1st November 2018
CFIUS PILOT PROGRAM CREATES NEW OBLIGATIONS AND CHALLENGES
On 31st October, Bass Berry & Sims published a blog post saying that about a pilot programme that imposes new obligations on foreign parties making investments, even non-controlling investments, in US businesses involved in 27 explicitly designated industries. The pilot programme defines such investments as “pilot program investments” and mandatory declarations of certain transactions are now required. The new rules come into effect on 10th November.
INVESTING VIA THE CROWN DEPENDENCIES AND THE CHANGES “SUBSTANCE” WILL BRING
An article from MJ Hudson on 30th October says that the latest challenge for Jersey, Guernsey and the Isle of Man has been the extension of BEPS with the EU calling for the islands to evidence ‘substance’ in the operations of businesses registered there by the end of 2018. So what, the article asks, will this mean for Investors? It says that the EU did not define what it means by substance (letting the Islands define it and then they would decide if that worked), but Jersey, Guernsey and the Isle of Man have all worked as one on the negotiations and enabling legislation is passing now. The key areas under scrutiny are fund management, financing and leasing, shipping, intellectual property, collective investment vehicles (funds) and holding companies that generate income from these.
ISRAEL: RULES FOR DEFENCE EXPORTS LIBERALISED
Hamodia in Israel on 31st October reported that the Israeli Ministry of Defense has announced a loosening of restrictions on the export of defence industry products, no longer requiring special licenses for weapons systems listed as “unclassified”. Defence companies will be allowed to sell arms to almost any country under the new protocols to be administered by the Israeli Defense Export Control Agency (DECA), it says, resulting in a reduction of red tape. The length of time currently needed to obtain a marketing license is 120 days. The reform will affect thousands of defence items made in Israel. However, DECA says that while the special permits may be waived, official approval must still be obtained for the execution of defence contracts, and advises exporters to include release clauses in their agreements with foreign customers in the event the state prohibits a sale. The new guidelines will not apply to negotiations between Israeli defence exporters and representatives of countries on the list of enemy countries, such as Lebanon, Syria, Iraq and Iran.
BULGARIA’S ARMS EXPORTS UP 20% TO €1.2 BILLION IN 2017
The Defense Post on 31st October reported that Bulgaria’s booming arms trade continued to grow in 2017 with arms and ammunition exports topping €1.2 billion, an official report has revealed. Conflicts in the Middle East have boosted Bulgaria’s arms sales in recent years to levels not seen since the fall of communism in 1989. Saudi Arabia, India, the US and Iraq remained the main buyers of Bulgarian-made munitions and light weaponry.
US: INTERNATIONAL LAW FIRM CAUGHT BETWEEN EXPORT CONTROL AND DISCRIMINATION LAWS
Torres Law on 31st October reported that Clifford Chance US LLP had been fined by the DoJ for discrimination (under the Immigration and Nationality Act) because it had limited its staffing for 36 positions on an ITAR-related document review project to US citizens without dual citizenship. It had done this to avoid inadvertently violating the ITAR and EAR export control laws. The case is said to be a perfect example of the intersection of, and friction between, immigration anti-discrimination laws and the export control regulations; and serves as a reminder to other companies to strike the appropriate balance between ITAR and EAR compliance and adherence to other relevant federal laws and regulations.
ITALY: 3 GREEK ARCHAEOLOGICAL FINDS BACK IN ITALY – NEW DRAFT LAW ANNOUNCED
ANSA in Italy on 31st October reported that a small vase for oils and ointments, a wine pitcher and a bowl for food are 3 archaeological finds from the Greek era that had been smuggled out of Italy and have been tracked down and will be brought back. The finds were recovered through collaboration between the cultural heritage section of the Carabinieri and the FBI and were handed over in Washington. The Italian culture minister also announced a new draft law and said that there would be stiffer penalties in the draft law.
ALMOST 11,000 SMUGGLED MEDICATIONS SEIZED BY COSTA RICA BORDER POLICE
The Costa Rica Star reported on 31st October that the Ministry of Security affirmed this one of the biggest confiscations of medicines registered in the northern border so far this year, having been smuggled from Nicaragua. Many of these medications require a prescription to be sold in the country.
