26th March 2018
US SANCTIONS 7 PAKISTANI COMPANIES FOR ENGAGING IN NUCLEAR TRADE
One India on 26th march reported that the US Bureau of Industry and Security had added the companies to its “Entity List”, and hence subject to stringent import and export restrictions, having recognised those firms as potential threats as they could compromise America’s national security by being involved in nuclear activities.
UK LAUNCHING CYBER SECURITY EXPORT STRATEGY TO SUPPORT SALES
SC Media reported on 26th March that cyber-security expertise as a UK specialisation is being made more explicit later when the International Trade Secretary launches the UK government’s new Cyber Security Export Strategy to promote UK expertise and strengthen defence capabilities in the UK and allied countries. Exports from the UK’s 800 cyber security companies were valued at £1.5 billion in 2016, and with global spend on cyber-security forecast to exceed £759 billion by 2021, the move is intended to ensure the UK wins an increasing share of this fast growing market.
MEGAUPLOAD FOUNDER WINS BATTLE IN ONGOING FIGHT AGAINST US EXTRADITION
Swissinfo on 26th March reported that Internet entrepreneur Kim Dotcom has won one battle with New Zealand authorities when a Wellington court ruled that the Attorney General broke the law by refusing his request to be given all information about him held by public agencies. German-born Dotcom faces extradition to the US relating to his Megaupload site, which was shut down in 2012 following an FBI-requested raid on his Auckland mansion. US authorities say Dotcom and 3 co-accused Megaupload executives cost film studios and record companies more than £352.96 million and generated more than $175 million by encouraging paying users to store and share copyrighted material. Dotcom, who has New Zealand residency, is fighting those charges and the extradition.
NEW ZEALAND: MAN LOSES CHALLENGE TO FIRST AML JUDGMENT
Scoop in New Zealand reported on 26th March that finance company director Xiaolan Xiao has lost his challenge to a $5.3 million fine imposed under anti-money-laundering laws. His company, Ping An Finance, which facilitated remittance of foreign funds and operated out of offices in central Auckland, “failed abysmally” to meet the rigorous reporting and monitoring requirements of the regime in transactions totalling $105.4 million. That judgment was the first under the then-4-year-old AML/CFT regime, and the judge said the penalties, including Xiao paying costs and Ping An Finance and Xiao being banned from continuing to offer financial services, were intended to be “so significant as to deter and denounce non-compliance.”
FOR A RUSSIAN COUPLE, SAFE HAVEN IN GUATEMALA IS FLEETING
The Wall Street Journal reported on 25th March on the case of Igor Bitkov, his wife, Irina, and their 26-year-old daughter, Anastasia, who fled Russia in 2008 and are now in Guatemalan prisons thanks to convictions that grew out of a claim by a Russian state bank that the family owed it money. It says that no plausible evidence was ever presented in Guatemalan court to prove the bank’s claim. But the Guatemalan Attorney General responded to the Russian charge from the VTB Bank, tracked the Bitkovs down and tried in 2015 to have them indicted in criminal court for fraud, money laundering, and using fraudulent documents to evade the law.
ZIMBABWE’S FORMER FIRST LADY GRACE MUGABE INVESTIGATED FOR IVORY SMUGGLING
Deutsche Welle on 25th March reported that Grace Mugabe, is suspected by wildlife officials of having smuggled ivory worth millions of dollars. She is alleged to have smuggled the ivory under the pretext of giving diplomatic gifts.
SINGAPORE INTRODUCES DEFERRED PROSECUTION AGREEMENTS
On 22nd March, Freshfields Bruckhaus Deringer produced a briefing explaining that on 19th March the Singapore Parliament passed the Criminal Justice Reform Act, which among other things, enacts a framework for Deferred Prosecution Agreements into the current Criminal Procedure Code. It says that the new law largely copies provisions from the U.K. DPA law, with a few key differences.
