8th August 2018
US REIMPOSES FIRST TRANCHE OF IRAN-RELATED SANCTIONS
A useful, and comprehensive summary of the re-imposed US sanctions is provided by Wilmer Hale – with others due to take effect in a further 3 months.
HUNDREDS OF THOUSANDS OF FAKE NIKE AIR JORDANS SMUGGLED INTO NEW YORK, NEW JERSEY
NBC in New York on 7th August reported that a group that allegedly smuggled more than 300,000 pairs of fake Nike Air Jordan trainers into New York and New Jersey has been broken up. More than 42 containers were imported from factories in China through Port Newark between January 2016 and July 2018. Federal prosecutors said the counterfeiting scheme cost Nike at least $73 million. 5 people have been arrested. Prosecutors said the trainers were labelled and shipped as generic shoes. Once in New York, smugglers would allegedly add certain stamps, trademarks and logos in warehouses and then would be sold and shipped to buyers across the US.
OVERDOSE DEATHS LINKED TO FENTANYL UP BY NEARLY A THIRD IN ENGLAND AND WALES
Illicit Trade on 7th August reported that the number of drug overdose deaths in which synthetic opioid fentanyl played role increased by 29% to 75 in England and Wales last year, according to the latest data from the Office for National Statistics (ONS). The ONS also noted that carfentanyl, a derivative of fentanyl that is said to be up to 10,000 times more potent than morphine, was mentioned for the first time in death certificates.
DRUG MISUSE DEATHS FALL BUT STILL REMAIN TOO HIGH
The Gov.uk blog from Public Health England on 8th August comments on the ONS report.
MALAYSIAN EX-PM NAJIB CHARGED WITH MONEY LAUNDERING
The Manila Bulletin and others on 8th August reported that Malaysia’s former prime minister, Najib Razak, faces new charges linked to a multibillion dollar financial scandal that contributed to his shock election defeat in May. Najib was charged with 3 counts of money laundering over claims he pocketed $10.3 million, and pleaded not guilty. He faces up to 15 years in jail for each charge. The charges are in addition to the charges he faced last month after he was first arrested — 3 for criminal breach of trust and a separate count that he abused his position to take the money. He faces up to 20 years in jail for each of those charges, which he has also denied.
ARGENTINE EX-VICE PRESIDENT AMADO BOUDOU CONVICTED FOR CORRUPTION UNDER FORMER PRESIDENT CRISTINA KIRCHNER
Japan Times on 8th August reported that Amado Boudou has been sentenced to nearly 6 years in prison after being found guilty of corruption while serving under former President Cristina Kirchner. The charges related to his attempt to buy a company that printed currency through a front business while serving as economy minister.
ROYAL MAIL DATA REVEALS USA IS UK’S TOP EXPORTING DESTINATION
Postal and Parcel Technology on 7th August reported that the US is the UK’s top exporting hotspot for business parcels (and has been for 4 years). The data for the 2017/2018 financial year, also revealed that France and Germany take the second and third spots, respectively, with Australia fourth and Ireland fifth. The top 5 countries that the UK imports goods from remains unchanged over the past 3 years – China, Germany, US, Netherlands, Switzerland. For letters, the most inbound have come from the US for the past 3 years; followed by France and Germany.
FORMER EL SALVADOR PRESIDENT PLEADS GUILTY TO MONEY LAUNDERING
Reuters on 8th August reported that former El Salvadoran President Antonio Saca pleaded guilty in court to embezzlement and money laundering involving more than $300 million during his government.
US PROSECUTORS TARGET GOLDMAN SACHS IN 1MDB PROBE
On 8th August, Reuters reported a New York Times story saying that US prosecutors are investigating whether Goldman Sachs Group Inc has any culpability in a Malaysian fraud involving the 1MDB government fund. Prosecutors are also considering criminal charges against former Goldman investment banker who worked closely with 1MDB.
UNIQUE POLLEN SIGNATURES IN AUSTRALIAN HONEY COULD HELP TACKLE A COUNTERFEIT INDUSTRY
The Conversation carries this report about fears growing about “counterfeit” or adulterated food, especially high-value foods like olive oil, coffee, saffron and honey, but says that Australian honey, produced from domesticated European honey bees mostly foraging in native vegetation, is unique. Counterfeit food is a growing threat to both consumers and producers, it says.
