Episode 138

9th December – 15th December 2024

Sanctions

The sanctions news this week starts in the US where the Office of Foreign Assets Control (‘OFAC’) has sanctioned ‘28 individuals and businesses involved in a global gold smuggling and money laundering network based in Zimbabwe, pursuant to Executive Order (E.O.) 13818, which targets perpetrators of serious human rights abuse and corruption around the world. The global network led by Kamlesh Pattni has facilitated illicit activities by bribing officials, deploying trusted supporters to mask ownership, and weaving a global web of businesses to hide the illicit activities. This fraudulent scheme has robbed Zimbabwe’s citizens of the benefit of those natural resources while enriching corrupt government officials and criminal actors.’

On enforcement action in the US, the Department of Justice has unsealed an indictment charging Alexey Komov ‘with conspiracy and violations of U.S. sanctions arising from his assistance to sanctioned Russian oligarch Konstantin Malofeyev, who was previously charged with sanctions violations in April 2022.’

In the UK, the Office of Financial Sanctions Implementation (‘OFSI’) has imposed sanctions on Anto Joseph ‘the CEO and manager of several gold trading companies, including Paloma Precious (designated by the UK in November 2023). Paloma Precious has purchased more than USD 300 million of Russian gold, thereby indirectly providing revenue for the Government of Russia which could be used for the war in Ukraine.’ The Russia financial sanctions have been updated, as well as the consolidated list. An addition has also been made to the Democratic Republic of the Congo (‘DRC’) financial sanctions regime. The addition is ‘Alain Goetz, a Belgian gold trader at the head of various gold refineries and companies across Africa. Goetz has smuggled illicit gold extracted from mines in the DRC controlled by armed groups which have been involved in serious human rights violations.’ In other news from the UK, the Export Control Joint Unit has published the ‘Strategic export controls commentary: 1 April to 30 June 2024.’

And finally this week, after the usual toing-and-froing, the European Union has agreed its 15th package of sanctions against Russia. The package targets Russia’s ‘shadow fleet’ in an attempt to limit its operations, and Chinese firms manufacturing drones.

Money Laundering

On money laundering news this week, we start with the Council of Europe’s anti-money laundering body, MONEYVAL, which has, first, published a follow-up report on Monaco, which indicates that the principality ‘has taken numerous steps to strengthen its anti-money laundering and terrorist financing systems.’ It has improved compliance on confiscation; targeted financial sanctions relating to terrorism and terrorist financing and related to proliferation; non-profit organisations; politically exposed persons; measures related to designated non-financial businesses and professions; transparency and beneficial ownership of legal persons and their legal arrangements; regulation and supervision of financial institutions, as well as their powers; regulation and supervision of designated non-financial businesses and professions; improved powers of law enforcement and investigative authorities; and other matters. Where there remains work to be done is in respect of innovative technologies, which is rated as only partially compliant. The second publication from MONEYVAL is second enhanced follow-up report on Croatia. The report has found that there have been improvements in relation to the assessment of risks and the application of the risk-based approach; national cooperation and coordination; targeted financial sanctions related to terrorism and terrorist financing, and financial sanctions related to proliferation; new technologies; internal controls and foreign branches and subsidiaries; statistics; sanctions; and, international instruments. Those rated as partially compliance are those respecting non-profit organisations; transparency and beneficial ownership of legal persons; and, mutual legal assistance: freezing and confiscation. Thirdly, on Georgia, it is acknowledged there have been improvements in its ‘measures for tackling money laundering and the financing of terrorism, especially in relation to the assessment of country’s anti money laundering and counter terrorist financing risks and regulation of virtual assets service providers. So far, Georgia has fully complied or largely complied with 31 FATF recommendations. It is still rated as non-compliant on a recommendation related to non-profit organisations and partially compliant on eight other recommendations.’

And finally on money laundering this week, AUSTRAC in Australia has updated the information on some of the pages of its website. First, those relating to the Summary of changes for current regulated entities, secondly, Why combat money laundering and terrorism financing? and thirdly, on Bolstering international cooperation on financial intelligence.

