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ICC Fraudnet GLOBAL REPORT 2021

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ICC Fraudnet GLOBAL REPORT 2021 GLOBAL REPORT 2021 International Developments and Perspectives in the field of Fraud, Financial Crime and Asset Recovery Acknowledgments Many individuals and organisations have been of great assistance in the writing, editing and production of the inaugural FraudNet Global Report. The Editor first wishes to thank FraudNet’s Members and Strategic Partners who have authored and co-authored articles for inclusion in this publication, as well as their colleagues and staff who have assisted them. FraudNet’s unparalleled international reach and subject expertise in fraud and asset recovery are well captured in this Report, and it is testament to the collective energy of the group that such wide-ranging insights were provided for this Report from so many countries, particularly in these unprecedented times. The Editor secondly wishes to thank Mr Peter Lowe, Executive Secretary of FraudNet for his support from the inception of this project right through to publication. His operational assistance, and acute understanding of the expertise and resources available within FraudNet has been greatly valued during the collation of papers. Further thanks are owed to Mr Michele Caratsch and Mr Babajide Ogundipe for their help throughout the strategic stages, and work in convening and being part of, along with Mr Peter Lowe, a very supportive Editorial Board. The Editor wishes to thank all members of the Editorial Board – Mr Bobby Banson, Mr Shaun Reardon-John, Mr Rodrigo Callejas, Mr Waseem Azzam, Mr Christopher Redmond and Mr John Greenfield – for their time, guidance and energy for this project. Gratitude is also extended to Mr Bruce Horowitz, whose support as an Assistant Editor has been significantly valued during the review and editorial stages, and also Mr Andrew Witts for his guidance. Finally, the Editorial Board wishes to thank all Members, Strategic Partners and Staff of FraudNet for their continued support and collaboration in making this Report possible. ii Contents Acknowledgments ii Foreword v Executive Summary vii Part 1: Criminal and Civil Asset Recovery Initiatives Asset Recovery Initiatives – A New Toolbox for Prosecutors 2 Kate McMahon Standing Up to Government Corruption: Access to Justice through Civil Asset Recovery and Private Funding as Alternatives to Public Investigation and Forfeiture 10 James Pomeroy Developments in Asset Tracing: A Cayman Islands Perspective 21 Nick Dunne & Colette Wilkins Exceptional Means to Assist with Multi-Jurisdictional Asset Tracing and Recovery in Panama 26 David M. Mizrachi Does Ghana’s Legal Regime for Tracing and Recovering Assets Procured by Cross-Border Fraud Offer Enough Protection for Foreign Victims? 31 Bobby Banson Part 2: Legal and Regulatory Developments in Beneficial Ownership Transparency and Economic Substance Requirements Economic Substance and Beneficial Ownership: Legal and Regulatory Developments 38 Anthony Riem & Priyanka Kapoor The International Corporate Transparency Landscape: A Not So Silver Bullet? 46 Dr Dominic Thomas-James Part 3: Complex and Commercial Fraud – Including Bankruptcy and Insolvency Issues Creditors Rights and Remedies in Guernsey, Channel Islands 53 John GreenField, David Jones & Steven Balmer British Virgin Islands – A Pro-Creditor Jurisdiction? A Review of Recent Case Law and Legislative Developments 60 Shaun Reardon-John iii Redefining Reflective Loss – the Long Awaited Decision of the Supreme Court in Marex 67 Anthony Riem & Catherine Eason Using Bankruptcy Proceedings to Investigate and Combat Fraud 72 Joe Wielebinski & Matthias Kleinsasser Collateral Damage: How Lenders Lose Billions on Fake Commodities and Forged Documents 79 Jingyi Li Blank and Ian Casewell Part 4: Cybercrime, Cryptocurrencies and Technology Threats Push Payment Fraud and the Liability of Banks 86 Joanelle O’Cleirigh Case Study of the Coincheck Cryptocurrency Hack: A Major Japanese Cryptocurrency Exchange Lost “NEM” worth USD $530 million due to Cyber-Attack 93 Hiroyuki Kanae & Hidetaka Miyake Do You Value Your Assets? 