12th July 2018


On 11th July, Mishcon de Rey published an article about the consultation recently launched by the Law Commission into possible changes to search warrants in the UK.  The article lists the concerns highlighted by the Commission.  The consultation runs to 5th September.



The Wall Street Journal on 11th July reported that an unidentified hacker is  said to have tried to sell purported US military documents containing information about combat drones last month after they were allegedly stolen from an US Air Force officer’s computer.  The hacker sought buyers for maintenance documents about the MQ-9 Reaper.   This was amid heightened concern about how US military secrets may be insufficiently protected from hackers.  The hacker likely didn’t know the value of the documents he had obtained because he was attempting to sell them for as little as $150.  The hacker also advertised the sale of another tranche of military documents that included a tank operation manual and training material on how to mitigate improvised explosive devices (IED).



On 11th July, The Australian reported that a French national, 26, is accused of using tourists to distribute illegal drugs, smuggled into Australia in wine bottles and chip packets. About 40 packages of MDMA and cocaine linked to the syndicate, worth up to $3.3 million, have been intercepted over the past 6 months, hidden in wine bottles, potato chip packets and chilli paste after arriving either in luggage or being sent via post.  3 French nationals and 1 Belgian have now been charged for their role in the syndicate since March.


On 11th July, Channel News Asia reported that the Attorney General’s Office in Switzerland began probing suspicious fund flows originating from 1MDB in August 2015 after several transactions linked to a Middle Eastern wealth fund were flagged by Swiss authorities.  “There were no scruples, money just flew out of the country,” Switzerland’s Attorney-General Michael Lauber told Channel NewsAsia.  Swiss authorities have co-ordinated action with Singapore counterparts and closed down 2 banks – BSI and Falcon – and are now investigating 6 people for possible criminal indictment.  About $403 million was frozen by Swiss authorities in relation to 1MDB – mainly bankable assets retrieved from the 2 closed banks


The Mail Online on 12th July reported that the Australian Tax Office had announced that it was A$8.7 billion short due to tax dodging and accidental underpaying by self-employed people in 2014-15.  This was far bigger than the $2.5 billion shortage from large companies and is said to dispel the myth that corporate tax dodging is the most pressing tax issue.  More than 70% of audited returns contained errors, the figures show.  The estimated net tax gap for individuals not in business in 2014–15 is approximately 6.4%, that for corporate tax payers is 5.8%.  Common mistakes include claiming deductions where there is no connection to income, claims for private expenses, or not having records to show that an expense was incurred.  Other areas of concern include high rates of incorrect claims for rental property expenses and non-reporting of cash wages.



OCCRP on 12th July reported that the man responsible for embezzling $485 million from his employer and perpetuating the biggest bank corruption scandal in China’s history was repatriated from the US.  Xu Chaofan, is the former president of the Kaiping branch of the Bank of China.  He fled to the US in 2001.  Chaofan was arrested in 2003 and was found guilty of racketeering, money laundering, international transportation of stolen property as well as passport and visa fraud.  He had funnelled money stolen from the bank into shell corporations in Hong Kong as well as multiple personal bank and investment accounts before it was laundered through Canada and the US.  In China, authorities have recovered more than $300 million of what he stole.



On 11th July, Janes.com reported that the planned sale of UK aerospace component manufacturer Northern Aerospace to Gardner Aerospace Holdings has collapsed.  Concerns had been raised by the UK government over the potential national security implications of the sale to Gardner, which had been acquired by a Chinese company in 2017.



On 8th May, the RAND Corporation in the US published an article saying that a RAND paper explores how 3D printers will affect personal, national, and international security.  The paper is part of RAND’s Security 2040 initiative, which looks over the horizon to anticipate future threats.  The same technology that might one day custom-print heart valves can just as easily produce gun parts.  The same machines that allow astronauts on the international space station to print their own tools might also help a state like North Korea print military or industrial equipment to get around international sanctions.  The article presents 4 areas to watch as 3D printing makes the leap from high tech to home tech.

