22nd February 2018
BRITAIN SOLD SPYING GEAR TO PHILIPPINES DESPITE DUTERTE’S BRUTAL DRUGS WAR
The Guardian on 21st February reported that the British government sold £150,000 of hi-tech spying equipment to the Philippines. The equipment purchased by Duterte’s government included IMSI-Catchers, which are used to eavesdrop on telephone conversations, and surveillance tools to monitor internet activity. Duterte has admitted authorising the wiretapping of at least 2 mayors whom he accused of being “narcopoliticians”, including the Ozamiz city mayor, Reynaldo Parojinog. Parojinog and 14 other people were killed in a police raid on his home last July.
NATIONAL SPACE COUNCIL PUSHES FOR NEW US COMMERCIAL REGULATIONS
Satellite Today on 21st February reported that members of the Council agreed on a number of new recommendations to reform commercial space regulatory frameworks at the Departments of Transportation and Commerce. Originally created to co-ordinate policies between NASA and other agencies involved in space, the Council had been inactive since 1993 until the Trump Administration. The Council also said it would initiate a policy review of the current export licensing regulations affecting commercial space activity. Council members were reported to have focused their discussion on how to make it easier for US companies to break into the space business, while also shoring up the government’s ability to protect its intergalactic assets, such as spacecraft and satellites.
SWISS BANKS INVESTIGATED OVER VENEZUELAN ‘MONEY LAUNDERING’
Telesur on 21st February reported that an investigation has been launched into several Swiss banks following allegations that Venezuelan former officials were involved in a corruption scandal at state oil company Petroleos de Venezuela (PDVSA) and follows sanctions placed last month against 5 former officials accused of soliciting bribes to help vendors win favourable treatment from PDVSA, as well as hiding extra profits in Switzerland. FINMA is investigating whether the Swiss banks – which have not yet been identified publicly – adhered to laws designed to combat money laundering.
BAVARIAN APARTMENTS, RUSSIAN INVESTORS AND A SUSPECT HOUSING DEAL
Handelsblatt on 21st February reported that the 2013 €2.5 billion sale of 32,000 apartments by the Gemeinnützige Bayerische Wohnungsgesellschaft (GBW), a real estate subsidiary of Bayerische Landesbank, the 8th largest financial institution in Germany and 94% owned by Bavaria’s state government, is raising eyebrows as new details have led to allegations of Russian money laundering in connection with the deal. It says that a joint investigation by Handelsblatt and Monitor, a news program from state broadcaster ARD, has turned up numerous indications that money laundering was involved. The buyer was a consortium of investors led by a real estate firm called Patrizia Immobilien AG, with the involvement of a main shareholder that is an investment fund listed in Luxembourg. Funds came from sources that included 2 companies that had received millions of euros from Russia and Cyprus.
FATF REMOVES LIBYA FROM TERROR-FINANCING WATCH LIST
Xinhua on 22nd February reported that FATF has removed Libya from the list of countries unable to fight money laundering and terrorism financing, the Central Bank of Libya said in a statement.
http://www.xinhuanet.com/english/2018-02/22/c_136991254.htm
CHINA’S TRASH BAN FORCES EUROPE TO CONFRONT ITS WASTE PROBLEM
Politico on 22nd February carried an article that says that until the beginning of this year, the EU kept itself clean by sending millions of tons of paper, cardboard, plastics and textiles on cargo ships to China. Of the 56.4 million tons of paper EU citizens threw away in 2016, some 8 million ended up in China, purchased by recycling centres that turn it into cardboard and send it back to Europe as packaging for Chinese exports. That same year, the EU collected 8.4 million tons of plastic waste, and sent 1.6 million tons to China. At the end of 2017, Beijing put in place strict limits on imports of foreign waste, and after only 8 weeks Europe is struggling to deal with mountains of plastic and paper waste.
