Denmark/Estonia: Danske Bank under investigation for money laundering
On 18 July, Copenhagen-headquartered Danske Bank announced that it would be forfeiting profits from a series of transactions conducted by its Estonia-based branch due to money laundering concerns. The transactions (totaling USD 8 billion), and Danske Bank’s internal compliance procedures, are currently the subject of a money-laundering investigation led by Estonia’s Financial Supervisory Authority (FSA). The profit forfeiture announcement follows the resignation of the bank’s head of compliance a week earlier, although bank representatives deny that the resignation is related to the ongoing investigation. Analysts estimate that potential fines imposed on the bank could total USD 670 million.
Greece/Romania: Failure to implement MLD4
On 19 July, the European Commission referred Greece and Romania to the European Court of Justice for failing to implement the EU’s 4th Anti-Money Laundering Directive. All EU member states were required to implement the directive by 26 June 2018.
Mexico: Attorney General announces end date for Odebrecht investigation
On 24 July, Mexican Attorney General Alberto Elías Beltrán stated that the corruption investigation into Odebrecht SA, Latin America’s largest construction company, was entering its latter stages. He also stated that charges will be brought against Mexican public officials before the end of President Enrique Peña Nieto’s term on 30 November 2018. Elías Beltrán confirmed that the former Pemex CEO Emilio Lozoya, who allegedly funneled USD 10 million in Odebrecht bribes to one of Penã Nieto’s campaigns, is a person of interest.
Australia: Reporting requirements under the proposed anti-slavery bill announced
The Modern Slavery Bill 2018 was introduced to the Australian Parliament on 28 June. Under the proposed bill, all Australian companies or foreign entities conducting business in Australia with an annual consolidated revenue or AUD 100 million and above are required to file an annual report on modern slavery risks. Mandatory reporting criteria include a risk assessment on its exposure to modern slavery practices, an action plan to combat any identified risks, and an assessment of the effectiveness of any measures that have been implemented. All the reports will be published on a government-run central registry. The bill will be debated during the next parliamentary session commencing August 2018.
In July, Duduzane Zuma (‘Duduzane’), the son of the former president of South Africa, Jacob Zuma (2009-2018), was charged with corruption following allegations that he had been involved in an attempt by the Gupta family, a prominent Indian business family, to ‘buy’ the post of finance minister in South Africa. According to the charge sheet, in 2015, Duduzane was party to an alleged attempt to bribe the then-deputy finance minister, Mcebisi Jonas, to influence the decision. Duduzane also allegedly arranged several state appointments for the Guptas, including with Jonas, who reportedly refused the bribe. Duduzane’s case, which is part of a wider crackdown on corruption by Cyril Ramaphosa, president of South Africa, has been postponed until January 2019.
Russia: Parliament mulls domestic offshores
On 24 July, the Russian State Duma held the second reading of a bill to establish offshore financial zones in Kaliningrad, Russia’s a western enclave between Poland and Lithuania, and on Russky Island in eastern Siberia. Companies registered in these zones would be exempt from a number of Russia’s corporate disclosure requirements, as well as tax on any income earned abroad. Analysts speculate that the bill is designed to allow Russian businesspeople whose interests have been affected by US sanctions to operate under less scrutiny from Western authorities while remaining in the country. The scheme will likely be launched in the autumn.
Armenia: Corruption crackdown continues
In May, peaceful, opposition-led protests brought about a change in Armenia’s leadership. Since then the local authorities have launched criminal investigations into family members of Karen Karapetyan, the ousted prime minister’s family. In July, authorities officially charged his brother, Levon Sarkisian, with forgery and conducting illegal business activities after allegedly discovering USD 7 million of undeclared earnings in his bank account. Two of the former prime minister’s nephews have also been charged with attempted murder, criminal activities relating to illegal drugs, and illegal weapons possession. Nikol Pashinian, the prime minister, has denied suggestions that these criminal investigations are politically motivated.
Russia: Sanctions update: bridge builders and aluminum smelters
Following last month’s announcement that the EU would extend its Russian sanctions programme until at least January 2019, international media cited anonymous EU officials stating that the EU was planning to sanction six more Russian entities involved in the construction of the Kerch Strait Bridge, which links southern Russia to the annexed Crimean peninsula. An official announcement regarding these plans is expected in the coming days.
Meanwhile, US Treasury Secretary Steve Mnuchin, has discussed the possibility of lifting sanctions on Rusal, Oleg Deripaska’s aluminium conglomerate, “in the right circumstances”. This potential backpedaling is reportedly a result of US dependence on aluminium imports from Rusal, which supplies approximately 10 percent of the country’s aluminium needs.