18th July 2019
KIDNAPPERS AND FAKE COPS PLAGUE PHILIPPINES GAMBLING SECTOR
On 17th July, Calvin Ayre reported that police had arrested 8 Chinese nationals and 1 Filipino who the authorities claim were responsible for kidnapping a Chinese casino gambler who couldn’t repay the money they’d loaned him. The gang then contacted the gambler’s wife in China, demanding that she pay US$39,000 in ransom to secure his safe return. The article says that loan shark and kidnapping stories like these are legion in the Philippines.
PAKISTAN: AUTHORITIES FREEZE ASSETS OF FORMER PUNJAB PRIME MINISTER SHEHBAZ SHARIF AND HIS FAMILY MEMBERS
Customs Today on 17th July reported that the National Accountability Bureau (NAB) has ordered that all moveable and immoveable assets belonging to Shehbaz Sharif and his family members should be frozen with immediate effect. It had arrested Shehbaz, also the Pakistan Muslim League-Nawaz (PML-N) president, in October 2018 in connection with alleged corruption. However, it also initiated another inquiry against Shehbaz for allegedly owning assets beyond his known sources of income.
NUMEROUS WEAPONS CONFISCATED DURING THE EU-CO-ORDINATED JOINT OPERATION ORION IN MOLDOVA/UKRAINE
A news release from Europol on 17th July announced that some 300 pieces small arms, almost 1,500 pieces of light weapons, more than 140,000 pieces ammunition and over 200 kg explosives were seized by the Moldovan and Ukrainian law enforcement agencies during a joint operation – in September 2018 to January 2019. Public awareness campaigns on voluntarily handing over the illegally possessed firearms, without facing any criminal liability, were also organised – with 2,027 light weapons, 54 small arms and 2,025 ammunition with different calibres, as well as 67 pneumatic and gas pistols voluntary handed.
GRANT OF A LEASE TO A NON-EXISTENT TENANT HIGHLIGHTS IMPORTANCE OF CHECKING THAT COMPANIES IN A TRANSACTION ARE REGISTERED AT COMPANIES HOUSE
An article from Shoosmiths on 15th July was concerned with a case where a lease of a restaurant in Cardiff was granted to a company called Seafood Shack UK Ltd. The identity of the tenant had been set out in heads of terms but, crucially, nobody checked to ensure that the tenant company had been incorporated. The lease was therefore ‘granted’ to a non-existent tenant. The premises were actually occupied by a company called Seafood Shack (Cardiff) Ltd (SSCL). When the error was found, and before a new lease could be completed, the occupier was wound up and liquidators appointed. The liquidators disclaimed any interest in the premises and the owner therefore peaceably re-entered the premises and forfeited the lease. A legal wrangle ensued, with Seafood Shack UK Ltd claiming that the owner had acted unlawfully in taking back possession of the premises, that it was the intended tenant of the lease and, therefore, still entitled to occupy the premises. Shoosmiths says that the case demonstrates the importance of checking that the parties to a document legally exist.
KEEP SMALL ARMS EXPORT APPROVAL WITH STATE DEPARTMENT, SAYS US HOUSE OF REPRESENTATIVES
Janes.com reported on 17th July that the US Senate is considering an amendment to the National Defense Authorization Act (NDAA) that would retain State Department control over small-arms exports, following a vote in the House of Representatives. The Trump Administration has floated the idea of relaxing small-arms export controls in 2017, arguing that it would make US gun manufacturers more competitive in the global marketplace.
DAWN OF A NEW AGE FOR IRISH INVESTMENT LIMITED PARTNERSHIPS
On 17th July, McCann Fitzgerald published an article about the Investment Limited Partnerships (Amendment) Bill 2019. Once the revised limited partnership framework is in place, it says, Ireland will offer the full suite of preferred legal structures for real asset/private equity investment. The article contains a Q&A which provides a quick overview of the main changes proposed in the Bill. The article explains that an Investment Limited Partnership is a regulated common law partnership structure and they are tailored specifically for investment in a collective investment fund.
JERSEY’S ECONOMIC SUBSTANCE – IDENTIFYING HOLDING COMPANY BUSINESS AND ITS IMPLICATIONS
On 16th July, Carey Olsen published a briefing which explains that a “holding company business” (HCB) is defined as “the business of being a holding company”, which suggests it applies to all companies holding assets. However, it says, it actually refers to a specific type of holding company. The article sets out questions to determine if a company is a HCB.
