Episode 135

18th November – 24th November 2024

Sanctions

The sanctions news this week starts in the UK where a general licence has been issued permitting ‘payments to be made in respect of certain permitted Iran Air activities.’ The General guidance has also been updated. Meanwhile, Islamic Republic of Iran Airlines and The Islamic Republic of Iran Shipping Lines have been sanctioned. Both are subject to an asset freeze. The Consolidated List has been updated. On the Russia Financial Sanctions Regime, 10 entries have been added. Then, later in the week, and marking the 1,000th day of the invasion of Ukraine, the UK government announced sanctions against the ‘perpetrators of Russia’s forced deportation and brainwashing of Ukrainian children,’ before then making further designations of three ‘kleptocrats who have siphoned wealth from their home countries, as well as their friends, families and fixers who helped them.’ There were other designations on the same Notice, and updates to the Global Anti-Corruption Financial Sanctions List. Transparency International has published a news item following this decision.

And finally on sanctions news from the UK, OFSI has issued guidance since it has ‘identified instances where shipments of Russian origin oil and oil products have been manipulated to appear as non-Russian through the use of fabricated or falsified certificates of origin.’ The ‘advisory includes an overview of red flags which may indicate this evasion method is occurring and potential mitigation measures which may help UK entities protect themselves against this.’

In the US, those committing acts of violence in the West Bank have been made the subject of sanctions. First, the Office of Foreign Assets Control (‘OFAC’) has designated ‘Amana the Settlement Movement of Gush Emunim Central Cooperative Association Ltd (Amana), a settlement development organization that is involved with U.S.-sanctioned individuals and outposts that perpetrate violence in the West Bank, and its subsidiary Binyanei Bar Amana Ltd.’ Meanwhile, the Department of State has announced sanctions against three individuals and an entity ‘for their connection to violence or threats of violence targeting civilians, efforts to place civilians in reasonable fear of violence with the purpose or effect of necessitating a change of residence to avoid such violence, destruction of property, seizure or dispossession of property by private actors, or terrorist activity, affecting the West Bank.’ Related, OFAC has this week also sanctioned 'six senior Hamas officials, including the terrorist group’s representatives abroad, a senior member of the Hamas military wing, the Izz Al-Din Al-Qassam Brigades, as well as individuals involved in supporting the terrorist group’s fundraising efforts and weapons smuggling into Gaza.’ In other news from OFAC, sanctions have also been imposed on a ‘network of nine Mexican nationals involved in fentanyl, heroin, and other deadly drug trafficking and money laundering.’

On action against Russia, OFAC has designated ‘Gazprombank, more than 50 internationally connected Russian banks, more than 40 Russian securities registrars, and 15 Russian finance officials.’ The aim is to reduce, further, the ability of Russia to access international finance.

In other news, the Office of Financial Sanctions Implementation (‘OFSI’) has published a blog marking the second anniversary of its enhanced partnership with the US Office of Foreign Assets Control (‘OFAC’).

Money Laundering

On money laundering news this week, the Council of Europe’s Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL) has carried out an evaluation visit to Latvia, with the report not likely to be delivered until June 2025, and launched the evaluation process of Armenia. Meanwhile, Saudi Arabia hosted the ‘39th Plenary Meeting of the Middle East and North Africa Financial Action Task Force.’ On the subject of pan-national organisations concerned with money laundering, the Transnational Institute has launched a website and watchdog ‘to monitor and challenge the Financial Action Task Force.’ The launch is accompanied by an interview with some of the coordinators.

In other money laundering news this week, Margaret Hodge and Andrew Mitchell, a former and current Member of the UK House of Commons, have jointly penned an article in The Guardian urging overseas territories and crown dependencies to tear down ‘secrecy and [promote] full corporate transparency and robust accountability through publicly accessible registers of beneficial ownership.’ And, staying in the UK, HM Treasury has issued updated Guidance: Money Laundering Advisory Notice: High Risk Third Countries.

Bribery and anti-corruption

To bribery and corruption news now and, just as with last week, the bulk of the stories concern organisations with a pan-national perspective. First, the Baseline Reports of the Fifth Round of Monitoring of Anti-Corruption Reforms in Kyrgyzstan, Tajikistan, and Uzbekistan have been published on the OECD iLibrary. Additionally, the OECD has expressed serious concern that Portugal ‘has not addressed long-standing recommendations on key elements of its legal framework on foreign bribery, particularly in relation to the liability of legal persons and to sanctions, in its implementation of the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.’ Portugal is urged promptly to ‘address these long-standing legal framework issues and to boost its enforcement against legal persons in foreign bribery cases,’ and asked to update the Working Group next month.