COSTA RICA AUTHORITIES INTERCEPT CONTAINERS OF COCAINE AND CASH
On 29th October, the Costa Rica Star reported the seizure of 2 trailers, one containing 20 packs of cocaine, the other $509,000 in cash. The trailer containing the cash was said to have originated in Mexico. In the same few days, a boat was carrying 18 kg of cocaine, an AK-47, two revolvers and 3,218 rounds of ammunition of different calibres was seized, and 2 men were arrested – one of them of Jamaican origin and the other a Costa Rican; and 4 fishermen and a boat contained 1200 kg cocaine detained.
PRESSURE MOUNTS ON BELGIAN GOVERNMENT OVER LIBYA PAYMENTS
Politico on 1st November reported that pressure is mounting on Belgium’s government to explain why payments of hundreds of millions of euros flowed to unknown recipients from frozen accounts in Brussels that once belonged to Libyan dictator, Muammar Gaddafi. A public broadcaster has linked the payments from the Libyan accounts in Brussels to arms shipments. Questions are being asked about why funds were paid out from accounts that were supposed be frozen under UN sanctions. They are also seeking assurances that the money did not end up in the hands of militia in Libya. Payments were made between 2011 and 2017. In September, a UN panel of experts concluded that Belgium had violated UN sanctions. “There has been one or two scandals linked to airplanes seized at the airport in Ostend with arms inside,” an unnamed source is quoted as having said. It is said that the Belgian finance ministry justified interest payments from the Belgian accounts by saying they were in accordance with an interpretation of the sanctions’ rules by RELEX, an expert group at the Council of the EU composed of diplomats from member countries.
UN PANEL FINDS BELGIUM IN VIOLATION OF LIBYA SANCTIONS
On 12th September, Politico had reported that a UN panel of experts on Libya has said that Belgium is in violation of international sanctions targeting assets once owned by the late Libyan dictator Muammar Gaddafi. The UN experts spent months this year traveling across the world — including several trips to Belgium — to investigate whether the frozen funds are in compliance with the 2011 UN sanctions. These assets included the interest payments that made their way from Euroclear – a financial institution headquartered in Brussels – to accounts belonging to the Libyan Investment Authority (LIA). The Panel concluded that payments of interest and other earnings were in non-compliance with the asset freeze.
AUTHORISED PUSH PAYMENT (APP) SCAMS – A NEW APPROACH
An article from CMS Law on 30th October examined the APP Scams Steering Group draft voluntary code to combat APP fraud. It explains that APP fraud is characterised by a transfer of funds executed across Faster Payments, CHAPS or an internal book transfer, authorised by a customer where they are either: deceived into transferring the funds to a different person, or where they believe they transferred funds for a legitimate purpose when it was, in fact fraudulent.
JAPAN LANDS TROVE OF OFFSHORE ASSET DATA TO FIGHT TAX EVASION
Nikkei Asia Review on 1st November said that Japan’s National Tax Agency has reported that it has obtained information on about 550,000 accounts that residents of Japan hold overseas, data expected to be a powerful tool in cracking down on tax evasion. The data was provided to Japan through the Common Reporting Standard (CRS) system, under which about a 100 countries and regions exchange each other’s bank information once a year. This marks the first time Japan took part in the programme, which started last year.
REPORT SETS OUT FUTURE BUSINESS PLAN FOR BLACKPOOL AIRPORT
Blue Sky on 1st November reported that aviation industry experts have produced a comprehensive report setting out the best opportunities to revive and secure the future of Blackpool Airport, and which makes a number of recommendations for investment in infrastructure, operations and management of the airport to ensure it remains a key transport asset for the North West of England.
WHY NIKE AND PUMA WANT CAMBODIA TO MEET EU DEMANDS
EU Observer on 31st October carried an opinion piece by the chief executive of the fair Labor Association and a former assistant secretary of state and director of the Center for Business and Human Rights at NYU. The article says that the EU has put Cambodia on notice that its preferential trade relationship with the EU is at risk over its human rights standards, and Cambodia’s deteriorating respect for the rights of workers also will be an important part of the EU’s review process. Progress on workers’ rights in Cambodia has slowed significantly lately. While the government still allows some independent unions and workers’-rights organisations to operate, the space for them to advocate effectively is shrinking. A number of labour union and human rights leaders have been targeted for official harassment, and some have been arrested or criminally charged. However, the article says that companies such as adidas, New Balance, Nike, Puma, Under Armour and VF have joined with NGO to pressure the Cambodian government to change its attitude and actions. It is said that Western buyers purchase hundreds of millions of dollars of manufactured products in Cambodia, which gives them the economic leverage to encourage meaningful changes in factory and worker conditions.
