9th December 2017
MONGOLIA LISTS SINGAPORE, SWITZERLAND AND HONG KONG TO BANNED LIST
The UB Post reports that the cabinet in Mongolia has updated the list of countries and territories where Mongolian state officials and their family members and business partners are banned from opening bank accounts and to access the ownership of property and real estate, adding Singapore, Switzerland and Hong Kong to the list.
WITH MUGABE’S DEPARTURE, SHOULD FOREIGN INVESTORS RECONSIDER ZIMBABWE?
Jones Day provides an article asking pertinent questions, such as what should investors considering Zimbabwe as a destination be thinking about? What are current risks, and what are positive signs to look for in the coming year?
THE USE OF DRONES BY THE UN
The Pass Blue website has an interesting piece on the use of drones (UAV) by the UN (which I for one had not realised), which started with a prototype in 2007 and began in earnest in 2013. It remarks on a recent report on the use of technology, saying that their use bring advantages to a peacekeeping operation in safety, security, situational awareness and command and control.
ALBANIA “MAIN TRAFFICKING SOURCE OF CANNABIS IN EU”
Albanian media has picked up on the comment in the recent Europol report that in its strategic report about how criminal groups get stronger through international drug traffic, and the same as in every other report of the past years, Albania is listed as the main trafficking report of cannabis in the EU.
FORMER IRANIAN BANKER SENTENCED TO 30 YEARS IN ABSENTIA
Iranian media reports that Mahmoud Reza Khavari, a former top baker who fled to Canada after allegedly carrying out a massive fraud, has been sentenced to 30 years imprisonment by the courts in Iran. 20 years were for “disrupting the economic system of the country” and 10 years for accepting a bribe, as well as a fine equivalent to the value of the bribe.
UK OIL PIPELINE THIEF JAILED
The Portsmouth News reports that a businessman has been jailed for 5 years for a £1 million oil scam which involved syphoning off fuel from underground pipelines. Roger Gull was part of a criminal operation which involved drilling into high-pressure pipelines to steal hundreds of thousands of litres of fuel worth millions of pounds. Among the targets was a pipeline in the grounds of the Chevening Estate in Kent, when it was the former Liberal Democrat leader’s ministerial country home. https://www.portsmouth.co.uk/news/crime/regional-jail-for-man-who-stole-oil-worth-millions-from-pipelines-1-8283747
US COURT ORDER FOR VIRTUAL CURRENCY INFORMATION FOR TAXPURPOSES
Law firm Dechert has published a brief concerned with the decision of the US District Court for the Northern District of California on November 28th to order the international digital currency broker, Coinbase Inc., to produce to the Internal Revenue Service (IRS) the records of Coinbase’s account-holders. The IRS seeks the information in connection with the investigation of allegedly underreported virtual currency gains. Coinbase had resisted the initial summons from IRS, but then the IRS significantly reduced the type and amount of information requested, and the court reduced even further narrowed the types of information to which the IRS would be entitled.
Dechert remarks that the decision of the court raises the issue of balancing the privacy interests of virtual currency account holders with the legitimate interest in investigating potential tax evasion and brings virtual currencies further into the regulatory scope of US government agencies.
IMPROPER USE OF IMPORTED GOODS IN US MILITARY CONTRACT LEADS TO $1.5 MILLION PENALTY
Sandler Travis & Rosenberg reports that a defence contractor in the US is to forfeit $1.5 million after admitting that optical materials it imported from China and used in weapons sights manufactured under contracts with the Department of Defense were improperly certified as compliant with the Buy American Act.
GUERNSEY LAW ENFORCEMENT ANNUAL REPORT ISSUED
The report covering 2016 shows that drug offences, assault and criminal damage were among the most common crimes, with the total number of reported crimes falling by 138 against 2015 to 1,389, continuing a trend. Fewer crimes were recorded during the year than in 2015 and detection rates remained largely on a par with the previous year at 48%. Cybercrime is said to be becoming increasingly commonplace for technology to be used as a tool to aid criminal activity, and is described as a major and increasing threat to the financial sector, businesses and members of the public. It says that the Financial Intelligence Service continues to proactively identify and target those engaged in financial and economic crime. Amongst the successes the report trumpets are –
- a number of successful prosecutions for fraud, including a director of a business group who had moved large sums of money between clients without their knowledge, one man who abused his position as a trustee to defraud his clients, and another for fraud by false representation involving the unlawful sale of shares; and
- assisting the Bulgarian authorities with international asset recovery, resulting in the forfeiture of assets worth approximately £1.1 billion.
WHITE PAPER: ENTITY SCREENING AND VESSEL TRACKING FOR UN SANCTIONS
On 9th December, Project Alpha announced a new White Paper. It remarked that the most recent UN Panel of Experts report on North Korea (published on 27th February 2017) found that “implementation remains insufficient and highly inconsistent”. This suggests that the availability of information on vessels in breach of sanctions against North Korea and the capabilities to obtain such information needs to improve. Improvements in these areas would assist the UN Sanctions Committee, individual Member States, and businesses in implementing UN sanctions. The White Paper aims to assess the potential usefulness of entity screening and vessel tracking (such as AIS data) for sanctions compliance, implementation, and enforcement by law enforcement, regulators and private sector.
The White Paper itself is at –
LAW CHANGE: LOCATION OF DEBTS FOR LETTERS OF CREDIT
On 6th December law firm Gowling WLG published a brief saying that the UK Supreme Court has allowed an appeal by petroleum company Taurus Petroleum Limited against the State Oil Marketing Company of Iraq (SOMO), and that this case has changed the law on the location of debts in the context of letters of credit (LoC). It summarises what has changed and the impact that this will have when enforcing letters of credit. The decision of the Supreme Court has overruled the previous case law on the location of debts arising under letters of credit. The general rule on location of debts now applies. This rule stipulates that the debt will be situated wherever the debtor (i.e. the issuing bank) is located. The case also had the effect of confirming that the place of debt under the LoC was in England and the necessary third party debt order could be made.
BANKING SECURITY SPEND TO EXCEED $96 BILLION
In Banking Technology it is reported that new regulations, such as the European Union’s General Data Protection Regulation (GDPR), are forcing enterprises to spend more of their IT budgets on security, which could push the overall market past $96 billion next year, according to new numbers from Gartner, according to Security Now (Banking Technology‘s sister publication).
WHAT IS THE FUTURE OF DIGITAL CASH?
Interesting article from Banking Technology, taking as its starting point the statement from a recent World Economic Forum (WED) report that “Sweden could stop using cash by 2023″, and that the country is moving towards favouring cards and mobile payment apps. There is criticism of, and warnings about, Bitcoin and other cryptocurrencies, and Bitcoin will no longer be talked about as being money, but that it does seem that digital cash in the form of card and mobile app payments do have a more promising future than cryptocurrencies. They will nevertheless need to be supported by traditional currencies and by banks themselves to work.
COMBATING FRAUD AND COUNTERFEITING OF NON-CASH MEANS OF PAYMENT
On 8th December the EU Parliament issued an impact assessment of a Commission proposal of 13th September for a Directive on combating fraud and counterfeiting of non-cash means of payment and replacing Council Framework Decision 2001/413/JHA. The current legal framework that establishes common minimum rules on the criminalisation of non-cash payment fraud and counterfeiting is Council Framework Decision 2001/413/JHA, which was part of the 2001 EU Action Plan on preventing fraud and counterfeiting of non-cash means of payment. However, the policy and legislative contexts have significantly changed since 2001 and various legislative acts have been adopted at EU level to secure payments and prevent fraud and counterfeiting, and the volume of online transactions and the use of non-cash payment methods have been increasing in Europe in recent years. The Impact Assessment is said to lay out the problem of non-cash payment fraud in a coherent and clear manner, but contains criticism of the consultation processes with stakeholders.
UNITED STATES’ NUCLEAR WEAPONS POLICY – NEW PRIORITIES, NEW CHALLENGES
Another European Parliament briefing issued on 8th December that considers –
- the current US nuclear forces
- US nuclear weapons policy beyond the Cold War
- US nuclear weapons policy under the Obama administration
- President Trump and the 2017 Nuclear Posture Review
- challenges for US nuclear policy
MULTILATERALISM IN INTERNATIONAL TRADE WTO ACHIEVEMENTS AND CHALLENGES
Yet another EU Parliament research briefing issued on 8th December. It notes that World Trade Organisation (WTO) has failed to conclude the 2001 Doha Development Round of trade negotiations and has been unable to address new trade issues that have arisen since its creation in 1995. This has led many countries to pursue bilateral, regional and plurilateral trade agreements outside the multilateral framework. It says that the worldwide rise of protectionism also threatens the WTO’s objective of free trade. This, it says, is exemplified by the election of President Trump, who has called the WTO ‘a disaster’.
The paper says that the EU nevertheless continues to strongly support the multilateral trading system, as it benefits from the WTO’s rules-based system that supports free trade. At the same time, the EU views bilateral, regional and plurilateral agreements as complementary approaches to the WTO and is thus actively pursuing agreements along both avenues.
BRIEFING – THE POLITICAL CRISIS IN VENEZUELA
And yet another EU Parliament research briefing, being an updated version of an October 2017 paper. A useful background to the turmoil and fallout from the situation in that country.
10th December 2017
$1.2 BILLION MAY BE TURNED OVER TO JAMAICAN GOVERNMENT
The Gleaner in Jamaica reports that the Government could get a financial windfall from the Financial Investigations Division (FID), which is sitting on just over $1.2 billion in cash, money it has taken from persons suspected of being involved in criminal activities. The FID was established by the Government to stamp out money laundering and related crimes, and the cash was seized over the last decade using the Proceeds of Crime Act (POCA). The money is now being held in an interest-bearing account until the courts determine whether it should be forfeited to the State, at which time it would go into the Consolidated Fund.
THE IMF AND CORRUPTION
Why does the IMF care so deeply about corruption?
SOUTH KOREA STEPS UP NORTH KOREA SANCTIONS
Yonhap News reports on 10th December that South Korea will add 20 North Korean organizations and 12 individuals to its sanctions blacklist, as part of its ongoing efforts to cut off international funding for Pyongyang’s nuclear and missile programmes, a senior official said. The companies, mostly banks and shipping companies, include Rason International Commercial Bank, Agricultural Development Bank, Cheil Credit Bank, International Industrial Bank, Koryo Commercial Bank, Korea Daebong Shipping Company and Yusong Shipping Company.
The listed individuals include Kim Su-kwang, a North Korean intelligence agent based in Belarus; Kim Kyong-Hyok, a First Credit Bank representative in Shanghai; Pak Chol-nam, a First Credit Bank representative in Beijing; Ri Ho-nam, a Ryugyong Commercial Bank representative in Beijing; and Ji Sang-jun, an official of Korea Kumgang Group Bank in Moscow.
NORTH KOREA REACTS TO THREAT OF US MARITIME BLOCKADE
Yonhap News on 10th December reported that North Korea lashed out at the US over the possible use of a naval blockade in the wake of its recent missile provocation, warning that it would consider such a move as a “declaration of war.”
BLAST FROM THE PAST – WHEN THE US NAVY SENT THE MAIL BY ROCKET
The Smithsonian National Postal Museum has published an article about the use of a Regulus surface-to-surface missile fired from a submarine in 1959 to carry a payload of mail. As the article says, it was ostensibly an experiment in communication transportation, the Regulus’ mail flight sent a subtle signal that in the midst of the Cold War, the US military was capable of such accuracy in missile flight that it could be considered for use by the post office.
11th December 2017
OECD PUBLISHES COMMENTS RECEIVED ON DRAFT TOOLKIT ON TAXATION OF OFFSHORE INDIRECT TRANSFERS
CCH Daily reports that the he OECD Platform for Collaboration on Tax has published comments received in response to the discussion draft of a toolkit on the Taxation of Offshore Indirect Transfers. The Platform is a joint effort launched in April 2016 by the IMF, OECD, UN and the World Bank Group. It is designed to intensify the co-operation between these organisations on tax issues. On 1st August, interested parties were invited to provide comments on the discussion draft of a toolkit on the Taxation of Offshore Indirect Transfers. The comments can be found at –
More information on the Platform –
The Platform formalises regular discussions between the organisations on the design and implementation of standards for international tax matters, strengthens their ability to provide capacity-building support to developing countries, and helps them deliver jointly developed guidance. It also increases their ability to share information on operational and knowledge activities around the world.
UK WARNING OVER MONEY LAUNDERING RISK FROM ‘NEGLIGENT’ ACCOUNTANTS
CCH Daily reported on 11th December that the recent UK National Risk Assessment contained a warning about “negligent” or “unwitting” accountants risk finding themselves involved in money laundering as accountancy services remain attractive to criminals. The NRA is quoted as saying that, “Some of those accountants involved in money laundering cases are assessed to be complicit or wilfully blind to money laundering risks, though the majority of these cases are likely to involve criminal exploitation of negligent or unwitting professionals”, and “law enforcement agencies assess that accountants with professional body status are attractive for those seeking to engage in high-end money laundering due to the credibility that their services can confer”. The areas highlighted are company formation seen as a higher risk when offered by accountants rather than specialised company formation agents), company liquidation and associated services (including insolvency practice).
THE TOP 100 ARMS‑PRODUCING AND MILITARY SERVICES COMPANIES 2016
In December the Stockholm International Peace Research Institute published this report. A factsheet was also produced which lists the SIPRI Top 100 for 2016 from the updated SIPRI Arms Industry Database and describes the trends in international arms sales. The data shows an increase over 2015. It says that this is the first year of growth in Top 100 arms sales after 5 consecutive years of decline. The arms sales of the Top 100 for 2016 are 38 per cent higher than those for 2002, when SIPRI began compiling data.
IN SEPTEMBER RUSSIA COMPLETED DESTRUCTION OF CHEMICAL WEAPONS STOCKPILE
In September, SIPRI reported that the Director-General of the Organisation for the Prohibition of Chemical Weapons (OPCW) had congratulated Russia on completing the destruction of its chemical weapons stockpile which originally totalled 39 967 agent tonnes (i.e. excluding munition weight).
DATABASE OF MULTILATERAL ARMS EMBARGOES SINCE 1950
SIPRI maintains this archive, which contains information on all multilateral arms embargoes that have been implemented by an international organization, such as the EU or UN, or by a group of nations. It includes both legally binding embargoes and those that are solely political commitments. It provides details of the aims, scope and amendments to all arms embargoes that are in force, or have been in force since 1998 and to most that were in force since 1950.
CHINESE USING FAKE LINKEDIN PROFILES TO LURE “INFORMANTS”
EU Observer on 11th December reports that the German domestic intelligence agency (BfV) says China is using fake profiles on social media to target German officials and politicians. Its head said it was a “broad-based attempt to infiltrate, in particular, parliaments, ministries and government agencies”. He said more than 10,000 Germans have been approached by the alleged ruse from Chinese profiles posing as reputable professionals on social networking site LinkedIn, and BfV released around half dozen fake LinkedIn profiles of young attractive Chinese professionals.
EUROPEAN COURT REJECTS APPEAL OF YANUKOVYCH
The appeal of former Ukraine president, Oleksandr Viktorovych Yanukovych against EU sanctions imposed against him has been rejected by the CJEU. Cases C-598/16 and C-599/16 refer, see Official Journal OJ C424 of 11th December.
ALLEGED CORRUPTION SCANDAL IN LONDON BOROUGH
The BBC reported on 11th December that secret recordings have emerged apparently connecting a Labour council to an alleged £2 million corruption scandal. Secret recordings leaked to the Sunday Times involve a businessman and a Labour-led London authority offering to deliver planning permission for a development in exchange for the “premium”. Tower Hamlets Council said it referred the case to the NCA.
ALLEGED MACEDONIAN MONEY LAUNDERING
BNE reports on 10th December that Macedonia’s public prosecution office has launched a probe into allegations that officials from the former government led by the conservative VMRO-DPMNE party were involved in laundering money via Serbian firms.
UK NATIONAL ECONOMIC CRIME CENTRE (NECC)
On 11th December the Home Secretary announced the creation of the National Economic Crime Centre (NECC) within the NCA. The multi-agency centre will plan, task and co-ordinate operational responses across agencies bringing together the UK’s capabilities to tackle economic crime more effectively. Supported by enhanced intelligence and analytical capabilities it will draw together expertise from across law enforcement agencies, Government and the private sector.
The NECC will have the power to direct the SFO to carry out certain investigations – the previously-threatened SFO having earned a reprieve.
