This month’s top stories:
- Thailand's Cyber Crime Investigation Bureau arrests five People’s Republic of China (PRC) and Laos citizens for suspected involvement in USD 76 million cryptocurrency investment fraud;
- European Commission investigates Poland’s cash-for-visas corruption scandal ahead of upcoming parliamentary elections; and
- US Securities and Exchange Commission announces review of thousands of messages sent by Wall Street employees on private messaging applications to investigate potential breaches of record keeping rules.
Netherlands: Defence ministry employee arrested over Russian sanctions evasion
On 15 September, the Dutch Fiscal Information and Investigation Service (FIOD) announced the arrest of an unnamed defence ministry employee accused of evading EU sanctions by exporting spare aircraft parts to Russia via third countries. According to the FIOD, the employee and his business partner began sending goods to Russia via Tajikistan and the United Arab Emirates on 25 February 2022, a day after the start of Russia’s invasion of Ukraine. Investigators found aircraft parts, weapons, and ammunition at his residence, as well as EUR 250,000 and USD 8,000 in cash.
UK: Preliminary review by Financial Conduct Authority finds banks have not discriminated against customers on basis of political beliefs
On 16 September, the UK’s Financial Conduct Authority (FCA) published the initial results of an investigation into whether banks have closed customer accounts based on customers’ political views. The investigation was launched after UK private bank Coutts was accused in early July of denying banking services to British politician Nigel Farage over his political position. The FCA analysed disclosures made by 34 banks, building societies, and payment companies regarding the reasons for account closures – including where this was due to reputational risk – and found no evidence of closures based primarily on political views. The review forms part of a wider inquiry launched by the FCA on 5 September into whether politically exposed persons are being unfairly denied banking services in the UK. The results of an internal investigation conducted by NatWest, Coutts’s parent company, into the case of Nigel Farage are due to be published at the end of October.
Belgium: London-based fintech owner accused of laundering money for international drug traffickers
On 19 September, a UK judge ordered the extradition of Caio Marchesani, an Italian owner of a London-based fintech company, to Belgium to face criminal charges. Marchesani is accused by Belgian authorities of aiding drug traffickers in laundering hundreds of millions of euros through a cryptocurrency exchange. Among Marchesani’s alleged clients are Sergio Roberto de Carvalho, a Brazilian drug trafficker described by Interpol as one of the world’s most wanted crime bosses, and Flor Bressers, a Belgian drug lord. Marchesani’s lawyers have denied the charges.
Poland: European Commission investigates cash-for-visas scandal
On 20 September, the European Commission asked Poland for “clarifications” regarding the media allegations that Polish officials have issued visas to hundreds of thousands of migrants from Africa and Asia in exchange for large sums of money. This alleged practice within Poland’s Ministry of Foreign Affairs and Polish consulates – widely referred to as the cash-for-visas scandal – has been investigated by the Polish national prosecutor’s office and the Central Anticorruption Bureau since March 2023. Deputy foreign minister Piotr Wawrzyk was dismissed in connection with the scandal on 31 August, and the Polish Foreign Ministry announced it would terminate all contracts with outsourcing companies that had handled visa applications. Seven people have been charged in relation to the allegations, three of whom remain in detention. The Polish government admitted that some visas had been issued illegally, but complained that the media coverage of the issue had been subject to undue exaggeration. The cash-for-visas scandal comes a month before the parliamentary elections in which the ruling Law and Justice party is seeking a third consecutive term in office.
Russia and CIS
Georgia: US sanctions former prosecutor general for furthering Russian influence abroad, following which National Bank of Georgia amends rules to avoid implementing international sanctions on Georgian nationals
On 14 September, Otar Partskhaladze became the first Georgian national to be sanctioned by the US in connection with the Russian war in Ukraine. Partskhaladze is the former prosecutor general of Georgia and is widely considered a close associate of influential oligarchs including Bidzina Ivanishvili, the billionaire founder of the Georgian Dream political party. The US designated Partskhaladze for allegedly influencing Georgian society and politics in Russia’s favour and for purported ties to the FSB, Russia’s security agency. The National Bank of Georgia (NBG) initially imposed restrictive measures against Partskhaladze, in line with US sanctions. However, after the incumbent Georgian Dream party criticised the measures for being unconstitutional, the NBG amended its rules and, on 20 September, reversed its decision regarding Partskhaladze. Under the amended rules, in the absence of a conviction from a Georgian court, restrictive measures on Georgian citizens subject to international sanctions will not be implemented. Revealing a divide, other major Georgian banks have asserted their commitment to international sanctions. Partskhaladze denied any wrongdoing and claims the allegations are politically motivated.
Russia: US arrests Hong Kong-based Russian national for sanctions circumvention
On 18 September, the US Department of Justice announced the arrest of Hong Kong-based Russian national Maxim Marchenko for smuggling US-manufactured dual-use microelectronics into Russia. Marchenko and two co-conspirators are accused of deceiving US distributors and government agencies into supplying him with military-grade OLED micro-displays on the basis that such products would be sold to end users across China, Malaysia, Europe, and other countries outside of Russia, primarily to be used in advanced medical research equipment. However, such micro-displays can also be used to produce a range of high-tech military equipment and weapons systems. According to the US authorities, Marchenko employed deceptive tactics – such as shell companies – to conceal the fact that he was trafficking the illicit goods through third countries, including Hong Kong, into Russia. Marchenko is facing seven charges, with each carrying a penalty between 5 and 20 years in prison. His legal representative declined to comment on the matter. Marchenko reportedly agreed to be detained but is expected to seek bail.