The report is at –




On 12th July, law firm Corker Bining published a briefing that looks at the options for the UK’s post-Brexit extradition arrangements with the EU – what will replace the European Arrest Warrant (EAW), and where will any new arrangements leave the UK?  It says that time is running out for a solution to be found to prevent the UK becoming a pariah; a safe haven for criminal organisations to flourish.  The SFO in its 2017 Annual Report stated that one of its biggest strategic risks was the potential loss of access to EU measures and tools as a result of Brexit, a loss it predicts could lead to an adverse effect on investigations and prosecutions.  It says that the possible scenarios are an EAW-style agreement with the remaining 27 EU states, or a return to the 1957 European Convention on Extradition.  The article then looks at each of the options.  It tells us that the 1957 Convention governs extradition relations between EU Member States and Council of Europe Countries (as well as Israel, South Africa and South Korea) and was the basis upon which extradition arrangements between EU states was underpinned prior to the introduction of the EAW in 2003.



Out-Law on 12th July published an article saying, that according to a tax expert at Pinsent Masons (the law firm behind Out-Law), HMRC is seeking “unprecedented” powers to obtain information about taxpayers without independent oversight from the tax tribunal.  These powers would allow HMRC to submit information requests to financial institutions, accountants, lawyers, estate agents and other third parties that hold information about taxpayers without first seeking approval from the tax tribunal.  A consultation is underway, closing on 2nd October.



The Irish Revenue Commissioners issued a news release on 12th July saying that, as part of an intelligence-led operation, Revenue officers seized 7.9 million smuggled cigarettes that arrived into Dublin Port aboard a vessel from Rotterdam.  The cigarettes were identified in a shipping container said to contain ‘welding equipment’ and ‘workshop machinery’ and were so-called ‘cheap whites’ branded “Business Royals” and “Gold Classic”.  These cigarettes may be legally produced but are then smuggled and traded illegally, are a growing problem in Europe.



On 12th July, a news release from the NCA reported that a Wolverhampton man, Daljinder Bassi, 36, who was jailed for 13 years in February and who acted as a wholesaler to drug dealers in the West Midlands has been ordered to pay back £742,270 in a confiscation hearing.   Officers searching his home in October 2017 seized £737,000 in cash, 22 kg of heroin, cocaine and mixing agents.  If he does not pay the sum of money within 3 months, he will be sentenced to a further 5 years and 5 months in prison.



Kenneth Rijock in his blog on 12th July reported that Moldova is creating the Moldovan Citizenship by Investment Programme (MCBI).  Moldovan nationals having visa-free access to Europe through a treaty with the EU, might make a Moldovan passport attractive for citizens from high-risk or sanctioned jurisdictions, he says. OCCRP says that the goal of the Moldovan government is to attract €1.3 billion over the next 5 years, but saying that the programme would be provided only to applicants who meet the best international standards, with a 4-stage verification of their economic and financial reputation, including checks by Interpol, the Moldovan Intelligence and Security Service, Interior Ministry (MAI), National Anticorruption Centre (CNA) and international diligence companies going through their case history and validating information contained in application form.  It is due to be launched in the next 3 months.




On 12th July, Bryan Cave Leighton Paisner provided a brief on the introduction of reverse-charge for VAT on construction services in the UK from 1st October 2019.  In many cases, it says, this will require the recipient of a supply of construction services, rather than the supplier, liable for the VAT on the supply.



Baker McKenzie on 12th July reported that President Buhari has signed the Nigerian Financial Intelligence Unit Bill 2018 into law, creating a body to monitor illegal money transfers and money laundering.  The FIU was previously within the Economic and Financial Crime Commission (EFCC) but will henceforth be an autonomous unit, although administratively located within the Central Bank.





From time to time, fingers are pointed at the UK, and particularly at the Isle of Man, about involvement in the supply of arms to Rwanda at the time of the genocide in that country in the 1990s.  Putting “Mil-Tec” into Google will link you to news stories and articles from non-governmental organisations (NGO), and even questions and debates in the UK Parliament refer to the case – though it is now more than 20 years since the events at the heart of the case.

In 1996, a story broke of the alleged involvement of a British company in the supply of arms used in the genocide in Rwanda[1].  The company said to have been involved was called Mil-Tec (Mil-Tec Corporation Limited[2]) and was registered in the Isle of Man, where it had supplied by, and was said to be administered by, BDO Binder.  All of its shareholders and directors were described in the reports as being nominees.  These initial reports made clear that Mil-Tec was not thought to have done anything illegal.