See also the Law Society Gazette article –
Statement by the Attorney General on the new Centre etc –
SFO Director insists it will retain independence
US ACCESS TO DATA HELD IN IRELAND: EU INTERVENES IN COURT CASE
Outlaw reported on 8th December that the European Commission has intervened in a long-running legal dispute in the US Supreme Court between the US government and Microsoft over the rights of US law enforcement agencies to access data on technology companies’ customers held on servers overseas under US law.
FORMER LONDON CRIME BOSS TO REPAY £750,000
The Daily Telegraph reported on 11th December that Terry Adams, former London crime boss, is to pay £750,000 of a confiscation order imposed after his conviction for money laundering in 2007. He had said he was unable to pay the sum, despite a lifestyle described as “lavish”. But despite claiming he had no money left, Adams has now paid in full amount after being warned that he faced another 2½ years in prison if he did not.
HOW ISIS PRODUCED ITS CRUEL ARSENAL ON AN INDUSTRIAL SCALE
On 11th December, the New York Times published an article following the discovery of improvised chemical rockets, the latest in a procession of weapons developed by the Islamic State during its “jihadist arms-manufacturing spree”, and a “system of armaments production that combined research and development, mass production and organized distribution to amplify the militant organization’s endurance and power”. In addition to such low-grade items such as improvised explosive devices (IED) and booby traps, there were locally-manufactured injection-molded munition fuses, shoulder-fired rockets, mortar ammunition, modular bomb parts and plastic-bodied land mines that underwent generations of upgrades. Many of these were said to ave been produced in “industrial quantities”. The article warns that the methods learned are likely to be spread to other IS-linked areas of conflict, such as in Africa and the Philippines.
UK GOVERNMENT’S PROPOSED CHANGES TO THE OFFENCE OF COLLECTING TERRORIST INFORMATION
Law firm, Corker Binning has issued a briefing referring to 2 specific changes to counter-terrorism legislation – criminalising the “repeated” viewing of terrorist content online, and increasing the maximum sentence for certain offences from 10 to 15 years imprisonment. The briefing is critical of the first of these – where “repeated” viewing of terrorist content is involved. The briefing reviews the current position and the proposed changes. A fundamental problem is that the proposal directly links viewing material with the preparation for acts of violence, and this may be a step too far. As the article quite rightly notes, passing legislation is relatively easy and cheap for Governments, but it is rarely effective by itself – it is how (or if) it is enforced and used that matters more.
“MOST WANTED” DRUG LORD ARRESTED IN COLOMBIA
KYC 360 reports that Juan Carlos Mesa-Vajello, alias “Tom” has been arrested at his 50th birthday party. There was a $2 million price on his head, offered by the US, for the man linked to crime, including murder, in Medellin. He was caught in the capital of the Medellin province.
THE TRANSNISTRIAN DEADLOCK
The Carnegie Center has produced an extremely useful article on the situation in Transnistria – the pro-Russian enclave carved out of Moldova and effectively recognised only by Russia. It argues that a convergence of international players’ interests in maintaining peace and high levels of connectivity between the Moldova and Transnistria has resulted in stability. But a conflict management strategy that relies upon a sub-optimal equilibrium is hardly enough—more needs to be done to prepare for a settlement in the long term. It alerts one to the fact that Moldova has renewed itsdemands for Russia to withdraw its military from Transnistria and, in August, declared the Russian Deputy Prime Minister Dmitri Rogozin a persona non grata – saying that many think this might indicate a re-escalation (though a survey showed only 1.3% of the Moldovan population considered the Transnistrian problem a priority, and only 1% of 18-29 year olds saw reunification a priority).
UK-ISLE OF MAN HMRC CUSTOMS ACCOUNT
HMRC on 11th December published the 2016/17 accounts. These accounts calculate the total share of common duties due to the Isle of Man government and the balance owing to either the Isle of Man or the UK. VAT and other indirect taxes and duties arising in the Isle of Man are collected on behalf of the Manx Government by the Isle of Man Customs & Excise Service.
HMRC PUBLISHED DETAILS OF DELIBERATE TAX DEFAULTERS
HMRC on 11th December published its latest list of “deliberate tax defaulters” with tax debts of more than £25,000.
IMPORTANT INSIDER DEALING DECISION IN HONG KONG
After 7 years of litigation, the Court of Appeal in Hong Kong has confirmed that offences of insider dealing or related conduct may be prosecuted under section 300 of the Securities and Futures Ordinance, even if the dealing is in securities listed overseas, so long as the fraudulent conduct has a nexus with Hong Kong. See the Bird & Bird briefing on the case –
FATF MUTUAL EVALUATION REPORT: PORTUGAL
On 11th December FATF published its report on Portugal’s AML/CFT regimes and concludes that Portugal has a sound and effective regime for fighting money laundering and terrorist financing, but should improve implementation of measures aimed at non-financial business and professions. Non-financial businesses and professions and their supervisors lack the understanding of the risks involved. It says that Portugal should allocate appropriate means and resources to the FIU so that it can adequately manage and investigate the increasing volume of suspicious transaction reports, and conduct strategic analysis to identify ML/TF trends and patterns, and should also maintain adequate and comprehensive ML/TF-related statistics in order to better support and document its understanding and analysis of risks, and demonstrate the actions taken and results achieved.
“WITHOUT PREJUDICE” – WHAT DOES IT MEAN?
The phrase “without prejudice” is commonly used in solicitors’ letters with the intention of making that correspondence inadmissible in any future litigation based on the same subject matter as the correspondence. However, Scottish law firm Morton Fraser reminds one that there are cases where the courts have considered that correspondence with is expressed as being “without prejudice” may still be admissible.
METAL THEFT FALLS IN UK AFTER INTRODUCTION OF SCRAP METAL DEALERS ACT
On 11th December, the Home Office reported that a review into the Scrap Metal Dealers Act, which (amongst other things) provided for a licensing regime, has found the number of thefts fell by more than three quarters in 4 years. The number of thefts has dropped from nearly 62,000 per year in 2012/13 to around 16,000 in 2015/16.
PUTIN ORDERS RUSSIAN FORCES OUT OF SYRIA
Defence Web reported on 11th December that President Putin had ordered Russian forces in Syria to start withdrawing, saying that after a 2-year military campaign, Moscow and Damascus had achieved their mission of destroying Islamic State.
NEW PROCEEDS OF CRIME ACT LEGISLATION IN THE UK
On 11th December, 2 new SI were published in the UK.
The Proceeds of Crime Act 2002 (Administrative Forfeiture Notices) (England and Wales and Northern Ireland) Regulations 2017 replaces defective provisions in 2015 regulations concerned with cases where a senior officer must give an account forfeiture notice under section 303Z9 of the Proceeds of Crime Act 2002 (POCA). An account forfeiture notice relates to the administrative forfeiture of funds held in bank and building society accounts, where those accounts contain the proceeds of unlawful conduct (i.e. criminality), or funds which are intended for use in unlawful conduct.
The Proceeds of Crime Act 2002 (Application of Police and Criminal Evidence Act 1984) (Amendment) Order 2017 amends the Proceeds of Crime Act 2002 (Application of Police and Criminal Evidence Act 1984) Order 2015 to include 2 new types of investigation and forfeiture orders provided for under the Criminal Finances Act 2017. The new forfeiture orders relate to the forfeiture of certain listed items of personal (or moveable) property, and the forfeiture of funds in bank or building society accounts, with the new investigation types being “detained property investigations” and “frozen funds investigations”.
TAIWAN-DOMINICAN REPUBLIC TELECOM FRAUD RING
Focus Taiwan on 11th December reported that Taiwan and the Dominican Republic had jointly cracked down on a Taiwanese-funded cross-border telecom fraud ring that set up its computer system in the Dominican Republic and preyed on Chinese nationals, the Taiwanese Criminal Investigation Bureau (CIB) said. In addition to seizures of cash and motor vehicles, police have filed a request with courts in Taiwan to seize 10 properties owned by man who runs a car company in Taichung, where laundering of the cash was said to have taken place.
3 JAILED FOR HIGHLY SOPHISTICATED VAT FRAUD
The Dundee Evening Telegraph reported that members of a gang who carried out a “highly sophisticated” £2.4 million VAT fraud have been jailed for a total of more than 24 years. They used insider knowledge provided by a former HMRC worker, Susanne Green, 38, to fraudulently claim millions in VAT repayments. A 3-year investigation found she had used her position working in the Electronic Payments Team in Southend to identify unallocated VAT payments – a payment made by a trader or individual which has insufficient details to enable HMRC to correctly allocate it to that traders’ account – and fraudulently pay them elsewhere. She used company details provided by accountants Michael Perry, 46, and Daniel Weidner, 47, to fraudulently misallocate VAT payments to specified businesses.
OXFAM: BLACKLIST THESE BALKAN STATES
BNE news website reports that Oxfam has called for several countries in the Western Balkans included on a so-called “grey list” of tax havens by the EU should instead be on the black list. Albania, Bosnia & Herzegovina, Macedonia, Montenegro and Serbia are all among the 47 countries on the EU’s watch list of countries that have promised to change their tax rules to meet the bloc’s standards.
THE THREAT TO INDISPENSIBLE UNDERSEA CABLES
Defence Web carries a report on a paper produced by Policy Exchange, a UK think-tank. This report stresses both the importance and vulnerability of the cables that are said to carry 97% of global communications and $10 trillion in financial transactions every day. In the article, the severe consequences of a disruption are highlighted as in April 2017, when the repair of the SeaMeWE 4 cable deprived Algeria of 90% of its bandwidth capacity and Internet access, and the report documents other cases with causes ranging from copper theft to earthquake. The cables are said to be “highly vulnerable” to “attack at sea and on land, from both hostile states and terrorists”. The report identifies Russia as an obvious threat, saying that it “actively contesting the Atlantic through a resurgent naval doctrine” by contemplating asymmetric targets like fibre optic cables more than conventional conflict with NATO. Russian submarines.
The report itself can be found at –
On 15th December Rferl (and the BBC and Guardian) reported that Air Chief Marshal Sir Stuart Peach, the chief of the defense staff said that Russia could pose a major threat to NATO countries by attacking underwater communication cables crucial for international trade and the Internet, and that Britain and NATO were prioritising the protection of lines of communication.
EUROPEAN REGULATORS’ AML/CFT GUIDANCE
The Joint Committee of the 3 European Supervisory Authorities (EBA, EIOPA and ESMA – ESAs) published on 11th December its final guidelines on AML/CFT. The guidance deals with the management of risk at group level where branches or subsidiaries are based in third countries whose laws do not permit the application of group-wide AML/CFT policies and procedures. In such cases, institutions are required to take effective steps to manage the resultant risk, including obtaining consent from customers to overcome restrictions on the ability to share and process customer data, and carrying out enhanced reviews to ensure branches and majority-owned subsidiaries are able to adequately assess and manage risk. In exceptional cases institutions will have to require their branch or majority-owned subsidiary to terminate the business relationship, or decline to carry out the occasional transaction, or close down some or all of their operations in the third country.
PONZI FRAUDSTER ORDERED TO REPAY TO VICTIMS
Finance Feeds reports that a New York court has ordered “Ponzi scammer” Renwick Haddow and his company Bar Works to pay $7.3 million. In June this year, the SEC had filed fraud charges against Renwick Haddow, a UK citizen living in New York. It alleged that he created a broker-dealer and did not register the firm with the SEC as required under the federal securities laws. Haddow allegedly used sales representatives to cold call potential investors and sell securities in Bitcoin Store Inc. and Bar Works Inc. He allegedly diverted more than 80% of the in funds raised.
BANK OF IRELAND SEEKS REPAYMENT OF €14.8 MILLION IN ALLEGED FRAUD CASE
Bank of Ireland says a couple transferred ownership of properties in Dublin with intent to defraud creditors, including the bank which says it is owed €14.8m. The bank has brought 2 sets of proceedings in the Commercial Court against Kenneth and Jacqueline White. The first is a summary judgment claim for €14.8m relating to 8 loans the bank advanced to the couple to acquire and/or refinance property investments in Dublin. Along with the summary judgment case against the couple, the bank has also brought separate proceedings saying the transfer of ownership of the Wicklow Street property and White home was done with the intention of defrauding creditors.
BITCOIN: HAVE THE LESSONS OF THE FINANCIAL CRASH BEEN LEARNED?
On 11th December the Royal United Services Institute published an article as the Chicago Mercantile Exchange chooses Halloween to open its Bitcoin futures contract exchange. The article highlights concerns about the systemic risks presented by Bitcoin and many other Fintech projects which are creating conditions that closely resemble those preceding the financial crisis.
DAUGHTER OF ROMANIAN JUDGE USED TAINTED MONEY FOR LAVISH LONDON APARTMENT
OCCRP carries a story alleging that he daughter of a top Moldovan judge lived the high life in London thanks to money that was channeled through 2 companies involved in the “Russian Laundromat” money laundering scheme that pumped billions of dollars through Moldova from Russia. Most of the money went to a real estate agency to cover the rent of a luxurious apartment while she was studying in London. A smaller amount was deposited directly into her personal bank account.
CAUTION: “VOLUNTARY INTERVIEWS” BY THE POLICE
Legalvoi website carries a cautionary article about the effect of the 28-day bail limit in the UK. It points out that when the police investigate a criminal offence, it may not be necessary to formally arrest a suspect – previously this was common, but now they are as likely to pursue matters with a “voluntary interview”. It points out that all suspects who are interviewed, whether arrested or voluntary, are entitled to free and independent legal advice, though this might not be an obvious point where a “voluntary” interview is involved but, it says, they should not be at the expense of legal advice.
SPOTLIGHT ON ISRAEL CORRUPTION
In the latest TRACE podcast interview, Chaim Gelfand of Israeli law firm Shibolet & Co talks us through the corruption scandals involving 2 Israeli Prime Ministers and discusses the current compliance environment in Israel.
IMPACT OF BREXIT ON THE DEVELOPMENT OF COMMON LAW, DISPUTE RESOLUTION AND JUDICIAL CO-OPERATION IN CIVIL AND COMMERCIAL MATTERS
Speech by Lord Justice Hamblen at conference in Hong Kong, seeking to dispel some “myths”.
CHINA TARGETS EXPORT MARKET WITH LATEST SUBMARINE DESIGNS
Janes.Com reports that China has unveiled a number of submarine designs aimed at the export market, having recently won orders from both Thailand and Pakistan. The designs include 200-, 600-, and 1,100-tonne diesel-electric submarines.
FRENCH DEFERRED PROSECTION AGREEMENT FOR HSBC
Law firm Corker Binning’s briefing on the settlement reached by HSBC in France, with the first use of a Convention Judiciaire d’Intérêt Public (public interest judicial agreement).
OFFICIALS SEE WEAPONS THREAT AS NORTH KOREA GAINS BIOTECH EXPERTISE
The Washington Post carries an article saying that 5 months before North Korea’s first nuclear test in 2006, a intelligence report to the US Congress warning that secret work also was underway on a biological weapon. North Korea had then already acquired the pathogens that cause smallpox and anthrax, had now assembled teams of scientists but the report considered the country lacked the expertise to make use of biological weapons a real threat. The situation appears to be different now. Now, it is claimed, the country has the essential machinery that could potentially be used for an advanced bioweapons programme. The Pyongyang Biotechnical Institute, on the grounds of what used to be a vitamin factory, has been identified as having “expensive equipment, including industrial-scale fermenters used for growing bulk quantities of live microbes, and large dryers designed to turn billions of bacterial spores into a fine powder for easy dispersal”, although other experts have pointed out an absence of biohazard suits and protective gear typically found in laboratories that work with deadly pathogens. Nevertheless, the theme of the article appears to be that whilst formerly North Korea was not considered technically capable of producing biological weapons, it now could.
RESEARCH INTO USE OF PLANTS TO DETECT WEAPONISED THREATS
I thought this might be an April fool, except it is December. According to Homeland Preparedness News, DARPA’s Advanced Plant Technologies (APT) programme aims to direct the physiology of plants to detect a variety of hazards, including chemical, biological, radiological and nuclear threats, according to Dr. Blake Bextine, the DARPA programme manager for the Advanced Plant Technologies. DARPA is the US Defense Advanced Research Projects Agency. The project is on the DARPA website, so is a real thing…
NORTH KOREAN SUBMARINE MISSILE THREAT
On 11th December, the New York Times carried a story saying about fears that North Korea is rapidly developing its submarine-launched ballistic missile technology, and saying that the US and South Korea had carried out drills to seek to counter the threat. Website 38 North points out that in November it carried an article saying that commercial satellite imagery of the Sinpo South Shipyard indicates that North Korea is on an aggressive schedule to build and deploy its first operational ballistic missile submarine.
