Compliance Carols

This is the time of year to roll out the platitudes and look back over the past 12 months, at the high points and low points  and this blog is no exception.

2014 has been a great year for compliance, mainly thanks to the numerous investigations into rate rigging, market

Christmas Candle

Christmas Candle

manipulation and sanctions breaches which although on a global scale, have affected the Asia Pacific region.

Terrorist financing

Starting on a very sombre note, the Australian police force has arrested and charged two men with giving AUD15,000 to ISIS by funding flights for Australians who went to join the jihad in Syria. There is no evidence linking this to the tragic siege in a Sydney cafe in December, perpetrated by an apparently mentally ill man. Nor are their any direct links between that and the barbaric terrorist attack on a school in Peshawar carried out by the Taliban who murdered more than 130 people, the majority of whom were children. Who is funding the Taliban? The UK, US and foreign aid budgets have been variously named as unwitting donors. But that is all old news. Terror was still being funded in 2014.

Last Christmas I broke the law for you

BNP have claimed the top of the Christmas tree this year with their admission to breaching US sanctions on Sudan, Iran and Cuba, accepting the largest financial penalty to date issued for this type of breach, an eye watering USD8.97bn, which is roughly how much money it sluiced for sanctioned entities between 2004 and 2012. The penalty has focused attention on sanctions, and upon the intricate systems used by BNP to hide transactions.

He sees when you are grafting, he knows when you’r e on the take

Corruption gained a very high profile in APAC this year, with President Xi Jinping launching merciless attacks on former allies and fellow politicians who have skimmed from the national coffers. Although some view this as a political purge with corruption used as an overcoat, the message sent out is loud and clear: you’d better watch out, you’d better not graft.

Lonely this Christmas

Hong Kong’s Independent Commission Against Corruption officers will surely be celebrating this week  as it landed a prize scalp. A jury found HK’s former second official – Rafael Hui – guilty of accepting HK$8.5m (£700,000) from executives of the Sun Hung Kai Properties development company. The case has exposed the intricate links between the SAR’s government and powerful property developers; Hui’s case is the latest conviction. He is due to be sentenced in time for Christmas in Hong Kong’s jail, which will be a far less chilling residency than those of peers in Mainland China.

All you want for Christmas is a job in KYC

Recruitment in Asia Pacific compliance is still booming. Banks in Hong Kong are looking for lawyers to shore up their regulatory defences but all is not lost for those without a law degree. Back in August, recruiters in Singapore were crying out for customer on boarding and know your customer specialists, as well as project managers to fill posts. While the legal eagle-eye view on financial crime is still viewed as a safe bet, firms still need hands-on practitioners to do the real work.

Financially include the world

One of the biggest campaigns to gain ground in 2014 is the rally behind financial inclusion –  lead by various non-governmental organisations including the Bangkok head-quartered  Alliance for Financial Inclusion. Financial inclusion aims to provide appropriate financial services to those who are excluded from the financial sector and as a result, are at the mercy of ruthless money lenders, usurers and criminals who use exploitation – whether via labour or sex – to earn money. If you could borrow money from someone who would not try to sell you or your children into slavery, you would, wouldn’t you? If the world’s biggest banks are looking in earnest to change their reputations for the good, they could do worse than to reach out to the less profitable sections of society, who could do with some support.

12 corps avoiding… or is that evading?

To round off with some festive cheer, let’s all join in with a rousing chorus of the 12 Tax Dodgers of Christmas, 38Degrees’ reworking of a popular Xmas carol to highlight those who chose to hide their wealth rather than paying taxes in the country where they make their vast fortunes. Step up Amazon, Caffe Nero, Johnny Walker et al.

Or maybe it should be‘O come all ye shameful.’

First published on the ICA blog in December 2014.


EU adds 12 to Syria sanctions list

Read the European Union’s Official Journal from June 24th for the full list.

US hits 7 Ukraine rebels with sanctions

WASHINGTON (AP) — The Obama administration imposed sanctions Friday on several pro-Russian separatist leaders in Ukraine, including self-proclaimed rebel mayors, governors and commanders in chief of cities under siege, for refusing to cede to the central government in Kiev. The sanctions came as U.S. officials renewed accusations that Russia is providing the separatists with tanks and heavy weaponry and as Ukraine’s president announced a unilateral ceasefire that Washington urged Moscow to support.

