/?src=ilaw

KENNETH RIJOCK CONTINUES CAMPAIGN AGAINST “DIPLOMATIC PASSPORTS” ALLEGEDLY SOLD BY DOMINICA AND OTHERS

He notes that under “the law of diplomacy and international relations…a diplomatic passport does NOT confer nationality or citizenship upon the holder” but alleges that Dominican ones claim Dominican nationality for foreigners.  Produces list of allegedly “bogus” passports.

Elsewhere in his blog he refers to other states’ citizenship by investment (CBI) programmes and their use or misuse.

http://rijock.blogspot.com/

PUTIN PROXIES

The output from a Novaya Gazeta and OCCRP investigation into the wealth surrounding Russian President Vladimir Putin includes an interactive infographic, using which you can click on the names to explore the members of the people surrounding Putin and the connections between them.

https://www.occrp.org/en/putinandtheproxies/#infographic

US CUSTOMS FIGHT AGAINST THE ILLEGAL IVORY TRADE

US Customs and Border Protection’s online “Frontline” magazine includes an article on the CBP efforts against the ivory trade.  It cites a BBC report that China is the world’s biggest “peddler”, fueling at least 70% of the illicit ivory trade, followed by the Philippines and Thailand where status and money drive demand.  CBP helped train dozens of dogs that could detect ivory (as well as heroin and cocaine) in Tanzania from 2015.

It also summarises the history of the use of drugs detector dogs by US Customs dating back to 1969.

https://www.cbp.gov/frontline/fighting-ivory-trade

HYPERSONIC MISSILE PROLIFERATION

7 minute video in which RAND researchers present an overview of their key findings on hypersonic missiles — a new class of military threat capable of maneuvering and flying faster than 5,000 kilometers per hour. The speed and maneuverability enable such missiles to penetrate most missile defences, and further compress the timelines for a response by a nation under attack. This research, sponsored by the Carnegie Corporation of New York for its project Disruptive Technologies and the Future of Deterrence, suggests that there is probably less than a decade available to substantially hinder the potential proliferation of hypersonic missiles and associated technologies.

https://www.rand.org/multimedia/video/2017/09/27/hypersonic-missile-nonproliferation.html

BRITISH COURTS REJECT 2 EXTRADITION REQUESTS FROM INDIA

The Hindu reports that the British court hearing the extradition case of Vijay Mallya (denies Indian government’s claim he supported his Force India Formula One team with money-laundered cash) has rejected 2 extradition requests by India in recent weeks.   Westminster Magistrates’ Court ruled in favour of –

  • on October 16th – UK-based alleged bookie Sanjeev Kumar Chawla – the key accused in the match-fixing scandal involving former South African cricket captain Hanse Cronje in 2000, on human rights grounds over severe conditions in Tihar Jail in Delhi where he would be held; and
  • on October 12th – British Indian couple, Jatinder and Asha Rani Angurala – wanted for fraud dating back to between 1990 and 1993 against the public sector bank, causing a total loss of about £24,000, as it would be unjust to extradite them after nearly a quarter of a century since the fraud was alleged to have taken place

The Mallya extradition trial is scheduled to start on December 4th.

The implication is that doubt is cast on the outcome of the Mallya hearing.

IS TURKEY HEADED FOR AN INCREMENTAL DIVORCE WITH THE WEST?

The Center for Strategic Studies in Zurich article seeks to establish how bad relations between Turkey and the West are: concluding that Turkey may be headed for a gradual divorce from the West. The Turkish leadership is not interested in a sudden rupture, but rather wants a gradual process that does not upset delicate balances both home and abroad; and should Turkey’s current internal restructuring and incremental disassociation with the West continue unabated, a full-fledged strategic realignment may be a fact by the centenary of the Turkish Republic in 2023.

https://isnblog.ethz.ch/international-relations/turkey-and-the-west-how-bad-is-it

UK ANNUAL REPORT FOR 2016 ON THE OPERATION OF THE CHEMICAL WEAPONS ACT 1996

The Department for Business, Energy & Industrial Strategy (BEIS) published this report on 5th November.

The CWC UK National Authority (UKNA), based in BEIS, is responsible for implementing the Act in the UK, its Crown Dependencies and Overseas Territories. The Act places legal requirements on all companies, universities, other entities and individuals that work with certain toxic chemicals to declare information required under the CWC, and to provide access to sites for verification of declarations by the Organisation for the Prohibition of Chemical Weapons (OPCW). In addition, the Act requires anyone wishing to produce, possess or use certain very toxic chemicals to obtain a licence to do so.

The controls include export and trade control licensing, and the report also refers to 9 site inspections by OPCW in the UK in 2016.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/657162/Chemical_Weapons_2016_Annual_Report.pdf

BBC “PARADISE PAPERS” REPORTING BASED ON LEAK OF APPLEBY MATERIAL AND IMPLICATING THE ISLE OF MAN

BBC reports –

http://www.bbc.co.uk/news/uk-41876942

http://www.bbc.co.uk/news/paradisepapers

Including the BBC guide to “4 years of offshore revelations”

http://www.bbc.co.uk/news/business-41877932

ICIJ blog

https://www.icij.org/blog/

OCCRP link

https://www.occrp.org/en/paradisepapers/

OCCRP AND KYIV POST LINK UKRAINIAN TO ISLE OF MAN IN PARADISE PAPERS

OCCRP reports that Sergiy Oleksiyenko, who has held several posts in Ukraine’s oil and gas industries, set up an offshore foundation in 2016 and planned to use Isle of Man lawyers to transfer $1 million to the foundation to avoid exchange controls, according to documents leaked.  He denies any such intent and said no transfer was made, saying that the foundation was never used for anything and has now been disbanded.

https://www.occrp.org/en/paradisepapers/ukrainian-gas-official-linked-to-scheme-to-hide-1-million

https://en.hromadske.ua/posts/ukrainian-gas-official-linked-to-scheme-to-hide-1-million-occrp?src=ilaw

OCCRP INVESTIGATIONS “REFUTE UKRAINIAN PRESIDENT PETRO POROSHENKO’S CLAIMS THAT HIS OFFSHORE FIRMS WERE NOT INTENDED TO MINIMIZE TAXES AND DID NOT HOLD ANY ASSETS OR CASH, AND THAT POROSHENKO IS NOT INVOLVED IN THEIR MANAGEMENT ANYMORE”

https://www.kyivpost.com/ukraine-politics/occrp-investigation-aims-refute-poroshenkos-claims-offshore-tax-policy-cash-flows.html

KAZAKHSTAN’S SECRET BILLIONAIRES

The massive leak of documents in the Paradise Papers, says OCCRP, reveals the hidden owners behind Meridian Capital, a major Kazakhstani investment and holding company with interests in oil and gas, real estate, mining, banks, aviation, transportation, and more.

https://www.occrp.org/en/paradisepapers/kazakhstans-secret-billionaires

CLAIM THAT KREMLIN CASH BEHIND BILLIONAIRE’S TWITTER AND FACEBOOK INVESTMENTS

New York Times reports that leaked files show that a state-controlled bank in Moscow helped to fuel Yuri Milner’s ascent in Silicon Valley, where the Russia investigation has put tech companies under scrutiny.

https://www.nytimes.com/2017/11/05/world/yuri-milner-facebook-twitter-russia.html?_r=0&utm_source=POLITICO.EU&utm_campaign=1bec157a0c-EMAIL_CAMPAIGN_2017_11_06&utm_medium=email&utm_term=0_10959edeb5-1bec157a0c-190081609  

LITHUANIAN MEP NAMED AS FOUNDER AND FORMER SHAREHOLDER OF GAMBLING NEWS PUBLISHER ESTABLISHED ON THE ISLE OF MAN

Politico claims that Lithuanian MEP Antanas Guoga named as founder and former shareholder of iBus Media, a gambling news publisher established on the Isle of Man. Guoga, a former global poker star and local business mogul, also owns Malta-registered SG Holdings, which is not listed in his parliamentary financial disclosure, according to 15min.lt. Guoga denied any wrongdoing.

https://www.15min.lt/naujiena/aktualu/pasaulis/nutekeje-duomenys-i-dienos-sviesa-tempia-antano-guogos-karalienes-elzbietos-ir-kitu-pasaulio-galinguju-paslaptis-57-877110?utm_source=POLITICO.EU&utm_campaign=1bec157a0c-EMAIL_CAMPAIGN_2017_11_06&utm_medium=email&utm_term=0_10959edeb5-1bec157a0c-190081609

ISLE OF MAN VAT REFUNDS ON AIRCRAFT – FoI RELEASE

https://www.gov.im/media/1359090/aircraft-vat.pdf

ALISHER USMANOV’S DUE DILIGENCE ROLE QUERIED

The BBC reported on 6th November that, Alisher Usmanov, an oligarch with close links to the Kremlin may have secretly taken ownership of Bridgewaters in the Isle of Man, a company responsible for AML checks on Russian cash, the Paradise Papers show.

http://www.bbc.co.uk/news/world-europe-41878961

TAX RESEARCH: THE ISLE OF MAN IS STILL BEING SUBSIDISED BY THE UK TO BE A TAX HAVEN

Richard Murphy resurrects his arguments about the apparent misaligned VAT receipts.

http://www.taxresearch.org.uk/Blog/2017/11/06/the-isle-of-man-is-still-being-subsidised-by-the-uk-to-be-a-tax-haven/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+org%2FlWWh+%28Tax+Research+UK+2%29&src=ilaw

HOW THE FBI WON THE “WORLD CUP OF FRAUD”, AS FIFA SCANDAL REACHES COURT

The Observer reports on the trial of 3 former high-ranking South American football figures in New York but US authorities have already secured 23 guilty pleas

https://www.theguardian.com/football/2017/nov/06/fifa-scandal-fbi-new-york-trial-chuck-blazer-sepp-blatter

