Insights: Week Of March 20, 2023

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The US government is showing its willingness to pursue criminal charges for sanctions and export restriction violations, becoming more assertive in its stance toward those who help sanctioned individuals and entities in Iran, Russia, and other countries evade sanctions and obtain access to critical goods and technologies.

A DC federal court this week unsealed two indictments charging multiple defendants for their roles in separate schemes to procure and export US technology to Iran between 2005 and 2013. In one matter, defendants Amanallah Paidar, of Iran, and Murat Bükey, of Turkey, conspired to procure and export US technology for Iran through their companies, Farazan Industrial Engineering and Ozon Spor Ve Hobbi Ürünleri.

In the second case, Agshar Mahmoudi and Bahram Mahmoudi Mahmoud Alilou, both of Iran, and Shahin Golshani, of the UAE, conspired to obtain US technology for Iran through their companies Aran Modern Devices Kish Company and Modern Technologies. The indictments show the US government’s determination to pursue criminal charges against those who violate sanctions and export restrictions.

FiveBy has been warning about the US government’s more aggressive posture toward sanctions and export control violations, stressing that regulators are determined to punish companies that violate US sanctions, export controls, and other restrictions and facilitate Russia’s and other sanctioned countries’ access to the US financial system and restricted US-origin equipment technologies. Simple list screening is insufficient to mitigate the risk of significant financial penalties, reputational damage, and even criminal charges.

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Compliance and Due Diligence

The US Treasury this week sanctioned several entities in Burma as part of a continued effort to target the military junta that overthrew the country’s democratically elected government two years ago and engaged in human rights abuses. Asia Sun Group is a key operator in the jet fuel supply chain supporting the Tatmadaw; Asia Sun Trading Co. Ltd. is has purchased jet fuel on behalf of Burma’s air force and imported it through the Thilawa Port; and Cargo Link Petroleum Logistics Co. Ltd. is a transport contractor that has used tanker trucks to distribute jet fuel to military bases across Burma. The latter two are already sanctioned by the UK. Asia Sun Group is designated by the EU and Canada.

OFAC this week also sanctioned three Belarussian entities, nine individuals, and a luxury airliner belonging to Belarus’s president Lukashenko. EU and Canada-designated Belarusian Automobile Plant (BelAZ) is one of the largest manufacturers of large trucks in the world, whose employees took part in strikes and peaceful protests in the aftermath of the fraudulent August 2020 presidential election in the country and were threatened with layoffs and intimidated by company management. Minsk Automobile Plant (MAZ) is one of the biggest automotive manufacturers in Belarus and a significant source of revenue for the Lukashenko regime. The Central Election Commission (CEC) of the Republic of Belarus has also been sanctioned. It was originally designated in December, 2020 after the country’s fraudulent elections and is now sanctioned under EO 14038 for being part of the Belarussian government.

Chinese president Xi Jinping this week visited Russia to meet with Russian president Putin. The Kremlin announced there would be the signing of “bilateral documents” and discussion of “topical issues” during the meeting, but the two almost certainly discussed ways to evade western sanctions during the visit, based on recent reporting that suggests China did indeed send lethal weapons to Russia last year.

The United States this week sanctioned four entities and three individuals in Iran and Turkey for their involvement in the procurement of equipment for unmanned aerial systems (UAS) to Iran. The sanctions targets are part of a procurement network that operates on behalf of Iran’s Ministry of Defense and Armed Forces Logistics, which oversees several firms involved in UAS and ballistic missile development.

Kosovo has imposed sanctions on Russia’s Wagner group, concerned that the mercenaries may be operating in the region, and also because of their involvement in threatening the sovereignty and territorial integrity of Ukraine. Regional media in January reported that the group was recruiting in the region through links to right-wing organizations.

The DHS undersecretary for strategy, policy, and plans says that sanctioning companies for using forced labor in China’s Xinjiang region is one of the department’s highest priorities. The Uyghur Forced Labor Prevention Act tasked the department with creating a sanctions list to ensure that goods produced by companies known to traffic in forced labor do not enter the United States. DHS is very interested in using technology, such as DNA testing, to determine whether cotton goods came from Xinjiang.

The White House may impose sanctions on certain members of Uganda’s parliament who are responsible for a recent law that criminalizes the LGBT+ community. The bill passed by Uganda’s parliament would impose prison sentences for anyone convicted of engaging in homosexual activity, with some “crimes” eligible for a death sentence.