NOTE TO EU BUSINESS OPERATING IN CRIMEA AND SEVASTOPOL
A reminder that on 13th February the EU reissued an updated version of its information note on restrictive measures in line with the non-recognition policy of the illegal annexation of Crimea/Sevastopol. The update aims at providing some indication of what the de facto application of Russian legislation in Crimea and Sevastopol might entail for foreign businesses, considering that such legislation may be in contradiction with the applicable Ukrainian laws.
http://ec.europa.eu/growth/content/note-eu-business-operating-crimea-and-sevastopol_en
UNION TRANSIT: MOVING GOODS BETWEEN 2 EU TERRITORIES
HMRC has reissued updated guidance on how to use Union Transit (formerly called Community Transit or CT) to move non-EU goods within the EU and to move goods to or from the special territories.
https://www.gov.uk/guidance/transit-and-other-suspensive-regimes
POST-BREXIT PORT HEALTH BORDER DISRUPTION STILL A MAJOR CONCERN FOR BRITISH PORTS
On 22nd February, the British International Freight Association reported that the British Ports Association warned that without agreements on cross-border environmental health standards there could be major disruption at UK and EU ports. The DEFRA report ‘Brexit: Trade in Food’ suggested that changes in UK–EU trade arrangements could lead to serious disruption for food supply chains.
COMBATING HUMAN TRAFFICKING BY THE FORMER YUGOSLAV REPUBLIC OF MACEDONIA
On 21st February the Council of Europe reported that, in its news report, the Council anti-trafficking expert group (GRETA) welcomes positive developments in “the former Yugoslav Republic of Macedonia” and calls on the authorities to do more to lower human trafficking risks for children and migrants. It says that there was progress in legislation and practices, more needed to lower risks for children and migrants. Expressing concern about the low number of convictions, GRETA calls on the authorities to secure adequate funding and sufficient staff for proactive investigative work as well as to ensure successful prosecution and effective sanctions.
MEPs BAR WMD AND KILLER ROBOTS FROM NEW EU ARMS FUND
EU Observer on 21st February reported that Members of the European Parliament’s industry and research committee decided on 21st February that the development of small arms for export purposes should not be excluded from a new EU fund for defence research. They did list, however, some other weapon types that must not be supported with EU taxpayer money – projects related to WMD, as well as fully autonomous weapons (or “killer robots”).
https://euobserver.com/science/141056
SWITZERLAND ALIGNS DRC SANCTIONS WITH EU
Swissinfo on 22nd February reports that following the lead of the European Union, Switzerland has extended its sanctions against the Democratic Republic of the Congo (DRC). The measures include financial sanctions against 14 people – who are also banned from entering Switzerland.
https://www.swissinfo.ch/eng/congo_swiss-freeze-assets-in-new-drc-sanctions/43918938?src=ilaw
PARLIAMENTARY COMMITTEE TO EXAMINE THE OPERATION AND EFFECTIVENESS OF THE UK’S ARMS EXPORT LICENSING PROCESS
The UK Parliament website reports that the Committees on Arms Export Controls (CAEC) question Amnesty International, Oxfam and Saferworld on UK arms exports during 2016 as it looks at matters contained within the Government’s 2016 Annual Report on Strategic Export Controls, including the operation and effectiveness of the UK’s arms export licensing process. The Committees will also look at international policy developments and controls on arms brokering. CAEC is the joint meeting of the Defence, Foreign Affairs, International Development, and International Trade Select Committees to scrutinise arms exports.
ADANI MINING GIANT FACING RENEWED CLAIMS OF $600 MILLION FRAUD IN INDIA
The Guardian on 21st February reported that India’s customs department has revived allegations of a $600 million financial fraud against the Adani Group, challenging an order clearing the mining giant last year as “erroneous, illegal and improper”. Adani has been fighting allegations for the past 4 years that it used a shell company in Dubai to siphon hundreds of millions of dollars from the company’s books into Adani family tax havens overseas. The Indian conglomerate is preparing to build one of the world’s largest coal mines in Australia.
BUSINESSMAN LINKED TO CONTROVERSIAL RUNCORN FLATS PROJECT CONVICTED OF FRAUD
The Liverpool Echo reported on 21st February that a property developer with links to a doomed Runcorn flats project has been handed a suspended prison sentence and £10,000 fine for fraud in a case brought by a disgruntled creditor. Andrew John Camilleri, 37, who now lives in Switzerland having previously been based in Manchester, was sentenced to 12 months in prison suspended for 12 months. A jury had convicted him of making false representations and fraudulently obtaining approval from creditors connected to false representations in his individual voluntary arrangement (IVA) – a procedure used to determine how much he could repay investors when he was facing bankruptcy in 2011.
