9th November 2018
BVI: WHAT TO DO WHEN YOUR REGISTERED AGENT GOES ROGUE
On 24th October, Harneys published an article saying that the registered agent fulfils a key role for BVI companies, but asks what if the agent won’t do what is asked – and considers the rights of directors and members and the options available to dealmakers in this article originally published by Asian Legal Business. The registered agent is described in the article as being somewhere between a mailman, company secretary and compliance gatekeeper, the RA is the only entity able to make most filings with the BVI’s registrar of corporate affairs and, as such, a key player in the BVI’s AML and compliance regime (as the principal person charged with collecting client due diligence information on BVI companies). The article also examines the ways in which third parties may force an agent to provide documentation or assistance and the obligations agents have to third parties generally.
IRANIAN NATIONAL PLEADS GUILTY TO CONSPIRING TO ILLEGALLY EXPORT PRODUCTS FROM US
Baker McKenzie and others reported on 8th November that Arash Sepehri, 38, has pleaded guilty to a federal charge stemming from his role in a conspiracy to cause the export of controlled goods and technology to Iran. Sepehri was an employee and a member of the board of directors of an Iranian company, Tajhiz Sanat Shayan, or Tajhiz Sanat Company (TSS) – a company subject to EU sanctions. Sepehri and others conspired to obtain high-resolution sonar equipment, data input boards, rugged laptops, acoustic transducers and other controlled technology from the US. UAE-based front companies and an intermediary shipping company based in Hong Kong were used and payment were arranged through the UAE.
UKRAINIAN DETAINED TRYING TO SEND AIRPLANE COMPONENTS TO EAST ASIA
112 UA on 8th November reported that, in Ukraine, a man from south-eastern Ukraine tried to smuggle components used in the military and civilian aviation to East Asia. The man reportedly used the international courier delivery service to send the package.
NEW REPORT DETAILS SECURITY CONCERNS IN OUTER SPACE
Space Daily on 7th November reported that the Key findings of the Space Security Index 2018 report point to deteriorating security conditions in outer space in the absence of renewed governance efforts. The topics considered in the report include the emergence of dual-use technologies such as debris removal, satellite servicing, and manoeuvring capabilities; and the continuing development and demonstration of anti-satellite capabilities. Amongst the facts in the report are that there are more than 1,800 active satellites and 70 civil space programmes, with 62 nations owning satellites. Satellite-industry revenues are said to be around $268 billion.
The report is available at –
FATF PUBLISHES THIRD ENHANCED FOLLOW-UP REPORT ON AUSTRALIA
Regulation Asia on 9th November reported on the release of this follow-up report, detailing some of its findings and noting that Australia remains non-compliant or partially compliant with 14 FATF Recommendations, and on this basis will remain in enhanced follow-up, which requires it to report back to the FATF on further progress to strengthen its technical implementation of AML/CFT measures. A separate follow-up assessment will analyse progress on improving the effectiveness of Australia’s AML/CFT regime, which is not covered in this report.
MONEYGRAM TO FORFEIT $125 MILLION FOR AML COMPLIANCE LAPSES
On 8th November, Compliance Week reported that MoneyGram had entered into agreements with the DoJ and the Federal Trade Commission in the US concerning previously disclosed compliance failures that resulted in a widespread money-laundering fraud. This extended the terms of an agreement from 2012, when MoneyGram agreed to forfeit $100 million and enter into a deferred prosecution agreement with the DoJ to resolve criminal charges.
MAN INDICTED FOR INTERNATIONAL MONEY LAUNDERING IN CONNECTION WITH ONLINE DRUG BUSINESS IN US
WAFB9 News in Louisiana reported on 9th November that Donovan Barker, 59, from Baton Rouge, has been indicted by a federal grand jury for allegedly aiding and abetting a conspiracy to distribute drugs, international money laundering, and other charges related to these activities. Barker owned and operated several businesses which sold and distributed green tea extracts and herbal supplements, but was actually working with others to import scheduled drugs into the US in order to repackage and distribute those drugs that were sold online. Barker was also reportedly accepting payments from these buyers and transmitting money to others operating outside the country.
