12TH JUNE 2018
US REVEALS DETAILS OF AGREEMENT WITH ZTE
On 12th June, Telecomlead carried an article detailing the deal between the US Department of Commerce and Chinese telecoms company ZTE for the former to lift the 7-year export supply ban on the latter, which threatened to put ZTE out of business –
- ZTE will pay $1 billion penalty and deposit an additional $400 million in suspended penalty money – this being in addition to the $892 million in penalties ZTE has already paid.
- The $400 million will be held in a US bank account for 10 years and can be forfeited if ZTE fails to abide with the agreement.
- ZTE will retain special compliance staff selected by and answerable to the US authorities for 10 years, and these will monitor ZTE compliance with US export control laws.
- ZTE will fund the chief co-ordinator and staff of at least 6 employees.
- ZTE will replace the board of directors and senior leadership team for 2 entities that work with global telecom equipment makers and smartphone market.
- ZTE must report details about all Chinese government ownership and control of ZTE.
- ZTE must post calculations of the US components in its products on its website. ZTE should not take any action or make any public statement, even indirectly, denying any of the allegations against it.
US FIREARMS EXPORT CONTROL REFORM – OPPORTUNITIES FOR INTERNATIONAL RETAIL SALES
Ammoland on 11th June reported that US companies that sell, or want to sell, aftermarket firearm components to foreign retail customers will significantly expand their opportunities starting sometime in early 2019 following changes to US export controls. It details the current restrictions, such as the cost of necessary licences and time taken to obtain them, and the changes to be made. The changes include some parts not being subject to licensing at all, and says that nearly all B2C supplies of firearm parts will be exempt from export licensing.
AIRPORT BUST UNCOVERS 4.5 MILLION CIGARETTES DISGUISED AS TOILET PAPER IN AUSTRALIA
The Daily Mail in Australia on 12th June reported that a dual national about to leave the country on a flight to Australia was stopped and detained after Australian Border Force discovered 3 containers containing cigarettes declared as toilet paper.
SWITZERLAND: PROPOSED IMPLEMENTATION OF FATF AND GLOBAL FORUM TRANSPARENCY RECOMMENDATIONS MEETS STIFF OPPOSITION
On 11th June, CMS von Erlach Poncet AG published a briefing saying that in its July 2016 report on Switzerland, the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes made a number of recommendations to further align Swiss legislation with international standards, particularly in regard to the transparency of legal entities. The recommendations, it says, overlapped with those following a FATF mutual evaluation later the same year. It comments on the proposal for the abolition of bearer, which replaces a system that was introduced only 3 years ago, saying that opposition means that bearer shares are not yet doomed to disappear in Switzerland.
https://www.lexology.com/library/detail.aspx?g=9b05bccb-62c6-4eca-9535-0b0c1caf01c8
BOTSWANA: NEW FINANCIAL INTELLIGENCE BILL TARGETS POLITICAL LEADERS
The Weekend Post in Botswana on 11th June reported that the proposed Financial Intelligence Amendment Bill has been crafted to deliberately target political leadership in the country. The Bill is said to be to harmonise Botswana’s financial intelligence legislation with international standards, in particular, FATF recommendations on AML/CFT and proliferation. One aspect it deals with is the question of due diligence on PEP (politically exposed persons), foreign or domestic.
http://www.weekendpost.co.bw/wp-news-details.php?nid=5239
LEBANESE HEZBOLLAH’S CONTINUING NARCOTICS FINANCES
A paper in the Small Wars Journal begins by saying that Lebanese Hezbollah, in the face of dwindling external financial support from the Iranian government between 2006 and 2012, diversified its funding streams by establishing lucrative and expansive narcotics smuggling and sales networks around the world. It then says that this narcotics trade is now arguably Hezbollah’s largest consistent source of revenue, enabling it to conduct terrorist activities, fund its charitable projects in Lebanon, and portray itself as a legitimate political and resistance movement. Hezbollah, it says, also created an expansive network of banks, money transfer services, and other businesses to materially benefit from the drug trade. As the Syria war subsides, and with it Iranian support, the paper argues that Hezbollah’s illicit narcotics networks will become of continuing importance to the future finances of this transnational terrorist group. It says that there are considerable vulnerabilities created by Hezbollah’s continued reliance on narcotics revenue can and should be exploited, and that co-ordinated efforts will reduce the funds available to Hezbollah to kill innocent victims and spread its ideology of destruction.