NEW PROTECTION AGAINST IDENTITY FRAUD FOR COMPANY DIRECTORS IN UK
On 22nd February the Department for Business, Energy and Industrial Strategy published a news release saying that laws will make it easier for directors to remove personal addresses from the company register while ensuring transparency, and will enable company directors to remove their personal addresses from the UK’s official company register on Companies House. Directors must still provide their business address as a legal requirement.
https://www.gov.uk/government/news/new-protection-against-identity-fraud-for-company-directors
TENNESSEE COMPANY SKIRTS CUSTOMS OBLIGATIONS AND PAYS $500,000 FCA PENALTY
On 21st February, Bass, Berry & Sims published an article about Home Furnishings Resource Group Inc (HFRG) which had agreed to a $500,000 settlement to resolve allegations that the company violated the False Claims Act (FCA). The DoJ contended that HFRG made false statements on customs declarations to avoid paying anti-dumping duties on wooden bedroom furniture that HFRG imported from China between 2009 and 2014, and misclassifying it. The case was initiated by a competitor of HFRG, University Loft Company (ULC), which made the allegations under the whistleblower provisions of the FCA.
https://www.jdsupra.com/legalnews/tennessee-company-skirts-customs-74001/
COMPANIES UNPREPARED FOR LEASE ACCOUNTING STANDARD
CCH Daily on 22nd February reported that, with under a year to go, many companies are at risk of being caught unprepared for new lease accounting rules under IFRS 16, which come into force next January and require imminent action to ensure compliance and prepare comparative data. It is pointed out that for several industries, such as retail, real estate, airline, transport and energy, this could well become one of the most material items on their balance sheets, and the airline industry will be particularly affected.
https://www.accountancylive.com/companies-unprepared-lease-accounting-standard
582 ARRESTED IN HONG KONG CUSTOMS’ LUNAR NEW YEAR ANTI-SMUGGLING OPERATION
Xinhua reported on 22nd February that total of 582 people have been arrested in Hong Kong in a 19-day special operation against cross-boundary smuggling activities before and during the Lunar New Year, the Customs of China’s Hong Kong Special Administrative Region (HKSAR) announced. It detected a total of 655 cases with the arrest of 582 persons, resulting in the seizure of items with an estimated value of about US$6.77 million. Most of the seized items were synthetic drugs, including cathinone (commonly known as “bath salt”), methamphetamine (commonly known as “ice”) and cannabis buds, which were seized mainly from inbound air parcels and air passengers.
www.xinhuanet.com/english/2018-02/21/c_136989396.htm
HIGH COURT ORDERS MANUAL DOCUMENT SEARCH IN $65 MILLION DAMAGES CLAIM AFTER CONCERNS OVER COMPUTER REVIEW
Litigation Futures on 22nd February reports that a UK High Court judge has ordered a manual search of 55,000 documents in a $65 million breach of warranty case because of concerns over the claimants’ approach to computer-assisted review (CAR). He said disclosure had been “something of a running sore in this case”, which potentially involved three terabytes of data made up of 20 million electronic documents in 860,000 folders.
BEYOND THE DARK WEB: ARMS TRAFFICKING IN THE DIGITAL AGE
On 16th February, Small Arms Survey published a post which says that online activities related to arms trafficking occur throughout the Internet, including on mainstream websites (i.e. not just on the Dark Web). This activity ranges from outreach to potential clients on social media to the procurement of weapons, ammunition, and accessories from online vendors. It points out, however, that arms trafficking remains tethered to the real (physical) world in important ways. In fact, very few illicit transfers are conducted entirely online. Weapons are physical objects that are manufactured, stored and transported offline. Technological advancements such as 3D printing could eventually sever some of the links between the real and virtual worlds but, for now, most ‘online’ arms trafficking involves extensive offline activities and interactions. It goes on to consider matters under the headings of –
- advertising (perhaps the most important role played by the Internet is efficiently connecting potential buyers and sellers of illicit weapons, including via social media);
- procurement (it says that some traffickers purchase most or all of their merchandise from online vendors);
- technology transfers (the illicit sharing of technical data on the creation, assembly and use of weapons); and
- moving forward (the continued links between the virtual and physical worlds provide additional opportunities for authorities to detect online trafficking networks and interdict arms shipments arranged by these networks. That said, the improving quality and increasing availability of 3D-printers and other production technologies could eventually tip the scales in favour of online traffickers, with potentially dire consequences for export control regimes).
