12th October 2018
US RELAXES RESTRICTIONS ON CANADIAN CANNABIS WORKERS
On 11th October, Yahoo News reported that US Customs and Border Protection says Canadian citizens working in the cannabis industry should be able to enter the US for reasons unrelated to the marijuana industry. This followed a previous vague statement that left the industry and investors facing uncertainty about travel of any kind to the US.
US COAST GUARD IS CATCHING MORE DRUG-RUNNING SUBS, BUT MOST ‘VERY STEALTHY’ NARCO SUBS ARE PROBABLY GOING UNDETECTED
Business Insider on 11th October reported that Colombia’s navy had captured 14 “narco subs” on the country’s Pacific coast — compared to 4 it captured all last year and another sign of drug traffickers’ ingenuity. The US Coast Guard reported in September 2017 that it had seen a resurgence of low-profile vessels, the most common kind of “narco sub,” capturing 7 of them since June 2017. It explains that low-profile vessels were the earliest kind of narco sub, a category that includes self-propelled semi-submersibles, which use ballast to run below the surface, and that the vessels appeared in the 1990s. It is said that criminal groups in Colombia continue to churn out homemade narco subs — 100 a year, according to one report.
SPAIN DISMANTLES NETWORK SMUGGLING WEAPONS TO MOROCCO IN SPEEDBOATS
Morocco World News on 11th October reported that Spanish authorities stopped the boats carrying black market arms worth, 10 minutes after their departure from Cadiz.
ALBANIA FAILS TO MAKE SIGNIFICANT PROGRESS IN MONEY LAUNDERING
The Tirana Times on 11th October reported that Albania only slightly improved its ranking at the 2018 Basel AML index, an annual ranking assessing the risk of money laundering and terrorist financing around the world, as it continued remaining a medium risk country, lagging behind 2 regional competitors; and was the 55th country most at risk of money laundering out of 129 countries worldwide. An earlier 2018 report by the US Department of State said Albania remains at significant risk for money laundering due to rampant corruption and weak legal and government institutions.
CYPRUS AMONG TOP 10 COUNTRIES SHOWING DECLINE IN FIGHTING MONEY LAUNDERING
The Financial Mirror on 11th October reported that Cyprus is among the top 10 decliners globally in combating money laundering and terrorism financing risks, according to the Basel AML Index. Cyprus’ risk-rating score worsened by 0.75 points to 5.01 compared to 2017 putting it 80 among 129 countries –Tajikistan (8.3) was the worst in first place. However, Finland, Iceland, Denmark and Slovenia, along with Cyprus – with the 7th highest increase – recorded a significantly higher risk rating in 2018.
MALTA PUBLISHES FAQ ABOUT THE VIRTUAL FINANCIAL ASSETS FRAMEWORK
Ganado Advocates reported that the Malta FSA has published a set of FAQ in relation to the Virtual Financial Assets framework. It provides key information on the framework itself, classification of DLT assets, VFA agents, Initial Virtual Financial Asset Offerings, VFA service providers, AML/CFT requirements and transitory provisions.
The FAQ are available at –
PANAMA PAPERS REVEAL OFFSHORE PAYMENTS BY MADAGASCAR’S SEAFOOD KING
ICIJ on 11th October reported that offshore entities played a key role in a network of companies owned by a rich and powerful shrimp merchant in the African island nation of Madagascar, as it showed how Aziz Ismail moved millions of dollars among offshore companies. A French citizen born in Madagascar, he entered Madagascar’s shrimp industry in 1973. His company, Unima, is now managed by his son Amyne Ismail and has subsidiaries around the world. The company is the largest player in Madagascar’s $75 million shrimp industry, which has been criticised for damaging the environment. In Madagascar, it is reported that 75% of the population survive on less than $1.90 a day. The article shows links to his BVI company, Ergia Ltd and Unima Europe, a Monaco company. An expert at Stockholm University is quoted as describing the arrangements as “aggressive tax planning scheme”, and saying that “it means loss of revenues for the country where the actual economic activities are taking place”.
