30th November 2018
CLAIM THAT CHINA’S ZTE MAY HAVE CHEATED ON US DEAL BY INSTALLING DELL HARDWARE FOR VENEZUELA
The South China Morning Post on 29th November reported that US senators have claimed that that ZTE helped build a surveillance system for Venezuela’s government using components of the system that may have been provided by US tech company Dell, in violation of commitments by ZTE to uphold US sanctions. ZTE allegedly built a database and develop a mobile payment system for a smart ID card.
US: 2 CHARGED IN `DIETARY SUPPLEMENT’ SMUGGLING SCHEME
My News LA on 29th November reported that 2 Southern California residents are facing federal charges in connection with a long-running scheme to smuggle fraudulent dietary supplement ingredients into the US from China. The indictment also charged Pure Assay Ingredients Inc., Chau’s import company, and 2 Chinese citizens who worked for Pure Assay in Chengdu. They allegedly mislabelled certain stimulants and other questionable ingredients as non-controversial substances to evade government scrutiny during import and sold the smuggled substances to dietary supplement manufacturers in the US for use in consumer products. In one instance, the indictment contends that they assembled a false shipment to fool FDA into believing that Pure Assay destroyed substances the agency blocked from distribution.
PAPER PUBLISHED TO ENCOURAGE GREATER ADOPTION OF DATA ANALYTICS SOLUTIONS BY FINANCIAL INSTITUTIONS IN SINGAPORE
Finews Asia on 30th November reported that the Anti-Money Laundering and Countering the Financing of Terrorism Industry Partnership launched a paper to encourage greater adoption of data analytics solutions by financial institutions in Singapore. It brings together the experiences of major banks in using data analytics techniques to combat financial crime. The paper also provides examples of effectiveness improvements, such as the 40% reduction in false positives and 5% increase in true positives delivered by one bank’s proof-of-concept conducted on a machine learning solution for transaction monitoring. The AML/CFT Industry Partnership (ACIP) is a private public partnership established in April 2017. It brings together the financial sector, regulators, law enforcement agencies and other government entities to collaboratively identify, assess and mitigate key and emerging money laundering and terrorism financing risks facing Singapore.
The paper itself is at –
IRELAND: 4th EU MONEY LAUNDERING DIRECTIVE TRANSPOSED: KEY REQUIREMENTS FOR INVESTMENT FUNDS
On 29th November, law firm Arthur Cox published a briefing saying that the Directive was finally transposed into Irish law with the enactment on 14th November of the Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Act 2018. From 26th November, it amends the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 to incorporate the requirements of 4MLD into the existing legislative framework. The amendments which are of key relevance to funds (and their administrators) include the introduction of requirements around business risk assessments, customer due diligence and transaction monitoring.
FIRST-EVER SOUTH AFRICAN CONVICTION FOR MARITIME POLLUTION
Defence Web on 29th November reported that the Department of Environmental Affairs notched up its first ever conviction for maritime pollution as part of a recent global Interpol operation. The captain of the Ukrainian registered fishing vessel More Sodruzhestva was found guilty of discharging sewage into South African coastal waters. He was sentenced to a fine or 2 years in prison.
FORMER ISLAMIST AL SHABAAB SOMALI MILITANT TURNS DEMOCRAT
Defence Web on 29th November reported that last year Mukhtar Robow had a $5 million US bounty on his head, but now the former Islamist al Shabaab militant has downed his guns. Robow fell out with the leadership in 2013 following a power struggle. Recognising the authority of the federal government in August 2017, he is running as a candidate as an independent. The US withdrew a $5 million reward for information leading to his capture and removed him from the list of sponsors of terrorism, although other international sanctions remain on him.
UK TECH ENTREPRENEUR MIKE LYNCH CHARGED IN US OVER AUTONOMY DEAL
City AM and others on 30th November reported that the prominent UK tech entrepreneur has been charged by the DoJ with fraud over the sale of software company Autonomy to Hewlett Packard in 2011. HP alleges “serious accounting improprieties” were at the root of the loss, however, Lynch has always claimed that HP mismanaged the acquisition. The SFO investigated the deal but in 2015 decided not to proceed with charges.
AUSTRALIA: REPORT CRITICISES HANDLING OF INDIGENOUS EMPLOYMENT PROVISIONAL SUM (IEPS) $100 MILLION FRAUD
On 30th November, ABC News in Australia reported that an employment scheme that was shut down in 2017 following fraud allegations “doesn’t pass the sniff test”, according to a corruption watchdog. 6 companies have been referred to police and 2 are currently facing charges, but more than a year-and-a-half after the first company was referred to police over the alleged fraudulent activity, the Northern Territory state government still does not know exactly how much public money was stolen by those companies through the IEPS. The article criticises how the inquiry has been undertaken.
E-STONIA TAKES OFF
In the December issue of the IMF Finance & Development magazine, there is an interview with Toomas Hendrik Ilves, the former president of Estonia. In it he says it was innovative policy more than technology that enabled Estonia’s remarkable digital transformation. Virtually all government services and a growing number of private sector services are offered online via its snappy e-Estonia.com state portal. It ranks among the most digitally advanced countries in the world thanks to a government-backed technology investment initiative dating back to the early 90s. At the heart of Estonia’s digital society lies an encrypted national identification card that provides access to all of Estonia’s e-services, such as one-click tax filing, i-voting and electronic medical records. Its e-Residency program—which offers non-residents virtual residency—continues to attract entrepreneurs who want to establish a company within the EU.