INDIANS PROBED BY GOVERNMENT AGENCIES ARE LINKED TO HIGH-END REAL ESTATE IN DUBAI
Indian Express on 12th June reported that Indian nationals investigated by various agencies in India, including CBI, for alleged financial crimes and links to opaque offshore entities figure on a global database of those connected to properties in over 20 prime real estate projects in Dubai. The database was accessed by Indian Express in partnership with the Organised Crime and Corruption Reporting Project (OCCRP). Of the 129,000 entries in the Dubai database from 181 countries, those of Indians form a sizeable chunk with 5,800 linked to properties in Dubai. The article details some of those included.
MALAYSIA TO INVESTIGATE BATTERSEA POWER STATION PROPERTY DEAL
The Guardian on 11th June reported that the purchase of Battersea Power Station, the biggest property deal in the UK, is under threat after the leader of Malaysia’s governing coalition said it would be investigated as part of “dubious” investments made by the previous administration. In January, a Malaysian state fund, agreed to buy a direct stake from other Malaysian shareholders in the power station next to the Thames, valuing the building at £1.6 billion.
BOGNOR MAN ARRESTED AFTER HMRC RAID UNCOVERS £2 MILLION IN CASH
The Bognor Regis Observer reported on 11th June that HMRC said the 31-year-old man was arrested alongside a 26-year-old, of no fixed address, after 20 HMRC officers searched an industrial unit and 2 vehicles in Harlow.
https://www.bognor.co.uk/news/bognor-man-arrested-after-hmrc-raid-uncovers-2m-in-cash-1-8529985
KENYA: OVER 100 ACCOUNTS IN 20 BANKS FROZEN FOR 6 MONTHS TO ALLOW INVESTIGATORS PROBE NYS SCAM
Capital News on 11th June reported that over 100 bank accounts of companies and suspects involved in the National Youth Service (NYS) scam have been frozen. It says that Equity Bank has most of the bank accounts of people and firms that were involved in the scam numbering 26, followed closely by Cooperative Bank at 20, Standard Chartered 15, Barclays Bank 8, KCB Bank 9, while Family and National Banks have 5 each.
CYPRUS PASSPORT SCHEME – STRICTER PROCEDURES, LIMITED NUMBER OF PASSPORTS
Shanda Consult in Cyprus published an article on 11th June which says that due to the mounting criticism of foreign countries Cyprus has tightened its vetting process in its Citizenship by investment scheme, and that after the changes the scheme applicants will be subjected to more rigorous vetting procedures and enhanced due diligence. The Finance Minister said the new procedures will be stricter and more credible and the number of passports issued per year will be limited to 700.
https://shandaconsult.com/cyprus-passport-scheme-stricter-vetting-procedures/
APPLICATIONS FOR GIBRALTAR RESIDENCY
ISOLAS on 7th June published an article about applications for residency is made under Gibraltar’s Immigration, Asylum and Refugee Act. It notes that all EU nationals have a right to reside, subject to certain conditions, but for non-EU nationals, for example US or Chinese Citizens, the application for residency is somewhat more involved and complex.
http://www.mondaq.com/article.asp?articleid=706540&email_access=on&chk=1667364&q=960824
IRELAND: DOUBLE JEOPARDY AND ADMINISTRATIVE SANCTIONS
On 11th June, McCann Fitzgerald published a briefing concerned with 4 judgments of the European Court of Justice that arose in the context of securities market manipulation, insider dealing and non-payment of VAT and which are likely to be of particular interest to those working in the financial services industry. It concludes that it is clear from the CJEU’s case law that there is no absolute prohibition on being subject to both administrative and criminal sanctions for the same offence.