EU TELLS DENMARK AND ESTONIA TO ADOPT MONEY LAUNDERING RULE OR ELSE
Bloomberg on 8th November reported that the European Commission has ordered Denmark and Estonia to completely transpose the 4th AML Directive into national law or face action in the European court. Denmark and Estonian have 2 months to respond, or the Commission said it may take further action, including a referral to the Court of Justice, as it has already done so for Romania and Ireland and plans to do so for Luxembourg.
ISRAELI POLICE RELEASE ‘SUBMARINE CASE’ CONCLUSIONS
Arutz Sheva on 8th November reported that Israel police had completed its investigation into the ‘Submarine Case’ and charges including bribery, fraud, breach of trust, money laundering. The case related to the purchase of 5 submarines from the German company, Thyssenkrupp AG, and was ordered by the Attorney General in 2016. A number of arrests were made in 2017. The report recommends charging 6 people, including former Israel Navy chief Eliezer Marom, but Netanyahu’s lawyer David Molcho is cleared. It found sufficient evidence to charge Prime Minister Benjamin Netanyahu’s lawyer and confidant, David Shimron, with facilitating bribery.
EU WARNS ITALY, ISLE OF MAN OVER YACHTS, PRIVATE JETS TAX BREAKS
Devdiscourse on 8th November reported that Italy and the Isle of Man found themselves in the European Commission’s crosshairs as it took steps to force them to scrap illegal tax breaks for yachts and private jets or face court action. It said incorrect VAT levied by Italy and the Isle of Man breached common tax rules and distorted competition. The UK received a letter of formal notice over the Isle of Man’s VAT practices related to supplies and leasing of aircraft. Cyprus, Malta and Greece were targeted by the Commission for similar yacht VAT breaches in March and have subsequently said they would revise their legislation.
IRISH LAW REFORM COMMISSION’S REPORT ON REGULATORY POWERS AND CORPORATE OFFENCES
On 6th November, an article from Mason, Hayes & Curran on the launch of the report that recommends that there should be a standard framework of regulatory powers for financial and economic regulators in Ireland. Over 200 recommendations are made by the Commission for further reform on regulatory powers and corporate offences.
RECENT US CUSTOMS RULINGS MAKE IT MORE DIFFICULT TO AVOID SECTIONS 301 DUTIES ON CHINESE-ORIGIN GOODS
Jones Day on 5th November published an article saying that US Customs & Border Protection will apply the substantial transformation standard to determine the country of origin of merchandise produced in Canada or Mexico using Chinese-origin components subject to Section 301 duties, rather than NAFTA marking rules. Also, CBP clarified how Section 301 duties will apply to sets put up for retail sale.
IMELDA MARCOS ARREST WARRANT ISSUED AFTER FAILING TO APPEAR IN COURT
CNN on 9th November reported that an arrest warrant has been filed for Imelda Marcos, 89, after the former Philippines First Lady failed to appear in court at the end of her corruption trial. Despite her absence, Marcos was sentenced to a minimum of up to 11 years for each of 7 counts.
CHINESE EVIDENCE, CANADIAN CHARGES: ACCUSED BUSINESSMAN SAYS FRAUD CASE BUILT WITH COERCION
The Globe & Mail on 9th November reported that case of Edward Gong, who is accusing Canadian investigators of relying on coerced confessions; and asks what does his case mean for the bigger questions of due process, international law and China’s notorious criminal justice system? Gong Xiao Hua, aka Edward Gong, 53, was arrested in December after a joint probe by the Ontario Securities Commission (OSC) and the RCMP in collaboration with China’s Ministry of Public Security and authorities in New Zealand, where some of the alleged proceeds of crime were transferred. He is accused of masterminding the fraudulent sale of hundreds of millions of dollars in stock of his health-supplements company, O24, to Chinese citizens.
WHAT MIGHT EU LOOK LIKE IN 2027?
In this paper from ETH Zurich on 9th November, Antonio Estella reflects on the future of the European Union and outlines possible scenarios on what the EU could look like in 2027. He argues that the EU’s future will be determined by 4 major variables – enlargement, economic growth, immigration and exit(s). Because 3 of these variables play against integration, Estella contends that the EU will definitely demonstrate a tendency towards disintegration within the next 10 years.
HM TREASURY AMENDS DETAILS OF 1 ENTRY ON VENEZUELA SANCTIONS LIST
On 8th November, HM Treasury issued a Notice advising of amendment of the entry relating to Diosdado Cabello RONDON.
