1st May 2018
SPENT CONVICTIONS AND THE RIGHT TO BE FORGOTTEN: NT1 & NT2 V GOOGLE LLC
McDowell Purcell on 24th April published an article that says that a recent decision of the High Court in England and Wales has addressed the interplay between spent convictions and the right to be forgotten in a data protection context. It explains the decisions in the case – the appeal in respect of NT2 was allowed, however, the appeal in respect of NT1 was not. In explaining the decision and, in particular, the distinction as between the claimants, the judge stated that NT1 had continued to mislead the public and had failed to show remorse. By contrast, in respect of NT2, it was noted that “the crime and punishment information has become out of date, irrelevant and of no sufficient legitimate interest to users of Google search to justify its continued availability”.
BVI LIMITED PARTNERSHIP ACT 2017 – KEY POINTS
On 17th April, Carey Olsen produced a briefing on this Act that came into force in February. It creates a modern regime for new limited partnerships and replaces Part VI of the former Partnership Act 1996 for new limited partnerships and for those existing limited partnerships that elect to re-register under the Act.
US CHARGES 2 WITH ESPIONAGE IN CHINESE TRADE SECRETS THEFT
On 30th April, World Intellectual Property Review reported that 2 men have been charged with conspiracy to commit economic espionage for the benefit of a Chinese company, 1 year after being indicted for conspiracy to commit theft of trade secrets. Shan Shi, a citizen of Houston, and Chinese national Gang Liu were charged on April 26th. They had been acting for the benefit of CBM-Future New Material Science and Technology (CBMF), a Chinese company based in Taizhou. It is said that Shi and Lui conspired with others to commit economic espionage and steal trade secrets from a US engineering firm that produces syntactic foam. The foam is a strong and lightweight material with commercial and military uses.
CAYMAN ISLANDS GOVERNMENT IS WORKING ON A FRAMEWORK OF GOVERNANCE FOR CRYPTOCURRENCIES AND DIGITAL COIN PROJECTS
The Cayman News Service on 30th April reported that the Cayman Islands Government is working on a framework of governance for cryptocurrencies and digital coin projects taking place in the jurisdiction while it considers how to implement a legislative framework for the sector.
AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY – CBA BANK HAD “INADEQUATE OVERSIGHT” OF NON-FINANCIAL RISKS, INCLUDING REPUTATIONAL RISKS AND SENSE OF COMPLACENCY WHEN ADDRESSING NON-FINANCIAL RISKS
The Brisbane Times on 1st May reported on the report published following a review commissioned by the Australian Prudential Regulation Authority into the Commonwealth Bank of Australia (CBA) culture which found the board of the bank had “inadequate oversight” of non-financial risks, including reputational risks. The review also found a sense of complacency within the bank when addressing non-financial risks. The review was sparked after CBA was sued by Austrac for more than 50,000 failings under AML/CFT laws. The report found serious failings with the board’s oversight of these issues.
HONG KONG’S FIGHT AGAINST DIRTY MONEY – OFFICIALS VOW TO ‘ADDRESS GAPS’
The South China Morning Post on 1st May reported that a just-released government risk assessment describes rise in money laundering reports as ‘significant’. Produced by the Financial Services and Treasury Bureau, the release of the 132-page report came as local authorities prepared for a major audit of the city’s AML capabilities by a team from FATF in October.
AUSTRALIA APPOINTS TOP POLICEMAN TO LEAD FIGHT AGAINST OFFSHORE CRIME
Xinhua on 1st May reported that the Australian government has named its first Transnational Organised Crime Coordinator to tackle the growing problem of offshore organised crimes, especially cybercrimes, child exploitation, human trafficking, illicit drugs and firearms, and money laundering. He will work within the Department of Home Affairs to lead a national effort against “transnational serious and organised crime”. Australia’s Minister for Home Affairs said a crime co-ordinator was needed because up to 70% of organised crimes occurred offshore.
