Included in this issue: Vice Chairman of Samsung jailed for bribery; FCA launch probe into HSBC anti-money laundering controls; UK government votes unanimously to pass the Magnitsky sanctions bill and more...

Bribery and Corruption

Vice Chairman of Samsung jailed for bribery

Heir to the Samsung group, Lee Jae-Yong has been arrested and jailed in Seoul for allegedly paying $36 million in bribes to Choi Soon-sil, a close friend of President Park.

Lee, is alleged to have made these payments in return for political favours obtained through Choi's relationship with President Park. Such favours include support for a restructuring within Samsung, in 2015, which gave Lee effective control of the group.

FCPA, 17 February 2017

Hong Kong's former leader jailed for corruption

Former leader of Hong Kong, Donald Tsang, has been jailed this week for 20 months for misconduct in public office.

Mr Tsang was a very prominent public official in Hong Kong, given a British knighthood for his role in overseeing the 1997 handover of rule to Chinese control and recognised for his dedication to public service over his forty year career.

Mr Tsang was found to have deliberately concealed a conflict of interest. In particular, he did not disclose his personal negotiations with a property tycoon while his cabinet approved a broadcasting licence for a now defunct radio company, whose major shareholder was the same property tycoon.

The Guardian, 22 February 2017

Money Laundering and Terrorism

ESA Joint Committee publish money laundering and terrorist financing opinion

The Joint Committee of the European Supervisory Authorities (ESAs) published an opinion this week on the risks of money laundering and terrorist financing and its effect on the EU's financial sector. The purpose of the ESA is to "work on fostering supervisory convergence and a level playing field" in AML and counter terrorist financing areas.

The opinion found a number of deficiencies in firms' understanding of risk and customer due diligence as well as timely access to intelligence to help detect and prevent money laundering and terrorist financing., 20 February 2017

FCA launch probe into HSBC anti-money laundering controls

HSBC revealed this week that the FCA have begun a new investigation into the bank's compliance with UK money laundering regulations and financial crime policy.

The bank is already under a monitoring program as part of a settlement with US authorities for alleged money laundering for Mexican drug cartels, which saw the bank pay a fine of £1.2 billion in 2012. It is reported that the head of the bank, Stuart Gulliver, stated that the probe was triggered by concerns raised by the US monitor who is required by US authorities to review HSBC's progress in improving its financial crime measures.

The Telegraph, 21 February 2017

Amendments made to the Terrorist Asset Freezing legislation

A new Terrorist Asset-Freezing etc. Act 2010 (Overseas (Territories) Amendment) Order 2017 has been made which brings into effect minor amendments to the previous order of the same name. The new order extends the definition of "designated person" by allowing the Treasury, Council of the European Union and Governors of an Overseas Territory to designate people targeted by the Act. The order does however, require a Governor to consult the Secretary of State and/or Treasury when designating a person or varying a licence in respect of a designated person.

The Order comes into force on 8 March 2017., February 2017

Financial Regulation

Bank of Tokyo-Mitsubishi and MUFG fined almost £27 million by PRA

The Bank of Tokyo-Mitsubishi UFJ Limited (BTMU) and MUFG Securities EMEA plc (MUFG) have been fined £17.85 million and £8.925 million respectively for failures to communicate openly with the Prudential Regulation Authority (PRA).

Both firms failed to inform the PRA, until after a public announcement had been made, that they had been fined $315 million by the New York Department of Financial Services for misrepresenting BTMU's dealings with sanctioned countries.

PRA, 9 February 2017


DOJ publish evaluation of Corporate Compliance Programs

The DOJ have recently published an evaluation of the factors that they take into account when considering conducting an investigation, pressing charges, and/or negotiating plea arrangements with corporate entities.

Although the DOJ have been clear to emphasise that each compliance program must be evaluated in its specific context, the DOJ have set out a list of common factors which are frequently pertinent to the evaluation of a corporate compliance program.

Such factors include an analysis of: the underlying misconduct; the actions and precedents set by senior and middle managers; the experience, qualifications and stature of compliance personnel; the design and accessibility of compliance policies and procedures; staff training; and the confidentiality and proper investigation of reports.

DOJ, 8 February 2017

Harlequin Group's David Ames is requisitioned to appear before the court

The chairman of property group Harlequin, David Ames, has been requisitioned (summonsed) to appear at Westminster Magistrates Court on 22 March 2017 regarding three counts of fraud by abuse of position.

This action comes after a joint investigation by the SFO and Essex Police which has been ongoing since March 2013. The investigation centred upon the sale of a number of off-plan villas in the Caribbean and other locations, which were never built.

SFO, 17 February 2017

UK's appeal court reduces sentence for convicted Libor trader

Jay Merchant, a former trader of Libor derivatives who was convicted in 2016 of conspiracy to defraud relating to manipulating Libor interest rates, has had his jail term reduced by one year by the Court of Appeal to five and a half years.

Separately there are reports that Tom Hayes, who was convicted in 2015 for a similar offences of conspiracy to defraud relating to manipulating Libor interest rates, is seeking to challenge the FCA's decision to ban him from working in the UK financial industry.

