19th June 2018
NEW “ITALIAN RESIDENT NON-DOMICILED” TAX REGIME TO DRAW HIGH NET WORTH INDIVIDUALS TO ITALY
On 14th June, LCA Studio Legale published a short article about the scheme whereby individuals who move their fiscal residence to Italy may opt for a substitute income tax regime on foreign income by a payment of a yearly substitute tax of €100,000. The regime may be extended to family members by a payment of an additional substitute tax of €25,000 for each family member.
WHAT IS “SPEARFISHING”?
On 14th June, law firm Foley and Lardner published a short piece concerning a recent DoJ news release announcing the arrest of 74 people allegedly engaged in email frauds. The article included a quote from the news release of the most common of the so-called “spearfishing” schemes (aka business email compromise of BEC) –
- “Romance scams,” which lull victims to believe that their online paramour needs funds for an international business transaction, a US visit or some other purpose;
- “Employment opportunities scams,” which recruits prospective employees for work-from-home employment opportunities where employees are required to provide their PII as new “hires” and then are significantly overpaid by check whereby the employees wire the overpayment to the employers’ bank;
- “Fraudulent online vehicle sales scams,” which convinces intended buyers to purchase prepaid gift cards in the amount of the agreed upon sale price and are instructed to share the prepaid card codes with the “sellers” who ignore future communications and do not deliver the goods;
- “Rental scams” occur when renters forward a check in excess of the agreed upon deposit for the rental property to the victims and request the remainder be returned via wire or check and back out of the rental agreements and ask for a refund; and
- “Lottery scams,” which involves persons randomly contacting email addresses advising them they have been selected as the winner of an international lottery.
FinCEN CALLS ATTENTION TO TRANSACTIONAL RED FLAGS ASSOCIATED WITH INTERNATIONAL CORRUPTION BY PEP
On 14th June, Cadwalader Wickersham and Taft published an article about a FinCEN Advisory describing how corrupt foreign “politically exposed persons” (PEP) access the US financial system. The Advisory provides a list of red flags that may help identify methods used to hide the proceeds of human rights abuses and other illicit international activities. The Advisory also provides examples of suspicious activities by PEP and their financial facilitators.
US SENATE VOTES TO REINSTATE ZTE BAN THAT NEARLY SHUT DOWN THE COMPANY
The Verge and others reported on 18th June that the Senate had voted to reinstate a ban on ZTE that prevents the Chinese telecom company from buying US components and using US software. However, the article cautions that it is still not clear if the reversal will make it into law: it has to clear a conference with the House of Representatives, and then avoid a veto from President Trump, who advocated for cutting a deal that would lift the ban.
SLOVENIAN POLICE TAKE DOWN EUROPEAN ARMS SMUGGLING RING
Xinhua on 19th June reported that Slovenian police have smashed a 23-member criminal ring involved in international arms smuggling and trafficking, arresting 15 of them, in cooperation with law enforcement from several other countries. Investigations and house searches were also conducted in Croatia and Spain. The weapons had been “intended for criminal rings from the Western Balkans that have their cells in larger EU countries and are involved in smuggling drugs from South America to Europe and cultivate drugs in Spain”, a senior official said.
VIJAY MALLYA “USED FORCE INDIA F1 TEAM AND IPL TEAM FOR MONEY LAUNDERING”
The Times of India on 19th June reported that Mallya, currently fighting extradition from the UK, alleges that he used his Formula One team and the Royal Challengers of Bangalore IPL cricket team as part of his money laundering. It is alleged that Mallya laundered the loan money with the help of shell companies with dummy directors that were controlled by him. He had also procured properties in name of these companies, and that he also allegedly took part of the money abroad through over-invoicing of lease rent for aircraft which he procured from a Mauritius-based company for his Kingfisher Airlines.
MALTA INTRODUCES MEASURES AIMED AT ATTRACTING SHIP & YACHT MANAGEMENT COMPANIES
KPMG on 18th June published an article saying that the Maltese Government has recently confirmed its commitment towards the Shipping and Maritime cluster through the recently introduced Legal Notice 140 of 2018. The measures include a favourable Tax Rate of 15% on employment income derived by individuals with respect to work or duties carried out in Malta (or in respect of any period spent outside Malta in connection with such work or duties). Ship Managers may be eligible to benefit from the tonnage tax exemptions with respect to the income derived from the management of vessels.