MYANMAR: EU MISSION ASSESSES HUMAN RIGHTS AND LABOUR RIGHTS SITUATION
A news release from the EU on 31st October said that a monitoring mission of experts from the European Commission and the European External Action Service visited Myanmar on 28th to 31st October. This was part of the broader engagement that the European Commission has launched to monitor Myanmar’s respect of fifteen fundamental UN and International Labour Organisation (ILO) conventions. In order to continue to benefit from duty-free, quota-free access to the EU market through the Everything But Arms (EBA) scheme, Myanmar must uphold and respect the principles enshrined in these conventions. The findings of this mission will feed into the analysis on whether to remove these trade preferences through a temporary EBA withdrawal procedure.
BREXIT AND PERSONAL DATA – HOW TO KEEP BUSINESS FLOWING
On 1st November, HFW published an article saying that unless a deal is struck it is likely that after Brexit extra measures (such as ‘Standard Contractual Clauses’) will need to be put in place to legitimise transfers of personal data from organisations and individuals in the EEA to organisations in the UK. Alternatively, organisations could consider whether one of the GDPR transfer mechanisms would be appropriate, or whether one of the Article 49 ‘derogations’ applies. Transfers from the UK to the EEA are likely to be unaffected.
TANZANIA: CITY BUSINESSMAN ARRAIGNED ON 75 ECONOMIC SABOTAGE CHARGES
The Citizen on 1st November reported that businessman Akram Aziz has appeared in court charged with, amongst other things, money laundering and possession of elephant tusks without the requisite licence. He is also said to have been found with 70 firearms and 65 kg of buffalo meat.
PERU’S KEIKO FUJIMORI JAILED UNTIL BRIBERY CASE TRIAL
The BBC reported on 1st November that opposition leader must Keiko Fujimori spend 3 years in jail while she awaits trial for corruption. Ms Fujimori has been accused of taking $1.2 million in bribes from the Brazilian construction giant Odebrecht in 2011.
UK: THE FUTURE OF LEGAL AID
On 31st October, the House of Commons Library produced a briefing paper in advance of a Westminster Hall debate on 1st November.
WALES: OWNER OF BUS FIRM AND SONS JAILED FOR FRAUD AFTER CLAIMING THOUSANDS FOR FAKE JOURNEYS
The Independent on 1st November reported that the family-run company, Express Motors, provided bus services but claimed money for fake journeys that never took place. The men used a collection of 32 lost smart cards – bus passes for over-60s – to “swipe” for journeys and claim the cash, with one card alone used 23,000 times between June 2012 and July 2014. Each “swipe” of a card was “literally money in the bank” for the family, the court heard. In all they fraudulently claimed £88,500 from the council, which the local authority claimed from the Welsh government under the all-Wales concessionary travel scheme.
FinCEN ADVISORY ON AML/CFT AND FATF JURISDICTIONS UPDATE
On 31st October, FinCEN issued a new Advisory following the recent FATF Plenary and relaying the outcome of that meeting re the blacklisted and grey list jurisdictions.
WHAT CAN AND CANNOT BE SEIZED BY AN ENFORCEMENT AGENT IN ENGLAND & WALES?
A briefing from the Sheriff’s Office on 30th October says that the Taking Control of Goods Regulations 2013 outlines what can and cannot be taken control of as part of a controlled goods agreement. Once a debtor has signed the controlled goods agreement, any items listed cannot be sold, moved or given away.
REFORM OF THE CRIMINAL LAW NEEDED TO PROTECT VICTIMS FROM ONLINE ABUSE, SAYS LAW COMMISSION IN UK
A news release from the Law Commission on 1st November says that reforms to the law are required to protect victims from online and social media-based abuse, according to a new Report by the Law Commission for England and Wales. DCMS will now analyse the Report and decide on the next steps including what further work the Law Commission can do to produce recommendations for how the criminal law can be improved to tackle online abuse.