 

6th November 2017

THE SFO DOUBLES USE OF ORDERS TO FREEZE AND SEIZE ASSETS

On 6th November, City AM reported that the Serious Fraud Office (SFO) froze assets suspected of being involved in fraud 8 times in the last financial year, according to law firm Pinsent Masons.  The use of the powers has doubled in the past year as the SFO tries to be more proactive in stopping criminals from liquidating assets, Pinsent Masons said.  The SFO has also increased its usage of funds obtained from criminals in compensating victims, the law firm said.

http://www.cityam.com/275183/serious-fraud-office-doubles-use-orders-freeze-and-seize

US AUTHORITIES ISSUE COMPREHENSIVE IMPLEMENTATION GUIDANCE ON NEW US SANCTIONS LEGISLATION

On 3rd November, Herbert Smith Freehills issued an update about comprehensive guidance from OFAC related to the Countering America’s Adversaries Through Sanctions Act of 2017 (CAATSA). The new guidance addresses multiple provisions of CAATSA, mainly the provisions concerning secondary sanctions targeting Russia. The new guidance significantly limits and clarifies the scope of these secondary sanctions.

https://hsfnotes.com/fsrandcorpcrime/2017/11/03/us-authorities-issue-comprehensive-implementation-guidance-on-new-us-sanctions-legislation/#page=1

The OFAC FAQ for “other sanctions regimes” –

At https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_other.aspx#373

The index for all OFAC FAQ at

https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/ques_index.aspx

 

7th November 2017

UK MODERN SLAVERY ACT 2015 – UPDATED GUIDANCE

The UK has updated its Transparency in Supply Chains guidance, and law firm Bird & Bird has produced a note summarising the changes made –

https://www.twobirds.com/en/news/articles/2017/uk/modern-slavery-act-2015-updated-guidance

The changes include suggesting those not required to produce a Transparency Statement to consider doing so.  The guidance now includes definitions in relation to child labour with reference to the International Labour Organisation, the implication being that the UK Government is taking a close interest in the employment of children, and it also places emphasis on the importance of human rights due diligence. Modern slavery due diligence will form a part of wider corporate social responsibility and human rights due diligence process.

Law firm Shoosmiths has also published a briefing entitled “Drafting an Anti-Slavery Statement: What not to do”

http://www.shoosmiths.co.uk/client-resources/legal-updates/drafting-an-anti-slavery-statement-what-not-to-do-13490.aspx

NETANYAHU CONFIDANT NAMED IN ISRAELI SUBMARINE CORRUPTION CASE

Yitzchak Molcho, Prime Minister Benjamin Netanyahu’s chief negotiator and personal envoy for over a decade, named as a suspect in the investigation into suspected corruption in Israel’s purchase of submarines from a German shipbuilder (“Case 3000”).

BAHRAIN STEPS UP ACTION AGAINST MONEY LAUNDERING AND TERRORIST FINANCING TO MEET FATF STANDARDS

New edict published that affects lawyers and foreign legal firms, and in line with criteria set by the regional FATF, as well as UN requirements.  It makes it mandatory for them to comply with a 2001 law and ensure that operations are not used for money laundering or terrorist financing.  It requires them to notify the country’s FIU (the Financial Investigation Directorate at the Ministry of the Interior)about any suspicious or abnormal activities, including in real estate transactions, in funds or asset management and in banking.

UN REPORT CALLS FOR FURTHER ACCELERATION OF IMPLEMENTATION OF PAPERLESS TRADE MEASURES

United Nations Economic Commission for Europe (UNECE), along with the other Regional Commissions, for Africa (ECA), Asia and the Pacific (ESCAP), Latin America and the Caribbean (ECLAC) and Western Asia (ESCWA), launched the second Global Report on Trade Facilitation and Paperless Trade Implementation.  Challenges persist in relation to the automation of trade procedures and the use of electronic data and documents in many countries. Cross-border paperless trade measures register an overall implementation rate of about 33% only globally, which is substantially lower than for of the other groups of measures surveyed.  Accordingly, the report calls for a substantial acceleration of paperless and cross-paper trade

http://www.unece.org/info/media/presscurrent-press-h/trade/2017/united-nations-report-calls-for-further-acceleration-of-implementation-of-paperless-trade-measures/doc.html

BILLS OF LADING – A CAUTIONARY TALE FOR FREIGHT FORWARDERS

An Australian court has ruled that a freight forwarder engaged in misleading or deceptive conduct by issuing house bills of lading where the ocean carriers had already issued negotiable bills of lading for the same shipments.

The case is a warning to freight forwarders who think that they are assisting their clients by issuing separate house bills of lading for “banking purposes” or for ”customs purposes” when such a document was never intended to be a contract of carriage or to be negotiated through the banking system.  Australian law firm, Mills Oakley, advises that freight forwarders need to review their practices and understand that house bills of lading are a legal document that can potentially be acted upon by third parties in unrelated transactions.  Importantly, freight forwarders should never issue separate house bills of lading if the ocean carriers have issued negotiable bills of lading for the same shipment.

A good summary of the case is available at –

http://www.millsoakley.com.au/the-elephant-in-the-room-a-cautionary-tale-for-freight-forwarders/

NEW WHITE COLLAR CRIME PACKAGE – TO MODERNISE & CONSOLIDATE IRISH ANTI-CORRUPTION AND BRIBERY LAWS

A package of changes to tackle corruption and increase transparency was announced by the Irish Government on 2nd November in its new White Collar Crime Package. Major features include overhaul of the Office of the Director of Corporate Enforcement (ODCE), as an independent agency; launch of a Joint Agency Task Force to tackle white collar crime, including payment fraud; and 2 new Bills – the Criminal Justice (Corruption Offences) Bill and the Criminal Procedure Bill.

The headline proposals within the former Bill include a broader definition of “corruptly” and expanded offences.

See articles at –

https://www.williamfry.com/newsandinsights/publications-article/2017/11/03/new-bill-proposes-to-modernise-and-consolidate-irish-anti-corruption-and-bribery-laws

http://www.arthurcox.com/publications/new-white-collar-crime-package/

SWEDISH GOVERNMENT PROPOSES STRICTER RULES ON WEAPON EXPORT

On 24th October, the Swedish government proposed stricter rules on weapon export. The proposals include that the destination country’s democratic status shall be of central consideration.  The less democratic standing, the harder to get a licence.

Baker McKenzie has a useful briefing at –

https://globalcompliancenews.com/swedish-government-proposes-stricter-rules-weapon-export/#page=1

CHINESE APPETITE FOR ABALONE SEES PRICES AND THE ILLICIT TRADESOAR

Hong Kong Trade Development Council (HKTDC) has published an article on the trade in abalone.  Prized for their flavour, texture and size, South Africa’s abalone stocks are sought out across Asia, with the growing demand from China alone enough to nurture a growing legal trade and an accompanying surge in black-market exports.

The HKTDC article goes on to say that the animal is capable of commanding prices of up to $300 per kilogram on the black market, it is, perhaps, unsurprising that organised crime has long had an interest in the abalone sector. Worldwide, it is estimated that the size of the illicit trade in abalone could be as high as 65% of that of the legal total. From South Africa alone, according to Abagold, about 2,500 tons of abalone is illegally exported every year.

As an indication of the scale of this illicit trade, in February 2017, the South African Department of Forestry and Fisheries seized about $1.67 million worth of illegally harvested abalone destined for export to Asia. Overall, most of the black-market trade in abalone is focused on Asia, with Hong Kong said to be the primary route in.  HKTDC also says that the problem is exacerbated by the fact that many such illicit abalone exports may be bartered for drugs – particularly methamphetamine – among the international criminal syndicates involved

http://economists-pick-research.hktdc.com/business-news/freepdfdownloadservlet?articleID=1X0AC0LF&LANGUAGE=en

HM TREASURY ISSUES NOTICE ON MAIL SANCTIONS – STILL NO NAMES LISTED

Re the implementation of sanctions pursuant to UN SCR 2374 and EU Regulation 2017/1770, notifying businesses of the sanctions but saying no further action needed at this stage.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/657636/HM_Treasury_Notice_07-11-2017_Mali.pdf

MAPPED: THE WORLD ACCORDING TO COCAINE CONSUMPTION

The Telegraph provides an interactive map using data from the UN Office on Drugs and Crime showing the prevalence of cocaine use as a proportion of the population.

The accompanying article states that Britain is among the world’s biggest users of the drug at 2.25% of the population of England and Wales aged 16-59, with cocaine use is slightly higher in Scotland – around 2.34%, while in Northern Ireland it’s lower – 1.8%.

http://www.telegraph.co.uk/travel/maps-and-graphics/cocaine-consumption-by-country/

HOW A COMPLICATED HISTORY LED TO PARAGUAY BECOMING A HUB FOR ILLICIT TRADE

Interesting Brown Political Review briefing of 2nd November on a country which is the fourth largest producer of cannabis (with negligible domestic consumption), and a “rampant” cocaine trade.

http://www.brownpoliticalreview.org/2017/11/para-legal-complicated-history-led-paraguay-becoming-hub-illicit-trade/

THE NEUTRON BOMB

In the US, the Air Force Magazine publishes an article revisiting the furore in the 1970s when it was claimed that “the United States is about to begin production of its first nuclear battlefield weapon specifically designed to kill people through the release of neutrons rather than to destroy military installations through heat and blast.”.  The enhanced radiation warhead concept became a political and international issue.

The article states that “In fact, the purpose had nothing to do with preserving property. The neutron bomb did not leave property intact; by limiting collateral damage, it just destroyed less of it. The objective was to restore the sagging credibility of “tactical nuclear weapons”—as they were then called—as a deterrent against an attack by Soviet and Warsaw Pact tank armies.” But “critics were closer to the mark with their accusation that the neutron bomb lowered the nuclear threshold by reducing the reluctance to use nuclear weapons”.