COUNTERFEIT STEROID TRAFFICKING, MONEY LAUNDERING CASE IN US
US Immigration and Customs Enforcement (ICE) on 27th April reported the case of a woman from Massachusetts who imported raw steroid materials from China/Hong Kong into the US and manufactured injectable anabolic steroids which were advertised and sold over social media sites, fitness blogs, and email as “Onyx Pharmaceuticals”. The steroids were marketed and sold with counterfeit labelling, holograms and branding and distributed all over the US. Search warrants yielded 9 kg of raw powder steroids, over 35,000 units of finished steroid units, laboratory production equipment, 14,000 fraudulent branding labels and boxes and more than $500,000 dollars in cash. The investigation was assisted by team members from the US Postal Inspection Service, and the FDA.
VATICAN MAKES CHANGES TO DONATION LAWS TO HELP FIGHT TERRORISM AND MONEY LAUNDERING
World Religion News on 30th April reported that the Vatican’s Financial Information Authority (AIF), its financial watchdog, has taken on the role of examining all suspicious donations made to charities in the name of the Vatican. The AIF will also investigate foundations. These actions form a component of the new financial reforms initiated by Pope Francis. The AIF annual report showed progressive consolidation of all reports with the aim to import the Vatican into international norms compliance for terrorist financing and money laundering.
EUROPEAN COMMISSION PROPOSES LEGISLATION BROADENING ACCESS TO CENTRALISED FINANCIAL INFORMATION
On 30th April, Shearman & Sterling published an article about EU proposals for a Directive aimed at increasing security within EU Member States and across the EU by improving access to financial information, including bank account information, to the relevant authorities and bodies in charge for the prevention, investigation and prosecution of serious forms of crimes. It is envisaged that this will enhance their ability to conduct financial investigations and analysis and improve their co-operation. In addition, the proposal contains measures to improve the ability of FIU to carry out their tasks under the 4th Money Laundering Directive. The new 5th Money Laundering Directive already will make it obligatory for Member States to establish centralised bank account registries or data retrieval systems. The proposal follows a public consultation by the Commission which ran from October 2017 to January 2018 and the Commission has published separately a summary of the responses it received to that consultation. The proposal will now be considered by the European Parliament and the Council.
COURT HOLDS THAT ALL RISKS CARGO POLICY DID NOT COVER FRAUDULENT DOCUMENTS FOR A NON-EXISTENT CARGO
On 30th April, Clyde & Co published an article about a recent UK court case – Engelhart CTP v Lloyds Syndicate 1221 – where the claimant bought copper ingots and re-sold them the same day. However, when some of the containers arrived for transhipment, it was discovered that they contained only slag of nominal value. It was assumed for the purposes of this case that no copper was ever shipped and that the claimant had, in good faith, paid for and taken up fraudulent bills of lading and other shipping documents. The claimant sought an indemnity under its All Risks marine cargo insurance policy and some of the insurers denied liability on the basis that the loss did not fall within the scope of the policy cover. It has now been held that the loss was not covered under the policy. Amongst other things, the judge noted that “Since an All Risks marine cargo policy is generally construed as covering only losses flowing from physical loss or damage to goods, there must be clear words indicating a broader intention.” No such clear wording existed in this case.
TRANSFER PRICING OVERVIEW FOR CENTRAL AMERICA
On 30th April, the TMF Group published a briefing that said that in Central America, there are 2 countries in particular that are engaging with the new transfer pricing landscape. Costa Rica, which is looking to become a full member of the OECD, and Panama, which is under pressure from the OECD to adopt these changes due to its status as a financial centre. Like other regions around the world, the region is adjusting to the OECD Base Erosion and Profit Shifting (BEPS) initiative, which has resulted in new regulations designed to tackle international tax avoidance. Panama was the first country in Central America to introduce transfer pricing legislation, with the legal framework created through tax reform in 2010. However, Panama is not a member of the OECD, but the OECD’s transfer pricing guidelines are generally used to inform national transfer pricing regulations. If the OECD guidelines interfere, or conflict, with national regulations, then the national regulations will prevail.
SWISS 1MDB CASE WIDENS WITH CRIMINAL PROBE INTO PETROSAUDI OFFICIALS
Bloomberg on 1st May reported that Swiss prosecutors have widened their probe into allegations of corruption at Malaysian development fund 1MDB, opening criminal proceedings to look into 2 officials of Saudi Arabian oil producer PetroSaudi who were allegedly involved in the affair. The investigation into the pair on suspicion of criminal mismanagement, fraud, bribery and aggravated money laundering began in November 2017.