CORRUPTION GUTTED SOUTH AFRICA’S TAX AGENCY
The New York Times on 10th June published a comprehensive article about the South African Revenue Service and the “messy fight” the new President faces to wrest the tax agency from the legacy of his predecessor. It says that hundreds of the tax service’s best employees left during the upheaval, many going into private practice, and some to tax agencies as far away as New Zealand. Even more damaging, the lurid tales of corruption and intrigue inside what was once an ANC showcase of good governance contributed to sharp drops in the nation’s tax collection: more than $6 billion short of what the government had expected in the previous 2 budget years. The shortfalls have left the nation with fewer resources to tackle its most pressing needs — housing, education, health — in a society that has grown even more unequal under the ANC.
https://www.nytimes.com/2018/06/10/world/africa/south-africa-corruption-taxes.html
IS THE EU READY FOR A COMMON CONSOLIDATED CORPORATE TAX BASE (CCTB)?
Market Mogul on 11th June published an article saying that in October 2016, the CCCTB was relaunched by the European Commission and since then, the CCCTB has undergone modifications and gained considerable political traction. In March, MEPs approved the CCCTB in their plenary session and the CCCTB will once again face the European Council. A Common Corporate Tax Base would streamline tax compliance by creating a ‘one stop shop’ for determining tax liabilities of multinationals. In addition, a study commissioned by Deloitte Tax Experts reveals that the CCTB would cut compliance time on average by approximately 10% and compliance costs by 2.5% and CCCTB shows notable potential in addressing the pressing problems facing the European corporate tax system. However, it cautions that, despite obvious advantages, perhaps a CCCTB may prove to be still too ambitious for some.
https://themarketmogul.com/eu-ready-common-consolidated-corporate-tax-base/
REPORT: MEXICAN JUDGE ISSUED ARREST WARRANT FOR JP MORGAN COUNTRY HEAD
HITC.com on 12th June reported that a judge in Mexico has issued an arrest warrant for Eduardo Cepeda, the country head of US investment bank JP Morgan, and who has been with the bank for 30 years, for alleged fraud in a dispute related to a 2007 loan to a Mexican real estate developer, according to the company, BVG World.
http://www.hitc.com/en-gb/2018/06/12/jpmorgan-head-said-in-mexico-arrest-rbc/?src=ilaw
US WARNED ST KITTS & NEVIS ABOUT ITS CBI PROGRAMME
In his blog on 12th June, Kenneth Rijock claimed that the current Prime Minister of St Kitts & Nevis (SKN) disclosed some critical historical information about official correspondence on file in his office, regarding US conclusions about the previous SKN government’s lack of effectiveness, in properly administering the due diligence portion of its citizen-by-investment (CBI) programme.
US: AIR CARGO SECURITY PROGRAMME MADE PERMANENT
Sandler Travis & Rosenberg on 12th June reported that US Customs and Border Protection (CBP) is implementing a mandatory Air Cargo Advance Screening (ACAS) programme after running ACAS as a pilot since December 2010. ACAS will continue to require the carrier or other eligible party to electronically transmit certain data elements to CBP as early as practicable but no later than prior to loading the cargo onto the aircraft abroad, but with new data. CBP will issue ACAS referrals when clarifying information and/or enhanced screening of high-risk cargo is needed to mitigate any risk. In addition, CBP will issue “do not load” instructions when a combination of ACAS data and intelligence points to a threat or terrorist plot in progress.
https://www.strtrade.com/news-publications-air-cargo-advance-screening-mandatory-CBP-061218.html
A COMPARATIVE LOOK AT SINGAPORE’S PROPOSED ACCOUNTABILITY REGIME FOR SENIOR MANAGERS AND EMPLOYEES IN MATERIAL RISK FUNCTIONS
Allen & Overy on 12th June produced a briefing saying that the Singapore regulator is proposing to require financial institutions to clearly identify and delineate the responsibilities of senior management and of employees in material risk functions. The proposed guidelines identify 5 outcomes that should be met in order to ensure that senior management and employees are held accountable for their responsibilities and incentivised to ensure that they and their staff meet these expectations.