In the US, the Securities and Exchange Commission (‘SEC’) has announced that ‘BIT Mining Ltd., formerly known as 500.com Limited, [has] agreed to pay a $4 million civil penalty to resolve charges that it violated the Foreign Corrupt Practices Act (‘FCPA’) from 2017 to 2019 by engaging in a widespread bribery scheme to influence numerous foreign officials, including members of Japan’s parliament, in efforts to establish an integrated resort casino in Japan.’ In other news from the SEC, charges have been announced against ‘executives of an Indian renewable-energy company (the Indian Energy Company), with conspiracies to commit securities and wire fraud and substantive securities fraud for their roles in a multi-billion-dollar scheme to obtain funds from U.S. investors and global financial institutions on the basis of false and misleading statements.’ The same case has also given rise to bribery allegations where certain individuals have been charged in connection ‘with a bribery scheme … involving one of the world’s largest solar energy projects.’

In the UK, the Serious Fraud Office (‘SFO’) has announced that the Director, in exercise of his discretion, has decided to close the investigation into Bombardier plc, initially announced in November 2020. The reason given is that 'other overseas authorities are best placed to progress this case to its final stages.’ In other news from the SFO, it has ‘launched an investigation into suspected bribery and corruption at multi-national aviation and defence electronics group Thales.’

And finally this week, Transparency International (‘TI’) has warned of the threat from the exploitation of Just Energy Transition Partnerships (‘JETP’s) which, it suggests, are ‘vulnerable to undue commercial influence and regulatory capture.’ ‘Just Energy Transition Partnerships (JETPs) offer a new and evolving approach to climate finance in which a group of predominantly Western donor countries and financial institutions work together to support coal-dependent emerging economies in transitioning to green energy.’ This week, TI has also reported on a publicity stunt ahead of the G20 Summit in Rio where giant dollar bills were flown on gliders reminding those gathered of the importance combatting corruption, but notes that the declaration emphasised resource mobilisation, ignoring corruption.

And finally on bribery and corruption, TRACE International has released its Bribery Risk Matrix 2024. The Matrix measures the bribery risk in 194 jurisdictions.

Market Abuse

On market abuse news this week, the Financial Conduct Authority (‘FCA’) has published Primary Market Bulletin 52, covering ‘Issuers’ ability to identify and make public information that is inside information under the UK Market Abuse Regulation (‘MAR’).’ Secondly, the ‘dissemination of information by issuers during shareholder calls and meetings. In particular, using communication apps to interact with groups of smaller private shareholders.’ The Bulletin reminds 'issuers of the application of MAR to these kinds of disseminations and sets out steps issuers can take to limit the risk of unlawful disclosure of inside information or market manipulation through misleading statements.’ The FCA has also announced a revision to its market cleanliness statistic methodology.

Fraud

On fraud news this week, the warnings have been coming thick and fast. First, to the US, where the Federal Emergency Management Agency (‘FEMA’) has warned residents of storm and flood-damaged districts of New Mexico to be aware of 'con artists and criminals may try to obtain money or steal personal information through fraud or identity theft after a disaster.’ Secondly, to mark International Fraud Awareness Week, the Internal Revenue Service (‘IRS') has reminded taxpayers ‘how to report tax-related fraud in their community to protect personal and financial information from scam artists and tax schemes.’

In the UK (technically England and Wales), the Land Registry, again in marking International Fraud Awareness Week, has warned against the relatively small-scale typology of property or title fraud. This can take a number of forms, including 'bogus landlords letting out properties they do not own, to a criminal stealing a property owner's identity and using it to make an application to HM Land Registry to register, for example, a forged transfer or mortgage deed.’ Using false documents to transfer property illegally is known as registered title fraud. The blog post accompanying the warning urges individuals in England and Wales to sign-up for the ‘Property Alert’ service which alerts owners 'to certain types of activity on the register, such as an application for an official search (the first step in any property sale) or a mortgage application, enabling you to respond quickly if you spot anything unusual.’

In an interesting piece of action from a telecoms corporation in the UK, Virgin Media O2 has announced an anti-fraud measure using AI which engages scammers in conversation to waste their time and reduce the scope for genuine victims to be affected by their actions. The announcement was accompanied by an entertaining video which introduced ‘Daisy,’ the name given to the AI.

And finally in events arranged around International Fraud Awareness Week, the City of London Police has hosted the Serious and Organised Crime Exchange, and the Serious Fraud Office has flagged its international collaboration.

Other Financial Crime News

In other financial crime news this week, while this is not technical financial crime, it is worth mentioning, and it concerns SLAPPs – Strategic Lawsuits Against Public Participation (‘SLAPPs’). First, the Council of Europe has updated on the assistance provided in the Western Balkans on implementing ‘Recommendation CM/Rec(2024)2 on countering the use of strategic lawsuits against public participation (SLAPPs)…. alongside the Directive (EU) 2024/1069 on protecting persons who engage in public participation from manifestly unfounded claims or abusive court proceedings (SLAPPs). This collaborative effort aims to empower media professionals to report freely, without the threat of legal harassment.’

Meanwhile, again on SLAPPs, in the UK The Guardian has reported that a cross-party group of MPs has called for the outlawing of SLAPPs where used to suppress the publication of matters in the public interest. The government has not committed to legislation on the subject, but anti-SLAPPs are picking up traction across many sections of society and around the world, so the matter is certainly not going to go away.