The term “neutron bomb” is said to have originated in a US News & World Report in 1959, which called it a “death ray” that “would kill man with streams of poisonous radiation, while leaving machines and buildings undamaged.”, and that the concept was debated in public in the US Congress in the early 60s.

Production deferred by President Carter was revived by the Reagan Administration in the 1980s, and the warheads were withdrawn in the 1990s by the first Bush Administration.

The article claims that both China and Israel have tested and possess the weapons, and that Russia has (or may have) a similar weapon.

http://www.airforcemag.com/MagazineArchive/Pages/2017/December%202017/The-Neutron-Bomb.aspx

GLOBAL GCN SURVEY: COMMERCIAL BRIBERY PROHIBITIONS AND ENFORCEMENT

Baker McKenzie survey analyzed where commercial bribery is a criminal offense, who may be prosecuted and how active the local authorities are.  The results, published on 6th November, analysed responses from 74 countries to 6 questions –

  1. Is commercial bribery a criminal offense in your country?
  2. If commercial bribery is a criminal offense, may the bribe giver and the recipient be punished?
  3. Does the prohibition apply to (i) individuals, (ii) companies or (iii) both?
  4. If commercial bribery is not a criminal offense in your country, is it prohibited by any other laws (e.g. unfair competition etc.)?
  5. How active are your local law enforcement agencies to enforce commercial bribery in your jurisdiction?
  6. To the best of your knowledge, how many commercial bribery proceedings took place in your jurisdiction over the past three years?

https://globalcompliancenews.com/survey-commercial-bribery-20171106/

 

8th November 2017

 US CHARGES ROLLS-ROYCE EMPLOYEES OVER ALLEGED BRIBERY OF KAZAKH, AZERBAIJANI OFFICIALS

On November 7th the US unveiled criminal charges against 5 people accused of involvement in a bribery scheme to help Rolls-Royce win energy-related contracts in Kazakhstan, Azerbaijan, and other countries.  The charges follow an $800 million settlement the company reached in January with US, British, and Brazilian authorities over allegations.  As part of that settlement, Rolls-Royce admitted to paying officials at state-run energy companies in Kazakhstan, Thailand, Brazil, Azerbaijan, Angola, and Iraq more than $35 million to win contracts.

IRAN TIGHTENS CASH DECLARATION REQUIREMENTS

On 8th November it was reported that, under FATF pressure to fully implement its Action Plan by 31st January, Iran has tightened its controls on foreign currency, banking instruments or bonds entering or exiting the country.  Whereas previously checks would be undertaken by officials where the value exceeded €10,000 (or the equivalent), the amendment says that “if related officials suspect money laundering, terrorism financing or other crimes for sums lower than €10,000 or its equivalent in other currencies, the same due diligence process will be employed”.

BILL TO CONTROL MONEY LAUNDERING IN IRISH GAMBLING SECTOR PROPOSED

On 8th November the Irish Examiner reported that the Irish Government was planning a new Bill to create a national gambling control office to clamp down on addiction, restrict advertising, and tackle money laundering in the sector.  The intention was said to be to introduce the Bill before Christmas 2017.

ONLINE MAP OF MARITIME PIRACY ATTACKS

The International Chamber of Commerce (ICC) has online a “live” map which shows all armed robbery and maritime piracy attacks reported to its Piracy Reporting Centre during 2016.

https://icc-ccs.org/piracy-reporting-centre/live-piracy-map

IVICA TODORIC BAILED IN LONDON

On 7th November, the Mail Online reported that Ivica Todoric, 66, a businessman described as one of Europe’s “most wanted fugitives” had given bail in London as he fights extradition to Croatia where he faces fraud charges relating to around €110 million.  The founder of the country’s largest private company, Agrokor, he is wanted by Croatian authorities on charges of alleged fraud and corruption.

http://www.dailymail.co.uk/news/article-5059821/Tycoon-Ivica-Todoric-fighting-fraud-charges-extradition.html#ixzz4xovAXGsa

SOUTH KOREAN AND JAPANESE FINANCIAL SANCTIONS ON NORTH KOREA

On 7th November the (excellent and useful) European Sanctions Blog of Maya Lester QC (https://europeansanctions.com/) reported that South Korea has imposed unilateral sanctions against 18 North Koreans who had all “worked overseas, representing North Korean banks and [have been] involved in supplying money needed to develop weapons of mass destruction”.  As a result of the measures, South Korean persons and entities are prevented from transacting with any of the listed individuals.

At the same time, it was reported that Japan added 9 entities and 26 individuals to its sanctions list.

NATIONAL SECURITY REVIEWS OF FOREIGN DIRECT INVESTMENT REPORT BY WHITE & CASE

Law firm White and Case has published a report examining national security reviews of foreign direct investment (FDI).   It reports that governments worldwide are focusing greater scrutiny on inbound FDI into their countries.  In particular, an increasing number of cross-border transactions are getting caught in the net of national security reviews that are being either strengthened or newly established across the globeThe report provides a breakdown of the position in 9 countries and the EU.

https://www.whitecase.com/publications/insight/national-security-reviews-global-perspective

REPORT – MOMENTUM TO PREVENT NUCLEAR TERRORISM HAS WANED

Global momentum has waned in efforts to prevent terrorists from obtaining nuclear and radiological materials, according to a new report released by the Stimson Center (which describes itself as a non-partisan organisation working to solve the world’s greatest threats to security and prosperity). The report, Re-energizing Nuclear Security: Trends and Potential Collaborations Post Security Summits, finds that momentum to combat nuclear security threats has slowed after a series of high-level global summits concluded in 2016. Industry, governments, and civil society can re-capture momentum through a series of pragmatic actions, the report concludes.

The author of the report says, “power plants can be vulnerable to evolving cyber threats. ISIL and Boko Haram are operating near nuclear facilities. The spread of weapons-grade material from North Korea is a very real concern. Industry, governments, and civil society can do more to address these challenges given this security landscape”.

The report proposes several recommendations for stakeholders to adopt to better confront nuclear security challenges.  Amongst the recommendations is the suggestion that streamlined reporting of compliance with the Convention on the Physical Protection of Nuclear Materials fundamental principles could be introduced as part of UN Security Council Resolution 1540 reporting.  UN SCR 1540, of course, requires all member states to refrain from providing any form of support to non-State actors that attempt to develop, acquire, manufacture, possess, transport, transfer or use nuclear, chemical or biological weapons and their means of delivery, in particular for terrorist purposes.

https://www.stimson.org/content/amid-evolving-risks-momentum-prevent-nuclear-terrorism-has-waned

Report at – https://www.stimson.org/sites/default/files/file-attachments/Nuclear-Energy-R7-WEB.pdf

UN SECURITY COUNCIL RESOLUTION ON SOMALIA PIRACY

In a Resolution the Security Council urged Somali authorities to continue passing comprehensive anti-piracy and maritime laws, to establish security forces with clear roles and jurisdictions to enforce these laws, as well as strengthen the capacity of Somali courts to investigate and prosecute those responsible for piracy.  The Resolution also urges criminalisation of piracy under member states’ domestic law and to consider prosecution and imprisonment of suspected pirates apprehended off the coast of Somalia as well as their facilitators and financiers on land.  It further encourages flag States and port States to consider the development of safety and security measures on board vessels, including developing regulations for the use of private contract armed security personnel on board ships, aimed at preventing and suppressing piracy off the coast of Somalia, through a consultative process, including relevant UN entities.

UN SCR 2383 of 7th November –

http://www.un.org/en/ga/search/view_doc.asp?symbol=S/RES/2383(2017)

UNITED NATIONS AND EUROPEAN UNION FINANCIAL SANCTIONS (LINKING) (AMENDMENT) (NO. 2) REGULATIONS 2017

In UK, SI 2017 No 1071 amend the “linking Regulations” to take account of the UN/EU Mali sanctions (even though no names had been designated yet).  The linking Regulations allow for temporary designation in the UK following changes to UN sanctions, providing cover until the necessary EU Regulation take effect.

http://www.legislation.gov.uk/uksi/2017/1071/contents/made

ZIMBABWE – FURTHER “PURGE” FOLLOWING SACKING OF LONG-TIME ALLY

After sacking deputy Emmerson Mnangagwa (one-time favourite to succeed President Robert Mugabe)for showing “traits of disloyalty”, it appears this was part of wider purge by Mugabe, intended to neutralise or remove any resistance to the political rise of his wife, Grace, and increasing the chance that she will become his deputy and likely successor.

CHANGES TO US CUBA SANCTIONS RULES IMPLEMENTED

OFAC and the Department of Commerce’s Bureau of Industry and Security (BIS) announced amendments to the Cuban Assets Control Regulations (CACR) and Export Administration Regulations (EAR), to implement changes to the Cuba sanctions program announced by President Trump in June.  The State Department is taking complementary steps.  The changes affect –

  • Financial sanctions – persons subject to U.S. jurisdiction will now be prohibited from engaging in certain direct financial transactions with entities and sub-entities identified by the State Department on the (new) “Cuba Restricted List”.  Certain transactions will be excluded from this prohibition.
  • Trade – BIS is establishing a general policy of denial for licence applications to export items for use by entities and sub-entities on the Cuba Restricted List unless the transaction is otherwise consistent with the National Security Presidential Memorandum (NSPM).
  • Personal and educational travel – new restrictions on how this can take place.
  • Support for the People Travel – subject to being for authorised purposes.
  • Prohibited Cuban officials – In accordance with the NSPM, OFAC is amending the definition of the term prohibited officials of the Government of Cuba to include certain additional individuals.  BIS is making conforming changes to 3 licence exceptions that include the same definition.  This change will affect certain otherwise-authorised transactions with the expanded group of such officials.

https://www.treasury.gov/press-center/press-releases/Pages/sm0209.aspx?src=ilaw

See also the comments from the Export Law Blog at –

http://www.exportlawblog.com/

Sandler Travis & Rosenberg comments on the export restrictions –

http://www.strtrade.com/news-publications-Cuba-export-policy-license-denial-BIS-110917.html

FLOODED SCOTTISH COURT RESULTS IN CONFISCATION CASE DELAY

The Dundee Courier reports that evidence needed to make a case for confiscation has been destroyed in flooding that affected Perth Sheriff Court in 2016.  The material related to former bus firm boss Stuart Newing-Davis, who was convicted in June of VAT fraud worth £174,000.  He had ran an agency that supplied trained staff to the UK rail industry, but repeatedly falsified its accounts to prop up another struggling business.  HMRC is said to be unsure how much it will be able to piece back together.

