10th May 2018
EU PROPOSAL FOR CROSS-BORDER TRANSACTIONS AND ONLINE COMPANY ESTABLISHMENT
On 8th May, NautaDutilh published an article saying that on 25th April the European Commission published 2 proposals for Directives: a proposal to make it easier for companies to merge, divide and transfer their registered office within the EU and a proposal to render it possible throughout the EU to establish a company online.
AUSTRALIA UPDATES ITS CONSOLIDATED LIST OF SANCTIONS
On 27th April, Baker McKenzie reported that on 25th April the Department of Foreign Affairs and Trade (DFAT) issued an updated version of the Consolidated List of all persons and entities who are subject to targeted financial sanctions or travel bans under Australian sanctions laws and includes all persons and entities to which the Charter of the United Nations Act 1945 and the Autonomous Sanctions Act 2011 currently applies.
NCA SECURES FIRST UNEXPLAINED WEALTH ORDERS (UWO)
On 8th May, Taylor Wessing produced a briefing saying that in February the courts in England granted the first ever Unexplained Wealth Orders (UWO), requiring an as yet unidentified individual to provide information about the extent of his or her interest in a number of properties totalling circa £22 million in London and South-east England. The properties have been frozen pending the provision of the information requested. If, without reasonable excuse, he or she does not provide the information requested in the order, the NCA could proceed to recover those assets as criminal property, and he or she could lose any interest he or she has in them.
ZTE CEASES ‘MAJOR OPERATING ACTIVITIES’
Multichannel News on 9th May reported that, in a filing to the Hong Kong stock market, China-based telecom company ZTE Corp. has halted “major operating activities” in the wake of a US export denial order. On April 18th, the US Department of Commerce said ZTE had violated the terms of its settlement agreement with the US over illegally shipping telecom equipment to Iran and North Korea and will be blocked from exporting its telecom equipment as a penalty, and, as a result, had denied export privileges to ZTE.
MARSHALL ISLANDS PROPOSES MAKING CRYPTOCURRENCY LEGAL TENDER
Coingeek on 10th May reported that the Marshall Islands is looking to offer a proprietary digital currency, which would be legal tender alongside the local fiat currency. It made the US dollar its legal currency in 1982. The anticipated sovereign currency (SOV) would be recognised as legal currency for business transactions and citizens on the islands. Neema, a financial technology company from Israel, was the first to propose the idea.
INCOMING LATVIAN AML CHIEF DEMANDS INDEPENDENCE
On 10th May, LSM in Latvia reported that the likely new head of the Kontroles dienests (Control department, KD), which is responsible for combating money-laundering, is demanding the institution be made independent as a condition for accepting the job, the Prime Minister has said.
ISLE OF MAN SANCTIONS NEWS RELEASES: JCPOA, YEMEN AND CAR
On 9th May, the Isle of Man issued 3 news releases – one was said to be issued to raise awareness of the US decision to withdraw from the Joint Comprehensive Plan of Action (JCPOA), otherwise known as the Iran nuclear deal. Another detailed amendments of the details of 1 person designated under Yemen sanctions – Ali Abdullah SALEH. The last detailed amendment of the details of 1 person under the Central African Republic sanctions – Eugene BARRET NGAIKOSSET.
SAUDI ARABIA SET TO PURSUE NUCLEAR WEAPONS IF IRAN RESTARTS PROGRAMME
On 9th May, CNN reported the perhaps unsurprising news that Saudi Arabia’s foreign minister told CNN that his country stands ready to build nuclear weapons if Iran restarts its atomic weapons programme.
CAN ANYONE AT MY COMPANY SIGN US EXPORT DOCUMENTS?
Shipping Solutions’ International Trade Blog poses this question for US exporters. It says that, as a general rule, it advises exporters that anyone can sign who can attest to the accuracy of the documents. It then goes on to explain what this means, and a role sometimes called “signature authority”. It does say that most of the US regulations related to exporting don’t define a specific type of person who must sign the export regulations – but they are clear that whomever signs the documents can be held personally liable for the accuracy of the information. It says that the exception to this ambiguity is found in the International Traffic in Arms Regulations (ITAR) – where the person who should sign documents should be an “empowered official” (a term which is explained).