Bribery and anti-corruption

Well, since this week has coincided with International Anti-Corruption Day, the international agencies have been churning it out in a desperate attempt to outdo one another. So, let’s start with the Council of Europe which marked the day with a call to mobilise the young in order to ensure that public trust in democratic institutions is regained by fostering transparency and accountability. In fact, the United Nations Development Programme published a blog on a similar theme, indicating integrity and anti-corruption can be fostered by youth-inclusive political processes. The second publication from the Council of Europe was a press release in the form of a call to action to States in the protection of democracy and institutions against corruption. Finally on coordinated action, the Organisation for Security and Cooperation in Europe (‘OSCE’) has marked its first conference on the occasion of International Anti-Corruption Day by highlighting the importance of cooperation in combatting corruption. The theme was echoed by the OSCE Mission to Bosnia and Herzegovina which held a conference on ‘The Role of Citizens in Anti-Corruption Processes’.

In the US to mark international Anti-Corruption Day and Human Rights Day, the State Department has made a range of designations on grounds of corruption, human rights violation, and the undermining of democracy. Some of the action was coordinated with the United Kingdom. Staying with the US, Chief Counselor, Brent Wible, has delivered the Keynote Address to the American Conference Institute’s International Conference on the Foreign Corrupt Practices Act.

On the subject of the United Kingdom, the big news is the appointment of the new Anti-Corruption Champion. Baroness Margaret Hodge ‘will support the government’s agenda to tackle corruption at home and overseas… Baroness Hodge is a leading campaigner on corruption and illicit finance. As Chair of the Public Accounts Committee from 2010-2015 and of the APPG on Anti-Corruption and Responsible Tax, she has shone a light on the impact of dirty money in the UK. In her role as the new UK Anti-Corruption Champion, she will work with Parliament, the private sector and civil society to help drive delivery of the government’s priorities to clamp down on corruption and the organised criminals who benefit from it, helping to deliver safer streets and secure borders.’ Transparency International has welcomed the appointment.

And finally on anti-corruption news this week, a couple of bits of light reading. First, Transparency International (‘TI’) has published a blog on how EU enlargement must prioritise fighting corruption. On political corruption, TI called on the Conference of State Parties to the UN Convention Against Corruption ‘to adopt new global standards for transparency in political finance’, and has welcomed the announcement in the UK of the new Domestic Corruption Unit. Secondly, Spotlight on Corruption has published a lengthy blog reflecting on the effectiveness of the first Unexplained Wealth Order agreed in the UK in 2018. Thirdly, researchers from universities across North America have published a paper in which they outline a model which they have developed on factors which individuals consider when deciding whether to pay or offer a bribe. The research ‘reveals how citizens’ motivations, costs, and risks influence their willingness to engage in corruption.’ Sadly, the publication is behind a paywall, and if you can get behind a paywall here is the link. However, if it is not possible to access, the Working Paper on which the article is based is provided open access by Northwestern University, and is also linked in the transcript.

Other Financial Crime News

In other financial crime news this week, the Europol Financial Intelligence Public-Private Partnership (‘EFIPPP’) plenary has taken place in The Hague. It focused on celebrating a major milestone by hosting its 25th plenary at Europol’s headquarters in The Hague. At the plenary, a new workstream was announced which will focus on ‘professional enablers, such as lawyers, real estate brokers, and accountants who help, knowingly or not, to move illicit funds into legitimate systems. The workstream will begin operating in 2025, based on insights shared by expert speakers during the event.’ Europol has also published a report looking at trends in terrorism across the EU, highlighting how they are exploiting global tensions.

In the UK, the government has, first, announced that it will support Cyprus in the establishment of a new National Sanctions Implementation Unit to address the issue of illicit Russian finance flowing through Europe. Secondly, the speech of the UK Security Minister to the UK Financial Economic Crime Congress has explained how the government is working to detect, disrupt, and defeat economic crime.

Cyber Crime

On cybercrime news this week, the Office of Foreign Assets Control (‘OFAC’) in the US has sanctioned ‘cybersecurity company Sichuan Silence Information Technology Company, Limited, and one of its employees, Guan Tianfeng, both based in People’s Republic of China, for their roles in the April 2020 compromise of tens of thousands of firewalls worldwide. Many of the victims were U.S. critical infrastructure companies.’

Staying in the US, the Treasury’s Office of Cybersecurity and Critical Infrastructure Protection has published ‘an advisory to consumers highlighting tips for consumers to avoid cyber and online scams during the holiday season.’

To Europe now, where Europol has announced the disruption of a ‘holiday tradition for cybercriminals: launching Distributed Denial-of-Service (‘DDoS’) attacks to take websites offline. As part of an ongoing international crackdown known as PowerOFF, authorities have seized 27 of the most popular platforms used to carry out these attacks.’ The National Crime Agency in the UK was part of the coordinated action.

And finally on cybercrime, the World Economic Forum has published ‘The top cybersecurity stories from 2024.’ Happy reading.