Money Laundering & Bank Secrecy Archives | Page 7 of 9

U.S. Treasury Expands GTO to 12 Metropolitan Areas and Lowers Reporting Threshold to $300,000

November 20, 2018 by Bruce Zagaris Leave a Comment

On November 15, 2018, the U.S. Department of Treasury Financial Crimes Enforcement Network (FinCEN) announced the issuance of revised Geographic Targeting Orders (GTOs) that require U.S. title insurance companies to identify the natural persons behind shell companies used in all-cash purchases of residential real estate. The purchase amount threshold, which previously varied by city, is now set at $300,000 for each covered metropolitan area. FinCEN is also requiring that covered purchases using virtual currencies be reported.

Prior GTOs resulted in valuable data on the purchase of residential real estate by persons implicated, or allegedly involved, in various illicit enterprises including foreign corruption, organized crime,fraud, narcotics trafficking, and other violations. Reissuing the GTOs will further assist in tracking illicit funds and other criminal or illicit activity, as well as inform FinCEN’s future regulatory efforts in this sector.

The latest GTOs cover certain counties within the following major U.S. metropolitan areas: Boston; Chicago; Dallas-Fort Worth; Honolulu;Las Vegas; Los Angeles; Miami; New York City; San Antonio; San Diego; San Francisco; and Seattle.

FinCEN also realized Frequently Asked Questions. The FAQs explain that one of the four criteria that triggers a Covered Transaction, is that “(s)uch purchase is made, at least in part,using currency or a cashier’s check, a certified check, a traveler’s check, a personal check, a business check, or a money order in any form, a funds transfer, or virtual currency.” Accordingly, payment of at least part of the purchase price using one of these methods, such as virtual currency, a wire transfer, a cashier’s check (sometimes referred to as a “bank check,” “official check,” or “treasurer’s check”), a personal check, a business check, or a certified check, triggers a Covered Transaction, assuming the other criteria to trigger a GTO are met: “residential real property”; foreign beneficial owner,which means each individual who,directly or indirectly, owns 25% or more of the equity interests of the Purchaser; and a Covered Business’s “agents” refers to people or entities that are authorized by the Covered Business, usually through a contractual relationship, to act on its behalf to provide title insurance underwritten by the Covered Business (or its subsidiaries).

The U.K. already has initiated a New Beneficial Ownership Register for UK Properties owned by Overseas Companies and other Legal Entities that will go live in 2021. The British Columbia government has released regulations to create a new condo and strata assignment register, in part in response to the significant number of foreign purchases of residences, some of which appear to be connected to proceeds of crime. With the international developments and the continuing extension of the GTOs by FinCEN, pressure is building for the GTOs to become permanent.

U.S. Unseals Criminal Complaint against North Korean Programmer for Cyber Attacks and Intruders

September 7, 2018 by Bruce Zagaris 1 Comment

On September 6, 2018, the U.S. government announced the unsealing of a criminal complaint filed in the U.S. District Court Central District of California (Los Angeles) charging Park Jin Hyok (aka Jin Hyok Park and Pak Jin Hek), a North Korean citizen, for his participation in a conspiracy to conduct multiple destructive cyberattacks around the world resulting in damage to massive amounts of computer hardware, and the significant loss of data, money and other resources.

According to the complaint Park participated in a government-sponsored hacking team known as the “Lazarus Group” and worked for a North Korean government front company, Chosun Expo Joint Venture (aka Korea Expo Joint Venture or “KEJV”), to support the DPRK government’s malicious cyber actions.

The conspiracy’s malicious activities include the establishment of the malware used in the 2017 WannaCry 2.0 global ransomware attack; the 2016 theft of $81 million from Bangladesh Bank; the 2014 attack on Sony Pictures Entertainment (SPE); and various other attacks or intrusions on the entertainment, financial services, defense, technology, and virtual currency industries, academia, and electric utilities.

Simultaneously, Treasury Secretary Steven Mnuchin announced that the Treasury’s Office of Foreign Assets Control (OFAC) designated Park and KEJV under Executive Order 13722 based on the malicious cyber and cyber-enabled activity alleged in the criminal complaint.