US DEPORTS ITALIAN NATIONAL CONVICTED OF WEAPONS TRAFFICKING
On 10th May, the US Immigration and Customs Enforcement (ICE) reported that Giovanni Zannoni, 35, an Italian national, and member of the Italian military, convicted of weapons trafficking was returned to his home country Tuesday by ICE. This is following a joint investigation by ICE Homeland Security Investigations (HSI) in New York and the Department of Defense’s Criminal Investigative Service (DCIS) which led to a guilty plea and subsequent sentencing. According to court records, between June 2013 and May 2017, Zannoni illegally exported and attempted to export night vision goggles and assault rifle components designated as defence articles on the United States Munitions List.
GOVERNMENT APPROVES STRATEGY FOR REVIVAL OF UKRAINIAN AIRCRAFT INDUSTRY
On 10th May, Open 4 Business reported that the government of Ukraine has approved the strategy for the revival of the national aircraft industry by 2022.
IRAN AND CHINA GO WAY BACK — AND NEW US SANCTIONS WILL SEE THEM GO FURTHER
Business Day in South Africa on 10th May reported that a constant in the years of US and EU sanctions was Chinese help, with everything from building rails to manufacturing wagons. It says that the JCPOA nuclear deal hasn’t delivered more than a trickle of Western investment — and even that is poised to dry up, after President Donald Trump pulled out of the agreement and said he’ll re-impose sanctions. To develop its $430 billion economy, Iran is being forced to rely on political allies in the east. Trade with China has more than doubled since 2006, to $28 billion. The biggest proportion of Iran’s oil exports go to China, about $11 billion a year at current prices. Chinese direct investment is arriving too, though reliable data is harder to come by.
HOW WERE AFRICAN ZEBRAS BROUGHT TO BANGLADESH?
The Dhaka Tribune in Bangladesh on 10th May reported that Bangladesh police suspect the rescued 9 zebras, hidden in a shed of the cattle market zebras were brought into the country to be smuggled into India. However, nobody has yet been arrested following the incident. A police official assumed the zebras were brought to Dhaka on a cargo flight of Turkish Airlines. One of the 9 zebras was found dead and the others were handed over to the local forest department officials.
ITALY POLICE BUST SUSPECTED TERRORISM FINANCING RING
Reuters on 10th May reported that Italian anti-terrorism police have dismantled a suspected international network that smuggled migrants across Europe and then funnelled some of the proceeds to Islamist militants in Syria. 14 arrest warrants for charges including money laundering, association with terrorist groups, and conspiracy to finance terrorism were issued, with 1 of the men sought for arrest still at large. 11 of the men were born in Syria and were living in Italy, Sweden, and Hungary, the arrest warrant says. 3 of the men were Moroccan. Police tracked the laundering of about €2 million, some of which had been sent to the former Nusra Front, which cut ties with al Qaeda and rebranded in 2016, and now spearheads an alliance of Islamist groups.
SINGAPORE DEPORTS 2 GUNRUNNERS TO TAIWAN
The Taiwan Times on 10th May reported that the suspects were allegedly involved in smuggling 109 guns into Taiwan, and that one was in a faction of the Bamboo Union organised crime gang.
FOUNDER OF CHINESE COMPANY WITH BILLIONS IN BRITISH COLUMBIA ASSETS GETS 18 YEARS FOR FRAUD
On 10th May, CBC in Canada reported that a court in Shanghai sentenced the founder of a Chinese insurance company that owns extensive assets in British Columbia to 18 years in prison after he pleaded guilty to fraudulently raising billions of dollars from investors, state media reported. The court also ordered the confiscation of $1.6 billion in assets from Wu Xiaohui, the former chairman of Anbang Insurance Group. Anbang controls the largest retirement and care home provider in the province through a subsidiary, which has 20 locations in BC, 2 in Alberta and 1 in Quebec.
VIETNAM ARRESTS OIL EXECUTIVES AS ANTI-GRAFT SWEEP BROADENS
Channel News Asia on 10th May reported that Vietnam has arrested the chairman and chief accountant of a leading state-run oil refining company for alleged abuse of power and property appropriation, as the government forges ahead with its massive anti-graft sweep. Dozens of high-flying executives and former officials have been punished in the corruption crackdown waged by a hardline administration in charge since 2016. Some of the biggest names swept up in the crackdown are linked to the country’s largest oil company, state-run PetroVietnam (PVN).