NEW PARALLEL IMPORTATION DEFENCE TO TRADE MARK INFRINGEMENT IN AUSTRALIA
On 11th October, Clayton Utz in Australia reported that recent amendments to the Trade Marks Act 1995 have likely expanded the parallel importation defence to the benefit of importers of parallel products into Australia. In the article, the firm discusses the relevant changes and how these may impact on parallel importers and owners of registered trademarks in Australia.
INTERNATIONAL ACTION AGAINST LARGE-SCALE VAT FRAUD INVOLVING MOTOR VEHICLES
A news release from Eurojust on 11th October reported that during a joint action day in 7 EU Member States, an international organised crime group was tackled, involved in large-scale VAT fraud with a damage of more than €20 million, related to sales of second-hand vehicles. The criminals bought used vehicles in Germany and then pretended to sell them to various companies in different EU Member States without paying VAT. At the request of the German authorities, the action and led to the arrest of the main suspects. The operations involved more than 100 house searches, particularly in Romania and Hungary, numerous hearings of witnesses and suspects and the recognition of freezing orders up to €18 million.
CZECH GOVERNMENT FAILING TO COLLECT ONLINE GAMBLING FINES
Calvin Ayre on 11th October reported that the Czech Republic is pushing back against local media claims of the government’s inability to punish online gambling operators that serve local punters without a local licence. Local media is said to have reported that of 24 fines totalling $20.4 million since the launch of the regulated market only $10,750 has been collected. The article says the paltry sum collected is due to the lack of any real tools to compel companies with no physical presence in the country to cough up.
US CUSTOMS HOPES TO EVALUATE BLOCKCHAIN PILOT BY DECEMBER
Customs Today on 11th October reported that US Customs and Border Protection (CBP) representatives said the agency has concluded its latest round of testing blockchain technology for supply chain management.
UK: FAILURE TO DISCLOSE VITAL EVIDENCE IN CRIMINAL CASES GROWING, SAYS WATCHDOG
The Guardian on 11th October reported that failure to disclose vital evidence is the biggest single cause of miscarriages of justice and the problem is getting worse, the outgoing chairman of the Criminal Cases Review Commission (CCRC) has said. He also highlighted a shortage of adequately trained investigators, resulting in criminals escaping justice, “trials collapsing at the courtroom door” and “convictions which prove unsafe” and are avoidable.
LAW SOCIETY PLEDGES ACTION OVER SOLICITORS’ USE OF NON-DISCLOSURE AGREEMENTS
Legal Futures on 12th October reported that the Law Society has told MPs that it is to take action over the inappropriate use of non-disclosure agreements by solicitors. This will involve guidance for both solicitors and their clients. The Bar Standards Board will also be issuing guidance later this month.
ISIS’S NEW PLANS TO GET RICH AND WREAK HAVOC
A commentary piece on the website of RAND Corporation on 10th October says that while IS has lost nearly 98% of the territory it once controlled, the group is ripe for a comeback in Sunni-majority areas of Iraq and Syria, and is developing new streams of revenue. During the apogee of its territorial control in 2015, the Islamic State accrued nearly $6 billion, making it by far the wealthiest terrorist group in history. Islamic State primarily generated its wealth from 3 main sources: oil and gas, taxation and extortion, and the 2014 looting of Mosul. It says that its surviving leadership may have smuggled as much as $400 million out of Iraq and Syria, and will seek to launder this money through front companies in the region, especially in Turkey, with some cash converted to gold and stockpiled for sale in the future. Reference is made to a diversified funding portfolio, and that it has developed a knack for raising money through a range of new criminal activities, including but not limited to extortion, kidnapping for ransom, robbery and theft, drug smuggling, and trafficking in antiquities.
SOLICITOR “IGNORED MONEY LAUNDERING DUTIES”
Legal Futures on 12th October reported that Amit Kumar Manibhai Patel, who recklessly exposed his firm to the risk of money laundering has been fined £12,500 by the Solicitors Disciplinary Tribunal (SDT).