The complaint charges Park with one count of conspiracy to commit computer fraud and abuse, for which there is a maximum sentence of five years in prison, and one count of conspiracy to commit wire fraud, for which there is a maximum sentence of 20 years in prison.

ark was a computer programmer and worked for more than a decade for KEJV, which had offices in China and N. Korea. It is affiliated with Lab 110, a part of the N. Korean military intelligence. The conspiracy also engaged in malicious cyber activities, utilizing spear-phishing campaigns, destructive malware attacks, exfiltration of data, theft of funds from bank accounts, ransomware extortion, and propagating “worm” viruses to create botnets.

The complaint describes several of the conspiracy’s alleged malicious cyber activities, both successful and unsuccessful, and in the U.S. and abroad, focusing in particular on four specific examples as follows: in November 2014, the destructive attack on Sony Pictures Entertainment (SPE) in retaliation for the movie “The Interview”, a farcical comedy that depicted the assassination of the N. Korean leader; in February 2016, the conspiracy stole $81 million from Bangladesh Bank, accessing the bank’s computer terminals that interfaced with the SWIFT communication system and then sent fraudulently authenticated SWIFT messages directing the Federal Reserve Bank of NY to transfer funds from Bangladesh to accounts in other Asian countries; in 2016 and 2017, the conspiracy targeted various U.S. defense contractors, including Lockheed Martin, with spear-phishing emails; and in May 2017 a ransomware attack known as WannaCry 2.0 infected hundreds of thousands of computers around the work, causing extensive damage, including significantly impacting the UK’s National Health Service.

In connection with the unsealing of the criminal complaint, the FBI and prosecutors furnished cybersecurity providers and other private sector partners detailed information on accounts used by the conspiracy in order to help these partners in their own independent investigative activities and disruptive efforts.

The current issue of the IELR will have a more comprehensive article on the case.

OECD and Argentina Establish Latin America Academy for Tax and Financial Crime Investigation

August 7, 2018 by Bruce Zagaris Leave a Comment

On July 22, 2018, OECD Secretary-General Angel Gurria and Argentina’s Minister of Treasury Nicolás Dujovne presided over a Memorandum of Understanding (MOU) to establish a center of the OECD Academy for Tax and Financial Crime Investigation in Buenos Aires, Argentina.

The signing occurred in the margins of the meeting of the G20 Finance Ministers and Central Bank Governments. The center will be housed in the facilities of Argentina’s Federal Administration of Public Revenues. Argentina’s Commissioner of Public Revenues Leandro Cuccioli and the OECD’s Director of the Centre for Tax Policy and Administration Pascal Saint-Amans signed the MOU.

The Academy will provide intensive capacity-building courses targeting tax crime investigators and other related law enforcement officials, including prosecutors, anti-money laundering and anti-corruption officials, especially from Latin America countries. The courses will aim to support tax crime investigators. It will feature broad-based courses on conducting and managing financial investigations as well as giving courses on specific types of tax and financial crimes, such as those associated with crypto-currencies, money laundering and VAT fraud.

The creation of the OECD Latin America Academy builds on the success of the original centre hosted by the Guardia de Finanza in Ostia, Italy, and a pilot Africa Academy for Tax and Financial Crime Investigation started by the OECD, Kenya, Italy and Germany at the G20 Africa Partnership conference in June 2017. Together, the centers have trained more than 550 financial investigators from over 80 countries.

The first program of the OECD Latin America Academy will occur in late 2018 and will focus on VAT/GST Fraud.

The 2019 Academy schedule for Latin America will include a program, concentrating on Conducting and Managing Financial Investigations. The program will include subject areas such as: bribery and corruption; beneficial ownership and offshore structures; money laundering; investigative techniques; international cooperation; and asset recovery.

With globalization the ways for individuals and entities to evade and avoid tax have expanded significantly. Just as importantly, the international mechanisms to prevent and combat tax evasion and avoidance, such as BEPS and its components, such as Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS, Country-by-Country reporting, the different types of exchange of information, the interplay between anti-money laundering, transnational corruption, and tax issues all require initial and ongoing training. The OECD Academies will help train tax officials at different levels. The nature of the training illustrates the increasing convergence between international tax enforcement and other international white collar enforcement. For more discussion of this development, stay tuned for the August issue of the International Enforcement Law Reporter.