The penalties on seven separatists were intended as a signal that the U.S. will continue to punish those it holds responsible for instability in Ukraine and that the West was still prepared to slap tougher sanctions on Russia’s economic sectors to punish it for stoking unrest in Ukraine should Moscow not take steps to de-escalate the crisis, the officials said.

The White House and State Department welcomed Ukrainian President Petro Poroshenko’s ceasefire announcement even as they denounced Russia for supplying separatists with military gear. White House spokesman Josh Earnest called reports of a new Russian military buildup near the Ukraine border “troubling” and dismissed explanations from the Kremlin that the movement of security forces is related to border security.

“We will not accept any use of Russian military forces, under any pretext, in eastern Ukraine,” Earnest said. He also slammed Russian officials for making what he said were false claims about the Ukrainian government being responsible for poor human rights conditions in eastern Ukraine.

“We see these statements for what they are: an attempt to create pretext for further illegal Russia intervention in Ukraine,” he said. “In fact, responsibility for the deterioration in the human rights situation in Ukraine lies with the armed separatists who are targeting the population, and their backers in Russia.”

President Barack Obama spoke by phone Friday with German Chancellor Angela Merkel, who has been a key interlocutor with Russian President Vladimir, and separately with French President Francois Hollande. The White House said the leaders all praised Poroshenko’s ceasefire, and agreed that Russia’s failure to take immediate steps to calm tensions would result in further penalties from the U.S. and the European Union – a threat the West has been making for months.

Washington last week accused Russia of sending three tanks and several rocket launchers to the separatists and, at the State Department on Friday, spokeswoman Jen Psaki said the U.S. believes Russia is preparing to send in more tanks and artillery from a site in southwest Russia.

“We have information that additional tanks have been prepared for departure from this same deployment site,” she said. “We also have information that Russia has accumulated artillery at a deployment site in southwest Russia, including a type of artillery utilized by Ukrainian forces but no longer in Russia’s active forces and believe Russia may soon provide this equipment to separatist fighters.”

Psaki would not say if the provision of the equipment to the separatists would be a trigger for additional sanctions.

Since Russia annexed Ukraine’s strategic Crimean peninsula in March, the U.S. has imposed sanctions against 71 individuals and entities, including in Russia, for their actions to destabilize Ukraine. The European Union has taken similar steps and next week, U.S. and EU officials will be discussing the possibility of wider sanctions at a series of meetings.

The sanctions imposed on Friday freeze any assets that the seven separatists have in the United States, and prohibit any American firms or businesses from dealing with them. It is a relatively limited slap against the separatists themselves but showed that the U.S. is ready to move forward with more if tensions ratchet back up.

In a statement, the Treasury Department said the sanctions penalize separatist leaders, including Vyacheslav Ponomaryov, who dubbed himself the “people’s mayor” of the eastern Ukraine city of Slovyansk after leading a group who overtook the local government there in early April; his colleague Igor Girkin, the self-described “commander in chief of the Donetsk People’s Republic” in the same town; and Valery Kaurov, who calls himself the “president of Novorossiya.”

Officials said Kaurov has asked Putin to deploy troops to Novorossiya, which translates to New Russia and is a pro-Russian term for a region in southeast Ukraine.

Last month, in an apparent attempt to ease tensions, Putin had pulled back many of his estimated 40,000 Russian troops massed along the border. They appear to have returned over the last week – even as Putin and newly elected Ukraine President Petro Poroshenko discuss Poroshenko’s plan for a unilateral cease-fire and as Putin says he is resisting rebels’ calls for help.

Follow Lara Jakes on Twitter at

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Source: AP

Have international sanctions affected Iran’s World Cup?

Sanctions and embargoes aren’t just buzzwords that affect Barcelona’s player transfers and Paris St Germain’s infringements on the Financial Fair Play rules. Laura Jones looks at whether Iran has suffered more than most in their preparations for the World Cup.