12th December 2017
INVESTIGATOR “FLED TURKEY WITH EVIDENCE OF CORRUPTION”
As the Reza Zarrab court case continue in New York, Reuters reports that a former Turkish police investigator told jurors that he fled Turkey out of fear of retaliation from the government after leading a corruption investigation involving high-ranking officials, taking his evidence with him.
Huseyin Korkmaz, 30, was given evidence in the trial of Mehmet Hakan Atilla,
who is with Zarrab to help Iran evade US sanctions.
UK CROSS-GOVERNMENT ANTI-CORRUPTION STRATEGY 2017-2022
The strategy to provide a framework to guide UK government action to tackle corruption for the period was issued on 11th December. This strategy sets out 6 clear priorities for the current Parliament. These are:
- reduce the insider threat in high-risk domestic sectors such as borders and ports;
- strengthen the integrity of the UK as an international financial centre;
- promote integrity across the public and private sectors;
- reducing corruption in public procurement and grants;
- improving the business environment globally; and
- working with other countries to combat corruption
Qualified welcome from Transparency international
UK ECONOMIC CRIME FACTSHEET
The Home Office blog on 11th December, alongside the announcement of the National Economic Crime Centre, published this factsheet indicating the scale of the issue and impact of fraud in the UK, and why the Government is taking more action.
NORTH KOREA $100 HIGH-QUALITY FAKE BANKNOTES
The Daily Express in the UK carries a story about seemingly authentic “supernotes” being released by North Korea, said to be prompting concern among officials. North Korea is already famous (notorious) for producing counterfeit US currency as a money-earner. The article says a bank in South Korea needed high-level forgery experts to determine if a $100 bill was a fake or not. It is said to be feared that thousands are in circulation in South Korea. The US government is quoted as saying that there at least $250 million worth of fake $100 bills circulating worldwide.
DUTCH BUSINESSMAN ARRESTED ON LIBERIAN SANCTIONS CHARGES
As often is the case, Defence Web has a story not commonly seen elsewhere. It reports that a Dutch businessman convicted in April of selling weapons to ex-Liberian president and warlord Charles Taylor has been arrested in South Africa on a Dutch warrant, officials said. “Blood timber” trader Guus Kouwenhoven, 75, (known in Liberia as “Mister Gus”) was sentenced as an accessory to war crimes for providing arms to Taylor’s government in violation of a UN embargo. He had been living in Cape Town and refused to return to the Netherlands for trial, citing health problems, and so was not present at the trial. He is said to have run 2 timber companies in Liberia 2000-03 and used them to smuggle arms, according to the Dutch court that sentenced him to 19 years in prison.
BRIBERY & CORRUPTION 2018 – CHINA & JAPAN
US law firm, Latham & Watkins, has issued a briefing for each, originally published in Global Legal Insights: Bribery & Corruption 2018 – 5th edition.
NORWAY GETS TOUGH ON UNAUTHORISED GAMBLING PAYMENT PROCESSORS
Calvin Ayre reports that Norway’s gambling regulator is backing up its tough talk by taking action against unauthorized online gambling payment processing repeat offenders. The Norwegian Gaming Authority had ordered local banks to sever links with 7 companies that the regulator deemed to be processing payments on behalf of online gambling sites not approved to accept wagers from Norwegian punters.
MACAU CASINO SUSPICIOUS ACTIVITY REPORTS
Calvin Ayre reports: the number of suspicious transactions reports (STR) that casinos in macau submitted rose by almost 37% in the first half of 2017, according to the Financial Intelligence Office (FIO). FIO announced that Macau casinos submitted a total of 1,074 STR in January-June 2017 period, compared to 780 last year. Casino operators are also required by the Gaming Inspection and Coordination Bureau to disclose high value transactions worth over $62,500. The low level of prosecutions were blamed by the FIO on the shortage of prosecutorial resources, heavy evidentiary requirements for third party money laundering, and the lack of an adequate policy directive.
FISH SMUGGLING BOOMS IN CHINA
Customs Today reports on 12th December that China’s demand for “silver cod” cod is causing a massive rise in smuggling as supply tightens, according to a respected industry research platform. Legal imports will total 1,000 tons in 2017, up from 633 tons in 2016, but smuggled imports could be as high as 2,000 tons, according to Dongpin Zhan Lue (Frozen Foods Strategy), with prices of up to $45.31 per kilogram for imported silver cod. The article explains that in China, silver cod has become a catch-all term for everything from common cod to toothfish, with opportunistic vendors marketing “silver cod” as a health food and a delicacy.
DAVID BAAZOV TRIAL UNDERWAY IN CANADA
The trial of former Amaya Gaming CEO, David Baazov, for alleged insider trading has finally got underway in Canada. Much of what is alleged flows from the takeover by Amaya’s of the parent company of online poker giant PokerStars in 2014.
CITES CONVENTION DECISIONS
A recent meeting the Standing Committee of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) took various decisions, including the following –
- actions.decided that parties should not accept any CITES permit or certificate for kosso rosewood that is issued by Nigeria unless its authenticity has been confirmed by the CITES secretariat;
- adopted specific recommendations to strengthen enforcement efforts to combat illegal trade in pangolins;
- requested that Qatar, which plays a significant role as a transit country for illegal ivory consignments moving from Africa to Asia, develop and implement a national ivory action plan;
- agreed to impose a suspension of all trade in CITES-listed specimens on Cameroon, Egypt, Ethiopia, and Tanzania if they do not submit reports on the progress of their national ivory action plans within 60 days; and
- recommended that parties suspend trade with Brunei, Djibouti, Dominica, Equatorial Guinea, and St. Vincent and the Grenadines for failing to submit annual reports for 3 consecutive years; and Mongolia and Tunisia for their lack of progress in adopting adequate wildlife legislation.
GUERNSEY FSC: POOR GOVERNANCE NOW BIGGER ISSUE THAN FINANCIAL CRIME This is Guernsey reports that in his annual update to industry, FSC director-general William Mason said that changes were being seen in financial services – governance issues and inappropriate operational risks were on the up, while incidents of conduct risk had declined. https://guernseypress.com/news/2017/12/12/please-write-your-example-heading-here/#e2BLPOKqzUko4WlR.99
EUROPOL: RESULTS OF CO-ORDINATED APPROACH TO INTELLECTUAL PROPERTY CRIME
In a news release on 12th December, Europol says intensive co-operation and co-ordination between enforcement authorities at EU level has led to the seizure of millions of fake and possibly harmful products and has helped to take down several transnational criminal networks.
At the forefront of this co-operation is said to be the Intellectual Property Crime Coordinated Coalition (IPC3), set up within the current structure of Europol, which has been co-funded by the European Union Intellectual Property Office (EUIPO) since July 2016. The news releases lists some of the major projects co-ordinated by IPC3.
VIENNA EVENT MARKS 10th ANNIVERSARY OF CONVENTION TO TACKLE NUCLEAR TERRORISM
The UN Office on Drugs and Crime reports on an event in Vienna to mark the 10th Anniversary of the Convention to tackle nuclear terrorism (ICSANT) with 100 participants from 47 delegations of States Parties and Signatories to the Convention. The Convention provides a legal basis for international co-operation in the investigation, prosecution and extradition of those who commit or support acts of nuclear terrorism. It for signature in 2005, and entered into force in 2007. It presently has 115 signatories and 112 States Parties. The event, in this regard, allowed participants to review their experiences in implementing the Convention’s key obligations. It also provided a platform to highlight States’ efforts to forge a global nuclear security architecture that is not only strong and resilient, but is also sustainable.
See the Convention at –
NO TRADE TAKES PLACE BETWEEN THAILAND AND NORTH KOREA, SAYS PM
The Thai Prime Minister said on 12th December that no trade takes place between Thailand and North Korea. This was ahead of an expected visit by a US envoy seeking to step up pressure on North Korea over its weapons programmes. Pressure has increased on SE Asian states, some of which (e.g. Malaysia before the recent assassination) had continued links to the DPRK.
300 LUXURY VEHICLES IMPOUNDED IN GHANA
Graphic.com reports that 300 luxury vehicles have been impounded by the Customs Division of the Ghana Revenue Authority (GRA) in the last 8 months. They were impounded during an exercise conducted between May and December this year to check the increasing sale of vehicles smuggled from neighbouring countries, particularly Togo, to Ghana.
INDIAN STAR TORTOISE SEIZURE IN THAILAND BRINGS THE YEAR’S TOTAL SEIZURES TO OVER 6,000
Traffic, the wildlife trade monitoring network, reports that Thai authorities on 1stdecember seized 330 Indian Star Tortoises at Bangkok’s Suvarnabhumi International Airport. The Indian Star Tortoise is a popular pet because of its striking markings and is trafficked internationally in large numbers, with a minimum of 6,040 individuals confiscated in 11 seizures in 2017 alone, based on published sources. International trade in the species is permitted — but only if the required permits accompany the shipment: without them, the animals are seized.
SOLICITORS SHOULD HAVE WARNED OF TAX AVOIDANCE RISKS
Legal Futures reports that a firm of solicitors should have warned a client of the significant risk that a tax avoidance scheme would not withstand a challenge from HMRC, the Court of Appeal has ruled. The client ended up having to pay £11.3m to settle with HMRC. He sued Baxendale Walker Solicitors and its founder, Paul Baxendale-Walker (who was struck off in 2007). Though the firm was not negligent in its interpretation of a piece of tax law, the appeal court held it was in failing to warn about the risk that it was wrong and likelihood of an HMRC challenge.
SOUTH AFRICA: ZUMA GETS FRESH DEADLINE OVER CORRUPTION CASE
KYC 360 reports that President Zuma has been issued a fresh deadline to the end of January 2018, by the country’s National Prosecuting Authority (NPA), to submit arguments on why he should not be prosecuted for corruption. The 783 charges against Zuma relate to a $2.20 billion government arms deal arranged in the late 90s. South Africa’s High Court reinstated the charges last year and the Supreme Court upheld that decision in October, rejecting an appeal by Zuma.
WORK CONTINUES TO COMBAT ILLICIT MARITIME ACTIVITY
On 12th December the International Maritime Organisation (IMO) reported on at a meeting of the G7 Group of Friends of the Gulf of Guinea in Lagos, Nigeria where prevention of piracy, armed robbery against ships and illicit maritime activity in west and central Africa was on the agenda. The meeting is reviewing progress made in implementing the Yaoundé Code of Conduct, which was signed by governments in the region, in 2013, to enhance co-operation to counter piracy and armed robbery at sea and other illicit maritime activity.
BINARY OPTIONS IN ISRAEL, THE NEW LAW OUTLAWS IT BUT…
A briefing from Italian lawyer, Calogero Boccadutri, says that a new law does not prevent the scammers from continuing with their deceit, they have simply changed their disguise, and the modifications introduced to the original Bill render it less effective compared to the expectations. It says that a crime network has developed around binary options in Israel, and that Israel is the home of the software on which the whole Forex world is based.
ORGANISED CRIME IN AFRICA: CHANGING ROLES
This report is a broad overview of Africa’s multiple and changing connections to global criminal markets. Over the past 2 decades Africa’s role in the global criminal economy has shifted. The impact of organised crime is widespread and growing, yet it is little understood. In this report from September 2017, the ENACT project focuses on understanding organised crime in Africa by examining wider trends in the global criminal economy.
Whilst drugs trafficking, and the rising problem of methamphetamine in Africa, as well as wildlife crime including the illegal ivory trade are covered well, one other aspects, common and obvious but often almost overlooked is the trade in weapons. The report says that the link between arms trafficking and organised crime in Africa should be viewed on 3 levels:
- the import of firearms from foreign sources where there is evidence of criminal activity. For example, arms may be imported using false end-user certificates or they may be transferred to secondary or tertiary destinations (to avoid sanctions, for example);
- when arms leak out of state supplies during conflict. The most prominent recent case entailed large flows of arms southwards into the Sahel after the fall of the Gaddafi regime in Libya; and
- the purchase of weapons by criminal groups and networks directly from suppliers or local sellers. Some of these purchases are completed under the guise of legal transactions, but the weapons are subsequently used in criminal activities.
GHANA TO DECRIMINALISE PERSONAL POSSESSION OF ILLEGAL DRUGS
Enact reported on 11th October that Ghana is poised to become the first African country, and the first country outside of Europe and the Americas, to decriminalise the personal possession and use of all illegal drugs. Ghana’s Narcotics Control Commission Bill, 2017, which will repeal and replace existing drug offences, is expected to be passed later this year. The proposed legislation seeks to address drug use as a “public health issue”.
On 12th December Baker McKenzie ran a free webinar providing an update on sanctions developments in recent months, not just the obvious (and varied) US and EU sanctions regimes, but also an update from Qatar from the boycott/embargoes there, and from its Asia-Pacific office with an interesting take on how states in that part of the world impose sanctions (or not).
DID AMERICAN MISSILE DEFENCE FAIL IN SAUDI ARABIA?
The New York Times on 4th December carried a story about the missile attack said to have been made by the Houthi rebels in Yemen against Saudi Arabia. Originally it was said that the missile was itself intercepted by a Saudi Patriot SAM, but it seems likely now that the interception did not take place and the Houthi missile got through and (nearly) reached its intended target of the airport at Riyadh.
EU RENEWS DR CONGO SANCTIONS TO DECEMBER 2008
On 12th December the EU published Council Decision 2017/2282/CFSP that extended current EU sanctions on the Democratic Republic of Congo to 12th December 2008.
INTEROPERABILITY OF EU INFORMATION SYSTEMS FOR SECURITY, BORDER AND MIGRATION MANAGEMENT
On 12th December the EU published a news release containing FAQ about the ability of information systems to exchange data and enable sharing of information, with EU authorised users (such as police officers, migration officials and border guards) having faster, seamless and more systematic access to the information they need to do their jobs. It is intended to be a targeted and intelligent way of using existing data to best effect while at the same time ensuring full respect of fundamental rights, in particular data protection requirements. The systems, current and under development, involved are –
- the Schengen Information System (SIS) which contains a broad spectrum of alerts on persons (refusals of entry or stay, EU arrest warrants, missing persons, judicial procedure assistance, discreet checks) and objects (including lost, stolen or invalidated identity or travel documents);
- the Eurodac system with fingerprint data of asylum applicants and of third-country nationals who have crossed the external borders irregularly or who are irregularly staying in a Member State; and
- the Visa Information System (VIS) with data on short-stay visa holders.
- the future Entry/Exit System (EES), which has been adopted and will replace the current system of manual stamping of passports and will electronically register the name, type of travel document, biometrics and the date and place of entry and exit of third-country nationals visiting the Schengen area for a short stay;
- the proposed European Travel Information and Authorisation System (ETIAS), which once adopted would be a largely automated system that would gather and verify security-related information submitted by visa-free third-country nationals ahead of their travel to the Schengen area; and
- the proposed European Criminal Records Information System for third-country nationals (ECRIS-TCN system), which once adopted would be an electronic system for exchanging information on previous convictions handed down against third-country nationals by criminal courts in the EU.
Interpol’s Stolen and Lost Travel Documents (SLTD) database should also be included, as well as easier/better access to Europol data.
AUSTRIAN MAJOR CORRUPTION TRIAL OPENS
Digital Journal reports the opening of a trial in Austria involving alleged high-level corruption and a flamboyant jet-setting former finance minister and 14 others appeared in court. The so-called Buwog affair centres on €9.6 million euros in alleged bribes paid out following a 2004 government sale of state properties. Karl-Heinz Grasser was finance minister at the time and is accused. Tax was allegedly avoided using Cyprus and Liechtenstein. Other defendants include a businessman, a real estate agent and a lobbyist.
UK OPEN GENERAL EXPORT LICENCES (OGEL)
On 12th December, the UK Department for International Trade issued a number of news releases highlighting both the current version of the various OGEL, and the various revoked versions. OGEL generally allow specific types of export, subject to conditions, and generally without prior approval (providing you follow the relevant terms and conditions), but with the exporter having to notify the Department of the use of the licence. For more information about OGEL see
HOW TO COUNTER A NORTH KOREAN MISSILE
Free podcast from the Center for Strategic and International studies – after North Korea tested its longest-range missile yet, a discussion what kind of counter-measures the US has in its arsenal and the future of US missile defence. Interesting. Includes “what ifs”, if something goes wrong, if something happens because the North Koreans don’t give forewarning of tests, and when do you use your missile defence and how many missiles?
GIBRALTAR BLOCKCHAIN ENABLING BILL
Low Tax says that Gibraltar’s Parliament has unanimously passed a Bill preparing the legal basis for the introduction of its new distributed ledger technology (Blockchain) framework, which will come into effect on January 1st.