SENIOR PALESTINIAN AUTHORITY OFFICIAL “EMBEZZLED EU AID MONEY”
On 21st February, Baker McKenzie reported that a top Palestinian official spent hundreds of thousands of dollars in aid money provided by the EU on personal expenses like overseas travel, electronics and landscaping, according to information obtained by i24NEWS. Sources in Gaza, Ramallah and Europe said that Marwan Durzi, the ex-head of the UN Development Program (UNDP) in the West Bank and the current head of the Palestinian co-ordination office for Zone C (the part of the West Bank under full Israeli military control) took advantage of his position overseeing grants provided by the EU for humanitarian purposes.
BIG GUNS TEAM UP FOR MARCO POLO BLOCKCHAIN TRADE FINANCE INITIATIVE
On 21st February, Fintech Futures carried an article that says that the big names are out in force for a new blockchain-fuelled trade finance initiative called Marco Polo. Launched in September 2017, with BNP, Commerzbank and ING as core banks, the initiative has attracted interest from others, with additional banks including Standard Chartered, DNB and the OP Financial Group joining in recent months. The aim is for the solution to enable “end-to-end, real-time, seamless connectivity between trade participants, eliminating the data silos which prevent free flow of information causing inefficiencies and discrepancies”. Initially it is focused on 3 distinct areas: risk mitigation by provision of payment commitments based on the matching of trade data, payables finance, and receivables finance. The ambition is to expand the initiative in 2018 to include additional banks and third party service providers, such as credit insurers, enterprise resource planning (ERP) and logistics providers.
www.bankingtech.com/2018/02/big-guns-team-up-for-marco-polo-blockchain-trade-finance-initiative/
MORE UK PROSECUTORS MAY BE SENT OVERSEAS TO TACKLE TRAFFICKING GANGS
On 21st February, the Guardian reported that, speaking before a 3-day international summit about the issue, the Director of Public Prosecutions said that more British prosecutors may be sent overseas to co-ordinate cases against trafficking gangs and those involved in modern-day slavery. Last year the CPS prosecuted 295 people in England and Wales for trafficking offences. “That was the highest number ever and we think the figure is going up,” the DPP told the Guardian. There are currently 30 CPS staff, known as liaison magistrates or crown prosecutors, working overseas in France, Italy, Spain, Pakistan, the UAE and the US.
SWISS FEDERAL SUPREME COURT: ABILITY OF THE IRS TO OBTAIN INFORMATION OF BANK EMPLOYEES AND OTHER THIRD PARTIES
Baker McKenzie on 21st February reported on the case where the Swiss Federal Supreme Court recently addressed the issue of whether the IRS is able to access information about bankers and other third parties under the exchange of information clause of the US-Swiss Double Taxation Treaty.
BEYOND THE CALIPHATE: BELGIUM
This project from the Combating Terrorism Center at West Point documents and identifies activity linked to and inspired by the Islamic State outside of the territory it claims (claimed?) as part of its physical Caliphate. In doing so, the project seeks to provide insights into how the influence, operational reach, and capabilities of the Islamic State are changing in certain locales over time. CTC researchers have collected open-source data regarding the Islamic State’s operational activity in select locations outside of the physical territory claimed by the group. As collection and analysis continues, the CTC released a number of short country and regional reports that leverage the data CTC has collected. The latest is concerned with Belgium. Others already released cover Turkey, SE Asia and Morocco.
