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FINANCIAL CRIME DIGEST

February 2017

Enforcement Network (FinCEN), many of which the trade association says are never read, and instead concentrate on using more innovative methods to counter money laundering and terrorist financing risks. The trade association states that the current US AML/CFT statutory and regulatory framework is outdated and ill-suited for apprehending criminals and countering terrorism in the 21st century. The Clearing House notes a number of strategic problems, such as an absence of prioritisation, an absence of overarching purpose and an outdated SAR regime. The report concludes that the FinCEN e-filing system requires updating by allowing banks to submit raw data electronically, which can now be parsed by technology while maintaining privacy. In doing so, The Clearing House argues that more time could be spent by bank staff for work at their financial intelligence units (FIUs). The report also notes a number of operational problems, such as counterproductive examination standards and procedures, the existence of significant barriers to information sharing, and inefficiencies arising from duplication of effort.

FINANCIAL CRIME DIGEST FEBRUARY 2017

IN THIS ISSUE:

The Clearing House recommends steps to overhaul US AML and CFT practices

Welcome to the February edition of the Financial Crime Digest, Aperio Intelligence’s monthly newsletter, an informative summary of the most recent developments relating to the world of money laundering, fraud and terrorist financing, bribery and corruption, and sanctions.

[email protected]

TECHNICAL UPDATES

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PRESS AND MEDIA 09 MONEY LAUNDERING | FRAUD | TERRORIST FINANCING

PRESS AND MEDIA 17 BRIBERY | CORRUPTION

PRESS AND MEDIA 27 SANCTIONS

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The Clearing House, a trade association of the largest US banks, has published a report: A New Paradigm: Redesigning the U.S. AML/CFT Framework to Protect National Security and Aid Law Enforcement.

Based on feedback from senior former and current law enforcement, national security, bank regulatory and domestic policy officials; leaders of prominent think-tanks in the areas of economic policy, development, and national security; consultants and lawyers practicing in the field; FinTech CEOs; and the heads of AML/CFT at multiple major financial institutions, the trade association concludes in its report that large banks currently spend billions of dollars a year on AML compliance – equivalent to a budget somewhere between the size of the ATF and the FBI – with limited benefit to authorities. The Clearing House argues that less time and money should be spent on submitting suspicious activity reports (SARs) to the US Financial Crimes

The Clearing House report can be found HERE.

https://www.theclearinghouse.org/~/media/TCH/Documents/TCH WEEKLY/2017/20170216_TCH_Report_AML_CFT_Framework_Redesign.pdf

FINANCIAL CRIME DIGEST | FEBRUARY 2017

FATF publishes MONEYVAL Mutual Evaluation report of Isle of Man

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TECHNICAL UPDATES

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The full mutual evaluation report of the Isle of Man can be found HERE.

The Financial Action Task Force (FATF) has published the Fifth Round Mutual Evaluation Report of the Isle of Man, undertaken by The Committee of Experts on the Evaluation of Anti-Money Laundering and the Financing of Terrorism – MONEYVAL, based on the result of its on-site visit carried out between 25 April – 7 May 2016.

Among the key findings of the report are:

• Co-ordination of anti-money laundering (AML) and countering the financing of terrorism (CFT) policies in the Isle of Man is strong. The report found that the AML/CFT Strategic Group has been extremely active in promoting sound AML/CFT policies and bringing about significant reforms

• The Isle of Man completed a National Risk Assessment in 2015 as a result of which, the authorities have a thorough understanding of money laundering (ML) and terrorist financing (TF) vulnerabilities within the national institutional and legal framework

• While the authorities are aware that the ML/TF threats are mainly external, their understanding of the threats may be incomplete due to limited aggregated data on the volume and destination of outgoing and incoming funds flows in the financial sector and the absence of aggregated data on where the beneficial owners of assets

managed or funds held in the Isle of Man are from or which countries those funds originate from

• The Financial Intelligence Unit (FIU) has contributed successfully to some cases investigated by the Financial Crime Unit of the Isle of Man Constabulary, but other that those cases, the FIU conducted only limited in-depth analysis and as a result the FIU only occasionally added significant value. The report notes that the FIU is hampered by the low quality of Suspicious Activity Reports (SARs) received from reporting entities

• The number of convictions achieved for all types of ML is modest and the results do not reflect the risk profile of the Isle of Man.

http://www.fatf-gafi.org/media/fatf/documents/reports/mer-fsrb/Mutual-Evalutaion-Isle-of-Man.pdf

aperio-intelligence.comFINANCIAL CRIME DIGEST | FEBRUARY 2017

Geneva art trade issues guidelines “on combating money laundering and terrorist financing”

The Responsible Art Market Initiative has been launched in Geneva with the publication of a set of guidelines designed to crack down on illegal activity in the city.

Geneva has been subject to increasing pressure as a result of the seizure of a range of looted art and antiques from its free port.

The Guidelines aim to:

• Raise awareness in the art market of the threats and risks of money laundering and terrorist financing;

• Provide a general framework and understanding of “risk based” anti-money laundering and terrorist financing measures, including the key elements

of client, artwork and transaction due diligence;

• Help Art Businesses:

• Implement “risk based” anti-money laundering and terrorist financing measures appropriate to the size and nature of their business;

• Identify “red flags” (indicators of suspicious activity) and take appropriate action in response.

Ultimately the Guidelines aim to facilitate transactions in artworks (rather than hinder them) by encouraging responsible practices by all art market participants.

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Conference of State Banking Supervisors develops AML self-assessment tool

The Conference of State Banking Supervisors (CSBS), the US nationwide organisation of state financial regulators, has developed a voluntary self-assessment tool to help banks and non-depositary financial institutions to identify, monitor and communicate Bank Secrecy Act/Anti-Money Laundering (BSA/AML) risks.