UK IMPORT CONTROLS SUMMARISED
The UK Department for International Trade has reissued a summary of import controls, and says that there are 3 main types of control –
- bans – where no import is allowed
- quotas – where the volume of goods is restricted
- surveillance – where the import of goods is monitored with licences
Goods currently subject to import bans and licensing controls are –
- UN ban on the import of anti-personnel mines
- EU quotas on textiles and clothing from Belarus and North Korea
- EU quotas on steel products from Kazakhstan
- EU ban on the import of torture equipment
- EU ban on the import of certain products from Iran
- EU ban on the import of certain products from Syria
- EU ban on the import of certain products from North Korea
- EU ban on the import of certain products from Russia and Crimea
- UK licensing controls on the import of firearms
US DoJ FCPA COMPLIANCE PROGRAMME
A briefing from Parker Poe Adams & Bernstein is concerned with the revised DoJ FCPA Corporate Enforcement Policy – where most observers had concentrated on the continuation of a previous pilot programme allowing mitigation from penalties for self-disclosure.
However, the briefing looks at another element, which provided detail about how the DoJ evaluates compliance programmes, specifying “hallmarks of an effective compliance programme”. It then asks a number of questions to be asked to determine if a compliance programme comes up to scratch.
BARCLAYS BANK EMPLOYEE LAUNDERED £2.5 MILLION
An NCA news release is concerned with a Barclays bank employee who has been jailed for 6 years and 4 months for his role in a conspiracy to launder over £2.5 million, which had been stolen using Dridex malware. Jinal Pethad, aged 29, from London, acted as ‘personal bank manager’ to money launderers Pavel Gincota and Ion Turcan, setting up 105 sham bank accounts for them using false ID documents. He managed the accounts to ensure that receipt of the stolen funds was not blocked by the bank’s security processes and that the pair could transfer money between them freely. Gincota and Turcan were jailed for the conspiracy in October 2016 after an investigation by the NCA. Pethad was arrested the following month.
EU AND UN AGENCY SIGN AGREEMENT TO COMBAT WILDLIFE CRIME AND TRAFFICKING OF NATURAL RESOURCES IN CENTRAL AFRICA
The EU and the UN Office on Drugs and Crime (UNODC) have signed an agreement worth €6.1 million to address wildlife and forest crime, and the illicit trafficking of natural resources in the Central African region. The first partnership of its kind between the EU and UNODC in the region.
The 4-year programme will be implemented by UNODC’s Global Programme for Combating Wildlife and Forest Crime in close collaboration with its Regional Office for West and Central Africa. The programme primarily aims to strengthen the national and regional capacities of law enforcement officers, prosecutors and the judiciary in the 10 countries of the Economic Community of Central African States (ECCAS).
The programme seeks to strengthen co-operation among the states to combat wildlife, forest crime and illicit trafficking in natural resources, and to significantly increase the national capacity of beneficiary countries to address corruption and money laundering that facilitate such crimes. For the first time, the programme addresses illicit minerals trafficking in selected areas in Central Africa.
US DOLLARS, OVERSEAS NETWORKS AND ILLICIT NORTH KOREAN FINANCE – NEW REPORT: “THE FOREX EFFECT”
The Wall Street Journal reports on a report from C4DS – see link below – highlighting that researchers in the US and South Korea have identified a number of business transactions that they say show North Korea’s international finance web is more sophisticated than what was widely known previously.
As an example, the report cites a transaction in which a military equipment supplier run by North Korea’s intelligence agency used a front company in Hong Kong to purchase components from an East Asian electronics reseller. The payment was cleared through a correspondent account at the Bank of America, according to the report.
The Report itself says that it has found that the financial structure used by the North Koreans networks, surrounding North Korea’s major foreign exchange banks, which is tasked with the management of hard currency, have found themselves serving as a financial lifeline for the regime, but are reliant on a system that North Korea cannot control and is therefore vulnerable to systemic disruption. The report says it is –
- is Cash Dependent, the report explores how maintaining a positive flow of hard currency has become an imperative for regime survival and how the regime has gone to great lengths, often by illicit means, to ensure ongoing access to it;
- is institutionally bottlenecked, the regime, hoping to maintain oversight and security, with limited methods for storing and transacting in foreign currency internationally. The report analyses how North Korea’s policies led the regime to offshore critical portions of its financial system; and
- Is exposed to disruption, the report looks at how North Korean assets, nested within businesses overseas, are inherently vulnerable. It further explores the potential for international law enforcement action to dismantle critical nodes of the system.
THIS IS HOW WAR WITH NORTH KOREA MIGHT START
Washington Post article by Jeffrey Lewis of Arms Control Wonk etc speculating on how a conflict might break out, based on public statements, intelligence reports and blast-zone maps. Not to be read just before bedtime, I think.
“US DEMANDS NATO ACTION ON RUSSIAN MISSILES”
German news site Der Spiegel carries an article saying that the US believes Russia is secretly developing nuclear-capable, medium-range missiles in violation of the 30 year old Intermediate Nuclear Forces (INF) Treaty covering nuclear-capable missiles with a range of 500 km to 5,500 km. It claims that Washington has now upped the pressure on NATO to formulate a response – and a new arms race could be the result. This claim arises after a meeting of the NATO Nuclear Policy Group in November.
The missile involved has been previously reported to be the land-based cruise missile Novator 9M729 (NATO designation: SSC-8).
TRUMP APPROVES NEW RUSSIA SANCTIONS FOR VIOLATING COLD WAR ARMS PACT
Linked to the previous story, Politico on the 8th December reported that the Trump administration is preparing new sanctions on Russia it hopes will force it to comply with the INF Treaty that the US says has been violated by deploying a banned cruise missile, Politico citing a “senior administration official”. The sanctions would punish Russian companies that have provided technology to help develop the new weapon,
13th December 2017
SCRAP MERCHANT OWING £9.6 MILLION HEADS TAX DEFAULTERS’ LIST
CCH Daily reports that a scrap metal merchant heads the list of UK tax defaulters recently issued by HMRC. Premier Metals (Leeds) Ltd paid a £4.7m fine for failure to pay £9.6m of tax owed for the period April to September 2013.
ANTIQUATED IRISH LAWS ON ANTI-BRIBERY AND CORRUPTION ARE TO BE MODERNISED AND STRENGTHENED, WITH TOUGHER PENALTIES AND NEW OFFENCES
Pillsbury article on the Criminal Justice (Corruption Offences) Bill 2017 and its consequences, including for international companies. The article remarks that whilst not a direct copy of the equivalent UK rules, the Irish corporate offence/defence is quite similar, and Pillsbury looks forward to the Irish MoJ issuing guidance similar to that published in the UK.
INSOLVENCY: SHARING INFORMATION BETWEEN COMMON OFFICEHOLDERS
The decision of the English High Court in Willmont and Finch v Shlosberg clarifies how insolvency practitioners can use and disclose documents obtained under compulsion or litigation to related insolvency estates. Buddle Findlay has published a briefing on the relevance of the case.
CLAWING BACK PONZI SCHEME PAYMENTS
In a case before the Judicial Committee of the Privy Council in a Cayman Islands case, the liquidators’ argument that a payment of $23 million should be returned on the ground of unjust enrichment failed. The Privy Council found that the redemption of the shares created a valid debt to a company that had obtained the payment for redemption of shares in the Ponzi scheme company, even though the payment was unlawful. It was possible, though unlikely, that the company that had redeemed the shares was a constructive trustee of the funds on the ground of knowing receipt, and remitted the matter to the Grand Court in Cayman to determine if it knew the payment was unlawful. DD Growth Premium 2X Fund (In Official Liquidation) (Appellant) v RMF Market Neutral Strategies (Master) Limited (Respondent) (Cayman Islands)
MEETING RAISES HOPES FOR SAHEL ANTI-TERROR FORCE
EurActiv reports that French President Macron hosts Germany’s Angela Merkel and African presidents from Burkina Faso, Chad, Mali, Mauritania and Niger at a meeting hoping to bolster the fledging G5 Sahel force fighting jihadists in an area the size of Europe. 2 years in the planning, the force would be used in an area dogged by extremism and where France is currently leading counter-terrorism operations. Saudi Arabia may contribute funding of $100 million, and has representatives attending, as does the UAE. The goal is to have 5,000 troops operational by mid-2018, with the top priority being to re-establish law and order where the borders of Burkina Faso, Mali and Niger converge.
DESTRUCTION OF LIBYAN AND SYRIAN CHEMICAL WEAPONS STOCKPILES
EU Council Decision 2017/2302/CFSP of 12th December pledges support, including financial support, the Organisation for the Prevention of Chemical Weapons (OPCW) programme to eradicate remaining chemical weapons materials in Libya. The Annex to the Decision contains a useful summary of the position in Libya, where its Category 1 chemical weapons substances were destroyed in 2014, but where Category 2 (precursors) and by-product effluent remain.
At the same time, Council Decision 2017/2303/CFSP is concerned with continuing support for the OPCW programme to eradicate Syrian chemical weapons. Again an Annex summarises the situation and developments. Although some eradication has taken place, the Annex states that the OPCW’s missions in Syria continue as incidents of the alleged use of chemical weapons are still being reported and will require imagery support for visual awareness and security assessments, prior to team deployments.
ALFA BANK SUBSIDIARY IN NETHERLAND IN MONEY LAUNDERING INVESTIGATION
Reuters reports that the Dutch subsidiary of Russia’s Alfa Bank, which is owned by billionaire Mikhail Fridman, has been searched as part of an investigation into possible money laundering. Amsterdam Trade Bank (ATB) is said to be suspected of violating AML laws by withholding information on “unusual transactions” made by clients and failing to do adequate background checks on its clients.
COMMONWEALTH BANK BREACHES OF AML LAWS IN AUSTRALIA
In Australia, ABC Radio reports that the Commonwealth Bank (CBA) admits breaching money laundering, counter-terror laws more than 53,000 times, and expects more charges. It is expected in court in March 2018. The regulator, AUSTRAC, has accused the CBA of failing to flag more than 53,000 transactions which exceeded a $10,000 threshold and passed through its smart ATM between November 2012 and September 2015. Named executives at the bank have been singled out in the class action as knowing about the compliance issues but failing to act, and a class action by shareholders is underway.
UK FRAUD PREVENTION SCHEME CLAIMS SUCCESS
Financial Reporting reports that the Banking Protocol, a fraud prevention scheme aimed at identifying and protecting potential fraud victims when they visit a bank or building society branch has reportedly prevented more than £9 million being passed to criminals in its first year of operation, figures from UK Finance show. A partnership between the finance industry, police and trading standards departments, it enables bank staff to contact police if they suspect a customer is in the process of being scammed, with an immediate priority response to the branch. It is said that the scheme has led to 101 arrests being made across the UK, with police having responded to 1,262 calls. It was only extended nationally in May 2017, following a pilot scheme in London.
FRANKFURT AIRPORT OPERATOR OFFICES SEARCHED IN BRIBERY CASE
Reuters reports that prosecutors have searched offices of Fraport, which operates Frankfurt airport as well as the homes of staff, investigating a case of suspected bribery in Senegal after an expose by newspaper Bild.
THE STORY OF THE FBME BANK OF CYPRUS
Buzz Feed article about FBME Bank of Cyprus, accused by FinCEN of aiding terrorists and criminals, and which found the bulk of its business from highly secretive Russians. A tale said to involve leaked documents, and a “farcical scramble inside one of the world’s dirtiest banks” to conceal incriminating information – while some of the world’s most prestigious accountants and lawyers used their powers to keep the bank in business.
Meanwhile, the Daily Beast carries an article linked to the same bank. It reports that the Russian oligarch who owns the Brooklyn Nets basketball team stashed money in the bank. Mikhail Prokhorov, who is not accused on any criminality, and whose wealth is estimated at nearly $9 billion, ran for president of Russia against Vladimir Putin in 2012 in a stage-managed campaign sanctioned by the Kremlin.
SAUDI ARABIA TO SET UP ORGANISATION TO MANAGE SURRENDERED ASSETS
Arabian Business reports that Saudi Arabia is setting up an organisation to manage assets “relinquished” by detainees as part of settlement agreements in the crackdown on corruption.
SIERRA LEONE EX-MINISTER ARRESTED
The Anadolu Agency in Turkey reports that police in Sierra Leone have detained a former lands minister for alleged forgery and illegal land acquisition. Musa Tarawally served as minister of lands, country planning and the environment and was arrested in connection with matter centred on a land transaction dating back to when he was minister in 2013-15.
AIRBNB DROPS USE OF PREPAID CARDS LINKED TO TAX AVOIDANCE/LAUNDERING IN FRANCE
Customs Today reports that, following a meeting with ministers, Airbnb has agreed to withdraw a payment system (Payoneer prepaid cards) in France that was suspected of facilitating tax avoidance, after the government complained it could potentially be used to launder money and lead to a loss in revenues.
US BAN ON KAPERSKY LAB PRODUCTS
On 12th December, Law 360 reported that President Trump had approved legislation banning Kaspersky Lab products from government information systems in response to concerns about potential security risks and ties to the Russian government.
CAYMAN COURT DISMISSES $2 BILLION CLAIM BY MADOFF FEEDER FUND
Ogier has published a briefing about what it describes as a “landmark judgment” of the Cayman Islands Grand Court in the case of Primeo Fund (in Official Liquidation) v Bank of Bermuda (Cayman) Ltd and HSBC Securities Services (Luxembourg) S.A. The court dismissed the claim against 2 of Primeo’s service providers arising out of the Bernard Madoff investment fraud. The claim was brought by the liquidators of Primeo, a Cayman Islands fund that invested in a Madoff vehicle through which he perpetrated his vast Ponzi scheme. The defendants were 2 HSBC Group companies that acted as the fund’s administrator and custodian respectively. The briefing says that the judgment is of particular interest to the Cayman funds industry generally as, although the claim ultimately failed, the duties and obligations owed by professional service providers in this jurisdiction were discussed in some detail by the Court.
UK HIGH COURT CONSIDERS DEFINITION OF TRAFFICKING
There are distinct differences between “people smuggling” and “human trafficking”, with coercion and a lack of voluntary involvement being two of the hallmarks of the latter. Where immigration or police come across illegal immigrants, it may be in the detainees’ interest to be seen as victims of trafficking, even if they may not consider themselves “trafficked”. This briefing from Alison Harvey, published in The Lawyer says that most domestic workers would prefer to be recognised as workers than labelled as trafficked, and ask to be empowered rather than rescued. But it is often necessary to plead their cases under the rubric of trafficking to secure their protection from exploitation. Cases involving domestic workers are often of considerable interest to those working on trafficking because the facts are frequently not in dispute and the focus is on the legal definitions.
In a case before the High Court, R(Said Abdelmoneim Ahmed Saadawi v Secretary of State for the Home Department the court held that it was not irrational of the Secretary of State to have concluded that the claimant domestic worker was not a trafficked person. The briefing argues that this conclusion is the result of a narrow focus on forced labour in the judgment, which is to be deprecated. The Home Secretary’s position was that she was not satisfied that the working conditions met the definition of forced labour. Ms Harvey refers to the definition of trafficking in the Palermo Protocol and the Council of Europe Convention on action against trafficking in human beings as seeming to contradict how the Modern Slavery Act is or can be applied in the UK.
In the case in question, the result was that whilst the woman involved had obviously been brought to the UK from Egypt via Qatar, she was not being exploited despite the extremely poor conditions imposed on her.
BENEFICIAL OWNERS OF UK PROPERTY ENTITIES AND HAVING PUBLIC PROCUREMENT CONTRACTS TO BE REGISTERED
Osborne Clarkle reports on 13th December that entities that hold UK property or enter into UK public procurement contracts will have to register their beneficial ownership information in a public register under government plans. Legislation is scheduled to be put before Parliament in the first half of 2018, as part of its anti-corruption strategy. It says that the plans are aimed squarely at overseas entities: UK entities are already required to disclose their beneficial ownership information under the “people with significant control” (PSC) regime.
TERRORIST ATTACKS BEFORE AND AFTER 9/11
The War on the Rocks website recently took a studied look at the number of terrorist attacks before and after 9/11, both inside and outside warzones. The thought-provoking study paired the Global Terrorism Database from the University of Maryland with civil war and insurgency data from the Uppsala Conflict Data Program in 194 countries. Spanning the years 1989 to 2014 allowed it to directly compare terrorist attacks in the early post-Cold War era with those since 2001.