The genocide had taken place in April to June 1994[3], and had seen the death of around 800,000 Rwandans, with most of the dead being ethnic Tutsis – the minority population of the former Belgian colony – with most of those who carried out the killings being Hutu – the majority and historically the dominant peoples of the country.  Ironically, the two peoples speak the same language, inhabit the same areas and follow the same traditions.

The former colonial power had been Belgium.  Belgians had considered the Tutsis to be superior to the Hutu, and the better jobs and educational opportunities went to the Tutsis.  There had been rioting before, fuelled by the resentment of the Hutu – for example, in 1959 some 20,000 Tutsis had died, with more fleeing to neighbouring states.  When the country achieved independence in 1962, the Hutu took control.

The initial trigger for the genocide was the death in a plane crash of President Juvenal Habyarimana, a Hutu.  Within hours violence had broken out in the capital Kigali and then spread throughout the country.  Leaders of the political opposition were killed, and then the slaughter of the Tutsis, and of moderate Hutus, began.  Soon the first perpetrators – the military and politicians – were joined by a mass of others.  The most horrifying aspect of the killings at the time was probably that many victims were murdered by being hacked to death by machete.  An unofficial militia group called the Interahamwe was formed, reaching at its peak some 30,000 members, and soldiers and police encouraged ordinary citizens to take part in the massacres.  There were UN troops in the country, but these withdrew after the murder of 10 Belgian soldiers.

Tutsi refugees in Uganda, supported by some moderate Hutus, had formed the Rwandan Patriotic Front (RPF), led by Paul Kagame (later, and currently, President of Rwanda).  This then attacked government forces, and eventually succeeded in capturing Kigali in July 1994, effectively ending the genocide.   Some 2 million Hutu fled to neighbouring Zaire (now the Democratic Republic of Congo, or DRC).  A multi-ethnic government was established in Rwanda, but Kagame later replaced the original Hutu president, and the government became Tutsi-led.  Violence continued, with Hutus implicated in the continual fighting in the DRC, and with incursions by Rwandan forces into the DRC in pursuit of Hutu forces there.


Mil-Tec was the company name found on invoices for arms, said to be worth around £3.3 million found on a bus abandoned at a Hutu refugee camp in eastern Zaire in November 1996.  In the UK, there were calls for an inquiry, and the office of the Prime Minister expressed concern that a British company may have breached the 1994 UN arms embargo on Rwanda.

The invoices were reported to have been found by a BBC reporter and apparently showed that Mil-Tec had supplied rifles and ammunition, rockets, mortar bombs and grenades until at least July 1994[4].

In its 1999 report, “Acknowledging Genocide”[5], Human Rights Watch said that one of the first actions of the interim government in Rwanda, on 10th April 1994, was to make contact with Mil-Tec to place an urgent order for arms and ammunition, as part of larger efforts to secure such from wherever available.  5 shipments were reportedly arranged.  As well as National Westminster in the UK, banks in Belgium (Banque Bruxelles Lambert), France (Banque National de Paris), Switzerland (Union Bancaire Privée, Geneva), Italy (Banca Nazionale de Lavoro), and in the US (Federal Reserve Bank, Chase Manhattan Bank) were also said to have handled financial transactions involved in the purchase of weapons for the regime.


Those behind Mil-Tec were said to be a nominee company, Business Management Services Nominees Limited, and company secretary, John Donnelly of BMS Company Secretaries, which was based in Sark.  A shell company, its original directors were both directors of BDO Binder, it was sold “off the shelf” to a client (Anoop Vidyarthi, see below) by BDO Binder, and the original nominees replaced by John Donnelly and his father, Trevor, both from Sark – and who, at the time, were on the boards of thousands of Channel Islands, Isle of Man and Turks and Caicos companies.

Its “manager” was said to be Anoop Vidyarthi, a Kenyan Asian who ran a travel consultancy (above an aromatherapy shop) in Hendon, North London, and Mil-Tec used a correspondence address in Hove (its registered office address continued to be that of BDO Binder in the Isle of Man).  The company’s letterhead stated that it had ‘Associates in – Europe – Israel – Korea – USA’.  Later the letterhead used a Douglas, Isle of Man address, though the company apparently continued to refer to the Hove address as its “correspondence address”.

