Ghosh dishonesty disapproved: Dishonesty now to be assessed solely against the standards of ordinary reasonabe and honest people
The Supreme Court has indicated that the correct test for dishonesty is whether or not the defendant's conduct is dishonest by the objective standards of ordinary reasonable and honest people: Ivey v Genting Casinos (UK) Ltd t/a Crockfords  UKSC 67. Although the Court did not need to rule on the point, the judgment, if followed in the criminal context, would remove the second limb of the previous two-phase objective and subjective test for dishonesty as set out in R v Ghosh  QB 1053. The Court also concluded that the tests for dishonesty in criminal and civil proceedings should be the same. Please click here for our full briefing on the background and decision in the case.
New sanctions targeting Venezuela and Mali
On 13 November 2017, the EU Council unanimously voted to impose a wide range of targeted sanctions on Venezuela in response to the growing political crisis in the country. The new EU sanctions include an arms embargo, as well as a travel ban and an asset freeze.
A similar regime has been imposed on Mali in order to target those seeking to derail the 2015 peace agreement, and the UK has laid the legal groundwork for financial sanctions and asset freeze targets to be imposed once relevant individuals and exiles have been identified. Please see our e-bulletin for further information.
SFO charges two individuals in Unaoil investigation
Following reports of alleged bribery and corruption, the SFO launched an investigation into Monaco-based oil company, Unaoil for its conduct between June 2005 and August 2011. Following the investigation, which began in 2016, the SFO has charged two former employees, Ziad Akle and Basil al-Jarah, with conspiracy to make corrupt payments on behalf of oil services companies in order to obtain contracts for projects in Iraq. Unaoil's commercial director, Monaco-based Saman Ahsani, will also be charged subject to an extradition request to Monaco.
UK shell companies reported to be linked to £80 billion of money laundering schemes
Transparency International UK, the anti-corruption NGO, has published a paper entitled "Hiding in plain sight: How UK companies are used to launder corrupt wealth". The paper details research conducted by Transparency International UK analysing 52 cases of global corruption, amounting to £80 billion over the past fourteen years. The research found that 766 shell companies are alleged to have been directly involved in laundering stolen funds from at least 13 countries. The research also raises concerns about the interest of trust and companies service providers ("TCSPs") who create UK registered companies on the behalf of their clients. This accords with an area of high risk identified in the recent UK National Anti-Money Laundering/Counter-Terrorist Financing Risk Assessment discussed below. Transparency International UK also makes a number of recommendations in relation to potential transparency enhancements. The full report can be accessed here.
National risk assessment 2017: Anti-money laundering/counter-terrorist financing
The UK Government has published its 2017 National Risk Assessment of Money Laundering and Terrorist Financing. This is the second National Risk Assessment ("NRA"). NRAs are now a requirement of the Fourth EU Money Laundering Directive, and the UK's NRA is also likely to be an important source of data in the context of the Financial Action Task Force's ("FATF's") Mutual Evaluation of its UK anti-money laundering ("AML") counter terrorist financing ("CTF") regime, which is due to conclude in 2018. Amongst the findings, the UK Government considers that high-end money laundering and cash-based money laundering remain the greatest areas of money laundering risk to the UK. New typologies continue to emerge, which include risks of money laundering through capital markets and increasing exploitation of technology.
ENRC wins leave to appeal important privelege judgement The former FTSE 100 mining company, Eurasian Natural Resources Corporation ("ENRC"), has won the right to appeal a Hight Court decision order to disclose documentation created in anticipation of an SFO investigation, (SFO v Eurasian Natural Resources Corporation Ltd EWHC 1017 (QB)). Please click here for our previous briefing. In May, the High Court had ruled that documents prepared by the company relating to an investigation into alleged fraud, bribery and corruption were not covered by legal professional privilege and therefore had to be disclosed. The initial decision was a victory for the SFO but raised concerns about the impact on internal investigations and corporate self-reporting. ENRC applied to the High Court for leave to appeal but the application was rejected. ENRC applied for leave to appeal at the Court of Appeal and leave was granted as of 2 October 2017. Lord Justice Floyd has commented that leave to appeal was granted as the company "had a real prospect of success".
FATF guidance on AML/CFT measures and financial inclusion
The FATF has published revised guidance on AML/CTF measures and financial inclusion, in order to encourage countries to make use of the flexibility in the FATF Recommendations to provide financial services to the financially excluded so that customers are not directed into unregulated channels of cash. The 2017 guidance supplements a simpler guidance document published in 2013 separately. It also provides examples provided by member countries of customer due diligence measures adapted to the context of financial inclusion. FATF has also published guidance on information sharing in the private sector. The guidance discusses the legal constraints and organisational challenges which can hinder the sharing of information concerning financial activity which may have possible links to crime and terrorism, and considers the requirements of the FATF Recommendations in this context. Finally, FATF announced the outcomes of its Plenary meeting of 1-3 November 2017, which included updated information on AML/CTF developments in a number of jurisdictions, an update of the list of jurisdictions with strategic AML/CTF deficiencies, and a FATF statement of support for responsible financial innovation (FinTech/RegTech).
ESMA issues warning on ICOs
The European Securities and Markets Authority ("ESMA") has published two statements on initial coin offerings ("ICOs"). In the first statement, ESMA alerts investors to the risky and speculative nature of ICOs. ESMA has warned of the extreme volatility in the price of tokens and the risk that investors may not be able to redeem their investment for a prolonged period. In the second statement, ESMA warns that some ICOs could fall outside of the scope of EU regulation, leaving investors without protections that they might otherwise expect, and notes that ICOs are vulnerable to the risk of fraud or money laundering. Regulators in China, the US and UK have also signalled caution on ICOs, which collectively have raised several billions of dollars to date.
UK Government introduces new sanctions and anti-money laundering bill
On 19 October the UK Government published the text of a proposed new Sanctions and Anti-Money Laundering Bill (the “Bill”), which seeks to create a post-Brexit domestic legislative framework for the imposition and enforcement of sanctions. The introduction of the Bill follows the publication on 2 August of the Government’s response to the consultation on the UK’s future legal framework for sanctions (see our previous blog post).
The new proposals would give the Government broad discretionary powers to impose a wide range of sanctions by way of secondary legislation, including asset freezes and other financial sanctions, travel bans and immigration restrictions and trade restrictions affecting goods and services. The Bill also provides for the creation of exceptions and licences in relation to any sanctions, including a new ability for the Government to issue general licences to permit particular types of conduct, such as (according to the impact assessment for the Bill) the operation of NGOs in Syria. To read our full briefing, please click here.