The Belgium report’s analyses where and when attacks took place, the individual involved and/or arrested and their connections. The Belgium report is at –
https://ctc.usma.edu/app/uploads/2018/02/CTC-Beyond-the-Caliphate-Belgium.pdf
https://ctc.usma.edu/beyond-the-caliphate/
INTERNATIONAL SALE OF GOODS AND ROLE OF UN CONVENTION
On 20th February, the STA Law Firm in the UAE published what is promised to be the first of 5 articles on the subject of the international sale of goods and mechanisms to prevent or resolve disputes arising. This first article looks at UNIDROIT, the ULF and ULIS Conventions and what it says is arguably the most successful of the various international agreements, the UN Convention concerning Contracts for the International Sale of Goods (aka the CISG Convention).
http://www.mondaq.com/article.asp?articleid=674888&email_access=on&chk=1635712&q=960824
UK FINANCE ACT 2003: UPDATES TO PART 3 – CUSTOMS POWERS
On 22nd February, HMRC released a policy paper on changes being made to customs powers in Part 3 the Finance Act 2003 to replace references to ‘the Community Customs Code (Council Regulation (EEC) 2913/92) (CCC)’ with references to the Union Customs Code (Regulation (EU) No 952/2013) (UCC). Part 3 of the Act Part 3 gives a power for HM Treasury to prescribe where a breach of a requirement imposed by or under certain specified tax legislation makes a person liable to a civil financial penalty
FINANCIAL CRIME ON THE RISE IN INDIA’S LIFE INSURANCE SECTOR
On 22nd February, the Deccan Herald carried an article saying that rising transactions with third parties, data privacy concerns and gaps in operational processes have augmented financial crime risks in the life insurance sector, according to a EY Fraud Investigation & Dispute Services’ report. According to the report, 56% of the life insurers stated up to 30% increase in fraud over the last 2 years; 7% confirmed up to 50% increase.
www.deccanherald.com/content/660932/financial-crime-rise-indias-life.html?src=ilaw
HMRC CONSULTATION ON EXTENDED TIME LIMITS FOR OFFSHORE INVESTIGATIONS
On 22nd February, Out-Law reports on a consultation from HMRC, and it will be able to look at 12 years’ worth of back taxes in cases involving an offshore element from April 2019, if the UK government goes ahead with a proposal announced in the last Budget. It plans to change the time limits from 4 years, or 6 years where a suspected underpayment has been brought about due to carelessness. The time limit will remain 20 years where the taxpayer has acted deliberately or dishonestly.
PROPERTY FRAUD BARRISTER DISBARRED – 9 YEARS AFTER DISCIPLINARY TRIBUNAL STRIKE OFF
On 22nd February, the Law Society Gazette reported that a dual qualified solicitor and barrister, Godwin Okri, has been disbarred, nearly 10 years after he was struck off the roll for the same conveyancing offence. The offence relates to Okri’s time as a solicitor. In 2004 while working on a conveyancing transaction, Okri acted for both seller and buyer where a conflict of interest existed without the written consent of both parties. He was struck off by the Solicitors Disciplinary Tribunal in 2009.
UK GOVERNMENT HOSTS FIRST INTERNATIONAL PUBLIC SECTOR FRAUD SYMPOSIUM
On 22nd February, counter-fraud experts from the UK, Australia, Canada, New Zealand and the US as they attend the first ever International Public Sector Fraud Symposium in London to share experience and expertise in tackling fraud in the public sector.
LAW SOCIETY OF ENGLAND & WALES SEEKS SOLICITORS’ VIEWS ON SANCTIONS ISSUES
The European Sanctions Blog on 22nd February reported that the Law Society is consulting members on the new sanctions reporting obligation on legal professionals, and sanctions licensing issues. The new reporting requirements are explained at –
http://www.lawsociety.org.uk/news/stories/uk-sanctions-regime/
FLORIDA OPTHALMOLOGIST GETS 17 YEARS FOR $42 MILLION MEDICARE FRAUD
Law 360 reports on 22nd February that Dr. Salomon E Melgen, a Florida ophthalmologist (who also gained notoriety as a co-defendant with US Senator Robert Menendez in an unsuccessful bribery case) has been sentenced to 17 years in prison and ordered to repay about $42 million on a conviction of massively overbilling Medicare.
https://www.law360.com/articles/1009904
US SUPREME COURT REJECTS VICTIMS’ CLAIMS TO COLLECT DAMAGES FROM IRAN
On 22nd February, the Jurist website reported that the US Supreme Court refused victims of a terrorist attack to collect damages from Iran through attaching government property present in the US. The case, Rubin v Islamic Republic of Iran, stems from a 1997 terrorist attack in Israel carried out by Iranian-backed Hamas militants. Several of the injured were US citizens.
