UNREST IN BURUNDI
The Daily Maverick on 15th January carried a piece reporting on ongoing unrest in Burundi, saying that since President Pierre Nkurunziza announced that he would run for a third term in early 2015, political instability across the country has tested the limits of global conflict prevention responses. This instability has included a failed coup d’état, violent clashes between government and opposition forces, increasing suppression of the media and civil society, as well as targeted assassinations. The violence has resulted in more than 400,000 Burundians fleeing to neighbouring states and over 55,000 internally displaced, amid allegations of serious human rights violations in the country. The International Criminal Court has opened an investigation into alleged crimes.
CHANGES TO AUSTRALIAN AML/CFT RULES
On 15th January, law firm Herbert Smith Freehills published a briefing on a number of practical changes that are included in a set of amendments to AML/CTF Rules that were registered with immediate effect by AUSTRAC in Australia on 11th January. These include changes to the rules for identification of customers, customer due diligence, ongoing risk assessments and independent review.
ANOTHER PANAMA BRIBERY SCANDAL
Swissinfo on 16th January reported that Panama is investigating over 30 people suspected of bribery offences in the so-called “Blue Apple” affair – accused of taking bribes of around £29 million in 2011-12 for public works projects, with the money sent to Blue Apple Services or laundering through banks. The network is said to include lawyers, public officials and businessmen.
BAR COUNCIL CRITICISES NEW UK AML/CFT QUANGO
On 15th January, the Law Society Gazette in the UK reported that the Bar Council (which represents barristers in England & Wales) has poured further scorn on plans to set up new AML quango, saying its members could be asked to foot the bill for a body that is irrelevant to most of their practices. It said the ‘low-risk’ profile of the bar must be taken into account when determining the level of fees to pay for the Office for Professional Body Anti-Money Laundering Supervision (OPBAS), for which it is said there is ‘little justification’.
FAL CONVENTION – E-REPORTING BY SHIPS
On 16th January, Shipping Insight carries an article on the beginning of mandatory electronic reporting of ships – a result of the 2016 changes to the 1965 Convention on Facilitation of International Maritime Traffic (aka FAL Convention) it owes much to the EU’s determination to digitise shipping. It points out that changes are, at least for the present, limited to details on cargo crew and passengers, whereas ships visiting most ports are obliged to complete a general declaration, a crew list plus a crew effects and a ships stores declaration and up to 3 further FAL-compliant forms depending upon whether they have cargo, passengers or hazardous goods on board – the general declaration and cargo declarations are generally completed by the ship’s agent but only the ship has full details about crew, crew effects and ships stores on board. The article says that under the new IMO FAL rules, there is an obligation on public authorities to establish systems for the electronic exchange of information, within a period of 3 years, with a transitional period of 12 months from the date of the introduction of such systems to make electronic transmission mandatory, during which period both paper and electronic documents will be allowed. Looking at electronic shipping documents more generally, according to the IMO, only 7 flag states are listed as issuing electronic certificates that would be required for presentation to port authorities – Bahamas, Denmark, Germany, Isle of Man, Liberia, Marshall Islands and Sierra Leone.
BBC: ‘STAGGERING’ TRADE IN FAKE DEGREES REVEALED
On 16th January the BBC reported that thousands of UK nationals have bought fake degrees from a multi-million pound “diploma mill” in Pakistan, a BBC Radio 4’s File on Four programme investigation has found (link below). Buyers are said to include NHS consultants, nurses and a large defence contractor. One British buyer spent almost £500,000 on bogus documents. Axact, which claims to be the “world’s largest IT company”, operates a network of hundreds of fake online universities run by agents from a Karachi call centre. with names such as Brooklyn Park University and Nixon University.
The broadcast also reveals buyers of fake qualifications apparently being effectively held to ransom, with a sort of blackmail, by the company as well.