UK RIGHT-TO-RENT CHECKS
The Sheriffs Office in the UK has produced a briefing on right to rent checks were first introduced in February 2016. They require that before a landlord rents a property, they must have carried out checks to ensure that the tenant or tenants have the right to rent in the UK. These checks must be carried out on all tenants even if they are not named on the tenancy agreement.
https://www.thelawyer.com/knowledge-bank/white-paper/right-to-rent-checks/
SOUTH-EAST ASIA’S APPETITE FOR PET OTTERS
Traffic on 8th June published an article saying that the online pet trade has emerged as a pressing threat to otters in SE Asia with a new TRAFFIC-IUCN Otter Specialist Group (OSG) study revealing hundreds of the animals for sale on Facebook and other websites over a 4-month period. There is a high demand for juvenile live otters in the region, with over 70% of the animals offered for sale online under a year old.
http://www.traffic.org/home/2018/6/8/southeast-asias-appetite-for-pet-otters-supplied-online.html
MALAYSIA SEIZES OVER 860 ITEMS IN CRACKDOWN ON WILDLIFE CYBERCRIME
Traffic on 8th June reported that wildlife cybercrime in Peninsular Malaysia took a hit with authorities netting over 680 wild animals and parts in 3 separate raids. The seizures were linked to illegal online wildlife trade and 3 men arrested in connection with the raids were believed to have played the role of wildlife suppliers who used social media to carry out their illegal trade. The majority of live animals seized were reptiles and amphibians: 290 snakes, turtles and lizards as well as 222 frogs. The raids also yielded 99 tarantulas, 17 scorpions, 12 skulls, 8 canines and 3 live mammals.
CRIME COSTS BRAZIL TENS OF BILLIONS YEARLY
Insight Crime on 11th June published an article saying that a new study by Brazil’s government estimates that the cost of crime has risen dramatically over the past 2 decades, now reaching the equivalent of tens of billions of dollars each year. In light of rising violence and ongoing resource constraints, the authors recommend authorities rethink current public security policies. The authors estimated that the cost of crime in 2015 amounted to 4.38% of Brazil’s GDP — about $76.6 billion. 2 decades earlier, in 1996, crime cost less than half that — about $30 billion. The report found that the relative costs of crime are higher in Brazil’s northern states. It notes that a report by the Inter-American Development Bank last year estimated that the average cost of crime in Latin America and the Caribbean to be 3.5% of GDP. That study found that crime cost Brazil 3.78% of its GDP in 2014.
https://www.insightcrime.org/news/brief/crime-costs-brazil-tens-billions-yearly-study/
UK BRIBERY ACT: A REMINDER OF THE IMPORTANCE OF HAVING ADEQUATE PROCEDURES IN PLACE
A briefing from law firm Ince & Co on 12th June in the light of 2018 seeing the first contested prosecution for the corporate offence of “failure to prevent bribery” under section 7 of the UK Bribery Act 2010.
SFO URGED TO STEP IN OVER LEONARDO BRIBERY CLAIMS
The Telegraph on 9th June reported that army Anglo-Italian helicopter-maker Leonardo faces mounting pressure over bribery allegations amid fresh calls for UK authorities to open a criminal inquiry. The watchdog group Corruption Watch examined Leonardo’s allegedly corrupt international sales of helicopters and has called on the SFO to launch a formal inquiry. Corruption Watch examined court evidence relating to the sale of helicopters to South Korea and India.
EU COMMISSION WELCOMES AGREEMENT ON A REINFORCED SCHENGEN INFORMATION SYSTEM
On 12th June, the EU reported political agreement by the Parliament and the Council on the Commission’s proposals to strengthen the Schengen Information System (SIS) – Europe’s most widely used information sharing system for security and border management. Consulted over 5 billion times by national authorities in 2017, the reinforced SIS will help border guards to better monitor who is crossing the EU’s borders; support police and law enforcement in capturing dangerous criminals and terrorists; and offer greater protection for missing children and vulnerable adults, in line with the new data protection rules.