It reports that the graphic indicates that global terrorist attacks rose dramatically after 2004: there were just over 1,000 in 2004, but almost 17,000 in 2014. The numbers from 2015 and 2016 (not shown) have remained remarkably high, but below the 2014 peak. The upward pattern holds even when removing attacks in Iraq and Afghanistan. However, it notes that more than 70% of the attacks in the past 10 years transpired in just 2 regions, both of which have seen extensive insurgency and civil conflict during that time: North Africa/Middle East and South-Central Asia. The article then posed the question, what do the numbers of attacks look like outside of places beset with civil strife?
The article highlights conclusions made from the data, including the apparent oddity that perhaps counterintuitively, the graphic also indicates that for a period in the mid-1990s, terrorist attacks in countries not experiencing civil wars exceeded attacks in war-torn states.
The article draws a number of significant conclusions – firstly, it is possible that post-9/11 counter-terrorism efforts have contributed to reducing incidents of non-insurgency terror (plus providing “easier” and more tempting targets in war zones, namely US and other soldiers in Afghanistan etc). Secondly, the decline in terrorism it describes could be reversed in the next several years (for example, if returning fighters caused mayhem).
Finally, and perhaps more importantly in a Trump era, the evidence raises difficult questions about the efficacy of the US approach to the war on terror in the future. Is it willing to maintain a sustained presence in Afghanistan, the Middle East, and parts of Africa to confront a problem that is increasingly regional and local?
The article makes some further observations (including civil wars are not normally the result of terrorism, but that terrorists exploit the conflict) and recommendations for US policy.
RUSSIA LOOKS TO CRYPTOCURRENCIES TO EVADE EU SANCTIONS
On 13th December, EU Observer reports a Kremlin aide in Moscow saying that Russia was looking to use cryptocurrencies, such as Bitcoin, to evade EU economic sanctions, as sanctions created an “objective need” for novel financial systems, including the creation of a Russian national cryptocurrency in 2018.
EU CRIMINAL RECORDS INFORMATION EXCHANGE NEEDS DATA PROTECTION SAFEGUARDS
The European Data Protection Supervisor (EDPS) on 13th December said that there is a clear need for the EU to develop a more efficient system for exchanging information on the criminal records of non-EU citizens. At the same time, any proposal to update the current system must ensure consistency with the EU Charter of Fundamental Rights and the Lisbon Treaty and fully respect data protection principles. EDPS issued both a news release and a draft Opinion re the extension of the existing European Criminal Records Information Service (ECRIS) to cover third country nationals (ECRIS-TCN). ECRIS is primarily used to facilitate judicial co-operation, through the exchange of information relating to criminal convictions.
IS THE ZIMBABWE ARMY A NEW JUNTA OR REFORMER/SAVIOUR?
Defence Web on 13th December published an article asking after Operation Restore Legacy, which saw the end to Mugabe’s 37 year rule, does this herald a democratic opening and economic recovery? The article says that at the moment, all that is clear is that the military will play a key and expanded role. The military has been highly influential since independence, but its role since it ended Mugabe’s rule will be considerably enlarged. It notes that the general who read the announcement of the military takeover on TV was made foreign minister and the Commander of the Air Force became Land Minister, and that new President Mnangagwa has had a long and close relationship with the army.
ICC WANTS UN SECURITY COUNCIL ACTION ON OUTSTANDING ARREST WARRANTS
Defence Web also carries a story saying that the prosecutor at the International Criminal Court has called on the Security Council, saying “there can be no justification for States Parties to fail to arrest a suspect against whom an ICC warrant of arrest has been issued, irrespective of that person’s official status.”. The article refers to the travels of Sudanese president Al-Bashir.
RUSSIA SAID TO BE CONSIDERING LIFTING LIBYAN ARMS EMBARGO
A final story from Defence Web on 13th December – about a Libyan news agency quoting the Russian Deputy Foreign Minister as saying that Russia will consider easing an arms embargo on Libya. This, it says, follows the Libyan PM earlier saying that he was hopeful a UN-imposed arms embargo dating from 2011 would be partially lifted against some branches of the country’s military.
UK RAISING AWARENESS OF “COUNTY LINES” DRUGS SUPPLIES
In the UK, the Home Office says that it is undertaking a range of work to raise awareness of what county lines (and associated criminal exploitation) is. This promotional material has been developed to support frontline staff understand the signs to look for in potential victims, and what to do about it.
The guidance explains that “county lines” is the police term for urban gangs supplying drugs to suburban areas and market and coastal towns using dedicated mobile phone lines or “deal lines”. It involves child criminal exploitation (CCE), as gangs use children and vulnerable people to move drugs and money. Gangs establish a base in the market location, typically by taking over the homes of local vulnerable adults by force or coercion in a practice referred to as “cuckooing”.
US TREASURY ADDS NAMES TO CENTRAL AFRICAN REPUBLIC SANCTIONS LIST
On 13th December, OFAC added 2 persons linked to the Lord’s Resistance Army to those persons designated for the purposes of its CAR sanctions regime, Okot Lukwang and Musa Hatari. Both facilitated the transfer of ivory, weapons, and money in support of the LRA. All property and interests in property of those designated today subject to US jurisdiction are blocked, and US persons are generally prohibited from engaging in transactions with them. OFAC originally designated the LRA and the group’s leader Joseph Kony in 2016.
4 PEOPLE ARRESTED AS PART OF AN INVESTIGATION INTO TERRORIST FINANCING LINKED TO A KURDISH NEWSPAPER IN THE UK.
On 13th December, the BBC reported that 2 Kurdish women and 2 teenagers were arrested in London on 7th December and questioned about the sale and distribution of Kurdish newspaper, Yeni Ozgur Politika – which means “New Free Politics”. 2 17-year-old boys, a 38-year-old woman and a 50-year-old woman were all arrested on suspicion of terrorist fundraising, terrorist money laundering and fraud offences. The Kurdish Solidarity Campaign described it as an attack on perfectly legal activities in the distribution of the newspaper in the UK.
US DEFENDS RUSSIA-LINKED PREVEZON MONEY-LAUNDERING SETTLEMENT
Rferl reports that US prosecutors have for the first time publicly defended a much-criticized decision to settle an alleged money-laundering case, a case that stemmed from a massive Russian tax-fraud scheme and has rippled through U.S.-Russian relations, he case, known informally as “Prevezon”. The case dates back to 2013, when US authorities sought to seize about $14 million in assets from the company, which was registered in Cyprus and largely owned by well-connected Russian businessman, Denis Katsyv. US officials alleged that the assets, mainly Manhattan real estate, came from a $230 million tax scheme, uncovered about 6 years earlier, to defraud the Russian government. That tax fraud scheme, which Moscow acknowledged, was revealed in part by Russian whistle-blower Sergei Magnitsky, who died in a Moscow jail in 2009 after suffering what his supporters said amounted to torture.
Prevezon’s main Russian lawyer was Natalya Veselnitskaya, who traveled to the US in June 2016 as part of the ongoing pretrial maneuvering for Prevezon. It later emerged that during that visit she met with Trump’s son, Donald Jr., along with a Russian-American lobbyist and Trump’s then-campaign manager, Paul Manafort. Veselnitskaya’s meeting with Trump also included discussion of the adoption ban that the Kremlin instituted in 2013. The US Attorney’s office “did not have any direct communication with [Natalya ] Veselnitskaya regarding the settlement,” it said.
GLENCORE’S SECRETS REVEALED BY THE PARADISE PAPERS
“Glencore” is Glencore PLC, one of the world’s largest mining and agriculture conglomerates, 16th on the Fortune Global 500 list of largest corporations, with revenue last year of more than $170 billion. It is the world’s largest commodity trader, a supplier of zinc and cobalt, a trader of wheat and a merchant of chickpeas; its products touch virtually anyone who has driven a car, held a smartphone or eaten a slice of bread. This ICIJ article reveals some of the secrets uncovered due to the Paradise Papers.
HOW GERMAN GAMBLING COMPANIES USE OFFSHORE
More from the Paradise papers material – online gambling is largely prohibited in Germany, but the Paradise Papers show how offshore companies can be used to skirt the country’s gaming laws. The Isle of Man gets a good few mentions.
HOW TO REPORT A FRAUD TO UK COMPANIES HOUSE
Companies House in the UK has issued advice on how to report suspected fraudulent company activity to Companies House and find out what action it can take.
SAUDI TYCOON SAID TO BE LOSING BILLIONS SINCE ARREST
The Middle East Monitor reports that Prince Al-Waleed Bin Talal’s fortune has taken a dramatic fall since his imprisonment, with billions of dollars is reported to have been “wiped off” the value of the Saudi tycoon and his main investment firm, Kingdom Holding Company (KHC). Saudi Arabia’s most famous investor was arrested under last month’s anti-corruption purge authorised by the Crown Prince Muhammed Bin Salman.
GUERNSEY CLAIMS A FIRST USING PRIVATE BLOCKCHAIN
Low Tax reports that 2 Guernsey funds have transferred digitized notes on a private blockchain, in what is believed to be a first for the island. Instead of transferring the notes through a traditional clearance service such as Euroclear or DTC, the notes were created and transferred on a private blockchain, which also satisfied the required KYC and AML requirements.
SOLICITOR CLEARED IN £245 MILLION MONEY LAUNDERING CASE
A solicitor wept as he was cleared of laundering proceeds from a £245m loan scam for corrupt bankers who blew a fortune on lavish holidays and prostitutes. Roger Hawes, 56, was cleared of concealing cash for senior HBOS official Lynden Scourfield, 55, and his associates between 2003 and 2010. He denied any wrongdoing and insisted corporate hospitality was part of the job. He was associated with others already convicted on charges including corruption and fraudulent trading
US CONGRESS FAILS TO MEET DEADLINE ON JCPOA WITH IRAN
The European Sanctions Blog reports that the US Congress has not decided on whether to agree changes to US legislation (in order to address the President’s concerns over the JCPOA deal) or to re-impose sanctions on Iran. It had to do so within 60 days of 13th October and it is now expected that President Trump will decide in mid-January 2018 whether to recertify the agreement and uphold Iran’s nuclear sanctions relief, or refuse to and risk breaching the deal.
ROSNEFT TO CHALLENGE EU SANCTIONS AGAIN
European Sanctions Blog reports on Rosneft, reopening a legal challenge against the validity of EU sanctions imposed in July 2014. It had previously challenged the EU sanctions in the High Court in the UK, but, in March 2017, the European Court of Justice gave a preliminary ruling deciding that the measures had been both valid and sufficient to justify certain operators being adversely affected.
JERSEY POSITION ON ICO
The Government of Jersey has stated its position concerning ‘initial coin offerings’ (ICO) – a digital way of raising funds from the public by using distributed ledger or blockchain technology.
UKRAINE PROMISES IMF-BACKED ANTI-CORRUPTION LEGISLATION BY FEBRUARY
OCCRP reports that Ukrainian President Petro Poroshenko has vowed to replace a languishing anti-corruption Bill with a new draft that will establish a special anti-corruption court.
SHOULD THERE BE A NO-FLY LIST FOR CONVICTED TRAFFICKERS?
In a thought-provoking article, Airport Technology on 13th December asked, as trafficking of goods and people by air creates victims the world over, could blacklisting of convicted traffickers from international air travel be an effective countermeasure, or simply a step too far? The UN’s International Labour Organization estimates that there are more than 20 million victims of human trafficking globally – a quarter of whom are children – in an illicit industry reported to be worth $150 billion. The recently-published World Customs Organization (WCO) Illicit Trade Report identified air transport as the most common method for transporting contraband, based on 2016 seizure data. In October 2017, the Global Sustainable Aviation Summit, hosted by industry body ATAG in Geneva, saw experts gather for a panel to discuss aviation’s role in countering illegal trafficking. During the panel, a discussion over the prospect of a blacklist system for convicted traffickers arose. One suggestion is that instead of looking for new solutions, the stakeholders in the campaign against trafficking should be looking to build on and enhance existing detection and prevention methods that work. However, it says that data-driven digital technologies will continue to improve the options available to authorities. “Things like e-freight will enhance the quality of data provided to enforcement agencies,” IATA’s environment team assistant director Jon Godson told Air Cargo News in April. “This will facilitate better targeting for illegal wildlife trade.”
ORGANISED CRIME AND ILLICIT TRADE IN ITALY: COUNTRY REPORT
On 13th December the Royal United Services Institute published a report which is the last in a series of 5 country-level papers on the role of organised crime groups in the illicit trade in tobacco, alcohol and pharmaceuticals across Europe, focusing on Italy as a case study. This paper identifies 4 core drivers of illicit trade across Italy –
- the broad social acceptability of buying and selling illicit goods;
- the accessibility of illicit products;
- price differentials play a key role in driving illicit trade in Italy; and
- corruption acts as an enabler of both illicit trade and broader organised crime in Italy. This is due, in many cases, to the extensive infiltration by the mafias of the public sector.
NEW US CYBERSECURITY AGENCY APPROVED
In the US, Homeland Preparedness reports that the House of Representatives approved legislation that would recalibrate the Department of Homeland Security’s cybersecurity and infrastructure security functions by establishing the Cybersecurity and Infrastructure Agency (CISA), a standalone organisation. It would replace the National Protection and Program Directorate of DHS as the nation’s leading civilian cyber security agency.
14th December 2017
WARNING TO CARRY OUT SANCTIONS DUE DILIGENCE IN A TAKEOVER OR MERGER
Export Law Blog carries the cautionary tale of Dentsply Sirona which had paid OFACa penalty of $1,220,400 over 37 unlicensed exports of dental equipment to Iran. But these not exports made by Dentsply Sirona, but rather made by 2 subsidiaries of Dentsply before it merged with Sirona in February 2016. OFAC applies a rule of successor liability. Not only did Dentsply supply the goods indirectly to Iran, it continued to do so even after receiving confirmation that the items had, in fact, been re-exported to Iran.
PARADISE PAPERS VIDEO FROM ICIJ: “SNAX HAVEN AND ITS SECRET SAUCE
Welcome to Reg and Ruby’s burger shop, Snax Haven. A clever consultant helps them grow their profits by charging their franchise owners a secret sauce fee. The recipe is kept in a country where there is no tax paid. It’s not just Reg and Ruby who use these tactics.
VICE-PRESIDENT OF ECUADOR CONVICTED OF CORRUPTION
The BBC reports that the vice-president of Ecuador has been sentenced to 6 years in jail in connection with corruption at the Brazilian construction giant Odebrecht. Jorge Glas is the highest-ranking politician to be convicted in the scandal that has spread across Latin America and further afield. Prosecutors said he took $13.5m in bribes.
US BILL WOULD MEAN PUBLICATION OF IRAN LEADERS’ ASSETS
The Washington Examiner reports that the US Treasury would have to publish a report chronicling the financial assets of Iran’s top leaders, under a Bill that that has been passed by the House of Representatives. If approved by the Senate and President Trump, supporters consider it will help reveal corruption by top Iranian officials.
US ACT TO UPGRADE GENERAL AVIATION SECURITY ARRANGEMENTS
Aviation website Blue Sky reports that the US National Business Aviation Association has welcomed the House of Representatives’ passage of much-needed legislation that would strengthen and streamline security for general aviation and charter operators – Securing General Aviation and Commercial Charter Air Carrier Service Act of 2017″ would improve security procedures for general aviation and commercial charter air carriers. I noted one element, with echoes of the 9/11 case, which would require the Transportation Security Administration (TSA) to issue a report to Congress on the feasibility of requiring security threat assessments for all candidates seeking flight school training to operate any aircraft with a maximum certificated take-off weight of more than 12,500 pounds in order to increase vetting of such candidates.
RUSSIA SANCTIONS: GERMANY THE MOST AFFECTED EU STATE
EU Observer on 14th December reports that according to a study from the Kiel Institute for the World Economy (IfW) the German economy suffers the most from sanctions against Russia. It appears that Germany accounts for almost 40% of lost trade in the West, far more than the UK (7.9%), France (4.1%) and the US (0.6%). The total cost of the Russia sanctions imposed in 2014 was €97 billion in 2015.
EU AND THE PANAMA PAPERS
After 18 months of investigation, hearings and fact-finding missions on the Panama Papers, the European Parliament has now presented 211 strong concrete recommendations to fight international tax avoidance, tax fraud and money laundering. The Progressive Alliance of Socialists and Democrats Group in the Parliament has a blog on “Investigating the Panama Papers” –
VENEZUELA SANCTIONS AND THE EU
On 6th December the House of Commons EU Scrutiny Committee considered an EU Council Decision re sanctions on Venezuela. In the report on the topic the Committee notes that within the EU, the situation in Venezuela is of particular concern to Portugal and Spain — whose citizens make up the majority of the 600,000 EU nationals in the country — and the Netherlands, which is responsible for the foreign relations of Curacao, an island off the Venezuelan coast. 14.12The sanctions regime will expire on 14th November 2018 unless a Decision is taken by the EU Council before that date to extend it further.
