Dipping Through Geometries

On October 31, BBC News reported that an undercover investigation by BBC News Arabic found that domestic workers in Kuwait “are being illegally bought and sold online in a booming black market”  through readily available apps.  Some of the trafficking of domestic workers reportedly “has been carried out on Facebook-owned Instagram, where posts have been promoted via algorithm-boosted hashtags, and sales negotiated via private messages.”  Similar listings “have been promoted in apps approved and provided by Google Play and Apple’s App Store, as well as the e-commerce platforms’ own websites.”

Despite the fact that Kuwait has laws to help protect domestic workers in the country, BBC News reported that various apps, such as 4Sale and Instagram, “enable employers to sell the sponsorship of their domestic workers to other employers, for a profit.”  This practice bypasses the agencies that ordinarily bring domestic workers into the country, and “creates an unregulated black market which leaves women more vulnerable to abuse and exploitation.”

According to the BBC, nine out of 10 Kuwaiti homes have a domestic worker.  In the BBC Arabic investigation, two members of the investigative team posed as a couple who was newly arrived in Kuwait.  They reportedly “spoke to 57 app users and visited more than a dozen people who were trying to sell them their domestic worker via a popular commodity app called 4Sale.”  That app “allowed you to filter by race, with different price brackets clearly on offer, according to category.”  One “seller”, a policeman seeking to sell his domestic worker, told the couple that “You will find someone buying a maid for 600 KD ($2,000), and selling her on for 1,000 KD ($3,300).”

Various “sellers” “almost all advocated confiscating the women’s passports, confining them to the house, denying them any time off and giving them little or no access to a phone.”  The undercover team were told by app users, “who acted as if they were the ‘owners’ of these women, to deny them other basic human rights, such as giving them a ‘day or a minute or a second’ off.”

In addition to the apps being used in Kuwait, the investigation found hundreds of women being sold on Haraj, a popular commodity app In Saudi Arabia and “hundreds more” on Instagram.

After the BBC team “contacted the apps and tech companies about their findings,” multiple companies took various actions:

• 4Sale “removed the domestic worker section of its platform.”
• Facebook, which owns Instagram, said that it had banned the Arabic hashtag that translates as “#maidsfortransfer,” and pledged to “continue to work with law enforcement, expert organisations and industry to prevent this behaviour on our platforms.”
• Google stated that it was “deeply troubled by the allegations,” and that it had asked the BBC “to share additional details so we can conduct a more in-depth investigation.”
• Apple stated that it “’strictly prohibited’ the promotion of human trafficking and child exploitation in apps made available on its marketplace,” adding that app developers “are responsible for policing the user-generated content on their platforms.”
• Haraj reportedly had no comment.

As of October 31, certain firms had continued to distribute the 4Sale and Haraj apps, “on the basis that their primary purpose is to sell legitimate goods and services.”  Consequently, hundreds of domestic workers were still being traded on Haraj, Instagram, and other apps.

The next day, however, the BBC reported that Kuwaiti authorities had “officially summoned the owners of several social media accounts used to sell domestic workers as slaves, ordered those responsible to take down their ads, and compelled them “to sign a legal commitment, promising no longer to participate in this activity.”  In addition, Instagram stated that “it had removed further content across Facebook and Instagram, and would prevent the creation of new accounts designed to be used for the online slave market.”  Google and Apple also stated that “they were working with app developers to prevent illegal activity on their platforms.”

N.B.: These BBC reports not only show another dimension of how modern slavery is conducted, but also provide evidence that tech companies need to incorporate into improving their Modern Slavery Act compliance programs.  App developers should also take note of these reports, and take action to see that their apps are not used for such repellent practices.

On October 29, the International Cricket Council (ICC) announced that it had banned Bangladesh cricket captain Shakib Al Hasan from all cricket for two years (with one of those years suspended), after he accepted three charges of breaching the ICC Anti-Corruption Code for Participants.  Under Article 2.4.4 of the Code, it is an offense for a player to fail to disclose to the ICC Anti-Corruption Unit (ACU), without unnecessary delay, “full details of any approaches or invitations received by the Participant to engage in Corrupt Conduct under the Anti-Corruption Code.”

Al Hasan was presented with three charges under Article 2.4.4: (1) Failure to disclose to the ACU “full details of any approaches or invitations he received to engage in Corrupt Conduct – in relation to the Bangladesh, Sri Lanka and Zimbabwe Tri-Series in January 2018 and/or the 2018 [Indian Premier League (IPL)]”; (2) Failure to disclose to the ACU “full details of any approaches or invitations he received to engage in Corrupt Conduct – in relation to a second approach in respect of the Tri-Series in January 2018”; and (3) Failure to disclose to the ACU “full details of any approaches or invitations he received to engage in Corrupt Conduct – in relation to an IPL 2018 match between Sunrisers Hyderabad v Kings XI Punjab on 26 April 2018.”

