26th July 2018
CANADA: AVOIDING THE EFFECTS OF CANADIAN COUNTERMEASURES AGAINST US IMPORT DUTIES
On 18th July, Bennett Jones published an article on its blog saying that since 1st July, Canada has imposed 25% and 10% ad valorem surtaxes on the importation of a wide variety of U.S. “originating” goods. Canadian and non-resident importers have been wondering what they can do to avoid the application of the countermeasures to their importations. It points out that the countermeasures are highly targeted, and in many cases identify affected products at the eight-digit tariff item level – so one should examine the precise classification of the goods, and if they really do count as being of US origin. It also asks if the goods have been exported or re-exported from Canada or are returning Canadian goods having been worked on abroad – in which case duty relief may be available. Finally, it says to consider if there are any special circumstances that might justify a remission of the duties involved.
US STATE DEPARTMENT DEFENDS ALLOWING PUBLICATION OF BLUEPRINTS TO 3D PRINT GUNS
ABC News on 25th July reported that the State Department is defending the move to allow people to 3D print firearms, even as the Secretary of State promised to look into the issue. This follows the settlement out of court of the case involving Defense Distributed founder Cody Wilson’s 2013 suit against the State Department after he was forced to take down blueprints his company posted online. A State Department spokesperson said, in effect, that the regulation involved had ceased to have effect due to the transfer of much regulation of gun export controls to the Department of Commerce – a move to have the effect of easing restrictions on firearms that are “commercially available” and strengthening the protection of more important weapons technology.
COLOMBIAN DRUG KINGPINS SMUGGLED OXYCODONONE PILLS INTO MIAMI
The Miami New Times on 25th July carried an article about the arrest of a father and son said to be kingpins of Colombia’s Oficina de Envigado, a drugs trafficking organisation dating back to the 1980s and said to have handled the dirtiest business for Pablo Escobar, including contract killing, until splitting from Escobar in the mid-1990s. José Bayron Piedrahita Ceballos, a former Cali Cartel drug lord, described as one its kingpins, was arrested in Colombia last year. Now, in June, US authorities have charged his son, José Piedrahita Castillo Jr, with conspiring to ship oxycodone pills into South Florida and send hundreds of thousands of dollars in drug money back to the cartel in Medellín. The lengthy article says that the new charges paint a clearer picture of how the current opiate trade operates.
Oxycodone is an opioid medication which is used for the relief of moderate to severe pain. It was developed in Germany during World War 1 as a morphine/heroin substitute. During World War 2 it is said to have been regularly given to Hitler. Subject to controls internationally, it is a Class A drug under the Misuse of Drugs Act 1971.
FEDS HUNT RUSSIAN TIED TO $65 MILLION NEW JERSEY ELECTRONICS SMUGGLING
App.com (part of USA Today) on 25th July reported that US federal authorities are hunting Alexander Brazhnikov Sr., 72, a Russian charged in connection with an alleged $65 million scheme to smuggle US electronics through 4 New Jersey businesses to Russian businesses with ties to that country’s military. He was indicted on charges of conspiracy to commit money laundering, conspiracy to smuggle goods from the US and conspiracy to violate a law that limits the export of goods that could help a foreign military. His son – Alexander Brazhnikov Jr., 39 – owned 4 New Jersey electronics companies. The indictment alleges that the father and son funnelled millions in Russian funds through dozens of shell companies in the BVI, Latvia, the Marshall Islands, Panama, Ireland, UK, UAE and Belize. The article includes a copy of the indictment.
SPANISH PROSECUTORS WANT 11-YEAR JAIL TERM AND €59 MILLION FINE FOR FORMER BARCELONA PRESIDENT
Former Barcelona president Sandro Rosell is facing charges for alleged money laundering related to TV rights and sponsorship in Brazil. He, his wife and 4 others are accused of “large-scale money laundering” of at least €19.9 million since 2006, in hiding money illegally obtained by Ricardo Teixeira, the former head of the Brazilian Football Confederation. The article says that Rosell had previously lived and worked in Brazil.
