11th June 2018
UK ACCUSED OF FAILING TO PASS ON FEARS OVER SAUDI ARABIA ARMS DEAL
The Guardian on 10th June carried a report on an allegation that relates to applications for standard individual trade control licences (SITCL) submitted to the Department for International Trade (DIT) in 2014 by 2 unnamed UK arms brokers. The application covered approval for the brokers to act as intermediaries in an arms deal involving 30 million rounds of ammunition – including 13,492,927 AK-47 bullets and 3,063,276 rounds of sniper ammunition – to be supplied by arms manufacturers in Bosnia to the Saudi government, which was listed as the “end user”. DIT normally processes applications within 20 days but in this case the UK government took 14 months to investigate before deciding to reject the applications. However, the Bosnian government was not told of the DIT’s suspicions and approved the export licence, allowing the ammunition to reach Saudi Arabia in 2015/2016. The Balkan Investigative Reporting Network (Birn) highlighted the dangers of the “diversion” of arms and ammunition legally supplied but then passed on to third-party “proxy fighters” including terror groups, and said the practice was fuelling conflicts.
WILL LIBYA’S NEWLY SIGNED BORDER SECURITY AGREEMENT CHANGE ANYTHING?
Al-Monitor on 8th June reported that Libya, Chad, Sudan and Niger have a security protocol to strengthen co-operation and aims to improve cross-border security by targeting transborder criminal activities, particularly human trafficking, arms and narcotics smuggling, as well as the smuggling of goods. It says that goods are especially smuggled from Libya, where they are subsidised, and then sold at high prices in countries like Chad and Sudan.
LIBYA’S NATIONAL OIL CORPORATION CALLS ON UN TO IMPOSE SANCTIONS ON FUEL SMUGGLERS
The Libya Observer on 10th June reported that the NOC called for expanding the UN sanctions list to include fuel and oil smugglers.
SMUGGLING ON NORTH KOREA-CHINA BORDER ‘THRIVING AFTER KIM-XI MEETINGS’
The Korea Times on 10th June claimed that smuggling on the North Korea-China border is thriving because border controls have eased following the summits between the countries’ leaders in March and May. A source is quoted as saying that North Korean workers from trading companies and firms generating foreign currency were transporting banned products by ship and handing the products to their Chinese partners on the outskirts of China’s Donggang and Dandong cities.
NEW UNIT TASKED WITH CATCHING ILLEGAL MIGRANTS FLYING INTO IRELAND TO CLAMP DOWN ON PEOPLE-SMUGGLING OPERATIONS
The Irish Sun on 10th June reported that a new unit has been tasked with catching illegal migrants flying into Ireland on bogus passports.
BACA AND EBAA UNITE TO COMBAT ILLEGAL (OR GREY) CHARTER FLIGHTS
Blue Sky reported that BACA (the air charter association) and the European Business Aviation Association (EBAA) announced their decision to join forces to combat illegal charter flights – often referred to as “grey” charter – where aircraft that have not been approved for paying passengers are used for charter. They will collectively gather data, via a joint reporting mechanism, in an attempt to gain a more accurate picture of an activity that clearly puts at risk the safety and integrity of the air charter market as a whole and those who use it. Cases of illegal charter often go unreported and the extent of the problem is therefore unknown. This is compounded by regulators handling full workloads and the resource drain that proving such cases represents.
US MAY SEEK TO REDUCE IMPORTS OF IDENTIFIED CRITICAL MINERALS
HK TDC on 8th June reported that the Trump administration is expected to begin taking steps to ease the US dependency on imports of 35 minerals deemed by the Department of the Interior to be critical to US security and economic prosperity. Such steps are likely to include efforts to reduce imports, boost domestic production and find viable alternatives. The final list of critical minerals includes aluminium (bauxite), antimony, arsenic, barite, beryllium, bismuth, caesium, chromium, cobalt, fluorspar, gallium, germanium, graphite (natural), hafnium, helium, indium, lithium, magnesium, manganese, niobium, platinum group metals, potash, the rare earth elements group, rhenium, rubidium, scandium, strontium, tantalum, tellurium, tin, titanium, tungsten, uranium, vanadium and zirconium. However, this list will be updated.