CENTRAL BANK OF IRELAND PUBLISHES SUBMISSIONS ON THE REFORM OF IRELAND’S WHITE COLLAR CRIME LAWS
Law firm A&L Goodbody on 12th January reporting that the Central Bank had published its response to a 2016 Law Reform Commission Issues Paper which had called for submissions on the reform of Ireland’s laws regarding white collar crime, with recommendations largely consistent with recent changes in the UK: including a criminal offence for senior management of financial institutions whose reckless decisions cause the institution’s failure, a new agency to deal with financial crime, more regulation of senior personnel, enhancing the “fit and proper” requirements.
NEW GUIDANCE POINTS TO POTENTIALLY AGGRESSIVE APPLICATION BY THE US OF SECONDARY SANCTIONS ON RUSSIA
In a briefing dated 11th January, Steptoe & Johnson LLP refers to recent US Treasury and State Department guidance. It refers to the CAATSA legislation, which the guidance that State and OFAC have issued suggests that they intend to implement CAATSA, as required by the statute. The briefing says that this calls for caution by those engaged in commerce or financial transactions involving Russia, and the firm expects continued pressure from Congress in 2018 to ensure aggressive implementation of these statutory mandates. The situation, it says, is not helped by the fact the agencies interpret the same terms from CAATSA differently, depending on the context of the specific statutory provision.
WHAT COULD HAPPEN TO IMPORTS IF THE US GOVERNMENT SHUTS DOWN: 2018 VERSION
Law firm Arent Fox on 12th January ponders what is likely to happen if US Government agencies run out of money. It points out that the government is funded until January 19th and the prospect of a shutdown is growing. It says that cargo clearance operations would continue, and entry review screening for cargo security and screening for illegal imports would continue. However, CBP staff not directly connected to processing cargo (mainly at headquarters and regional offices) would be furloughed and as a result, some non-essential trade activity would stop.
RUSSIAN COMPANIES SUPPORTING NEW CRUISE MISSILE ADDED AS DESIGNATED ENTITIES BY THE US
On 12th January, Crowell & Moring reported that, on December 20th, the US Bureau of Industry and Security added 2 Russian companies to its Entity List because they provided technology which aided the development of a new Russian cruise missile — the nuclear-capable Novator 9M729 missile (designated by NATO as the SSC-8, codename “Slingshot”) — which the US alleges is a violation of the 1987 Intermediate Nuclear Forces Treaty (INF). It points out that this action is part of the new Trump Administration INF Treaty Integrated Strategy. The designated parties are:
- JSC Experimental Design Bureau Novator; and
- JSC Federal Scientific and Production Center Titan-Barrikady.
USE OF RELATED PARTY TRANSFER PRICES FOR CUSTOMS VALUE UNDER EU LAW
In its monthly international trade newsletter for December, on 12th January Crowell & Moring reported that the EU ECJ had Significantly Limited the Use of Related Party Transfer Prices for Customs Value, when it decided that a company may not use transaction value for customs valuation purposes when a transfer price consisted of both an amount initially invoiced and declared, and a flat-rate adjustment made after the end of the accounting period. The 20th December decision involved German company Hamamatsu Photonics Deutschland GmbH (Hamamatsu Deutschland), a subsidiary of Hamamatsu Photonics of Japan. It points out that the fact that the judgment is based on the old Community Customs Code rather than the current Union Customs Code, which entered into force in 2016, is unlikely to affect the applicability of the conclusions.
CANNABIS: A BUDDING CANADIAN INDUSTRY
On 11th January Norton Rose Fulbright published a briefing starting with a quotation from a recent EY report which said – “This is an unprecedented opportunity for the country to be the global leader in the cannabis space, to shape the regulatory framework for cannabis around the world and to spur innovation and economic productivity “. It goes on the briefly review the content and implications.
CANADIAN APPEAL COURT DECIDES “VIRTUAL PRESENCE” IS ENOUGH FOR PRODUCTION ORDER FOR USER INFORMATION AGAINST NON-CANADIAN COMPANY
In a briefing dated 12th January, McInnes Cooper reported on a Canadian case where the RCMP sought a production order for information from a non-Canadian business, Craiglist, with only a “virtual” existence in the country in British Columbia (Attorney General) v. Brecknell.
