SFO: Three former Unaoil executives sentenced for bribery
The Serious Fraud Office (SFO) has announced that three former executives of Unaoil have been sentenced for bribery in post-occupation Iraq. The details are as follows:
- two former Unaoil territory managers for Iraq have been sentenced for paying over $500,000 in bribes to secure a $55 million contract to supply offshore mooring buoys. One executive was sentenced to five years’ imprisonment, whilst the other was sentenced to three years’ imprisonment. Both individuals conspired with others to pay bribes to public officials to secure contracts for Unaoil and its clients to construct offshore mooring buoys in the Persian Gulf. A jury at Southwark Crown Court had found the first co-conspirator guilty on two counts of conspiracy to give corrupt payments, whilst the second co-conspirator was found guilty in the same trial on one count of conspiracy to give corrupt payments, in both cases contrary to Section 1 of the Criminal Law Act 1977 and Section 1 of the Prevention of Corruption Act 1906;
- Unaoil’s former Iraq partner has been sentenced to three years and four months’ imprisonment for paying over $17 million in bribes, which were paid to dishonestly secure approximately $1.7 billion worth of contracts to construct oil pipelines, offshore mooring buoys and other infrastructure projects. The individual pleaded guilty to five offences of conspiracy to give corrupt payments contrary to Section 1 of the Criminal Law Act 1977 and Section 1 of the Prevention of Corruption Act 1906; and
- a further individual faces retrial in January 2021.
Please click here to watch the second webinar in our CC&I Conference series, which focused on developments in anti-bribery and corruption and deferred prosecution agreements (DPAs).
SFO charges individuals with fraud in relation to activities of steel group
The SFO has announced that it has charged four individuals with fraud in relation to the activities of a steel group and one of its subsidiaries. The charges pertain to letters of credit and other documents, and follow the opening of an investigation by the SFO into the steel group in May 2017. The individuals have been charged as follows:
- the former Director of the group and subsidiary is charged with two counts of fraudulent trading in the carrying on of the businesses of the group and subsidiary with the intent of defrauding creditors, in addition to six counts of conspiracy to defraud various financial institutions;
- the former Finance Director of the group and subsidiary is charged with two counts of fraudulent trading in the carrying on of the businesses of the group and subsidiary with the intent of defrauding creditors;
- a former member of the subsidiary board’s Executive Committee is charged with one count of fraudulent trading in the carrying on of the businesses of the subsidiary with the intent of defrauding creditors, in addition to five counts of conspiracy to defraud various financial institutions; and
- another former member and Treasurer of the subsidiary board’s Executive Committee is charged with one count of fraudulent trading in the carrying on of the businesses of the subsidiary with the intent of defrauding creditors, in addition to six counts of conspiracy to defraud various financial institutions.
On 22 October 2020, a fifth individual was charged with two counts of fraudulent trading in the carrying on of the businesses of the group and subsidiary with the intent of defrauding creditors and one count of conspiracy to defraud a development bank. All individuals appeared at Southwark Crown Court on 27 October 2020.
SFO charges former executives of global security company with fraud against taxpayer
The SFO has charged three former executives of a global security company with multiple offences in relation to a multi-year scheme to defraud the Ministry of Justice (MoJ). The three individuals – a former Managing Director, Commercial Director, and Finance Manager and Acting Commercial Director – have each been charged with seven offences of fraud in connection to false representations made to the MoJ between 2009 and 2012.
These charges are in addition to the DPA reached between the SFO and the global security company this year. Further case management is set for 18 December 2020, and the trial begins in January 2022.
SFO charges three individuals in fund investigation
The SFO has charged three individuals with multiple offences in connection with its investigation into the collapse of a legal financing fund. The collapsed fund was an unregulated investment scheme, which loaned money to law firms to fund cases. The three individuals are charged with carrying out a fraudulent scheme to divert money from the fund for their own benefit.
The SFO had announced its investigation in May 2017.SFO secures £5.45 million confiscation order against former executives of Afren Plc
The SFO has secured confiscation orders totalling £5,450,000 against the former Chief Executive Officer (CEO) and Chief Operating Officer (COO) of an international oil exploration and production company. The former CEO was ordered to pay £2,935,000, and the former COO was ordered to pay £2,515,000. Both individuals were each found guilty of one count of fraud contrary to Section 1 of the Fraud Act 2006 and two counts of money laundering contrary to Sections 328 and 329 of the Proceeds of Crime Act 2002 (POCA) in October 2018. The individuals were found to have deceived the board of the oil company into a $300 million deal, from which the individuals received over $17 million in fees.