MONEY LAUNDERING AND FINANCIAL EXCLUSION
In an article from Bright Line Law on 23rd July, Jonathan Fisher QC discusses the House of Commons inquiry into the AML/CFT regime and focuses on one problem with the regime – the rise of de-risking leading to financial exclusion. He says that, to some extent, the withdrawal of services by financial institutions is readily understandable. He points out the efforts to reinforce AML/CFT controls can be somewhat counterproductive – if a client is not taken on or the relationship is terminated, there is a risk that transactions will be pushed underground or routed through jurisdictions where systems and controls are weaker; and he says that the Treasury Parliamentary Committee must grapple with these issues.
https://www.brightlinelaw.co.uk/news/money-laundering-and-financial-exclusion.html
PODCAST: US V IRAN, TWITTER WAR AND POSSIBLE SCENARIOS
In a Carnegie Center Diplopod podcast, Jen Psaki discusses with Carnegie scholar and Iran expert Karim Sadjadpour the impact of the Twitter war of words between President Donald Trump and Iranian officials, the future of Iran’s leaders, and President Trump’s approach to Iran policy.
https://soundcloud.com/diplopod/twitter-war-with-iran
GERMANY PLANNING CRACKDOWN ON ONLINE TAX EVASION
Reuters on 26th July reported that the German Finance Minister plans to unveil legislation aimed at reducing tax evasion by online dealers using platforms such as eBay and Amazon, with these liable for the sales tax of dealers, unless they can prove that those parties have registered with the proper tax authorities.
NEW CUSTOMS FACILITIES BEING BUILT IN DUBLIN PORT AHEAD OF BREXIT
Customs Today on 25th July reported that Dublin Port has started putting up new buildings for customs officials to check vehicles coming off ships and ferries after Brexit. The port’s CEO said people travelling by sea will again be met with uniformed officers as necessary checks are put in place when the UK pulls out of the EU.
http://www.customstoday.com.pk/new-customs-facilities-being-built-in-dublin-port-ahead-of-brexit/
PRIVATE FISHING COMPANIES INVESTING IN RUSSIA’S PORTS
Customs Today on 25th July reported that Russia is now in the midst of a restructuring of its seafood sector – from investments in infrastructure to overhauling fisheries laws to efforts to boost domestic and overseas markets for its products, Russia’s government is pouring resources into reviving and invigorating all aspects of its fisheries economy. It says that a central part of the strategy is attracting more Russian fishing companies to use the country’s own fishing terminals to land their catch and repair their vessels inside Russia. At present, an increasing majority of Russian-flagged ships are instead spending money and selling fish at ports abroad, primarily in South Korea, Japan, China, and Norway.; and the problem is most severe in Russia’s Far East.
http://www.customstoday.com.pk/private-fishing-firms-step-up-to-invest-in-russias-ports/
CRIMINALS SMUGGLING GOLD INTO JAPAN CONCEALED BARS IN AEROPLANE TOILETS AS GANGS GROW MORE SOPHISTICATED IN THEIR TACTICS
On 23rd July, Customs Today reported that Japanese authorities have warned international gold smuggling rings are becoming more sophisticated after cracking a scheme to conceal gold bars in aircraft toilets.
COCAINE WORTH €60 MILLION SEIZED OFF MARTINIQUE
Customs Today on 25th July reported that 2 men have been arrested after French Customs officials seized 1.5 tonnes of cocaine valued at €60 million in a sailboat off Martinique. The 2 suspects reportedly set fire to their boat and took refuge on their life raft, but the Navy were able to extinguish the fire and during a search of the boat Customs officials discover the narcotics.
http://www.customstoday.com.pk/cocaine-worth-60-million-euros-seized-off-martinique/
GUIDE TO LIMITED LIABILITY PARTNERSHIPS (LLP) IN JERSEY
On 25th July, Appleby published an article saying that following on from its original introduction in 1997, the legislation governing the LLP in Jersey has recently undergone significant revision and the Limited Liability Partnerships (Jersey) Law 2017 is to come into force on 1st August. The article considers the key features of this flexible vehicle.
ALABAMA COAL EXECUTIVE AND LAWYER ARE GUILTY OF BRIBING POLITICIAN OVER POLLUTION CLEAN-UP
Baker McKenzie on 25th July reported that a coal company executive and a lawyer have been convicted in federal court of bribing an Alabama lawmaker to oppose Environmental Protection Agency plans that could have made the company help pay to clean up a polluted site.
SOUTH KOREAN COMPANY BACKTRACKS ON $130 BILLION RUSSIAN ‘TREASURE SHIP’ GOLD CLAIMS
Reuters reported on 26th July that Shinil Marine had said that it had discovered the wreck of the Dmitrii Donskoi, a Russian armoured cruiser sunk in 1905 after fighting Japanese warships off South Korea; but has now backtracked on those claims and apologised for having cited unverified news reports saying the ship held about $130 billion worth of gold.
COLOMBIAN EX-PRESIDENT RESIGNS FROM SENATE AMID CRIMINAL INQUIRY
Baker McKenzie on 25th July reported that former Colombian President Alvaro Uribe, who was in office from 2002 to 2010 and is a mentor of incoming President Ivan Duque, resigned his Senate seat after the Supreme Court called on him to testify in an investigation into whether he participated in witness tampering and bribery.