JERSEY WILL ONLY RETURN STOLEN ABACHA MONEY TO NIGERIA IF SENT DIRECTLY

Buzz Nigeria reports that Jersey has informed Nigeria that the $300 million found in Jersey and stolen by former Nigerian dictator, Sani Abacha of 1993-98, will be returned only if sent direct in a government-to-government transfer, and not via any third party.

UNFIT CONDUCT: HOW TO FIND OUT IF SOMEBODY IS DISQUALIFIED OR SUBJECT TO RESTRICTIONS BY THE INSOLVENCY SERVICE

The Insolvency Service in the UK has published guidance on –

  • how to find out if a director has been disqualified or an individual is subject to bankruptcy or debt relief restrictions because of unfit conduct or misconduct and why it took action against them.

https://www.gov.uk/government/publications/unfit-conduct-our-disqualification-and-restrictions-search-facilities–2

  • the effect of a disqualification order

https://www.gov.uk/government/publications/corporate-insolvency-effect-of-a-disqualification-order

DISCIPLINARY TRIBUNAL IMPOSES LARGEST-EVER PENALTY AGAINST A LAW FIRM IN ENGLAND & WALES

Solicitors Disciplinary Tribunal confirmed the largest-ever penalty levied against a law firm in England and Wales.  It ordered that US firm Locke Lord, which has an office in London, must pay £500,000 after admitting 4 allegations of misconduct, relating to its failure to supervise an unnamed solicitor from involving himself and using the client account in transactions that bore the hallmarks of dubious financial arrangements or investment schemes.

A PRIMER ON CANADIAN SANCTIONS LEGISLATION

Canadian law firm, Blake Cassels and Graydon LLP, has published a briefing outlining the current (ad varied) sanctions regime framework in Canada

https://www.jdsupra.com/legalnews/a-primer-on-canadian-sanctions-20615/

and another on new Canadian sanctions legislation giving effect to the so-called “Sergei Magnitsky Law”.

https://www.jdsupra.com/legalnews/new-canadian-sanctions-legislation-in-57399/

ILLEGAL ONLINE GAMBLING TARGETING CHINA – MORE CHINESE ARRESTED IN PHILIPINES

CalvinAyre.com reports that a tip-off from the Chinese embassy has led Philippine immigration officers to an online gambling operation where 4 Chinese “fugitives” and 77 other undocumented foreigners were illegally working.

A MENTION IN THE PARLIAMENT!

At the third reading of the Customs and Excise Bill 2017 in the House of Keys (the lower house of the Isle of Man parliament, Tynwald) I received a name check from the Member taking the Bill through.  A pleasant surprise, even if I cannot claim to have been “responsible for hundreds of bills”, a handful plus maybe hundreds of orders, regulations etc maybe J

http://www.iomtoday.co.im/article.cfm?id=36888&headline=Law%20to%20help%0Aisland%20fight%20financing%20%0Aof%20terror&sectionIs=news&searchyear=2017#readComments

HEAD OF REVOLUTIONARY GUARD – NO NEED TO FOR IRAN EXTEND 2,000 KM BALLISTIC MISSILE RANGE

Al Jazeera reports that the head of the Revolutionary Guard has said that Iran has no need to extend the current 2,000 km range of its ballistic missiles as they can already strike enemy targets in case of aggression, and that the ballistic missile range is based on the limits set by the country’s Supreme Leader Ayatollah Ali Khamenei.  But he warned Iran’s enemies of the “high costs” of provoking his country.

http://www.aljazeera.com/news/2017/10/iran-extend-2000km-ballistic-missile-range-171031135651513.html

Arms Control Wonk has done a podcast on the announcement and take a survey of regional missile proliferation from Egypt to Iran.

http://armscontrolwonk.libsyn.com/missiles-over-the-middle-east

 

9th November 2017

 EU TO IMPOSE ARMS EMBARGO ON VENEZUELA, AND PREPARE SANCTIONS

Reuters reported on 8th November that EU sources had said that it is set to impose an arms embargo on Venezuela and will consider further sanctions in response to the political crisis.

PANAMA PAPERS REPORT FROM THE EU

On 9th November, Politico reports that MEPs on the Panama Papers inquiry committee have released a 121-page report summarising findings and recommendations, to be voted on in the EU Parliament later in November.  The findings start on page 13 (and continue to page 43…).

https://www.politico.eu/wp-content/uploads/2017/11/2017-11-08-PANA-Final-Report-002.pdf?utm_source=POLITICO.EU&utm_campaign=5ecda84209-EMAIL_CAMPAIGN_2017_11_09&utm_medium=email&utm_term=0_10959edeb5-5ecda84209-190081609

WE ARE ONLY TARGETING USA, SAYS NORTH KOREA

MSN.com reported on 9th November that North Korea had responded to European concerns about being within range of DPRK nuclear-capable ICBM by assuring the head of NATO that such weapons were only intended for the US.

EU AMENDS LIBYA SANCTIONS ENTRY RELATING TO “LYNN S”

Commission Implementing Regulation 2017/2006/EU of 8th November replaced the entry in Regulation 2016/44 relating to the ship, “Lynn S”, extending restrictions to 29th January 2018.  Council Decision 2017/2008/CFSP makes matching changes.  HM Treasury notice –

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/658450/Libya_2017_2006.pdf

2 BINARY OPTIONS FRAUDSTERS USED ISLE OF MAN WEBSITE

Finance Feeds reports that inary options fraudsters got convicted and sentenced in Australia, following an investigation by the Australian Securities and Investments Commission (ASIC).  During 2015, Jaros and Capper operated an unlicensed financial services business using the companies Astra Group Pty Ltd and Old Cambridge Pty Ltd.  They recruited and trained staff to cold-call persons and attempt to sell them membership in a currencies, indices and commodities trading system through a company registered in the Isle of Man that used a website – Binary.com.  They were convicted but released on condition of good behaviour for 3 years

https://financefeeds.com/binary-options-scam-duo-get-convicted-sentenced-australia/

RESPONSE FROM THE COMPETITION AND MARKETS AUTHORITY TO THE GOVERNMENT’S NATIONAL SECURITY AND INFRASTRUCTURE INVESTMENT REVIEW GREEN PAPER

The CMA responds to the Green Paper (i.e. government discussion paper) on steps to ensure that UK national security interests are safeguarded and that ownership or control of critical businesses or infrastructure does not provide opportunities to undertake espionage, sabotage or exert inappropriate leverage.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/657894/cma-response-national-security-and-infrastructure-investment-review-green-paper.pdf

RUSI COMMENTS ON UK NATIONAL RISK ASSESSMENT AS THE UK PREPARES FOR FATF REVIEW IN EARLY 2018

In an article published 8th November, RUSI’s Centre for Financial Crime and Security Studies welcomed the UK government’s new National Risk Assessment. See –

https://www.gov.uk/government/publications/national-risk-assessment-of-money-laundering-and-terrorist-financing-2017

However, it says that there is a fear that it avoids recognising important systemic weaknesses.  The new NRA, the article maintains, has made a welcome attempt to focus more on activity that presents risks of money laundering, rather than taking a strict sectoral approach.  It says that one striking element of the NRA is the downgrading of estate agents from medium to low risk given the sector has demonstrated poor awareness and compliance and is now responsible for due diligence on both sellers and buyers.  The article says that a RUSI CFCS report will shortly reveal issues within the UK supervisory regime that require a considerably more radical response that have been made or are in hand.  Digital currencies remain deemed a ‘low risk’ for both money laundering and terrorist financing, reflecting the continued lack of significant evidence of their greater use by organised criminals and terrorists.  Worryingly, as resources continue to be restricted (or cut), the report says that the levels of resource to investigate complex (or even simplistic) money laundering cases are dwindling.

https://rusi.org/commentary/countdown-fatf-evaluation-uk%E2%80%99s-updated-national-risk-assessment-money-laundering-and

PARADISE PAPERS AND THE YACHTING SECTOR

Superyacht News comments on “another PR nightmare” which, it says, has thrown yachting into the unwanted limelight.  An article explore the industry’s desire to fix its public image and consider whether, perhaps, the current trajectory is ill-considered.  The article concludes that whilst people seem to believe that without promoting “crafty ways” to limit the cost of yachting, ultra-high-net-worth individuals will simply not be attracted, it is precisely these mechanisms that give superyachting a bad name.

http://www.superyachtnews.com/opinion/the-paradise-papers-another-pr-nightmare

PARADISE PAPERS, GERMAN BANKS AND ONLINE GAMBLING

Calvin Ayre reports that German banks are feeling the heat after documents exposed their willingness to process payments for international online casino operators, in apparent contravention of Germany’s current gambling laws.  The banks have issued statements denying that their activities were in violation of current German gambling laws, which prohibit online gambling outside of sports betting.  The Interior Ministry of Lower Saxony, the article says, suggests that banks could be found guilty of facilitating illegal gambling operations, as well as potential money laundering charges.

https://calvinayre.com/2017/11/08/business/german-banks-under-fire-online-casino-transactions/

GENERAL ELECTRIC AND THE EMPTY JET!

