31st July 2018
PODCAST: SPOTLIGHT ON FRANCE
In the latest TRACE podcast, Dominique Mondoloni with TRACE’s partner firm in France, Willkie Farr & Gallagher, discusses the new Sapin II law and its implications for both compliance and enforcement of anti-bribery laws there.
INDIA TOPS US LIST FOR HIGH TECH SALES, EXPORT CONTROLS EASED
Asian Age reported on 31st July that India is the only South Asian nation to feature on the US list of Strategic Trade Authorization-1 (STA-1) countries – equivalent to same status as for exports to NATO countries. It allows India to buy more advanced and sensitive technologies from America at par with that of the US’ closest allies and partners and ensures enduring co-operation into the future. The designation authorises the export, re-export and transfer (in-country) of specified items on the Commerce Control List (CCL) to destinations posing a low risk of unauthorised or impermissible uses.
20 US STATES SUE TO GET 3D GUN COMPANY FILES OFF THE INTERNET
Ars Technica reported on 30th July that 20 US states have announced that they plan to ask a federal judge in Seattle to immediately issue a temporary restraining order against Defense Distributed, a Texas-based group that has already begun making 3D-printer gun files available after the settlement of a legal case with the US State Department. It says that US law allows anyone to manufacture their own firearm without a licence, but manufacturing such weaponry for sale or transfer does require a federal licence.
US CHARGES POINT TO RAMPANT CORRUPTION AT VENEZUELA STATE OIL COMPANY PDVSA
Insight Crime on 30th July carried an article saying that US authorities are charging a network of Venezuelan elites and international financial actors with laundering over a billion dollars stolen from the state-owned oil company. Businessmen nicknamed “boliburgués” along with several Venezuelan officials allegedly embezzled more than $1.2 billion from Petróleos de Venezuela SA between 2014 and 2015, and later attempted to launder the funds through US and European banks. Most of the defendants named in a US complaint remain at large. It says that PdVSA is not the only government institution in Venezuela subject to rampant corruption.
INDIA: RBI CANCELS LICENCES NON-BANKING FINANCE COMPANIES (NBFC) – OVER 100 JULY ALONE
Business Today in India on 30th July reported that the Reserve Bank of India has been cancelling the licences of many NBFC. This after over 1,200 NBFC, flagged as ‘high risk’ prone for not complying with a provision of the AML law, had submitted records to the government in April to be identified as legally compliant. An NBFC is a company “engaged in the business of loans and advances, acquisition of shares, stock, bonds, hire-purchase insurance business or chit-fund business but does not include any institution whose principal business includes agriculture, industrial activity or the sale, purchase or construction of immovable property”.
EUROPEAN PRODUCTION AND PRESERVATION ORDERS
On 26th July, 6 King’s Bench Walk in London published an article about the proposal from the European Commission in April for the introduction of ‘European Production and Preservation Orders for electronic evidence in criminal matters’. It says that the aim is to make it easier and faster for police and judicial authorities to obtain electronic evidence for investigations or prosecutions, including emails or documents stored on the Cloud. A European Production Order would allow a judicial authority in a Member State to request electronic evidence directly from a service provider offering services in the EU, and established or represented in another Member State. A European Preservation Order would allow a judicial authority in a Member State to oblige a service provider to preserve specific data, so that it may be requested later via mutual legal assistance, a European Investigation Order, or a European Production Order. However, the article says, it appears that the UK Government is preparing to go ahead on its own in this area, or at least to prepare the way for similar orders to be available in the UK, should there be a separate arrangement between the UK and the EU in the future (see the next post below).
NEW PROPOSALS TO GIVE UK AUTHORITIES POWERS TO OBTAIN ELECTRONIC EVIDENCE FROM OVERSEAS
Freshfields Bruckhaus Deringer on 30th July published a briefing about the Crime (Overseas Production Order) Bill 2018. The Bill would enable UK law enforcement agencies (in particular the SFO but also FCA), to obtain a court order compelling any person holding data overseas to produce or grant access to data for the purposes of investigating or prosecuting serious crimes.
FAQ: NEW EU RULES ON MANDATORY DISCLOSURE OF CROSS-BORDER TAX ARRANGEMENTS BY EU INTERMEDIARIES
On 26th July, Baker McKenzie published an article saying that on 25th May the Council of the EU adopted a Directive on the mandatory disclosure and exchange of cross-border tax arrangements. Under the new rules intermediaries such as tax advisors, accountants and lawyers that design, promote or implement tax planning schemes are required to report potentially aggressive tax arrangements to the tax authorities. The article provides a useful FAQ on the most important aspects of the reporting obligation and its potential implications.
BLACKLIST, WHITEWASHED: HOW THE OECD BENT ITS RULES TO HELP TAX HAVEN USA
The Tax Justice Network published an article on 27th July that refers one to Annex 2 of the OECD report to the G20, which includes the OECD’s updated criteria – which it was required to prepare at the request of the G20 – to identify jurisdictions that have not satisfactorily implemented the OECD tax transparency standard. The article compares the old and new criteria for blacklisting – saying that while the criteria may look more demanding, they actually allow the most secretive aspect of the US to be whitewashed.