The tool is intended to reduce uncertainty surrounding BSA/AML compliance and support more transparency in the financial sector. CSBS President and CEO John W. Ryan said: “The BSA/AML Self-Assessment Tool helps financial institutions have a more consistent framework for assessing and communicating their BSA/AML risk management programme. And it does so in a format that is easily customisable to each institution’s risk profile.” The BSA/AML Self-Assessment Tool builds on CSBS’s efforts to help banks understand their risk exposure to third parties.

TECHNICAL UPDATES

Details of the Self-Assessment Tool can be found HERE.

The Guidelines can be found HERE.

https://www.csbs.org/regulatory/resources/Pages/JobAids.aspx

http://responsibleartmarket.org/guidelines/guidelines-on-combatting-money-laundering-and-terrorist-financing/


US Department of Justice issues guidance on evaluation of corporate compliance programmes

The guidance can be found HERE.

The Criminal Division of the US Department of Justice has issued guidance on the “Evaluation of Corporate Compliance Programs”.

‘The Principles of Federal Prosecution of Business Organizations in the United States Attorney’s Manual’ describes specific factors that prosecutors should consider in conducting an investigation of a corporate entity, determining whether to bring charges, and negotiating a plea or other agreements. These factors, commonly known as the “Filip Factors,” include “the existence and effectiveness of the corporation’s pre-existing compliance program” and the corporation’s remedial efforts “to implement an effective corporate compliance program or to improve an existing one.” Because a corporate compliance programme must be evaluated in the specific context of a criminal investigation that triggers the application of the Filip Factors, the Fraud Section does not use any rigid formula to assess the effectiveness of corporate compliance programmes.

It recognises that each company’s risk profile and solutions to reduce its risks warrant specific evaluation. Accordingly, it makes a specific determination in each case. There are, however, common questions that it may ask in making a specific determination. The guidance document provides some important topics and sample questions that the Fraud Section has frequently found relevant in evaluating a corporate compliance programme.

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TECHNICAL UPDATES

https://www.justice.gov/criminal-fraud/page/file/937501/download

The Trade Finance Principles – Wolfsberg Group, ICC and the BAFT, 2017 can be found HERE.

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TECHNICAL UPDATES

FINANCIAL CRIME DIGEST | FEBRUARY 2017

The Government of Hong Kong has proposed new anti-money laundering (AML) measures as part of a drive to maintain consistent AML standards with other financial centres, and in contemplation of its pending Financial Action Task Force (FATF) mutual evaluation in 2018.

Specifically, the Hong Kong Government has proposed changes to the Companies Ordinance requiring the establishment of a register of “beneficial owners” or “persons with significant control”, mirroring UK legislation; and the extension of customer due diligence requirements to solicitors, accountants, real estate agents, trust or company services providers in certain circumstances.

Current Hong Kong legislation does not require a company to ascertain or maintain information about its ultimate beneficial owner, except in the case of listed corporations which must maintain a register of persons owning five percent or more of the share capital. The proposed new requirements will apply to all companies, including those limited by shares, by guarantees, or unlimited liability companies.

Hong Kong Financial Services and the Treasury Bureau proposes new AML measures

Wolfsberg Group, ICC and BAFT issue updated Trade Finance Principles publication

The Wolfsberg Group, The Banking Commission of the International Chamber of Commerce (ICC) and BAFT have published an update to their original 2011 guidance on trade financial principles.

This broader industry edition now addresses the due diligence required by global and regional financial institutions of all sizes in the financing of international trade. Tracy Paradise, the Executive Secretary of

the Wolfsberg Group, said: “The extensive collaboration between the Wolfsberg Group, the ICC and BAFT to enhance the Wolfsberg Group’s 2011 Trade Finance Principles paper will serve a much wider number of FIs and, as a result, ensure their applicability more broadly across the industry. This publication is particularly timely in light of the recent focus on international trade flows and correspondent banking.

This effort demonstrates the impact that such joint work can have on the industry and will no doubt drive further efforts on other issues in the future.”

A government spokesman said that the proposals relate to Hong Kong’s fulfilment of the relevant FATF obligations and in particular in light of “increasing international concerns over the misuse of companies, particularly those with complex ownership and control structures, as a way to facilitate money laundering, or serve illicit purposes such as tax evasion, corruption, or terrorist financing.”

The Consultation on enhancing AML regulation of designated non-financial businesses and professions can be found HERE.

The Consultation on enhancing transparency of beneficial ownership of Hong Kong Companies can be found HERE.

http://www.wolfsberg-principles.com/pdf/home/Trade-Finance-Principles-Wolfsberg-Group-ICC-and-the-BAFT-2017.pdf

http://www.fstb.gov.hk/fsb/ppr/consult/doc/consult_eaml_e.pdf

http://www.fstb.gov.hk/fsb/ppr/consult/doc/consult_etbo_e.pdf


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UK House of Commons passes third reading of Criminal Finances Bill with amendment

Following a cross-party motion tabled by a prominent Conservative member of parliament Dominic Raab, with support from a group of 50 MPs representing eight political parties, the UK Government has consented to an amendment to the Criminal Finances Bill that would grant authorities the right to seize assets of foreign human rights abusers, such as real estate property, in the UK.

Although the Home Office denied that the amendment amounted to a US-style “Magnitsky Act”, the Home Office security minister Ben Wallace told MPs that the Government was acting after “the atrocious murder carried out in Russia against Mr

Magnitsky”. He said it was “a clear statement that the UK will not stand by and allow those who have committed gross abuse or violations around the world to launder their money here”. The Home Office has however refused to allow third parties the right to initiate claims against human rights abusers, fearing “vexatious claims based on gimmic politics”. Speaking in the Commons, Dominic Raab said “we have to stop turning a blind eye to the blood money of butchers and despots which, frankly, flows all too freely through some UK banks, businesses and property.”