What if sanctions and embargoes were in place because your country is deemed to be a threat to the security of other countries?

This is the current situation in Iran.

Iran has extensive financial and trade sanctions in place against it, imposed by the European Union (EU) and the United Nations (UN) and enforced by governments across the globe. These embargoes are designed to penalise the Iranian government for refusing to suspend its uranium enrichment programme.

The reasoning behind the sanctions is to cut off any trade or funding that could be use to acquire materials for the continuation of the country’s nuclear programme. The impact is having a bearing on the entire Iranian population where poverty is on the increase and businesses are failing because they are also prohibited by the trade sanctions.

Iran reached the 2014 World Cup with a 1-0 win over South Korea - this will be just their fourth World Cup

However, there is a dispute about whether the national football team is suffering the same fate, or if the lack of preparation for the World Cup is a product of incompetence by the Iran Football Federation (FFI).

As oil companies are finding it difficult to import the necessary equipment to export its natural resource, Iran’s national team has been discovering that to be able to prepare adequately for the world’s biggest football stage they also need better kit.

Players have been allocated one tracksuit during the World Cup preparations. They have also been ordered by the FFI not to swap shirts with opposition players during the tournament.

According to the President of the FFI, Ali Kafaschian, they are “not giving the players a shirt for every game. The players need to be economical with the shirts.”

It will be interesting to see if the are any repercussions for the player who defies this command by swapping his shirt with Lionel Messi, when Iran play Argentina on the 21 June.

In 2011, Queiroz signed a deal to coach the Iran national football team until the end of the 2014 FIFA World Cup

The current Iran coach, Carlos Queiroz, has been publicly apoplectic about the quality of the training kit. Before the qualifying games against Qatar and South Korea the kit supplied to the team sounded like the remnants of the box at school when you’d forgotten your PE kit. Football boots were supplied but not in the correct sizes for the players and the socks allegedly shrunk during the humidity of the game. As the former Manchester United coach observed “this could have put Iran out of the World Cup.”

A bad workman blames his tools but when footballers are playing in shoes too large for them and socks that are shrinking on their feet as they play, you can’t help but feel a little embarrassed for the players.

The kit issues and the lack of quality opposition in the run up to the World Cup have been blamed on the UN sanctions. This has certainly been the view of Western media but Middle Eastern journalists are less convinced. Mani Djazmi, an Iranian-born BBC journalist, doesn’t believe the international sanctions are affecting the national team. He thinks the blame lies with “an incompetent FA.”

There are suggestions that the Iranian FA is overrun with officials that are focussing on everything but improving the team, yet claiming it is in the best interests of the squad. This is why Carlos Queiroz has been so vocal in his dismay, so much so that the FA has alleged that the Iran coach has been pocketing money from lucrative warm up games. An allegation he firmly denies. If Queiroz is right then being seen as an international pariah is helpful cover for an incompetent FA.

Djazmi highlights the domestic leagues, where it is more obvious that the financial restrictions are having an impact. Players have complained of not being paid for months and they have either left the country to play in Persian Gulf leagues or continued to play without pay.

Iran appeared at their first World Cup in 1978

Serbian footballer Goran Lovre claimed that his club Esteghlal were holding him hostage by keeping his passport and refusing to pay him. In a case reminiscent of French footballer, Zahir Belounis, trapped in Qatar. Lovre looked for sanctuary at the Serbian embassy but the matter was quickly resolved with a settlement and a release from his contract.

As we have seen in previous World Cups, football can be used as a tool of unity. There are mixed reports coming from Tehran about whether the government is using the Brazilian tournament as propaganda.

Former international footballer, Hassan Nayeb-Agha, who played in first Iran squad to qualify for the World Cup in 1978, believes the government are:

“Dealing with a totally disenchanted and disgruntled population, in particular among the young people, (they are) trying to use the World Cup as a tool.The regime’s objective is to pretend as though it is an advocate of sports, sportsmen and Iranian national team – and in the process they hope to appease the growing animosity Iranians and the youth in particular have for the regime.”