US INQUIRY: COMBATING IMPORTS OF ILLEGALLY HARVESTED SEAFOOD
On 8th June, HK TDC reported that the US Department of Commerce is seeking information by 31st December regarding nations whose vessels are engaged in illegal, unreported or unregulated (IUU) fishing, by-catch of protected living marine resources and/or fishing activities in waters beyond any national jurisdiction that target or incidentally catch sharks. It is also seeking information on foreign commercial fishing operations that export fish and fish products to the US and the level of incidental and intentional mortality and serious injury of marine mammals in those fisheries. Both initiatives are to inform enforcement of US import controls.
‘MINI 1MDB’ RIFE ACROSS MALAYSIA, PM’S TOP ADVISER SAYS
Bloomberg on 11th June reported that Malaysia has discovered “many mini 1MDBs” in its campaign to root out corruption in the state, according to a top adviser to the Prime Minister. The 1MDB case involved a state-owned investment fund at the heart of a multi-billion dollar corruption scandal.
INDIAN AGENCIES MAY SEEK FOREIGN HELP IN ICICI BANK FRAUD CASE
Indian Age on 10th June reported that a multi-agency probe continues in India into alleged lapses involving ICICI Bank’s chief Chanda Kochhar and her family members. Sources said the SEC is also is actively looking into the matter as ICICI Bank is listed in the US.
NIRAV MODI “SEEKING POLITICAL ASYLUM IN UK”
On 11th June, India Today reported that the billionaire jeweller at the heart of a more than $2 billion fraud case in India involving the PNB Bank, has fled to the UK, where he is claiming political asylum, claiming political persecution in India.
JERSEY POLICE ANNUAL REPORT
Bailiwick Express on 11th June reported that the annual report from Jersey Police included information that 2017 saw the injection of additional funding into the Jersey Financial Crime Unit and the creation of an Economic Crime and Confiscation Unit within the Law Officers’ Department. The FIU saw an increase of 4% on 2016 in terms of overall submissions in the form of SAR, requests for assistance and other miscellaneous reports – the highest levels to date.
US AIR FORCE CAPTAIN, MISSING FOR 35 YEARS, CHARGED WITH DESERTION
Canoe.com on 10th June reported the case of William Howard Hughes Jr who was apprehended at his home after a fraud investigation involving a fake identity he had been using. He had been involved in classified planning and analysis of NATO’s control, command and communications surveillance systems during the Cold War and specialised in radar surveillance. He was last seen withdrawing more than $28,000 in Albuquerque in the summer of 1983. Hughes told authorities after his capture that he was depressed about being in the USAF and decided to leave, so he created a fake identity and lived in California ever since.
WHY BLOCKCHAIN COULD REVOLUTIONISE TRADE FINANCE DOCUMENTATION
Banking Tech on 6th June published an article explaining how blockchain could be used for trade financing saying that while blockchain solutions for trade finance are still at an early stage, there are already important lessons that can be made.
ARE PAYMENT SERVICE PROVIDERS GOING TO BECOME VAT COLLECTORS? HMRC CONSULTATION ON VAT “SPLIT PAYMENTS”
Osborne Clarke on 6th June published an article saying HMRC has launched a formal consultation into implementing a VAT “split payments” system. If adopted, this could effectively make PSP (both card issuers and merchant acquirers) collectors of merchants’ VAT liabilities. This may require significant changes to PSPs’ (and potentially card schemes’) technology systems and contractual arrangements. Responses are due by 29th June. Essentially, the proposals require PSP to deduct an amount in respect of VAT from the total payment given by the customer, account for the VAT to HMRC, and then pay the balance to the merchant.
WHEN IS A BID OR OFFER A ‘SPOOF’?
In an article published on 5th June, US law firm Morvillo Abramowitz Grand Iason & Anello explains what makes a commodity futures trader’s conduct illegal instead of a legitimate trading strategy. This follows the first US criminal conviction for “spoofing” in the Coscia case.
SEC UNSEALS COMPLAINT AGAINST CALIFORNIA “BLOCKCHAIN EVANGELIST” FOR FRAUD SURROUNDING ICO
Nelson Mullins on 6th June produced an article about the case of Michael Stollaire, a self-described “blockchain evangelist,” and his companies Titanium Blockchain Infrastructure Services, Inc. (TBIS) and EHI Internetwork and Systems Management Inc, alleged by the SEC of violations of the anti-fraud and registration provisions of the federal securities laws. The Complaint describes a “create and inflate” scheme to pump up the value of “BAR,” the digital asset offered through the ICO, at the time of issuance and for subsequent resale, using social media and fabricated corporate client testimonials.