MIGRANTS TAKE NEW BALKAN ROUTE THROUGH BOSNIA
EurActiv on 26th March reported that an alternative migrants’ itinerary from Greece through Albania, Montenegro and Bosnia has emerged. It says that the route, according to a western diplomatic source, matches the one taken by arms and drugs traffickers, indicating that human smuggling networks have been established.
DISCHARGE OF CARGO WITHOUT ORIGINAL BILLS OF LADING AND LETTERS OF INDEMNITY (LOI) – ONE OF THE BIGGEST RISKS A SHIPOWNER OR CHARTERER CAN TAKE
HFW has produced a briefing which discusses the implications of The Songa Winds case. It starts by saying that LOI are essential documents to help world trade run smoothly. They are given by cargo interests and parties above them in the contractual chain to obtain cargo at a discharge port without delay in circumstances where the original bills of lading are not immediately available. However, LOI are fraught with danger and have led to much recent litigation, with the latest reported case involving THE SONGA WINDS. If delivery is not made in compliance with bills of lading then an owner may face a claim from the lawful holder of the bills for the tort of conversion (i.e. preventing a lawful owner taking control, or taking unlawful control, of property).
FOREX FRAUDSTER JAILED AGAIN FOR FAILURE TO REPORT ASSETS
FT Adviser on 26th March reported that Alex Hope, a convicted fraudster sentenced to 7 years’ imprisonment in 2015 for defrauding more than 100 investors of more than £5.5m using an unauthorised collective investment scheme, has been given jailed for another 16 months after he opened new bank accounts and bought tickets for a Rihanna concert while on day release. While on day release he opened 5 new bank accounts which receive more than £75,000 and was mainly withdrawn in cash or used to fund his lifestyle, and he used the money to buy tickets to events in London including a Rihanna pop concert and an Anthony Joshua boxing fight.
UK NATIONAL SECURITY AND RUSSIA
On 26th March, the House of Commons Library released a briefing as the House of Commons debates National Security and Russia in the light of the attempted murder of a former double agent in Salisbury.
EU VAT ON OUTSOURCED BANKING SERVICES
VAT Live on 26th March reported on a new outsourced financial services tax case, reviewing the VAT exemption on outsourced bank support services, has been sent by the German courts to the European Court of Justice. The outcome may be large, irrecoverable tax charges for banks that have outsourced ancillary back-office administrative services. In this case, a German outsourcing company set-up, operated and replenished cash-points for bank clients. The operator considered itself as part of an exempt financial service for EU VAT, and therefore did not charge its bank clients VAT. However, the German federal fiscal court, BFH, challenged this as merely a payment and administrative service, and therefore taxable. The article says that, should the ECJ rule that the services are taxable, then banks will be charged VAT. As banks are exempt for EU VAT, they will not be able to recover the charge and will therefore make a loss, and this may lead to banks in-housing such services in future to avoid VAT liabilities.
OFFSHORE ‘CROOK’S BANK’ DEVELOPER FACING £1 MILLION FINE
International Adviser on 23rd March that Sandeep Singh Gill, 43, a money launderer who developed an online service for criminals using bank accounts in Portugal, the Cape Verde Islands, Jersey, Cyprus, and Switzerland has been ordered to pay £1 million. He was jailed for 6 years in June 2016 following an investigation by HMRC and was convicted on 2 counts of transferring criminal property totalling £621,151 but a confiscation hearing concluded Gill had benefited by more than £6.3 million from criminal conduct, but his current realisable assets including property are just more than £1million.
HEALTH CANADA RELEASES PROPOSED REQUIREMENTS FOR PACKAGING AND LABELLING OF CANNABIS PRODUCTS
Gowling WLG on 22nd March released an article saying that Health Canada had released a report that summarises feedback from consultation on the proposed regulatory approach to cannabis. Significantly, the report provides details on the expected requirements for packaging and labelling of cannabis products, the highlights of which are detailed in the article.