THE EU AND CONTROLS ON IMPORTS OF CULTURAL GOODS
On 29th November the House of Commons EU Scrutiny Committee considered EU Commission proposals for a new customs regime under which any cultural goods such as art works, antiquities and manuscripts would be subject to an import licence (for artefacts considered most at risk, such as parts of ancient monuments) or a self-certification system, affirming the legal exportation of the good before they could enter the EU for free circulation. The purpose of the legislation is to protect cultural heritage, and to prevent revenue from illegal trade in cultural goods from being laundered to avoid tax or finance terrorism. The market for cultural goods is estimated to be worth $22 billion annually, of which the UK alone accounts for over 60%.
WILL CASH IMPORT/EXPORT CONTROLS APPLY TO ALL IMPORTS/EXPORTS AFTER BREXIT?
In considering amendments to the current cash controls undertaken by HMRC, the House of Commons EU Scrutiny Committee posed the question of what will happen after (if?) the UK leaves the EU. Currently, declarations are required where €10,000 or more is sent or taken to or from a place outside the EU (which includes to or from the Crown Dependencies). The immediate impact of the UK’s withdrawal from the EU, the Committee notes, will be that the remaining Member States will have to apply the Cash Control Regulation to movements of cash into the EU from the UK and vice versa, unless an agreement to the contrary is concluded before March 2019.
UPDATE ON THE 5th MONEY LAUNDERING DIRECTIVE
On 22nd November the House of Commons EU Scrutiny Committee considered the 4th and 5th EU money laundering Directives. It noted that major areas of disagreement between the European Council and the EU Parliament were access to the register of trusts, the threshold of “beneficial ownership” of an entity and the supervision of “obliged entities”. Establishing a “proportionate level of access” to the register of trusts was said to be one of the UK’s priorities for the negotiations, without specifying what that means. It was also said to be unclear if the EU Parliament’s amendments to minimum AML standards in any country seeking a trade agreement with the EU on financial services would also have to be applied in the UK’s Overseas Territories and Crown Dependencies, if the Government were to seek such an agreement post-Brexit – with the partial exception of Gibraltar, EU AML law does not apply in those territories at present. It was noted that discussions in the EU mechanisms are scheduled to continue in December 2017, and given the remaining divergences between the Parliament and the Council, it is likely the Directive will not be adopted until 2018.
PROCEEDS OF CRIME: MUTUAL RECOGNITION OF FREEZING AND CONFISCATION ORDERS
On 13th November the House of Commons EU Scrutiny Committee considered the proposal for an EU Regulation on the mutual recognition of freezing and confiscation orders between Member States.
EU EXPORT LICENCES FOR DUAL-USE ITEMS
The UK Department for International Trade explains how EU General Export Authorisations (GEA) licences authorise the export of specified controlled dual-use goods to certain countries outside the EU. EU GEA are the EU equivalent of the national system of Open General Licences (OGEL) issued under UK export control law and are designed to licence dual-use exports. There are 6 GEA for –
- EU001 – exports to Australia, Canada, Japan, New Zealand, Norway, Switzerland (including Liechtenstein) and US – NOTE: this was previously known as the Community General Export Authorisation or CGEA.
- EU002 – export of certain dual-use items to certain destinations
- EU003 – export after repair/replacement
- EU004 – temporary export for exhibition or fair
- EU005 – telecommunications
- EU006 – chemicals
UN REPORT: NON-TARIFF MEASURES MORE COSTLYTHAN TARIFFS FOR DEVELOPING COUNTRIES
Sandler, Travis & Rosenberg reported on 14th December that a new report by the UN Conference on Trade and Development and World Bank reveals that non-tariff measures make trade costlier for developing countries than tariffs. NTM are defined as measures other than ordinary customs duties that can potentially have an economic effect on international trade, e.g., safety regulations for machinery or toys, health regulations for food or medicines, quotas, price controls, and export restrictions. The report is based on NTM data for 109 countries, covering 90% of global trade. On usage of NTMs, the report found that –
- NTM affect 77% of global trade
- in general, developed countries regulate more products and a higher share of imports than least-developed and developing countries
- agricultural products are more often regulated than manufactured goods and natural resources
- technical barriers to trade (TBT) and Sanitary and phytosanitary (SPS) measures are the most frequently used form of NTM
- developed countries drive the high global usage of TBT and export measures, while the use of SPS measures is more uniformly distributed
http://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=1629&Sitemap_x0020_Taxonomy=UNCTAD Home;#2030;#Trade and Non-Tariff Measures
“UNPRECEDENTED” PROBE OF HONG KONG FINANCIAL ADVICE COMPANY
International Adviser carries a story saying that Hong Kong’s financial services firms can expect greater regulatory scrutiny following an unprecedented joint probe by the Independent Commission Against Corruption (ICAC) and the Securities and Futures Commission (SFC) into Convoy Financial, one of Hong Kong’s largest financial advice companies. It reports that this had led to 4 arrests, including its CEO, and to 8 locations related to the firm being raided.
UK LAW REFORM PLANS INCLUDE FOR ELECTRONIC SIGNATURES AND TRUST LAW
For its 13th programme, the Law Commission in the UK proposes 14 new areas of law set for reform. The projects in the 13th Programme of Law Reform include –
- electronic signatures; and
- modernising trust law for a global Britain.
The Commission will also continue its ongoing work on 12th Programme of Law Reform and referral projects including the high-profile areas of misconduct in public office and search warrants. The new topics follow the July 2016 launch of the 13th Programme consultation to seek the public’s views on the issues most in need of reform. The consultation received the largest-ever volume of responses with over 1,300 submissions covering 220 different topics. The Law Commission’s Protocol with Government, agreed in 2010, means that it can only take on projects where there is a “serious intention” on the part of Government to reform the law.
SANCTIONS AFFECTING AID EFFORTS IN NORTH KOREA
Website Jurist reports that the UN High Commissioner for Human Rights has said that sanctions against the People’s Democratic Republic on North Korea have a negative effect on aid efforts.
EU AGREES TO MAKE PARCEL DELIVERY MORE AFFORDABLE
A news release on 14th December reports that EU negotiators have reached a provisional agreement to make prices for cross-border parcel delivery services more transparent and affordable and to increase regulatory oversight of the EU parcel market.
NEW ZEALAND SPIES UNLAWFULLY ACCESSED CUSTOMS DATA FOR 19 YEARS
Radio New Zealand on 14th December reported that the Inspector-General of Intelligence and Security has revealed the Secret Intelligence Service (SIS) unlawfully accessed Customs data for almost 20 years, with direct access to a dedicated Customs computer terminal which contained information on passenger movements in and out of New Zealand, including information relating to many New Zealanders between 1997 and 2016. It is said that the issues identified in the report were largely legacy issues and relate to a period when the law was unclear, and when the NZSIS had challenges with resources and capability.
SLAVE AUCTIONS IN LIBYA IN 2017
In the latest TRACE podcast, Nima Elbagir and Raja Razek of CNN go undercover in Libya to expose a hellish, thriving slave trade.
US FORCED LABOUR IMPORT CONTROLS: UPDATE
Baker McKenzie on 13th December provided an update on the developments with regard to US Customs and Border Protection’s (CBP) enforcement of the US import ban on goods made with forced labour. In early 2016, Congress removed a loophole in the near-80 year old statute banning the importation of goods made with forced labour. Amongst other changes, in August 2017, as part of an wide-ranging sanctions Bill, the statute now specifies that merchandise made by North Korean labourers, regardless of location, is presumed to be made with forced labour, and, therefore, subject to the import ban. The update concludes with a set of recommendations for businesses.
LAST NORTH KOREAN INTERNATIONAL BANKING CONNECTION SUSPENDED?
NK Pro on 13th December reported that, for reasons that are unclear, the only remaining international banking connection between North Korea and the outside world was suspended on 15th September and the link with Sputnik Bank of Russia is yet to reopen.
US CONGRESS VOTE IN FAVOUR OF LAW TO END BANKING FOR HUMAN TRAFFICKING
On 13th December the US House of Representatives Financial Services Committee voted unanimously to advance legislation targeting the financing of human trafficking. The End Banking for Human Traffickers Act of 2017 would add the Secretary of the Treasury to the President’s Interagency Task Force to Monitor and Combat Trafficking, and require the task force to make recommendations to specifically target money laundering related to human trafficking. In addition, it would require the Federal Financial Institutions Examination Council with reviewing and enhancing AML programmes to target human trafficking operations, and require the State Department to report on AML efforts related to human trafficking.
GREEK SUPREME COURT APPROVES EXTRADITION OF ALLEGED BITCOIN FRAUDSTER TO USA
KYC360 reports that the Greek Supreme court has cleared the way for the extradition to the US of Alexander Vinnik, a Russian also wanted in Moscow, who is suspected of having laundered billions of dollars in the digital currency bitcoin. The final decision now lies with the Greek justice minister. Vinnik is the alleged mastermind of a $4 billion bitcoin laundering ring, and US authorities accuse him of running BTC-e — a digital currency exchange — to facilitate crimes ranging from computer hacking to drug trafficking since 2011.
WERE EXPENSES INCURRED WHILST NEGOTIATING RANSOM PAYMENT FOR PIRATED SHIP PAYABLE UNDER INSURANCE?
According to a brief from Colin Biggers & Paisley, the UK Supreme Court has overturned a lower court’s decision and held that a vessel’s operating expenses during the negotiating period were allowable. The vessel was the chemical carrier “Longchamp” which was boarded by pirates in the Gulf of Aden on 29th January 2009. A ransom was negotiated 51 days later, and paid 5 days, with the pirates leaving the ship the next day, with the ship then continuing its voyage.
The basic ransom of $1.85 million paid (reduced down from an initial $6 million) was accepted as a “general average” insurance cost, but a dispute arose over other expenses for the operation of the ship during the 51 days that negotiations were underway.
Mitsui & Co Ltd and others (Respondents) v Beteiligungsgesellschaft LPG Tankerflotte MBH & Co KG and another (Appellants).
“CHEAP WHITES” CIGARETTE SMUGGLING – EU PRESSURE ON BELARUS
On 14th December EurActiv reported that the rising illicit tobacco trade and particularly of the so-called “cheap whites” from Belarus to the EU will be discussed at the next EU-Belarus meeting on 19th December. Whilst the illicit tobacco trade had been dominated by counterfeit products, “illicit whites” are an emerging trend in Eastern European countries. These cigarettes may be legally produced but are then smuggled and traded illegally. Belarus is considered the main source of cheap whites in Europe, and most of the illegal products originate in an official state-owned factory located a few kilometres from the Polish border.
BAHAMAS NATIONAL RISK ASSESSMENT MONEY LAUNDERING RISKS
The Nassau Guardian on 13th December carries a report on the Bahamas’ 2015/2016 National Risk Assessment Report which says that the report considers the local real estate sector has a high exposure to money laundering risk, and that the sector presents a “common vehicle” for money laundering, due to the large amount of monetary transactions and the international nature of the real estate market. The report also warns that local web shops have a “high level” of exposure to money laundering risk. The risk is linked to the potential laundering of funds from locals who are involved in drug, human and gun trafficking, according to the report. Other sectors that were linked to a high exposure of risks are international and domestic commercial banks, the insurance sector and money transmission businesses. The Central Bank of The Bahamas says that it plans to expand from AML/CFT on-site examinations to examination plus continuous AML/CFT supervision, as well as revising its communication strategy to allow for greater stakeholder engagement on AML/CFT and proliferation financing risk management.
US TO MAINTAIN ZIMBABWE SANCTIONS FOR NOW
All Africa reports that US officials have confirmed that the Trump administration will maintain sanctions the US imposed against Zimbabwe despite the change of leadership.
MIGRANTS AND MILITIAS: LIBYA’S ENDURING CRISES
RUSI has published a paper which says that Libya is back in the international spotlight after reports emerged of African migrants being sold to the highest bidder. However, it says, this is just one aspect of the North African state’s 7-year crisis which has simmered since the 2011 NATO-led, UN-approved intervention that led to the toppling and eventual killing of Muammar Qadhafi. This paper provides a briefing on the current situation, and problems, in the country.
CAMELOT GOOD CAUSES SPENDING SCRUTINISED
The Chairman of the House of Commons Public Accounts Committee has queried how UK National Lottery operator Camelot UK Lotteries Ltd managed to grow its profits over a 7-year period but failed to boost its good causes contributions. Calvin Ayre carries a piece based on a Guardian article saying that an inquiry is being launched into whether it had been remiss in its duty to shore up the profits of the National Lottery good causes
ITALIAN YACHT BUILDER UNDER INVESTIGATION
Superyacht News carries a report saying that efforts to save the Mondomarine shipyard took a turn for the worse when the Guardia di Finanza began searches of the company’s offices in Savona, Pisa and Milan with the seizure of documents relating to the company’s financial dealings. It reports that the raids were prompted by complaints from customers and contractors who claim to have been scammed and the fiscal authorities are investigating possible fraud, false accounting and credit abuses using invoices for non-existent transactions. However, it says that Mondomarine shareholders have requested an accounting survey from PWC and the results were delivered to the judiciary.
KIMBERLEY PROCESS FOR ROUGH, CONFLICT OR BLOOD DIAMONDS
The EU takes over as chair of the Kimberley Process. It has published information on the Process and its aims. The Kimberley Process Certification Scheme (KPCS) was launched in 2002 by a coalition of governments, civil society and the diamond industry in response to the role diamonds play in funding some of the most devastating civil wars in Africa. The KPCS sets out requirements for participating States to control all imports and exports of rough diamonds.
WESTERN UNION $586 MILLION SETTLEMENT IN US
WISTV in the US reports a $586 million settlement between US Government and Western Union over money laundering and consumer fraud violations, and victims may now apply for compensation before February 12th. The settlement requires Western Union to develop and put into action a comprehensive anti-fraud programme designed to help detect and prevent incidents where consumers who have been the victims of fraud use Western Union to wire money to con artists.
The Federal Trade Commission webpage for applications is at
The FTC claims that, from January 2004 to August 2015, the company got more than 550,000 complaints about money transfers made for fraudulent lottery & prizes, family emergency calls, advance fee frauds, online dating and more. There were its own internal reports, which flagged fraud by some of its own agents, including many international agents that paid out fraud-induced transfers from US consumers. And there were warnings from US and international law enforcement about the fraud.
TURKISH CRACKDOWN ON ONLINE GAMBLING CONTINUES
Calvin Ayre on 14th December said that Turkey’s crackdown against unauthorised online gambling had been stepped up by the national banking regulator BDDK imposing new curbs on mobile money transfers. Estimates are that 10% of online commerce activity in the country involve online gambling. The new controls impose a $128 per day limit on money transfers by mobile phone, and restricting mobile users to 2 financial transactions per day, while requiring senders to list their ID numbers and putting a 24-hour window in which passwords sent to transfer recipients will remain valid. There were already restrictions on ATM use based on the government’s conclusion that unauthorised betting operators had enlisted cash-poor cab drivers to conduct gambling-related transactions via the machines along the drivers’ daily routes. For more information see –
CHANGES FOR US COMPLIANCE IN MAY 2018 INCLUDING NEW CDD RULE
Michael Volkov has identified May 2018 as a bad month for US compliance officials. On May 11th the new customer due diligence (CDD) Rule for beneficial ownership becomes effective, and on May 25th the EU’s General Data Protection Regulation (GDPR) comes into effect.
The new CDD rules are expected to have a significant impact on the collection of beneficial ownership information and AML enforcement. Under the new regulations, certain financial institutions have to identify and verify the beneficial owners of legal entity customers. It applies to all federally regulated banks, federally insured credit unions, mutual funds, brokers or dealers in securities, futures commission merchants and brokers in commodities, with the intention for entities to identify the ultimate beneficial owner, not the nominee or straw owner. The FinCEN guidance is at –
NORTH KOREAN NUCLEAR REACTOR SAFETY: THE THREAT NO ONE IS TALKING ABOUT
On 14th December website 38 North published an article saying that the ability of North Korea to safely operate its nuclear reactors, according to many experts, is increasingly being called into question given the North’s isolation and lack of safety culture. Pyongyang’s ability to respond to a nuclear accident in a timely fashion will make the difference between a small-scale event and a catastrophic disaster. A video of Kim Jong Un smoking next to an untested liquid-fuelled missile tells you everything you need to know about North Korea’s nuclear safety culture. It argues that it is in everyone’s interest to prevent such an accident from occurring; ensuring nuclear safety is one of the few truly universal policy imperatives. An arrangement, it is suggested, could take any number of forms: perhaps an exchange of scientists or a multilateral agreement on incident response, in the event of a nuclear or radiological accident. North Korea actually signed 2 such conventions immediately following Chernobyl
CONCERNS ABOUT BAHAMAS EXTENDING AML REQUIREMENTS TO INSURERS
KYC 360 reports on fears in the industry sector that the Bahamas could be “shooting ourselves in the foot” by including general and captive insurers within its AML regime, and concern that such a move would undermine the efforts to revive a captive/external insurance industry. It was claimed that none of its rivals defined external insurers as “financial institutions” under their AML regimes, and suggesting that the Bahamas would be unable to compete on a level playing field.
