23rd July 2018
PROLIFERATION – RISK OF TURKEY GOING NUCLEAR?
Channel News Asia carried a commentary on 23rd July speculating on whether Turkey is on the road to become a nuclear-armed state. It cites such things as its missile development programme (that could supply a delivery system), the internal political situation and the Akkuyu nuclear power station being developed with Russian assistance.
TOBACCO SMUGGLING: MARSEILLE’S ILLICIT SECRET
On 23rd July, EurActiv carried a report that says that OLAF has warned that there are worrying indications that genuine tobacco products produced for the North African market in Algeria are finding their way across the Mediterranean “in greater bulk than could be justified”. Flows from Algeria to France have increased 300% since 2012, when volumes of legally produced cigarettes in Algeria that are smuggled to France soared from 1.08 billion in 2012 to 3.19 billion in 2016. It says that the city of Marseille is particularly impacted as it is one of the main ports of entry into France from the Maghreb region. A police officer from the Northern district of Marseille is quoted as saying that the illegal genuine cigarettes, mainly Marlboro, arrive from Algeria by plane in suitcases but most prominently by ships in cargo containers. Manufacturer Philip Morris said that said it has actively tackled the problem by introducing an anti-diversion action plan, including a carton tracking programme, and raising awareness with the Algerian authorities.
ETHIOPIAN SECURITY FORCES SEIZE $10 MILLION SMUGGLED CURRENCY
Ezega.com on 22nd July reported that Ethiopian security forces have seized nearly $10 million in currency that was being smuggled out of the country. It says that the operation followed declining dollar exchange rate in Ethiopia’s black market almost comparable to the exchange rate at the country’s commercial banks. A police commissioner is quoted as saying that the money was being smuggled with an intention to purchase weapons that could be smuggled back into the country.
PANAMA PAPERS: MALTESE PRIME MINISTER CLEARED OF WRONGDOING
The Guardian on 23rd July carried a report saying that the Maltese prime minister, Joseph Muscat, says that a year-long inquiry into allegations of financial wrongdoing linked to the Panama Papers scandal had cleared him. It reports that the inquiry undertaken by a judge did not find any evidence that Muscat, his wife, his close aide Keith Schembri, tourism minister Konrad Mizzi, or former European commissioner John Dalli were involved in money laundering or suspicious financial transactions involving holders of bank accounts in Azerbaijan via the Pilatus Bank.
CITY OF LONDON POLICE GET CRYPTOCURRENCY TRAINING TO HELP TACKLE MONEY LAUNDERING
City AM, and others, reported on 22nd July that fears that the growth of cryptocurrencies are opening up further opportunities for criminals to launder money have led to the establishment of a new training programme by the City of London Police.
BRIBERY RISK IN THE MINING SECTOR – WHAT CAN BE LEARNT FROM THE GLENCORE SAGA?
Keystone Law on 17th July published an article saying that behind the tumbling share price of Glencore lies both an intrigue worthy of a paperback thriller and a salutary lesson in how not to manage corruption risk in a high-risk sector. It also says that the largest commodity trader in the world and the biggest supplier of zinc and cobalt has been hit with fallout from bribery and corruption allegations that came to light with the leak of the Paradise Papers and links to a company owned by Dan Getler, an Israeli billionaire, after it enlisted him to secure controversial mining agreements in the Democratic Republic of Congo (DRC). The article says that the tale is a case study in the British and US authorities’ exercise of their powers to crack down on corruption and assert their jurisdiction wherever in the world it happens, where it affects companies traded in the UK or dealing in US currency.
CAYMAN ISLANDS EXEMPTED LIMITED PARTNERSHIPS
On 4th July, Ogier published a briefing on the main legal requirements and general principles applicable to the formation, registration, operation and termination of exempted limited partnerships (ELP) in the Cayman Islands. It says that it provides a modern framework that makes an ELP the vehicle of choice for particular types of international business, including for all types of private equity, real estate and other closed-ended funds; as tax transparent master funds in onshore/offshore hedge fund structures; and as single-investor vehicles replicating managed accounts.
CALIPHATE IN DECLINE: AN ESTIMATE OF ISLAMIC STATE’S FINANCIAL FORTUNES
On 30th May, the International Centre for the Study of Radicalisation (ICSR) published a report which said that Islamic State’s most significant sources of revenue are closely tied to its territory and they are taxes and fees; oil; and looting, confiscations, and fines. It says that it found no hard evidence that foreign donations continue to be significant. Similarly, revenues from the sale of antiquities and kidnap for ransom, while difficult to quantify, are unlikely to have been major sources of income. In the years since 2014, Islamic State’s annual revenue has more than halved: from up to $1.9 billion in 2014 to a maximum of $870 million in 2016 . There are no signs yet that the group has created significant new funding streams that would make up for recent losses – and so, with current trends continuing, the Islamic State’s “business model” will soon fail. It also says that there are good reasons to believe that Islamic State revenues will further decline, but this decline in revenue may not have an immediate effect on the group’s ability to carry out terrorist attacks outside its territory, as these operations tend to be inexpensive and self-financed.