Another Isle of Man company was also implicated in at least one shipment: Merstone Investments.  Vidyarthi was also said to be linked to a UK arms dealer called Paul Restorick, who ran another arms brokering company, Mil-Tec Marketing, situated in Ashford, Kent.  Restorick admitted that he had ‘advised’ Vidyarthi in 1993, but he denied any corporate connection with Mil-Tec Corporation and any involvement in arms supplies to Rwanda.


The UN Security Council had imposed an arms embargo on Rwanda five weeks into the genocide, on 17th May 1994[6].

However, Mil-Tec was said to have organised the supply of arms and ammunition both before and after the 17th May (and at least until July 1994 – when the RPF had taken Kigali).  The goods were said to have been sourced in Bulgaria and the Former Yugoslavia and flown in from Albania and Israel via Goma in Zaire.  End-user certificates showed Zaire as the end destination[7].

At the time, responsibility for ensuring UN sanctions measures applied to the Isle of Man was the responsibility of the UK Government.  Whilst such binding UN Security Council measures should apply automatically to all member states (and to the Isle of Man by virtue of the UK being the responsible member state), they still required formal implementation by means of orders-in-council under the United Nations Act 1946 of Parliament.  Such orders would also provide enforcement powers, provide for offences and penalties etc.  The Foreign and Commonwealth Office would have had overall responsibility for ensuring the implementation of the UN Security Council Resolution, and there appears to have been a breakdown of communications between it and the Home Office (which, at the time, had responsibility with liaison with the Isle of Man Government authorities).  As a result, the necessary order extending the sanctions controls for Rwanda to the Island was not made until December 1996 – after the story had broken in the press.

Hence, at the time the supplies of arms and ammunition were arranged and made, the necessary order implementing the UN arms embargo in the Isle of Man had not been made, and so there appeared to be no legislation in force outlawing the activities of Mil-Tec in the Island.

A committee of the UK Parliament subsequently reported that “there had been a lack of consistency in implementing embargoes in the UK, the Crown Dependencies[8] and the Dependent Territories” and “that there were no structured arrangements for ensuring the timely and accurate imposition of embargoes”.

Other problems highlighted by the case included the fact that no British arms were involved, and no export from the UK (or from the Isle of Man) – so that no export licence would have been required[9].  Furthermore, though destined for Rwanda, the goods were delivered (at least initially) to Zaire[10].  HM Customs and Excise in the UK did interview Vidyarthi and carried out other inquiries and visited various premises, but no prosecutions ensued.

Hence, it was considered unlikely to have been any breach of export control or general customs law in the Isle of Man either.


Over the years a number of enquiries were fielded by the Isle of Man authorities, and one in 2015, where the response was made public, provided a succinct summary of the authorities’ position.

In 2015, in a letter responding to questions raised by the Celtic League (a Celtic nationalist organisation), the Chief Minister of the Isle of Man confirmed that “following the allegation regarding the company’s activities made in late 1996, the Customs and Excise Division of Treasury[11] did conduct enquiries and these established that as the Sanctions Orders were not introduced in the Island until 21st December 1996[12], the company could not be charged in relation to its alleged supply of ammunition to Rwanda in 1993 and 1994”[13].

The Chief Minister went on to say that “as no further investigation or proceedings were possible, the…records [of the investigation] …were retained in accordance with the Customs and Excise Division’s document retention policy for 10 years and were then destroyed”.  The Celtic League expressed its concerns at the news (and it does seem shortsighted for the authorities to dispose of documents that could have assisted them in refuting future allegations of ineptitude or worse).

The Isle of Man Government also submitted evidence to the Parliamentary committee, setting out the position as it saw it.


The Isle of Man now takes a more proactive approach to sanctions matters – UN and EU, trade and financial[14].  Concerned by delays that could occur in the UK making the necessary order to implement UN sanctions in the Island, it shifted reliance to EU sanctions regulations – which it could apply and implement using its own domestic legislation and without waiting for the UK to act.  More recent changes allow for the temporary imposition of new UN sanctions measures pending the necessary EU regulation.