FORMER CFO OF AUTONOMY GUILTY OF ACCOUNTING FRAUD
The Irish Times on 1st May reported that a case which relates to $10.3 billion price Hewlett-Packard paid for the UK software maker in 2011. A jury voted to convict Sushovan Hussain on all 16 counts of wire and securities fraud after 3 days of deliberations in San Francisco federal court. Autonomy was the UK’s second-largest software business when Hewlett-Packard acquired it in 2011.
CONSULTATION LAUNCHED ON THE REFORM OF LIMITED PARTNERSHIP LAW
On 1st May, Berwin Cave Leighton Paisner published a briefing saying that in the UK BEIS has published a consultation on the reform of limited partnership law, in response to its January 2017 call for evidence. This briefing sets out the main elements of the proposals, along with comments on them. Responses are requested by 23rd July. The full picture will emerge when legislation is produced, which BEIS states is the intention “as soon as Parliamentary time allows”.
ISSUES SURROUNDING A US WITHDRAWAL FROM THE IRAN NUCLEAR AGREEMENT
A briefing from the Washington Institute in April said that President Trump warned in January that absent improvements to the JCPOA Iran nuclear agreement, he might decide by the May 12th deadline not to extend the sanctions waivers, effectively withdrawing the US from the deal. In reality, but reimposing sanctions is not a simple flip of a switch: the process requires numerous steps without which withdrawal would have little meaning. This report by distinguished Iran expert Patrick Clawson outlines the options available to the administration should it choose to terminate its co-operation with JCPOA provisions, and the technical, legal, and administrative considerations related to reimplementation of sanctions.
OLEG DERIPASKA TO REDUCE EN+ GROUP HOLDING IN BID TO AVERT US SANCTIONS
The European Sanctions Blog on 1st May reported that proposals had been aired for Deripaska to reduce his shareholding below 50%, resign from the board and agree to the appointment of others, so that independent directors form a majority.
Meanwhile, Rferl reported that the “US not aiming to ‘put Russian aluminum giant out of business’ with sanctions
2nd May 2018
UK COMPANIES AND THE ROLE OF A SENIOR ACCOUNTING OFFICER (SAO)
On 25th April, MacFarlanes published a briefing explaining the role of SAO under UK law, which requires certain UK companies to appoint a senior accounting officer. The SAO of a qualifying company must ensure that the company establishes and maintains ‘appropriate tax accounting arrangements’, on pain of a personal financial penalty. HMRC appear to be taking a stricter approach to SAQ, and the SAO regime forms part of the company’s Business Risk Review (BRR) performed by HMRC. This process has been recently under consultation and the government has concluded that the reformed BRR framework should allow for more consideration of the volume of tax risk management work already required by large businesses, such as the SAO provisions and the publication of tax strategies. It explains that the regime applies only to companies incorporated under the Companies Act 2006, so it does not apply, for example, to companies incorporated outside the UK even if they are resident in the UK or operate through a UK branch. In addition, UK open-ended investment companies, partnerships, and LLP are all excluded from the regime. It is further limited to UK incorporated companies which alone, or with other UK incorporated companies in the same group, have annual turnover of more than £200 million or a balance sheet total of more than £2 billion (aka ‘qualifying companies’).
INTERACTIVE: THE MISSILE WAR IN YEMEN
Updated on 13th April, the Missile Threat project produced this guide to the missile war element of the Saudi Arabia-launched Operation Decisive Storm intended to bolster the internationally recognised Yemeni government. An interactive map shows the relative intensity of missile and missile defence-related activity across the Arabian Gulf which has occurred as part of the ongoing Yemen conflict beginning in June 2015. There is also an interactive timeline.
ISRAEL: SECRET FILES DETAIL IRAN’S NUCLEAR SUBTERFUGE
On 30th April, the New York Times provided a comprehensive guide to the recent presentation by the Israeli PM on intelligence material and where he accused Iran of lying for years about its efforts to build a nuclear weapon.