When do a corporate jets become a compliance issue?  Blog site FCPA Compliance & Updates says that is perhaps one question that is being asked in the US at General Electric (GE) since the revelation came to light that its former CEO, Jeff Immelt, had an additional empty aircraft fly behind his jet on corporate trips. This second aircraft tracked Immelt’s jet and was designed to be available if there was a mechanical issue, which presumably could not be fixed sufficiently in time for the CEO’s busy travel schedule. There were several points that the compliance practitioner can learn from this revelation going forward.

http://fcpacompliancereport.com/2017/11/14247/

440 SUSPECTS IN US NAVY “FAT LEONARD” CORRUPTION CASE

OCCRP reports that the “Fat Leonard” corruption investigation has grown over the past few years to involve 440 active-duty and retired US Navy personnel, including 60 current and former admirals, suspected of being connected to the Singapore-based maritime tycoon who defrauded the USN of nearly $35 million.  Leonard Glenn Francis pleaded guilty in 2015 of bribing dozens of Navy officials with prostitutes, liquor and other temptations in exchange of confidential information.

https://www.occrp.org/en/27-ccwatch/cc-watch-briefs/7233-us-probes-440-suspects-in-fat-leonard-graft-scandal

THE FA v CELLINO – BEHIND THE HEADLINES

Blackstone Chambers has published a briefing providing background on the Football Association action against the former owner of Leeds United (Massimo Cellino), who in December 2016,  together with football Intermediary (agent?) Derek Day were charged with various breaches of FA Regulations.

https://www.sportslawbulletin.org/fa-v-cellino-behind-headlines/

NUCLEAR SECURITY CULTURE FOR USERS OF RADIOACTIVE SOURCES: MODEL, SELFASSESSMENT, ENHANCEMENT

The University of Georgia Center for International Trade and Security has released its August 2017 report that provides a roadmap for improving security management of radioactive sources with an emphasis on a culture model, including self-assessment tools and a series of indicators as benchmarks to help convey a culture’s measure and identify practical ways for enhancement.  It notes that radioactive sources are used throughout the world in many widespread applications for a variety of peaceful, productive, and beneficial purposes. These applications can include industrial radiography, oil well logging, medicine, research and education, and military.

The report includes in its introduction the IAEA table the risks, dispersal scenarios and the types of devices involved for various radioactive sources, divided into categories from “most unlikely to be dangerous” to “extremely dangerous” to the person.

http://spia.uga.edu/wp-content/uploads/2017/11/CRP-report-final-November-2017.pdf

TRACE PODCAST – THE VOLKSWAGEN EMISSIONS SCANDAL

Jack Ewing of the New York Times in Frankfurt discusses his excellent book, “Faster, Higher, Farther:  The Volkswagen Scandal,” and the outrageous fraud and cover-up uncovered by a handful of university (WVU) students. https://www.traceinternational.org/bribe_swindle_or_steal

WHAT SHOULD THE US NATIONAL BIODEFENCE STRATEGY LOOK LIKE?

The Bulletin of Atomic Scientists reported on 8th November that the US may finally be getting such a strategy. In late 2016, Congress enacted the National Defense Authorization Act for fiscal year 2017, requiring 4 government agencies — the Departments of Defense, Health and Human Services, Homeland Security, and Agriculture — to jointly develop a national biodefence strategy and implementation plan.  As of September 2017 that effort was underway, overseen by the National Security Council.  As a strategy takes shape, the article says that now is a good time to consider what a national biodefence strategy should look like, and what obstacles stand in the way.

https://thebulletin.org/what-should-us-national-biodefense-strategy-look11268

ETHIOPIAN-BORN SAUDI BILLIONAIRE DETAINED IN SAUDI ARABIA

Sheikh Mohammed Hussein al-Amoudi is one of the richest African-born people in the world, and now arrested in what has been described as an anti-corruption sweep in Saudi Arabia. He was born in Dessie, Ethiopia, in 1946 to an Ethiopian mother and a Saudi father. He immigrated to Saudi Arabia in the mid-1960s and made his first fortune in the 1980s with a contract to build an underground oil storage facility.  His enlarged empire includes Sweden’s largest petroleum refiner, and Bloomberg sets his personal fortune at around $10 billion.  He has invested a large portion of his portfolio – $3.4 billion – in Ethiopia, where he holds interests in oil, gold mines, agriculture and cement.

SAUDI ARABIA CLAIMS CORRUPTION PROBE INTO $100 BILLION LOSS

Saudi Arabia announced on 9th November that it has detained 201 people and said that at least $100 billion has been misused through embezzlement and corruption in past decades.

OECD FORUM ON TAX AND CRIME HELD IN LONDON

NEW OECD PUBLICATION (1) – FIGHTING TAX CRIME: THE TEN GLOBAL PRINCIPLES

NEW OECD PUBLICATION (2) – EFFECTIVE INTER-AGENCY CO-OPERATION IN FIGHTING TAX CRIMES AND OTHER FINANCIAL CRIMES – 3rd EDITION

More than 200 tax crime and economic crime experts attended the 5th OECD Forum on Tax and Crime on 7th and 8th November, where they discussed ways to tackle these tax and economic crimes more effectively.

The Forum identified 5 priorities for action –

  • Ensure that professional enablers play their part in tackling tax crime;
  • Step-up the level of international and cross government co-operation to build a comprehensive and global response to tax crime, drawing on a report launched at the Forum

http://www.oecd.org/tax/crime/effective-inter-agency-co-operation-in-fighting-tax-crimes-and-other-financial-crimes.htm

  • Learn the lessons from around the world about how best to respond to tax crime by implementing the OECD 10 Global Principles, which were also launched at the Forum (see below)

http://www.oecd.org/tax/crime/fighting-tax-crime-the-ten-global-principles.htm

  • Strengthen the ability to collaborate globally and by building capacity to share intelligence and data quickly and securely
  • Build capacity in all countries – including developing countries – to combat financial crimes so that there can be no hiding place for tax criminals. Refers to the OECD International Academy for Tax Crime Investigation, which is intended to improve the ability of developing countries to detect and investigate financial crimes, and recover the proceeds of those crimes, by developing the skills of tax and financial crime investigators through intensive training courses.

http://www.oecd.org/ctp/crime/tax-crime-academy.htm

Closing statement from HMRC and OEC

http://www.oecd.org/tax/crime/closing-statement-oecd-forum-on-tax-and-crime-november-2017.pdf

OECD news release

http://www.oecd.org/tax/strengthening-the-global-response-to-tax-crime.htm

The OECD 10 Global Principles-

Principle 1.        Ensure Tax Offences are Criminalised

Principle 2.        Devise an Effective Strategy for Addressing Tax Crimes

Principle 3.        Have Adequate Investigative Powers

Principle 4.        Have Effective Powers to Freeze, Seize and Confiscate Assets

Principle 5.        Put in Place an Organisational Structure with Defined Responsibilities

Principle 6.        Provide Adequate Resources for Tax Crime Investigation

Principle 7.        Make Tax Crimes a Predicate Offence for Money Laundering

Principle 8.        Have an Effective Framework for Domestic Inter-Agency Co-operation

Principle 9.        Ensure International Co-operation Mechanisms are Available

Principle 10.      Protect Suspects’ Rights

OPINION STATEMENT ON THE BERLIOZ ECJ CASE ON THE EU TAX MUTUAL ASSISTANCE REGIME

The Confederation Fiscale Europeenne (CFE) ECJ Task Force has published an opinion statement on the Case C-682/15, Berlioz Investment Fund SA, ECJ judgment of 16th May confirmed the right to request a judicial review the levying of penalties and to challenge the foreseeable relevance of information requested by one tax authority of another to exchange by way of mutual assistance.  When reviewing the legality of the request in this context, the judiciary will ascertain whether manifestly irrelevant information is being requested, without necessarily informing the taxpayer of the detail.

http://www.cfe-eutax.org/node/6064

TRADE IN IVORY: UK AND INTERNATIONAL POLICY AND REGULATION

House of Commons Library Briefing of 9th November details UK and international control of the ivory trade in the light of the UK announcement in October to introduce a total ban on its sale.

http://researchbriefings.files.parliament.uk/documents/CBP-7875/CBP-7875.pdf

WITH ANOTHER VETERAN CRIMINAL PROSECUTOR AT FINCEN’S HELM, AGGRESSIVE AML ENFORCEMENT EXPECTED TO CONTINUE

US law firm Fox Rothschild on 9th November predicted that the appointment of Kenneth A. Blanco (who has been a federal criminal prosecutor for 28 years, most recently serving as Acting Assistant Attorney General of the DoJ Criminal Division) as Director of FinCEN, will almost certainly see the continuing the rigorous AML enforcement agenda that his predecessor initiated 5 years ago.

https://www.fincen.gov/news/news-releases/treasury-announces-ken-blanco-fincen-director

GIBRALTAR – BILL TO AMEND THE PROCEEDS OF CRIME ACT 2015

This Bill will expand upon the current definition in the Act of ‘unlawful conduct’ to include conduct outside Gibraltar by a public official that constitutes a gross human rights abuse.  This is further defined in the Bill as the torture or inhuman, cruel or degrading treatment of a person on the grounds that such person has been obtaining, exercising, defending or promoting human rights, or has sought to expose gross human rights abuse conducted by a public official.  This amendment reflects a similar change made to the corresponding UK law earlier this year, but is not yet in force there, and relates to the so-called “Magnitsky Amendment”, (named after the Sergei Magnitsky, a Russian lawyer who was tortured and died in prison in Moscow in 2009).