The ICC decision in this case made clear that the charges pertained to Al Hasan’s failure to report overtures he had received from “an individual known to the ACU and suspected of involvement in corruption in cricket, Deepak Aggarwal,” via WhatsApp to provide Aggarwal with inside information for betting purposes.

Under Article 6 of the Code, a violation of Article 2.4.4 can result in a period of ineligibility from six months to five years.  In this case, the ICC weighed both aggravating and mitigating factors.  The aggravating factors included:

1. Al Hasan’s failure to report “not one but three approaches” from Aggarwal to provide him with Inside Information;
2. The occurrence of Aggarwal’s approaches and Al Hasan’s failures “over a period of several months”;
3. The approaches to Al Hasan “were clear in their content and intent”;
4. Al Hasan’s status as “an experienced international cricketer who, having participated in several anti-corruption education sessions, was fully aware of his responsibilities under the Code”; and
5. Al Hasan’s “position of responsibility as captain of the Bangladesh national side.”

The mitigating factors included:

1. “Al Hasan’s voluntary admission and cooperation during his interviews with the ACU”;
2. “Al Hasan’s prompt admission of his breaches following receipt of the [ICC] Notice of Charge”;
3. “Al Hasan’s remorse and contrition as expressed to the ACU”;
4. Al Hasan’s “previous good disciplinary record”;
5. “The fact that the offences did not substantially damage the commercial value and/or public interest in the relevant matches”; and
6. “The fact that the offences did not affect the outcome of the relevant matches.”

The ICC concluded that a two-year ban, with 12 months of that being suspended, “is reasonable and proportionate.”

Although Al Hasan told the ACU that he did not accept or act upon any of the approaches he received from Aggarwal, and did not provide Aggarwal with any of the information requested, he chose to admit the charges and accept the ban.  Provided that he complies with the terms of the suspension—i.e., not committing any offence under the Code (or the anti-corruption rules of any National Cricket Federation) during the initial period of suspension, and participating “promptly and fully in any anti-corruption education and/or rehabilitation programmes as specified by the ICC” – Al Hasan will be eligible to resume international cricket on October 29, 2020.

N.B.: This ICC decision is significant in part because of the prominence of Al Hasan as an experienced cricketer, and in part because it sanctions Al Hasan specifically for failure to report corrupt overtures.  This sanction, coupled with the ICC’s recent charging of three United Arab Emirates cricketers on multiple charges that included alleged violations of Article 2.4.4, sends a strong signal that cricketers must take seriously their obligation to disclose promptly any and all corrupt overtures.

On October 24, The Economist published an article profiling Lithuania’s use of software known as Demaskuok (“debunk” in Lithuanian) to combat disinformation emanating from Russian disinformation factories.  As The Economist noted, Russian-sponsored disinformation “is a bane everywhere, but it is particularly rife in Estonia, Latvia and Lithuania—the three countries that, in 1990, were the first to declare independence from the Soviet Union” and later “join[ed] NATO and the European Union.” Those offenses, in the eyes of certain Russians still nostalgic for the halcyon days of Soviet rule, warrants making the Baltic states “particular targets for falsehoods intended to confuse and destabilise.”

Demaskuok has become the tip of the spear for Lithuanians to combat these relentless Russian disinformation campaigns.  According to The Economist, it is software that searches for the true points of origin of particular disinformation.  Developed by Lithuanian news portal Delfi in conjunction with Google, it

works by sifting through reams of online verbiage in Lithuanian, Russian and English, scoring items for the likelihood that they are disinformation. Then, by tracking back through the online history of reports that look suspicious, it attempts to pin down a disinformation campaign’s point of origin—its patient zero.

Demaskuok searches for a variety of clues characteristics of disinformation, such as:

• “[W]ording redolent of themes propagandists commonly exploit,” including “poverty, rape, environmental degradation, military shortcomings, war games, societal rifts, viruses and other health scares, political blunders, poor governance, and, ironically, the uncovering of deceit”;
• “[A] text’s ability to stir the emotions,” including topics like immigrants, sex, ethnicities, injustice, gossip, and scandal, because effective disinformation has that effect;
• “Virality,” “the number of times readers share or write about an item,” because “disinformation is crafted to be shared”;
• The reputations “of websites that host an item or provide a link to it”;
• “[T]he timing of a story’s appearance”; and
• The names of people quoted in disinformation, “as they sometimes crop up again, and images, which may be posted in other locations.