98 Rami Tamam & Gilad Cohen The Approach of Polish Law to Cryptocurrencies – Selected Issues 102 Joanna Bogdańska Failing to Prevent – Virtual Asset Service Providers’ Liability for Abuse of Traded Cryptoassets 106 Chris Stears Covid-19 and its Impact on the Global Fight Against Fraud and Financial Crime 111 Dr Dominic Thomas-James Part 5: Investigations, Ethics and Other Selected Issues Technology in Investigations and Evidentiary Considerations 117 Craig Heschuk, John Moscow & Alex Clarke The Impact of the Invalidation of the Privacy Shield on Global Investigations 124 Karen Schuler & Christopher Beveridge Ethics in Without Notice Orders – Frankly, the Judge Needs to be Told 130 Lance Ashworth QC & Matthew Morrison The Financial Conduct Authority and a Sample of its Enforcement Activity 137 ProFessor Stuart Bazley Collateral Attacks on Funders as a Defense Tactic in Asset Recovery and Fraud Claims 143 James C. Little & Christopher N. Camponovo iv Foreword This, the first FraudNet Global Report emerged from discussions of members at our Beirut meeting in October 2019. Following the decision to elect us as co-Executive Directors, members may have thought that we had to be kept busy. One of the things that emerged were thoughts about the need to develop a more academic element to the network. Given that the focus of our members is more practical in nature, aimed at providing results for clients, this was a move in a slightly different direction. Consideration was given to participating in programmes with educational institutions, and this thinking resulted in a meeting in January 2020 with Professor Barry Rider OBE, the Founder of the annual Cambridge International Symposium on Economic Crime and sometime Fellow, Dean and Tutor of Jesus College, Cambridge, amongst his many accomplishments. At the time, the existence of a new disease reported to have originated in Wuhan, China, was known, but nobody at that meeting had any notion of what was to come. Professor Rider introduced us to Dr Dominic Thomas-James, who agreed to be the Editor of a journal that would feature articles on developments related to our practice areas from our members and Strategic Partners, as well as from leading academics engaged in research relating to economic crime, risk, financial regulation and compliance, and who were authors of key academic texts in the field. The explosion of the new disease into something that left no part of the world untouched was not foreseen. Had it not occurred, this Report would nevertheless have been produced. The pandemic prevented FraudNet members, Strategic Partners and invited guests from meeting in Nairobi and Miami in 2020. Had we been able to hold these meetings, doubtless some of the material contained here would have been shared there. Whilst the Report did not come about as a result of the pandemic, what we are experiencing most certainly influenced some of its contents. The certification of vaccines, which started in December 2020, holds out hope that the fears, restrictions and risks related to travel will have dissipated by the time the 2022 Report is published. We thank all the contributors, not just for providing such valuable material, but for doing so in good time and thereby relieving the Editor of chasing them holding a big stick. This augurs well for future editions. v We hope that readers will find the articles that follow informative and stimulating. Please share the Report widely and do not hesitate to engage our contributors directly or through our indefatigable Executive Secretary, Peter Lowe. We cannot end these few words without expressing our thanks to Dominic Thomas-James and to the other members of the Editorial Board for their work on this, our first, FraudNet Global Report. Babajide Ogundipe Michele Caratsch 16th December 2020 Babajide Ogundipe Partner, Sofunde Osakwe Ogundipe & Belgore Lagos, Nigeria e. [email protected] t. +234(1)4622502 Michele A. Caratsch Partner, Baldi & Caratsch Zurich, Switzerland e. [email protected] t. +41-44-250 2525 vi Executive Summary Fraud and financial crime are among the greatest inhibitors to the stability and prosperity of organisations, institutions and economies around the world – in both developed and developing jurisdictions alike. Fraud is the crime to which most people are likely to fall victim. However construed, be it sophisticated and complex commercial frauds, insider dealing, market manipulation, money laundering, bribery, terrorism financing or tax evasion, these are ever- developing, transnational threats to which meaningful and innovative thinking is required in response. While an ethos of “shared values, shared approaches” underpins the global anti- economic crime framework, particularly vis-à-vis money laundering and financial regulation, a one- size-fits-all approach often omits important contextual challenges across different jurisdictions. For lawyers and investigators, only a more nuanced approach taken to the subject of fraud, financial crime and asset recovery will enable us to understand and properly articulate what the real challenges are at international, regional and domestic levels – both practically, and theoretically. Thereby, more meaningful and practical cooperation and collaboration can be facilitated. In recent years, financial crime has been an increasingly regular subject in the news media. It has been seen in successive breaches of confidential data from law firms in the offshore world (such as the Bahamas leaks, the Panama and Paradise papers)
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