DRC COMPANY PROMISED CHEAP FOOD, BUT $43 MILLION ALLEGEDLY STOLEN INSTEAD

OCCRP reports that a tax-exempt company said it would supply inexpensive food to the people of the Democratic Republic of the Congo (DRC), but leaked documents seem to reveal that it received millions from the central bank illegally – only for the money to disappear into accounts linked to the president’s cronies. Leaked records appear to trace the flow of money from the Central Bank of Congo (CBC) through the food company, Entreprise Générale d’Alimentation et de Logistique (EGAL), and on to other businesses run by 2 of EGAL’s board members, Alain Wan and Marc Piedboeuf. The men are known Kabila associates whose multiple companies have received lucrative government contracts in everything from construction to eco-tourism.

https://www.occrp.org/en/28-ccwatch/cc-watch-indepth/7234-drc-company-promised-cheap-food-delivers-stolen-money

BUSINESS AND HUMAN RIGHTS REVIEW

Law firm Allen & Overy has published the second edition of this Review.  The firm says that as the trend towards increased regulation and scrutiny of companies’ human rights impacts continues, the Review brings together diverse voices to discuss the role that business can play in protecting, respecting and promoting human rights across the world. This edition includes –

  • Advising banks on human trafficking risks: an interview with Nick Bryan-Brown of Blackpeak Group (an investigative research and risk advisory firm focused on uncovering critical risk-related information for its clients);
  • Wise counselling on global supply chains – the need for lawyers to advise their clients and to be aware of the IBA Practical Guide on Business and Human Rights for Business Lawyers from the International Bar Association
  • Business and human rights in diplomacy and politics: an Interview with Eva Biaudet (former diplomat at the Organisation for Security and Co-operation in Europe (OSCE) and the Ombudsman for Minorities and Non-Discrimination in Finland)
  • Introducing the French Corporate Duty of Due Diligence Law

http://www.allenovery.com/publications/en-gb/Documents/The%20Business%20and%20Human%20Rights%20review%20Issue%205%20Brochure.pdf

CROSS-BORDER LITIGATION

Law firm Herbert Smith Freehills has published the latest issue of this periodic publication spotlighting legal and practical issues specific to litigation with an international aspect.  This edition includes articles on –

  • The US statutory procedure known as a “section 1782 order” that can be an extremely valuable tool in cross-border disputes, essentially allowing a litigant in non-US proceedings to obtain US style discovery from US-based entities
  • European Account Preservation Orders: a new streamlined procedure for freezing EU bank accounts in cross-border cases – since 18th January, creditors in the EU have available to them the new EAPO procedure, aimed at facilitating debt recovery in civil and commercial matters by streamlining the process for freezing a debtor’s bank accounts in most EU countries. This article answers some of the questions that clients have been asking about the new procedures.
  • Politics, corruption and other obstacles to justice in foreign jurisdictions

https://www.herbertsmithfreehills.com/latest-thinking/cross-border-litigation-international-perspectives-issue-2

FAKE PHARMA RELOCATES AS CHINA AND INDIA CRACK DOWN

A informative article in the Asia Times on the fake pharmaceutical industry in Asia reports that as China and India clamp down on rampant fake drug production, criminal gangs have moved to less regulated and cheaper SE Asia to sustain the multi-billion dollar trade with suppliers simply crossing the border to less-regulated Mekong countries (Vietnam and Cambodia). One counterfeiting network detected in Cambodia was found to have links to the Japanese Yakuza

Whilst Pakistan, now emerging as a secondary South Asian supplier of fake drugs, will require barcodes on all medicines from December 2017 and adopt international standards for product authentication in a bid to track the origins of all pharmaceuticals, the article notes that enforcement operations detect only a fraction of the estimated US$75 billion of illegal and fake drugs sold annually, which cost legitimate firms up to US$200 billion in lost business.  Myanmar, Vietnam and Thailand were already major transit points for fake medicines produced by gangs in both India and China, with illegal drugs shipped to global markets from seaports in Singapore, Malaysia, Vietnam and Thailand (the WCO has found that 50-60% of illicit drugs go by sea)

http://www.atimes.com/article/fake-pharma-thrives-mekong/

CHINA REPORTS MORE THAN 1,500 COUNTERFEIT FASHION CASES THIS YEAR

The Fashion Law carries an article on Chinese efforts to clamp down on fashion counterfeiting.  China’s General Administration of Customs has announced that in 2017to date, Chinese customs has detected more than 1,560 cases of intellectual property infringement involving goods exported to the US, with 2 joint China-US crackdowns this year.

http://www.thefashionlaw.com/home/china-reports-more-than-1500-counterfeit-cases-this-year

INTERDICTION EFFORTS ADAPT AS DRUG TRAFFICKING IN AFRICA MODERNISES

On 7th November, the Africa Center for Strategic Studies published a report on drug trafficking, a major transnational threat in Africa that it says converges with other illicit activities ranging from money laundering to human trafficking and terrorism.

The report details the extent of the problem, the changing nature of criminal syndicates and regional responses – saying that as governments collaborate more in counter-narcotics, criminal groups are changing their structures and modifying their tactics. Corruption and poor governance are seen as major problems.

https://africacenter.org/spotlight/interdiction-efforts-adapt-drug-trafficking-africa-modernizes/

COLOMBIA’S BIGGEST-EVER COCAINE SEIZURE

Police have seized more than 12 tonnes of cocaine from Colombia’s top crime gang, the biggest haul ever made in the country.  It was found stored underground on 4 farms in a banana-growing region near the border with Panama. The US market value was estimated by Santos at about of $360 million.

 $300 MILLION IN CRYPTOCURRENCY SAID TO BE ACCIDENTALLY LOST FOREVER DUE TO BUG

More than $300 million of cryptocurrency is said to have been lost after a series of bugs in a popular digital wallet service led one curious developer to accidentally take control of and then lock up the funds, according to reports.  The Guardian reports that a user mistaken took control of hundreds of wallets containing cryptocurrency Ether, destroying them in a panic while trying to give them back.

https://www.theguardian.com/technology/2017/nov/08/cryptocurrency-300m-dollars-stolen-bug-ether

 RISK OF AN INADVERTENT NUCLEAR WAR IS RISING BECAUSE OF THE ENTANGLEMENT OF NON-NUCLEAR WEAPONS WITH NUCLEAR WEAPONS AND THEIR COMMAND-AND-CONTROL CAPABILITIES

Worrying piece from the Carnegie Endowment for International Peace that contends that the entanglement of non-nuclear weapons with nuclear weapons and their enabling capabilities is exacerbating the risk of inadvertent escalation.  Whilst the debate about the severity of this risk has been almost exclusively limited to US participants, Carnegie teams from Russia and China set out to examine the issue from the perspective of those countries and answer 2 questions:

  • How serious are the escalation risks arising from entanglement?
  • How do the authors’ views compare to those of their countries’ strategic communities?

http://carnegieendowment.org/2017/11/08/entanglement-chinese-and-russian-perspectives-on-non-nuclear-weapons-and-nuclear-risks-pub-73162

REPORT EXPOSES INNER WORKINGS OF TIMBER TRAFFICKING IN PERU

Insight Crime reports a new Global Witness report into an emblematic case of timber trafficking in Peru highlights the corruption and fraud that continue to sabotage attempts to crack down on a trade that is devastating the Amazon region.

http://www.insightcrime.org/news-analysis/report-exposes-inner-workings-timber-trafficking-peru

YEMENI REBELS UNVEIL ANTI-SHIP MISSILES

Janes reports that Yemen’s Houthi rebels unveiled what they said was an indigenously produced anti-ship missile called the Al-Mandab 1 on 6th November.  The rebels recently fired a ballistic missile at Riyadh, Saudi Arabia.  Contrary to what some believe (and as discussed in the Arms Control Wonk podcast mentioned above), missiles and their use are common in the Middle East – with not just Iran being a missile producer and user.  Janes said that photographs showed 4 missiles that appeared to be the same as the Chinese-made C-801 (a type known to have been supplied to the Yemeni Navy to equip the three Type 021 fast attack craft that were delivered in the mid-1990s).

EU PARLIAMENT REPORT: CROSS-BORDER RESTITUTION CLAIMS OF LOOTED WORKS OF ART AND CULTURAL GOODS

Works of art and cultural goods looted in armed conflicts or wars usually travel across several borders when they are sold. The cross-border character of looted art creates legal challenges for restitution claims as they often concern various national jurisdictions, with differing rules, as well as fragmented and insufficiently defined legal requirements in international and European legal instruments.  Against this background, this European Added Value Assessment identifies weaknesses in the existing EU legal system for restitution claims of works of art and cultural goods looted in armed conflicts and wars.  Moreover, it outlines potential legislative measures that could be taken at the EU level and that could generate European added value through simplification and harmonisation of the legal system in this area.

http://www.europarl.europa.eu/RegData/etudes/STUD/2017/610988/EPRS_STU(2017)610988_EN.pdf

SOCIÉTÉ GÉNÉRALE BRACED FOR BRIBERY PROBE IN FRANCE

World ECR reported on 9th November that French banking and financial services operator Société Générale is is being investigated by the French regulatory authorities over alleged bribery in its work with the Libyan Investment Authority (LIA), Libya’s sovereign wealth fund.