UAE – BRIBERY AND CORRUPTION
On 16th July, DLA Piper published a briefing outlining how UAE has in recent times strengthened its anti-corruption commitments, legislation and institutions. It looks at the law, offences etc, including the extra-territorial effect and application to foreign public officials.
THE UK LAW COMMISSION REPORT ON SUSPICIOUS ACTIVITY REPORTS (SAR)
On 17th July, 6KBW College Hill chambers published an article about the recent report from the Law Commission, which was asked in 2017 to conduct a review of the systemic problems in the SAR process. It lists the main recommendations made in the report –
- The creation of an Advisory Board to oversee drafting of guidance, to continue to measure the effectiveness of the reporting regime and to advise the Home Secretary on ways to improve it;
- Rationalising the existing ‘fragmented and sometimes conflicting’ guidance across industries by imposing an obligation on the Home Secretary to issue guidance covering the operation of Part 7 of POCA. Guidance should be provided on a number of key statutory concepts including suspicion, ‘appropriate consent’, the reasonable excuse exemption and ringfencing criminal property; and
- Using the Home Secretary’s existing power to prescribe the form of a SAR.
VIJAY MALLYA’S UK HIGH COURT EXTRADITION APPEAL TO BE HEARD IN FEBRUARY 2020
The Indian Express on 18th July reported that the Indian liquor tycoon, and former Kingfisher Airlines owner, Vijay Mallya’s appeal in the UK High Court against his extradition order to face fraud and money laundering charges has been listed for a 3-day hearing from February 11th.
SENIOR BANKER WITH JP MORGAN PLEADS NOT GUILTY TO BRIBERY CHARGES IN HONG KONG
The Globe & Mail reported on 18th July that JP Morgan’s former Asia investment banking vice-chair, Catherine Leung, has pleaded not guilty to charges of bribery in a Hong Kong court. Leung is alleged to have offered employment to the son of the chairman of a logistics company as a reward for the chairman favouring JP Morgan. Whilst not admitting the accusations, in 2016 JP Morgan agreed to pay US authorities $264-million to resolve allegations it hired the relatives of Chinese officials to win banking deals.
SUSPICIOUS ACTIVITY REPORTS – WHAT CAN THE CHANNEL ISLANDS LEARN FROM THE UK?
An article in Bailiwick Express in Guernsey on 18th July reflects on the June report from the UK Law Commission on SAR reporting in the UK. In an interview with Bedell Cristin’s Managing Partner, David Cadin, says Guernsey could learn a number of things from the UK if it reflected on those similarities, including how financial services businesses must file SAR whenever they “think that there was a possibility, which was more than fanciful”, that a person is engaged in money laundering or have objective grounds for so suspecting.
UN: ORGANISED CRIME OUTPACES AUTHORITIES IN SE ASIA
On 18th May, Reuters reported that the UN Office of Drugs and Crime has said that transnational crime syndicates are growing more powerful in SE Asia and raking in profit by exploiting rampant corruption, weak law enforcement and lax border controls – citing the rising trade in drugs, counterfeit goods and medicines, people-smuggling, and trafficking of wildlife and timber. It says that many of the cartels, based in Hong Kong, Macau, Taiwan and Thailand are outpacing the ability of law enforcement to match them – and are able to launder proceeds through poorly regulated casinos and the formal banking system in Singapore and Hong Kong, it added. As evidence of the rise of organised crime, the UNODC report highlighted an explosion in production of the drug methamphetamine in Myanmar and its distribution across the Asia-Pacific, often concealed in tea packages.
UK – REGULATION OF PROPERTY AGENTS: WORKING GROUP FINAL REPORT
The Department of Housing, Community and Local Government has published the final report of a working group containing recommendations for government on a new regulatory framework for property agents. It recommends that a new proposed regulatory framework should cover estate agents across the UK and letting and managing agents in England – with all those carrying out property agency work be regulated (including auctioneers, rent-to-rent firms, property guardian providers, international property agents, and online agents). Property portals (e.g. Rightmove) – which do not perform agent functions, the short-let sector (e.g. AirBnB), would be excluded (at least initially). The Government, it says, should create a list of ‘reserved activities’ which can only be performed by a licensed property agent at a regulated firm.
POLICE DISRUPT ORGANISED CRIME GANG RESPONSIBLE FOR SUPPLYING THE CITY OF LONDON WITH COCAINE
A news release from the City of London Police (as opposed to the Metropolitan Police, which is responsible for Greater London) on 15th July advised that City of London Police has disrupted a large-scale organised crime gang responsible for taking orders of cocaine from City workers and delivering the drugs in the Square Mile and central London. Overall, a gang of 12 have been sentenced to over 30 years in prison.