ROMANIAN STIRS DEBATE WITH ANTI-GOVERNMENT LICENCE PLATES
[I just like this story…] EurActiv reported on 31st July that Romanian police have confiscated the number plates and driving licence of a man who registered his car in Sweden with letters featuring an obscene insult to the left-wing ruling party.
EU REMOVES 1 NAME FROM ITS LIBYA SANCTIONS LISTS
EU Regulation 2018/1073/EU removes Omar ASHKAL from the list of persons subject to sanctions in view of the situation in Libya.
See also Council Decision 2018/1086/CFSP
EU UPDATES A NUMBER OF ENTRIES ON ITS NORTH KOREA SANCTIONS LISTS
On 30th July, EU Regulation 2018/1074/EU replaced or updated a number of entries in the lists of those persons and entities subject to sanctions.
See also Council Decision 2018/1087/CFSP
UK: POLICE AND CRIMINAL EVIDENCE ACT 1984 (PACE) CODES OF PRACTICE
On 31st July, the Home Office published an updated page which covers the Police and Criminal Evidence Act 1984 (PACE) and the accompanying PACE codes of practice, which establish the powers of the police to combat crimes while protecting the rights of the public, with links to each code.
UK GOVERNMENT ANNOUNCES LAUNCH OF NEW COUNTER-FRAUD AND ECONOMIC CRIME PROFESSION
Bdaily on 30th July reported that the Minister for the Constitution has announced that the Government Counter Fraud Profession (GCFP) to be launched on 9th October will create a new community of counter-fraud specialists across government, with benefits for both individuals and organisations. GCFP will aim to improve the structure of the government’s counter-fraud capability and put the UK Government in a better position to find and fight fraud and economic crime. GCFP will also introduce a Professional Skills Platform (PSP), a web-based tool through which members can register their knowledge, skills, and experience, and self-assess against a range of counter fraud roles.
PNB FRAUD: MEHUL CHOKSI ASKS ANTIGUA COURT TO BLOCK EXTRADITION TO INDIA
On 31st July, First Post in India reported that Choksi, wanted in connection with the Punjab and National Bank (PNB) fraud, has approached the High Court of Antigua asking it to block India’s move to extradite him.
NEW ZEALAND: GUILTY VERDICTS IN $41 MILLION LOAN FRAUD CASE
On 31st July, Scoop reported that A jury has found property developer Leonard John Ross, 51, and company director Michael James Wehipeihana, 46, guilty of fraudulently obtaining a large bank loan from the ANZ Bank for their company, Emily Projects Limited to build an Auckland inner-city apartment block, the Waldorf Celestion Apartment Hotel.
FRAUDSTER ‘STOLE £79,000 POSING AS JUDGE ON VIDEO CALL’
The Law Society Gazette on 31st July reported that a fraudster impersonated a judge to persuade his victim to send him money. He threatened his victim with imprisonment for contempt of court if transfers were not made. News of the deception comes as HM Courts and Tribunals Service prepares to make much greater use of video hearings and judges appearing to litigants via a computer screen.
US: IN-BOND TRANSPORT MODERNISATION ARRIVES
On 30th July, Benesch published an update about the updating of in-bond transportation, including the replacement of paper documents with electronic ones. The article explains that in-bond transportation permits motor carriers to lawfully transport freight from one port of entry to another where the goods are then entered for warehousing, admitted to a foreign trade zone, entered for consumption in the US, or exported from the US. This flexibility can be a valuable tool for the effective management of traffic flows in global supply chains.
US: CONTRACTOR SETTLES FOR $9.1 MILLION AFTER PROVIDING DEFECTIVE EARPLUGS FOR SERVICEMEMBERS
The US forces newspaper, Stars & Stripes, on 30th July reported that a contractor sold defective earplugs issued to thousands of servicemembers deployed to Iraq and Afghanistan from 2003 to 2015. 3M Combat Arms’ selective attenuation earplugs were originally manufactured by Aearo Technologies, which was acquired by 3M in 2008. Aearo was aware of the plug’s defects as early as 2000.
HOW THE NCA IS SMASHING SILOS, BOOSTING STAFF PAY AND MAKING THE CASE FOR A NEW FUNDING MODEL
Civil Service World on 31st July published an article about the NCA’s aim to break down barriers and help cement its reputation at the “pinnacle of law enforcement” and following an interview with Deputy Director General, Nina Cope. She says that the NCA has stepped up is work on awareness-raising, alerting people to the harm these hidden threats can cause to communities, and to their personal responsibilities, e.g. over cheap car washes. There are also remarks about “the massively disproportionate” levels of funding available to tackling serious crime (£37 million), compared to funding (in billions) for tackling terrorism. NCA is said to have has the strongest ties to the Home Office, but it also works closely with the Department for International Development and is developing its relationship with the Foreign and Commonwealth Office; and within law enforcement, the NCA’s goal is to break down institutional barriers: to assess what capabilities are needed in the system as a whole and decide who is best placed to lead on them. There the problems in recruitment and retention – staff turnover was 8.4% in 2016/17 according to the NCA’s pay review body. There are pay problems, and part of the problem on pay has been that the NCA, which was only created in 2013, is an amalgamation of several law enforcement bodies that preceded it. It took on responsibilities and staff, who were subject to varying pay arrangements, from the now-dissolved Serious and Organised Crime Agency, National Policing Improvement Agency and UK Border Agency. There are around 4,400 staff in the agency, with backgrounds in customs, policing, the civil service, intelligence and more.