SFO charges company and three individuals following corruption investigation
The SFO has brought charges against a company and three individuals in relation to an investigation into allegations regarding conduct in the Kingdom of Saudi Arabia. The company and two of the individuals have been charged with corruption in relation to contracts awarded to the company regarding work carried out between January 2007 and December 2012. The first individual has been charged with misconduct in public office between September 2004 and November 2008. A third individual has also been charged with aiding and abetting the misconduct in public office offence.
The company and the three individuals appeared at Southwark Crown Court on 12 October 2020 to enter pleas.
SFO: Director Osofsky speech on future challenges in economic crime
The SFO has released a speech given by Director Lisa Osofsky at the Royal United Services Institute (RUSI) on the topic ‘Future Challenges in Economic Crime: A View from the SFO’. Among other things, Ms Osofsky discussed:
- what the government can do to combat economic crime, and what the SFO’s role is;
- the possible introduction of a ‘failure to prevent’ offence, legislation allowing the SFO to use Section 2 powers prior to the opening of an investigation in fraud and domestic bribery cases, and a ‘tipping off’ offence in relation to Section 2 notices; and
- the challenges facing the SFO’s mission, including data and Brexit.
SFO: Director Osofsky re-examines priorities of SFO at Cambridge Symposium on Economic Crime
The SFO has released the keynote speech given by Ms Osofsky to the 38th Cambridge Symposium on Economic Crime. In her speech, Ms Osofsky re-examined the four key priorities that she outlined at her first address to the Symposium in 2018 and referred to a number of new developments which she said would affect the SFO’s future work.
Please read our briefing for a summary of Ms Osofsky’s key points.HMCPSI inspection of SFO’s response to Covid-19
HM Crown Prosecution Service Inspectorate (HMCPSI) has published its review of the SFO’s response to Covid-19 between 16 March to 8 May 2020. The review highlights that, although the SFO’s IT architecture was not designed to support widespread working from home, the SFO successfully moved to a position where the majority of staff were working from home.
Please click here to read our briefing on our first webinar in the CC&I Global Conference series, which focused on CC&I in the time of Covid-19. Please also click here to watch a recording of the webinar.FCA consultation on extension of annual financial crime reporting obligation
The Financial Conduct Authority (FCA) has published a consultation paper (CP) on extending the scope of its annual financial crime reporting obligation (CP20/17). CP20/17 proposes to extend the scope of the obligation to include firms that carry on regulated activities that potentially pose a higher money laundering risk, irrespective of firms’ revenue thresholds. The FCA aims to publish a policy statement by Q1 2021.
The deadline for feedback was 23 November 2020.FCA: Changes to FCG now in force
The FCA has updated its webpage on the Money Laundering Regulations (MLRs) to note that, following a consultation, changes to the Financial Crime Guide (FCG) reflecting amendments to the MLRs, are in force from 1 October 2020. The changes introduced by FCG (Amendment No 4) Instrument 2020 pertain to Sections FCG 3.24 and 3.27 of the FCA Handbook, and relate to amendments to the MLRs in relation to customer due diligence measures, the new requirement to report discrepancies in registers and enhanced due diligence measures. FCA: £1.6 million confiscation order against Richard Baldwin
The FCA has published a statement confirming a confiscation order made by His Honour Judge Hehir at Southwark Crown Court against Mr Richard Baldwin in the sum of £1,633,766. Mr Baldwin has been ordered to pay the order within three months or face a further eight years in prison. The confiscation order was made in Mr Baldwin’s absence after he absconded during his trial and conviction for money laundering in 2017. He was previously sentenced to a total of five years and eight months’ imprisonment for the offence as well as separate contempts of court which he admitted in 2015.FCA: Criminal proceedings brought against three individuals
The FCA has announced criminal proceedings against three individuals, all of whom are former employees of an IT service provider that was issued with a public censure by the FCA in June 2020 for market abuse. The former CEO, Chief Financial Officer (CFO), and Finance Director of the company have each been charged with two counts of making a false or misleading statement, contrary to Section 89(1) of the Financial Services Act 2012. The former CFO and Finance Director have also been charged on additional counts including false accounting and fraud by false representation.