DISCUSSIONS ON SANCTIONS EXEMPTIONS UNDER WAY FOR FOOD AID FOR NORTH KOREA
The Yonhap News Agency in South Korea reported on 18th July that discussions are currently under way with the US to get sanctions exemptions for South Korea’s plan to send food aid to North Korea. South Korea and the UN World Food Programme (WFP) are trying to secure ships that will be used to transport 50,000 tons of rice to the impoverished state struggling with worsening food shortages.
SPACEPORTS OF THE WORLD
The Center for Strategic and International Studies has produced an interactive map for use to discover the history of ground-based space launches around the world, and to learn more about each spaceport. Since 1957, 27 spaceports around the world have been used to launch satellites to orbit. This data repository shows the cumulative launches from each spaceport from 1957 to 2018, as well as the destination orbital regime and inclination for each launch’s primary payload.
FCA TO BAN THE SALE TO RETAIL CLIENTS OF INVESTMENT PRODUCTS THAT REFERENCE CRYPTOASSETS
On 17th July, Paul Hastings published an article saying that the FCA has published its proposals to ban the sale, marketing, and distribution to retail clients of derivatives (e.g. CFD, options, and futures) and exchange traded notes referencing “unregulated transferable cryptoassets” by firms in, or from, the UK. It says that “Unregulated transferable cryptoassets” include well-known tokens such as Bitcoin, Ripple, and Ether, but exclude other types – which are detailed in the article, including e-money tokens. The article looks at why the FCA has proposed the ban, and what are the implications. It says that FCA is currently consulting on these proposals with the deadline for feedback being October 2019, and aims to publish a final policy statement and final FCA Handbook Rules in early 2020.
DR CONGO EBOLA OUTBREAK NOW A PUBLIC HEALTH EMERGENCY
On 17th July, the UN advised that the second-worst Ebola outbreak of all time, in the Democratic Republic of the Congo (DRC), has been officially declared a Public Health Emergency of International Concern, with the head of the WHO calling for countries to ‘take notice and redouble our efforts”. So far, there have been more than 2,500 cases of infection, and nearly 1,670 have died in the provinces of Ituri and North Kivu, where multiple armed groups and lack of local trust have hampered efforts to get the outbreak under control.
ALGERIA’S UPRISING: A SURVEY OF PROTESTERS AND THE MILITARY
The Brookings Institute in the US has produced a briefing in the light of the resignation of President Abdelaziz Bouteflika in April, when he became the 5th Arab president to fall to a mass uprising since the start of the Arab Spring in 2011. It conducted an online survey of over 9,000 Algerians, gauging their attitudes towards the protests and their goals. The survey also includes a large sample of 1,700 military personnel, allowing the Institute to compare and contrast their attitudes with the protesters. It says that the majority of Algerians in the survey support the protest movement and want a complete change of the political system. Protesters and non-protesters alike are fed up with corruption and would prefer a transition to democracy. The lower ranks of the military — the soldiers and junior officers — largely agree with the protesters on these demands, but the senior officers are more resistant. However, moving forward, protesters are likely to come into conflict with military personnel of all ranks over the military’s political and economic privileges post-Bouteflika.
HOW TO ATTACK A UK PATENT OR APPLICATION
On 15th July, UDL published an article saying that attacking UK patents can be costly and time-consuming — but then provides what it says that you need to know about the process and how you can go about it. It says that, in the UK, unless you convince the UK Intellectual Property Office (UKIPO) that an application shouldn’t be granted while it’s still pending, you must start revocation proceedings.