OIL’S $133 BILLION BLACK MARKET
On 11th October, Oil price.com carried an article about the 9th October report from Yale University in the US – see https://wordpress.com/post/raytodd.blog/4916 saying that a flourishing black market is no surprise, with about $133 billion worth of fuels stolen or adulterated every year. These practices fund dangerous non-state actors such as the Islamic State, Mexican drug cartels, Italian Mafia, Eastern European criminal groups, Libyan militias, Nigerian rebels and more – and are a major global security concern. The top 5 countries accused of oil trafficking – Nigeria, Mexico, Iraq, Russia, and Indonesia.
MEASURES TO PREVENT CHINA’S ILLEGAL DIVERSION OF US CIVIL NUCLEAR TECHNOLOGY FOR MILITARY OR OTHER UNAUTHORISED PURPOSES
On 11th October, the US Department of Energy reported measures which it says are the result of a US government policy review prompted by concerns about China’s efforts to obtain nuclear material, equipment, and advanced technology from US companies. It says that there will be a presumption of denial for new license applications or extensions to existing authorisations related to the China General Nuclear Power Group, which is currently under indictment for conspiring to steal US nuclear technology. The controls include those on the export of source codes (including for computer programs, systems, or components), and certain engineering and manufacturing techniques.
The new licensing policy is spelled out in –
UK: EX-TAXMAN USED OFFSHORE FIRMS, ACCOUNTS FOR £6.9 MILLION FRAUD SCAM
KYC 360 on 12th October reported that David Michael Hughes, aka Mike Hughes, 52, worked for the Inland Revenue in the 1980s before setting up as a tax consultant in Kent. He led a conspiracy which used a string of UK and offshore companies and bank accounts to steal £6.9 million in taxes paid by clients and deducted from workers’ wages, through fraudulent payroll schemes. Hughes left the UK in September 2011, eventually setting up home in Northern Cyprus, which does not have an extradition treaty with the UK. He was arrested by HMRC investigators at Heathrow Airport in January 2018 when he arrived on a flight from Istanbul.
MORE THAN 5 TONNES OF CANNABIS RESIN RECOVERED IN STRAIT OF GIBRALTAR
The Gibraltar Chronicle on 12th October reported that more than 5 tonnes of cannabis resin was recovered in the Strait of Gibraltar by Spanish authorities in 2 seizures, and 5 individuals were arrested on suspicion of drug trafficking as they made their way towards Algeciras on a RHIB.
SERBIA ENDS VISA-FREE TRAVEL FOR IRANIANS
Rferl on 12th October reported that Serbia has scrapped visa-free entry for Iranians little more than year after it was introduced out of concern that some Iranians were using the system as an avenue to permanently relocate to Europe.
TOP CORRUPTION INVESTIGATOR SHOT DEAD IN MOSCOW REGION
Rferl on 11th October reported that Colonel Yevgenia Shishkina, a top Russian investigator involved in serious economic crimes and corruption cases, has been shot dead in the Moscow region. Shishkina had received threats and that her car was burned in an arson attack several months ago.
EUROPE RAISES RED FLAGS OVER CHINA’S CYBER ESPIONAGE
Politico on 9th October published an updated article saying that a PwC study urges the EU to strike a deal with China to limit cyber espionage, which it says is rampant, and that the EU is gearing up to confront China on alarming levels of cyber espionage on European industry. The European Commission’s department for industry is said to be drafting a document that would sum up Europe’s worries on the issue and could still come up with new measures to defend European trade secrets. The article says that the report details “public and private sector concerns about the increasing risks associated with cyber-theft of trade secrets in Europe”. In the manufacturing sector, the report said, industrial espionage and cybertheft of trade secrets constitute up to 94% of all cyberattacks. The summary cites estimates that cyber espionage is costing Europe up to €60 billion in economic growth — a figure that would rise as European companies digitize their services.
