20th September 2018
RUSSIAN TAX AUTHORITIES’ GUIDANCE ON DETERMINATION OF TAX RESIDENCE BETWEEN CYPRUS AND RUSSIA
On 19th September, Elias Neocleous & Co LLC published an article comparing the 2017 additional rule on what made a person tax resident in Cyprus with a statement from the Russian Ministry of Finance on the application of the Cyprus-Russia double taxation agreement following the introduction of the new residence provisions in Cyprus. The Russian statement makes clear that it will judge tax residence only in terms of the Russian rules, and that possession of a tax residence certificate from Cyprus does not have any automatic effect in this regard.
BUSINESS CRIME BRIEFS: BVI AND CAYMAN ISLANDS
On 17th September, Maples and Calder published separate guides to the law enforcement and courts arrangements in the two jurisdictions, as well as on the law relating to various business crimes, including embezzlement, tax crimes, bribery and insider trading.
https://www.maplesandcalder.com/news/
IRELAND: CONDUCTING CORPORATE INVESTIGATIONS – RECENT DEVELOPMENTS
On 17th September, Matheson reviewed recent developments in Ireland re corporate investigations, saying that all the cases involved allegations of corruption and/ or fraud, and thus these decisions are even more significant when viewed in the context of the recently enacted Criminal Justice (Corruption Offences) Act 2018 (CJCA). It also advises that companies should give careful consideration to putting in place a protocol regarding the establishment of internal investigations and the treatment of documents generated in relation to the process.
ASSOCIATED BRITISH PORTS (ABP) IS TO PILOT A BLOCKCHAIN SOLUTION ACROSS ITS UK SITES
On 20th September, Loadstar reported that an MoU with Marine Transport International (MTI) will see ABP commit shipments for MTI’s blockchain technology. ABP operates 21 ports across the UK, handling 25% of the country’s seaborne cargo.
https://theloadstar.co.uk/abp-signs-trial-blockchain-technology-across-uk-port-operations/
FIRST TIR INTERMODAL SHIPMENT ON WAY FROM MIDDLE EAST TO EUROPE
Loadstar on 20th September reported that a container has left the UAE bound for Europe on the first intermodal TIR transport between the Gulf Cooperation Council (GCC) and the EU, destined for the Czech Republic. It will travel by land and sea, arriving in Hamburg. TIR means a vehicle travelling under the TIR Convention which facilitates the international carriage of goods from one or more customs offices of departure to one or more customs offices of destination (up to a total of 4 customs offices departure and destination) and through as many countries as necessary. As a rule, the vehicle remains sealed throughout the TIR transport and, thus, goods are generally not inspected at border crossings.
https://theloadstar.co.uk/first-tir-intermodal-shipment-middle-east-europe-way/
LISA OSOFSKY OUTLINES HER PRIORITIES AS NEW DIRECTOR OF THE SFO
Wilmer Hale on 14th September reported that on 3rd September, Lisa Osofsky gave her inaugural speech as the new Director of the SFO to the annual Cambridge International Symposium on Economic Crime. It says that Osofsky was keen to establish at this early stage that she will be “a different kind of Director”. By extension, it concludes, we may find ourselves dealing with a different kind of SFO.
UK: SECURITY FEATURES FOR TOBACCO TRACK AND TRACE TO BE IMPLEMENTED BY 20 MAY 2019
On 20th September, HMRC published a news release saying that from 20th May 2019, all unit packs of cigarettes and hand-rolling tobacco manufactured in, or imported into the UK must carry at least 5 security features which include overt, semi-covert and covert elements. A unit packet includes the cellophane wrapper only if it is affixed in a way that its removal would leave a mark. Other tobacco products (e.g. cigars) do not need security features until May 2024. They are therefore not required to apply the necessary features. Further details on the security features for these products will be provided in due course.
https://www.gov.uk/guidance/security-features-for-tobacco-track-and-trace
HOW PUERTO RICO BECAME THE NEWEST TAX HAVEN FOR THE SUPER RICH
On 18th September, GQ Magazine published an article which says that a year after the tragedy of Hurricane Maria, the “51st state” has become the favourite playground for extremely wealthy Americans looking to keep their money from the taxman. The only catch? They have to cut all ties to the mainland (wink, wink). Individuals must prove to the IRS that they have become bona fide residents of Puerto Rico, without “close contacts” on the mainland and most native Puerto Ricans are not eligible for the exemption. The mainlanders who have relocated belong to the middle class of the ultra-rich.