The alleged offences took place between 1 May 2015 and 31 October 2016. All three individuals appeared at Westminster Magistrates’ Court on 23 September 2020.FCA final notice to trader following insider dealing conviction
The FCA has published the final notice it has issued to a former senior trader. The individual has been banned from performing any function relating to any regulated activity carried on by an authorised person, exempt person or exempt professional firm. This is because the FCA does not consider the individual to be a fit and proper person following a conviction for insider dealing.NCA Annual Report and Accounts 2019/20
The National Crime Agency (NCA) has published its Annual Report and Accounts for 2019 – 2020. The Report details the NCA’s performance over the past year against the national priorities for serious and organised crime that are outlined in the National Strategic Assessment, and the Agency’s operational priorities as agreed in the Annual Plan. Among other things, the Report highlights that within the reporting period from 1 April 2019 – 31 March 2020, the NCA’s actions resulted in:
- almost £150 million criminal assets frozen or seized and £9 million forfeited;
- 295 guilty pleas following NCA investigations, which are estimated to have saved almost £6.5 million in costs to the justice system; and
- over 1,000 arrests in the UK by NCA officers, and over 600 abroad.
NCA: Businessman with links to serious crime settles £10 million UWO case
The NCA has announced that it has settled with a businessman following the securing of an Unexplained Wealth Order (UWO) against eight properties owned by the individual. The settlement was agreed on 24 August 2020 and the High Court sealed the agreed recovery order on 2 October 2020. The total value of the assets recovered was nearly £10 million.
This is the first time that the NCA has disclosed the existence of a settlement agreement following the securing of a UWO.NCA recovers more than £1 million of assets
The NCA has announced that it has recovered more than £1 million worth of assets, following a civil recovery investigation into a fraudster and his partner. Both individuals were ordered by the High Court to pay £1 million to the NCA under POCA. HMT annual report on AML/CFT
HM Treasury (HMT) has published its annual report for 2018 – 2019 on anti-money laundering and counter terrorist financing (AML/CFT) supervision. The report contains data provided to HMT by AML/CTF supervisors in their annual returns and provides information on supervisory activity carried out by AML/CTF supervisors and steps taken to promote and ensure compliance.HMT consultation on economic crime levy
HMT published a consultation on the economic crime levy which will fund new government action to tackle money laundering, and help deliver reforms committed to in the 2019 Economic Crime Plan. The consultation sought views on what the levy will pay for and how it should be calculated and distributed.
The consultation closed on 14 October 2020 and feedback is currently being analysed.FinCEN papers: Treasury Committee seeks answers from Ministers, HMRC and FCA
The Treasury Committee has published several letters to Government Ministers (Lord Callanan and James Brokenshire), HM Revenue & Customs (HMRC) and the FCA asking a series of questions about the recent leak of the US Financial Crimes Enforcement Network (FinCEN) papers, including:
- what needs to be done to further secure the financial system from economic crime;
- whether UK law enforcement agencies are following up on the information in the FinCEN papers;
- whether the release of the FinCEN papers will impact on the submission of Suspicious Activity Reports (SARs); and
- whether reports that the UK is a ‘higher-risk’ jurisdiction are a cause for concern.
OFSI updated guidance on financial sanctions in UK
The Office of Financial Sanctions Implementation (OFSI) has updated some of its guidance. The updates include:
- notices regarding amendments to and additions of listed entries under the Ukraine regime on sovereignty and territorial integrity;
- a notice regarding new and updated listed entries under the Global Human Rights regime (with some corrections), which includes the President of Belarus, Alexander Lukashenko;
- a new webpage on the Afghanistan regime after the end of the transition period;
- two notices regarding amendments (here and here) to the terrorism and terrorist financing regime, in addition to a notice regarding two renewed designations under the Terrorist Asset-Freezing etc. Act 2010 (TAFA);
- three notices regarding amendments to and additions (here and here) of listed entries under the Central African Republic (CAR) regime;
- a notice regarding corrections to 20 listings under the Guinea-Bissau regime;
- a notice regarding corrections to 14 listings under the Myanmar (Burma) regime;
- a notice regarding corrections to 26 listings in the Venezuela regime;
- two notices regarding amendments to and additions of listed entries under the Libya regime, in addition to a notice de-listing certain entries;
- a notice regarding amendments to listed entries under the Democratic People’s Republic of Korea (DPRK) regime;
- a notice regarding additions of listed entries under the cyber-attacks regime;
- a notice regarding additions of amendments (here and here) to under the ISIL (Da’esh) and Al-Qaida Organisations regime;
- a notice regarding amendments to five listings under the Yemen regime; and
- new guidance for entities and individuals operating within the maritime shipping sector.