Grand Jury Indicts 12 Russian Intelligence Officers for Cybercrime Offices in the 2016 Election

July 16, 2018 by Bruce Zagaris Leave a Comment

On July 13, 2018, Deputy Attorney of the United States announced that a grand jury in the U.S. District Court for the District of Columbia return an indictment presented by the Special Counsel’s Office.

The indictment charges twelve Russian national for committing federal crimes that were intended to interfere with the 2016 U.S. presidential election. All of the defendants are members of the Main Intelligence Directorate of the General Staff (GRU), a Russian Federation intelligence agencies. In their official capacities, they worked for months started in March 2016 to hack into the computer networks of the Democratic Congressional Campaign Committee (DCCC), the Democratic National Committee (DNC), and the presidential campaign of Hillary Clinton, and released that information on the internet under the names of “DCLeaks” and “Guccifer 2.0” and through another entity.

Starting in March 2016, the Russian intelligence officials started spearphisphing volunteers and employees of the presidential campaign of Hillary Clinton, including the campaign’s chairman. They defendants were able to steal the usernames and passwords for numerous individuals and use the credentials to steal email content and hack into other computers. They also hacked into the computer networks of the DCCC and the DNC.

They defendants coordinated with other intelligence officials to release the stolen documents for the purpose of interfering with the 2016 presidential election. They registered the domain DCLeaks.com and later staged the release of thousands of stolen emails and documents through that website.

According to the indictment on July 27, 2016, Russian hackers tried for the first time to break into the servers of Mrs. Clinton’s personal offices. It was the same that then candidate Trump said “Russia, if you’re listening, I hope your’e able to find the 30,000 emails that are missing…I think you’ll probably be rewarded mightily by our press.” Trump was referring to the emails Mrs. Clinton had deleted from the private account she had used when she was secretary of state.

The indictment states the hackers were communicating with “a person who was in regular contact with senior members of the presidential campaign” Two government officials identified the person as Roger J. Stone Jr., a longtime adviser to Mr. Trump and the subject of close scrutiny by the FBI and the Special Counsel’s team.

To avoid detection, defendants used false identities, while using a network of computers located around the world, paid for with cryptocurrency. The funding structure supported their efforts to buy key accounts, servers, and domains.

The indictment alleges: a criminal conspiracy to commit an offense against the U.S. through cyber operations by t he GRU that involved the staged release of stolen documents to interfere with the 2016 president election (Count 1); aggravated identity theft for using identification belonging to eight victims to further their computer fraud scheme (Counts 2-9); a conspiracy to launder money in which the defendants laundered the equivalent of more than $95,000 by transferring the money that they used to purchase servers and to fund other costs related to their hacking activities through cryptocurrencies such as bitcoin; and conspiracy to commit an offense against the U.S. by trying to hack into the computers of state boards of elections, secretaries of state, and U.S. companies that supplied software and other technology related to the administration of elections.

There is no allegation in the indictment that any American was a knowing participant in the alleged unlawful activity or knew they were communicating with Russian intelligence officers. However, the person who benefitted from the alleged crimes, had a one-on-one meeting on July 16, 2018 with President Vladimir V. Putin of Russia. The meeting occurred, notwithstanding the indictment and public warnings by Dan Coats, the director of national intelligence, that “the digital infrastructure that services this country is literally under attack.“

CARICOM HEADS ISSUE COMMUNIQUÉ ON SECURITY, MARIJUANA LEGALIZATION AND OTHER ENFORCEMENT INITIATIVES

July 9, 2018 by Bruce Zagaris Leave a Comment

At 39^th meeting of the heads of government of the Caribbean Community in Montego Bay, Jamaica on July 4-6, 2018, several significant actions occurred on international enforcement and security cooperation, as shown by the Communique.

Jamaica signed the CARICOM arrest warrant treaty, which enables Jamaica and CARICOM countries to more easily surrender individuals without need to extradite them.

After receiving an update on current and emerging Crime and Security issues in the region, the Heads mandated the Regional Security Agencies to work closely with the National Security Heads to address the various challenges emphasizing the need to strengthen the network of security head in the region to promote further information and intelligence sharing.

The Heads underscored the importance of strengthening the use of information and Communications technology in the fight against illicit trafficking in narcotics and firearms, trans-border criminal activities and cyber attacks. They emphasized the importance of working more closely with their international development partners to help the region in this regard.