10 CLAUSES UK GOVERNMENT MUST CHANGE IN COUNTER-TERRORISM AND BORDER SECURITY BILL
On 12th October, the House of Commons Library reported that the Joint Committee on Human Rights is proposing significant amendments to the Counter Terrorism and Border Security Bill. The amendments will be considered and debated in the House of Lords as the Bill continues to progress through parliament in coming weeks. The Committee asks the government to justify the extensive powers being proposed in the Bill, and raises concerns that the Bill is legislating close to the line – or indeed crosses the line – in breaching human rights. It recommends that certain clauses and schedules be removed, clarified or narrowed in order to remedy these defects, and proposes a total of 27 amendments for Parliament to consider – including that the new stop and search powers at ports and borders should be amended so that they are always necessary and proportionate, and that a pre-approved vetted panel of lawyers could be made available to detainees as an alternative to limited access to legal advice proposed.
US THREAT OVER LOW-COST POSTAL DELIVERIES FROM CHINA
Loadstar on 12th October reported that the Trump Administration is unhappy with the Universal Postal Union (UPU) and has threatened “repercussions” if the international mail body does not address below-cost delivery rates for e-commerce sent from China. The system of postal fees for international mail deliveries gives an unfair advantage to Chinese online merchants. Under the current framework of what are termed “terminal dues”, China Post pays its counterparts in North America and the EU for the delivery of mail that result in much lower mailing costs for Chinese online merchants, as China. Imports can also benefit from duty-/tax-free delivery in the recipient country if below certain de minimis levels.
PATISSERIE VALERIE CFO ARRESTED
On 12th October, Accountancy Daily reported that the cake and café chain Patisserie Holdings has announced that its finance director, Chris Marsh, who is currently suspended from his role, has been arrested by police and released on bail. This follows the announcement of the shock discovery of ‘significant, potentially fraudulent, accounting irregularities’ and a demand from HMRC for £1.4 million together with a winding-up order.
THE MILLIONAIRES HOARDING UK FISHING RIGHTS
Unearthed on 10th October reported the results of a 5-month investigation that revealed that more than a quarter of the UK fishing quota is in the hands of a tiny group of the country’s wealthiest families, with just 5 families on the Sunday Times Rich List hold or control 29% of the UK’s fishing quota, and more than two-thirds of the UK’s fishing quota is controlled by just 25 businesses – and more than half of those are linked to one of the biggest criminal overfishing scams ever to reach the British courts (the Scottish “black fish” case, described as an “episode of shame” by the judge ). Meanwhile, in England nearly 80% of fishing quota is held by foreign owners or domestic Rich List families, and more than half of Northern Ireland’s quota is hoarded onto a single trawler.
For some detail on the “black fish” case see –
EXPORT ROUGH DIAMONDS: SPECIAL RULES
On 12th October, the FCO reissued a guide reminding one that you need a certificate to export rough diamonds. You can export jewels, gold and precious metals without a licence or certificate, except for uncut (rough) diamonds. There is also a ban on exporting precious and semi-precious stones, gold and silver items and other luxury goods to Syria and North Korea.
HONG KONG CONCLUDES CONSULTATION ON REVISED AML/CFT GUIDELINES
A release on Mondo Visione on 12th October reported that the Hong Kong Securities and Futures Commission (SFC) had released its conclusions on the consultation held over proposals to amend its Guideline on Anti-Money Laundering and Counter-Terrorist Financing. The categories of politically exposed persons (PEP) will be expanded to include international organisation PEP who are persons entrusted with a prominent function by an international organisation. The enhanced scrutiny for foreign PEP will be extended to domestic PEP and international organisation PEP where their business relationships with a firm are assessed to be of high risk. Changes will also allow firms the flexibility to adopt reasonable risk-based measures to verify customer identification information. To facilitate non-face-to-face customer onboarding, firms are allowed to take a mix of supplementary measures to guard against impersonation risk.
MONEYVAL UNDERTAKES ON-SITE EVALUATION OF MOLDOVA
The Council of Europe reported on 12th October that a team to evaluate Moldova’s AML/CFT systems made an on=site visit from 1st to 12th October.