DAIMLER ABANDONS IRAN EXPANSION PLANS AS US SANCTIONS BITE
Reuters on 8th August reported that German car and truck manufacturer Daimler has said it has dropped plans to expand its Iran business in reaction to renewed US sanctions. In early 2016, Daimler established a joint venture with Iranian vehicle manufacturer and dealer Iran Khodro Co to make and distribute Mercedes-Benz trucks in the country.
IS IRAN A THREAT TO GERMANY?
Nordwest Zeiting in Germany (and in German) on 8th August poses this question, saying that Iran appears to be continuing its WMD and missile programmes, and examining Iranian activities in Germany. It concludes that the regime in the Iran pursued a range of hostile activities against Germany and other democratic States and that Germany is in many ways a direct target of Iranian intelligence services.
INDUCEMENT IN FRAUDULENT MISREPRESENTATION CASES
On 7th August, Dechert LLP published an article about a recent High Court case that provides a warning about giving estimates as negotiating devices which are not based on an honestly held belief as to their accuracy; and also clarifies the test applicable to establish inducement for the purposes of a fraudulent misrepresentation claim. The case also confirmed an earlier decision that in misrepresentation cases the representation needed only to be a factor in the representee’s decision to enter into the contract, not the sole factor.
ECJ AT ODDS WITH ADVOCATE GENERAL ON EUROPEAN ARREST WARRANTS AND DOUBLE JEOPARDY
On 25th July, Brick House Chambers published an article about an important case concerning the European Arrest Warrant system. The case concerns 2 warrants issued by the Croatian courts in respect of an individual who is the subject of criminal proceedings in Croatia. The Hungarian authorities refused to execute the first warrant, because the same allegations had already been investigated in Hungary, and the investigation had been closed with no further proceedings. Importantly, the ECJ held that grounds for non-execution of a European Arrest Warrant must be interpreted strictly, and since the Hungarian investigation was conducted against an unknown person, that could not be grounds to refuse the warrant.
The judgment is at –
ISRAEL’S MIZRAHI BANK REJECTS $342 MILLION US TAX SETTLEMENT OFFER
Reuters on 8th August reported that Mizrahi-Tefahot Bank, Israel’s third-largest bank, said it would not accept a proposal from the DoJ to pay a fine of $342 million to settle a US tax evasion investigation, arguing the fine should be smaller.
JERSEY: WHEN IS A TAX RESIDENT NOT A TAX RESIDENT?
Bailiwick Express on 8th August reported that officials in Jersey are looking for views on their plans for what companies need to do in order to claim tax residency in the island, and in connection with commitments made in 2017 to the EU Code of Conduct Group on Business Taxation. It also refers to a 54-page report published in June by the Committee:
The consultation is at –
QC SEES DISPUTED TAX PENALTIES CUT FROM £1 MILLION TO £220,000
Accountancy Daily on 8th August reported that a leading barrister who has been involved in a long running dispute with HMRC over more than £1 million of penalties imposed for late self-assessment returns in connection with his role as the executor for the estate of his late father, Osias Tager, has won his case in the Court of Appeal on the grounds that there was no sign of ‘deliberate concealment’.
80% OF EUROPEAN HASHISH SMUGGLED IN EVERY YEAR TO SPANISH TOWN, LA LINEA, NEAR GIBRALTAR
Customs Today on 3rd August reported that a Spanish coastal town of under 65,000 people is the entry point for 80% of the hashish resin consumed annually by Europe, claims a report by northern Spanish daily La Voz de Galicia. It says that at least 280,000 tonnes of hashish arrive via La Línea de la Concepción every month, according to an anti-narcotics officer interviewed for the report. The officer estimates that smugglers drop off 2 tonnes of hashish 7 times per night, 20 days per month.
PHILIPPINES: DUTERTE FIRES OFFICIAL PROBING HIM FOR GRAFT
OCCRP on 7th August reported that the order to fire an anti-corruption official who was investigating President Duterte over millions of dollars of unexplained family wealth will be carried out.
JOINT NGO POSITION PAPER ON THE BIOLOGICAL WEAPONS CONVENTION
On 7th August, VERTIC reported on a joint paper submitted to the Biological Weapons Convention Meetings of Experts encouraging state parties to take action on, amongst other things, cooperation and assistance, national implementation, and institutional strengthening. The position paper gives 31 recommendations on a wide range of issues, including the call on states to ‘adopt and enforce the necessary legal measures’ to bring the convention into effect on a national level. As well as VERTIC, the document has been endorsed by 11 NGO and several individual experts on biological arms control.