CARICOM Members were encouraged to urgently update all legal instruments to combat crime and enhance regional security.

The Heads observed with great concern the amendment approved by the UK House of Commons to the Sanctions and Anti-Money Laundering Bill requiring the UK Government to ensure that the British Overseas Territories, but not Crown Dependencies, establish public registers of beneficial ownership information by no later than December 31, 2020.

They expressed solidarity with the territories “adversely affected by this unfair and unilateral action to legislate in areas of domestic policy constitutionally devolved to the territories without the consent of the people. Moreover, the action ran counter to an alternative arrangement to public registers earlier negotiated and agreed with the UK government and put in place at great cost to the overseas territories.”

According to the Heads, this they view as similar to the “unfair, unilateral and punitive extraterritorial measures such as blacklisting and de-risking taken against their own countries financial services sector, also a critical aspect of their economies, despite their best efforts at transparency and compliance.”

The Heads welcomed the report of the Regional Commission on Marijuana, which reviewed information and studies pertaining to marijuana legislation regulating its use and classification, findings related to research conducted on the medicinal use of marijuana as well as the economic and social impact and its implications for the region.

The Heads accepted in principle the need for changes in the classification of the drug which will make it more available for medicinal purposes and research. The acknowledged the region must intensify its lobbying at the international level to facilitate reclassification.

The Communiqué shows that the Caribbean Single Market Economy continues to facilitate streamlined procedure to enforcement cooperation, such as the CARICOM arrest warrant treaty. They continue to try to develop common approaches and policies to transnational criminal threats, such as illicit trafficking in narcotics and firearms, trans-border criminal activities and cyber attacks.

The Heads are also developing common approaches to efforts by extraregional actors to impose tax transparency and money laundering/counter-terrorism financial regulatory and enforcement policies on them. They are especially supportive of the overseas territories because the same policies, e.g., the requirement to have corporate public registers, will undoubtedly be imposed on them, even as they continue losing their financial service markets to other jurisdictions, especially to states in the U.S. which do not even have any private registers and the Trump Administration has not prioritized or pledged to meet international standards in tax transparency or anti-money laundering.

CARICOM has developed a number of regional enforcement and security mechanisms, including CARICOM Implementing Agency for Crime and Security (IMPACS), the Association of Caribbean Commissioners of Police, and subregional enforcement mechanisms, such as the Organization of East Caribbean States (OECS) Regional Security System.

Five Countries Form Joint Chiefs of Global Tax Enforcement (J5) Alliance

July 2, 2018 by Bruce Zagaris 2 Comments

On July 2, 2018, Her Majesty’s Revenue and Customs announced an alliance on tax enforcement between the United Kingdom, Canada, the Netherlands, the United States and Australia to combat international tax crime and money laundering. Members include the heads of tax crime and senior officials from the Australian Criminal Intelligence Commission (ACAC) and the Australian Taxation Office (ATO), the Canada Revenue Agency (CRA), the Dutch Fiscal Information and Investigation Service (FIOD), Her Majesty’s Revenue & Customs (HMRC), and Internal Revenue Service Criminal Investigation (IRS-CI).

The group will build on existing international cooperation by sharing intelligence and expertise, and will cooperate on joint operations to investigate persons who are enablers of tax crime.

At their first meeting, the J5 brought leading experts in tax and other financial crimes from each of the five member countries to develop tactical plans and identify opportunities to pursue cyber criminals and enablers of international tax crime.

According to HMRC, the new alliance will help to build on work that has obtained more than £ 2.8 billion from offshore tax evaders since 2010.

The J5 was formed in response to a call to action from the OECD for countries to do more to tackle the enablers of tax crime. All five countries have similar threats: organized crime groups and wealthy offshore tax evaders who are well resourced and have access to professional enablers to hide income and assets using the global financial system.

According to IRS Criminal Investigation division chief Don Fort, the J5 will have three areas of focus: professional enablers, cybercrimes and cryptocurrencies, and increased use of data analytics and new investigation technology. (Nathan J. Richman, Enforcement Collaboration to Focus on Emerging Tax Issues, 2018 Worldwide Tax Daily 126-1, June 29, 2018).