Raab agreed to drop his proposed amendment requiring UK law enforcement agencies to act in situations where there was compelling evidence of abuse and it was in the public interest to do so, after security minister Ben Wallace said the government would act rigorously in pursuing the assets of rights abusers and would publish annual data on how often the measure had been used.

Following a vote by the US Senate, President Trump has signed a congressional resolution to repeal regulation which requires energy companies to disclose payments they make to foreign governments.

The Securities and Exchange Commission’s (SEC) foreign payments rule was mandated under the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act and was intended to reduce the level of corruption in resource-rich countries by ensuring disclosure of royalties and other payments made by oil, natural gas, coal and mineral companies to governments. However, the rule, which came into force in June 2016, was targeted as part of a push by congressional Republicans to repeal large elements of former President Obama’s legacy by repealing major regulations through the Congressional Review Act. Oil industry groups claim that the SEC’s rule forces US companies to disclose proprietary information to its competitors while foreign entities do not.

President Trump repeals SEC transparency rule for resource extraction issuers

TECHNICAL UPDATES

Photo: NBC

aperio-intelligence.com FINANCIAL CRIME DIGEST | FEBRUARY 2017aperio-intelligence.com FINANCIAL CRIME DIGEST | FEBRUARY 2017

The three European Supervisory Authorities (EBA, EIPOA and ESMA) have published a Joint Opinion addressed to the European Commission on the risks of money laundering (ML) and terrorist financing (TF) affecting the European Union’s financial sector.

The Joint Opinion will contribute to the European Commission’s risk assessment work as well as that of the ESAs of fostering supervisory convergence and a level playing field in the area of anti-money laundering (AML) and countering the financing of terrorism (CFT). The Joint Opinion finds that problems exist in relation to firms’ understanding of the ML/TF risks they are exposed to. It highlights difficulties associated with the lack of timely access to intelligence that might help firms

European Supervisory Authorities issue Joint Opinion to the European Commission on ML/TF risks affecting the EU financial sector

TECHNICAL UPDATES

identify and prevent terrorist financing, and considerable differences in the way national competent authorities discharge their functions. The Joint Opinion concludes that these issues, if not addressed, risk diminishing the robustness of the EU’s AML/CFT defences and more action is needed to ensure their effectiveness.

This is particularly important as Members States move towards a more risk-based AML/CFT regime that requires a level of ML/TF risk awareness and management expertise, which not all firms and all sectors currently have. According to the ESAs, there are several initiatives already underway, such as the ESA’s work on a common approach to risk-based AML/CFT supervision that, in the short to medium term, will serve to address many of the risk identified.’

The Joint Opinion can be found HERE.

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https://www.eba.europa.eu/documents/10180/1759750/ESAS+Joint+Opinion+on+the+risks+of+money+laundering+and+terrorist+financing+affecting+the+Union%E2%80%99s+financial+sector+%28JC-2017-07%29.pdf


The UK’s Financial Conduct Authority (FCA) is investigating HSBC in relation to potential breaches of money laundering rules after concerns raised by the bank’s appointed monitor in 2016.

The bank is reported to have failed to disclose the specific concerns raised by the monitor, including in connection to clients of the bank with suspected links to terrorism. HSBC has disclosed that the bank is subject to an FCA investigation into its compliance with UK money laundering regulations and financial crime systems and control requirements. HSBC’s monitor has criticised the bank for being too slow to improve its systems.

Recently, HSBC’s chief executive Stuart Gulliver commented that the bank had been identifying more regulatory issues owing to better internal policing, noting that it has “been able to identify more bad actors in our 37 million customer base”. Gulliver also commented that: “Our monitor has raised certain concerns but we have continued to progress and our commitment remains unwavering. By the end of this year, we are on track to have our anti-money laundering and sanctions policy framework in place and to have introduced major compliance IT systems across the group.”

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MONEY LAUNDERING | FRAUD | TERRORIST FINANCINGPRESS AND MEDIA

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Two former HBOS employees jailed for almost 50 years after convictions for fraudulent trading and money laundering

Lynden Scourfield and David Mills, two former HBOS bankers, and four business associates have been convicted of fraudulent trading, corruption and money laundering. Scourfield is reported to have accepted expensive gifts, cash, overseas trips and sex with escorts after forming a corrupt relationship with David Mills, in exchange for “huge rewards”.

Scourfield led an HBOS division charged with assisting small firms in financial difficulty. Having reportedly been bribed by Mills, Scourfield drove small businesses towards Mills’ firm QCS in order to obtain further lending from HBOS, allowing Mills’ to demand large fees and takeover struggling businesses in HBOS’s impaired assets division for his own benefit. A jury at Southwark Crown Court convicted Mills of six charges, including four relating to fraudulent trading, while Scourfield has previously pleaded guilty to six counts, including conspiracy to corrupt before his trial began.

HSBC said it had been able to identified “more bad actors” in its base of 37 million customers

HSBC faces new FCA section 166 investigation into AML controls

Photo: mirror.co.uk



Gian Pietro Milano, the Vatican’s Promoter of Justice, has disclosed that Holy See authorities froze over two million euros in funds suspected of having been involved in money laundering in 2016.

In his annual address on the status of the Vatican’s criminal justice system, the Promoter of Justice added that the total amount of suspect money frozen between 2013 and 2016 was approximately EUR 13 million. These funds were frozen following

alerts from the Vatican Financial Intelligence Authority, which Pope Francis is reported to have given more operative power as part of a wider effort to clean-up the finances of the Holy See.