UK POLICE IDENTIFYING MORE VICTIMS OF MODERN SLAVERY THAN EVER BEFORE
The National Police Chief’s Council on 26th March reported that the UK Modern Slavery Police Transformation Unit has published its first annual report, which highlights the work of the Unit since it was set up in April 2017 to help forces support vulnerable victims and bring more perpetrators to justice. The report demonstrates the significant increase in the number of modern slavery operations being led by the police, with the number of live operations tripling since 2015, when the Modern Slavery Act 2015 became law. In February of this year police held 568 live Modern Slavery operations, more than triple the 188 being managed in December 2015. Police force investigations are also driving the rise in referrals of suspected victims of modern slavery to the National Referral Mechanism, as announced on 26th March by the NCA.
FRAUD WARNING: FAKE KIMBERLEY PROCESS CERTIFICATES FOR SIERRA LEONE, GHANA, AND GUINEA
A reminder that the US Customs and Border Protection on 22nd December issued an advisory advising the public on several scams involving Kimberley Process Certificates. Legitimate Kimberley Process Certificates are used to control the international trade in rough (or “conflict”) diamonds. US CBP has identified false Kimberley Process Certificates from Guinea, Ghana, and Sierra Leone that have been used by criminals in an advance-fee scheme to defraud people of thousands of dollars. Criminals have approached US citizens via the internet urging them to purchase rough diamonds directly from West African sources promising legitimate Kimberley Process Certificates for export.
LATEST DETAILS ABOUT BENEFICIAL OWNERSHIP REGISTER FOR NON-UK ENTITIES HOLDING UK REAL ESTATE AND PUBLIC PROCUREMENT CONTRACTS
On 26th March, Osborne Clarke produced a briefing saying that the UK government has set out its thinking on how the forthcoming beneficial ownership register for overseas entities holding UK real estate and public procurement contracts will work ahead of the draft legislation which is due to be published by July 2018. The register will apply to all real estate holdings which are registrable at the UK Land Registry. Broadly speaking, this means all freehold titles and all leasehold titles of longer than 7 years. The firm advised that sector players must now start planning for the regime which the government has confirmed will be operational in 2021.
RUSSIA AND THE 2016 US PRESIDENTIAL ELECTION: LAYING OUT THE PUBLICLY AVAILABLE EVIDENCE
On 10th March, Russia Matters at the Belfer Center published a briefing laying out what is in the public domain in the way of evidence surrounding the allegations of interference and/or collusion involving Russia during the 2016 election.
IRANIAN RADIO-CONTROLLED, PASSIVE INFRARED-INITIATED IED IN YEMEN
Conflict Armament Research has produced a briefing on what is described as Iran’s latest technological contributions to the war in Yemen. The IED recovered in Yemen feature explosively formed projectiles (EFP), which have been camouflaged to resemble natural rocks. These devices are armed by radio control (RC) and initiated using passive infrared (PIR) switches. They can be classed as radio-controlled IED (RCIED).
See also the Arab News article – “Iran supplies sophisticated IEDs to Houthi militias”
TRUMP’S NORTH KOREA TALKS NEED TO ADDRESS SYRIAN AND IRANIAN PROLIFERATION
The Washington Institute says that when Pyongyang was able to co-operate freely with Middle Eastern regimes in the past, it built a clandestine nuclear reactor in Syria, so Washington cannot afford to turn a blind eye to such activity again.
ZUMA FINGERED IN ABALONE BRIBERY CASE
Defence Web on 26th March reported that specialist police unit, The Hawks, are investigating an alleged 1 million Rand bribe paid to former President Jacob Zuma by an abalone dealer in the Western Cape. This comes as after a number of Department of Agriculture, Forestry and Fisheries (DAFF) employees were arrested for abalone poaching.