The J5 has similarities to the Joint International Tax Shelter Information and Collaboration (JITSIC). On October 24, 2014, 38 countries, meeting in Dublin, Ireland for the 9th meeting of the Forum on Tax Administration (FTA), agreed to establish the JITSIC. The JITSIC Network focuses specifically on cross border tax avoidance. JITSIC has the goal to deter the promotion of, and investment in, abusive tax schemes by: increasing the community’s awareness of the potential risks of promoting and investing in tax schemes; sharing ideas on how to identify and address abusive tax schemes; enhancing compliance and enforcement efforts through coordinated ‘real-time’ exchanges of information; developing new internet searches and other techniques for the early identification of promoters and investors involved in abusive tax schemes; and identifying emerging trends and patterns to anticipate new abusive tax schemes, and improving knowledge of techniques used to promote cross-border abusive tax schemes.

The J5, unlike JITSIC, will actually engage in joint tax investigations and use increased data analytics and investigation technology in its work.

There will be a more comprehensive article in the July 2018 issue of the International Enforcement Law Reporter.

U.S. and Brazil Start Permanent Forum on Security

May 23, 2018 by Bruce Zagaris Leave a Comment

On May 22, 2018, the United States and Brazilian governments issued a joint statement following the start of the U.S.-Brazil Permanent Forum on Security.

The initiative arose during a meeting in Brasilia at which U.S. Deputy Secretary of State John J. Sullivan was accompanied by the Assistant Secretary for Economic and Business Affairs Manisha Singh and Acting Assistant Secretary for Western Hemisphere Affairs Francisco Palmieri.

The Acting Minister of Foreign Affairs, Secretary General Marcos Garvão hosted the U.S. delegation in a working lunch and a meeting where they discussed several aspects of the U.S.-Brazil partnership.

The start of the Permanent Forum on Security arises from “consistent cooperation between the United States and Brazil on fighting transnational crime, and based upon the strengthening of collaboration of law enforcement and security agencies in both countries.”[1]

The Brazilian Ministry of Foreign Affairs and the U.S. State Department will coordinate the Forum, which aims to facilitate interagency teamwork and design operating strategies in six pre-defined areas: drug trafficking, arms trafficking, cybercrime, money laundering and financial crimes, terrorism, and institutional cooperation.

The first working meeting of the Forum will occur later this year in Washington, D.C.

During the visit, the two sides also issues related to criminal cooperation, such as space cooperation and defense. They discussed the recent exchange of diplomatic notes completing the process for the U.S.-Brazil Open Skies Aviation Agreement and welcomed the resumption of negotiations on a Technology Safeguards Agreement. They exchanged ideas on regional issues, including the region’s response to the political, economic, and humanitarian crisis in Venezuela.

According to the remarks of Deputy Secretary Sullivan, the U.S.-Brazilian security cooperation has included the Summer Olympics in Rio de Janeiro.

A future IELR article will include a more comprehensive discussion of the Forum, its scope and some of the implications.

[1] State Department, Western Hemisphere: U.S.-Brazil Bilateral Cooperation, May 22, 2018

Transparency Int’l Critiques G20’s Unmet Promises on Ending Anonymous Companies

May 1, 2018 by Bruce Zagaris Leave a Comment

by Bruce Zagaris

On April 19, 2018, Transparency International issued a report G20 Leaders or Laggards? Review G20 promises on ending anonymous companies.

The TI report discusses how the major cross-border “grand corruption” scandals have tarnished the Group of 20 (G20) countries in recent years. It cites the fact that in 2017 Odebrecht the Brazilian engineering company, was assessed a US$2.6 billion fine for bribery after being charged with paying US$788 million in bribes. In the “Russian Laundromat” scandal, exposed in 2017, a group of individuals in G20 member Russia allegedly established 21 shell companies, which then moved and laundered illegal proceeds out of the country, making more than 26,000 payments to 96 different countries including every G20 country aside from Brazil. Increasingly, anonymous companies hide the identity of the person at the source of the funds either to launder and transfer stolen money, or to operationalize corrupt deals, using companies and offshore accounts to pay bribes or buy influence.