Thus, there should not be the same problem arising from a breakdown in communications between UK Government Departments and, to be fair, the Island has been highly diligent in implementing and keeping up to date the various UN and EU sanctions regimes.

In addition, export control legislation now imposes licensing controls on the involvement of activity in the Island, or of “Island persons”, in the movement of certain goods between two (or more) third countries, i.e. goods that are not exported from, or via, the Isle of Man.  Some of these controls are extra-territorial, i.e. they capture activities that take place outside the Isle of Man[15].  The goods covered include most military and paramilitary goods, certain riot control devices using incapacitating chemical substances, certain security and paramilitary police equipment (including “torture” and restraint equipment), combat aircraft etc.

Thus, the activities of Mil-Tec would probably now be caught by export control legislation, whether the activity involved had taken place in the Isle of Man or (as seems more likely to have been the case) in the UK.  The extra-territorial provisions of the legislation would probably not have been relevant, given the types of goods involved[16] – so that, if those involved had undertaken all their activities outside the UK and the Isle of Man, they may still not have committed any offence.  However, the guidance issued in the Isle of Man makes clear that even “a single email, fax or telephone call could constitute sufficient activity[17]” if made in or from the Island (and presumably the same would apply under the corresponding UK legislation).

Furthermore, it should be noted that trust and corporate service providers (or TCSP) are regulated in the Isle of Man and licensed by its Financial Services Authority (FSA)[18].  The FSA supervision includes anti-money laundering and countering terrorist financing issues but would also take into account how such TCSP deal with other matters, including sanctions and export control issues, as well as how they question the beneficial ownership and uses of the corporate vehicles they supply and administer.

Just creating new laws and rules cannot eliminate the risk of a Mil-Tec type of situation arising again and improved awareness of potential risks in law enforcement and regulators can only play a part in preventing or detecting such cases.  Constant vigilance on the part of all those who may be involved, including in the TCSP, banking, legal and insurance sectors is required.  All need to be aware that not only could bad things happen, but bad things have happened and could happen again and, if they do, as in the Mil-Tec case, they could continue to haunt you for many years into the future.


R Todd

12th July 2018


[1]  For example, see https://www.independent.co.uk/voices/islands-of-uncertainty-1353627.html

[2]  Incorporated in 1993 and dissolved in 1998: see https://opencorporates.com/companies/im/061586C

[3]  https://www.britannica.com/event/Rwanda-genocide-of-1994

[4]  For more detailed information, see “The Arms Fixers” (Norwegian Initiative on Small Arms Transfers): http://francegenocidetutsi.org/TheArmsFixers.pdf That report lists the shipments arranged by Mil-Tec as being – 6th June 1993 ($549,503 of ammunition from Tel Aviv to Kigali); 17th–18th April 1994 ($853,731 of

ammunition from Tel Aviv to Goma); 22nd–25th April 1994 ($681,200 of ammunition and grenades from Tel Aviv to Goma); 29th April–3rd May 1994 ($942,680 of ammunition, grenades, mortars and rifles from Tirana to Goma); 9th May 1994 ($1,023,840 of rifles, ammunition, mortars and other items from Tirana to Goma); 18th -20th  May 1994 ($1,074,549 of rifles, ammunition, mortars, RPG rockets and other items from Tirana to Goma); 13th–18th July 1994 ($753,645 of ammunition and rockets from Tirana to Kinshasa) – the date on the air waybill appears first, and the invoice second.

[5] https://www.hrw.org/reports/1999/rwanda/Geno15-8-02.htm#P414_131702

[6]  UN Security Council Resolutions 918 (1994) of 17th May 1994, 997 (1995) of 9th June 1995 and 1011 (1995) of 16th August 1995 provided for States to prohibit the sale and supply of arms and related materiel to persons in the States neighbouring Rwanda if such sale or supply is for the purpose of the use of such arms or materiel in Rwanda.

[7]  For more details of example shipments, see “Under the Counter and Over the Border: Aspects of the Contemporary Trade in Illicit Arms” by Mark Phythian (Springer Science & Business Media, 2013)..

[8]  The Isle of Man status is that of a Crown Dependency (along with the Channel Islands).