ANGOLA CHARGES SON OF EX-PRESIDENT DOS SANTOS WITH FRAUD
Reuters on 26th March reported that the son of Angola’s ex-president, José Filomeno dos Santos, has been charged with fraud relating to a $500 million transaction out of a central bank account. He was the former head of Angola’s $5 billion sovereign wealth fund, and the former governor of the central bank, Valter Filipe da Silva, has also been charged with fraud in relation to the case.
ROLLING UP RUSSIA’S RED MONEY CARPET IN THE UK
On 26th March, the Royal United Services Institute published an article, a commentary saying that 2 decades of laying out the welcome mat to Russian cash is haunting the British government in the wake of the assassination attempt in Salisbury. It poses 3 questions – how easy would it be to roll up this ‘red money carpet’? How easy is it to reverse the considerable flow of Russian money that has made its way to London over the past 2 decades since the Russia debt crisis in 1998? And why did Russian money choose London?
FUND MARKETING IN THE EU – COMMISSION PROPOSES CHANGES
Reed Smith on 26th March reported that the EU Commission on 12th March issued proposals for a new Directive and new Regulation intended to “boost the cross-border market for investment funds” and “eliminate current regulatory barriers to the cross-border distribution of investment funds in order to enable a better functioning Single Market and economies of scale”.
THE OPERATIONAL IMPLICATIONS FOR PASSENGER YACHTS
Superyacht News on 26th March carried an article that takes a look at the emerging problems associated with manning superyachts able to carry more than 12 passengers. It points out that, in November 2010, in recognition of the ever-increasing size of superyachts and the wish to carry more passengers, the Passenger Yacht Code (PYC) was introduced by the Red Ensign Group as an alternative to full compliance with SOLAS 1974 and Load Line 1966 Conventions for private and commercial yachts wanting to carry up to 36 passengers. The introduction of the PYC was a significant step forward for the superyacht industry, and since its implementation, the Code has been a valuable vehicle for commercial and private yachts that want to be able to carry more than 12 passengers, and there are a number of yachts now operating successfully under the PYC.
SPAIN ARRESTS LEADER OF GLOBAL €1 BILLION BANK CYBER HEIST
Law 360 on 26th March reported that the suspected mastermind behind a multinational gang of cybercriminals that stole more than €1 billion by hacking into banks to manipulate their ATM networks has been arrested in Spain, according to Europol, the EU police agency. The criminals used using pieces of malware they designed, known as Carbanak and Cobalt.
BERNIE ECCLESTONE TO FACE TRIAL OVER PRIVATE EQUITY COMPANY BRIBE CLAIM
Law 360 on 26th March reported that former Formula One chief executive Bernie Ecclestone will face a trial in London in October 2019 over a US private equity firm’s allegations that he bribed an official from a German bank so the financial institution would sell its stake in the global motor racing championship to a competing private equity company.
VAT FRAUDSTER STOLE ALMOST £10 MILLION TO FUND LUXURY LIFESTYLE
The Belfast Telegraph on 26th March reported how Jason Butler used a complex scam to fund his lifestyle and buy cars including a Lamborghini and 2 Ferraris. He is said to have created hundreds of false invoices to steal millions of pounds in VAT and tried to hide the scam in a complex trading chain involving companies in the UK, Gibraltar, Spain and the US. He told investigators that he bought almost £60 million worth of personal data, relating to Payment Protection Insurance (PPI), but was really trading cheap raw data and forging purchase invoices to falsely reclaim VAT. Butler was arrested by police at Manchester Airport when he arrived into the UK from Malaga in January 2015. He was jailed for 9 years on 26th March at Leeds Crown Court.
AIRCRAFT LEASE FINANCING: WHO’S THE OWNER?