Gian Pietro Milano did not disclose how much of the money was unfrozen following investigations, but that two cases led to indictments in 2016. He noted that 17 investigations of suspected financial crimes were still being undertaken. In 2014, the Promoter of Justice froze millions of euros in bank accounts owned by two former Vatican bank managers as well as a lawyer as part of an investigation into the sale of Vatican-owned real estate.

Vatican freezes EUR 2 million amid new money laundering claims

Photo:

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part of a settlement with Deutsche Bank, the DFS imposed a monitor, which will police the behaviour inside the bank for two years.

The bank has disclosed that the investigations into its Russian operations and the so-called ‘mirror trades’ had not yet finished and that it was ‘cooperating with other regulators and law enforcement authorities’.

The FCA reported that Deutsche Bank’s anti-money laundering controls had not been tough enough to stop the bank from being used by unidentified customers to transfer approximately USD 10 billion from Russia to offshore bank accounts in a manner highly suggestive of financial crime. The regulator noted that funds had been moved via Deutsche Bank in the UK to bank accounts overseas, including in Cyprus, Estonia and Latvia. The two penalties imposed of the bank relate to its failure to obtain information about its customers involved in mirror trades, which ‘mirror’ one another and have no economic purpose, which allowed Deutsche Bank Moscow to execute over 2,400 pairs of trades between April 2012 and October 2014.

Shares in major Russian companies were paid for in roubles through the Moscow office and then the same stock was sold through London for a related customer. The sellers were registered in offshore locations, and received payment for the shares in dollars.

FCA fines Deutsche Bank GBP 163 million for serious AML control failings; NY DFS fines New York branch a further USD 425 million

The Financial Conduct Authority fine against Deutsche Bank of GBP 163 million represents the largest penalty ever imposed by the regulator

The multinational German investment banking major Deutsche Bank has been fined over USD 630 million (approximately GBP 506 million) for failing to prevent approximately USD 10 billion of funds originating from Russia being laundered and exposing the UK financial system to the risk of financial crime.

The UK Financial Conduct Authority (FCA) fined Deutsche GBP 163 million – representing the largest fine the regulator has ever imposed – for potential money laundering offences.

The FCA contended that the bank missed several opportunities to clamp down on the activities on its Russian operations as a result of weak systems to detect financial crime between 2012 and 2015. The New York Department of Financial Services (DFS) also fined Deutsche Bank USD 425 million. As

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FINMA orders Coutts to pay CHF 6.5 million over AML failings relating to 1MDB scandal

The Royal Bank of Scotland group company and private bank Coutts & Co. has been ordered by the Swiss Financial Market Supervisory Authority (FINMA) to pay back 6.5 million Swiss francs in unlawfully generated profits from transactions involving assets relating to 1Malaysia Development Bhd (1MLDB).

FINMA reported that the bank had allowed a total of USD 2.4 billion worth of assets relating to 1MLDB to flow through accounts in Switzerland despite it having good reason to be suspicious of the transactions, noting that Coutts had ‘seriously breached money

US Department of Justice subpoenas PayPal’s AML program

PayPal’s anti-money laundering programme has received subpoenas for information from the US Department of Justice, the company has disclosed in a filing.

The company reported that they were ‘cooperating with the DoJ in providing information in response to the subpoenas’ and ‘unable to predict the outcome of the

laundering regulations by failing to carry out adequate background checks into business relationships and transactions’ and ignored internal warnings from some of its employees.

FINMA disclosed that it also considered enforcement proceedings against those Coutts employees responsible for the bank’s actions. The Swiss attorney general’s office has disclosed that it had asked FINMA for a copy of the enforcement decision to help evaluate whether Coutts’ behaviour meets the test for corporate criminal liability, while FINMA has reported that it has flagged the case with the UK Financial Conduct Authority. The Malaysian sovereign wealth fund 1MLDB lies at the centre of several international investigations into alleged corruption and money laundering undertaken by public officials.


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government’s investigation.’ PayPal is reported to have suggested in a statement that the Department of Justice is seeking information regarding PayPal users, as opposed to targeting the company in a probe.

PayPal spokesperson Ellen Hayes commented, “PayPal takes its compliance obligations seriously and is committed to continuously working with law enforcement to combat financial crime”.

Photo: ABC


Australian sports betting and gaming operator Tabcorp Holdings Limited agrees with AusTRAC to pay a fine of around AUD 34.6 million to settle money laundering allegationsThe Australian Transaction Reports & Analysis Centre (AusTRAC), Australia’s financial intelligence unit (FIU), has moved to fine the Australian gaming major Tabcorp approximately AUD 34.6 million for excessive breaches of anti-money laundering and counter-terrorism financing rules and compliance standards.

The company has agreed to pay the penalty plus legal costs to resolve proceedings, and has reported that it will execute a number of admissions of unintentional non-compliance and had already made numerous large investments to improve its AML & CFT compliance. Tabcorp previously admitted that the company had failed to inform AusTRAC on all of the occasions it had been suspicious of gambling activities.

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Former Rio de Janeiro governor Sergio Cabral charged with 184 counts of money laundering 184 counts of money laundering against the former governor of Rio de Janeiro, Sergio Cabral, have been formalised by a Brazilian court.

Cabral, who has been imprisoned since November 2016 in relation to a separate matter, is accused of having laundered approximately USD 12.6 million and bribed in exchange for favouring companies in relation to construction projects in connection with the city’s hosting of the 2014 FIFA World Cup and 2016 Olympic Games. Judicial authorities have estimated that Cabral, his close associates and members of his administration embezzled over USD 100.4 million from state funds.