The report is at –
ITALY TO SPARK AN E-INVOICING REVOLUTION?
Banking Tech on 8th August carried an article asking this question. It says that 1st July marked the start of a significant revolution within fintech in Europe, as the first stage of Italy’s new e-invoicing legislation kicked in and the wheels were set in motion to usher in one of the biggest tax reforms Italy has ever undertaken. From 1st September, e-invoicing will be required for tax-free shopping. From 1st January, B2B e-invoicing will become mandatory for suppliers of goods and services between all parties established and VAT-registered in Italy, and will also apply to B2C contracts where the customer expressly requests an invoice. Exclusions will apply purely for non-resident taxpayers identified purely for VAT purposes.
RESTORING ECONOMIC SANCTIONS: THE IMPACT ON IRAN
In the July 2018 edition of its Strategic Assessment journal, the Institute for National Security Studies at Tel Aviv University says that analysis reveals that the US economic campaign can be expected in upcoming quarters to intensify the foreign currency crisis in Iran, increase inflation, and reduce the scope of local and foreign investments and this could lead the Iranian economy to a situation similar to the one it faced on the eve of the JCPOA nuclear agreement in 2015. In terms of the political implications of the renewal of sanctions it is too early to assess whether the pressure in itself will serve to moderate the regime’s policies. It is also difficult to predict how the economic pressure will affect public opinion. Heightened pressure could serve to intensify popular protest in Iran, but it could also help the regime mobilise public support against the West.
SAUDI ARABIA: WALKING THE NUCLEAR PATH
In the July 2018 edition of its Strategic Assessment journal, the Institute for National Security Studies at Tel Aviv University examines Saudi Arabia’s nuclear policies, including that alongside civil developments, senior Saudi officials have threatened publicly and explicitly that if Iran acquires nuclear weapons, Saudi Arabia will immediately follow suit.
CAN A SIMPLE CAUTION BE GIVEN ON ADMISSION ALONE?
PNLD on 8th August carried a Q&A, saying that an admission is a pre-requisite of issuing a simple caution, but there must also be sufficient evidence to provide a realistic prospect of conviction if the offender were to be prosecuted.
NIGERIA, NIGER AND BENIN TO HOLD RICE SMUGGLING SUMMIT
On 7th August, Illicit Trade reported that ministers from Nigeria, Niger and Benin have agreed to meet to discuss the growing problem of rice smuggling in the region. Benin ambassador to Nigeria said the smuggling of rice and other products posed a threat to relations between the countries. She said that while the Economic Community of West African States (ECOWAS) protocol had paved the way for free movement within the region, local countries have a responsibility to do more to crack down on rice smuggling and other crimes.
US FINALISES NEXT CHINA TARIFF LIST TARGETING $16 BILLION IN IMPORTS
Reuters on 7th August reported that the US will begin collecting 25% tariffs on another $16 billion in Chinese goods from 23rd August as it published a final tariff list targeting 279 imported product lines. The latest list will hit semiconductors from China, even though many of the basic chips in these products originate from the US, Taiwan or South Korea. The 25% tariffs also will apply to a broad range of Chinese electronics, plastics, chemicals and railway equipment.
AGREEMENT SIGNED BETWEEN ETHIOPIA AND OROMO LIBERATION FRONT
On 8th August, Defence Web reported that Ethiopia’s government has signed an agreement to end hostilities with the Oromo Liberation Front, which it previously declared a terrorist movement. Since the 1970s, the rebels fought a low-level insurgency for self-determination for the Oromiya region.
EX-NAIROBI GOVERNOR KIDERO ARRESTED, TO FACE GRAFT CHARGES
Capital FM in Kenya on 8th August reported that former Nairobi Governor Evans Odhiambo Kidero has been arrested by detectives from the Ethics and Anti-Corruption Commission over graft allegations. The DPP says there is overwhelming evidence linking Kidero and 7 others to mismanagement and embezzlement of public funds.