World ECR also reports that the US DoJ is also investigating the alleged bribery claims as part of a broad investigation into possible violations of the Foreign Corrupt Practices Act(FCPA) by a number of financial service institutions, hedge funds and private equity firms active in the Libyan market at that time.

https://www.worldecr.com/news/societe-generale-braced-home-country-bribery-probe/

 

10th November 2017

HIDING IN PLAIN SIGHT: HOW UK COMPANIES ARE USED TO LAUNDER CORRUPT WEALTH

A Transparency International report has identified 52 global corruption and money laundering cases involving 766 UK companies.  It found that the UK is home to a thriving company formation industry which gives money launderers access to UK firms and that the UK’s system to defend against this is failing to prevent the abuse of UK companies.   It found 766 companies registered in the UK that have been directly involved in laundering stolen money out of at least 13 countries.  These companies are used as layers to hide money that would otherwise appear suspicious, and have the added advantage of providing a respectability uniquely associated with being registered in the UK.  It also reports that trust and corporate service providers (TCSP) that form and administer companies have a poor track record of identifying and reporting money laundering with only 77 of the 400,000 SAR filed in the UK last year coming from this sector.

Key statistics:

  • 766 UK companies involved in 52 corruption and money laundering cases worth up to £80 billion

o   those 766 companies could have cost a total of just £15,000 to set up

o   one quarter of these are still active today

o   half of these registered to just 8 different addresses

  • Just 6 staff in Companies House police the integrity of some 4 million UK companies
  • TCSP filed just 77 of the 400,000 SAR last year, which are designed to flag possible money laundering.

Key recommendations:

  • prohibit non-UK registered agents from setting up companies to avoid TCSPs with no presence in the UK, and circumventing UK AML checks
  • use financial incentives to encourage UK companies to hold a UK bank account, discouraging the use of offshore bank accounts
  • provide Companies House with sufficient resources to identify suspicious activity
  • the UK Government should seek to apply a “failure to prevent” approach to money-laundering, meaning TCSP are held more accountable for forming companies that are used to launder money
  • overhaul the UK’s AML system

http://www.transparency.org.uk/press-releases/revealed-britains-own-applebys/#.WgVCkbp2tZU

NEW US CUSTOMS ENFORCEMENT INITIATIVE TARGETS GOODS MADE WITH FORCED LABOUR

HK TDC reports that US Customs and Border Protection has launched an initiative to enforce laws broadening the existing ban on imports of goods made with forced labour.  This is currently focused on gathering information from importers, but CBP retains the authority to detain shipments suspected of non-compliance. In addition, importers may be at risk for monetary and criminal penalties.

PANAMA SAYS ODERBRECHT PAID EX-PRESIDENT’S SONS $49 MILLION

Reuters reports that Panama prosecutor’s office alleges that the 2 sons of former Panamanian President Ricardo Martinelli were paid $49 million by Brazilian engineering company Odebrecht through a network of shell companies.

US IMPOSES SANCTIONS ON 10 MORE VENEZUELAN OFFICIALS

The US Treasury on 9th November announced sanctions against 10 current or former Venezuelan government officials, whom it said “are associated with undermining electoral processes, media censorship, or corruption in government-administered food programs in Venezuela.”  They include Freddy Alirio Bernal Rosales, minister of urban agriculture, Ernesto Emilio Villegas Poljak, the newly-appointed minister of culture and the former minister of communication and information, and Julian Isaias Rodriguez Diaz, the ambassador to Italy.

https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20171109.aspx

The relevant US Treasury FAQ have also been updated –

https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20171109_33.aspx?src=ilaw

http://www.bbc.co.uk/news/world-latin-america-41936661?src=ilaw

SAUDI BILLIONAIRES WANT TO WITHDRAW THE ASSETS FROM THE KINGDOM AND THE STATES OF THE PERSIAN GULF Bloomberg has reported on 10th November that several Saudi billionaires are negotiating with the banks, managing companies and councilors about withdrawal of their assets from Saudi Arabia and the states of the Persian Gulf, due to fears of a freezing of their assets in the light of the anti-corruption crackdown in Saudi Arabia.

THE KLANSMAN AND HIS DEATH RAY

You may have missed the 2005 US case, which has recently been the subject of an appeal – US v Crawford which was the first conviction under the 2004 law barring the acquisition and use of so-called “dirty bombs”.  Its bizarre plot involved Ku Klux Klan business cards, a modified x-ray machine, and a plot to kill President Obama and a number of Muslims.  The US Navy veteran was convicted and sentenced to 30 years imprisonment.  He had planned to use a modified industrial x-ray machine that would, with assistance of Klansmen, emit deadly levels of radiation.  He had also attempted to recruit the Israeli Embassy and Jewish organisations in his plot to help kill what he called “enemies of Israel”.  He had actually tested a remote-control trigger for his device before arrested by the FBI (after a tip-off).

Court documents relating to the appeal, and including the tale, are at –

https://www.pbwt.com/content/uploads/2017/11/US-v.-Crawford.pdf

OFAC REMOVES CÔTE D’IVOIRE SANCTIONS REGULATIONS

With effect from 13th November OFAC is cancelling the Côte d’Ivoire Sanctions Regulations.

US CANNABIS LAW FIRM TARGETS UK OPENING

Legal Futures reports that a US law firm that only acts for cannabis industry operators is set to launch an office in the UK.  It said Denver-based Hoban Law Group (HLG) announced that it will open 4 offices in the EU by late autumn and 2 offices in Latin America by spring of 2018.  HLG describes itself as the US’s only full-service “cannabusiness” (cannabis business) law firm, “servicing all legal medical and adult use cannabis” and has a presence in all 19 US states and territories where cannabis has been legalised.

The article quotes a statement from HLG in which it says, “The need for this international expansion has been created by existing client needs in the rapidly evolving global cannabis marketplace.  HLG has been working internationally for several years, including advising numerous international governments on cannabis policy and facilitating international business transactions in this space.  HLG’s international offices will deal primarily with structured finance, M&A activity, worldwide trade, regulatory law, and equity placement exclusively in the cannabis industry”.

https://www.legalfutures.co.uk/latest-news/bringing-new-meaning-high-us-law-firm-targets-uk-opening

NORTH KOREA: A SANCTIONS OVERVIEW

On 8th November law firm Clyde & Co published the latest of its useful summaries of sanctions law and processes.  It considers UN, EU and US sanctions, and in particular the situation for shipping under the UN sanctions.

https://www.clydeco.com/blog/sanctions/article/north-korea-a-sanctions-overview#page=1

THE QATARI BOYCOTT FOUR MONTHS ON

Law firm Clyde & Co reviews the situation.  It reports that 4 months after UAE, Saudi Arabia, Egypt and Bahrain (the so-called “B4 countries”) ended diplomatic relations and imposed trade and other restrictions on Qatar the dispute shows no sign of immediate resolution.  For the time being, it says, the various restrictions remain in force and whilst it is still in theory possible to lawfully move goods from B4 states to Qatar via third countries, it is taking longer to do so and is proving more expensive.

https://www.clydeco.com/insight/article/the-qatari-boycott-four-months-on

CANNABIS FACTORY CRIMINAL’S FILM AND TV MEMORABILIA AUCTIONED

Martin Fillery was the guy responsible for the cannabis farm found in a Cold War bunker in Wilshire housing 4,000 plans and capable of £2 million yield per year.  It turned out he was a collector of film and TV memorabilia,  which were seized and auctioned in Northern Ireland.  It included a BMW that was driven by the character Biff in “Back to the Future II” (realised £20,000), and a “Batboat” (£15,000).  A replica of the “Only Fools and Horses” yellow Reliant 3-wheeler sold for £6,000, and a 6-feet high Iron Man statue raised £3,100.

EUROJUST SUPPORTS MULTI-NATIONAL ACTION AGAINST ONLINE PORTAL

The operations led by the German criminal authorities were carried out in close co-operation with the judicial and law enforcement authorities of France, Netherlands, Spain, Canada, San Marino and Switzerland, and followed investigations in Germany against criminal networks suspected of managing the Internet-based download portals http://www.usenetrevolution.info, www.town.ag and www.usenet-town.com, which illegally offered licensed or copyright materials (e.g. films, TV shows, software, computer games, music, e-books and e-papers).  In total, the portals provided illegal access to approximately 2 million links to licensed or copyrighted materials.

http://eurojust.europa.eu/press/PressReleases/Pages/2017/2017-11-10.aspx

HOME OFFICES CONSULTATION: AIR PASSENGERS “MISDIRECTED” FOR BORDER CHECKS

On 10th November consultation opened on new powers to allow the Home Office to operate a civil penalty under the Immigration Act 2016.  A penalty may be imposed on a carrier or airport operator if they fail to take all reasonable steps to ensure that passengers arriving in the UK are correctly directed through a secure channel to border control for appropriate checks to be completed.  This consultation seeks views on the content of 2 codes of practice which will support carriers and airport operators in taking all reasonable to steps to do this and sets out a clear charging matrix for the penalty where a misdirection occurs.

DOES JAPAN REALLY WANT TO GO NUCLEAR?

Article in Swiss thinktank, Center for Security Studies (CSS) at ETH Zurich.  It asks what would it take for Japan to create a nuclear weapons programme.  More specifically, is such an endeavor feasible?  To answer this question, Richard Bitzinger outlines and explores the necessary infrastructure requirements, economic investments and political maneuvers that would underpin the creation of a Japanese nuclear programme.  While Japan might be able to fund a nuclear programme, Bitzinger maintains that management of the inevitable public resistance to the project would constitute a significant hurdle.

http://www.css.ethz.ch/en/services/digital-library/articles/article.html/270d47a4-e3cd-408f-8cb0-765b89320114

LAW SOCIETY SET TO INTERVENE IN LANDMARK PRIVILEGE CASE

The Law Society Gazette reports that the Law Society to seek permission to intervene in a alleged bribery and corruption case between the SFO and mining company ENRC which could reset the parameters of legal professional privilege.  In May, the High Court found in favour of the SFO, but an appeal in the Court of Appeal could result in internal documents relating to criminal investigations being handed over to prosecutors.  The SFO claimed that documents prepared for ENRC’s own internal investigation should not be covered by privilege.