DOZENS OF FOREIGNERS ENTERED US ILLEGALLY USING FRAUDULENT HUNGARIAN PASSPORTS
On 10th May, Newsweek carried a report claiming that more than 5 dozen foreign nationals managed to dupe US authorities and enter the country illegally as part of a wide-reaching Hungarian passport fraud scheme, according to a Department of Homeland Security report obtained by the Washington Post.
12th May 2018
THE CHINESE COMPANY SELLING IRANIAN SNIPER GEAR AROUND THE WORLD
On 11th May, the Daily Beast website reported that a thermal sniper sight that allows a shooter to see his prey’s body heat against the black of night used by Iran, and which it said was its own product, made by Rayan Roshd Afzar, is linked to the chairman of one of Iran’s largest defence contractor’s shell company investing in Chinese optics manufacturing, specifically Sanhe Haobang Optoelectronic Equipment Co, Ltd, a Chinese company. The website reports that Turkey has already arrested Kurdish militants using the RU60G gunsight, in a possible sign that Iran’s arms production is starting to fuel other, unrelated conflicts. Sanhe registered websites for Raybeam Optronics and a host of other companies, and began marketing (including on Alibaba) military optics. In June 2017, the US designated Emily Liu (the Chinese said to be behind Sanhe), Raybeam, and a handful of other companies connected to her.
BUSINESS BOOMING FOR THE UK COMMUNICATIONS INTERCEPT INDUSTRY
On 11th May, The Intercept website published an article about the communications interception and disruption (and surveillance) businesses clustered around the GCHQ base in Cheltenham; including offices of US companies like Raytheon and Northrop Grumman. The article says that the UK is investing £22 million for a new cyber business park on a patch of land close to GCHQ’s headquarters. “It will act as a ‘honeypot’ for cyber security and high-tech supply chain businesses,” the promotional literature said, creating 7,000 jobs. The article reports that, according to the London-based advocacy group Privacy International, the UK has 104 companies producing surveillance equipment for export to foreign governments and corporations. Only the US, with 122 companies, has more. According to the article, despite membership of the Wassenaar Arrangement that since 2013 has “controlled” surveillance and hacking technology, the UK has continued to sell eavesdropping equipment to a number of countries with questionable human rights records, such as Honduras, Bahrain, Saudi Arabia, China, and Qatar.
UK HAS SOLD $1 BILLION OF WEAPONS TO TURKEY SINCE COUP ATTEMPT
As President Erdogan visits London, the Middle East Monitor has reported that new figures reveal that Britain has sold more than $1 billion of weapons to Ankara since the failed 2016 coup and subsequent crackdown under emergency powers. It says that Turkey remains a “priority market” for British weapons, despite concerns from human rights groups and EU officials over the erosion of the country’s rule of law. UK weapons sales since the attempted coup include a $667million deal for military electronic data, armoured vehicles, small arms, ammunition, missiles, drones, aircraft and helicopters. It also includes a $135 million deal for BAE Systems to fulfil Erdogan’s plan to build a Turkish-made fighter jet, signed in January 2017 under an “open licence” to ease the transfer of military technology, and UK officials now reportedly wish to expand the deal by pushing for Rolls-Royce to win the engine contract.
CANADIAN GETS SECOND JAPANESE ARREST WARRANT IN ALLEGED DRUG-SMUGGLING CASES USING “PRIVATE LODGING SERVICES”
The Japan Times on 12th May reported that a fresh arrest warrant has been served to a Canadian man for allegedly smuggling stimulants into Japan by sending them to a minpaku (private lodging service) facility in Tokyo. He is suspected of sending the drugs to a condominium in Tokyo from California via airmail in January. The minpaku are thought to have been used as visitors can book them online and can check into their rooms without having to meet the caretakers or other staff, sources said.
PAKISTAN CENTRAL BANK SEEKS SECURITY OFFICIALS’ HELP TO CURB FOREX CASH SMUGGLING
The News in Pakistan reported on 12th May that the central bank sought help of security officials to check suspicious inland movement of foreign currencies to curb their smuggling or use in terror financing. It claims that the State Bank of Pakistan (SBP) wrote letters to the Federal Investigation Agency, Federal Board of Revenue and other border agencies to take appropriate action in accordance with the law to keep vigil on inland movement of cash foreign currencies in bulk by unauthorised individuals or entities.