CRIMINAL LAW NOT KEEPING PACE WITH DIGITAL WORLD – REPORT
A Guardian article on the above report on 1st November says that online communications law is incoherent and fails to protect victims of abuse from harassment such as “deepfake” pornography, according to the report. The Home Office estimates that only 3% of malicious communications offences result in a prosecution.
THE 1918 GLOBAL FLU PANDEMIC KILLED 50 MILLION PEOPLE. COULD IT HAPPEN AGAIN?
An article on NTI on 31st October, to mark the 100th anniversary of the 1918 global flu pandemic, features an interview with Beth Cameron, NTI’s Vice President of Global Biological Policy and Programs.
BVI INTRODUCES COUNTRY-BY-COUNTRY REPORTING FOR CERTAIN MULTINATIONAL ENTERPRISES AND UPDATES CRS REQUIREMENTS
On 1st November, Harneys published a briefing saying that the BVI recently approved legislative changes that require certain multinational enterprises to file a country-by-country report with the BVI International Tax Authority (ITA), as part of the implementation of the OECD Base Erosion and Profit Shifting (BEPS) framework. It also amended Common Reporting Standard (CRS) obligations, with a requirement for financial institutions to establish, implement and maintain written policies and procedures to comply with the relevant obligations and to file nil returns.
EXAMINING OFFICERS AND REVIEW OFFICERS UNDER SCHEDULE 3 TO THE COUNTER-TERRORISM AND BORDER SECURITY ACT 2018 – DRAFT CODE OF PRACTICE
On 1st November, the Home Office published this draft code of practice. Schedule 3 to the Counter-Terrorism and Border Security Bill would allow an examining officer to stop, question, search and detain a person at a port or the border area for the purpose of determining whether the person appears to be a person who is, or has been, engaged in hostile activity. It also allows for the examination of goods for the purpose of determining whether they have been used in connection with a person’s engagement in hostile activity. An “examining officer” is a constable, or an immigration officer or customs officer designated for the purpose of Schedule 7 to the Terrorism Act 2000.
HOME OFFICE CIRCULAR 018/2018: RESCHEDULING OF CANNABIS-BASED PRODUCTS FOR MEDICINAL USE IN HUMANS
On 1st November, the Home Office issued a new Circular about the rescheduling of cannabis-based products for medicinal use in humans, which is lawful from 1st November under regulations having effect in England, Wales and Scotland. There will be a legal route for cannabis-based products for medicinal use to be prescribed by doctors on the General Medical Council (GMC) specialist register in the strictly controlled circumstances required by the Misuse of Drugs Regulations 2001 without the requirement for a Home Office licence.
US CHARGES 2 FORMER GOLDMAN BANKERS AND FINANCIER IN 1MDB MALAYSIAN FRAUD
On 1st November, the Economic Times reported that US prosecutors filed criminal charges against a Malaysian financier (Jho Low) and 2 former Goldman Sachs investment bankers who helped raise money for a Malaysian government investment fund from which about $4 billion disappeared.
MALAYSIAN AUTHORITIES SEEK FORMER PRIME MINISTER’S BRITISH ‘PR GURU’ IN FRAUD PROBE
On 1st November, the Telegraph reported that Malaysia’s anti-corruption body (MACC) is hunting for a British PR consultant in connection with the 1MDB multi-billion-dollar financial scandal that helped bring down the previous government. It appealed for the public’s help in locating Paul Stadlen, 39, who reportedly handled press operations for Najib Razak, the former prime minister.
SERIOUS AND ORGANISED CRIME: HOME OFFICE RESEARCH PRIORITIES APRIL 2018 TO MARCH 2021
Linked to the new Serious and Organised Crime Strategy, this Home Office report published on 1st November contains what analysts have identified a set of prioritised evidence needs to support delivery of the strategy.
PRACTICAL ADVICE, INFORMATION AND USEFUL LINKS FOR UK BUSINESSES LOOKING TO ACCESS THE US MARKET BY SELLING ONLINE
On 1st November, the Department for International Trade published a guide giving information to UK businesses who are considering using e-commerce to access the US market. This includes information on US rules and regulations, and links to guidance for UK companies looking to export.