UK INQUIRY A CHANCE TO CONSIDER DIGITAL CURRENCY POSITIVES, SAYS FINTECH LAWYER
An article from Out-Law on 22nd February reports that a new inquiry opened by a UK parliamentary committee presents an opportunity to ensure the potential benefits of cryptocurrencies are better recognised, a specialist in financial services and technology law has said.
INDIA TESTS NUCLEAR-CAPABLE SHORT-RANGE MISSILE
Janes.com on 22nd February reported that India successfully conducted a night-time test-launch of its indigenously developed nuclear-capable Prithvi II short-range ballistic missile (SRBM) to a range of 350 km off the country’s east coast on 21st February.
http://www.janes.com/article/78098/india-test-fires-nuclear-capable-prithvi-ii-srbm
IRAN MAY WITHDRAW FROM NUCLEAR DEAL IF BANKS CONTINUE TO STAY AWAY
KYC 360 on 22nd February reported that Iran will withdraw from the 2015 JCPOA nuclear deal if there is no economic benefit and major banks continue to shun the Islamic Republic, its deputy foreign minister said.
https://kyc360.com/news/iran-says-may-withdraw-nuclear-deal-banks-continue-stay-away/
MONEY LAUNDERING: LATVIAN BANK SEEKS €480 MILLION LOAN TO RE-OPEN
KYC 360 on 22nd February reports that ABLV, one of Latvia’s largest banks, has asked for a €480 million loan from the country’s central bank as part of efforts to reopen for business after being forced to halt all payments in the face of money laundering accusations. The request for credit from the Baltic state’s central bank comes amid frantic efforts by ABLV’s management to keep the bank afloat after US authorities singled it out for money laundering and moved to block it from doing financial deals in dollars.
https://kyc360.com/news/money-laundering-latvian-bank-seeks-e480-million-euro-loan-reopen/
REPORT TO US CONGRESS ON ARMY DIRECTED-ENERGY WEAPONS
Real Clear Defence website on 22nd February carries extracts from the report. It says that the US military has a long and complicated history in developing directed energy (DE or laser) weapons. Many past efforts have failed for a variety of reasons and not all failures were attributed to scientific or technological challenges associated with weaponising DE. Some believe the Army is making progress to field viable DE weapon systems designed to counter rockets, artillery, and mortars (C-RAM) and address certain types of short-range air defence (SHORAD) threats.
IN-FIGHTING IN MALI OPENS DOOR FOR AL-QAIDA
On 21st February, the Cipher Brief reported in an article that a 2015 peace accord between the Mali government and ethnic Tuaregs in the north of the country has failed to produce economic or security benefits for the northern tribe, with each side blaming the other for the failure of the deal. The dispute could devolve once again into civil war, and create an opening for al-Qaida in the Islamic Maghreb (AQIM) and other terrorist groups to further fortify their continuing operations in the northern part of the country.
https://www.thecipherbrief.com/article/africa/al-qaida-aims-undermine-fragile-peace-mali
DENIABILITY AND DE-ESCALATION: RUSSIA USE OF “MILITARY CONTRACTORS” IN PROXY WARS
On 18th February, the Cipher Brief reported that Russia’s use of private military contractors in Syria lends it deniability that becomes problematic when the US tries to calculate how to retaliate against incursions again US and coalition troops by the Assad regime. The problem arose earlier this month when the of US conducted retaliatory strikes that reportedly killed some 200 Russian contractors in what could amount to the most lethal clash between US and Russian citizens since the Cold War.
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