CHARGES FILED IN LARGEST-EVER DRUG SEIZURE IN SOUTHERN SWEDEN
The Local on 11th May reported that a drug smuggling charge has been filed in what was the largest-ever narcotics seizure in Malmö, Swedish Customs (Tullverket) announced. The agency said in a press release that customs officials stopped a truck entering Sweden from the Öresund Bridge in March 2017 after a GPS transmitter mounted on the vehicle drew suspicion. When the truck was checked 663 kg of drugs were found, including over a half tonne of cannabis, and more than 100 kg of amphetamines were also discovered. According to the agency, the drugs were distributed into numerous packages and appeared ready for delivery. The estimated street value of the seizure was $10.5 million.
PARAGUAY’S PRESIDENT “SOUL BROTHER” ACCUSED BY BRAZIL OF MONEY LAUNDERING
Merco Press on 11th May reported that Paraguayan authoritie have issued an arrest warrant for a man President Horacio Cartes has described as his “soul brother” as part of a sweeping investigation into corruption in Latin America. A financial crimes prosecutor accused the president’s friend, Dario Messer, of money laundering and criminal association. The dual Brazilian-Paraguayan citizen has been on the run since Brazilian authorities issued an arrest warrant there. Brazilian authorities alleged Messer is the leader of a group of Brazilian illicit money dealers who delivered bribes as part of the mammoth “Car Wash” kickback scheme, the biggest corruption scandal in the history of Brazil.
US CUSTOMS SUED OVER REQUIRING “HOLD HARMLESS AGREEMENT” FOR RETURN OF SEIZED CASH
On 11th May, Export Law Blog reported the case of a woman, a nurse who was traveling to Nigeria to establish a medical clinic for women and children in Nigeria. She had with her $41,377. This was money which she had saved from her nurse’s salary. It was intended to seed money for the clinic. All of the money was seized at the airport because she did not file a declaration of the cash at the US Customs and Border Protection (CBP) Office 6 miles from the airport just before her departure. When the US government did not file a judicial forfeiture action within 90 days of receiving the claim form the law requires return of the cash. CBP then mailed her a letter saying it would give her cash back to her but only if she signed a “hold harmless agreement” which would prevent her from filing suit against the government and would require her to indemnify the government against any future claims made against the released property. The letter also said that if she did not sign the hold harmless agreement within 30 days, administrative procedures to forfeit the cash would be instituted. She is now suing CBP, arguing that such a conditional release is not lawful. The Blog suggests you return a hold harmless agreement back with a cover letter indicating that the hold harmless was not signed voluntarily but was signed because of CBP’s unlawful demand that it be signed as a condition to return property that is lawfully yours.
LASER MISUSE (VEHICLES) ACT 2018
On 10th May, this UK Act received Royal Assent. It creates the offence of shining or directing a laser beam towards a vehicle or shines or directs a laser beam towards an air traffic facility or towards a person providing air traffic services.
FinCEN REDUCES AML PENALTY AGAINST CASINO – PENDING GOOD BEHAVIOUR
On 8th May, Cadwallader Wickersham and Taft LLP published an article reporting that FinCEN had rescinded and replaced a November 2017 Assessment against a California-based casino for AML violations, reducing the initial fine against the casino in exchange for the casino’s commitment to improve its AML compliance and other conditions.
HOW POLICY CAN CHANGE TO SPOT AND SINK COMPANY LETTERBOX-TYPE PRACTICES
A December 2016 report from the European Trade Union Syndicate (ETUC) sets out a number of recommendations to combat the problem of “letterbox practices” whereby companies circumvent their obligations to not only to pay lower taxes, but also lower wages and to impose bad working conditions. It explains that letterbox companies are legal entities established in an EU country, where they have no (or minor) economic activities, in order to “regime shop” for lower taxes, wages and social contributions. A key feature of letterbox companies is that they can be very quickly, simply and cheaply set-up and wound down. Indeed, such entities may be established and disbanded in a matter of a few hours, making supervision very difficult. An earlier first report ‘The impact of letterbox-type practices on labour rights and public revenue’, featured case studies from Germany, the Netherlands, Italy and Sweden, covering the meat, road transport, car manufacturing and construction sectors. It showed how tax avoidance often combines with exploiting workers. This second report focuses on recommendations and approaches to address the problem by joining up the 3 dimensions of tax, social security and labour law.