UP TO 5 YEARS IN PRISON FOR CRIMINALS WHO USE UK PROPERTY MARKET FOR MONEY LAUNDERING
The Department for Business, Energy and Industrial Strategy published a news release on 23rd July about the draft legislation laid before Parliament on that day, saying that foreign companies owning UK properties will have to reveal their ultimate owners on the world’s first public register, and it says that new public information will make it easier for law enforcement agencies to tackle money laundering while reducing opportunities for criminals to hide. Under the new draft laws, companies will also be required to provide annual updates to Companies House to ensure the information on the register is up-to-date.
DRAFT REGISTRATION OF OVERSEAS ENTITIES BILL
Consultation closes on 17th September.
UK BREAKING VAT MOSS RULES, SAYS EU
VAT Live on 23rd July reported that, on 19th July, the European Commission sent a warning to the UK that its administration of the VAT Mini-One-Stop-Shop (MOSS) for B2C e-services VAT contravened EU rules. The UK is failing to gather UK taxpayers’ bank account information for speedy credits of VAT repayments where changes or refunds were due. The UK has 2 months to comply with the rules or face a referral to the ECJ.
FLANDERS WAS TRANSFORMED INTO HUB FOR INTERNATIONAL COCAINE TRAFFICKING
On 20th July, OCCRP published an article about an international ring of drug traffickers with ties to the Italian mafia, based in Belgium and with operations in the Netherlands. It could count on suppliers from Costa Rica and Colombia and secret large caches of cocaine in fruit shipments from Latin America to Western Europe. A major Belgian law enforcement operation took down part of the network — only to see its mastermind murdered before he could be brought to justice. The investigation into cocaine smuggling involved 34 defendants and the seizure of over €8 million in cash, drugs, cars, and weapons and dragged on for over 4 years before finally wrapping up on February 2017. A key element of Aquino’s operation was that the cocaine was smuggled from Colombia in banana shipments and relied on accomplices in the docks.
UK AND GIBRALTAR WORKING ON REGULATORY ALIGNMENT IN THE INSURANCE SECTOR
The Gibraltar Chronicle on 23rd July reported that UK and Gibraltar Governments are pressing ahead with work to ensure post-Brexit regulatory alignment in the insurance sector and have engaged Deloitte to work on a diagnostic assessment of the Gibraltarian insurance regulatory regime, against the benchmark of the UK regulatory regime. It is said that a new, modernised agreement on market access for Gibraltar to be introduced after 2020 and based on shared, high standards of regulation, and underpinned by information-sharing, transparency and regulatory co-operation.
NEW DATA AND ANALYSIS: SOCIAL MEDIA USE BY US EXTREMISTS
On 20th July, START (the National Consortium for the Study of Terrorism and Responses to Terrorism) in the US issued a report saying that online social media platforms are playing an increasingly important role in the radicalisation process and lone actors are particularly active on social media.
WMD TERRORISM: THE ONCE AND FUTURE THREAT
On 15th May, The Journal of Complex Operations from Prism National Defense University in the US published a paper which says that despite clear interest on the part of some non-state adversaries, a true WMD is at present likely out of their reach of terrorists in all but a select set of scenarios. Changes in technology, however, could augur a dramatic shift in the WMD terrorism threat picture. It emphasises important distinctions: WMD are typically understood to encompass chemical, biological, radiological, and nuclear (CBRN) weapons but not all CBRN weapons, though, constitute WMD. This distinction is especially important in the case of non-state actors, since such actors often operate under severe resource constraints and are far more likely to plan or implement smaller-scale chemical, biological, or radiological attacks that fall below the WMD threshold. This leads to a distinction between a weapon and a “harm agent” – such as toxic chemicals, pathogenic microbes, and ionising radiation where effectiveness is almost wholly dependent on the efficiency with which the harm agent is delivered to the intended target(s). The article analyses how a terrorist organisation might acquire the necessary weapon or harm agent, including producing its own (such as by use of precursor chemicals to make a toxic harm agent). It considers the risks that ISIL and lone actors have, or could, present; and technological advances (such as genetic engineering) and changing adversaries.
US NVOCC AND CUSTOMS BROKER HELD LIABLE FOR IMPORTATION OF COUNTERFEIT NIKE SHOES
A non-vessel operating common carrier (NVOCC: which can be a freight forwarder, forwarder, or forwarding agent) and an unrelated customs broker have been found liable in a New Jersey court for their roles in facilitating the transportation and importation of counterfeit NIKE shoes. The NVOCC, City Ocean International and its US affiliate, City Ocean Logistics, issued bills of lading and selected the customs broker – Eastern Ports Customs Brokers, and provided the broker with a fictitious power of attorney. Defendants argued that they were “innocent service provider[s]” who “neither knew nor had any reason to have known that [their] services were being used by the actual, direct counterfeiters to assist in the shipment of product from China to the US”. The Court held that for purposes of liability, Nike need not show that Defendants intended to transport counterfeit goods, or that they had knowledge of the counterfeit goods in the seized shipments. The Court held that the NVOCC materially assisted in the transport of the counterfeit goods and held that such actions constituted “use in commerce” as required by the federal trademark statute. The Court awarded damages of $30,000 for each trademark infringed upon for a total of $240,000. The parties have 30 days within which to appeal the judgment.