Reuters, 22 February 2017

Cyber Crime

US judgment allows warrants to extend to evidence stored by US internet service providers outside the US

A US Magistrates Judge in Pennsylvania handed down an important judgment earlier this month compelling internet service providers to comply with warrants requiring the provision of data on communications sent by criminals within US jurisdiction no matter where that information is stored.

The case concerned Google's refusal to provide emails required by a warrant which were sent and received by criminals within the US. Google argued that it could only be compelled to provide data which it knew was stored in the US. The problem is that Google's system stores individual data files in a number of data "shards" in many separate locations around the world, which periodically shift due to a Google algorithm. This would make it impossible for courts to access this data even with the cooperation of law enforcement agencies in other jurisdictions.

The judge ruled that as the data was to be accessed in California, copied in California and sent to law enforcement agencies within the US for investigation within the US, the warrant was enforceable and Google must comply.

This judgment sets an important precedent about internet providers' obligations to comply with investigations involving communications sent via the internet.

DoJ, 6 February 2017

Accenture Report suggests most Global Organisations are vulnerable to a Cyber-attack

A new report from Accenture, published last week, found that 73% of organisations globally cannot identify and protect themselves against cyber-attacks.

In preparing the report Accenture surveyed 2000 top enterprise security practitioners across 15 countries and 12 industries assess the strength of these organisations in responding and protecting themselves from cyber-attacks. Each organisation was measured on 33 different competencies.

Only 9% of organisations were able to achieve a high performance in 25 or more of the competencies. However the UK scored high in cybersecurity performances, with UK entities achieving a high performance in 15 out of 33 competencies, and topped the tables for cooperation with third-parties during crisis management.

Companies in the communications industry were found to perform the highest in protecting themselves against cyber-attacks, followed by the banking industry.

Accenture, 16 February 2017


Member of the Spanish monarchy is acquitted of tax fraud

The sister of the King of Spain, Princess Cristina, has been cleared of charges including tax evasion and fraud. Her husband, Iñaki Urdangarin however, was sentenced to six year and three months in prison for fraud, tax evasion and embezzlement of around €6 million from public resources.

Amongst the charges levelled at Princess Cristina was that she was aware that a real estate firm owned with her husband, Aizoon, benefitted from these embezzled funds and was used by the Princess to pay for home renovations as well as clothes and dancing lessons for her children.

Although Princess Cristina was cleared of all criminal charges she was ordered to pay a €265,000 fine in recognition of her "civil responsibility" for benefiting indirectly from the embezzled funds.

The Guardian, 17 February 2017


UK government votes unanimously to pass the Magnitsky sanctions bill

The House of Commons voted to pass new sanctions legislation that will expand powers to freeze the assets of those considered to be human rights violators. It also allows the government and UK courts to freeze the assets of individuals who "profited from or materially assisted in the abuses."

The Bill will now be considered by the House of Lords.

FCPA, 22 February 2017

Russia imposes new sanctions on North Korea after ballistic test

Russia has drafted additional sanctions against the Kim regime this week banning the sale of helicopters and ships to North Korea. The new measures are a reaction against the state's latest ballistic missile test in Pyongyang earlier this month in breach of UN Security Council resolutions.

China has also reacted by banning coal imports from North Korea for the rest of this year and Russia are also considering banning the importation of copper, zinc, nickel and silver from the state.

The Independent, 21 February 2017

US prosecutors renew probe into Deutsche Boerse Iran ties

US prosecutors are pressing ahead with an investigation into Clearstream Banking SA and its parent company Deutsche Boerse AG's role in aiding transactions with Iran in breach of Sanctions.

Clearstream is suspected of acting as an intermediary between Iran's central bank, Bank Markazi, and JPMorgan. The company is also accused of making false statements to the US regulators and making misleading regulatory filings.

Bloomberg, 21 February 2017

Health and Safety

London bus company fined £600,000 plus costs for worker death

Bus company, Go Ahead London, has been sentenced after worker was killed when he fell from a ladder.

The worker was using a ladder to access the top of a fuel tank when he fell two and a half meters backwards, suffering fatal head injuries.

Go Ahead London were found guilty of breaching section 3 (1) of the Health and Safety at Work Act 1974 and fined £600,000 plus costs of £78,531.

HSE, 14 February 2017

Container terminal found guilty of failing to clearly signpost excavation works

London Container Terminal (Tilbury) Limited (LCT) has been fined after a worker was seriously injured when the straddle carrier he was driving overturned at Tilbury Docks in November 2014.

The worker inadvertently drove his straddle carrier into a large excavation at the docks as he did not see the road cones, small flashing lights or the ticker tape around the excavation because it was dark and the weather conditions were poor.

The worker suffered life changing injuries and continues to suffer from post-traumatic stress disorder.

London Container Terminal Limited pleaded guilty to breaching sections 2(1) and 3 (1) of the Health and Safety at Work Act 1974 and was fined £180,000 plus costs of £73,296. London Container Terminal ceased trading in December, the fine will be paid by the Port of Tilbury (London) Limited.

HSE, 20 February 2017


Key Contacts

Nichola Peters

Nichola Peters

Partner, Global Investigations

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Erin Shoesmith

Erin Shoesmith

Partner, Health & Safety
United Kingdom

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