Episode 137

2nd December – 8th December 2024

Sanctions

The sanctions news this week starts in the US where the Office of Foreign Assets Control (‘OFAC’) has sanctioned officials of the former government of Uzbekistan for human rights abuses, and imposed ‘sanctions on 35 entities and vessels that play a critical role in transporting illicit Iranian petroleum to foreign markets.’ Additionally on enforcement, two stories. First, the Department of Justice has brought civil forfeiture action to recover the proceeds of sale of a music studio in Burbank, California, the alleged beneficiary of which is sanctioned Russian oligarch, Oleg Deripaska. Secondly, OFAC has announced that ‘Aiotec GmbH, a Berlin, Germany-headquartered company that sources industrial equipment for the energy sector, has agreed to pay $14,550,000 to settle its potential civil liability for one apparent violation of OFAC sanctions on Iran.’

In the UK, the Office of Financial Sanctions Implementation (‘OFSI’) has designated an individual whom the government says it has reasonable cause to suspect is concerned in terrorist activity. ‘Brian Sheridan [is also] suspected of providing or assisting others in providing financial services or making available funds or economic resources for the New IRA.’ OFSI has also sanctioned three individuals under the ISIL (Da’esh) and Al-Qaida financial sanctions regime. The Terrorism Financial Sanctions Regime and the Consolidated List have been updated.

In other sanctions news from the UK, four licences have been revoked on: payments to revenue authorities; payments to local authorities; payments to Companies House; and, payments to the Financial Conduct Authority. Finally, significant other updates have been made by the UK government to a host of sanctions’ regimes and allied guidance. The date does not appear to have been updated on the general website, but all the individual updates have been made.

And finally on sanctions news this week, a direction to some interesting reading in the form of a short opinion piece in Politico asking whether tariffs are the new sanctions, an interesting question given the imminence of a second Trump term and the reported plan to use tariffs extensively in the name of achieving a range of policy goals.

Money Laundering

On money laundering news this week, the National Crime Agency (‘NCA’) has announced the outcome of an international investigation led by the NCA which has ‘exposed and disrupted Russian money laundering networks supporting serious and organised crime around the world.’ The action – Operation Destabilise – was revealed at the same time as the Office of Foreign Assets Control in the US announced sanctions against ‘the Russian-speaking men and women at the head of these networks, as well as four businesses linked to [one of two criminal enterprises allied to it].’

Bribery and anti-corruption

Recent bribery and corruption news has concerned, to a significant degree, reports from pan-national organisations concerned with corruption. It’s the same this week. The Organisation for Economic Cooperation and Development (‘OECD’) has identified that more needs to be done at the highest level to tackle corruption in Kazakhstan, Kyrgyzstan, Mongolia, Tajikistan, and Uzbekistan. This is the principal finding of reports published on those five countries by the OECD in recent weeks. The reports highlight issues with the resolution of conflicts of interest and asset and interest disclosure, and all five countries ‘are yet to introduce legal and institutional frameworks for much needed whistleblower protection, especially with respect to restricted civic space [and the] level of enforcement of corruption offences is average to low in the assessed countries’.

In Tonga, the United Nations Development Programme and the UK government have been collaborating to embolden anti-corruption efforts in the country. In South Africa, the Special Investigating Unit and the National Assembly’s Standing Committee on Public Accounts have renewed the memorandum of understanding on anti-corruption.

Finally on bribery and corruption stories this week, McKinsey and Co, Africa, ‘a wholly-owned and controlled subsidiary of McKinsey & Company, Inc, a multinational strategy and management consulting firm headquartered in the U.S., will pay over $120 million to resolve an investigation by the DOJ into a scheme to bribe government officials in South Africa in exchange for lucrative consulting contracts at multiple state-owned and state-controlled entities.’ The deferred prosecution agreement has been published.

Fraud

The fraud news this week starts with an interesting story at the intersection of the global food supply chain and international fraud, with news that Apimondia – the International Federation of Beekeepers’ Associations – will not make awards for honey at next year’s World Beekeeping Awards because of concerns that product is being bulked out with sugar syrup, thereby compromising the quality of the product. Nothing on the Apimondia website, but The Guardian in the UK and other mainstream media outlets reported the news.

In the UK, the Covid Corruption Commissioner has started an investigation into personal protective equipment (‘PPE’) fraud. Almost £9bn worth of PPE purchased by the government during the Covid-19 pandemic was inadequate and the funds were written off by the previous government. The hope is that some can be recovered where fraud and other wrongdoing is uncovered. Separately, the National Crime Agency is investigating possible criminality in PPE procurement.

Other Financial Crime News

In other financial crime news this week, the Financial Conduct Authority (‘FCA’) has published policy statement PS24/17 concerning the Financial Crime Guide. The update follows consultation CP24/9. In CP24/9, the FCA consulted on a number of issues including sanctions, proliferation financing, and transaction monitoring. In other news from the UK, the Ministry of Justice has updated ‘Part 5 of the Proceeds of Crime Act 2002 and Schedule 1 to the Anti-terrorism, Crime and Security Act 2001 [which] deal with the confiscation of criminal property and terrorist property … to allow for seizure of cryptoassets….’

Cyber Crime

On cybercrime news this week, the Bank of England has published its Financial Stability Report. While it is the usual mix of economic outlook, financial market developments, and the overall risk environment, one interesting element focuses on cyber-attack risk. ‘Higher geopolitical tensions … create an environment of heightened risk of cyber-attacks, which could coincide with, and amplify, other stresses. Recognising that this is a global challenge, the FPC [Financial Policy Committee] encourages continued industry, government, and international regulatory community focus on sharing information and building national and cross-border resilience to these threats.’

In other cybercrime news this week, speaking at the National Cyber Security Centre’s (‘NCSC’) London headquarters, the Head of the NCSC, Richard Horne, has warned the threat which the UK faces from cyberattack is ‘widely underestimated’. Not on this podcast it isn’t. The NCSC has published its Annual Review 2024, which was introduced at the event, on its website.

In news from Europol, it has reported the take-down of ‘a sophisticated criminal network responsible for facilitating large-scale online fraud.’ In total, ‘50 servers were seized, significant digital evidence was secured, and two key suspects were placed in pretrial detention.’ In the US, an individual has been sentenced for conspiracy to launder the proceeds of crybercrime.

And finally on cybercrime this week, INTERPOL ‘has launched a campaign to raise awareness on the growing threat of cyber and financial crimes against vulnerable individuals and organizations. The Think Twice campaign, which includes a series of short videos, focuses on five rising online threats: ransomware attacks, malware attacks, phishing, generative AI scams, and romance baiting.’ And in other coordinated action, Europol has also this week announced that a global operation has taken down a ‘sophisticated encrypted messaging service, MATRIX.’