FIRST US IPO OF A MARIJUANA COMPANY ON NASDAQ
On 23rd July, Husch Blackwell published an article of the IPO of Tilray on 9th July. The article says that the national securities exchanges (i.e. NYSE and Nasdaq) in the US are getting increasingly comfortable with the listing of plant-touching businesses operating in Canada (though not those from the US).
GUERNSEY RECEIVES TOP MARKS FOR TRANSPARENCY FROM OECD’S GLOBAL FORUM ON TRANSPARENCY AND EXCHANGE OF INFORMATION FOR TAX PURPOSES
On 23rd July, a news release from the Guernsey Government reported that Guernsey has received an overall rating of ‘Compliant’ following the second round of Global Forum peer reviews to assess compliance with the international standard on tax transparency and exchange of information on request. The review took place in August 2017. These reviews assess jurisdictions against updated international standards, which incorporate beneficial ownership information of all legal entities and arrangements.
UK: SHOP OWNER JAILED OVER £960,000 TAX FRAUD
Accountancy Daily on 23rd July reported that a shopkeeper who owned several stores and a website selling Formula 1 merchandise has been jailed for 4 years after he fraudulently claimed over £960,000 in tax repayments to keep his businesses afloat. He also ran an Italian restaurant in London where he failed to declare half of his sales and falsely claimed £58,507 in 4 VAT claims.
INDIA: “ENOUGH EVIDENCE AGAINST EX-AGUSTAWESTLAND, FINMECCANICA DIRECTORS”
News 18 in India on 23rd July reported that a court was told by the agency that the bribery investigation into the supply of helicopters was still going on and various sensitive documents were to be received from the multiple countries, including the UAE. The article reports that the Enforcement Directorate has accused 34 Indian and foreign individuals and companies, including Finmeccanica, the parent company of AgustaWestland, of laundering around €28 million. The probe report also claimed that the kickbacks were paid by AgustaWestland through 2 different channels. The case dates back to 2014 when India scrapped the contract with Finmeccanica’s UK subsidiary, AgustaWestland, for supplying 12 AW-101 VVIP helicopters to the Indian Air Force over alleged breach of contractual obligations and charges of kickbacks paid by it to secure the deal.
UK STRATEGIC EXPORT CONTROLS ANNUAL REPORT 2017
On 23rd July, the FCO published a news release about the report which gives a detailed overview of the UK’s Strategic Export Controls work in 2017.
HEAD OF UK OFFICE OF TAX SIMPLIFICATION HELPING SET UP A TAX HAVEN IN KAZAKHSTAN
On 23rd July, website Vice claimed an exclusive over the story that Angela Knight, a former Tory MP, and head of HM Treasury’s Office for Tax Simplification (OTS) since 2015 is also Deputy Chairman of the Astana Financial Services Authority in Kazakhstan, where her job is to help this board regulate the “Astana International Financial Centre” (AIFC), a tax haven being set up by the President.
‘VIRTUAL KIDNAPPING’ SCAMS HIT UK
Business Cloud on 23rd July reported that the Chinese Embassy in London has issued a warning that ‘several’ cases had been recorded in the UK. The warning follows similar notice from the Chinese consulate in New York in August 2017. The scam involves coercing people to stage their own kidnapping before blackmailing their family into handing over thousands of pounds could be on the rise in the UK. The report says that the scam – which has mainly targeted mandarin speakers but is now operating in English – begins with fraudsters imitating senior officials from embassies and anti-crime organisations.
GUERNSEY INTRODUCES SANCTIONS FRAMEWORK AGAINST THE MALDIVES
On 23rd July, Guernsey announced that it had followed the EU lead and imposed a framework for sanctions that could (if there is no change or improvement) be imposed on persons in the Maldives.
HONDURAS: JUDGE ORDERS ARREST OF 38 LAWMAKERS AND OFFICIALS FOR GRAFT
On 23rd July, Baker McKenzie reported that a judge in Honduras has ordered the arrest of 38 Hondurans, including (unnamed) lawmakers, officials and individuals, accused of diverting more than $11.7 million to finance political campaigns in the 2013 elections.
UK MAIL TO ADOPT GLOBAL BRAND AS IT BECOMES DHL PARCEL UK
On 23rd July, CILT reported that following the acquisition of UK Mail by Deutsche Post DHL Group in December 2016, the company will begin rebranding to DHL Parcel UK.