CHECK THE STATUS OF UK TAX POLICY CONSULTATIONS
On 31st July, HM Treasury published a spreadsheet listing tax policy consultation and any resulting legislation.
EX-COP AND HIS ORGANISED NETWORK OF DRUG TRAFFICKERS, STRIP CLUB OWNERS AND PSYCHICS RIGGED MCDONALD’S MONOPOLY GAME TO WIN ALMOST EVERY PRIZE FOR 12 YEARS, STEALING OVER $20 MILLION
OCCRP on 31st July published an article saying that, launched in 1987, McDonald’s Monopoly game is one of the franchise’s longest-running and most popular marketing promotions. The cop was Jerry Jacobsen, a former police officer, was head of security for the company responsible for running the promotion, Simon Marketing. He oversaw the production of the game pieces and was entrusted with transporting them from the printing plant to the packaging factories. In 1989, Jacobsen stole his first sticker worth $25,000 and gave it to his brother-in-law. The scheme grew and he would provide people, often recruited through friends and family, with winning pieces in exchange for a cut of the cash. After a chance meeting at an airport in 1995, Jacobsen partnered with Gennaro Colombo of the Colombo crime family in New York and, in total, Jacobsen and his network stole over $24 million in falsely claimed winnings. It all ended after an anonymous tip to the FBI in 2000.
SENATOR RUBIO WANTS NATIONAL CRACKDOWN ON REAL ESTATE MONEY LAUNDERING
Baker McKenzie on 31st July reported that Florida Republican Senator. Marco Rubio is seeking to take a US Treasury crackdown on dirty money in luxury real estate (through Geographical Targeting Order) and expand it from a few high-priced enclaves to the entire nation. It reports that he, through an amendment to an unrelated major spending Bill, will ask Treasury to study whether government regulators should force shell companies that buy homes priced at $300,000 or more in cash nationwide to disclose their owners – and that could be as much as 10% of the nation’s real-estate deals.
EU NAVFOR – MARITIME PIRACY TASK FORCE TO LEAVE UK POST-BREXIT
The BBC reported on 31st July that the UK will lose command of the EU naval task force – set up to combat piracy off the coast of Somalia – as it exits the EU. The headquarters – currently in Northwood, north London – will move to Rota in Spain, with some operations heading to Brest, in France.
CHANNEL ISLAND BANKS FUND IEA RESEARCH DEFENDING TAX HAVENS
The Unearthed website from NGO Greenpeace on 31st July carried a report saying that a recent report by the Institute of Economic Affairs (IEA) pushing back against a crackdown on tax havens was funded by Jersey-based banks. It says that IEA used the report to try to persuade a cabinet minister not to increase regulations on Jersey and Guernsey offshore financial centres. “Offshore Bet: The benefits of capital mobility” argued against increased regulation of offshore financial centres. The article also claims that in 2012 the UK casino industry funded a report on casino deregulation and said it saw the IEA as a way of getting its messaging out via an independent organisation. A spokesman for Jersey Finance said it had not paid the IEA for the ‘Offshore Bet’ report but had “provided some funding to support the research phase of the paper”. Another recent IEA report on financial services in May was funded by the financial services industry in Guernsey, according to the Guardian.
KINAHAN GANG DEALT HEAVY BLOW AS COURT RULES LUXURY CARS AND PROPERTIES CAME FROM PROCEEDS OF CRIME
The Irish Independent on 31st July reported that the Irish High Court has ruled that hundreds of thousands of euros worth of property linked to the Kinahan crime gang came from the proceeds of crime. The property includes 2 houses in south Dublin, luxury cars, high powered motorcycles, jewellery and cash. It is mostly owned by, or linked to, people associated with Liam Byrne, who the Criminal Assets Bureau (CAB) says is head of an organised crime gang. A company called LS Active Car Sales, in Dublin, the judge said was not operated as a normal car sales business – but appeared to just provide vehicles and funds for the organisation.
JERSEY: WOMAN CHARGED WITH FRAUD OVER CLOTHES RECYCLING BUSINESS
On 31st July, ITV News reported that Michelle Anne Yuksel, a woman who had a business exporting second-hand clothes to developing countries, has appeared in Jersey’s Magistrate’s Court charged with fraudulently using more than £200,000 given for items for her own expenses and debts. The majority of the 10 charges faced by relate to money given to Parisma or Logistics2Go.