[9]  Now, in addition to any UN or EU sanctions controls, such shipments between two third countries and involving someone in or from the UK (or Isle of Man) can require a trade control licence – see Notice 279T at https://www.gov.im/media/814275/notice-279t-man-trade-control-licensing-2-jul-18.pdf – as originally proposed in the 1998 UK White Paper on Strategic Export Controls.

[10]  The sanctions legislation was subsequently amended to deal with this, an amendment extending the embargo’s controls “to any person in Burundi, Tanzania, Uganda or Zaire, knowing or suspecting that the goods in question are intended for use within Rwanda” – see the United Nations Arms Embargoes (Somalia, Liberia and Rwanda) (Isle of Man) (Amendment) Order 1997.

[11]  The Division had (and has) responsibility for investigation of customs, export and trade sanctions offences.

[12]  The United Nations Arms Embargoes (Somalia, Liberia and Rwanda) (Isle of Man) Order 1996.

[13]  https://www.celticleague.net/news/records-of-genocide-arms-dealings-destroyed/

[14]  Until 2000, the Bank of England was responsible for the implementation of financial sanctions in the Isle of Man and Channel Islands.  The role was then devolved to the islands’ own authorities.

[15]  These extra-territorial provisions apply to “Category A” goods which comprise certain security and paramilitary police equipment (i.e. goods for internal repression or torture such as electric shock batons and belts, leg-irons etc), types of cluster munitions, attack helicopters and combat aircraft.  The requirements apply to the activities of bodies incorporated under the law of the Island and LLC (or other corporate bodies) registered in the Island, or various types of British citizen (including “Manx” persons) and British protected person who are resident in the Isle of Man when undertaken anywhere in the world.

[16]  Unless the goods came into the category of goods intended or used for internal repression or torture, they would likely not have been considered “Category A” goods – see above.

[17]  Paragraph 17 of Notice 279T.

[18]  https://www.iomfsa.im/regulated-sectors/trust-and-corporate-service-providers-tcsps/


The Wall Street Journal on 10th July in its Risk and Compliance Journal said that North Korea relies on vulnerabilities in the insurance sector to evade global sanctions on shipping blacklisted goods, according to a new report from RUSI, saying that insurers providing coverage can end up facilitating illicit activity for North Korea.  Much of North Korea’s shipping sector is subject to sanctions, but North Korea has used techniques so that any connection may not be immediately obvious to the insurer.

The RUSI paper was published on 9th July and seeks to establish the baseline for a discussion on proliferation finance in the (re)insurance sector and how the industry can play a vital role in contributing to the successful implementation of international sanctions and wider counter-proliferation efforts against North Korea.  The paper proposes a more proactive approach by (re)insurers to identify and exclude the underlying entities involved and their activities, as simply checking sanctions list and/or voiding existing contracts is insufficient.  Furthermore, also required is greater engagement in due diligence by the supply chain that is supported by the provision of insurance, such as the transport sector, as the work undertaken in such related sectors is not sufficiently robust to prevent proliferation-linked activities, thus providing limited comfort to the supporting (re)insurers.


The RUSI paper is available at –



On 12th July, VoA reported that the US and UAE have broken up a network funnelling illicit funds to Iran.  The currency exchange network was allegedly transferring millions of dollars to Iran’s Islamic Revolutionary Guards Corps’ Quds Force.  Dismantled in May, it was said to have used currency exchanges employing the UAE financial system to transfer cash out of Iran and convert it into US dollars for use by Iranian-supported proxy groups in the region and used forged documents and disguised its dealings behind front and shell companies.  In early June, the UAE had announced it had restricted the operations of 7 currency exchange houses for unspecified violations of AML and other regulations.  The article also notes that UAE exports to Iran are about 5% of the UAE’s GDP.



Well worth, as a good (but depressing) read.