The Commerce Department this week added 14 Chinese entities to the BIS Unverified List, forcing US exporters to conduct greater due diligence before shipping goods to them because the United States has not been able to inspect them. The entities could wind up on the Entity List in 60 days if China continues to block US inspections. The entities are:

  1. Airpart Consolidated Trading
  2. ECOM International (HK) Co., Ltd.
  3. Guangzhou Trusme Electronics Technology Co., Ltd.
  4. HK P&W Industry Co. Ltd. (HKPW)
  5. Jet-Prop International Forwarding (HK) Ltd.
  6. Kesina Services
  7. Lightstar Technology Ltd.
  8. Shandong Yuehaitongxin Keji Ltd.
  9. Shengwei Technology Co., Ltd.
  10. Small Leopard Electronics Co., Ltd.
  11. Solar Way (Hong Kong) Ltd.
  12. Sunway Technology Electronics Ltd.
  13. USETA Tech (HK) Ltd.
  14. Winners Global Trading Co.

South Korea this week announced new restrictions on North Korea that target materials for its satellite program, following a barrage of ballistic missile launches despite a ban on such tests. Seoul unveiled a “watch-list” of 77 items related to North Korea’s satellite development program, including optical components, solar panels, antennas, and GPS devices, that will be banned from export to the DPRK.

Ukrainian president Zelensky has announced sanctions against hundreds of individuals and companies, including Syrian President Bashar al-Assad and Iranians associated with the production of the Shahed drones that Russia has been using in Ukraine. Most of the more than 400 individuals and companies are Russian and are involved in the defense industry, but Iranian and Syrian individuals are also on the list. The new additions also include 141 legal entities, including companies from Russia, Iran, and the UAE.

More trouble for the UK’s gambling industry. The Gambling Commission has fined online operators 32Red Ltd and Platinum Gaming Ltd—owned by Kindred Group Plc—$8.8 million for social responsibility and AML failures. The regulator said financial triggers for AML reviews at both companies were insufficient or inappropriate to effectively manage money laundering and terrorist financing risks.

The Australian government is imposing Magnitsky-style sanctions and travel bans on 14 individuals and 14 Iranian entities responsible for egregious human rights abuses and violations in Iran. Among the sanctions targets are four members of the Morality Police who were responsible for the arrest, detention, and death of Mahsa Amini. Australia is also imposing financial sanctions and travel bans on Iranian individuals and one entity involved in the production and supply of drones to Russia.

The UK this week imposed sanctions on IRGC financiers, including five members of the Board of Directors of the IRGC Co-operative Foundation, responsible for managing IRGC’s investments. Two senior IRGC commanders in Tehran and Alborz provinces have also been sanctioned for human rights violations. The EU also designated one entity—the Supreme Council of Cultural Revolution—and eight individuals for human rights violations.

Moldova is imposing sanctions on 25 individuals it says are complicit in the Russian invasion of Ukraine. The sanctions targets will be banned from entry into Moldova, and their assets will be frozen.

Swiss banks Credit Suisse and UBS are among the financial institutions facing an investigation by the Justice Department for violations of Russia sanctions. The probe aims to determine whether employees at the banks helped Russian oligarchs evade sanctions. The Swiss banks were included in a recent wave of subpoenas sent out by the US government, but this happened before the now-infamous Credit Suisse nosedive. Some major US banks also received subpoenas that aim to determine which bank employees dealt with sanctioned clients and how those clients were vetted.

The Bank of Lithuania has fined Twitter founder Jack Dorsey’s popular Cash App payment software for “serious and systematic infringements of the prevention of money laundering and terrorist financing.” The Bank of Lithuania provides a license to Verse, a Cash App company founded in Barcelona, Spain, and its investigation last year found that Verse had an insufficient customer identification program. The company had also “failed to ensure that customers at high risk of money laundering and terrorist financing were subjected to enhanced customer due diligence procedures.” The Lithuania bank also noted that Cash App did not have adequate procedures in place to enforce international financial sanctions, which have become more and more critical, given the quickly changing environment that has incentivized. Hindenburg Research yesterday said it was taking a short position on Block, the owner of Cash App, because of the company’s alleged compliance weaknesses. Hindenburg’s report on Block is here.