In an article on 26th March, Smith Amundsen in the US says that aviation lending is a world unto its own, populated by lawyers and lenders alike that focus on this niche area. One example of this is the question on whether the lessee of an aircraft can register it with the FAA despite the fact that the lessee is not the owner. As with many things in the law, it depends. It says that, decades ago, the FAA issued an opinion stating that lessees of aircraft could register it with the FAA, even though they were not the actual owner, if certain conditions were met. However, despite the fact that a lessee can be the “owner” for the purposes of registering the aircraft with the FAA, the lessor is the actual owner. The fact that both the lessor and lessee are considered owners, albeit in different contexts, can be confusing and lenders must insure that the proper party grants them a security interest. The article cautions that lenders must be diligent in not only knowing their customer, but also in knowing the law.
MAN CHARGED IN UK IN RELATION TO ALLEGED INTERNATIONAL ANABOLIC STEROID SMUGGLING NETWORK
A news release from the NCA on 26th March reported that Jacob Sporon-Fielder, 37, a Mumbai-based Danish national, has been charged in connection with an alleged international network of illegal anabolic steroid smuggling. An NCA investigation was launched in 2014 following the seizure of more than 630 kg of anabolic steroids and prescription medicines by Border Force officers at Heathrow Airport, destined for an address in Belfast. The investigation, which is ongoing, has so far led to seizures worth an estimated £30 million.
PAKISTAN’S NEW AMBASSADOR TO US ACCUSED OF EMBEZZLEMENT
OCCRP on 26th March reported that Pakistani authorities have banned the country’s newly appointed ambassador to the US, Ali Jahangir Siddiqui, from traveling abroad after investigators accused him of having embezzled millions of dollars in public funds. He previously managed an investment firm and investigators believe he deprived the state of hundreds of millions of dollars by selling shares of a company to financial and government institutions way over the market price.
RATKO MLADIĆ APPEALS WAR CRIMES CONVICTION
Jurist on 26th March reported that former Bosnian military leader Ratko Mladic has appealed his conviction to the UN Mechanism for International Tribunals. He was sentenced to life imprisonment on 22nd November.
UK COURT UPHOLDS WORLDWIDE FREEZING ORDER SOUGHT BY KAZAKHSTANI COMPANIES PENDING APPEAL
On 26th March, Out-Law reported that the UK High Court has allowed a significant worldwide freezing order (WFO) to remain in effect following a first instance judgment. The successful claimants in the main litigation were a number of Kazakhstani companies, who sought damages on issues including fraudulent inducement to pay for construction work. The court granted a WFO in the amount of £72 million over the assets of the 2 individuals allegedly behind the fraud, Maksat Arip and Shunar Dikhanbayeva, before the claim was issued.
CENTRAL AMERICA ELITES CONTINUE ONSLAUGHT AGAINST ANTI-GRAFT COMMISSIONS
Insight Crime on 26th March reported that elites in Guatemala and Honduras are continuing their campaign to defang anti-corruption commissions in their respective countries with a series of new moves aimed at getting rid of the independent bodies or severely hampering their capabilities.
FACT SHEET – MOHAMMED BIN SALMAN’S SAUDI ARABIA: A CLOSER LOOK
The Project on Middle East Democracy has produced this latest factsheet –
FCA WINS JUDGMENT AGAINST CAPITAL ALTERNATIVES LTD AND OTHERS RE UNAUTHORISED COLLECTIVE INVESTMENT SCHEMES
Mondo Visione on 26th March reported a FCA news release saying that a judgment handed down by the High Court found that Capital Alternatives Limited, Renwick Haddow, Marcia Hargous, Robert McKendrick and others should pay a total of £16.9 million in restitution for their roles in 4 unauthorised collective investment schemes which were unlawfully promoted to the public by false, misleading and deceptive statements. In summary, the schemes involved:
- African Land (also known as Agri Capital) which offered investments in rice farm harvests in Sierra Leone, run by African Land Limited; and
- Reforestation Projects (also known as Capital Carbon Credits) which offered investments in carbon credits intended to be generated from land in Sierra Leone, Brazil and Australia, run by Reforestation Projects Limited.