SAUDIS HALT OIL SHIPMENTS IN RED SEA AFTER ATTACK BY IRAN-BACKED HOUTHIS
On 26th July, Rferl reported that Saudi Arabia announced it was temporarily halting all oil shipments through a strategic Red Sea shipping lane after an attack on 2 oil tankers by Yemen’s Iran-backed Houthi rebels. The Bab al-Mandeb strait, where the Red Sea meets the Gulf of Aden, is only 20 km wide making ships easy targets there.
https://www.rferl.org/a/29391317.html
CORRUPTION TRIAL AGAINST FORMER ALMATY MAYOR OPENS IN KAZAKHSTAN
Rferl on 26th July reported that a court in Kazakhstan has opened preliminary hearings in the case against former Almaty Mayor, Viktor Khrapunov, and his wife, Leila Kharpunova, who now live in Switzerland. They have been charged in absentia with fraud, creating and running an organised-crime group, money laundering, abuse of office, and embezzlement. 10 individuals who worked under Khrapunov’s supervision while he was mayor between 1997 and 2004 have also been charged.
CHINA’S COAL IMPORT RESTRICTIONS LEAVE SHIPS IDLE
Port Strategy on 23rd July reported that coal-carrying vessels have increasingly been left idle off the coast of China as a result of thermal coal import restrictions at the country’s major ports, sources have said. Restrictions were introduced in April to restrict growth in coal imports in order to support domestic coal prices and encourage an increase in local production.
http://www.portstrategy.com/news101/world/asia/chinas-import-restrictions-leave-ships-idle
PETROECUADOR IN-HOUSE LAWYER SENTENCED TO 4 YEARS IN PRISON FOR MONEY LAUNDERING IN FLORIDA
Corporate Counsel from Law.com reported on 25th July that a judge in Miami has sentenced Marcelo Reyes Lopez, an in-house lawyer for PetroEcuador, the state-owned oil company in Ecuador, to 53 months in prison for laundering bribe money. He could have faced up to 20 years in prison but is co-operating with investigators. Details of Reyes Lopez’s role are sparse because key documents in the case are sealed, including the complaint against him.
RIPA CODES: INVESTIGATORY POWERS (CODES OF PRACTICE AND MISCELLANEOUS AMENDMENTS) ORDER 2018
In the UK, this Order (SI 2018/905) brings into force 3 revised codes of practice regarding functions carried out under the Regulation of Investigatory Powers Act 2000 (RIPA) –
- Covert surveillance and property interference – covering the authorisation of covert surveillance (both directed and intrusive surveillance) and property interference. Property interference is the entry on or interference with property or with wireless telegraphy. It includes, for example, covertly entering a private property for the purpose of installing a listening device;
- Covert Human Intelligence Sources (CHIS) – relates to the use and conduct of CHIS. CHIS are people who, at the direction of a public authority, establish or maintain a relationship with someone else for the covert purpose of obtaining, providing access to or disclosing information, e.g. an undercover officer;
- Protection of electronic information – this relates to the use of the power in Part III of the RIPA, which enables public authorities to require protected electronic information which they have obtained lawfully or are likely to obtain lawfully to be put in intelligible form; or to acquire the means to gain access to protected information, and to acquire the means to put protected information into an intelligible form. This power is usually used in criminal investigations. In Part III of RIPA, “protected information” means any electronic data which, without the key to the data, cannot, or cannot readily, be accessed, or cannot, or cannot readily, be put into an intelligible form.
http://www.legislation.gov.uk/uksi/2018/905/contents/made
SCHEDULING OF CANNABIS-DERIVED MEDICINAL PRODUCTS IN UK
On 26th July, the Home Office published a letter sent by the Home secretary to the Advisory Committee on the Misuse of Drugs responding to the advice given by ACMD. He says that accepts the first of 2 recommendations made by the ACMD – that the term “cannabis-derived medicinal products” should be defined and that only products meeting this definition be made available on prescription as Schedule 2 drugs under the Misuse of Drugs Regulations 2001. He also agreed with its third recommendation – about the need to develop additional ‘checks and balances’ to be able to maintain appropriate prescribing whilst minimising the risk of diversion; and its fourth recommendation to keep synthetic cannabinoids in Schedule 1 to the 2001 Regulations pending the ‘longer term’ review by the ACMD due in July 2019. He also said he supported the conclusion on the need for further clinical trials to establish the effectiveness and safety of Cannabis-derived medicinal products and the need to resolve the issue with potential ‘barriers to research’.