CRIMINAL PROSECUTION TO POLICE FOREX TRADING ACTIVITIES IN THE US
In a briefing on 11th January, the Brattle Group reports that 2 of its principals have co-authored an article on Law360 discussing the use of criminal prosecution to police trading practices in institutional financial markets in the US and the recent case involving HSBC’s former foreign exchange executive, Mark Johnson, who was convicted for misappropriating inside information in a large foreign exchange (FX) trade.
UNMANNED VESSELS AND THE CARRIAGE OF GOODS – CONTRACTUAL AND INSURANCE CONSIDERATIONS
On 12th January, Clyde & Co reported that in 2017 Clyde & Co partnered with the Institute of Marine Science, Engineering and Technology (IMarEST) to research the adoption of new technologies in the shipping sector. Its research on unmanned vessels revealed that while the industry is in the early adoptive stages, best practice for regulating, insuring and managing liability need to be clarified before the industry will see wide spread adoption. It suggests that, if unmanned vessels are the future of shipping, the legal and insurance position will need to respond to the precise way in which the technology operates, but that for carriage of goods, the key contractual considerations are likely to remain broadly the same.
See also its “Technology in Shipping” report from November 2017 –
CANADA’S INDIRECT ECONOMIC SANCTIONS: THE ROLE OF EXPORT DEVELOPMENT CANADA (EDC)
On 15th January LexSage produced an interesting article detailing the indirect role of EDC in limiting or preventing Canadian exports to certain destinations – not just those subject to UN sanctions. The EDC is Canada’s export credit agency/trade finance agency. It extends credit to Canadian businesses (big and small) to facilitate export sales. If the EDC will not provide trade insurance, export financing or bonding products for exports to certain countries, many Canadian businesses are not able to pursue opportunities in those markets (unless the business is able to self-fund or obtain banks financing and insurance). A prominent example quoted is Russia – Canadian companies cannot get EDC financing or insurance to do business in Russia. Many countries are subject to restrictions and some (e.g. Afghanistan, Algeria, Pakistan, Sri Lanka, Tunisia) are not subject to Canadian economic sanctions.
EU PROPOSES REMOVING 8 COUNTRIES FROM BLACKLIST
Reuters on 16th January reported that EU officials have proposed removing 8 jurisdictions from the blacklist of tax havens the bloc adopted in December, after they offered to change their tax rules, according to EU documents seen by Reuters – Panama, South Korea, UAE, Barbados, Grenada, Macao, Mongolia and Tunisia.
EU OPPOSES EXCISE TAX ON E-CIGARETTES AND NOVEL TOBACCO PRODUCTS, FOR NOW
EurActiv reports on 16th January that the European Commission has decided not to propose a harmonised approach for excise taxation of e-cigarettes and other novel tobacco products until further information about these products is available. It said that it would re-examine the situation in the next regular report on tobacco taxation due in 2019.
CYPRUS: BETTING COMPANY SEEKS ENDING OF INVESTIGATION INTO REVENUE STREAMS
The Cyprus Mail reports that the Cypriot Supreme Court has given the green light to betting giant Opap Cyprus to file for a second injunction to stop police investigations into its revenue stream. It reports that the probe into Opap’s revenue stream was launched after the Auditor-General, while looking into the agreement between the betting company and the state, reported that he had found information on suspicious financial transactions between Opap Cyprus and an individual living overseas. This information was passed on to police, who opened an investigation. In November Opap secured an initial court injunction that stopped a first police search warrant, after the court found fault with police procedures.
BIRMINGHAM MORTGAGE FRAUD GANG ORDERED TO REPAY £13 MILLION
Birmingham Mail reports that 3 men – including the brother of a feared Birmingham criminal – have been ordered to pay back £13 million after a huge mortgage fraud or face more jail time. They are the 2 brothers and a sister-in-law of Mohammed Suleman Khan (aka MSK). It says that this marks the culmination of an operation by a crack team combining the strengths of the Regional Organised Crime Unit’s Regional Assets Recovery Team West Midlands (RART) and the Economic Crime Unit of West Midlands Police.