Photo: Agência Brasil


aperio-intelligence.com FINANCIAL CRIME DIGEST | FEBRUARY 2017



Bank of China agrees to pay EUR 600,000 fine as part of a plea deal in money laundering case

According to Reuters news agency, Bank of China has agreed to pay a EUR 600,000 fine to settle money laundering charges in connection with its branch in Milan and ordered to pay back EUR 980,000 a court in Florence reported it had earned through illegal operations.

The news outlet also reported that the Florence court handed down a suspended two-year prison sentence to four employees of Bank of China’s Milan branch for failing to report illicit money transfers.

Prosecutors leading the investigation alleged that over EUR 4.5 billion had been smuggled from China to Italy between 2006 and 2010 by Chinese individuals living mostly in Florence, and that half of the funds had been sent via Bank of China.

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The prosecutors contended that these funds originated from a series of illegal activities, including counterfeiting, embezzlement, exploitation of illegal labour and tax evasion.

Bank of China stated that the company had not committed any crime and was not admitting guilt by agreement to pay the fine.


Human rights campaigners file criminal complaint against Rabobank, alleging it was complicit with Mexican drug traffickersLawyers and activists in the Netherlands are reported to have filed a criminal complaint against Rabobank for allegedly being complicit in laundering funds for Mexican drug cartels via a branch of its subsidiary in southern California.

The SMX Collective, acting on behalf of Fernando Hernandez (a Mexican living in the Netherlands whose uncle was abducted by a cartel in 2010), filed the complaint against the bank and its executives, and are calling on prosecutors to investigate. The branch in southern California has been closed since 2015 and investigated by federal authorities in the US amid money laundering allegations. The Dutch prosecution service has reportedly confirmed that it has received a copy of the complaint and will review it.

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French conservative politician Serge Dassault fined EUR 2 million for fraud and banned from holding public office

The wealthy French aviation industrialist and 91-year-old senator Serge Dassault has been found guilty of fraud after failing to fully declare his assets – reportedly held by foundations and companies in Luxembourg and Liechtenstein – to tax authorities between 1999 and 2014.

Dassault was fined two million euros and handed a five-year ban from public office, however his lawyer has commented that he would appeal against the decision. His legal team contended that their client had inherited many of the arrangements from his father, and that he had since rectified the situation with French authorities.





Austria approves extradition of Dmitry Firtash to the US

An appeals court in Austria has approved a US request to extradite the Ukrainian business tycoon Dmitry Firtash on corruption charges. However, soon after the approval, Austrian authorities arrested Firtash in relation to a separate Spanish warrant.

FinCEN extends rule ordering title companies to identify real purchaser

The US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) is to extend a rule ordering title insurance companies to report to authorities all-cash purchases in parts of California, Texas, Florida and New York for 180 days, mandating title companies to identify real purchasers even when sales are made through shell companies.

FinCEN Acting Director Jamal El-Hindi commented that the information was “valuable data that is assisting law enforcement and is serving to inform our future efforts to address money laundering in the real estate sector”.

FinCEN disclosed that since first imposing the order in January 2016, it had found that 30% of cash real estate transactions had involved an individual who had been previously reported to authorities for suspicious financial activities.

According to a document seen by Bloomberg, magistrates in Barcelona have charged him with money laundering and engaging in organised crime. Firtash is believed to have significant connections in Russia, having previously profited from deals with the Russian multinational energy major Gazprom. US prosecutors suspect him of having been involved in a conspiracy to pay USD 18.5 million to Indian officials to facilitate a high-value titanium project. In 2016, US prosecutors submitted wiretaps showing what they contend is evidence of his ties with organised crime. Firtash has denied the charges, which his legal team has described as politically motivated.

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Photo: dmitryfirtash.com

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PRESS AND MEDIA BRIBERY | CORRUPTION

Jay Y. Lee, the vice chairman of the South Korean multinational electronics major Samsung, has been formally arrested on charges of bribery, perjury and embezzlement.

A spokesperson for the Seoul Central District Court, which issued the warrant for Lee’s arrest, disclosed that the decision to arrest Lee had been based on the possibilities that he might have destroyed evidence or fled the country. The spokesperson also commented that evidence had been identified which indicates that Lee concealed profit gained through criminal acts and had concealed assets overseas. Investigators are looking into whether Lee was involved in providing as much as 43 billion won (approximately GBP 30.4 million) to benefit South Korea’s President Park Geun-hye in exchange for support of his management succession. Prosecutors believe that Lee funded Park’s associates as he attempted to consolidate his control over Samsung.

The Central District Court rejected the special prosecutor’s request to arrest Samsung Electronics’ President Park Sang-Jin. Samsung has denied that the company made an unlawful offer or paid a bribe to the president in exchange for favours. The probe into Lee is part of a broader investigation into contributions that dozens of Korean companies gave to a confident of President Park, Choi Soon-sil. President Park has been impeached and her powers suspended.

Samsung heir arrested on bribery charges


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Angolan Vice President Manuel Vicente charged in Portugal with corruption and money laundering

Prosecutors in Portugal are reported to be preparing corruption charges against Angola’s Vice President and the former head of the African country’s state oil company, Manuel Vincente, alleging that he paid USD 810,000 in bribes to Portugal’s former public prosecutor, Orlando Figueria, to close investigative proceedings into his affairs closed.


BRIBERY | CORRUPTIONPRESS AND MEDIA

The investigation, which was halted in 2012, focused on the origin of funds the vice president used to purchase a luxury apartment in Lisbon, according to Portuguese press outlets.

Vincente’s lawyer, Rui Patricio, has denied the allegations made about his client and has reported that he had not been notified of any charges being brought against him. Vincente had been tipped as a potential successor to Angola’s long-standing ruler, President Jose Eduardo dos Santos, until the corruption scandal broke in 2016.