MAPPING THE IMPACT OF ILLICIT TRADE ON THE UN SUSTAINABLE DEVELOPMENT GOALS (SDG)
The Transnational Alliance to Combat Illicit Trade (TACIT) has produced a report about the UN Sustainable Development Goals (SDG), adopted in 2016 and which lay out an ambitious set of 17 goals to address the world’s most acute economic, social and environmental challenges. They cover everything from poverty eradication and zero hunger to clean water, decent jobs and peace. Among the portfolio of tools available to achieve the SDGs is the expansion of international trade – because trade has historically proven to be an engine for development, boosting income generating capacity and contributing to unprecedented reductions in poverty levels. However, the expansion in legal trade has been accompanied by the alarming emergence of illicit trade, with estimates quantifying it and associated transnational criminal activities at between 8% and 15% percent of global GDP. From smuggling, counterfeiting and tax evasion, to the illegal sale or possession of goods, services, humans and wildlife, illicit trade is compromising the attainment of the SDG in significant ways, crowding out legitimate economic activity, depriving governments of revenues for investment in vital public services, dislocating millions of legitimate jobs and causing irreversible damage to ecosystems and human lives. The report argues that insufficient attention has been given to the substantial impact that illicit trade has on holding back progress. Based on the research undertaken in this study, the socio-economic impacts of illicit trade are all quantifiably negative and present significant deterrence to achieving all 17 of the SDG. It says that, while the findings show that illicit trade poses a threat to all 17 SDG, nowhere is the nexus as evident than in SDG 16 (Peace, Justice and Strong Institutions) and SDG 8 (Decent Work and Economic Growth). Across the board, these 2 goals are negatively impacted by all types of illicit trade examined in this study. Chapters in the 130-page report those on the effect on SDG of illicit trade in the agri-food industry and illicit trade in agrochemicals and pesticides; illicit trade in alcohol; illicit trade in counterfeit and pirated goods; illicit trade in forestry products; illegal, unreported, and unregulated (IUU) fishing; illicit trade in petroleum products; illicit trade in pharmaceuticals; illicit trade in precious metals and gemstones; illicit trade in tobacco products; trafficking in persons; and illicit trade in wildlife.
MEETING THE CHALLENGE OF SECONDARY SANCTIONS
The European Council on Foreign Relations has published this briefing on “secondary sanctions”. It defines primary and secondary sanctions in the context of US sanctions as –
- Primary sanctions prohibit companies and individuals in the sanctioning country from engaging with their counterparts in the sanctioned country. Such sanctions apply to US persons, as well as US-origin goods and transactions that take place on US territory or in which the US can assert its jurisdiction; and
- Secondary sanctions are generally directed towards foreign persons. These measures threaten to cut off foreign individuals or companies from the US financial system if they engage in certain conduct with a sanctioned entity, even if none of that activity touches the US directly.
The paper assesses Europe’s main vulnerabilities to secondary sanctions and proposes policies that will restore its freedom of action – or, at least, minimise these measures’ impact. It says that Europe’s exposure to US secondary sanctions is a major foreign policy challenge for which there is no easy solution, particularly in the light of re-imposed US sanctions following its withdrawal from the JCPOA on Iran.
See also this briefing from the Atlantic Council in February 2018 –
US TARGETS RUSSIA’S SOVEREIGN DEBT
An article from the Carnegie Moscow Center on 18th July said that the US is close to banning US nationals from buying or dealing in Russian sovereign debt. It also says that US sanctions on Russian sovereign debt will not have an immediate effect either: they are strategic measures whose impact will only be felt much later. For now, the lack of an immediate effect from the measures will likely be presented as yet another victory for Russia. It says that US sanctions fall into 3 categories: personal, financial, and sanctions against the companies of specific businessmen, and that, to date, only sanctions against the companies of 2 major businessmen, Viktor Vekselberg and Oleg Deripaska, had an impact that was noticed and felt at a national economy-wide level. Financial sanctions that limit Russia’s borrowing are for now ineffective, and will only become truly effective when there is a deficit in the Russian federal budget.
UKRAINE VOWS TO ENHANCE CUSTOMS COLLABORATION WITH EU TO TACKLE CIGARETTE SMUGGLING
EurActiv on 18th July reported that the Ukrainian government has adopted new legislation to strengthen customs co-operation with the EU in order to better combat corruption and smuggling, including tobacco products. It is reported that Ukraine has become a world hub for the supply of illegal cigarettes to Europe. From China, the UAE through Odesa, Belarus, Moldova, from uncontrolled territories [of Donbas] through Ukraine, as a kind of a ‘wild land’, illegal cigarettes go to Europe.
FRAUDULENT PRACTICES ON EUROPE’S ENERGY REFURBISHMENT MARKET
An article on EurActiv on 18th July from GEO PLC about a recent debate on the fight against fraudulent practices in the energy refurbishment sector in Europe. It says that every year, in Europe, several billion euros are invested in energy refurbishment – such as energy transition tax credit, eco-loans, national housing agency subsidies, grants and bonuses for households, industries or local authorities to carry out various projects, such as the free insulation of roofs, the replacement of oil boilers, etc. In Ireland, Italy and France, fraud, malfunctions and household mistrust have been reported by media organisations, politicians and energy suppliers, and these are real obstacles to achieving large-scale refurbishment. The article says that the energy refurbishment sector should also be getting its own national authorities (as happened for the financial sector). Such a body would impose processes for the setting up of financing files by ensuring the consent of households. It would also have the power to supervise worksites, issue approvals and even withdraw them.