The regional FATF released its mutual evaluation report on the Bahamas in July –
US EMERGENCY MEDICAL PROFESSION UNPREPARED FOR NUCLEAR ATTACK
In the face of North Korea’s threats to carry out a nuclear strike on the US new research appears to show more training is needed among emergency medical personnel. Homeland Preparedness on 14th December reported that A survey of 418 US and Japanese medical professionals found they lacked knowledge regarding nuclear and radiological contamination risks, which can affect their willingness and ability to respond to those types of disasters. The details have been published in a report, “Readiness for Radiological and Nuclear Events among Emergency Medical Personnel,” in Frontiers for Public Health. The article says that the nuclear reactor accidents at Fukushima in 2011 and Chernobyl in 1986 highlight the importance of expertise and training for emergency medical responders.
15th December 2017
CORRUPTION, NOT TERRORISM, IS TUNISIA’S BIGGEST THREAT
The Carnegie Center has published an article on the current situation in Tunisia. Whilst the Tunisian element (referred to as the “Jasmine Revolution”) of the “Arab Spring” in 2010-11 was motivated by the corruption of the then leader, Ben Ali, and his wife, and the post-revolution government has moved to make anti-corruption initiatives part of the new construct the common perception on the ground is that there are even higher levels of corruption today.
The article argues that corruption has been, in effect, decentralized, rather than concentrated in the ruling family. The head of the country’s National Anticorruption Authority has estimated a loss of around €800 million a year to corruption and poor governance. The article concludes with several recommendations for how the EU can assist Tunisia to combat corruption, giving their close links and geographical proximity.
Meanwhile, the Cipher Brief asks: At Arab Spring anniversary, is Tunisia really a success story?
EU AMENDS ITS DUAL-USE EXPORT LISTS
EU Regulation 2017/2268/EU replaces the main list (in Annex I), together with associated lists (in Annexes IIa to IIg and IV) of Regulation 428/2009/EC, to correspond to changes and developments to international agreements and export control arrangements. It takes effect from 16th December.
NEW YORK WOMAN CHARGED WITH LAUNDERING CRYPTOCURRECIES TO FUND ISIS
A woman in New York has been charged with laundering bitcoin and other cryptocurrencies and wiring the money overseas to help the Islamic State group. Zoobia Shahnaz, 27 and Pakistani-born former lab technician, is being held without bail following arraignment on charges of bank fraud, conspiracy to commit money laundering and money laundering. Prosecutors allege that beginning in March she fraudulently obtained more than $85,000 through a bank loan and credit cards to buy bitcoin and other cryptocurrencies online, and then made several wire transactions to individuals and opaque entities in Pakistan, China and Turkey, which were designed to avoid transaction reporting requirements and conceal the identity, source and destination of the illicitly-obtained monies – with the transaction “motivated to benefit ISIS”.
JAPAN EXPANDS NORTH KOREA SANCTIONS
Fox News reported that on 15th December Japan’s Foreign Ministry announced that it is freezing the assets of 19 companies dealing in finance, coal and minerals and transport and already been subject to US sanctions.
EVASION OF SANCTIONS ON NORTH KOREA
The Peterson Institute for International Economics (a US-based non-partisan think tank) on 14th December published an article lauding 2 recent reports from C4DS (“The Forex Effect” – see earlier blog post) and the Institute for Science and International Security for high-quality open-source reporting on North Korean trade and investment.
The latter report is said to be apart of a larger project called the Peddling Peril Index (PPI), which ranks 200 countries, territories, and entities “according to their capabilities and demonstrated success in implementing strategic export controls.” The index comes replete with a color-coded ranking of countries on the quality of their export control regimes and the likelihood of corruption. The report identifies no fewer than 49 countries involved in sanctions violations and of 4 types –
Angola, Cuba, DR Congo, Egypt, Eritrea, Iran, Mozambique, Myanmar, Namibia, Sri Lanka, Syria, Uganda, and Tanzania.
- non-military related that involved facilitating front companies, financial transactions, and other business activities (18):
Angola, Brazil, Bulgaria, China, Egypt, Ethiopia, Germany, India, Iran, Malaysia, Namibia, Poland, Romania, Russia, Singapore, Sri Lanka, Sudan, Syria, and UAE.
- import of sanctioned goods (19):
Barbados, China, Costa Rica, Egypt, El Salvador, France, Germany, India, Indonesia, Iran, Ireland, Malaysia, Mexico, Pakistan, Philippines, Sri Lanka, Syria, and Vietnam.
- reflagging of ships and shipping-related violations (20): Brazil, Cambodia, China, Egypt, Fiji, Greece, Japan, Kiribati, Malaysia, Marshall Islands, Mongolia, Palau, Panama, Peru, Russia, Sierra Leone, Singapore, Tanzania, Thailand, and Togo.
The main point of the brief is to show the accuracy of the PPI in predicting such violations. But the list actually contains a lot of surprises: Sri Lanka, Germany, France, Brazil, Mexico, Peru, Barbados; and the article calls for further enforcement work, such as by FATF. As one might expect, the results of the study suggest that North Korea has often targeted countries with weak or non-existent export and proliferation financing controls and those that suffer on average from more corruption than other countries.
The Institute for Science and International Security study is at –
NUCLEAR INFRASTRUCTURE AND PROLIFERATION RISKS OF THE UAE, TURKEY, AND EGYPT
The Institute for Science and International Security also produced this interesting paper in September 2017. It states that apart from Saudi Arabia, which the Institute views as currently the largest proliferation risk in the Middle East, 3 key neighbours of Iran also warrant intensive study as to their nuclear capabilities and plans, safeguards and obstacles to proliferation, and future proliferation risks. None of these are countries which most people would immediately highlight as obvious proliferation risks – but given the general levels of instability, if not outright conflict, across the larger Middle East region, any or all states in the region might be considered a risk.
CONTEMPT OF COURT IN CIVIL LITIGATION IN THE UK
Kingsley Napley has issued a briefing on contempt of court in the UK. It says that one of the trends over the last few years in civil fraud cases has been the increase in applications to the court for defendants in civil fraud proceedings to be committed to prison for contempt of court, and that “cases against a number of ‘oligarch’ for breaches of freezing orders spring to mind”. However, it says, recent cases show that the increase in such applications is not just in fraud proceedings.
It provides a precis of what contempt of court means, before looking at several recent cases. In its conclusion, it reminds one of what Mr Justice Norris said back in 2015 “A contempt of court is not a wrong done to another party to the litigation. It is an affront to the rule of law itself and to the court“. The message being given by the court is, it argues, loud and clear – if you breach orders of the Court you do so at your peril and you face imprisonment for doing so.
UK RECEIVING GAS FROM SANCTIONED RUSSIAN COMPANY
EurActiv reports on 15th December that the UK is to take direct delivery of Russian gas for the first time this month, after a temporary closure of a North Sea gas pipeline led to fears of a supply crisis. The deal is said to be controversial because the provider is a Russian gas project that is the subject of US sanctions – Novatek, but UK and EU sanctions do not directly target the LNG provider but do restrict access to financing instruments. EurActiv says that Novatek has managed to circumvent the penalties through some “creative accounting” and by turning to Chinese investors for a large loan. French energy firm Total is also a partner on the project.
UK GOVERNMENT AND TAX AVOIDANCE
On 14th December the House of Commons Library published a briefing that said it provides an introduction to the issue of tax avoidance, looking in detail at the development of follower notices and accelerated payments, before discussing the current Government’s approach.
THE ARMED GROUPS IN IRAQ AFTER THE DEFEAT OF ISIL
War on the Rocks has published what is promised to be the first of a series, produced in conjunction with the US Institute of Peace on post-conflict Iraq. This article focuses on the various armed groups – the Kurd Peshmerga, the official government military, the Shia “self-defence” militias and Popular Mobilization Forces (backed by Iran), and Sunni militias, and armed groups for other minorities – Yazidis, Christians, Turkmen, and Shabak. It concludes that one has a competing agenda – with weapons… It sounds like a recipe for continuing uncertainty unrest or worse.
RUSSIAN MINISTER CONVICTED OF CORRUPTION
Rferl reports that a Moscow court has found former Russian Economy Minister Aleksei Ulyukayev guilty of taking a “large bribe” in a high-profile corruption case and sentenced him to 8 years in a strict-regime prison, and a $2.2 million fine. Ukyukayev was accused of taking a $2 million bribe from Igor Sechin – the CEO of state oil giant Rosneft and a longtime associate of Putin — in exchange for his ministry’s approval of the sale of regional oil company Bashneft to Rosneft. Commentators have suggested that the case may have been as much about curbing Sechin as punishing Ulyukayev.
ESTONIA – THE DIGITAL REPUBLIC
The New Yorker magazine looks at Estonia; its government is virtual, borderless, blockchained and secure. It asks if this tiny, post-Soviet nation has found the way of the future.
ISLE OF MAN UPDATES NORTH KOREAN SANCTIONS, IMPOSES VENEZUELAN SANCTIONS
On 15th December the Isle of Man announced that the European Union (North Korea Sanctions) (Amendment) (No. 7) Order 2017 [SD 2017/0363] had come into operation, applying in Island law Council Regulation (EU) 2017/2062 of 13th November. This Regulation amended Annex VIII to Regulation (EU) 2017/1509, which contains the list of goods subject to sanctions controls.
It also announced that European Union (Venezuela Sanctions) Order 2017 [SD 2017/0366] had come into operation, applying the provisions of Council Regulation (EU) 2017/2063 of 13th November, concerning restrictive measures in view of the situation in Venezuela, as part of the law of the Island.
THE SECRET HISTORY OF THE RUSSIAN SAN FRANCISCO CONSULATE
Fascinating article (with linked audio podcast of the text) from Foreign Policy, about the closure ordered on 31st August and its links to espionage and intelligence-gathering… It asserts that sources confirmed that the San Francisco consulate served a unique role in Russian intelligence-gathering operations in the United States, as an important, and perhaps unrivalled, hub for its technical collection efforts here. Why was it singled out for closure by the US authorities? Well, Silicon Valley and other assets might be a factor… One theory is that the Russians were mapping the US fibre-optic and communications networks, including undersea cables (see earlier report of NATO concerns over the vulnerability of undersea communications cables)
EU CYBER THREAT PROPOSALS
Law firm Bird & Bird on 15th December published a briefing which began by stating that the European Commission has recently published its 11th Security Union Report, which includes a set of operational and practical anti-terrorism measures. The aims of the EU are to tackle terrorism and security threats to citizens in the EU, in particular those threats utilising cyber technologies and networks, as well as building resilience against those threats. The Commission is responding to the increased vulnerabilities in the EU and is striving to implement the measures over the next 16 months. The proposed measures are directed towards cutting terrorist financing, countering online radicalisation, boosting cyber security, enabling decryption where required to break into terrorist networks, and strengthening cross-border co-operation and information exchange between the relevant authorities, as well as removing obstacles for obtaining financial transaction data. The article considers the proposals –
AUSTRIA: FATF EVALUATION FOLLOW-UP REPORT
On 15th December, FATF issued a report following up its evaluation of the AML/CFT/CPF systems in Austria. It analyses Austria’s progress in addressing the technical compliance deficiencies identified in the mutual evaluation report. The report also looks at whether Austria has implemented new measures to meet the requirements of FATF Recommendations that have changed since their 2016 mutual evaluation. It also details re-rating of the results Austria received against several FATF Recommendations in 2016on its technical compliance.
MAFIA PLANS TO INFILTRATE MALTA ONLINE GAMBLING
Specialist news site, Gambling 911, carried a story, originating with the Times of Malta that an anti-Mafia investigation in Palermo, Italy had uncovered “advanced plans” by Mafia clans to relocate their underground activities through online gaming companies in Malta. This seemingly followed the arrest of some 25 mafiosi in connection with an investigation on the infiltration of the Mafia into horse races held at the “Favorita” race track in Palermo. See the original story at –
ANGLOPHONES IN CAMEROON FLEE IN FACE OF CRACKDOWN
On 15th December, Defence Web carried a further story on the increasing problems in Cameroon, saying that what began last year as peaceful protests by Anglophone activists against perceived marginalisation by Cameroon’s Francophone-dominated elite has become the gravest challenge yet to President Paul Biya, expected to seek to renew his 35 years in power in an election next year. In October, secessionists declared an independent state called Ambazonia and since then, 7,500 people have fled to Nigeria, including 2,300 in a single day fearing government reprisals after raids by separatist militants killed at least 6 soldiers and police officers. It is said that the UN is preparing for up to 40,000 potential refugees.
FRENCH ANTI-CORRUPTION AGENCY HAS PROBLEMS WITH FOREIGN COMPANIES
Reuters reports that the head of France’s new anti-corruption agency (AFA) says 1-year old legislation designed to bolster the fight against corporate graft should be overhauled because he is almost powerless to go after foreign companies. France adopted the so-called Sapin 2 law in November last year. It enables companies to strike negotiated settlements with magistrates. Under the law, the AFA can only target public bodies and companies with more than 500 employees and turnover of above €100 million, or subsidiaries of foreign companies that are headquartered in France and meet those 2 criteria.
PARLIAMENTARY SCRUTINY OF DRAFT REGULATIONS TO IMPROVE THE SCHENGEN INFORMATION SYSTEM
The House of Commons EU Scrutiny Committee has produced a report concerned with its scrutiny of 3 draft EU Regulations. At the end of 2016, the EU Commission presented a package of 3 proposed Regulations to improve the functioning of the Schengen Information System — SIS II — and strengthen border control and counter-terrorism efforts across the EU. The proposals are intended to close information gaps and enhance the exchange of information on terrorism, cross-border crime and irregular migration so that “in the future, no critical information should ever be lost on potential terrorist suspects or irregular migrants crossing our external borders.”
UK TRADE BILL
This House of Commons Library briefing analyses the Trade Bill, which was published on 7th November. The Trade Bill is one of a series of “Brexit Bills” intended to adjust UK legislation for Brexit, in addition to the European Union (Withdrawal) Bill. Together with the Customs Bill (the Taxation (Cross-Border Trade) Bill), the Bill is intended to allow the UK to continue its existing trade policy as far as possible immediately after Brexit. The Bill is not intended to deal with future trade agreements with the EU or other countries.
UK: IMPACT OF THE TRADE IN IVORY ON ENDANGERED SPECIES
This House of Lords Library Briefing has been prepared in advance of the debate on 21st December on the following motion moved by Lord Carrington (Conservative) “that this House takes note of the impact of the trade in ivory on endangered species, and of the efforts being made to eliminate that trade while protecting the cultural heritage of antique ivory”.
OVERSIGHT OF THE INTELLIGENCE SERVICES: A COMPARISON OF THE “FIVE EYES” NATIONS
This House of Commons Library briefing provides a comparison of the arrangements for oversight of the intelligence services in the ‘”Five Eyes” nations: the UK, Australia, New Zealand, Canada and the USA.
The civil war may have ended but peace in Sudan remains elusive. This House of Commons Library briefing paper looks at recent developments in Sudan including peace efforts, UK relations and the recent easing of sanctions by the US. It notes that a UN arms embargo on Darfur remains in place, as does an EU arms embargo on Sudan.
CORPORATE TAX AND THE DIGITAL ECONOMY: UK POSITION PAPER AND CONSULTATION
HM Treasury published on 15th December a position paper which sets out the government’s view on the challenges posed by the digital economy for the corporate tax system and its preferred solutions. It invites feedback on the content by 31st January.