USD 810,000 allegedly paid in bribes

Photo: African briefing


A spokesperson for Austria’s defence ministry has informed the Austrian Press Agency that the government could sue the Airbus and Eurofighter consortium for 1.1 billion euros in relation to a EUR 2 billion transaction to acquire Typhoon multi-role fighters.

The defence ministry believes that the government was misled over the purchase price, while Airbus claims that the allegations are part of a political manoeuvre. Airbus and Eurofighter charged nearly 10% of the purchase price for offset deals, which involve work for local contractors; this should have been charged separately, the defence ministry contends, claiming that the EUR 1.1 billion figure is based on a calculation for the difference in price between the Eurofighter and a cheaper option. Austrian defence minister Hans Peter Doskozil noted that an investigation into the transaction suggested that Austria would have decided to purchase the Eurofighter platform in 2003 had it not been for the “fraudulent deception”. Austria ordered 24 of the multirole fighter jets in 2002, however later reduced its order to 15 of the aircraft. It then ordered a review of the acquisition in 2012 following allegations of bribery.

PRESS AND MEDIA

Airbus to be sued in relation to alleged fraud

BRIBERY | CORRUPTION

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A judge in Peru has issued a national and international arrest warrant for the former President of Peru, Alejandro Toledo, as prosecutors prepare criminal charges against him for allegedly receiving USD 20 million in bribes from the Brazilian multinational construction major Odebrecht in exchange for his administration’s granting of a contract to build a trans-oceanic highway between Brazil and the Peruvian coast.

The former president is reported to have angrily denied any wrongdoing when interviewed by Peruvian journalists. Peru’s attorney general’s office formally charged Toledo with asset laundering and influence trafficking after police and prosecutors raided his home in Lima, seizing documents, videos, mobile phones and over USD 30,000 in cash.

Prosecutors allege that the payments to Toedo were made through his associate Josef Maiman, a Peruvian-Israeli businessman who was investigated alongside Odebrecht’s former county chief, Jorge Barata, whose testimony is reported to implicate the former president. The attorney general’s office is also investigating two other former presidents, Alan García and Ollanta Humala, for allegedly having received bribes as part of the widening Odebrecht scandal.

It has been estimated that Odebrecht paid out over USD 730 million in bribes across 12 countries in Latin America in exchange for being awarded lucrative construction contracts.

Peru issues international arrest warrant for fugitive ex-leader of Peru, Alejandro Toledo

Photo: GG2

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Kenia Porcell, Panama’s attorney general, noted during a press conference that Mossack Fonseca’s Brazilian representative had allegedly been instructed to conceal documents and remove evidence of illegal activities relating to the ongoing Lava Jato scandal, Ramon Fonseca, a partner at Mossack Fonseca, denied that the company had a connection to Odebrecht, which has admitted to bribing officials in Panama and other countries between 2010 and 2014. He is reported to have commented, “Mossack Fonseca has no relationship with Odebrecht, nor with any other Lava Jato company”, referring to the companies implicated in the scandal, which centres on Brazil’s semi-public petroleum major Petrobras.

Juergen Mossack and Ramon Fonseca, the founders of the Panamanian multinational legal and corporate services firm Mossack Fonseca (which lies at the centre of the Panama Papers scandal), have been taken into custody following an investigation into the company’s role in establishing corporate entities linked to corruption in Brazil.

PRESS AND MEDIA

Founders of Mossack Fonseca arrested and denied bail in connection with bribery and corruption allegations involving Odebrecht


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Fonseca also alleged that the President of Panama had informed him that he had accepted donations from Odebrecht.

Ramon Fonseca, a partner at Mossack Fonseca, denied that the company had a connection to Odebrecht, which has admitted to bribing officials in Panama and other countries between 2010 and 2014.

Photo: DailyEntertainmentNews.com


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The new government in the Gambia has claimed that the country’s former autocratic leader, Yahya Jammeh, stole far more funds from the state than previously believed.

According to two senior ministers of President Adama Barrow’s administration, Jammeh siphoned off at least USD 50 million from the Gambia’s social security, ports, and national telecommunications company, and that his private jet was acquired with USD 4.5 million taken from the state pension fund. It is unclear where the funds purportedly stolen are being held, according to the Guardian,

New government in the Gambia claims Jammeh stole more than previously believed

if the money has not already been spent. The new administration in the Gambia has estimated that Jammeh’s administration left the impoverished country, which is struggling to pay public sector pensions, with a debt of USD 1 billion. The Gambia’s minister of finance has claimed that over USD 50 million in funds meant for the country’s telecoms company, Gamtel, was diverted into two accounts with the state’s central bank and have since been nearly emptied. The finance minister, a political prisoner during Jammeh’s tenure in office, noted that there was still much work to be done before the new government could ascertain the full extent of state corruption during the former president’s rule.

Photo: Public Radio International

USD 4.5mnallegedly taken from

the state pension fund


The positively reputed Tsang was found to have deliberately concealed private rental negotiations with the property tycoon Bill Wong Cho-bau while his cabinet and approved a digital broadcasting licence for a now defunct radio company of which Wong was a key shareholder. The offence is reported to have occurred just before Tsang’s retirement in 2012, when reports of his alleged lavish spending and lifestyle began surfacing. After being sentenced, Tsang’s wife commented to the press that her husband would appeal the ruling. However, a retrial relating to a separate bribery charge on which jurors failed to return a majority verdict has been set for September. A string of senior and high-profile former and incumbent officials in Hong Kong have defended Tsang, pointing to his track-record in the public sector.

The former leader of Hong Kong, Donald Tsang, has been jailed for 20 months for misconduct in public office in what has been reported as a significant fall from grace.