https://www.gq.com/story/how-puerto-rico-became-tax-haven-for-super-rich
FRENCH RULES REGARDING THE LIABILITY OF LEGAL ENTITIES, WHETHER PRIVATE OR PUBLIC (EXCEPT THE STATE)
On 20th September, Bird & Bird published a briefing outlined the position of companies and other legal entities under French law and how the entity can be liable if a representative commits a criminal act. Employees who do not hold a delegation of authority will be solely responsible, but the legal entity can be prosecuted if the offence was perpetrated for its benefit. A managing officer who has not taken “adequate measures to avoid the perpetration of the offence” may also be prosecuted alongside the perpetrator and the legal entity under what is called “cumulative liability”. The article also notes that French criminal law is evolving: gradually moving towards a negotiation mechanism with a form of deferred prosecution agreement available for corruption offences, for example.
RUSSIAN OIL FIRM SEEKS PAYMENTS IN EUROS AMID US SANCTION THREAT
EurActiv on 20th September reported that Surgutneftegaz, representing 11% of oil production in Russia, is pushing buyers to agree to pay for oil in euros instead of US dollars if the need arises, apparently as insurance against possible tougher US sanctions.
EUROPOL: COMPANIES MAY TRY TO BYPASS GDPR FINES BY NEGOTIATING WITH CYBERCRIMINALS
On 20th September, EurActiv reported that the 5th Internet Organised Crime Threat Assessment (IOCTA) from Europol warned that EU data protection laws may lead to an increase in cyber-extortion and of the implications of companies breaching General Data Protection Regulation (GDPR) rules and choosing to pay hackers bribes – as this may be cheaper than the 4% of global turnover for GDPR breaches.
DRUG INDUSTRY REACTS TO OXFAM’S ALLEGATIONS OF TAX-DODGING
EurActiv on 19th September reported that the 4 multinationals named in research carried out by Oxfam deny that they hid their profits in tax havens. Pfizer, Merck, Johnson & Johnson, and Abbott, are behind some of Europe’s best-known brands such as Neutrogena, Anadin and Tylenol, as well as lifesaving medicines with global revenues topping €1.5 trillion in the 10 years from 2006 to 2015. According to the Oxfam report, the drug companies appeared to underpay an estimated €1.2 billion in taxes in 6 European countries (Denmark, France, Germany, Italy, Spain and the UK) over a 3-year period.
EU COMMISSION PUBLISHES NEW GUIDANCE FOR ENDING UNJUSTIFIED GEO-BLOCKING AND MAKING CROSS-BORDER PARCEL DELIVERY MORE AFFORDABLE
On 20th September, the Commission issued updated guidance for ending unjustified geo-blocking to help Member States and businesses active in the area of e-commerce to adapt to the new rules which start applying across the EU as of 3rd December. A new EU Regulation on cross-border parcel delivery entered into force earlier this year. The measures now adopted specifies the information that parcel delivery service providers will have to hand in to national regulators.
http://europa.eu/rapid/press-release_MEX-18-5838_en.htm
CHINA ESTABLISHES INTERNATIONAL COMMERCIAL COURTS
On 19th September, Forwarder Law reported that China’s Belt & Road Initiative (BRI), launched in 2013, is well underway in increasing China’s regional connectivity and stimulating trade. The BRI includes multiple infrastructure projects as well as IT and finance initiatives. On 29th June, the Supreme People’s Court of China officially launched its First and Second International Commercial Courts (the CICC) in Shenzhen and Xi’an respectively to handle a wide range of international commercial disputes. The article describes their key features. The CICC is intended particularly to deal with disputes arising out of projects under the BRI.