SOCIÉTÉ GÉNÉRALE AND LEGG MASON TO PAY NEARLY $650 MILLION TO RESOLVE DOJ INVESTIGATION OF LIBYAN BRIBERY SCHEME
On 7th June, Paul Weiss published an article about the settlement between the DoJ and Paris-based Société Générale SA and its wholly-owned subsidiary, SGA Société Générale Acceptance NV, and Maryland-based Legg Mason Inc. Société Générale and SGA NV agreed to pay over $860 million in penalties to resolve criminal charges in the US and France in connection with charges of bribery and interest rate manipulation, included is a deferred prosecution agreement with the DoJ. Investment management firm Legg Mason entered into a 3-year non-prosecution agreement with the DoJ and agreed to pay $64.2 million in connection with Legg Mason’s participation in the same Libyan bribery scheme. The article highlights several important considerations for other businesses to bear in mind.
FORMER BELGIUM MINISTER INDICTED IN CONNECTION WITH “KAZAKHGATE” PROBE
Dorsey, in its Anti-Corruption Digest, carried a report saying that Armand De Decker, a former Belgium government minister, has been indicted for influence-peddling in connection with the “Kazakhgate” probe, which centred on alleged bribery connected to a large trade deal between Kazakhstan and France, which included the sale of trains and helicopters.
PORTUGAL TO ALLOW FORMER ANGOLAN VP TO BE TRIED IN ANGOLA
It also reported that on May 10th, a Portuguese court ruled that the former Vice President of Angola, Manuel Vicente, can be tried in Angola for charges of money laundering and corruption
FORMER PAKISTAN PM Sharif Faces Corruption Probe Again
Nawaz Sharif is facing another corruption probe. This time the National Accountability Bureau (NAB) is investigating allegations regarding the possible laundering of $4.9 billion to India.
ADDITIONAL PHILIPPINES MONEY CHANGER LICENSES REVOKED
The central bank of the Philippines revoked the registration certificates of 2 money changers, Edzen Enterprises (Edzen) and World Wide Money Changer (World Wide). It said Edzen and World Wide violated AML regulations and failed to adhere to rules applicable to foreign exchange dealers.
ECSTASY PILLS SURGE IN POPULARITY IN HONG KONG AS SEIZURE OF DRUG LEAPS BY MORE THAN 60 TIMES
The South China Morning Post on 9th June reported that seizures of Ecstasy in Hong Kong have jumped more than 60 times to about 30,000 tablets in the first 4 months of this year on foreign nationals’ demand, law enforcement officials said.
UK WASTE CRIME REVIEW
Professional Security Magazine on 11th June carried an article about the just-announced review of waste crime laws in the UK. It reports that more than 850 new illegal waste sites were discovered by the Environment Agency in 2016-17. While an average of 2 illegal waste sites are shut every day, they continue to create severe problems for communities and business, particularly in rural areas, as well as posing a risk to key national infrastructure, the Government admits.
TRACE PODCAST: SPOTLIGHT ON GERMANY
In the latest TRACE podcast, Christian Schefold, with TRACE partner firm Dentons in Berlin, discusses anti-bribery enforcement and compliance developments in Germany.
IMPLEMENTATION OF THE TRADE SECRETS DIRECTIVE – THE DEADLINE HAS PASSED
Bird & Bird on 11th June published a briefing reminding one that 9th June was the deadline for Member States to implement the Trade Secrets Directive, which seeks to both raise and harmonise the minimum standards of protection for trade secrets across the EU. In the UK, this was the day that the Trade Secrets (Enforcement, etc.) Regulations 2018 came into force, putting the protection of trade secrets on to the statute book in the UK for the first time. The briefing outlines the key features of the UK Regulations and the state of implementation throughout the EU. The Regulations introduce a new definition of a “trade secret”. The Directive aims to harmonise the remedies available to trade secrets holders in the event of a misuse or misappropriation of their trade secrets. The briefing says that the measures involved are not expected to change UK law dramatically, but that the harmonisation and clarification they will bring both within the UK and across Member States is to be welcomed.