Meanwhile a podcast from the Arms Control Wonk website discusses the Iranian nuclear weapons programme, how Netyanyahu added to what we already knew about its programme, and why the JCPOA is important to verify that Iran’s bomb programme remains confined to dusty files in binders and CD in a dilapidated warehouse.
US: CUTTING OFF CHINESE RESEARCHERS AT UNIVERSITIES
On 2nd May, Inside Higher Ed published an article saying that the White House reportedly considers new restrictions barring Chinese citizens from engaging in sensitive research at US universities, and that higher education groups say they want to protect national security interests, but US universities must remain open. Among the possibilities under consideration, according to the New York Times, are restricting which types of visas Chinese nationals are eligible for and expanding existing regulations that already apply to Chinese nationals who conduct research with military or intelligence value at American universities. The newspaper also reported that the exact scope of the possible restrictions is not clear, but that they could affect collaborative research in technologies that relate to China’s “Made in 2025” plan to achieve domination in fields like advanced microchips, artificial intelligence and electric cars.
US RETURNS THOUSANDS OF SMUGGLED ANCIENT ARTEFACTS TO IRAQ
Yahoo News and others on 2nd May reported that about 3,800 artefacts, including Sumerian cuneiform tablets dating to 2100 BC, that were illegally smuggled to US retailer Hobby Lobby Stores Inc were returned to Iraqi officials in Washington. Last year, the US company Hobby Lobby was accused of illegally smuggling thousands of ancient tablets out of Iraq for their newly built Biblical museum in Washington DC.
COLOMBIAN VET CHARGED WITH SMUGGLING LIQUID HEROIN IN PUPPIES
SBS News and others on 2nd May reported that a 38-year-old Colombian vet has appeared in a New York court, accused of injecting liquid heroin into puppies to evade border control. Andres Lopez Elorez was arrested in Spain on a US warrant and extradited to the US. Prosecutors say he used his vet skills to surgically implant packets of liquid heroin into the bellies of puppies transported from Colombia to the US where the heroin was surgically removed, officials said.
CURTIS WARREN ALLY GOES ON TRIAL OVER 200 KG SPANISH COCAINE SMUGGLING PLOT
The Liverpool Echo on 2nd May reported that Brian Charrington was previously jailed over drugs offences, once worked with Warren on South American drug deals. He has gone on trial in Spain over allegations centred around a 200 kg cocaine smuggling plot. He is said to have orchestrated a drug trafficking operation 5 years ago from his fortress villa in the resort of Calpe, 15 miles north of Benidorm. Charrington, a former car dealer, had set up a drugs empire in the late 1980s and early 1990s in the UK.
GHANA: FATF AML/CFT MUTUAL EVALUATION REPORT
On 30th April, FATF announced that a GIABA report provides a summary of the AML/CFT measures in place in Ghana as at the date of the on-site visit in 2016. It analyses the level of compliance with the FATF 40 Recommendations and the level of effectiveness of Ghana’s’ AML/CFT system and provides recommendations on how the system could be strengthened. This Mutual Evaluation Report was adopted by the GIABA at its annual meeting in May 2017 and the findings of the assessment have also been reviewed and endorsed by the FATF.
ART DEALERS PUSH BACK AGAINST EU’S NEW AML/CFT RULES
The Financial tribune in its 3rd May edition reported that some art dealers predict that the new rules in the EU 5th ML Directive will make business transactions unnecessarily complicated and at least 2 trade organisations are pushing back. The International Confederation of Art and Antique Dealer Associations argued in a position paper that the regulations put “an unacceptable burden on the art market business”, and that the measures are disproportionate to the risk. The British Art Market Federation also opposes the stricter standard and says that its main concern now is to “work with the government to minimise the administrative effect on small businesses”.
US ART DEALERS MAY SOON BE SUBJECT TO GOVERNMENT FINANCIAL REGULATION
Art Net on 2nd May reported that that art world has been put on high alert with news of new government oversight. US clients of a leading art law firm were warned that legislators have their sights trained firmly on art dealers and the market.