BRIEFING NOTE – UK NON-DOM TAX CHANGES
On 29th November, Smith & Williamson produced a briefing note providing details of significant changes to the taxation of non-UK domiciled individuals and non-UK trusts came into effect from 6th April 2017 and 6th April 2018.
US COURT UPHOLDS IMPORT BAN ON MEXICAN SEAFOOD
Sandler Travis Rosenberg on 30th November reported that the courts have upheld a ruling upholding a ban on imports from Mexico of fish and fish products harvested by gillnets in the upper Gulf of California within the geographic range of the vaquita, an endangered porpoise. This ban covers all shrimp, curvina, sierra, and chano fish and fish products but exempts fisheries for curvina and sierra using actively deployed gear. All other fish and fish products not within the scope of these import restrictions but imported under the same published HTSUS numbers must be accompanied by a certification of admissibility.
JERSEY MUTUAL INSURANCE SOCIETY BEING INVESTIGATED BY THE POLICE AFTER ‘POTENTIAL FRAUDULENT ACTIVITY’
The Jersey Evening Post on 30th November reported that tHE finances of Jersey Mutual Insurance Society are being investigated by the police after ‘potential fraudulent activity’ spanning a number of years came to light.
MEXICO AND UNODC OPIUM POPPY CULTIVATION SURVEY
On 29th November, the UN Office on Drugs and Crime reported that it and Mexico had presented the opium poppy cultivation survey on Mexico covering the periods of 2015-2016 and 2016-2017. The report estimates that between 2015 and 2016 the area under opium poppy cultivation in Mexico reached 25,200 hectares, while in period of 2016-2017 around 30,600 hectares were registered. Opium poppy cultivation increased by 21% in the country between these time periods, representing a net increase of 5,400 hectares.
SWEDEN ISSUES FIRST ONLINE GAMBLING LICENCES
On 30th November, iGB reported that Sweden’s gambling regulator the Lotteriinspektionen has issued the country’s first online gaming licences ahead of the country’s re-regulated market opening on January 1st.
A WAY TO REIN IN ARMED DRONE PROLIFERATION?
The Bulletin of the Atomic Scientists on 30th November published an article saying that te proliferation of military drones worldwide is accelerating at an alarming rate, due to the willingness of certain states, like China, to export them widely. 18 countries may now have armed drones, with more than a dozen seeking to acquire them, and is an important international security issue for several reasons. It discusses how to restrict their proliferation, something that the current Missile Technology Control Regime (MTCR) international control system actually complicates. Delivery systems (which are or may be delivering WMD), especially those with a range of more than 300 km and a payload capability of over 500 kg are classed as “Category I” with a “strong presumption of denial” of an export licence. Non-members, like China, do not have to comply, and others simply lie or obfuscate. The article says that the status quo has not just failed to control the spread of armed drones, but also undermined the credibility of the MTCR as a whole, and that reform is necessary. One option would be altering the MTCR to put drones in the same category as inhabited aircraft, which are not regulated by the regime. A second option might involve a broader shift away from exclusive reliance on the 300 km and 500 kg restrictions. Current MTCR members and other interested states could create a new arms control agreement focused specifically on drone proliferation, while exempting drones from the MTCR. Alternatively, it says, states like the US could simply ignore the (voluntary) restrictions of the MTCR (as others do anyway).
CLIENT BRIEFING – E-SIGNATURES
Eversheds Sutherland on 30th November publishing a briefing which is a response to the UK Law Commission consultation on electronic signatures. The Law Commission is investigating a number of potential barriers to the wider adoption of electronic signatures including their use for deeds and how the requirement for witnessing can be satisfied by electronic means. A copy of the response is attached, and was drawn up by an internal working party with input from several financial institution clients.
WCO: NEW TOOL TO ASSIST COUNTRIES IN THE PREVENTION OF ILLICIT TRAFFICKING OF CULTURAL HERITAGE
On 30th November, a news release from the WCO said that it had published its Training Handbook on the Prevention of Illicit Trafficking of Cultural Heritage (PITCH). It is a unique specialised tool, aimed at improving the knowledge and know-how of Customs officers deployed in the field, and goes hand in hand with a training programme. It notes that UN Security Council Resolution 2347 (2017) calls for the WCO, along with other partner organisations, as appropriate and within their existing mandates, to assist Member States in their efforts to prevent and counter destruction and looting of and trafficking in cultural property in all forms.
See also: http://www.wcoomd.org/en/topics/enforcement-and-compliance/activities-and-programmes/trafficking-of-cultural-objects.aspx
GUNS, ENGINES AND TURBINES – THE EU’S HARD POWER IN ASIA
On 27th November, the EU Institute for security Studies published a report which sheds light on the new security dynamics in EU-Asia relations from the ‘hard security’ perspective, and looking at the burgeoning arms trade, dual-use technology transfers, and the emerging connections between defence markets and the EU. It also looks at the 3 decades-long EU arms embargo on China (following the government’s violent repression of student protests in Tiananmen Square in 1989), the embargo’s past and present purpose, and assesses to what extent it actually impedes EU-China relations. However, the arms embargo is only a legally non-binding policy declaration preventing the export of major weapons systems, and such exports have taken place. The report looks at dual-use technology transfers to China.