BRITISH PORTS ASSOCIATION WELCOMES NEW REPORT ON NORTHERN “FREE PORTS” STRATEGY PROPOSAL
The British International Freight Association on 19th June reported that the British Ports Association has welcomed the renewed focus on role that ports play in regional and national UK economies (post-Brexit) in a new report on ‘Supercharged Free Ports’.
MORE THAN £240,000 COUNTERFEIT FOOTBALL KITS SEIZED AT EAST MIDLANDS AIRPORT
The Burton Mail on 19th June reported that Leicestershire County Council’s trading standards team had been taking part in a 2-month long exercise. More than 12,000 fake kits were seized during 27 separate incidents.
CRIMINAL RECORDS DISCLOSURE CHALLENGE REACHES THE SUPREME COURT
The Law Society Gazette on 19th June reported that the Supreme Court begins hearing a challenge by human rights group Liberty to rules requiring anyone with multiple convictions, no matter how minor, to disclose them to future employers. Liberty argues the requirement breaches privacy rights under article 8 of the European Convention on Human Rights, and that the system is arbitrary and disproportionate, and must be urgently reformed.
LITRG: REDUCE THE IMPACT OF CROSSING THE VAT THRESHOLD BEFORE CONSIDERING LOWERING IT
The Chartered Institute of Taxation on 18th June announced that the Low Incomes Tax Reform Group (LITRG) has sounded a note of caution on any reduction of the UK VAT threshold in the near future. LITRG says it is hugely concerned that any lowering of the VAT threshold at this time could threaten seriously a small business’ ability to remain competitive in its marketplace if its trade is mainly with non-VAT registered customers.
KENYA WILL DEPORT ANY FOREIGNERS INVOLVED IN ILLEGAL GAMBLING
Calvin Ayre on 18th June reported on the campaign against Chinese-owned gambling machines intensifies. The Cabinet Secretary is quoted as saying that the illegal gambling machines that have proliferated in retail shops across the country were “a threat to our society” and the government “shall not accept” their continued existence. He was speaking at the symbolic torching of gambling machines brought into Kenya illegally.
5 ESSENTIAL ELEMENTS OF CORPORATE COMPLIANCE (2018 EDITION)
On 19th June, Baker McKenzie announced the newly revised and updated edition of “5 Essential Elements of Corporate Compliance” and “A Short Guide to 5 Essential Elements of Corporate Compliance”. It has distilled into 5 essential elements what it considers the requirements: leadership, risk assessment, standards and controls, training and communication, and oversight. The 2018 edition of the publication is said to provide fresh expert insight on effectively managing corporate compliance efforts in today’s evolving regulatory and enforcement environments. The pages are filled with practical insight, intuitively divided by the 5 elements, for all companies with extended enterprises–both domestic and multinational–seeking to deter, detect, prevent, and, when necessary, remediate illegal practices or other misconduct. The publication (downloadable from the webpage) also addresses a wide array of related risk management considerations, from effective culture and governance to active programme awareness and adherence.
LATEST FRONT IN DENMARK CLAIM FOR $2.1 BILLION IN RETIREMENT FUND FRAUD
The New Jersey Law Journal from Law.com on 18th June reported that New Jersey is the latest front in a battle by the government of Denmark to recoup $2.1 billion it allegedly lost to a tax fraud scheme perpetrated by retirement funds and their managers. It reports that Denmark’s tax authority, SKAT, has filed 40 suits in the District of New Jersey, and another 100 or more in courts across the US since early May, to recover funds it claims to have paid out on fraudulent tax refund applications. It claims administrators of pension, profit-sharing and stock bonus plans falsely claimed to own stock in Danish companies and submitted fraudulent documentation to SKAT for refunds of taxes they claim were withheld on dividends from the alleged stocks. The alleged pay outs began in 2012 and were discovered in August 2015.