PRESS AND MEDIA

Donald Tsang, former leader of Hong Kong, found guilty of corruption


Photo: HKTDC.com

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A judge in Toronto has rebuked the Royal Canadian Mounted Police (RCMP) for its investigation into former SNC-Lavalin executives who were suspected of having bribed foreign officials to secure a CAD 50 million bridge construction supervision contract in Bangladesh, and thrown out wiretap evidence relating to the law enforcement agency’s case.

Superior Court Justice Ian Nordheimer previously ruled that the an RCMP officer who swore what is known as an ‘information to obtain’ in 2011 in order secure a wiretap of the accused individuals’ private communications had failed to provide verifiable information and had used language that in effect deceived a different judge into signing it.

In 2011, the World Bank’s integrity unit is reported to have approached the RCMP ‘concerning allegations that had come to [their] attention regarding possible corruption involving SNC-Lavalin and the Padma Bridge project’.

Ex-SNC-Lavalin executives acquitted of bribery after judge rules wiretap evidence inadmissible



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Photo: Emazi


ABB noted in a statement that the company had reported matters to the SFO, US Securities and Exchange Commission and Department of Justice in regards to its past dealings with Unaoil and its subsidiaries, including alleged improper payments made by these entities to third-parties. ABB added that it was cooperating with the SFO and takes a “zero-tolerance” approach to financial improprieties. Last year, the Australian press and media major Fairfax Media and its newspaper The Age published a series of reports alleging that Unaoil had secured a number of lucrative contracts around the globe for a number well-known companies, including for ABB in Iran.

Serious Fraud Office announces commencement of investigation into ABB Ltd’s UK units

The SFO investigation into ABB reportedly relates to the agency’s ongoing investigations into Unaoil

The UK’s Serious Fraud Office (SFO) has confirmed that it had commenced as investigation into the activities on the subsidiaries, officers, employees and agents of the multinational Swiss-Swedish robotics, power and automation technologies major ABB for suspected bribery and corruption offences in relation to the agency’s ongoing criminal investigation into the activities of the oil and gas services sector company Unaoil. major ABB for suspected bribery and corruption offences in relation to the agency’s ongoing criminal investigation into the activities of the oil and gas services sector company Unaoil.

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Council of Europe to investigate allegations that Azerbaijani members bribed others to influence votes on human rights issues

The Council of Europe is reported to be set to investigate possible corruption in its assembly in response to allegations that Azerbaijani members bribed others to influence votes on human rights in the country.

In January 2013, the council voted down a resolution that would have condemned Azerbaijan for the country’s treatment of political prisoners. The multinational anti-corruption initiative and non-governmental organisation Transparency International as well as other anti-corruption groups subsequently called for an inquiry into the behaviour of members of the Azerbaijani delegation. The council has now reported that the assembly has decided to establish an independent investigation to “shed light on hidden practices that favour corruption.”

PRESS AND MEDIA BRIBERY | CORRUPTION

Photo: FT


US Navy Commander arrested in relation to the“Fat Leonard” caseThe US Department of Justice has announced that it is charging another US Navy commander in relation to the “Fat Leonard” bribery and corruption scandal.

Commander Mario Herrera is accused of having accepted bribes, including “luxury travel and entertainment expenses and the services of prostitutes”, from Leonard Francis (nicknamed “Fat Leonard”) in exchange for directing business towards his company Glenn Defense Marine Asia (GDMA).

Nigeria seizes USD 1.2bn oil field an announces prosecution of Shell and Eni for alleged corruption

Control of one of Africa’s richest oil blocks, Oil Prospecting Licence 245, is reported to have been ceded to the federal government of Nigeria while it investigates the Malabu Oil scandal, which could lead to prosecution actions against the multinational oil majors Shell and Eni.

Nigeria’s Economic and Financial Crimes Commission is reported to have filed a petition in Nigeria’s federal high court alleging that Shell and Eni acquired the block with knowledge that the transaction was “fraught with fraud” and that a payment of approximately GBP 950 million to Nigeria’s former petroleum minister Dan Etete and his associates was a bribe. The petition also reportedly notes that the government is preparing further charges of conspiracy, bribery, official corruption and money laundering against Shell and Eni, which are already the subject of related criminal charges files in an Italian court.

Photo: The Washington Post


Herrera is believed to have helped GDMA win business, partially by twice directing US Navy vessels to take alternative routes that benefited the contractor and cost the Navy USD 3.6 million.

“Fat Leonard” used his connections with the Navy’s Seventh Fleet in Asia to bilk the armed service out of millions of dollars, and in the process bribed senior military officers. Francis pleaded guilty to bribery charges in 2015.

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US adds 13 people and 12 companies to Iran sanctions list following ballistic missile test

PRESS AND MEDIA SANCTIONS

Following Iran’s recent medium-range ballistic missile test, the US Department of the Treasury imposed sanctions targeting 13 individuals and 12 companies, including groups in China, Lebanon and the UAE and members of the Islamic Republic’s Revolutionary Guards Corps.

The US Treasury Department’s acting sanctions chief, John Smith, commented in a statement that “Iran’s continued support for terrorism and development of its ballistic missile programme poses a threat to the region, to our partners worldwide and to the United States”, while Iran vowed to impose reciprocal measures. Then US National Security Adviser Michael Flynn contended that Iran’s “lawless behaviour” had only increased since the “very favourable” Joint Comprehensive Plan of Action.

The US noted that Iran’s ballistic missile test violated UN Security Council resolution proscribing missiles that could carry nuclear devices. The Iranian foreign ministry later said Tehran would “impose legal restrictions on a number of American individuals and companies which have been involved in creating and supporting extremist terrorist groups or are helping in the killing and oppression of defenceless people in the region.”