US AUTHORITIES WANT TO QUICKLY SELL VOLATILE SEIZED BITCOINS
Customs Today reports that US Attorneys in Utah prosecuting a multimillion-dollar opioid drug-ring are moving quickly to sell seized bitcoin that’s exploded in value to about $8.5 million from $500,000 since the alleged ringleader’s, Aaron Shamo arrest a year ago. Shamo is accused of selling pills containing the powerful opioid fentanyl on the Dark Web at one point raking in $2.8 million in less than a year. The 500,000-pill bust ranked among the largest of its kind in the country, and authorities also found $1 million of cash stuffed into trash bags. Shamo has pleaded not guilty to a dozen charges.
TURKISH POLICE SEIZE COBRA VENOM SMUGGLED FROM SYRIA
Customs Today reports that Istanbul police on 11th December seized a total of 1,725 tubes containing cobra venom smuggled from Syria, with a market value of approximately $7.8 million. This amount is reported to be the highest amount ever seized in a raid in Turkey. The report tells us that cobra venom is used in various industries, including medicine, chemistry, cosmetics and arms. Considered to be the world’s second most expensive venom after scorpion toxin, cobra venom is produced in limited amounts in Turkey.
LEGAL ENTITY IDENTIFIERS (LEI) EXPLAINED
Irish law firm explains what Legal Entity Identifiers (LEI) are, and who will have to have one and why. In a response to the global financial crisis, a recognised identification system has been introduced, and it will be mandatory from 3rd January for parties to financial transactions (such as legal entities or investment funds) to obtain a LEI code under the European Market Infrastructure Regulation (EMIR), the Markets in Financial Instruments Directive (MiFID II) and the Markets in Financial Instruments Regulation (EU) No 600/2014 (MiFIR). An LEI is a unique 20-digit, alpha-numeric code which enables every legal entity that is party to a financial transaction to be identified in any jurisdiction.
UNODC LAUNCHES PUBLICATION TO HELP MEMBER STATES COUNTER OPIOID CRISIS
On 14th December, the UN Office for Drugs and Crime reported that it had published a manual for forensic labs: Recommended Methods for the Identification and Analysis of Fentanyl and its Analogues in Biological Specimens. Fentanyl is a narcotic analgesic used in cancer pain relief and surgical anaesthesia, and it is on the WHO list of essential medicines. There are 4 fentanyl analogues used as pharmaceuticals and a total of 15 are under international control. Identification of fentanyl analogues in cases of poisonings and fatalities as well as in overdose deaths remains a major challenge. Fentanyl analogues can be present in adulterated drug samples in small amounts, making their detection and identification difficult. Such circumstances obstruct obtaining accurate information on the scope and extent of the problem at the global level. Since 2012, more than 20 non-controlled fentanyl derivatives have been reported to UNODC.
11 ARRESTS AND 9 VICTIMS SAFEGUARDED IN OPERATION AGAINST cross-border SEXUAL EXPLOITATION OF WOMEN in europe
Europol reported on 15th December that Spanish Guardia Civil and the Romanian Police have joined forces, supported by Europol and Eurojust, to dismantle an organised group involved in trafficking Romanian women for sexual exploitation in Madrid. Police officers carried out 5 house searches in Madrid and 8 in Romania.
PANGOLIN SMUGGLERS FIND NEW ROUTES AND EVADE CUSTOMS DESPITE GLOBAL BAN
The South China Morning Post carries a feature which starts by saying that the scale-covered, ant-eating mammal is prized as an edible delicacy and ingredient in traditional medicine, especially in China and Vietnam as well as across Africa. While at least 20 tonnes of pangolins and their parts are seized annually after being trafficked across borders, smugglers were using dozens of new routes for the illegal trade every year in a determined effort to stay ahead of authorities. It reports that a study by wildlife trade monitoring group Traffic and the University of Adelaide analysed international seizures from 2010 to 2015 found about 27 new trafficking routes were being created a year, underlining the highly mobile nature of smuggling networks. The study recorded 1,270 cross-border pangolin seizures, involving 67 countries and territories.
A composite image released by the United States on 14th December shows the remnants of the ballistic missile that was launched from Yemen at Riyadh on 4th November next to a photograph of an Iranian Qiam (Zachary Welch/Defense TV via Janes.com)
In a podcast on 15th December, the folks at Arms Control Wonk consider this and related revelations, noting that the missile parts shown were a composite of more than one missile (i.e. the one fired recently and an earlier one – not the same type), and discuss the missile type(s) and origins etc.
YEMEN AFTER SALEH
INSS of Tel Aviv University has published a paper speculating on the future of Yemen following the assassination of former Yemeni President Ali Abdullah Saleh by Houthi rebels on December 4th, seemingly a response to his announcement a few days previously that he was ready to start negotiations with representatives of the Arab coalition led by Saudi Arabia and the UAE on ending the fighting in Yemen. Since March 2015, Saudi Arabia and the UAE have led a coalition of Arab states that aimed, so far with little success, at a withdrawal and disarming of the Iranian supported Houthi forces and the restoration of President Abdrabbuh Mansour Hadi, whose appointment as President instead of Saleh was welcomed by the US and other Western countries. The report says that Yemen’s importance lies mainly in its location – close to Saudi Arabia, with whom it shares a border of 1,800 km; and the fact that it overlooks the strait of Bab el-Mandeb, the southern gateway to the Suez Canal in the direction of Israel. The report says that in the short term, Saleh’s assassination will not bring greater stability to Yemen, and will aggravate the military conflict.
HORIZON SCANNER 2018
In its “Horizon Scanner” for financial crime and cyber-security for 2018 UK law firm, Eversheds Sutherland, marks expected events as red, amber or green. The “reds” include –
- The first red is the FATF evaluation of UK AML/CFT/CFP systems: the UK onsite visit is anticipated to take place in February/March 2018 with a plenary discussion anticipated in October 2018.
- Another red is for regulations regarding the creation of an Office for Professional body Anti-money Laundering Supervision (OPBAS): though the implementation date for the regulations is not yet known.
- The UK asset recovery plan will set out how the UK is responding to the challenges involved in improving the recovery of the proceeds of crime. While the UK’s performance in asset recovery has been broadly stable, the government strives to be more ambitious in tackling criminal finances and the action plan will outline a new approach to asset recovery.
Watching briefs are recommended for “amber” matters, including the Brexit-related Sanctions and Anti-Money Laundering Bill, the 5th EU AML Directive and implementation of the remaining parts of the Criminal Finances Act 2017.
16th December 2017
LARGE-SCALE DRUGS BUST ACROSS EUROPE
Eurojust on 15th December reports that judicial and law enforcement authorities from Germany, Spain, Italy, France and Austria combined forces to dismantle an organised criminal group involved in the smuggling of huge quantities of hashish and marijuana from a base of operations in the Province of Cadiz, Spain, to other Member States, in an operation called ‘Maestro’, ‘Turbofan’ and ‘Undertaker’. These latest actions resulted in the arrest of 23 people: 8 in Italy, 13 in Spain (comprising 9 Spanish and 3 German citizens and 1 Russian national) and 2 in Germany. In addition to 5 tonnes of hashish and marijuana, more than €500,000 in cash, firearms, precious metals, real estate, boats, vehicles and drug processing equipment were seized. A joint investigation team (JIT) was formed in November 2016 with Germany, Spain and France. JIT allow team members to quickly and easily share information and discuss investigations and common actions. The JIT received funding from Eurojust for transportation, interpretation, translation, accommodation and equipment used in the investigations. The drugs were sometimes concealed in boats with double hulls in Spain, for distribution in Germany and Austria. Postal packages containing drugs and addressed to Germany were intercepted as a result of the joint operations.
ZUMA MUST SET UP INQUIRY INTO CORRUPTION
Defence Web reports that South Africa’s High Court has ruled President Zuma must set up a judicial inquiry into state influence-peddling within 30 days, upholding a recommendation by the Public Protector. High Court Judge President Dunstan Mlambo said an application by Zuma challenging the inquiry was “ill-advised and reckless” and an abuse of the judicial process. The ruling comes days after the same court dealt a rebuke to Zuma ruling his appointment of a state prosecutor to decide whether to reinstate corruption charges against him was not valid and should be set aside immediately.
FORMER ZIMBABWE MINES MINISTER ARRESTED
Zimbabwe news site Newsday reports that former higher education secretary and mines minister, Francis Gudyanga, was arrested on charges of corruption and abuse of public office hardly a week after being was sacked from his position. No details of the charges were revealed. According to sources at the anti-corruption body, Gudyanga faces graft charges emanating from deals he struck while he was mines and mining development secretary, when he was accused of ordering the State-owned Minerals Marketing Corporation of Zimbabwe (MMCZ) to do work on behalf of the Zimbabwe Republic Police Border Control Unit, but it turned out that no job was rendered by MMCZ, losing the state of close to $1.7 million. Gudyanga also reportedly ran a one-man board at MMCZ where he allegedly handsomely rewarded himself with allowances. The Mines and Energy Portfolio Committee recently recommended that Gudyanga be fired for his role in abusing the country’s mineral resources and aiding illicit financial outflows, but former President Mugabe re-assigned him to the higher education portfolio.
PODCAST: WHAT HAS CHANGED SINCE 9/11?
In a special episode of DiploPod at the Carnegie Center, Jen Psaki sat down with the outgoing Director of the US National Counterterrorism Center and former Carnegie junior fellow Nicholas Rasmussen. They discussed how the threats facing the US have changed since 9/11, whether the US government is the most effective voice for combating extremism online, and what social media companies should do to address the threat of terrorism.
EU AGREES NEW AML RULES, INCLUDING FOR BITCOIN ETC
Deutsche Welle reports that the European Parliament and the European Council have agreed to a new set of rules on 15th December (the so-called 5th Money laundering Directive that amends the current 4th Directive) that target exchange platforms for bitcoin and other virtual currencies. The new measures would require platforms to identify users that previously allowed users to remain anonymous. They –
- require platforms that transfer bitcoin and “wallet” providers that hold cryptocurrencies for clients to identify users;
- limit use of pre-paid payment cards;
- raise transparency requirements for company and trust owners;
- allow national investigators more access to information, including national bank account registers; and
- grant access to data on the beneficiaries of trusts to “persons who can demonstrate a legitimate interest”.
£2.5 MILLION FRAUD FROM CAR DEALERSHIP BY ACCOUNTANT
Car Dealer magazine reports that a fraudster has been jailed for 6 years after swindling millions of pounds from an Evans Halshaw dealership. Accountant Allan Curry, 24, from County Durham, devised the sophisticated scheme to siphon off the money from the Evans Halshaw Vauxhall garage he worked for in Middlesbrough, with the scam eventually running to more than £2,470,000.Having initially begun to pay off a personal debt of £20,000, he became addicted to the thrill and went on to buy four houses as well as expensive cars such as Mercedes, BMWs and Range Rovers. His activities also included spending £140,000 on personalised number plates and transferring £136,000 into a Sky Bet account. He used false email and other accounting documents evidencing bogus transfers of vehicles in between branches and creating inter-company debts which required the transfer of money between different Evans Halshaw showrooms. The fraud involved 10 bank accounts across three different banks, with 140 different transactions taking place.
INFOGRAPHIC: AIRLINE TICKETING FRAUD ETC
Nethone, a Polish-based anti-fraud specialist, provides an infographic based on its research into travel fraud, including airline ticketing fraud. The infographic which looks at the scale of fraud in travel and its impact on travel firms before revealing the 4“not so obvious facts about fraudsters’ behaviour”.
GIBRALTAR PUBLISHES DLT GUIDANCE
Gibraltar Chronicle reports that government and GFSC have published guidance notes to assist operators applying for licences under the new regulatory framework for distributed ledger technology (DLT). From January 1st, any company operating in or from Gibraltar using DLT to store or transmit value belonging to others will need to be licensed by the GFSC.
PALESTININE BILLIONAIRE DETAINED IN SAUDI ARABIA
The Times of Israel reports that Palestinian billionaire businessman Sabih al-Masri has been detained in Saudi Arabia for questioning during a business trip to Riyadh, amidst the ongoing anti-corruption purge. Masri, who is the founder of Zara Investment Holding and chairman of Jordan’s largest lender, Arab Bank.
PKK FUNDING ARRESTS IN LONDON
The Henry Jackson Society, a Cambridge-based think tank, reports that the 4 people arrested in the Haringey area of north London as part of a probe into terrorist fundraising, through money laundering and fraud were doing so on behalf of the Kurdistan Workers’ Party (PKK), and through sale and distribution of one of the Yeni Ozgur Politika (New Free Politics) newspaper. It asks if this is the start of a UK crackdown on the PKK connection.
UK AMENDS/UPDATES 9 EXPORT LICENCES
The UK Export Control Joint Unit has issued Notice to Exporters 2017/29 confirming that it has updated and amended 9 open general export licences (OGEL) following changes to the EU’s list of controlled dual-use items.
$25 MILLION PHISHING FRAUD SUSPECT JAILED IN USA
IBT Times reports that a Nigerian man has been sentenced to more than 3 years in prison in the US after pleading guilty to participating in a major $25 million global email scheme. David Chukwuneke Adindu, 30, of Lagos, was sentenced on charges stemming from a wire fraud and identity theft conspiracy undertaken between 2014 and 2016. He tricked his victims in a business email compromise scam (BEC scam) into wiring millions of dollars into bank accounts he opened in China. He sent emails to employees of various companies impersonating supervisors or third-party vendors linked to the company. The funds transferred from unsuspecting victims were then quickly withdrawn or moved into a different bank account.
30,000 ANXIETY TABLETS SEIZED BY IRISH CUSTOMS
Customs Today on 16th December reported that Alprazolam tablets worth €60,000 have been seized at Dublin Port. The pills, which are used to treat anxiety, were found when officers stopped and searched a consignment labelled ‘computer chips’ which had arrived from Hungary. The 30,000 tablets, branded ‘Ksalol’, have an estimated retail value of €60,000.
SWISS HSBC BRANCH TO PAY €300 MILLION FINE
Customs Today reports that HSBC Private Bank, a Swiss unit of banking giant HSBC, has agreed to pay €300 million to avoid going to trial in France for enabling tax fraud. HSBC was accused last year of helping French clients to hide at least €1.67 billion from the tax authorities, according to a source close to the probe.
ALLEGED LAUNDERING BY VENEZUELANS VIA ANDORRA
KYC 360 reported on 16th December that at least 10 people including former vice-ministers, businessmen, their relatives and front men acting for politicians are suspected of earning more than €2 billion in illegal commissions for facilitating contracts with state oil company PDVSA 1993–2013, according to reports compiled by police in Andorra, where a court is investigating money laundering. The money received for the alleged bribes 2007-2012 was paid into Banca Privada d’Andorra (BPA), with a web of 37 accounts and Panamanian shell companies.
DRUGS TRAFFICKING CONSPIRACY UNCOVERED IN UGANDA POLICE
News website ENACT reports that in November 2017 Ugandan police uncovered a drugs conspiracy involving 9 of its senior officers. It was alleged that the suspected police officers have been selling drugs recovered from suspects, and are accused of tampering with narcotics exhibits and theft from police stores of 85 kg drugs, with an estimated street value of UGX13 billion, about $3.6 million.
ARMS TRAFFICKING IN AFRICA
A research paper from ENACT Africa examines the current challenges posed by illicit arms flows in Africa and responses by the African Union and regional organisations. It reviews the achievements attained so far, explores some of the drivers of the demand for arms and identifies recommendations for bolstering existing efforts. The report recommends strengthening current efforts of the African Union, regional economic communities and regional mechanisms, and –
- strengthening stockpile management systems within member states. This should include the construction of modern armouries and capacity building for relevant personnel;
- enforcing the implementation of arms embargoes, in collaboration with the UN sanctions committees and embargo monitoring groups;
- addressing terrorism comprehensively. Terrorism is increasingly becoming a major driver for illicit arms flows. There is an urgent need for the AU and its sub-regional organisations to co-ordinate efforts to eliminate this growing menace;
- regulating artisanal arms manufacturers. These manufacturers should be supported in a framework that allows them to operate in a more formalised way. Failure to do this would exacerbate illicit arms proliferation and manufacturing.
The report also mentions a number of factors abetting arms trafficking, including the falsification of end-user certificates, the “grey market” (which again often uses falsified or substituted documentation), the porous borders found in Africa, the (onward) transhipment of goods
CATTLE RUSTLING ON THE RISE IN AFRICA
On 23rd November, ENACT Africa reported that cattle rustling is becoming increasingly violent and transnational, and requires more co-ordinated regional responses. In recent years it has grown both in scale and violence and is increasingly linked to organised criminal and terrorist groups as a source of income. The crime is also transnational in that cattle are moved across borders, meaning that increased regional co-operation is required if it is to be addressed. The report says that East Africa has a long history of cattle rustling, but the crime is also increasingly seen in Nigeria, Cameroon and Madagascar.