OFSI Annual Review 2019 – 2020
OFSI has published its Annual Review for 2019 – 2020. In addition to reflecting on the four years since OFSI’s inception, the Review highlighted recent developments in compliance and enforcement, including the monetary penalties levied against a telecommunications company and a bank. The Review also highlighted, among other things, OFSI’s engagement with international partners.
Further detail on the Review can be found in our recent blog post.
OFSI quarterly report to Parliament on TAFA 2010
OFSI has published its quarterly report to Parliament on its operation of the UK’s asset-freezing regime under TAFA 2010 for the period 1 January 2020 to 31 March 2020. A collection of these reports can be accessed here.
HMRC releases details of breaches of 2017 MLR in 2019/2020
HMRC has released a list of businesses that have not complied with the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (2017 MLRs), which covers the period of the tax year 2019 to 2020. It sets out details of businesses that have received a penalty notice between 6 April 2019 and 31 January 2020, in addition to a brief description of the breach, the penalty amount, and appeal status.BEIS response to consultation on Companies House reform
The Department for Business, Energy & Industrial Strategy (BEIS) has published its response to the consultation on the reform of Companies House, which seeks to enhance the role of Companies House and increase the transparency of UK corporate entities. The response sets out the Government’s proposed changes, including:
- introducing compulsory identity verification for all directors, People with Significant Control, and those filing information on behalf of a company;
- providing the Registrar of Companies with stronger powers to query, seek evidence for, amend or remove information and to share it with law enforcement partners when certain conditions are met;
- improving the processes for removing personal information from the register; and
- further consultation on the introduction of full digital tagging of accounts to ensure consistency, easier identification and comparability of information on the register.
The Government will propose legislation to enact the reforms set out in the consultation when Parliamentary time allows.BEIS CfE – UK approach for international regulatory cooperation
BEIS has announced the launch of a call for evidence (CfE) on how to improve the UK’s international regulatory cooperation practices. The CfE has been launched in response to a review completed by the Organisation for Economic Cooperation and Development (OECD).
Responses to the CfE are requested by 25 November 2020. The feedback will inform the development of a new Government strategy.The Money Laundering and Terrorist Financing (Amendment) (EU Exit) Regulations 2020
The Money Laundering and Terrorist Financing (Amendment) (EU Exit) Regulations 2020 have been published. The Statutory Instrument (SI) updates the existing UK AML legislation to implement changes in the EU AML framework and make minor corrections and amendments. The Regulations also fix the deficiencies that would otherwise arise from these amendments at the end of the Transition Period.
An accompanying explanatory memorandum has also been published.Draft Sanctions (EU Exit) (Consequential Provisions) (Amendment) Regulations 2020
The draft Sanctions (EU Exit) (Consequential Provisions) (Amendment) Regulations 2020 (and accompanying draft explanatory memorandum) have been published. The purpose of this SI is to make amendments that are consequential on the commencement at the end of the Transition Period of the counter-terrorism sanctions framework established by the ISIL (Da’esh) and Al-Qaida (United Nations Sanctions) (EU Exit) Regulations 2019 (SI 2019/466), the Counter-Terrorism (International Sanctions) (EU Exit) Regulations 2019 (.I 2019/573) and the Counter-Terrorism (Sanctions) (EU Exit) Regulations 2019.Draft SI: Closing the bearer certificate loophole for collective investment schemes
The Bearer Certificates (Collective Investment Schemes) Regulations 2020 (and accompanying draft explanatory memorandum) have been published as a draft SI. The Regulations intend to close a technical loophole which still allowed certain collective investment schemes to issue bearer certificates. Abolishing such certificates is required under international standards on AML and tax transparency.