FRANCE AND GERMANY LAG AS DEADLINE PASSES FOR NEW TRADE SECRETS LAWS
For another view on the implementation of the Directive, see this article from Out-Law on 11th June –
TAX EVASION DEPRIVES THE EU OF 20% OF CORPORATE TAXES
On 11th June, EurActiv carried an article from its French arm saying that economists consider, based on tax havens’ statistics such as Bermuda or Ireland, that 40% of multinational companies’ profits avoid taxation. The EU would thus be deprived of a fifth of its income from companies. A new article, The Missing Profits of Nations, has several economists including the Gabriel Zucman, a French tax evasion specialist based at OC Berkeley, question the reasons for this drop in corporate tax rates, from 49% to 24% on average between the 1980s and 2018.
Data and working paper from Zucman are available at –
On a related theme, on16th March, EurActiv had reported that, despite the uproar that followed the publication of ‘sweetheart’ deals between member states and corporations, the number of ‘secret’ unilateral tax agreements the countries signed with companies in 2016 actually rose 64% over the previous year to reach 2,053.
EU ADOPTS PROPOSALS AMENDING THE ASSOCIATION AGREEMENT WITH MOROCCO TO GRANT PREFERENCES TO PRODUCTS FROM WESTERN SAHARA IN LINE WITH ECJ RULING
On 11th June, the EU announced that the EU Commission has adopted 2 proposals for Council Decisions in relation to the agreement between the EU and Morocco on the amendment of the EU-Morocco Association Agreement to clarify the status of products from Western Sahara for preferential tariff treatment when imported into the EU. In December 2016, the ECJ ruled that no trade or association agreement with Morocco could be applied to the territory of Western Sahara, since Western Sahara is not part of Morocco and that Western Sahara ought to be viewed as a third party to the EU’s relations with Morocco. Any such bilateral arrangement to affect the third territory of Western Sahara, the express consent of the people of that territory should be obtained.
CONTROL OF TRADE IN ENDANGERED SPECIES REGULATIONS 2018
In the UK, SI 2018/703 provide for the enforcement of Council Regulation 338/97/EC on the protection of species of wild flora and fauna by regulating trade in them and which implements in the EU the 1973 Convention on International Trade in Endangered Species of Wild Flora and Fauna (CITES). Also known as COTES, the new Regulations consolidate a number of existing pieces of secondary legislation in this area, primarily the Control of Trade in Endangered Species (Enforcement) Regulations 1997 and subsequent amending legislation and allows for updates of the existing enforcement regime. The UK is a party to CITES in its own right and will continue to be bound by CITES commitments after the UK leaves the EU. The UK proposes to amend the legislation to allow for, amongst other things, test purchases, the taking of non-invasive samples from live animals or other samples, enable police to recover expenses linked to seizure of a live specimen in the course of investigating an offence, for a ban or suspension from possessing or controlling CITES specimens to be imposed on persons, and designate ports of entry and exit through which CITES controlled species and products can be brought in and out of the UK. The legislation will also establish a new regime of civil penalties.
SWISS AUTHORITIES PROPOSE MAJOR MONEY LAUNDERING LAW REFORMS
On 11th June, the International Consortium of Investigative Journalists (ICIJ) reported that Switzerland’s federal government appears poised to crack down on money laundering in the wake of banking scandals and investigations linked to FIFA chiefs and Vladimir Putin’s favourite cellist among others. It says that on June 1st the federal government proposed 3 key changes including stricter fiduciary obligations for those involved in creating, managing or maintaining companies and trusts; disclosure of beneficial ownership; and establishment of a commercial register.
CASINOS IN INDIA HIT WITH TAX EVASION INVESTIGATION
Gambling Insider on 11th June reported that 10 of the biggest casinos in Goa have been placed under investigation by India’s tax agency under claims that they have been evading service taxes on licence fees.
US SANCTIONS RISK PREVENTS NIKE FROM SUPPLYING IRAN FOOTBALL TEAM
On 11th June, the European Sanctions Blog reported that Nike had decided that it will not be providing sports equipment to the Iranian football team for the 2018 World Cup due to the US decision to withdraw from the JCPOA and the imminent implementation (or “snapback”) of US sanctions.
GERMAN CONTAINER LINE HAPAG-LLOYD SCALING BACK IRAN BUSINESS
Customs Today reported on 11th June that Hapag-Lloyd is the latest shipping line saying that it is ending or reducing its involvement with Iran due to the US decision to withdraw from the JCPOA. It has stopped one of 2 feeder services to Iran and will decide on the remaining one before a 4th November deadline imposed by the US.