The President of the Law Society said, “Without the protection of legal professional privilege, firms may find it difficult to conduct effective internal investigations. If the ruling is upheld, it potentially has the perverse effect of discouraging firms from self-reporting for fear of the consequences.  The right for anyone to communicate confidentially with their lawyer is a fundamental part of our legal system and we want to ensure that this right is protected for all of us, including corporations.”

https://www.lawgazette.co.uk/law/law-society-set-to-intervene-in-landmark-privilege-case/5063665.article

COUNTERFEIT REMEMBRANCE DAY GOODS SEIZED BY ORDER FORCE

The Evening Times on 10th November reports that counterfeit Remembrance Day merchandise (poppy-branded jewellery, key rings and scarves), some with “Lest We Forget” on it, which infringes the Royal British Legion copyright, seized at Tilbury on import from China.

COUNCIL OF EUROPE CORRUPTION REPORT ON THE UK

The Group of States Against Corruption (GRECO) publishes its second 4th round compliance report on the UK.  It was adopted by GRECO plenary in March 2017, and reviews implementation of recommendations in respect of corruption prevention among MP, judges and prosecutors.  It concludes that, of the 8 recommendations issued to the UK in 2012, 7 have now been implemented and 1 (that the number of fee-paid judges is reviewed with a view to reducing it in favour of salaried judges) partially implemented.

https://rm.coe.int/fourth-evaluation-round-corruption-prevention-in-respect-of-members-of/168076504f

WHAT IS HAPPENING IN LEBANON?

After the resignation of its prime minister, and Kuwait and Saudi Arabia telling their citizens to leave the country, this RUSI article Syria seems to be reasserting its historic control over its neighbour.

https://rusi.org/commentary/lebanon-return-pax-syriana

NEW US BORDER LEGISLATION INCREASES FOCUS ON CYBERSECURITY AND PRIVACY AT PORTS

Law firm Reed Smith reports that the US House of Representatives’ Homeland Security Committee held a hearing on “Examining Physical Security and Cybersecurity at Our Nation’s Ports” that sought to identify and understand cyber threats posed by vulnerabilities at seaports, and explore potential mitigation strategies to protect industries and individuals at the nation’s borders.  The hearing came on the heels of a new Bill proposed by the House of Representatives and passed by the Committee on October 4th, entitled the Border Security for America Act that could implicate privacy concerns and data-sharing obligations of these same individuals and businesses.  Among other heightened data collection efforts, the Act seeks to establish a biometric exit data system to collect and verify information on the movement of persons (e.g. passengers, longshoremen, crew members, and others) entering US ports while having ”the least possible disruption” on the movement of cargo.

https://www.technologylawdispatch.com/2017/11/privacy-data-protection/coming-to-america-cybersecurity-and-privacy-concerns-await-you-at-u-s-ports/

EU ARMS EMBARGO ON VENEZUELA TO COME?

The excellent European Sanctions Blog reports that EU ambassadors have agreed to impose an arms embargo on Venezuela, as well as a ban on any equipment capable of being used to repress opponents within the state and EU Foreign Ministers will vote on whether to approve the measures.  The proposed sanctions follow a UN report (published August 2017) which concluded that “extensive human rights violations and abuses” had been carried out in the context of country-wide anti-Government demonstrations.

TRIO JAILED FOR SMUGGLING 2,800 DEAD BUTTERFLIES INTO CHINA

ABC (Australia) reports that Chinese authorities have jailed 3 people for up to 10 years each for smuggling butterfly specimens into the country.  It reports that the group had been buying samples from overseas and mailing them to China falsely labelled as clothing or art since October 2015. Then in January 2016 customs officials intercepted a package labelled “dresses” and instead found a box full of colourful dead butterflies, and in total customs authorities seized more than 2,800 samples, in what customs described as the “biggest endangered butterfly specimen smuggling case” uncovered in the country.

http://www.abc.net.au/news/2017-11-09/china-court-hands-down-jail-terms-over-butterfly-smuggling/9133696

COCAINE SEIZURES IN ENGLAND AND WALES UP BY A THIRD

The Mail Online reports that the amount of cocaine seized by Border Force and police officers has surged by nearly a third in a year, 5,516 kg seized in England &Wales in 2016/17. This is said to be a 30% increase compared with the previous year, and the largest volume since at least 2003.

http://www.dailymail.co.uk/wires/pa/article-5067025/30-increase-cocaine-seized-police-Border-Force.html#ixzz4y34DCDkP

TRADER JAILED FOR OFFERING TO SELL ELEPHANT TUSKS AND RHINO HORNS

ACPS news release reports that an illegal trader who offered to sell elephant tusks, rhino horns, and hippopotamus teeth has been jailed for a total of 14 months.  Abbas Allawi, 52, marketed the items for sale “cash only” on Instagram at £60,000 per kg. It was estimated he would have made £2 million from the sale.  He was convicted of 6 offences at Harrow Crown Court.  A raid on his home had found the horns, tusks and teeth in the loft.

http://www.cps.gov.uk/news/latest_news/trader-jailed-for-offering-to-sell-/

 

 

 

REPORT – HIDING IN PLAIN SIGHT: HOW UK COMPANIES ARE USED TO LAUNDER CORRUPT WEALTH

A Transparency International report has identified 52 global corruption and money laundering cases involving 766 UK companies.  It found that the UK is home to a thriving company formation industry which gives money launderers access to UK firms and that the UK’s system to defend against this is failing to prevent the abuse of UK companies.   It found 766 companies registered in the UK that have been directly involved in laundering stolen money out of at least 13 countries.  These companies are used as layers to hide money that would otherwise appear suspicious, and have the added advantage of providing a respectability uniquely associated with being registered in the UK.  It also reports that trust and corporate service providers (TCSP) that form and administer companies have a poor track record of identifying and reporting money laundering with only 77 of the 400,000 SAR filed in the UK last year coming from this sector.

Key statistics:

  • 766 UK companies involved in 52 corruption and money laundering cases worth up to £80 billion

o   those 766 companies could have cost a total of just £15,000 to set up

o   one quarter of these are still active today

o   half of these registered to just 8 different addresses

  • Just 6 staff in Companies House police the integrity of some 4 million UK companies
  • TCSP filed just 77 of the 400,000 SAR last year, which are designed to flag possible money laundering.

Key recommendations:

  • prohibit non-UK registered agents from setting up companies to avoid TCSPs with no presence in the UK, and circumventing UK AML checks
  • use financial incentives to encourage UK companies to hold a UK bank account, discouraging the use of offshore bank accounts
  • provide Companies House with sufficient resources to identify suspicious activity
  • the UK Government should seek to apply a “failure to prevent” approach to money-laundering, meaning TCSP are held more accountable for forming companies that are used to launder money
  • overhaul the UK’s AML system

http://www.transparency.org.uk/press-releases/revealed-britains-own-applebys/#.WgVCkbp2tZU

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OECD FORUM ON TAX AND CRIME HELD IN LONDON – AND NEW REPORTS PUBLISHED

OECD FORUM ON TAX AND CRIME HELD IN LONDON

NEW OECD PUBLICATION (1) – FIGHTING TAX CRIME: THE TEN GLOBAL PRINCIPLES

NEW OECD PUBLICATION (2) – EFFECTIVE INTER-AGENCY CO-OPERATION IN FIGHTING TAX CRIMES AND OTHER FINANCIAL CRIMES – 3rd EDITION

More than 200 tax crime and economic crime experts attended the 5th OECD Forum on Tax and Crime on 7th and 8th November, where they discussed ways to tackle these tax and economic crimes more effectively.

The Forum identified 5 priorities for action –

  • Ensure that professional enablers play their part in tackling tax crime;
  • Step-up the level of international and cross government co-operation to build a comprehensive and global response to tax crime, drawing on a report launched at the Forum

http://www.oecd.org/tax/crime/effective-inter-agency-co-operation-in-fighting-tax-crimes-and-other-financial-crimes.htm

  • Learn the lessons from around the world about how best to respond to tax crime by implementing the OECD 10 Global Principles, which were also launched at the Forum (see below)

http://www.oecd.org/tax/crime/fighting-tax-crime-the-ten-global-principles.htm

  • Strengthen the ability to collaborate globally and by building capacity to share intelligence and data quickly and securely
  • Build capacity in all countries – including developing countries – to combat financial crimes so that there can be no hiding place for tax criminals. Refers to the OECD International Academy for Tax Crime Investigation, which is intended to improve the ability of developing countries to detect and investigate financial crimes, and recover the proceeds of those crimes, by developing the skills of tax and financial crime investigators through intensive training courses.

http://www.oecd.org/ctp/crime/tax-crime-academy.htm

Closing statement from HMRC and OEC

http://www.oecd.org/tax/crime/closing-statement-oecd-forum-on-tax-and-crime-november-2017.pdf

OECD news release

http://www.oecd.org/tax/strengthening-the-global-response-to-tax-crime.htm

The OECD 10 Global Principles

Principle 1.        Ensure Tax Offences are Criminalised

Principle 2.        Devise an Effective Strategy for Addressing Tax Crimes

Principle 3.        Have Adequate Investigative Powers

Principle 4.        Have Effective Powers to Freeze, Seize and Confiscate Assets

Principle 5.        Put in Place an Organisational Structure with Defined                    Responsibilities

Principle 6.        Provide Adequate Resources for Tax Crime Investigation

Principle 7.        Make Tax Crimes a Predicate Offence for Money Laundering

Principle 8.        Have an Effective Framework for Domestic Inter-Agency Co-operation

Principle 9.        Ensure International Co-operation Mechanisms are Available

Principle 10.      Protect Suspects’ Rights

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