The police in Iran have allegedly tightened their grip on supporters enjoying the World Cup. Cafes in the capital Tehran have been banned from screening the games and mixed gender cinemas will not be allowed to show the games either. According to BBC journalist, Djazmi, Iranian’s don’t traditionally gather in numbers to watch games because large organised gatherings are prohibited. Most supporters watch the matches in their own homes. On that score everything seems to be business as usual. Not that the citizens of Iran will take comfort in this.

Djazmi leaves me with the thoughts of one of his friends.

“Iran can run out of petrol and people would grumble, but if Iran was banned from FIFA there would be blood on the streets.”

Maybe the Iran FA should have invested more in the national squad after all.


Source: Offside Rule

Iran will go after its money in Turkey

An interesting look at why Iran goes after embezzled state funds but may FCA - Rouhaninot get to the bottom of the bribery network. This story reveals how a the military’s appointed chauffeur to the former head of the Central Bank earned USD20,000 a day as a bagman making illegal foreign currency transfers and went on to make USD14bn in assets. Using his network of international connections, he became a key figure in circumventing sanctions on Iran, facilitating crude oil sales in the 2000s under President Mahmood Ahmedinejad’s regime.

Babak Zanjani, the man at the centre of the case, and a former ally of the regime, is now looking like President Hasan Rouhani’s first scalp in a campaign to clean up Iran’s financial dealings. Transparency brings in foreign investors. Zanjani was named in the European Union’s sanctions on Iran in December 2012

Iranian investigators have travelled to Malaysia, Tajikistan and Turkey to track down Zanjani’s funds. He has been in custody and under interrogation in Iran since January. Corruption is punishable by death in Iran.

Looking too closely at who was involved in a bribery and corruption schemes in any jurisdiction could expose people in the top ranks of government and where their hands have been. Those in power will carefully protecting their position and reputation.

To learn more about this case, read this analysis.

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China: Zhou’s House of PEPs Infographic

Think that Frank Underwood from Netflix‘ House of Cards series and his network are ruthless in their relentless pursuit of power? Wait until you read about one of China’s FCA - Zhoupolitico-business families. Sanctions officers might consider placing this infographic on their desktops as a reminder of who is who and who they have done business with.

Meet the Zhous, China’s very own House of PEPs, which is odd given they have thrived in a Communist country which expounds the virtues of equality for all and no citizen being better than the next. The infographic shows the prominent politically exposed persons in the clan, how they are related, and shows the business investments they have made and lists the companies connected to them via investment or other business dealings.

The thirteen members of the Zhou family depicted in this New York Times Infographic appear to have stakes in more pies than they have fingers. Seven of the clan have been detained by Chinese authorities,  the whereabouts of six of them is reported ominously as ‘unknown’. One of the clan lives in California and is presumably, for now at least, safe from prosecution by China. Two more are on the lam; they are not under arrest, as far as we know, but no one knows where they are.

The Zhous at a glance 

Zhou Yongkan, the patriarch of the family sits at the top of the tree. He has held various positions in government and state entreprises. His is under arrest and Chinese authorities have already seized USD14.5bn in assets belonging to Zhou and his associates.

Wang Shuhua, his first wife, is deceased, but their son Zhou Bin took an 80 percent stake in the energy investment company, Zhongxu, in 2009. He is also underarrest.

Jia Xiaoye, his second wife, us under arrest – location unknown.

Zhou Bin’s wife Huang Wan and her father Huang Yusheng are both being detained for questioning in undisclosed locations, while her mother Zhian Minli is in California.

Zhou Yuangqing, Yongkang‘s brother, his sister-in-law Zhou Lingying and nephew are also mentioned on this ominous family tree; while mum and dad are under arrest, the whereabouts of Zhou Feng, the nephew, is unknown.

Source: The New York Times

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Terrorist financing: Spain arrests four in Iran proliferation network

Spanish law enforcement officers have arrested a group people suspected of trafficking sanctioned materials through Spain to Iran. The group FCA - SPAIN TBML ARRESTmoved dual-use goods, so-called as they can be used for civilian or military purposes and which in this case could have been used for Iran’s banned nuclear programme.