UK: CANNABIS-DERIVED MEDICINAL PRODUCTS TO BE MADE AVAILABLE ON PRESCRIPTION
Also on 26th July, the Home Office announced that specialist clinicians will be able to legally prescribe cannabis-derived medicinal products by the Autumn.
TOP RUSSIAN INVESTIGATOR JAILED IN EXPLOSIVE MAFIA BRIBE CASE
The Moscow Times on 26th July reported that Alexander Lamonov, the deputy head of security at Moscow’s branch of the Investigative Committee, a top crime-fighting official in Moscow who was arrested in 2016 has been sentenced to 5 years in jail for accepting a bribe from one of Russia’s most notorious mafia bosses in a case that has brought down several senior investigators.
RUSSIAN SPACE CONTRACTOR ARRESTED IN EMBEZZLEMENT CASE
The Moscow Times on 26th July reported that the head of a key Russian space contractor has been arrested on charges of large-scale fraud in a $5.2 million embezzlement case, days after the arrest of a space researcher suspected of leaking hypersonic missile technology to the West. Sergei Lemeshevsky headed the Lavochkin Association, a contractor that develops military satellites and deep-space scientific probes for the Roscosmos federal space agency.
https://themoscowtimes.com/news/russian-space-contractor-arrested-embezzlement-case-62353?src=ilaw
SCANDAL-HIT CRYPTO MINING FIRM PROBED BY FINMA IN SWITZERLAND
On 26th July, Swissinfo reported that the Swiss financial regulator has opened proceedings against the German-Swiss cryptocurrency venture Envion that dissolved into bitter infighting and claims of fraud shortly after raising $100 million from an initial coin offering (ICO) crowdfund.
BOOKIES COULD BE SET FOR £1 BILLION VAT REFUND FOLLOWING FOBT CASE
The Racing Post reported on 26th July that high street bookmakers could be set for a windfall worth as much as a billion pounds or more after a judge found in their favour in a tax battle with HMRC involving fixed-odds betting terminals (FOBT). Betfred had argued that they had been incorrectly paying VAT on their winnings on FOBT between 2005 and 2013 as the same games or similar games available on the machines were exempt from the tax when played in casinos or online. The tax tribunal found that the FOBT games should have been exempt from VAT. The newspaper explains that FOBT were originally subject to betting duty of 15%. VAT was then imposed in 2005 before being replaced by machine games duty (MGD) in 2013 at 20% (now 25%).
TRADE RESTRICTIONS ON METALS AND MINERALS
Chatham House on 26th July published an article saying that the intensity of export restrictions on the trade of metals and minerals is increasing, affecting the cost of products, introducing supply-chain uncertainties, and leading to trade disputes. It says that the use of export restrictions on metals and minerals is increasingly common – the inventory of export restrictions on industrial raw materials records such restrictions on 65 strategic and essential raw materials in all major exporting countries; and restrictive measures — outright export bans, export quotas, export taxes, non-automatic export licensing requirements and other export restricting measures — has risen significantly in the last 6 years. Also, once export restricting measures are in place, they are rarely lifted.
The report analyses the sources and trade in metals and minerals, what restrictions there are (and the reasons for them, in at least some cases). It points out that trade restrictions on metallic waste and scrap pose a particular challenge to the aim of decoupling industrial production from resource use (i.e. encouraging recycling and the circular economy), which has been deemed necessary to achieve the UN Sustainable Development Goals – it notes that approximately 40% of copper and 40% of steel are produced from recycled materials. For other common materials such as aluminium, lead and zinc, over 30% of production presently uses recovered inputs.
https://resourcetrade.earth/stories/trade-restrictions-on-metals-and-minerals#top
NEARLY 3,200 PEOPLE ARRESTED AND HK$220 MILLION IN ILLEGAL GOODS AND DRUGS SEIZED IN HONG KONG CRIME CRACKDOWN
The South China Morning Post on 26th July reported on a cross-border operation ‘Thunderbolt 18’ which has shut down more than 300 illegal gambling dens, drug distribution centres and other establishments in the city. This year’s crackdown launched on May 15 also targeted fraudsters behind investment scams and illegal bookmakers. The 3-month operation is part of an annual cross-border “clean-up” against organised crime syndicates and triad activities led by police from Hong Kong, Guangdong province and Macau due to end in mid-August.