UK TAX AVOIDANCE LITIGATION DECISIONS
On 18th July, HMRC published details of litigation decisions where it considered tax avoidance was involved. The yearly reports are from 2015/16 to 2018/19.
IMPROVING WITNESS TESTIMONY
On 18th July, the House of Commons Library published a briefing paper which says that witness testimonies are often seen as a strong form of evidence by police, judges and jurors. However, as with any evidence, the reliability of witness testimony decreases if it is not carefully obtained, managed and handled during investigations and prosecutions. It refers to research which indicates that witness testimony that incorrectly implicated a defendant was a leading factor in wrongful convictions. In a 2018 review of 365 wrongful conviction cases in the US where an individual was later exonerated by DNA evidence, 69% involved inaccurate witness identifications of the suspect.
UKRAINE OPENS NEW CORRUPTION INQUIRY IN DEFENCE INDUSTRY
Interfax Ukraine on 18th July reported that Ukrainian law enforcement agencies have been revealed another corruption scheme in the defence industry, whereby dubious contracts were used to remove $300 million to offshore companies.
ETHIOPIA SECURITY DILEMMAS
On 18th July, RUSI published a Commentary which starts by saying that the recent murders of regional officials and top federal army officers raise serious questions about Ethiopia’s ability to manage and contain various regional militias and militant formations which could threaten the country’s territorial integrity.
ARGENTINA HAS DESIGNATED HEZBOLLAH A TERRORIST ORGANISATION
Kenneth Rijock in his blog on 18th July reported that Argentina has designated Hezbollah a terrorist organisation – the first Latin American state to do so, and ordered that all its assets in the country be frozen. The government has also created a Register of Persons & Entities Linked to Acts of Terrorism and Terrorist Financing, (RePET and Renapost).
EUROPOL: 5G WILL MAKE INVESTIGATING ORGANISED CRIME HARDER
On 18th July, OCCRP reported that Europol’s new director, Catherine De Bolle, has said in an interview that emerging 5G technology will disable Europol from tapping criminal communications and will therefore make it harder to investigate organised crime. Unlike 4G, 5G will encrypt the unique identifiers that enable the identification and geo-location of mobile phone users, making intercepting and investigating communications between suspected criminals more challenging; and the sheer bulk of information that 5G would allow users to quickly download and transfer is also poised to easily overwhelm law enforcement.
UK-WIDE COMPANIES SHOULD BEWARE SCOTTISH DEBT RECOVERY LIMITS
An article from Out-Law on 18th July warns companies that the limitation period for recovery of debts in Scotland is 5 years, and not the 6 years that it is in England.
BERMUDA INSURANCE VEHICLE OVERHAUL WELCOMED – BUT WILL NEW VEHICLE TAKE OFF?
On 18th July, an article from Appleby said that the insurance-linked securities (ILS) market has broadly welcomed moves by the Bermuda Monetary Authority to create a new collateralised insurance vehicle, but opinions vary on whether the new rules will prove to be onerous.
SEC ASSET FREEZE ON A PUMP AND DUMP SCHEME TARGETING ELDERLY RETAIL INVESTORS
A release on Mondo Visione on 18th July reported that the SEC has announced an emergency action charging 2 individuals with running a pump and dump scheme targeting retail investors. The SEC also obtained an emergency court order freezing the defendants’ assets. It is said that Florida resident Garrett M. O’Rourke and Maryland resident Michael J. Black worked together between 2016 and 2018 to fraudulently sell the stock of several microcap companies to investors, including elderly retail investors, using high pressure stock promotional campaigns.
The release also contained information saying how investors can find additional information about such pump and dump schemes, including the warning signs of fraud, on Investor.gov. The Office of Investor Education and Advocacy and Division of Enforcement’s Retail Strategy Task Force has also issued Investor Alerts about these types of fraud, and links to relevant websites are included in the release.
PUMP AND DUMP SCHEMES
In the US, the SEC has a website containing information about co-called pump and dump frauds. In a pump and dump scheme, fraudsters typically spread false or misleading information to create a buying frenzy that will “pump” up the price of a stock and then “dump” shares of the stock by selling their own shares at the inflated price. Once the fraudsters dump their shares and stop hyping the stock, the stock price typically falls and investors lose money.
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