http://forwarderlaw.com/2018/09/19/china-establishes-international-commercial-courts/
TRADING IN DRUG PRECURSORS CHEMICALS IF THERE’S NO BREXIT DEAL
On the 20th September, the Home Office issued updated information on how trading in drug precursor chemicals would be affected if the UK leaves the EU with no deal. Drug precursors are chemicals that can be used in the illicit manufacture of narcotic drugs. They also have legitimate commercial uses and are legally used in a wide variety of industrial processes, such as medicines, flavourings and fragrances. They are divided into 4 categories:
- Category 1: the most sensitive substances (the ‘main’ drug precursors)
- Category 2: less sensitive substances and pre-precursors
- Category 3: bulk chemicals that can have different types of uses in the manufacturing process, for example as feedstock, solvents or impurities removers
- Category 4: covers medicinal products for human and veterinary use containing ephedrine or pseudoephedrine
ARMENIA: FORMER YEREVAN MAYOR QUESTIONED IN CORRUPTION PROBE
On 20th September, Rferl reported that Armenia’s National Security Service (NSS) has questioned former Yerevan Mayor Taron Markarian as part of a criminal investigation into a municipal fund that was overseen by him. NSS officers searched the offices of the Yerevan Fund and arrested its executive director and another municipal official in mid-June. The men were accused of extorting hefty payments to the charity from individuals seeking construction permits from the mayor’s office.
https://www.azatutyun.am/a/29500948.html
BELGIAN PROBE IMPLICATES BRITAIN IN PHONE SPYING
AFP reported on 20th September that a confidential report by Belgian investigators confirms that British intelligence services hacked state-owned Belgian telecom giant Belgacom on behalf of the US. It says that the report, which summarises a 5-year judicial inquiry, is almost complete and was submitted to the office of the Justice Minister, a source close to the case told AFP
https://www.afp.com/en/news/23/belgian-probe-implicates-britain-phone-spying-doc-19a2bs1
JAPANESE REFINERS STOP BUYING IRAN OIL AHEAD OF SANCTIONS
Oil Price.com on 20th September reported that Japanese refiners have stopped buying Iranian crude ahead of the November 4th deadline set by Washington to all countries doing business with Iran before economic sanctions return. Japan is one of Iran’s largest oil importers, but it is also the US staunchest ally in Asia.
MOVE TO FREEZE 2 TRINIDAD ISIS AGENTS’ ASSETS
The Trinidad & Tobago Guardian on 19th September reported that 2 Trinidad & Tobago nationals, identified as Emraan Ali and Eddie Aleong, have been designated by the US and sanctioned for being financiers of the ISIS terror network, as regionally co-ordinated investigations seek out certain targets between the country, Suriname and other areas. The news release from the US Treasury said Aleong, 38, was based in the country and is also known as “Ishmael Mohammed,” “Ishmail Muhammed” and “Isma’il Ali Yong”; while Ali, 51, was based in Syria.
http://www.guardian.co.tt/news/move-to-freeze-2-trini-isis-agents-assets-6.2.671593.7d055d2227
LAW FIRM UNDER SCRUTINY IN PNB SCAM
The Telegraph in India on 20th September reported that the country’s largest law firm, Cyril Amarchand Mangaldas (CAM), is being scrutinised by federal agents after they seized documents related to the $2 billion fraud at state-run Punjab National Bank (PNB) from CAM’s premises. CAM declined to comment on its relationship with Modi, who is on the run overseas.
https://www.telegraphindia.com/business/lens-on-law-firm-in-pnb-scam/cid/1669590?ref=search-page
BRIEFING PAPER ON BAILIFFS
The House of Commons Library has published a briefing paper on bailiffs in England and Wales which summarises recent changes to the regulation of bailiffs, and attempts to answer the most common questions about bailiff action. A bailiff, now known officially as an enforcement agent, can either be an officer of the court or employed by a private debt collection company. They are authorised to collect certain debts on behalf of a creditor. They may do this by asking for immediate payment of the debt, or by “levying distress”, which means seizing the debtor’s goods and selling those at auction to raise the money needed to repay the debt and cover the bailiff’s fees.
https://researchbriefings.parliament.uk/ResearchBriefing/Summary/SN04103
CZECH REPUBLIC: WATCHDOG CALLS FOR EU PROBE OVER PRIME MINISTER’S ALLEGED CONTROL OF AGROFERT
On 20th September, Radio Prague reported that the Czech branch of anti-corruption watchdog Transparency International has sent a formal complaint to the European Commission alleging a conflict of interest between PM Andrej Babiš and his economic interests in relation to the Agrofert group.