THE TRUTH ABOUT ILLICIT FINANCIAL FLOWS
Podcast from the IMF on 24th July. Illicit financial flows have been under the spotlight recently. Both the Panama Papers and subsequent Paradise papers exposed large amounts of money held in tax havens —some under questionable circumstances, and the UN has included tackling illicit financial flows as a target within its Sustainable Development Goals. In this podcast, the Center for Global Development’s Maya Forstater talks about how much or how little we really know about illicit financial flows. Forstater was invited to speak at the IMF as part of the Developing Economies Seminar Series.
http://imfpodcast.imfpodcasts.libsynpro.com/
$1.2 BILLION VENEZUELAN OIL SCHEME AND THE FLORIDA CONNECTION
On 26th July, Daily Business review from Law.com carried a feature about a case where 8 are charged with a money-laundering conspiracy to clean money stolen from Venezuela’s state-run oil company, Petroleos de Venezuela SA (PDVSA). It is said to involve falsified contracts, fake bonds, a fake Miami mutual fund and the Porsche tower condo unit in South Florida. Federal prosecutors charge an elaborate network of banks from Canada to Malta and a UK broker-dealer were used to launder money stolen from PDVSA. The broker-dealer is Global Strategic Investments, which reports more than $2 billion in assets under management. It is said to be affiliated with Latin America-focused financial services group The Global Securities Group. Those indicted include various Venezuelans, a Portuguese and a Uruguayan – as well as a former official from the Julius Baer, Matthias Krull, 44, a German national living in Panama, and Gustavo Hernandez Frieri, 45, a Colombian with US citizenship. Krull is a former wealth manager at Julius Baer and Frieri is said to control Global Strategic Investments.
US-ISRAEL NON-PROLIFERATION CONFERENCE
At the end of April, the James Martin Center for Nonproliferation Studies (CNS), the National Defense University’s Center for the Study of Weapons of Mass Destruction (CSWMD), and Tel Aviv University’s Institute for National Security Studies (INSS) held a 2-day meeting on non-proliferation dialogue in Tel Aviv. The purpose of the dialogue was for experts and officials from the US and Israel to exchange views on evolving threat perceptions, perceived gaps in goals, priorities, and policies, and identify further opportunities for deepening bilateral co-operation to counter the proliferation of WMD and related threats. The dialogue was aimed at supporting and complementing the official dialogue between the 2 countries.
https://www.nonproliferation.org/us-israel-nonproliferation-dialogue/
The following documents come from this meeting.
NUCLEAR ENERGY AND PROLIFERATION IN THE MIDDLE EAST
This policy memo is based on a presentation given at the meeting. It starts by saying that more countries have pursued a nuclear weapon capability in the Middle East than in any other region. They include Egypt, Iraq, Libya, Syria, and Iran. Leaving aside Israel, none has succeeded in acquiring nuclear weapons—at least so far. It goes on to say that, since 2006, more than 18 Middle East states have declared their intention to pursue nuclear energy programs. For most of these countries, the expressions of intent have been aspirational and unrealistic. But for several of them, plans to build nuclear power reactors are more concrete. The memo examines the spread of nuclear energy programmes, and the risk of regional tensions leading to states seeking nuclear weapons. The author concludes that, despite concerns about the future of the JCPOA and Iranian intentions — and despite increased regional interest in nuclear energy and reluctance to forgo fuel cycle facilities — the proliferation of latent or actual nuclear weapons capabilities in the Middle East is far from inevitable. He predicts that 10 and 20 years from now, there will still be only one nuclear-armed state in the Middle East.
MISSILE PROLIFERATION IN THE MIDDLE EAST
This memo starts by tracing missile proliferation in the Middle East to the 1950s and 1960s with French transfers to Israel and Egypt’s effort to develop missiles with the help of German scientists. It says that this trend continued with Soviet transfers of Scuds to Egypt, Iraq, Libya, and Syria in the 1960s and 1970s, and accelerated in the 1980s and 1990s with North Korean exports of missiles and missile production capability to Egypt, Iraq, Libya, and Syria. Technology from North Korea, the former Soviet Union, and China continued to flow into the region well into the 1990s and beyond. Hence, numerous states in the Middle East have a missile capability, some with a development and production capability as well. The memo goes on to examine what the author sees as the main missile threats affecting the region; and the nature of the threat – including to US assets in the region. The memo concludes by saying that missile proliferation is a significant part of the Middle East security landscape.
CHEMICAL WEAPONS AND NON-PROLIFERATION EFFORTS IN THE MIDDLE EAST
This memo looks at the chemical weapons threat in the Middle East, from state and non-state actors, in the context of Israel’s situation and threats facing it.
ADDRESSING CONTEMPORARY CHEMICAL WEAPONS THREATS IN THE MIDDLE EAST
In this memo, the author examines US and Israeli perceptions of the threats, including the acquisition and use of them by non-state actors.
https://www.nonproliferation.org/wp-content/uploads/2018/07/Smithson.pdf
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