COUNTERING CHEMICAL, BIOLOGICAL, RADIOLOGICAL AND NUCLEAR THREATS FROM OUTSIDE THE EU: BETTER GOVERNANCE, BUT CO-OPERATION SHOULD BE MORE TARGETED
On 19th June, the EU’s Court of Auditors published a report on the EU CBRN Centres of Excellence Initiative (which aims to mitigate chemical, biological, radiological and nuclear threats and risks from outside the EU) saying that EU action in partner countries to counter chemical, biological, radiological and nuclear (CBRN) threats from outside the EU has improved capacities and co-operation at national and regional level, but activities still need to be prioritised according to the level of risk. It also says that funding should be concentrated in areas relevant to security and an adequate risk management approach should be developed.
EU COMMISSION WELCOMES AGREEMENT TO IMPROVE THE FUNCTIONING OF EUROJUST AND BOOST CO-OPERATION BETWEEN NATIONAL AUTHORITIES AGAINST CROSS-BORDER CRIME
On 19th June, the EU reported on the agreement reached by the European Parliament and the EU Member States on the reform of Eurojust, which helps EU national judicial authorities to team up and to fight against cross-border crime and terrorism. The new rules will facilitate the co-operation between Eurojust and its national members, with national authorities, with Europol and other agencies (such as the European Border and Coastguard Agency and OLAF). The new rules will also allow for a close co-operation between Eurojust and the future European Public Prosecutor Office, which will be a specialised body to investigate and prosecute crimes against the EU budget, such as corruption or fraud with EU funds, or cross-border VAT fraud.
UKRAINE ANTI-CORRUPTION COURT LAW NEEDS AMENDING: IMF CHIEF
Reuters reported on 19th June that the head of the IMF welcomed the adoption by Ukraine’s parliament of a law to create an anti-corruption court, but said lawmakers needed to amend it to guarantee the court’s effectiveness.
REPORT PUBLISHED INTO LLOYDS’S HANDLING OF HBOS READING FRAUD CASE
City AM and others on 19th June reported that the publication of a damning internal report into an historic fraud case at HBOS Reading branch in which those involved deliberately pushed small firms out of business before stripping their assets for personal gain between 2003 and 2007. 6 people, including former HBOS managers, are currently serving a combined 47 years in prison for the offences involved. The report alleges that top executives at HBOS understated the extent of liabilities left by the fraud to regulators and to shareholders ahead of the takeover of the stricken bank by Lloyds in early 2009. It also alleges serious misconduct by auditors KPMG.
THE STEINHOFF SAGA
On 19th June, News 24 in South Africa published the first of a series of in-depth features which sheds light on the company’s remarkable growth – and spectacular collapse. This is Part One: from humble beginnings in Germany to a massive global holding company which, in the UK, owns Poundland, Benson for Beds and others. Comprehensive and fascinating…
IDENTITY THEFT USED IN INTERNATIONAL MONEY LAUNDERING SCHEME – €211,000 FROZEN IN IRELAND FORFEIT
On 19th June, the Irish Times reported that the High Court has ruled as proceeds of crime a sum of €211,000 held in bank accounts opened by a person using an alias Darren H Barnett) and who registered a company (Harglena Global) purporting to sell luxury yachts. CAB had the funds frozen in 2016, which had discovered that in 2010 Barnett fraudulently obtained the UK passport number attributed to another person.
SOUTH AFRICAN ACCOUNTING BODY CHARGES FORMER CFO WITH MISCONDUCT LINKED TO GUPTAS
Reuters on 19th June reported that the South African Institute of Charted Accountants (SAICA) said said it would charge the former chief financial officer of state-owned company Eskom, Anoj Singh, with serious misconduct related to a $43 million loan to the Gupta business family. Singh was suspended as CFO of the company last July before resigning in January as investigations into corruption at Eskom began.
HOW TO REPORT SUSPECTED FRAUDULENT COMPANY ACTIVITY TO UK COMPANIES HOUSE
On 19th June, Companies House issued updated guidance on how to report suspected fraudulent company activity to Companies House and find out what action it can take.
ITALY ARRESTS 102 MAFIA SUSPECTS WITH BALKAN SMUGGLING LINKS
On 19th June, OCCRP reported that Italian police arrested 102 suspects after a 12-year investigation into mafia families that allegedly rule Puglia region on Italy’s southeast coast and are responsible for large-scale drug trafficking from the Balkans. Among those arrested was a businessman called Roberto De Blasio, who sat on the local chapter of the Italian Anti-Racketeering Association, FAI. The families are part of the Sacra Corona Unita, a consortium of crime groups that operate in the heel of Italy.