US CUSTOMS PREVENTS SMUGGLING OF NEARLY 900 LB INVASIVE MITTEN CRABS
US Customs and Border Protection on 31st October reported that its agriculture specialists discovered hundreds of pounds of invasive Chinese mitten crabs while conducting routine inspection operations at a local express consignment facility. During examinations of incoming Chinese freight, specialists noted x-ray anomalies in 16 separate shipments, all which were labelled as various types of clothing. Once the specialists opened the boxes they found thousands of live crustaceans, all destined for residences in New York. In Asia, mitten crabs are considered a seasonal delicacy; however, their disastrous impact on other global habitats has earned them a place on the Invasive Species Specialist Group’s list.
US CUSTOMS OFFICERS RECOVER 23 LUXURY VEHICLES DESTINED FOR CHINA
On 31st October, US Customs and Border Protection reported that stolen vehicles valued nearly $1.9 million include Mercedes-Benz GLS 450 and Land Rover Range Rover brands in Los Angeles.
GUERNSEY STATES APPROVES PROPOSALS FOR ELECTRONIC AGENTS LEGISLATION
Appleby on 1st November reported that proposals for the preparation of new legislation regarding the use of “electronic agents” have been approved by Guernsey’s government to bring certainty regarding the legal effects of transactions undertaken by or via “electronic agents”. It says that an “electronic agent” is defined in the Electronic Transactions Law as “a computer programme or electronic or other automated means used independently to initiate an action or to respond in whole or in part to information or actions in electronic form or communicated by electronic means, without review or action by a natural person”.
CHANNEL ISLANDS AND ECONOMIC SUBSTANCE FOR COMPANIES
On 1st November, Appleby published an article on Jersey and Guernsey proposals to meet the EU requirement for legislation dealing with economic substance for companies that are tax resident in the Islands.
SALES OF ILLEGAL ALCOHOL IN LATIN AMERICA MAKE FOR A BOOMING CONTRABAND INDUSTRY
Insight Crime on 1st November reported that a new report shows how sales of illegal alcohol in Latin America make for a booming contraband industry that is hardly ever held accountable. It claims that 15% of alcohol is sold illicitly in Latin America. Mexico tops the list with 42.5% of its alcohol sales coming from illegal sources. Chile is bottom of the regional table with a level of consumption of only 1.2%. The main effect of this illegal trade is the loss of around $1.7 billion in tax revenue.
COURT ORDERS FREEZE ON MACEDONIA MAIN OPPOSITION PARTY’S PROPERTY
Rferl on 1st November reported that a Macedonian court has ordered the temporary freezing of property belonging to the country’s main opposition party, VMRO-DPMNE, as part of an investigation into suspected unlawful political financing. Prosecutors began an investigation in 2017 against 14 people, including ex-VMRO-DPMNE leader and former Prime Minister Nikola Gruevski, on allegations the party received €4.9 million in funding through money-laundering. Gruevski is due to begin serving a 2-year sentence this month in another corruption case.
IRISH REVENUE SEIZE 7.2 MILLION CIGARETTES WORTH €4 MILLION IN DUBLIN PORT
The Revenue Commissioners reported on 1st November that, as part of routine operations, Revenue officers seized 7.2 million smuggled cigarettes that arrived into Dublin Port. The cigarettes were discovered when officers conducted an examination of freight which arrived in Dublin from Rotterdam, with the assistance of Revenue’s mobile x-ray scanner and detector dog Kelly.
HOW RESEARCHERS DISCOVERED UNDECLARED URANIUM MINING IN NORTH KOREA
The James Martin Center for Nonproliferation Studies at Monterrey published on 1st November an Occasional Paper which focuses on the insights gleaned from remote sensor images of known Chinese uranium mines and mills to understand the current status of uranium mining and milling in North Korea. Uranium mining and milling obviously constitute the first step in any nuclear-weapons programme, but nuclear non-proliferation analysts have devoted surprisingly little attention to monitoring these processes, it says. The Paper estimates uranium production at North Korea’s declared uranium mine and identifies 3 potential, previously undetected North Korean uranium mines and mills.