REVISED UK AML/CFT GUIDANCE
Shearman & Sterling on 15th January reported that the UK Joint Money Laundering Steering Group has published final revised guidance on AML/CFT for the financial services sector. The revised guidance released on 21st December will only replace the existing guidance once it has been approved by HM Treasury. However, the JMLSG notes that firms may use the revised version if they wish to.
RUSSIA LOOKS TO IMPOSE SANCTIONS ON WADA OFFICIALS
On 16th January, the European Sanctions Blog reported that Russian lawmakers have begun formulating sanctions against officials of the World Anti-Doping Agency (WADA) responsible for banning the Russian national team from participating in the 2018 Winter Olympic Games in PyeongChang in South Korea.
MALAYSIAN PLASTIC RECYCLERS HOPE TO CLEAN UP AFTER CHINA IMPORT BAN
Customs Today reports that Heng Hiap Industries is just one of the SE Asian plastics recycling companies gearing up to benefit from China’s decision to ban imports of plastic waste from the start of 2018. Before the ban China was the world’s dominant importer of such waste. In 2016, it imported 7.3 million tonnes of waste plastics, valued at $3.7 billion, accounting for 56% of world imports.
FRENCH WEALTH TAX LIMITED TO REAL ESTATE
Customs Today on 16th January announced that French residents no longer have to pay a wealth tax on savings and investment income, after sweeping tax reforms came into effect limiting it to real estate. In September 2017, the French Government announced that a number of tax reforms, including significant tax cuts for investment assets and income.
NEW HONG KONG AIRCRAFT LEASING AND FINANCING ARRANGEMENTS
Berwin Leighton Paisner has published a briefing saying that Hong Kong is expected to become one of the world’s most attractive jurisdictions for aircraft leasing and financing following changes to tax rules. The article focusses on leases for Russian airlines.
PROBLEMS PERSIST FOR BRITISH LORRIES IN CALAIS
Lloyds Loading List on 16th January reports that British lorries are still being attacked on a daily basis in Calais. RHA says migrants and traffickers continue to threaten safety of drivers, claiming it has evidence of French authorities allowing stowaways to pass undetected.
MEGAUPLOAD FOUNDER LOSES EXTRADITION FIGHT IN NEW ZEALAND
On 14Th January the Jurist website reported that Internet pirate Kim Dotcom suffered another legal setback last month in his fight to avoid extradition from New Zealand to the US, where he is facing charges relating to a massive copyright infringement when the High Court rejected all of Dotcom’s contested arguments against extradition. He was behind Megaupload, one of the world’s biggest Internet sites when it was shut down by the DoJ in 2012. Ostensibly a cloud-based storage system for large files, the site produced more than $175 million per year in revenue generated by its premium subscribers and third-party advertising attracted by the site’s 50 million daily visitors.
TRACE PODCAST: US SOCCER GOVERNANCE
In the latest TRACE podcast, Grant Wahl of Sports Illustrated discusses power, governance and the upcoming election at the US Soccer Federation as Sunil Gulati steps down.
VENEZUELAN MILITARY “INVOLVED IN CONTRABAND MINERALS TRADE”
Insight Crime on 15th January reported that 2 congressmen in Venezuela allege that members of the armed forces play a central role in the country’s contraband mineral trade, and claimed that there is no coltan, gold or diamond operation that the Bolivarian National Armed Forces (Fuerza Armada Nacional Bolivariana — FANB) do not control, so the contraband of minerals is sponsored, orchestrated and executed by members of the FANB.
WEAPONS OF RUSSIAN SNIPERS
The Firearms Blog in the US has an interesting entry analyzing photos of Russian army snipers’ weaponry during a recent military exercise.