SOMALIA DEFAULTS ON COAST GUARD VESSELS
On 11th May, Defence Web carried a report saying that the delivery of 6 offshore patrol vessels to Somalia has been thrown into doubt as Somalia has defaulted on its payments and the supplier has begun arbitration over the €132 million contract that was signed in July 2013.
GAMBIA SELLING FORMER PRESIDENT’S ASSETS
Defence Web on 11th May reported that Gambia is selling several planes and a fleet of luxury cars bought by former President Yahya Jammeh as it seeks to reduce a mountain of crippling debt contracted during the authoritarian leader’s decades-long rule. Jammeh, who seized power in a 1994 coup, fled Gambia early last year. Jammeh acquired vast wealth, much of which he packed into planes and took with him into exile in Equatorial Guinea.
AL-QAEDA AFFILIATE THREATENS WESTERN COMPANIES IN AFRICA
On 9th May, Defence Web reported that an Al-Qaeda affiliate threatened attacks on Western companies’ operations across North and West Africa, calling them “legitimate targets” and urging Muslims to boycott them.
Al Qaeda in the Islamic Maghreb (AQIM) launched raids on installations in the past, in particular in Algeria where it carried out a major assault on a gas plant in 2013 killing dozens of workers.
ALBANIAN EX-MINISTER TO FACE DRUG TRAFFICKING CHARGES
On 12th May, Reuters reported that an Albanian court has ruled that former interior minister Saimir Tahiri should be kept under house arrest and face trial on charges of drug trafficking and corruption, the prosecution office said.
CHINESE BILLIONAIRE GETS 4 YEARS TERM IN UN SCANDAL
The Gulf Today on 13th May reported that Chinese billionaire Ng Lap Seng has been sent to prison for 4 years by a US federal judge after being convicted of bribery in a UN corruption scandal. It said that the businessman, 69, wealthy real estate developer, was found guilty in July 2017 of bribing a former president of the UN General Assembly and a former deputy ambassador for the Dominican Republic. He was convicted on 6 counts in connection with a scheme to pay more than $1.3 million in bribes to UN officials. In addition to his prison term, he was ordered to pay a fine of $1 million, forfeit $1.5 million and make restitution to the UN for its legal fees.
MALTA GAMBLING MAFIA LINKS SPOOK OPERATORS
Calvin Ayre reported on 11th May claimed that gambling operators have threatened to pull their businesses out of Malta amid reports that a mafia group has infiltrated the sector.
The Times of Malta has reported that Malta-based operators are exerting extra pressure on the Malta Gaming Authority (MGA) to weed out gambling firms that are connected to Cosa Nostra kingpin Matteo Denaro and clean up the industry from unwanted and dodgy business.
HOW MALTESE ONLINE GAMBLING BECAME AN ATM FOR THE ITALIAN MAFIA
Meanwhile, OCCRP carried an article dated 10th May on Malta’s online gambling industry, that is said to contribute some 12% of the island’s GDP.
GIBRALTAR WILL NOT GIVE AN INCH ON SOVEREIGNTY GARCIA TELLS US CONGRESS
In a press release of 9th May, the Government of Gibraltare reported that its Deputy Chief Minister Dr Joseph Garcia has told Members of the US Congress that Gibraltar will not cede an inch of its sovereignty, jurisdiction and control as Brexit looms. Moreover, he has pointed to the danger of Spain challenging the status quo by redrawing the borders of Europe at a time of so much uncertainty and instability on the Continent.
GRAFT TOOK $320 BILLION FROM IRAQ’S ECONOMY SINCE 2003
OCCRP on 10th May carried an article claiming that buying jets for $13 million each when they actually cost less than $1 million is just one of the examples of how the billions disappeared.
SRI LANKA CREATES SPECIAL COURTS FOR RAJAPAKSE-ERA GRAFT
On 10th May, Baker McKenzie reported that Sri Lanka’s parliament has voted to set up special courts to try multi-billion dollar graft cases under former President Mahinda Rajapakse. The move aims to accelerate several high-profile cases following criticism over the slow pace of justice since President Maithripala Sirisena came to power in 2015 promising to stamp out corruption.