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US prosecutors considering whether Deutsche Boerse AG and Clearstream Banking SA violated US Iran sanctions

The Deutsche Boerse AG unit SA is set to pay USD 152 million to resolve an investigation into whether the company violated US sanctions on Iran, according to the US Department of the Treasury.

In a statement, the Treasury noted that the settlement stems from Cearstream’s use of an account with an unspecified financial institution in New York to hold USD 2.8 billion in securities on behalf of the Central Bank of Iran. A spokesman for Clearstream commented that he company has implemented a new compliance programme and is pleased to have resolved the matter. After meeting with officials in late 2007 and early 2008, Clearstream transferred interests in securities from the Central Bank of Iran’s

account with Clearstream to a European bank’s then newly-opened custody account with the company, according to the Treasury.

The new account allowed the central bank to continue holding its interests in the securities through Clearstream’s US account, “buried one layer deeper in the custodial chain”.

USD 152mnset to be paid by

Clearstream Banking SA


OFAC also designated Smark Jose Lopez Bello for providing material assistance, financial support, or goods or services in support of the international narcotics trafficking activities of, and acting for or on behalf of El Aissami, describing him as the vice president’s ‘front man’. OFAC further designated or identified as ‘blocked property’ 13 companies owned or controlled by


SANCTIONS PRESS AND MEDIA

OFAC designates Venezuela’s Vice President as a narcotics traffickerThe US Department of the Treasury’s Office of Foreign Assets Control (OFAC) has designated the Executive Vice President of Venezuela, Tareck Zaidan El Aissami Maddah, pursuant to the Foreign Narcotics Kingpin Designation Act for ‘playing a significant role in international narcotics trafficking’.

OFAC Finding of Violation issued to B Whale Corporation for breach of US Iran sanctions

The US Department of the Treasury’s Office of Foreign Assets Control (OFAC) has issued a ‘Finding of Violation’ to B Whale Corporation, a Taipei company a member of the TMT Group of shipping companies, for a violation of the Iranian Transactions and Sanctions Regulations.

According to OFAC, between on or about 30 August 2013 and on or about 2 September 2013, B Whale Corporation violated sanctions when its vessel conducted a ship-to-ship transfer with, and received 2,086,486 barrels of condensate crude oil from the National Iranian Tanker Company.

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Photo: Eigenes Werk

Lopez Bello or other designated parties that comprise a network spanning the British Virgin Islands, Panama, the UK, the US, and Venezuela. El Aissami is believed to have facilitated shipments of narcotics from Venezuela, including planes that left from a Venezuelan air base, as well as control of drug routes through the ports in Venezuela.

He is also reported to have overseen or partially owned narcotics shipments of over 1,000 kilograms from Venezuela on multiple occasions, including those with the final destinations of Mexico and the US, and to have facilitated, coordinated, and protected other narcotics traffickers operating in Venezuela. El Aissami has also been linked to coordinating drug shipments to the Mexican drug cartel Los Zetas, and providing protection to Colombian drug lord Daniel Barrera and Venezuelan drug trafficker Hermagoras Gonzalez Polanco.


PRESS AND MEDIA SANCTIONS

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Speaking before an EU foreign affairs council meeting on the measures implemented with the US against Russia’s energy, financial and defence industries in 2014, UK Foreign Secretary Boris Johnson commented that “there is no case for relaxation of the sanctions”. EU diplomats fear that the US may move to relax sanctions on Russia, making it difficult for the EU to keep its sanctions in place, while it is believed that member states including Hungary, Italy, Greece and Bulgaria would push to re-establish business dealing with Russia. Fourteen EU member countries, including the UK, Sweden and Denmark, called for renewed backing for Ukraine in a joint statement presented at the meeting, including the approval of visa-free travel for Ukrainians in the EU and full implementation of the EU-Ukraine free-trade agreement.

European Union members’ foreign ministers have said that sanctions on Russia will remain in place until the country drops its support for separatists in Ukraine.

EU foreign ministers reaffirm their commitment to Russia sanctions

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SANCTIONS PRESS AND MEDIA

US Vice President Mike Pence has described Iran as the “leading state sponsor or terrorism” and called on Russia to honour the international peace accords that seek to end the conflict in eastern Ukraine before European leaders, commenting on the latter: “Know this. The United States will continue to hold Russia accountable, even as we search for new common ground, which, as you know, President Trump believes can be found”.

President Trump and senior figures in his administration have repeatedly expressed scepticism over the 2015 Joint Comprehensive Plan of Action (JCPOA) to curb Iran’s nuclear programme. Pence’s comments marketed out a divide on Iran between Europe and the new administration in the US.

Vice President Pence calls Iran the “leading state sponsor of terrorism” and says Russia must be held accountable for Ukrainian crisis

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UK Treasury lifts sanctions on Bank Saderat

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A copy of the UK Treasury notice can be found HERE

Ten individuals added to EU sanctions list

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The European Union Council has added 10 individuals to its sanctions on Syria in relation to their involvement in repression against the civilian population and support for the Syrian regime.

The individuals include high-ranking military officials and senior figures linked to the Syrian regime. The decision brings to 217 persons the total number of

persons targeted by a travel ban and an asset freeze for violent repression against the civilian population in Syria.

The designation follows an announcement by the EU Council that it would seek to impose further sanctions against supporters of the Syrian regime.

The European Union has de-listed Bank Saderat and its UK subsidiary Bank Saderat PLC from its sanctions on Iran following a decision that the bank’s listing should apply only until 22 October 2016.

Previously under the JCPOA, Bank Saderat was not due to be de-listed until transition day, which is 20 October 2023. The UK Treasury has published a notice confirming these entities have been removed from the consolidated list of sanctioned entities and are no longer subject to an asset freeze.

The EU Council press release can be found HERE

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