On 12th July, the Guardian published an article saying that the years since 2008 have seen a global crackdown on offshore finance.  Yet a few places have doubled down on offering secrecy to the super-rich.  Among these, one tiny Caribbean island might be the worst offender.  Nevis, with a population of just 11,000, has been implicated in some of the worst financial scams of modern times, from the UK’s biggest-ever tax fraud to the fleecing of 620,000 vulnerable Americans in a $220 million payday loan scam.  The story of Nevis, it says, reveals the difficulties the world faces in trying to put an end to tax evasion, fraud and kleptocracy.  It says that Nevis specialises in letting its clients create corporations with greater anonymity than almost anywhere else on earth.  Last year, information on 70,000 Nevisian companies was leaked as part of the Paradise Papers investigation, but that did not help one find out who owns them: ownership information is so secret there that even the island’s own corporate registry doesn’t know.  In other words, there was nothing substantial to leak.  While the BVI has seen the number of companies created there each year collapse, the number created in Nevis has stayed stable and since 2012, the island’s financial services sector has grown by more than a quarter.  The article traces the story back to 1984, when Bill Barnard, an American lawyer who had taken to vacationing on Nevis, asked the island’s premier if he would be interested in getting into the offshore game.  Barnard and his team of US lawyers had borrowed their legislation from Delaware.  Barnard’s monopoly expired in 1994.  It says that Nevis-controlled but British-registered companies, whose ownership is unclear, have been involved in many of the massive eastern European money-laundering scams.



On 28th June, Garrigues published an article which says that Spanish law requires individuals to report the cash they take out of the country across the border. The penalties for failure to do so can be up to twice the unreported amount. According to the European Court (CJEU), the penalty is disproportionate.  The Court said that the penalties go beyond what is necessary to ensure compliance with the obligation to declare.  The article also argues that the same could apply to the penalty regime on compliance with the obligation to report assets abroad, which levies penalties up to 150% of the tax liability.  See ECJ Case C-190/17: Zheng.  In 2014, 2014, Mr Zheng, a Chinese national, checked in his luggage at the Grand Canary airport for a flight to Hong Kong, with stopovers in Madrid and Amsterdam.  A check in Madrid revealed that his luggage contained the €92,900 in cash which he had failed to declare.  All but €1,000 was seized.  An administrative fine of €91,900 on Mr Zheng after finding as aggravating circumstances the significant amount of the undeclared sum, the failure to provide proof of the lawful origin of the cash, the inconsistency of the interested party’s statements concerning his professional activity and the fact that the cash was found in a place which showed a deliberate intention to conceal it.




On 13th July, EU Regulation 2018/979/EU will remove the GENERAL ESTABLISHMENT FOR GRAIN TRADING (aka GRAIN BOARD OF IRAQ; and STATE ORGANISATION OF GRAIN) from its Iraq sanctions list following the decision of the relevant UN sanctions committee.



The Times of Israel on 12th July reported that a finance ministry official has told the Knesset that tThe secretary-general of the OECD has sent personal letters to the finance minister and the prime minister saying that Israel is not complying with commitments under the Common Reporting Standard (CRS) and could be subject to sanctions by the OECD.  The main sticking point preventing passage of the regulations is said to be gemachim, or ultra Orthodox free-loan societies run by volunteers that allows members of the community to deposit money and others to receive loans interest-free.  There are thousands of such free-loan societies in Israel’s one-million strong ultra-Orthodox, or Haredi, community.  The Finance Committee chairman refuses to pass the CRS regulations without a promise that the activity of gemachim will be largely exempt from oversight.  Israel’s AML authority has warned that gemachim must be regulated because many are being used to evade taxes and for money laundering.  It says that, under FATCA rules, Israeli banks have been demanding information about American depositors into gemachim that the gemachim cannot or will not provide, and many Israeli gemachim have had their bank accounts closed.  It mentions a 2009 case, where 44 people in the US were arrested, including 5 rabbis, where an international money laundering scheme involved accepting tax-deductible donations to a gemach in the US.  It said that, rather being used for laundering, gemachim more likely function as banks for the Haredi cash economy – if you are not declaring income to the tax authorities, you might prefer to put it in a gemach than a bank.  A 2014 study is said to have found that found that 80% of Haredi families in terms of income were consistently spending more than they earned, month after month.




In April, Torres Law published an article warning that non-US companies involved in the re-exporting of US goods or technology should familiarise themselves with the applicable US export laws, regardless of where they are located.  This is because the US export and economic sanctions laws have wide ranging extraterritorial reach.  It explains how this applies and provides examples of the laws’ extraterritorial reach.  It then provides some tips on how to comply.