Officers received information on the purchase of two metal working machines from a British defence company in 2013. The Guardia Civil police force believes the machines were first sent from the UK to Spain to throw investigators off the scent and until they could be safely sent onto their final destination in Iran. Sending dual-use goods to Iran is in breach of international sanctions  in connection with the development of the country’s nuclear and missile programs.

The suspects – three Spaniards and one Iranian – have been charged with belonging to a criminal organisation, smuggling dual-use materials and money laundering. Investigators raided four homes and business premises in Tarragona, northern Spain and in Palma de Mallorca in the Canary Islands. The industrial metal working machines were made by LEIFELD. Officers seized the equivalent of EUR10,000 in Iranian Rials and Euros which they suspect was earned through trafficking. The police also issued an order to freeze the assets of companies suspected of being part of the network.

Proliferation parameters

Although not mentioned in the Guardia Civil’s press release, the cash to pay for the machinery must have been channelled through the financial system somehow. FCA - SPAIN TBML METALMACHINETransactions to defence companies and for duel-use materials should be in a high-risk category and subject to enhanced scrutiny, including enhanced due-diligence for entities involved in the transactions.

Identifying dual-use materials from a transaction sheet, however, can be challenging for bank analysts who are not necessarily aware of the range of uses a gas centrifuge, for example, can be put to. Transaction monitoring software can be tuned to identify suspicious transfers within certain parameters, but where does the bank get the information from to set the parameters? Entity based parameters which include geography, type of business, beneficial owners, locations of subsidiaries, are easier to follow than new technological developments.

The Financial Action Task Force stepped up its work on ‘proliferation financing’ in 2012 when it made implementing targeted financial sanctions to comply with the United Nations Security Council Resolutions (UNSCRs) relating to the prevention, suppression and disruption of proliferation of weapons of mass destruction (WMD) and its financing one of its 40 Recommendations.  A 2010 report on the subject examines, among other areas, how practitioners can apply a risk-based approach to proliferation financing, managing transaction monitoring and analyses the pros and cons of  ‘goods based screening.’  The report notes that financial institutions are not necessarily in possession of the technical knowledge available to experts and exporters and that a list of controlled goods can be a challenge for export enforcement authorities and real time screening.

‘Goods lists, in themselves, should not be used as a basis for transaction screening by FIs, as they are difficult for those without a degree of technical expertise to interpret correctly which thus make them an inefficient safeguard.’

Reports produced on this subject by the International Chamber of Commerce provide useful information for financial institutions working on international trade transactions and examples of sanctions clauses which could appear in transactions.


Source: Guardia Civil

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U.N. sanctions experts investigate Rodman’s North Korea trips

(Reuters) – A group of United Nations sanctions experts has been investigating former basketball star Dennis Rodman because of gifts he brought to North Korea during his visits to the reclusive state, according to an excerpt from the group’s latest report.

Bodyguards clear a path for former NBA basketball player Dennis Rodman (C) as journalists surround him upon his arrival from North Korea's Pyongyang at Beijing Capital International Airport January 13, 2014. CREDIT: REUTERS/KIM KYUNG-HOON

Bodyguards clear a path for former NBA basketball player Dennis Rodman (C) as journalists surround him upon his arrival from North Korea’s Pyongyang at Beijing Capital International Airport January 13, 2014.

While the U.N. Panel of Experts, an independent body that monitors compliance with the United Nations’ North Korea sanctions regime, did not explicitly accuse Rodman of violating the U.N. ban on luxury goods, it suggested his actions may have represented a breach of international restrictions on Pyongyang.

“The panel also investigated allegations that Dennis Rodman and his party may have taken luxury items as gifts when he visited Pyongyang in September and December 2013 and January 2014,” the experts’ unpublished report says.

On his January trip, Rodman was accompanied by a contingent of other former National Basketball Association players for an exhibition game in Pyongyang. He sang “Happy Birthday,” to Kim Jong Un at a celebration marking what was believed to be his 31st birthday.

“Media reports … corroborated by the panel indicate that among items taken by Dennis Rodman and his party during their visits were sporting goods from various countries, five bottles of vodka (United States) taken by Rodman and one bottle of whiskey (Ireland),” the report says.