EX-NETFLIX EXECUTIVE ALLEGEDLY BANKED PAYOLA FOR TECH DEALS WITH WEB TV GIANT
On 2nd May, The Register reported that a former vice-president at Netflix has been indicted for allegedly taking illegal kickbacks while making multimillion dollar deals with the streaming giant’s tech providers. Michael Kail, 49, formerly the VP of Internet Technology at Netflix, is said to have taken more than half a million dollars in payoffs from companies that wanted to sell Netflix the equipment it uses to prop up its massive video library. He is charged with wire fraud, mail fraud, and money laundering. The payments were made by 3 companies seeking deals with Netflix, though the DoJ believes that Kail was also given stock options by “numerous other Netflix business partners” while in his VP role.
ISLE OF MAN: THE ENFORCEMENT OF ARBITRATION AWARDS
An article from Appleby on 2nd May provided an overview of the Isle of Man’s Arbitration Act 1976, modelled on the 1950 Act of Parliament of the same name, blending into it some of Parliament’s afterthoughts.
BULGARIA EXTRADITES PRIME SUSPECT IN ÇIFTLIK BANK FRAUD SCHEME TO TURKEY
The Daily Sabah on 2nd May reported that a man wanted by Turkey for his involvement in notorious Çiftlik Bank (“Farm Bank”) fraud scheme was extradited by Bulgaria. Düzgün Genç (whose name and last name is roughly translated as Honest Young Man) is accused of being one of co-founders of the scheme that tricked gullible Turks out of their life savings. Çiftlik Bank, a virtual farming simulator, made $264.1 million in less than a year from more than 132,000 people who invested real money for virtual animals. Basically, a Ponzi scheme which promised customers doubled earnings in less than a year, it inspired other fraudsters who made the most of virtual farm frenzy before authorities, one by one, started shutting them down, seizing companies and detaining their owners.
FAT LEONARD: AUSTRALIAN NAVY OFFICER REVEALED AS SUSPECT IN MASSIVE US NAVY BRIBERY AND FRAUD CONSPIRACY
Radio Australia on 3rd May reported that a senior Australian Navy liaison officer allegedly shared US naval secrets in exchange for lavish dinners at fi5ve-star hotels and time with prostitutes. “Fat Leonard” — real name Leonard Francis — was a Singapore-based naval contractor, keen to court favour with the sailors, since his company, Glenn Defense Marine Asia (GDMA), provided millions of dollars of services to the US Navy’s ships each year. In return for those favours, the US officers would leak him classified information. Some even altered Navy fleet movements, so Francis’s company would be in pole position for the US Navy’s business. The case involved corruption at every stage of the contracting process for the US Navy’s port visits in SE Asia.
DEMOCRATIC PEOPLE’S REPUBLIC OF KOREA (SANCTIONS) (OVERSEAS TERRITORIES) (AMENDMENT) ORDER 2018
This Order in Council (SI 2018/528) amends a 2012 Order to make changes corresponding to those made by the Order above.
TERRORISM ACT 2000 (ENFORCEMENT IN DIFFERENT PARTS OF THE UNITED KINGDOM) ORDER 2018
This UK Order (SI 2018/521) makes provision for orders made under the Terrorism Act 2000 in one part of the UK to be enforced in another part of the UK. The Act provides for various orders to be issued in relation to a terrorist investigation.
SOCIETE GENERALE IS READY TO PAY UP TO $1 BILLION TO END US PROBES
On 2nd May, Bloomberg reported that Societe Generale SA is nearing an agreement to pay as much as $1 billion to resolve 2 US probes – into the rigging of benchmark interest rates and allegations of bribery in Libya – according to people familiar with the matter.
FACTSHEET: MODERN SLAVERY
The Home Office blog on 2nd May contained a factsheet on modern slavery in the UK and how the government is combating it.
HMRC MONEY LAUNDERING SUPERVISION: REPORT COVERING 2015 TO 2017
On 1st May, HMRC released a report which describes HMRC’s role in tackling financial crime in the supervised sectors and highlights its priorities and achievements.