EBA calls on Commission to establish single rulebook on AML/CTF
The European Banking Authority (EBA) has published its response to the European Commission’s call for advice on how to strengthen the EU legal framework on anti-money laundering and counter terrorist financing (AML/CTF). The recommendations include:
Please click here to watch the sixth webinar in our CC&I Conference series, which focused on developments in anti-money laundering, including these EU developments.
The European Commission has published a speech given by Executive Vice President Valdis Dombrovskis at the high-level conference on AML/CTF. Mr Dombrovskis reviewed the response to the Commission’s proposed AML action plan, noting that the proposals contained within the plan had received broad public support. He expressed his view that he would favour creating a dedicated AML authority with ‘significant and direct supervisory powers regarding the most risky obliged entities’; such a body would also have a coordinating role among national authorities and would develop a single AML rulebook.
The Commission is now engaged in the preparation of a package of legal proposals which Mr Dombrovskis expects will be presented in the first quarter of 2021.
The European Commission has, pursuant to Article 31(1) of Directive (EU) 2015/849 (4MLD), published a report to the European Parliament and Council of the European Union (CEU) assessing whether Member States have duly identified and made subject to the obligations of 4MLD, as amended by Directive (EU) 2018/843 (5MLD), all trusts and similar legal arrangements governed under their laws. The report is based on Member States’ notifications, their oral and written input through the Expert Group on the Prevention of Money Laundering and Terrorist Financing, analyses produced by the Financial Action Task Force (FATF) and the Organisation for Economic Co-operation and Development (OECD), and academic research.
The Commission has adopted a Communication titled ‘Towards better implementation of the EU’s AML and CTF framework’. The Communication from the Commission to the Parliament and Council summarises a set of reports relating to the EU’s legal framework for preventing money laundering and terrorist financing and its implementation. The Commission’s findings are intended to inform the debate about how the EU’s AML/CFT framework could be further improved and to provide the basis for further discussions with relevant stakeholders.
The Communication was accompanied by four reports:
EU ‘Magnitsky Act’ proposal to be announced soon
The President of the European Commission, Ursula von der Leyen, has outlined the next steps for Europe in her State of the Union speech at the European Parliament Plenary, entitled ‘Building the world we want to live in: A Union of vitality in a world of fragility’. In her speech, President von der Leyen announced that the Commission will come forward with a proposal for a European Magnitsky Act, recognising ‘there is a clear need for Europe to take a clear position and quick actions on global affairs’.
This follows comments made by the Irish foreign minister that a new EU human rights sanctions regime could be adopted later in 2020.
A Russian oil company has lost its challenge at the Court of Justice of the European Union (CJEU), which means it will continue to face restrictions imposed by EU Member States in response to the situation in Crimea. The EU’s measures, imposed in 2014, restrict the supply of certain goods and services to the Russian oil sector, and limit access for certain companies to EU capital markets. The CJEU has upheld the measures as “duly justified and are suitable for putting pressure on Russia”.
The Council of the European Union (CEU) has published a declaration made by the EU’s High Representative, Josep Borrell, on the EU’s response to promote international security and stability in cyberspace. Mr Borrell denounced malicious behaviour in cyberspace, and advocated for a ‘global, open, stable, peaceful and secure cyberspace where human rights and fundamental freedom and the rule of law fully apply’. The declaration follows the adoption on 30 July 2020 of the Council Decision (CFSP) 2020/1127, amending Decision (CFSP) 2019/797 concerning restrictive measures against cyber-attacks threatening the Union or its Member States. The Decision targets six individuals and three entities or bodies that the High Representative view as involved in cyber-attacks with a significant effect, or attempted cyber-attacks with a potentially significant effect.
In line with similar measures imposed by the UK and US, the EU has imposedrestrictive measures against 40 individuals identified as responsible for repression and intimidation against peaceful demonstrators, opposition members and journalists in the wake of the 2020 Belarusian presidential election, as well as for misconduct of the electoral process.
Europol has published a report entitled ‘The involvement of organised crime groups in sports corruption’. The report highlights the relationship between sports corruption – mainly different forms of match-fixing – and organised crime groups (OCGs). The report draws attention to the way in which criminal proceeds from sports corruption are channelled through banks and other payment systems such as money service businesses and e-wallets payments services. According to Europol, annual profits from global betting-related match-fixing stand at over €120 million.