https://www.radio.cz/en/article/556886
UK – ILLEGAL WORKING CIVIL PENALTIES: AN EMPLOYER’S GUIDE
On 20th September, UK Visas and Immigration issued updated guidance on the civil penalty scheme for employers who give a job to an illegal worker. Employers may have to pay an illegal working fine (also known as a civil penalty) if they employ someone who does not have the right to work in the UK.
https://www.gov.uk/government/publications/illegal-working-fines-employers-guide
BLOCKCHAIN, SMART CONTRACTS AND THE MINING AND METALS GLOBAL SUPPLY CHAIN
On 20th September, White & Case published a briefing which starts be explaining what a blockchain is, what smart contracts are, and says that blockchain’s role in sustainable and transparent supply chains could be a game-changer, thanks to its ability to promote trackability, transparency and security through open, peer-to-peer and incorruptible data sharing. It then looks at benefits for the mining and metals global supply chain, saying it is a question of when, not if.
UPDATED SECURITY CRITERIA FOR C-TPAT TO BE PHASED IN STARTING IN 2019
On 20th September, Sandler Travis & Rosenberg reported that US Customs and Border Protection (CBP) is currently circulating within the trade community draft modifications to the minimum security criteria (MSC) associated with the Customs Trade Partnership Against Terrorism (C-TPAT). This is said to be the first major revision of the MSC since the introduction of C-TPAT. The article says that, generally, the changes include establishing 3 focus areas and 3 new criteria categories, explicitly delineating requirements as “must” or “should” based on risk, and providing guidance on how to combat terrorism financing and money laundering. The article provides an overview of the updated MSC.
https://www.strtrade.com/news-publications-CTPAT-minimum-security-criteria-092018.html
For more information on C-TPAT, see –
https://www.cbp.gov/border-security/ports-entry/cargo-security/ctpat
When an entity joins C-TPAT, an agreement is made to work with CBP to protect the supply chain, identify security gaps, and implement specific security measures and best practices. Applicants must address a broad range of security topics and present security profiles that list action plans to align security throughout the supply chain. C-TPAT members are considered to be of low risk, and are therefore less likely to be examined at a US port of entry.
MORE WORK NEEDED TO STOP ILLEGAL LOGGING IN PERU
On 21st September, Sandler Travis Rosenberg reported that the Office of the US Trade Representative has indicated that more work needs to be done to stop illegal logging in Peru. Only 2 of 3 shipments verified were found to be compliant with all relevant laws and regulations but a third shipment was found to be non-compliant.
https://www.strtrade.com/news-publications-Peru-timber-verification-USTR-092118.html
PAKISTAN’S EX-PM RELEASED ON BAIL OVER LUXURY LONDON FLATS
OCCRP on 20th September reported that a Pakistani court has ordered ex-prime minister Nawaz Sharif and 2 of his family members to be released on bail while they appeal corruption charges related to their ownership of luxury properties in London. Sharif spent 69 days in prison after being sentenced in absentia over 4 luxury London flats he and his children allegedly own through offshore companies found in the “Panama Papers”. He was arrested a week after his sentencing, on July 13th
https://www.jurist.org/news/2018/09/pakistan-court-suspends-nawaz-sharifs-prison-sentence/
COCA CROPS IN COLOMBIA AT ALL-TIME HIGH
UNODC on 19th September reported that the area under coca cultivation in Colombia reached the highest-ever recorded figure of 171,000 hectares in 2017, according to the UNODC Coca Cultivation Survey Report for Colombia. This represents an increase of 25,000 hectares, or 17% in 2017 compared to 2016.
WHY TITLE INSURANCE FIRMS ARE PAYING CLOSE ATTENTION TO LATEST US RUSSIAN SANCTIONS BILL
Baker McKenzie on 20th September reported that a US Treasury programme that spotlights anonymous real estate purchases in a number of gateway cities could become a nationwide law if the Defending American Security from Kremlin Aggression Act of 2018, a bipartisan bill introduced to the Senate last month is passed. One provision in, would force title insurance companies to report the identities of people using limited liability companies behind high-priced real estate transactions across the country. It could see Geographical Targeting Orders (GTO) applied nationwide. Title insurance is indemnity insurance that protects the holder from financial loss sustained from defects in a title to a property and from the invalidity or mortgage loans being unenforceable.