In an excerpt seen by Reuters, the report also refers to other gifts, including “two whiskey glasses and one whiskey decanter (Ireland), and a Mulberry handbag (United Kingdom) taken by Paddy Power, a company based in Ireland.”

The former basketball star’s trips had previously been financed by Irish bookmaker Paddy Power, although it has since withdrawn its backing. Rodman used his first visit in 2013 to promote his own vodka brand.

“The panel considers that this (the Rodman case) illustrates the importance of informing individuals and companies of their obligations under the (Security Council sanctions) resolutions,” the report said. “It is continuing in its enquiries.”

There is a U.N. ban on the export of luxury goods to North Korea under sanctions imposed by the Security Council in response to Pyongyang’s 2006 and 2009 nuclear tests and several missile launches.

The athlete’s most recent visit to Pyongyang became controversial after an agitated, drunken Rodman gave an interview to CNN from North Korea in which he suggested that Kenneth Bae, an American missionary imprisoned in North Korea, was responsible for his own imprisonment.

Rodman checked himself into a substance abuse rehabilitation center shortly after returning from North Korea in January.

Last year, the Panel of Experts said North Korea continued to violate the U.N. ban on luxury goods, which is intended to punish the country’s ruling elite. The panel cited suspected violations of the ban involving alcohol, tobacco, electronic items, automobiles and cosmetics.

The Panel of Experts has also looked at the case of a North Korean cargo ship, the Chong Chon Gang, detained near the Panama Canal for holding Cuban weapons. The ship was seized in July 2013 for smuggling Soviet-era arms, including two MiG-21 aircraft, hidden under 10,000 tons of sugar.

Several Security Council diplomats told Reuters on condition of anonymity that in the Chong Chon Gang case, the experts determined that North Korea had used a network of firms based abroad, including in China – its standard method of trying to avoid detection while violating the U.N. arms embargo.

(Reporting by Louis Charbonneau, editing by G Crosse)

Source: Reuters

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Wrestling with dimplomacy: Has Iran ruler’s Twitter account helped ease OFAC sanctions?

Wrestling with diplomacy - Iran tackles US head on

Wrestling with diplomacy – Iran tackles US head on


The Iranian President Hassan Rouhani has taken to using his Twitter account to share his ideas and movements and promote diplomacy,  which is a far cry from his predecessor’s tactics. Although a recent breakthrough in sanctions on Iran may not be directly linked to one of Rouhani’s tweets, his efforts to create transparency in Iran since he took office on August 3rd, less than 40 days ago, have been effective to say the least.

The US Treasury‘s Office of Foreign Assets Control has issued two general licences which authorise the exportation of services and funds transfers by non-governmental organisations (NGOs) to support humanitarian needs and athletic exchanges.

The OFAC press release and details of General Licence E (humanitarian) and General Licence F (athletics) are here.

Wrestling with diplomacy

In February, the US national wrestling team touched down in Tehran to compete alongside Iranian and other national wrestling teams in the World Cup Tournament. This scored a diplomatic coup for both countries and may have allowed the US Government direct access to next ruler of Iran before candidate registration opened in May. Either that, or the trip to Tehran may have been a fortuitous coincidence. 

Nonetheless, the limited application licenses demonstrate clearly the US is willing to reopen communications with Iran and this may be due in no small part to efforts by Iran’s Twitter using, moderate cleric President Hassan Rouhani who is actively trying to re-establish Iran’s reputation on the global scale and to reinvigorate an economy severely damaged by sanctions on oil, gas and financial transactions. This week, he even tweeted good wishes to Israel for Rosh Hashanah.

Rouhani has repeatedly called for a lift on social media black-outs in Iran, and despite some opposition, has formed a task force dedicated to studying the legality of what Iranian’s say online and how they use the internet. Rouhani has used his twitter account in the past to comment on education, women, chemical weapons use and ‘Al Qaeda wreaking havoc’ in Syria.

The Iranian leader’s use of twitter as a diplomatic channel is a far cry from ex-President Mahmoud Ahmadinejad‘s ultra-conservative, Holocaust denying approach to building bridges.

Follow Rouhani on Twitter @HassanRouhani.

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