The Director-General of the European Anti-Fraud Office (OLAF), Ville Itälä, has stated in an interview that the European Public Prosecutor’s Office (EPPO) will be a ‘game changer’ in the fight against the fraud, corruption, and tax avoidance that damages the EU’s finances when it becomes operational in November 2020. The Director-General said that he wants to co-operate closely with EPPO, which is the first supranational prosecutor responsible for investigating and prosecuting white-collar offences against the EU budget. EPPO will complement the work of OLAF, which conducts administrative investigations into cases of fraud, corruption and misuse of taxpayers’ money but lacks the power to compel national law enforcement authorities to act on its recommendations. The Director-General said, ‘My vision for the future is to have a strong OLAF and a strong EPPO working together’.
The European Commission has announced that the European Chief Prosecutor and 22 European Prosecutors of EPPO have taken an oath before the CJEU. The EPPO’s current priority is to recruit European Delegated Prosecutors, who will conduct investigations in their respective Member States under the supervision of the European Prosecutors.
FATF Annual Report 2019 – 2020
FATF President speech at counter-terrorism conference
The FATF has published a speech by FATF President, Dr Marcus Pleyer, given at the 2020 Chairmanship Organization for Security and Co-operation in Europe-Wide Counter-Terrorism Conference. In his speech, Dr Pleyer outlined the FATF’s CTF work. In particular, the importance of public-private partnerships in was highlighted in addition to the FATF’s three-pronged approach, namely:
FATF: Updated consolidated assessment ratings
The FATF has published an updated consolidated assessment ratings document. FATF and its nine FATF-Style Regional Bodies (FSRBs) conduct peer reviews to assess how effectively their respective members’ AML/CTF measures work in practice, and how well they have implemented the technical requirements of the FATF Recommendations. The updated ratings document provides an up-to-date overview of countries’ ratings (as at 7 October 2020).
The FATF has published a new report titled ‘Virtual Assets: Red Flag Indicators of Money Laundering and Terrorist Financing’. It is intended that the report, which is based on over 100 case studies collected by members of the FATF Global Network, assists national authorities to detect whether virtual assets are being used for criminal activity. Key red flag indicators that could suggest criminal behaviour include:
This report is accompanied by handouts for the financial and non-financial sectors, virtual asset service providers, and the public sector. This report also complements the FATF’s ‘Guidance for a Risk-Based Approach to Virtual Assets and Virtual Asset Service Providers’, released in June 2019.
The FATF has published the speech given by the FATF President, Dr Marcus Pleyer, to the Financial Task Force of Latin America (GAFILAT) Virtual Plenary Meeting. The President focused on the impact that Covid-19 is having on AML/CFT, and stressed that AML/CTF should not be deprioritised during Covid-19. The President praised GAFILAT’s work, including its recent webinar; finalisation and approval of the update of GAFILAT’s Regional Money Laundering Vulnerabilities Assessment during Covid-10; and the Beneficial Ownership paper that GAFILAT discussed in late August. During the German Plenary years between July 2020 and June 2020, the FATF will prioritise work in the following areas:
OECD: Public-private efforts against corruption ‘must continue’ after Covid-19
Patrick Moulette, Head of Anti-Corruption at the Organisation for Economic Co-operation and Development (OECD), has stated that the increased public-private efforts against corruption – due in part to Covid-19 – should continue after Covid-19. In his speech, given at the Cambridge International Symposium on Economic Crime on 11 September 2020, Mr Moulette said that the private sector ‘has a role to play, and it’s very important that they complement what the public authorities are doing and continue to apply the internal controls [and] the compliance measures’ to combat illicit financial flows.
Wolfsberg Group statement on effective AML/CTF programmes
The Wolfsberg Group has published a statement on developing an effective AML/CTF programmes. This document outlines steps that financial institutions can take to evolve their AML/CTF regimes to meet the key elements of an effective programme.
Wolfsberg Group FAQs on Source of Wealth and Source of Funds
The Wolfsberg Group has published Frequently Asked Questions on how financial institutions and their private banking and wealth management customer segments can identify, mitigate and manage money laundering risks by undertaking Source of Wealth and Source of Funds checks.