LITHUANIA BLACKLIST BANS 49 RUSSIANS FOR ALLEGEDLY VIOLATING HUMAN RIGHTS OR ENGAGING IN CORRUPTION AND MONEY LAUNDERING
FFERL published an article on 16th January about the Magnitsky Law sanctions list issued by Lithuania and banning 49 Russians for allegedly violating human rights or engaging in corruption and money laundering, and including Ramzan Kadyrov, the leader of Russia’s Chechnya region. It reports that also targeted on the Lithuanian blacklist are Russian Investigative Committee chief Aleksandr Bastrykin, who is accused of carrying out numerous politically charged cases against Putin opponents, and Russian lawmaker Andrei Lugovoi, who is accused in the poisoning death of Kremlin critic Aleksandr Litvinenko at a hotel in London in 2006.
STRINGENT NEW SOLID WASTE IMPORT AND REPROCESSING REGULATIONS ADOPTED BY CHINA
On 16th January HKTDC in Hong Kong reports that new regulations regarding the import of solid wastes and their subsequent reprocessing into raw materials have been introduced by China’s Ministry of Environmental Protection with effect from 15th December.
BRITISH POLICE DROP FRAUD CHARGES AGAINST EX-RABBI
The Times of Israel on 16th January reported that an investigation has been dropped against a British banker in Manchester who heads an investment firm and was arrested on suspicion of conspiracy to commit fraud. Benji Silverstone, who heads the HBFS Wealth Management office in Manchester, has worked there for nearly 5 years after serving over 9 years as a rabbi and the Manchester director of the Jewish outreach group Aish Hatorah.
TRADE UNIONS WELCOME FREEZING OF GUPTA-RELATED ASSETS
News 24 in South Africa reports that the Congress of South African Trade Unions (Cosatu) said on 16th January that it hoped freezing the assets of Gupta-linked companies McKinsey and Trillian, combined with the Commission of Inquiry into state capture, would signify the “beginning of the end of the Gupta patronage network that has wreaked havoc on our economy”.
29 ARRESTS OVER $300 MILLION VAT FRAUD IN ISRAEL
The Times of Israel reports the arrest of 29 people over a $300 million VAT fraud in Israel that is said to have begun in 2015. The suspects, including a senior official at a major bank, are believed to have issued fictitious receipts in the construction industry. It is reported that among the detainees were several people — including 2 heads of an unnamed crime family — who were arrested in Spain. More arrests are expected.
CZECH PM WANTS TO DEFEND HIMSELF AGAINST FRAUD CHARGES
Prensa Latina reports that the Czech Prime Minister, Andrej Babis, requested that Parliament withdraw immunity to defend himself against the charges against him of misuse of EU funds.
See also –
144 INTELLIGENCE REPORTS SENT TO POLICE BY MALTA FIU SINCE 2013
Malta Independent reports that the answer to a question in parliament reveals that the Financial Intelligence Analysis Unit submitted a total of 144 intelligence reports on money laundering to the police since 2013. The data shows that 26 intelligence reports were passed on to the police by the FIAU in 2013, 27 in 2014, 20 in 2015, 39 in 2016 and 32 by 30 November 2017.
UK LIST OF THOSE BANNED FROM RUNNING AN EMPLOYMENT BUSINESS
On 16th January the UK Department for Business, Energy & Industrial Strategy issued an updated list containing details of people who have been banned from running an employment agency or business, including the period of the ban.
AMENDMENTS TO UK SANCTIONS AND AML BILL
The always on the ball European Sanctions Blog on 16th January reported on the state of the UK’s Sanctions and AML Bill as it enters the Report Stage of its passage through the House of Lords. The blog entry lists the various amendments proposed by the government after discussions with the members of the upper house. These include an express requirement to provide details (subject to national security restrictions) of the case against the person designated to that person, and an enhanced requirement to provide guidance and review designations. 2 government amendments were defeated, so that (for the moment) the Bill makes more explicit the purposes for which sanctions regulations can be made (including for human rights violations), and there is now no power for the Government to create new criminal offences.
ISLE OF MAN Q&A ON ICO
On 21st December, the Isle of Man FSA published a Q&A on initial coin offerings (ICO).