LESSONS FROM DOWN UNDER: THE SOFT POWER DIVIDEND OF FINANCIAL CRIME TECHNICAL ASSISTANCE
An article on the Royal United Services Institute website on 8th August says that, in the face of an imminent FATF evaluation, as the UK improves its legislation (e.g. the Criminal Finance Act) and boosts resources for its FIU and others (although, as the article points out, 10 years after having promised to do so – the last time that FATF evaluated the UK…), what is it doing to improve financial integrity and fight financial crime elsewhere? Despite talk of international co-operation and a global crackdown on dirty money, the article suggests that the UK is still, in reality, not matching its rhetoric. It compares what the UK has done to that of AUSTRAC in Australia. It says that there are several benefits to be gained if the UK were to become a global leader in the provision and co-ordination of technical assistance by turning its financial crime-fighting focus abroad.
FEW SWEDISH COMPANIES AFFECTED BY US SANCTIONS ON IRAN
Radio Sweden on 8th August reported that only some Swedish faced difficulties, and published an 4-minute audio interview with an export specialist to assess the impact; and he emphasised that the main challenge was the US dollar payment channel. They also spoke to a spokesperson for Scania.
MOSCOW COURT RECOVERS OVER $3.9 MILLION FROM RUSSIAN AUTHORS’ SOCIETY EX-HEAD
RAPSI in Russia reported on 8th August that Sergey Fedotov, ex-Director General of the Russian Authors’ Society (RAO), had been sentenced to 1½ years in a penal colony for large-scale fraud. RAO is a non-governmental organisation created in 1993 for collective management of author’s rights. At this moment over 25,000 people are listed as members.
8,000 BOTTLES OF FAKE AUSTRALIAN PENFOLDS WINE SEIZED IN NORTHERN CHINA
The Drinks Business on 8th August reported that police have seized more than 8,000 bottles of the fake wine, just 3 months after a previous seizure of 50,000 bottles in central China.
GHOST BROKERS IN DOCK AFTER ESURE AND POLICE UNCOVER RACKET
Insurance Age on 6th August reported that a team of East London-based fraudsters who set up a ghost-broking operation targeting minicab drivers have collectively been sentenced to 57 months suspended following being convicted of conspiracy to commit fraud. The defendants set up AHD Solutions and operated between June 2012 and August 2013. They went to great lengths to seem legitimate, conducting the scam out of a real office and even setting up a website. In order to appear authentic, AHD Solutions were also using insurer Esure’s name on their website, which alerted Esure, and eventually led to their downfall.
OVERSEAS BUSINESS RISK – THE OCCUPIED PALESTINIAN TERRITORIES
On 8th August, the FCO and Department for International Trade published an updated edition of this guidance that looks at the intellectual property, organised crime, human rights, bribery and corruption and terrorism risks that UK businesses may face when operating in the Occupied Palestinian Territories.
TAIWAN CUSTOMS SEIZE MAJOR DRUGS HAUL BOUND FOR MALAYSIA
Customs Today on 8th August reported that a total of 1.6 million pills of the controlled hypnotic drug Nimetazepam (Erimin-5) have been seized by Taiwan customs and police. The drugs were found hidden in 32 boxes disguised as live bait ready to be exported to Malaysia.
ISLAMIC STATE SMUGGLING WOOD TO FINANCE MILITANCY IN AFGHANISTAN
Customs Today on 8th August reported that Islamic State is chopping down fruit trees and smuggling the timber into Pakistan, claim Afghan officials and local residents of the Deh Bala district of eastern Nangarhar province. The district has thousands of pine nut trees that locals rely on as the only natural source of income. Nangarhar province in eastern Afghanistan is famous for its precious stone mines and, according to an Afghan anti-corruption network report published in 2017, militant groups received at least $46 million from minerals and precious stones illegally exported in 2016 from the eastern Nangarhar province to neighbouring Pakistan.
FOREIGN INVESTMENT RISK REVIEW MODERNIZATION ACT – THE MOST IMPORTANT REFORMS TO CFIUS IN 30 YEARS
On 8th August, Reed Smith published a Client Alert saying that on Monday August 13th President Trump is expected to sign into law the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA), the most significant changes to the law governing the Committee on Foreign Investment in the United States (CFIUS) since the creation of the US foreign investment regime in 1988. The Alert details the expanded jurisdiction of the law and other changes. There are also changes to export control legislation which requires the administration to identify “emerging” and “foundational” technologies, and to impose licences on exports to China and certain other countries. This classification process is expected to take place over the coming months.