Fraud and Abuse

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An investigation by Al Jazeera exposes some of Southern Africa’s largest gold-smuggling operations that help launder billions of dollars and evade international sanctions. The report reveals how billions of dollars’ worth of gold is smuggled every month from Zimbabwe to Dubai, allowing criminals to clean dirty money through a web of shell companies, fake invoices, and bribery. It also shows how Zimbabwe President Mnangagwa’s government, including individuals in his inner circle, is using gold smugglers to circumvent sanctions.

Thai police this week dismantled an international gang that operated call centers to deceive older Americans into wiring them money, netting more than $87 million. Authorities arrested 21 suspects after raiding nine locations in four Thai provinces, seizing 162 bank accounts, 61 mobile phones, two cars, one gun, and multiple real estate properties.

A Pensacola insurance company owner this week was sentenced to 14 years in federal prison for selling fraudulent insurance policies. John Thomas in 2021 pleaded guilty to multiple counts of wire fraud and money laundering and defrauding customers of more than $4.8 million through premium diversion, which involves using insurance premiums paid by customers for personal use without generating insurance policies.

Artemis Seaford, a dual US-Greek national, was targeted with cyberespionage tool, Predator, and wiretapped by Greek intelligence. Seaford, who worked on Meta’s security and trust team while based in Greece, was placed under a yearlong wiretap and hacked in the first known case of a US citizen being targeted in an EU country. Greece has been plagued by a mounting wiretap and illegal spyware scandal since last year, raising accusations that the government has abused its powers.

Ukrainian HAPI Labs has launched a platform for reporting scam- and other crime-related addresses, in partnership with Ukraine’s cyber police. Scamfari OSINT, currently in beta mode, allows users to report possibly suspicious digital wallets, and the Ukrainian cyber police will investigate and freeze these wallets if appropriate.

The hacker tied to the DC Health Link breach says the attack was linked to “Russian patriotism.” The breach exposed sensitive health care information of nearly two dozen Congress members and their families, as well as other DC-area residents, putting them at risk of identity theft and additional cyber-attacks. The hacker, “Denfur,” claims to be a Russian national.

The BreachForums hacking and data leak website this week shuttered after its remaining administrator, Baphomet, disclosed that law enforcement may have access to the site’s servers. The FBI last week arrested and charged Conor Brian Fitzpatrick, who admitted that he was the forum’s owner and one of the administrators, who used the alias “Pompompurin.” BreachForums is widely considered to be a reincarnation of RaidForums, a similar crime forum that the FBI infiltrated and dismantled last year.

Telecommunications company Ericsson has pleaded guilty to violating its 2019 settlement with the Justice Department after it failed to disclose its bribery schemes in China and East Africa. Ericsson this week admitted to violating the Foreign Corrupt Practices Act and agreed to pay more than $206 million in criminal penalties. The two charges were part of a 2019 deferred prosecution agreement over bribery allegations.

Ukraine is warning that Russian hackers are infecting online copies of software hacked to work without a license with trojan viruses that allow them to get access to the computers of those who install it. The warning adds that the data could then be accessed by the Russian intelligence services.

Russian businessman Artem Uss, wanted in the United States for alleged money laundering and sanctions evasion, has escaped from house arrest in Italy a day after an Italian court approved his extradition. Uss is the son of the governor of Krasnoyarsk region in Siberia and was the co-owner of a Germany-based commodities trading and industrial equipment business called Nord-Deutsche Industrieanlagenbau, which he used to buy sensitive US military technology and send it to Russia, including to sanctioned companies.

Do Kwon, the founder of the collapsed blockchain platform behind the TerraUSD stablecoin and its sister coin Luna, and who is wanted in South Korea and the United States on fraud and other charges, has been arrested in Macedonia. According to authorities, he was arrested at the airport with counterfeit documents, attempting to travel to Costa Rica. Kwon and his travel partner were also found with Belgian and South Korean traveling documents. The United States charged him with fraud shortly after his arrest.

The former head of legal and compliance at OneCoin faces 40 years in prison after being extradited to the United States. Charges against Irina Dilkinska this week include one count of conspiracy to commit wire fraud and one count of money laundering. Dilkinska was in charge of compliance at the digital asset scam OneCoin that stole $4 billion and “assisted in the creation and management of shell companies in order to launder OneCoin proceeds and to hold property belonging to (Ruja Ignatova)” – the still-missing crypto queen.


  FiveBy provides a weekly roundup of relevant news and insights to help readers keep abreast of regulatory developments and reputational risks. We hope you find the insights useful. Please feel free to contact us at if you have any questions or suggestions.

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