JERSEY: FRAUDSTER’S SENTENCING IS HALTED
Guernsey Press on 9th November reported that Christopher Paul Byrne, a convicted fraudster and former managing director of Lumiere Wealth, had his sentencing in Jersey abruptly adjourned after it emerged at the 11th hour that he is helping Guernsey authorities with the investigation into Providence.
BVI APPROVED MANAGER REGIME
A briefing from Conyers, Dill & Pearman in November on the Approved Manager regime says that it reduces the costly and complex regulatory burden on global asset managers looking to launch funds in the BVI.
EU REPORT ON UKRAINE – IMPORTANT PROGRESS IN REFORMS BUT MORE NEEDS TO BE DONE ON THE JUDICIARY AND FIGHT AGAINST CORRUPTION
On 9th November, a report said that Ukraine has made progress in a number of important areas over the past year, but several outstanding reforms still need to be reinforced so that Ukrainian citizens can fully reap the benefits of the EU-Ukraine Association Agreement and its Deep and Comprehensive Free Trade Area. While the renewal of the judiciary continued, there have been only few convictions in high-level corruption cases so far. The establishment of the High Anti-Corruption Court remains a test case in this regard. A landmark law on the reform of the security sector was adopted in June 2018, awaiting now follow up.
TAX AVOIDANCE: REPORT ON RECENT DEVELOPMENTS
On 9th November, the House of Commons Library published a briefing paper which provides an introduction to the issue of tax avoidance, looking in detail at the development of follower notices and accelerated payments, before discussing the current Government’s approach.
SWISS SUSPEND TOP INVESTIGATOR AMID FIFA PROBE
Swissinfo on 9th November reported that Swiss federal prosecutors have suspended the head of their white-collar crime unit following allegations about his conduct during investigations into suspected corruption at world soccer body FIFA.
EUROPOL SUPPORTS PORTUGAL IN HUGE OPERATION TARGETING ILLICIT LOTTERIES AND SPORTS BETTING
A Europol news release on 9th November about Operation Shadow Game 6th to 8th November. After an investigation of 15 months, law enforcement forces carried out 267 house searches in Portugal and 8 house searches in Luxembourg. 30 individuals were arrested in Portugal, and 1 in Luxembourg under an European Arrest Warrant. €576,000 have been seized in cash alongside some 3,000 computer devices used for illegal gambling, 22 firearms, 86 vehicles, including several luxury vehicles. Seizure of several bank accounts resulting in the recovery of more than €6 million in criminal assets. 14 commercial companies and 93 people from Portugal, Luxembourg, as well as Brazil and Switzerland were indicted. The investigation revealed a structured and hierarchical transnational criminal organisation operating in Belgium, Luxembourg, Portugal and Switzerland.
SEYCHELLES: AML/CFT MUTUAL EVALUATION REPORT
On 9th November, the regional FATF-style body (ESAAMLG) published the MER for the Seychelles and dated September 2018. This report provides a summary of the AML/CFT measures in place in the Republic of Seychelles as at the date of the on-site visit from 20th November to 5th December 2017. The Seychelles had just completed its National Risk Assessment (NRA). It says that law enforcement agencies have inadequate capacity (technical, material and human) to identify potential money laundering/terrorism financing cases for investigation and prosecution. Whilst the authorities have investigated a few laundering cases arising from drug-related offences including one conviction, the focus has been on predicate offences. The same criticism of inadequate resources also applies to the FIU. Implementation of targeted financial sanctions against terrorist financing in terms of the UN Security Council Resolutions (UNSCR) 1267 and 1373 (and successor resolutions) is ineffective because of lack of proper co-ordination between the competent authorities; and the Seychelles does not have both a legal and institutional framework nor mechanisms in place to implement targeted financial sanctions relating to proliferation financing.
WITH US SANCTIONS WAIVER, CHABAHAR PORT SET TO COMMENCE OPERATIONS BY MONTH-END
Hellenic Shipping News on 9th November reported that India to start operating the Chabahar port in Iran by the end of November after the US granted exemptions to the port from the sanctions it had imposed on Iran.
UK REMOVES MAYSAN SUGAR STATE ENTERPRISE FROM IRAQ SANCTIONS LIST
On 9th November, HM Treasury followed the UN and EU by issuing a Notice advising that MAYSAN SUGAR STATE ENTERPRISE was no longer subject to sanctions.