Thailand: Arrests made in connection with USD 76 million cryptocurrency investment fraud
On 11 September, Thailand's Cyber Crime Investigation Bureau arrested four individuals from the PRC and one from Laos for their suspected involvement in a fraudulent cryptocurrency investment scheme that deceived more than 3,200 locals. The investigation, which began in late 2022 with the assistance of the US Homeland Security Investigations, found the suspects operated a fraudulent Bitcoin investment platform which swindled over THB 2.7 billion (USD 76 million) from local investors. They have been charged with collusion in transnational crime, public fraud, and money laundering. The Thai Anti-Money Laundering Office seized property worth THB 585 million (USD 16.2 million) from the accused on 4 September, with further asset recovery actions expected to be ongoing. The individuals arrested have not commented publicly on the charges against them. In response to the growing threat of crypto-related scams, in January 2023, Thailand’s Securities and Exchange Commission introduced new requirements for virtual asset service providers operating within the country which aim at enhancing investor protection and securing user funds held by custody providers.
Myanmar: General stripped from leadership positions amid corruption probe
On 18 September, the Myanmar junta announced the removal of Lieutenant-General Moe Myint Tun from his key positions as chairman of the Myanmar Investment Commission, the Foreign Exchange Supervisory Committee, and the Central Committee on Ensuring the Smooth Flow of Trade and Goods, after an internal investigation was launched against him and he was arrested for alleged bribery and corruption. Moe is suspected of having accepted millions of dollars in bribes from businesspeople over the past two years, with sources close to the general claiming he demanded at least USD 20,000 in cash or gifts from businesspeople who wished to meet him. Moe has since been placed under house arrest while the investigation continues. Several other senior trade and finance officials were investigated and dismissed earlier in September, leading commentators to see Moe’s arrest as part of a crackdown as the Myanmar junta seeks to increase foreign revenue and bring prices under control. Moe has not responded publicly to the accusations.
Venezuela, Colombia: OFAC sanctions individuals for involvement in terrorist financing
On 12 September, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned four individuals and three companies in Lebanon, Venezuela, and Colombia. The sanctions were imposed due to suspected use of the companies by the four individuals to finance Hezbollah, a Lebanese Shia Islamist political and militant group. OFAC also highlighted the involvement of one of the sanctioned individuals, Amer Mohamed Akil Rada – who allegedly served as a Hezbollah operative in South America for over a decade – in terrorist attacks in Argentina in the 1990s that killed more than 100 people.
US: Senator indicted on bribery charges in connection with links to Egypt
On 22 September, US Senator Robert ‘Bob’ Menendez, chairperson of the Foreign Relations Committee, was indicted by federal prosecutors in New York for bribery. The Attorney’s Office for the Southern District of New York claimed that Menendez had agreed to use his government position to benefit the Government of Egypt and three New Jersey businesspeople, in exchange for gifts which included gold bars, cash, and a luxury convertible. The indictment cites examples of political pressure applied by Menendez on the US Department of Agriculture as well as two criminal cases that were allegedly disrupted by Menendez to protect the businesspeople involved in the bribery scheme. The indictment further describes Menendez’s ties to Egyptian intelligence officials, including meetings in his offices in Washington and Cairo to discuss the USD 1.3 billion in annual foreign military aid provided to Egypt. Menendez has denied the charges and rejected calls for him to resign.
US: SEC probe into Wall Street’s use of private messaging applications escalates
On 25 September, Reuters reported that the US Securities and Exchange Commission has collected thousands of “off-channel” private messages from at least 16 major investment firms on Wall Street – including Apollo Global Management and Blackstone – to investigate potential breaches of record keeping rules. The SEC had previously asked companies to internally review their employees’ use of WhatsApp, Signal, and other unapproved messaging applications to discuss work. The SEC’s own review of staff messages is a new development in the probe that initially targeted broker-dealers, and in 2022 resulted in the SEC imposing a combined USD 1.1 billion in penalties on firms for failures in record keeping, as the internal investigations found employees discussed work outside approved channels.
Middle east and north africa
UAE: AML and CFT investigative body has seized USD 354 million worth of assets in crackdown since March 2023
On 18 September, the director general of the UAE’s Anti-Money Laundering and Counter-Terrorism Financing Executive Office announced that the state had seized and confiscated over USD 354 million of assets between March and July 2023 as part of the UAE’s increased anti-money laundering and counter terrorist financing efforts. The AML Executive Office also issued AED 199 million (USD 54 million) worth of AML-related fines in the first half of 2023 – exceeding the combined total of AED 85.4 million (USD 23 million) in fines issued in 2019, 2020, and 2022. The seizures and fines are part of the UAE’s wider efforts to prioritise investigations and prosecutions of large-scale, complex money laundering cases while the country is working to build longer-term and sustainable AML and CFT capabilities.
Iran: US imposes sanctions in connection with Iran’s drone programme
On 27 September, the US treasury imposed sanctions on five entities and two individuals involved in the procurement of key parts for Iran’s unmanned aerial vehicle (UAV) or drone programme. The network – spread across Iran, the PRC, Hong Kong, Turkey, and the UAE – facilitated shipments and transactions for the Islamic Revolutionary Guard Corps Aerospace Force Self Sufficiency Jihad Organization relating to servomotors, a critical component of Iran’s Shahed-series UAVs. The US has accused Iran of supplying Shahed UAVs to Russia for use in Ukraine and a motor procured by the network was recently found in a downed Russia-operated Shahed-136 drone. Iran has denied supplying UAVs to Russia.