The software, however, does not do the job all on its own; human scrutiny “is an important part of the process.”  Demaskuok users, who include Delfi journalists, the Lithuanian Foreign Ministry, “and a score of news outlets, think-tanks, universities and other organisations,” review items that Demaskuok flags and provide feedback on the accuracy of those flags to improve the software’s performance.  In addition, more than 4,000 volunteers known as “elves” — about 50 at one time –

scroll through Demaskuok’s feed of suspected disinformation, selecting items to be verified. These are sent to the other elves for fact checking. Reports on the findings are then written up by the software’s users and emailed to newsrooms and other organisations, including Lithuania’s defence ministry, that produce written or video “debunks” for the public.

N.B.: Although disinformation and “deepfake” technology have garnered the most publicity for their geopolitical ramifications, companies must also be attentive to what one expert commentator termed “the threat deep fakes and disinformation more generally pos[e] to corporations, brands and markets.”  Companies with international operations and visibility should therefore look more closely at the successes and techniques of Demaskuok – including its marriage of technology and human judgment – in evaluating their reputation risks and their capacity for timely prevention or response to disinformation campaigns directed at them.

On October 30, the Australian Transaction Reports and Analysis Centre (AUSTRAC) issued a report setting out its money laundering and terrorist financing (ML/TF) risk assessment for the Australian mutual banking sector.  As AUSTRAC explained, mutual bank “are owned by their customers, with profits returning to customers rather than being distributed to shareholders.”  Mutual banks constitute a significant component of Australian banking, as “four million Australians and businesses bank with mutuals holding some [AU]$101 billion in deposits and [AU]$119 billion in assets.”

At the outset, the report noted that over the past ten years (2008-2018), the Australia mutual banking sector has undergone serious consolidation (decreasing from 142 to 71 entities, while experiencing 88 percent growth in both assets and deposits (i.e., from AU$60.2 billion to AU$113.1 billion in assets, and from AU$51.6 billion to AU$96.8 billion in deposits).  Mindful of these trends, the report focused on three primary topics:

• Criminal Threat Environment: AUSTRAC assessed the overall ML/TF risk associated with mutuals’ criminal threat environment to be medium. The report stated that suspicious matter reports (SMRs) “indicate the key threat faced by mutuals is money laundering, with substantial reporting activity detailing large and frequent cash transactions, transactions involving unknown third parties, and the rapid and complex movement of funds between financial products and  ”  It considered many of these reports to be “highly likely to be trigger-based in nature, and describe legitimate, if unusual, transactional activity.”  As for TF activity, AUSTRAC stated that less than one-half of one percent of the SMRs in the dataset “related to terrorism financing,” but that it assessed the nature and extent of TF activity evident in the mutual sector as a medium risk.
• Vulnerabilities: AUSTRAC assessed AUSTRAC assesses the overall ML/TF risk associated with vulnerabilities in the mutual banking sector to be high. The report identified three factors that most expose the sector to financial crime:
  • “The types of products offered by the sector,” particularly transaction accounts with high levels of (1) cash exposure, (2) access to international remittances, including with high-risk jurisdictions , and (3) transactions by unknown third parties;
  • “A high level of non-face-to-face service delivery”; and
  • “High levels of outsourcing of customer-facing and AML/CTF processes, and limited oversight/influence over the operations of third-party service providers.”

The report also singled out the delivery channels that mutuals use to provide their services to their customers – which include ATMs, online banking, banking apps, the nationwide New Payments Platform (NPP), and outsourcing of customer-facing services   — as presenting a high ML/TF risk.

• Consequences: AUSTRAC assessed consequences of ML/TF activity in the mutual banking sector to be moderate. The report noted that those consequences “can include” the following:
  • Personal loss and emotional distress for customers;
  • For mutuals, “loss of revenue and capital from fraud, higher insurance premiums, reputational damage and heightened regulatory attention”;
  • “[I]ncreased predicate offending affecting the community”;
  • “[R]educed government revenue as a result of tax evasion, and higher government expenditure due to welfare fraud, impacting on the delivery of critical government services”;
  • “[D]amage to Australia’s international economic reputation as a safe and secure place to invest’; and
  • “[E]nabling and sustaining the activities of Australian foreign terrorist fighters, or enabling terrorist acts in Australia or overseas.”

The report also assessed the sector’s level of implementation of risk mitigation strategies to be medium.  On this point, it identified four principal areas “in which mutuals’ risk mitigation systems and controls could be strengthened”:

• Risk Assessment: The report characterized a robust risk assessment as “the centrepiece of an effective AML/CTF regime.” Emphasizing the importance of risk assessment processes’ capacity to generate a genuine understanding of ML/TF exposure at an individual reporting entity level,” it cautioned that “the use of of-the-shelf risk assessment tools needs to be tailored to ensure it reflects the actual risks posed to mutuals operating within different contexts.”
• SMR Processes: The report took note of “many examples of good SMR reporting practices from the sector,” but found inadequacies in some SMR processes. These included:
  • Lack of Followup: Mutuals “repeatedly reporting on the same customers exhibiting the same behaviours without any indication they were attempting to address their suspicion by engaging with the customer, conducting further investigation, or even exiting the customer in cases of unacceptably high risk.”
  • Trigger-Based Reporting: Mutuals submitting an SMR to AUSTRAC “solely on the basis of a trigger generated by their transaction monitoring system without conducting further investigation to form suspicion on reasonable grounds.”
  • Insufficient Details: Mutuals submitting SMRs “with insufficient details in the Grounds for Suspicion section.” Some reports “failed to provide details about why the activity was considered suspicious,” and some SMRs reviewed for the risk assessment “contained only 2-3 words.”
• Transaction Monitoring Programs: One industry participant in the risk assessment commented that the most significant vulnerability for the mutual banking sector is the quality of automated systems to detect unusual transaction activity, which is limited by the amount of resources many smaller mutuals have to invest in their technology.” In addition, an industry expert “observed mutuals often have a ‘set and forget’ approach to AML/CTF measures, particularly in the context of growing size and scale.”
• Outsourcing: The report stated that “[m]utuals and industry experts engaged for this assessment indicated they saw outsourcing as a major challenge for the sector.” Their observations about outsourcing included “inadequate documentation and oversight of service-level agreements,” senior management’s inadequate prioritizing of oversight of outsourcing arrangements, and “heavier reliance on of-the-shelf products which are not tailored to individual businesses” limiting effectiveness of controls.

N.B.: Although this AUSTRAC report does not identify any urgent ML/TF threats to the mutual banking sector in Australia, compliance teams at Australian mutuals should nonetheless review it closely and draw on the findings in revising or updating their bank-specific ML/TF risk assessment processes.

On October 27, the Sunday Post reported that Scotland’s prosecution service, the Crown Office & Procurator Fiscal Service (Crown Office), is investigating multinational energy services firm John Wood Group.  That investigation involves payments relating to the foreign-bribery investigations pertaining to Unaoil and other companies by the United Kingdom Serious Fraud Office (SFO), the U.S. Department of Justice, and the U.S. Securities and Exchange Commission (“SEC”).

Since 2016, the SFO has been “conducting a criminal investigation into the activities of Unaoil, its officers, its employees and its agents in connection with suspected offences of bribery, corruption and money laundering.”  Since 2017, it expanded into investigating the activities of London-based engineering company Amec Foster Wheeler, which the Wood Group acquired in October 2017, “and any predecessor companies owning or controlling the Foster Wheeler business, together with the activities of any subsidiaries, company officers, employees, agents and any other person associated with any of these companies for suspected offences of bribery, corruption and related offences.”

In its August 20 statement of its half-year results for 2019, the Aberdeen-based Wood Group included a number of disclosures relating to Unaoil and Amec Foster Wheeler.  With regard to the SFO’s Amec Foster Wheeler investigation, the Wood Group stated that it

is co-operating with and assisting the SFO in relation to this investigation.  Notifications of certain matters within the above investigations have also been made to the relevant authorities in Brazil (namely, the Federal Prosecution Service and the Office of the Comptroller General).

According to the Wood Group, Amec Foster Wheeler made a disclosure to the SFO about “investigations into Amec Foster Wheeler in relation to Unaoil and in relation to historical use of agents and certain other business counterparties by Amec Foster Wheeler and its legacy companies in various jurisdictions.”  In that regard, it noted that “since April 2017, in connection with the SFO’s investigation into Unaoil, the SFO has required Amec Foster Wheeler to produce information relating to any relationship of Amec Foster Wheeler with Unaoil or certain other third parties.”

The Wood Group further disclosed that it had independently “conducted an internal investigation into the historical engagement of Unaoil by legacy Wood Group companies, reviewing information available to the Group in this context.”  That internal investigation “confirmed that a legacy Wood Group joint venture engaged Unaoil and that the joint venture made payments to Unaoil under agency agreements.” Thereafter, in September 2017, the Wood Group informed the Crown Office of the internal investigation’s findings.  It added that the SFO and the Crown Office agreed that the Crown Office “has jurisdiction in respect of this investigation.”

Finally, the Wood Group provided an update on the foreign-bribery investigation of Amec Foster Wheeler by the Justice Department and the SEC.  It reported that it “has received voluntary requests for information from, and continues to cooperate with,” both agencies.

N.B.: This report indicates that four separate enforcement agencies – the SFO, the Crown Office, the Justice Department, and the SEC – are now investigating connections between the Wood Group, Amec Foster Wheeler, and Unaoil for possible foreign bribery, and that two more agencies in Brazil may be doing so as well.   It is also incidentally instructive as a reminder that, while the SFO gets the lion’s share of publicity for enforcement of the Bribery Act 2010, it is the Crown Office that has authority to pursue Bribery Act violations in Scotland.