UK SANCTIONS AND ANTI-MONEY LAUNDERING BILL: EXCEPTIONS AND LICENCES POLICY NOTE
On 1st May, the FCO published a document which sets out the government’s intended approach to exceptions and licences when the UK becomes responsible for implementing its own sanctions regimes. When it receives Royal Assent, it will enable the UK to impose and implement sanctions to comply with international obligations. It will also support wider foreign policy and national security goals. Currently, both UN and EU sanctions regimes include various exceptions to the prohibitions within those regimes and enable the provision of licences so that valid actors, such as non-government organisations (NGO), can carry out humanitarian activity in countries affected by sanctions.
PODCAST: ANONYMOUS SHELL COMPANIES
In the latest TRACE podcast, Gary Kalman of the FACT Coalition argues for transparency in corporate ownership and an end to the use of anonymous shell companies in this timely discussion about offshore accounts.
JAMAICA AS FIREARMS TRAFFICKING ROUTE
The Gleaner on 2nd May reported that Selvin Hay, who serves as a deputy commissioner of police (DCP) in charge of the Jamaica Constabulary Force’s (JCF) crime and security portfolio, has said that based on factors such as geographical location and the presence of 145 unmanned ports across the island, Jamaica is a prime location for firearm trafficking. By sheer geography, Jamaica is placed in the midst of a trafficking route right across South America, North America and Europe.
NORTH KOREA’S FATHER-AND-SON SPYING TEAM HAVE ASSETS FROZEN IN BRITAIN
On 29th April, The Times reported (as already mentioned in the UN Panel of Experts report etc) a father-and-son spying team from North Korea are suspected of raising funds in Europe for Kim Jong-un’s nuclear weapons programme have assets in the UK which have now been frozen by the British government. Kim Su Gwang, 41, and his father, Kim Yong Nam, 70, separately infiltrated 2 leading UN agencies and used their work as cover to allegedly handle a network of spies across the continent. Kim Su Gwang is known to have made regular trips to London, raising concerns he could have used British banks to transfer money back to North Korea circuitously. The men and their wives were placed under sanctions by HM Treasury on April 20th.
WHY THE BIKE INDUSTRY HAS A TOUGH TIME CATCHING COUNTERFEITERS
A commentary published on 2nd May by the Cycling Industry News explained how affected the bicycle industry may be and offering a few solutions.
SOLICITOR “TAKEN IN” BY GANGSTER STRUCK OFF FOR MONEY LAUNDERING OFFENCES
Legal Futures on 3rd May reported that a solicitor who claimed that he “unwittingly facilitated” money laundering on behalf of an associate of convicted murderer and drug dealer Dale Cregan has been struck off. Neil Richard Bolton was jailed for 9 months after being convicted of 7 counts of failing to comply with money laundering regulations and one count of failing to disclose his suspicions while working at Stockport firm, Harvey Roberts Solicitors.
WHERE SHOULD THE BRITISH NATIONALS, WHO WERE PART OF AN INFAMOUS ISIL TERRORIST CELL KNOWN AS “THE BEATLES,” BE TRIED?
RAND International has reflected on the question of where “international” terrorists be tried if or when caught. It suggests that, in an interconnected world, with an increasing number of fragile states, the International Criminal Court (ICC) may be the most ideal institution to try these accused terrorists. The court would ensure that the legal status of terrorists, the nationalities of their victims, and the location of the crimes are taken into account — all while upholding the core values of Western democracies.
GULF STATES SCRAMBLE FOR SOMALIA SEAPORTS
Defence Web on 2nd May reported that a battle for access to seaports is underway in one of the world’s unlikeliest places: Somalia, now caught in a regional struggle between Saudi Arabia and the UAE on one side with Qatar backed by Turkey on the other. The Middle Eastern feud is driving the desire to control the Horn of Africa and its waters, according to diplomats, businessmen, scholars and Somali officials.
MOROCCO SEVERS TIES WITH IRAN OVER SUPPORT FOR POLISARO FRONT
Defence Web on 2nd May reported that Morocco has severed diplomatic ties with Iran over Tehran’s support for the Polisario Front, a Western Sahara independence movement, the Moroccan foreign minister said. Morocco claimed Western Sahara since colonial power Spain left in 1975. But Polisario fought a guerrilla war for independence for the Sahrawi people until a UN-backed ceasefire in 1991, monitored by UN peacekeepers.