BANKS AND TRADERS UNVEIL KOMGO FOR BLOCKCHAIN-BASED TRADE FINANCE
On 20th September, Banking Tech reported that a group of 15 big-name organisations have unveiled a new blockchain-based platform for trade finance. Komgo involves partners who invested in it, including ABN Amro, BNP Paribas, Citibank, Crédit Agricole, Gunvor, ING, Koch, Macquarie, Mercuria, MUFG Bank, Natixis, Rabobank, Shell, inspection, verification, testing and certification company SGS and Societe Generale. It will be managed and operated as an independent entity and the plan is to launch the platform before the end of the year.
UK CLAIMS MANAGEMENT COMPANIES FACE AN END TO “PHOENIXING”
On 20th September, Legal Futures reported that an end to owners of claims management companies (CMC) closing down one firm without fulfilling their obligations or paying their debts and opening another – known as ‘phoenixing’ – is on the cards under new proposals from the FCA, which takes over their regulation next year, with a consultation having been published.
https://www.legalfutures.co.uk/latest-news/cmc-owners-face-an-end-of-phoenixing
US SECRETARY OF STATE BACKED CONTINUING SUPPORT FOR SAUDI WAR IN YEMEN
The Wall Street Journal on 20th September reported that Secretary of State Mike Pompeo backed continued US military support for Saudi Arabia’s war in Yemen over the objections of staff members after being warned that a cut-off could jeopardise $2 billion in weapons sales to Gulf allies, according to a classified memo and people familiar with the decision.
WREXHAM: ILLEGAL WASTE DUMPING LINKED TO “MAJOR ORGANISED CRIME”
Wrexham.com carried a story on 20th September saying that an industrial estate near Wrexham has been targeted by illegal waste dumping of 1,000 tonnes of mixed waste which has been linked to major organised crime. A representative of Natural Resources wales is quoted as saying that with China not being willing to import rubbish there is going to be a bigger problem.
CHINESE GANGS FUEL ILLEGAL SOUTH AFRICA ABALONE TRADE
Deutsche Welle on 19th September reported that Chinese crime syndicates working with local South African gangs have caused stocks of abalone to be depleted at a record rate, with the illegal trade in the marine molluscs extending across sub-Saharan Africa. TRAFFIC, a wildlife trade monitoring network, said that 96 million individual abalone worth nearly $900 million have been illegally poached off South Africa’s shores in the past 17 years. Nearly all of the large sea snails were sent to China and Hong Kong, where they are considered a delicacy and only around a third of abalone harvested off South Africa’s coast was fished legally.
https://www.dw.com/en/chinese-gangs-fuel-illegal-south-africa-abalone-trade-report/a-45567801
UK BORDER DETAINEES COULD BE DENIED ACCESS TO LAWYER FOR AN HOUR
PNLD and the Guardian on 19th September reported that travellers stopped at UK borders may be denied the right to consult a lawyer for up to an hour and officers will be allowed to listen in to private consultations under new security powers contained in the Counter-Terrorism and Border Security Bill. The Guardian says that powers delaying access to a lawyer and permitting police to listen in to legal consultations during border stops have not been publicised previously partially because the Bill contains so many other complex legal details.
DISCLOSURE OF DOCUMENTS TO A REGULATOR HELD NOT TO INFRINGE PRIVILEGE
Clyde & Co on 20th September published an article about the recent decision of the High Court that an entitlement to legal professional privilege (LPP) on the part of an auditor’s client is not infringed by the production of documents to the Financial Reporting Council when the purpose of the disclosure was for a confidential investigation carried out by the FRC into the auditor’s conduct.
AUSTRALIA: ACTION AGAINST SEVERAL PROPOSED INITIAL COIN OFFERINGS OR TOKEN-GENERATION EVENTS TARGETING RETAIL INVESTORS AND A CRYPTO-ASSET MANAGED INVESTMENT SCHEME
On 20th September, Mondo Visione carried a notice from Australian regulator, ASIC, saying that it has acted to stop several proposed initial coin offerings or token-generation events (ICO), targeting retail investors. As well, ASIC recently stopped the issue of a Product Disclosure Statement for a crypto-asset managed investment scheme.
ASIC has also updated its Information Sheet on ICO and cryptocurrency, and issued Moneysmart guidance page on ICO.
https://www.moneysmart.gov.au/investing/investment-warnings/initial-coin-offerings-icos
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