MASSIVE CRACKDOWN ON METAL THEFT: OVER 350 TONNES SEIZED IN 12 EU MEMBER STATES
On 19th June, Europol reported in a news release that the operation took place in twelve EU Member States: Belgium, Bulgaria, Cyprus, France, Germany, Greece, Italy, Poland, Portugal, Romania, Spain and the UK. 54 846 people, 42 237 vehicles, 7 986 environmental companies and scrap dealers, 589 border areas and 2 572 other hotspots (including harbours and rail transport sites, energy, telecommunications infrastructures and customs shipments) were checked by law enforcement. As a result of the operation, 117 suspects were arrested, alongside 1,311 individuals who were convicted of minor offences and then released. A further 1,659 crimes were discovered to have been committed (75 cases of theft, 60 of knowingly receiving stolen goods, 137 environmental crimes and 1,387 cases of miscellaneous crimes) and 2,763 administrative violations were noted. Moreover, police officers seized 357,874 kg of metal (worth almost €890 000), including 92,982 kg of copper valued at around €540,000, as well as 983 solar panels and 140 vehicles.
CUSTOMS BROKERS AND IMPORTERS IN “DUTY-FREE” SCAM IN BVI
On 18th June, BVI News reported that a number of local importers and Customs brokers have been implicated in connection to a recently launched scheme to defraud Her Majesty’s Customs and, by extension, the Government. They are alleged to have been ‘doctoring’ invoices and other customs documents in order to import items into the territory without paying customs duties. Following the 2017 hurricanes, the government had introduced a temporary policy in which certain items imported into the country was exempted from duties. This ended on 31st March, but those who had purchased goods before that date have until June 30th to ship those items into the territory free of duty – since then, persons were changing dates on certain documents to reflect a purchasing date prior to March 31st.
NEW PANAMA LAW SMALL STRIDE TOWARDS REMOVING DIRTY MONEY STIGMA
Insight Crime on 19th June reported that Panama is seeking to clean up its image as a financial crimes haven by passing new regulations. On June 11th it passed a Decree which requires the country to automatically share tax-related financial information with 33, primarily European, nations – using OECD Common Reporting Standards (CRS).
VIETNAM MOVES TO REMOVE ITS MILITARY FROM BUSINESS
On 14th June, Asia Times reported that on June 7th, the National Assembly, Vietnam’s legislature, approved an amendment to a law passed last year that will commit the Ministry of National Defense to substantially reduce the number of military-owned businesses. It reports that, in recent years, that number has been reduced from over 300 to 88. The new amendment’s aim is to reduce that number to just 18, before divesting the military from almost all of its economic activities. At present, military-owned businesses dominate several areas of the economy, including the crucial telecoms sector. For example, Military-owned Viettel Group, the country’s largest telecoms operator with subsidiaries abroad, reportedly earned almost $2 billion in profit last year, up 12% from 2016. However, some analysts are thus doubtful that full divestment will happen any time soon.
ISLE OF MAN: UPCOMING CHANGES TO “FIT AND PROPER” ASSESSMENTS
On 19th June, the FSA in the Isle of Man advised that the changes to fitness and propriety assessments, notified in March, are due to commence on 1st August. The Regulatory Guidance, Forms and related documents have now been finalised and can be accessed online.
SEC SHUTS DOWN $102 MILLION PONZI SCHEME
On 19th June, a news release on Mondo Visione reported that the SEC had filed charges and obtained an asset freeze against the individuals and companies behind a $102 million Ponzi scheme that bilked investors throughout the US. The SEC alleges that the defendants defrauded more than 600 investors through sales of securities in issuers they controlled, including First Nationle Solution LLC, United RL Capital Services, and Percipience Global Corp.
ENFORCING ACCOUNTABILITY FOR USERS OF CHEMICAL WEAPONS
On 19th June, the Center for Strategic and International Studies published a report saying that, in 2012, a 20-year moratorium on state employment of chemical weapons use was broken. Since then, there have been more than 200 uses, against civilians, military targets, and political enemies. Accountability for these recent attacks has been limited or non-existent, which threatens the credibility of the non-proliferation regime and only encourages further use. It says that leaders must find the political and moral strength to use a full spectrum of tools to re-establish this system of restraint.