The report makes 5 major findings and then recommendations as follows:

G20 Countries are starting to tackle anonymous company ownership – but progress is slow. Some 3 years after the G20 adopted their High-Level Beneficial Ownership Principles at the Brisbane G20 Summit, the number of countries with weak or average frameworks has dropped from 15 to 11, but still major weaknesses exist across the principles.
The majority of countries still do not know who owns and controls companies in their territories and do not keep current information on them. The 20 Principles encouraged legal entities to require beneficial ownership information when recording information about their shareholders. Legal entities are now expected to understand their ownership and control structure and monitor individuals who have an interest in a company but are presented through nominee shareholders or other legal entities. However, the great majority of countries evaluated still do not require legal entities to maintain beneficial ownership information themselves. Central beneficial ownership registers improve collection of beneficial ownership information and access to law enforcement, supports domestic and international cooperation between authorities and permits them to do their job more quickly. Six assessed countries now have central beneficial ownership registers.
Verification of information is weak across the board. This undermines the ability of competent authorities to investigate suspicious cases, and the ability of banks and businesses to carry out proper due diligence. All 23 countries analyzed now require financial institutions to identify the beneficial ownership of customers. Unfortunately, in high-risk cases, only 8 G20 countries required financial institutions to use independent and reliable sources to verify the beneficial owner of their customers. Finally, no register authority in any G20 or guest country verifies information collection in company registers.
Rhetoric does not always translate into action. Government are frequently aware of the weaknesses in their system. However, in many cases they fail to implement key measures they know will help mitigate those problems.
Gatekeepers such as lawyers, accountants, real estate agents, and trusts and company service providers remain money laundering weak spots.

TI makes the following recommendations:

— Governments should establish a central register of beneficial ownership information and make it publicly available in open data format.

— Governments should resource and establish mechanisms to ensure that at least some verification of beneficial ownership information occurs, such as cross-checking the data against other government and tax databases, or conducting random inspections.

— Financial institutions or DNFBPs should not be permitted to proceed with transactions if the beneficial owner of their customer cannot be identified.

— Governments should undertake national money laundering risk assessments on a regular basis. These should include an analysis of the risks posed by domestic and foreign legal entities and arrangements. Key stakeholders, including obliged entities and civil society organizations should be consulted. The results of the assessment should be published online.

— Governments should consider prohibiting nominee shareholders. If they are permitted, they should be required to disclose their status upon the registration of the company and registered as nominees. Nominees should be licensed and subject to strict anti-money laundering obligations.

— Governments should require the registration of both domestic and foreign trusts operating in their country. Information on all parties to the trust (trustee, settlor and beneficiaries), and the real individuals behind them should be recorded.

The report illustrates how civil society plays an important role in shaping and implementing commitments by governments and international organizations to transparency and anti-corruption. They invest significant resources before the G20 meetings to develop precise commitments and then lobby the governments to support them. Thereafter, civil society continues to monitor the performance of the governments against the commitments and produce reports, exposing gaps. They also work with other organizations, such as the International Consortium for Investigative Journalists (ICIJ). The current issue of the IELR will have a more comprehensive discussion of the TI report.

VIII Summit of the Americas Commitment on anti-Corruption

April 24, 2018 by Bruce Zagaris Leave a Comment

On April 14, 2018, during the VIII Summit of the Americas, the heads of government agreed to the Lima Commitment with respect to “Democratic Governance against Corruption.”

The commitment includes provisions to reinforce democratic governance, including” the strengthening of democratic institutions for the prevention of and fight against corruption in the Hemisphere.” It comes at a time when many of the governments in the hemisphere, such as Honduras, Venezuela, and Brazil are undergoing a crisis of stability largely due to corruption issues.

The commitment has a section on “transparency, access to information, protection of whistleblowers, and human rights, including freedom of expression.” The section commits to increasing national anti-corruption measures or systems and strengthening conditions for the effective participation of civil society, social organizations, academia, the private sector, citizens, and other social actors in monitoring government performance, including the development of prevention mechanisms, channels for reporting possible acts of corruption and facilitating the work of watchdogs including other citizen oversight mechanisms, and incentivizing the adoption of digital means of participation.” One of the initiatives is to promote the establishment of an Inter-American Data Program within the OAS in order to strengthen open information policies and increase the capacity of governments and citizens to prevent and fight corruption.

A section concerns “financing of political organizations and election campaigns.”

A section on the “prevention of corruption in public works and public procurement and contracting.” One element is to request that the Joint Summit Working Group (JSWG), together with other relevant regional and international bodies, develop an infrastructure platform to facilitate the exchange of experiences, training and cooperation programs for project monitoring and development, feasibility and risk analysis studies, transparent bidding procedures, and government procurement.”