CHILE DISMANTLES ARMS TRAFFICKING RING IMPORTING US WEAPONS
On 11th May, Insight Crime reported that authorities in Chile say they have uncovered the first international arms trafficking network importing guns from the US to be resold in Chile, said to illustrate how crime groups across Latin America have taken advantage of lax US gun laws to supply the region with illicit weapons.
HOW BILLIONS IN DIRTY CASH FLOWED THROUGH PERU’S BIGGEST BANKS
On 11th May, Baker McKenzie reported that secret documents from the Peruvian FIU are said to reveal that more than $2.2 billion linked to suspected criminal activity entered Peru’s financial system through clients with alleged ties to drug trafficking, illegal gold mining, tax evasion and corruption. An investigation reveals the banking system’s role in money laundering by organised crime groups and inaction by Peru’s only state oversight entity, the AFP – SBS, revealing multiple cases of non-compliance with regulations intended to combat such crimes.
A THEFT THAT WAS NOT THEFT – COURT OF APPEAL AND THE DARROUX CASE
On 12th Mary, Bartfield Forensic Accountants reported on a case where a woman employed by a housing association charity was first convicted of theft by submitting what were held to be false claims for inflated overtime and on-call claims and claims in lieu of holiday entitlement for herself. The total amount said to be involved said to be £49,465 for the period between January 2011 and February 2014. However, the Court of Appeal held that, on the facts and circumstances of this case, the counts of theft were unsustainable. The dishonest actions were not “theft” as defined in law, for reasons set out in the article. The article concludes that it was perhaps surprising that no one appears to have drawn the attention of the Court of Appeal to the offence of false accounting contrary to section 17 of the Theft Act 1968 – which seems to perfectly cover the facts of this case; and that a ‘technical’ error in selecting the correct offence to charge may result in a dishonest defendant going free.
MODERN SLAVERY WIDESPREAD ACROSS SECTORS OF UK ECONOMY
On 10th May, PNLD carried a story of a new report which says that exploitation and abuse of workers is widespread across the UK economy, according to a new report, which finds that 17 sectors are high-risk for mistreatment. Construction, recycling, nail bars and car washes were among the top sectors.
3D PRINTING COULD LEAD TO SECURITY THREATS, LABOUR MARKET DISRUPTION
On 11th May, Homeland security Today reported on a RAND Corporation report which says that the technology known as 3D printing could disrupt labour markets and exacerbate security threats from violent actors. It says that 3D printing could benefit military adversaries, violent extremists, and even street criminals, who could produce their own weapons for use and sale. Without proper controls, some violent actors might be able to reproduce even more sophisticated weapons systems and drones. They could also replicate jamming devices or decoys that disrupt intelligence collection. The technology could also be susceptible to hackers who could create flawed instructions or algorithms into things like airplane parts.
FCA SECURES £1.9 MILLION CONFISCATION ORDERS AGAINST INSIDER DEALERS
On 11th May, Mondo Visione reported that UK courts have made confiscation orders for £1,074,236 against Martyn Dodgson and £624,521 against Andrew Hind. The orders must be paid within 3 months or Mr Dodgson will face a further 7½ years in prison and Mr Hind will face a further 5½ years. These confiscation orders follow an FCA prosecution in which Messrs Dodgson and Hind were convicted of conspiring to insider deal.
NZ PRICIEST PLACE TO BUY COCAINE AND MDMA: GLOBAL DRUG SURVEY 2018
Stuff in New Zealand on 9th May reported that New Zealanders told the Global Drug Survey (GDS) 2018 they paid more than $360 on average for a gram of cocaine – nearly 4 times what Americans said they paid. They also paid the most for MDMA pills, and the fourth-highest price for LSD compared with the 20 countries surveyed in the GDS. The Survey is available at –
ORGANISED CRIME IN MONTENEGRO ON RISE AMID CLAIMS OF GANG LINKS TO GOVERNMENT
The Guardian on 10th May reported on the continuing gang warfare in Montenegro following the shooting of a journalist there. For years, Montenegro has been riven by gang violence linked to lucrative drugs and cigarette smuggling routes. Usually the killings take place away from the tourist hotspots, but not always. There are persistent allegations that government figures are linked to the criminal gangs.