http://europa.eu/rapid/press-release_STATEMENT-18-4133_en.htm
UK INVESTIGATORY POWERS ACT 2016 – CODES OF PRACTICE
On 12th June, the Home Office published a set of codes of practice setting out processes and safeguards for a number of investigatory powers by public authorities including bulk acquisition of communications data, Intelligence services’ retention and use of bulk personal datasets, equipment interference, interception of communications and national security notices. A further code of practice relating to the retention and acquisition of communications data has been subject to a public consultation and will be published once it has been approved by Parliament.
https://www.gov.uk/government/publications/investigatory-powers-act-2016-codes-of-practice
NEW MERGER AND TAKEOVER RULES POTENTIALLY AFFECTING UK EXPORTERS IN FORCE FROM 11TH JUNE
On 12th June, Notice to Exporters 2018/13 was published by the Export Control Joint Unit and Department for International Trade advising that the UK government has strengthened its ability to scrutinise mergers and takeovers with relation to possible national security concerns through new rules that came into force on 11th June. The new regulations amend the threshold tests for businesses in the military, dual-use, computing hardware and quantum technology sectors that are most likely to have implications for national security. Businesses that develop or produce goods on certain of the Strategic Export Control Lists will be covered by the amended thresholds. The changes allow ministers to intervene for public interest reasons when the target business’s UK turnover is more than £1 million, down from £70 million under the previous rules, and remove the requirement that a merger or takeover in these sectors lead to an increase in the parties’ combined share of supply of relevant goods or services before the Government is able to intervene.
FATF TO SET CRYPTOCURRENCY REGULATIONS IN JUNE
Finance Magnates on 12th June reported that FATF is planning to introduce rules for cryptocurrency exchanges, according to Reuters. The report cites a Japanese government official who is familiar with the matter. In March, the G20 committed itself to implement the FATF standards as they apply to crypto-assets, and called on the FATF to advance global implementation. It is reported that FATF aims to hold talks around the subject starting on June 24th.
HMRC CHIEF FLOATS IDEA OF HANDING OVER AML ROLE
Ekklesia on 12th June reported that HMRC’s executive have discussed ending the organisation’s role as the AML supervisory body for a number of key sectors, and that there have been calls for this to permit a more wide-ranging review of AML controls. HMRC is the supervisor for estate agents, a sector Transparency International has highlighted as being particularly at risk of money laundering.
http://www.ekklesia.co.uk/node/26082?src=ilaw
RETIRED DOCTOR AGREES €1.86 MILLION SETTLEMENT WITH IRISH REVENUE – NEW TAX DEFAULTERS LIST
The Irish Times on 12th June reported that retired consultant obstetrician Valerie Donnelly has agreed a settlement of €1.865 million with Revenue after an audit discovered a €1.145 shortfall in income tax. She tops the latest tax defaulters list with 60 other names. A total of €9.4 million in settlements was agreed with 61 taxpayers.
PRIVATE PROSECUTION SECURES 8-YEAR SENTENCE FOR FRAUDSTER IN UK
The Law Society Gazette reported on 12th June that, after the CPS decided not to proceed, the victim of a £100 million fraud, Allseas, pursued a private prosecution. This resulted in Paul Sultana receiving an 8-year sentence and being disqualified as a director for 7 years.
NEW FCA WARNING OVER INVOLVEMENT IN CRYPTOCURRENCIES
On 12th June, Bryan Cave Leighton Paisner published a briefing following the latest “Dear CEO” letter from the FCA, described as a clear warning shot that banks servicing clients involved in crypto-assets must take steps to reduce the risk of the firm facilitating financial crime. It says that the letter provides guidelines on steps that a firm would be expected to take, and that they should consider whether they are within scope of the new Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.
$8 MILLION AWARD FOR WOMAN TRAFFICKED BY CULT
On 12th June, Law 360 reported that a woman who spent virtually her entire life under the control of a cult that trafficked her from city to city and forced her to work without pay for a decade secured an almost $8 million judgment in Kansas. She was indoctrinated into the United Nation of Islam (now known as The Value Creators) as a 2-year-old girl.
https://www.law360.com/articles/1047973
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