A section focuses on “international legal cooperation: the fight against bribery, international corruption, organized crime, and money laundering; and asset recovery.” Among the action agreed is continuing to implement, prior to the IX Summit of the Americas, the applicable recommendations from the specific rounds of the Implementation Review Mechanism of the United Nations Convention against Corruption (UNCAC) as well as the recommendations from the successive rounds of the Mechanism for Follow-Up on the Implementation of the Inter-American Convention against Corruption (MESICIC).

A section focuses on “strengthening of Inter-American Anti-Corruption Mechanisms.” One action item is to identify resources to strengthen its operations with a view to more efficiently address the new challenges that corruption poses in the Hemisphere. The document contains a series of recommendations, such as calling on MESICIC to promote instruments for the exchange and dissemination of best practices, technical capacities, and measures to strengthen legal and institutional frameworks to prevent and combat corruption that will contribute to the implementation of its recommendations.

The final section concerns “follow-up and reports.” The Lima Commitment requests the Joint Summit Work Group (JSWG) to help States with resources and technical capacity-building, so that they can implement the commitments undertaken at the Summit in the area of strengthening democratic governance and anti-corruption efforts. The section calls upon the private sector in general to adopt similar initiatives as those in the “Private Sector Commitment to Transparency” of the American Business Dialogue presented at the III CEO Summit of the America.

The challenges for the stakeholders in the VIII Summit of the Americas will be to garner sufficient resources, implementation, and enforcement mechanisms, so that the lofty commitments can come to fruition. In particular, the Organization of American States, which provided much of the organizational work for the Summits of the Americas, has limited resources. In addition, the JSWG has limited resources and authority to implement the provisions of the commitment. The Summits of the Americas illustrate an effort by governments, the private sector, and civil society to develop government networks. In the VIII Summit of the Americas, the prioritization is on anti-corruption. It is quite appropriate since the prosecutions in Operation Car Wash and especially of heads of government (Dilma Rousseff) and former heads of government (Lula da Silva) have generated an agreement to cooperate in the enforcement of the Oderbrecht case and has triggered investigations and resignations of high-level officials in Ecuador and Peru, as well as a proliferation of prosecutions and civil cases for corruption. There will be a more comprehensive look at the Lima Commitment in the current issue of the IELR journal.

U.S. Imposes Sanctions For Russian Cyber Interference with the 2016 U.S. Elections and Malicious Cyber-Attacks

March 18, 2018 by Bruce Zagaris Leave a Comment

On March 15, 2018, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated five entities and 19 individuals under the Countering America’s Adversaries Through Sanctions Act (CAATSA) as well as Executive Order (E.O.) 13694, “Blocking the Property of Certain Persons Engaging in Significant Malicious Cyber-Enabled Activities,” as amended, and codified pursuant to CAATSA.

Treasury Secretary Steven T. Mnuchin explained the new sanctions counter Russia’s continuing destabilizing activities, ranging from interference in the 2016 U.S. election to conducting destructive cyber-attacks, including the NotPetya attack, a cyber-attack attributed to the Russian military on February 15, 2018 in statements released by the White House and the British Government. Mnuchin said the cyber-attack was the most destructive and costly cyber-attack in history. The attack resulted in billions of dollars in damage across Europe, Asia, and the United States, and significantly disrupted global shipping, trade, and the production of medicines. Additionally, several hospitals in the United States were unable to create electronic records for more than a week.

Since at least March 2016, Russian government cyber actors allegedly have also targeted U.S. government entities and multiple U.S. critical infrastructure sectors, including the energy, nuclear, commercial facilities, water, aviation, and critical manufacturing sectors. Indicators of compromise, and technical details on the tactics, techniques, and procedures, are provided in the recent technical alert issued by the Department of Homeland Security and Federal Bureau of Investigation.

Administration has sanctioned more than 100 individuals and entities under our Ukraine and Russia-related sanctions authorities, including 21 individuals, nine entities, and 12 subsidiaries that are owned 50 percent or more by previously sanctioned Russian companies on January 26, 2018.

The current issue of the IELR will carry a more comprehensive article on the new sanctions.