UNDERSTANDING THE SYNTHETIC DRUG MARKET: THE NPS FACTOR
The UN Office for Drugs and Crime (UNODC) has produced a report on new psychoactive substances (NPS) which says that synthetic drugs constitute one of the most significant drug problems worldwide. After cannabis, amphetamine-type stimulants (ATS) are the second most widely used drugs across the globe, with use levels often exceeding those of heroin and/or cocaine.
UK TERRORISM REINSURANCE COVERAGE EXTENDED BEYOND PROPERTY DAMAGE
On 11th June, Out-Law published an article reporting that the UK government has introduced new legislation which will enable the government-backed terrorism reinsurer to extend its business interruption cover beyond property damage. The reinsurance model stems from financial losses incurred by insurers after the IRA bombings in the City of London in the early 1990s, when the insurance industry set up Pool Re, a central fund to pool resources from which they could ensure cover would be available for businesses. From 1993 the government backed the scheme, underwriting it.
NEW ZEALAND CUSTOMS STAFF PROBED OVER ALLEGED SERIOUS MISCONDUCT
Stuff in New Zealand on 11th June reported that dozens of Customs staff have been investigated over allegedly being involved in fraud or misconduct over the past 5 years. 60 employees were investigated over misconduct claims between 2013 and 2017, and of those, 40 faced disciplinary action. 3 staff members either quit or were fired due to drug-related allegations. In 2014, 1 staff member was fired for using drugs, although this had happened during the workers’ previous employment. But none of the employees investigated in that time period were criminally charged with an offence.
AN ACTION PLAN ON US DRONE POLICY: RECOMMENDATIONS FOR THE TRUMP ADMINISTRATION
On 7th June, the Stimson Center policy think tank in the US published an article which says that a comprehensive policy on drones would align US national security priorities and commercial interests with US foreign policy ideals. However, it says that the Trump Administration’s approach to US drone policy has thus far revealed a desire to roll back some of the principles, procedures, and guidelines put in place by the Obama Administration — measures established to balance concerns about the use of drones in lethal operations with a greater degree of transparency and accountability; and indeed, US drone policy under the Trump Administration has thus far been defined by uncertainty coupled with less oversight and less transparency.
ELEGY FOR THE PREDATOR DRONE
In the US, the Air Force Magazine carries an article saluting the Predator UAV, the original armed drone, as it leaves USAF service, saying that the remotely piloted aircraft that ushered in the era of drone warfare and permanently transformed modern combat. It points out that, so indispensable was the MQ-1 to USAF operations during its 24-year life span — during which the type amassed more than 2 million flight hours — that a Predator was flying a combat mission in the Middle East on the day of the retirement ceremony.
KOSOVO DRAFTS LAW ON ASSET CONFISCATION
Gazeta Express on 11th June reported that the Kosovo Ministry of Justice has drafted the Law for Extended Competencies on confiscation of property obtained with a criminal offense aimed at increasing fight against organised crime and corruption.
US TERROR ASSESSMENT HIGHLIGHTS VULNERABILITY OF EXISTING US-MEXICO SMUGGLING ROUTES
Homeland Security Today on 11th June reported that the US House Homeland Security Committee Terror Threat Snapshot for June highlights growing concerns about terrorists gaining access to existing smuggling routes between the US and Mexico.
EU LOSES €60 BILLION A YEAR TO IP RIGHTS INFRINGEMENTS
Illicit Trade on 11th June reported on the latest report from the EU Intellectual Property Office, saying that it revealed that €60 billion is lost across the EU every year as a consequence of counterfeiting in 13 economic sectors. That figure represented a loss of €116 for every EU citizen on an annual basis. Approximately 434,000 jobs are estimated to have been lost in these sectors as a consequence of legitimate manufacturers making fewer products than they would if intellectual property rights infringements were not committed by counterfeiters.
THE CONTAINER INDUSTRY’S FUTURE
On 11th June, Port technology reported that freight insurer, the TT Club had produced a new report “Brave new world? – Container transport in 2043” which summarises the thoughts and opinions of 30 industry leaders on what the future holds for the industry over the next 25 years. One of its main conclusions is that, despite changes in operators and trade routes, the physical characteristics of the industry are unlikely to change, as the container and the ships that carry them will still exist over the next 25 years.
The report can be found at –