13 December 2018
ISLE OF MAN SANCTIONS UPDATE – SOUTH SUDAN, ERITREA, UKRAINE
On 12 December, 3 separate news releases advised of updates to sanctions regimes in the Isle of Man – adding 1 name to the South Sudan sanctions list and 9 names to the Ukraine sanctions list, and notifying the coming into operation of the European Union Eritrea (Sanctions Revocation) Order 2018 and Eritrea Sanctions (Revocation) Regulations 2018.
DOCUMENTS REVEAL AUSTRALIA’S SECRET ARMS DEALS WITH NATIONS FIGHTING YEMEN’S BLOODY WAR
ABC News on 13 December reported that internal Defence Department documents obtained under Freedom of Information (FOI) and from parliamentary hearings reveal since the beginning of 2016, Canberra has granted at least 37 export permits for military-related items to the UAE, and 20 to Saudi Arabia. This news comes as Australia will spend $200 million between now and 2028 in order to make Australia the 10th-largest arms exporter in the world. It is currently the 20th largest.
CANADA: CIGARETTE SMUGGLER DODGES ‘UNPAYABLE’ MULTI-MILLION DOLLAR FINE
The Windsor Star on 12 December reported that a judge refused to impose the minimum fine on a man caught with a truckload of cigarettes being smuggled from the US, because the judge said he’d have to win the lottery jackpot to pay the nearly $4 million penalty. He said that by imposing a fine that is so significant, it’s unlikely to ever be paid, and hence the offenders effectively suffers no real penalty.
IRISH REVENUE COLLECTS EXTRA €213 MILLION IN TAX CRACKDOWN – 25% FROM ISLE OF MAN AND SWITZERLAND ALONE
The Irish Independent on 13 December reported that the Revenue Commissioners took a €213 million tax haul last year as a result of a crackdown on defaulters that was backed by the recruitment of extra staff. It says that of disclosures of offshore assets made under the increased Revenue scrutiny, 9 were for more than €1 million, while 18 were for between €500,000 and €1 million. However, most of the disclosures of offshore assets – 2,828 in total during 2017 – were for amounts of less than €5,000. The largest proportion of disclosures, more than 1,300, were made in respect of assets in the UK, and almost 14% related to assets in the US.
UK: PUBLISHED DETAILS OF DELIBERATE TAX DEFAULTERS
On 13 December, HMRC published its latest list of tax defaulters – people who deliberately get their tax affairs wrong, and where HMRC has carried out an investigation and the person has been charged one or more penalties for deliberate defaults and those penalties involve tax of more than £25,000. However, information will not be published if the person earns the maximum reduction of the penalties by fully disclosing details of the defaults.
REGULATOR DID NOT SHARE DOCUMENTS WITH POLICE WHO WERE INVESTIGATING FRAUD ALLEGATIONS IN NORTHERN IRELAND
The Belfast Telegraph on 13 December reported that Northern Ireland’s gas and electricity regulator did not share all of its information with police probing allegations of fraud by a former government special adviser.
JAILED FORMER VENEZUELA OIL MINISTER DIES IN STATE CUSTODY
The Miami Herald on 12 December reported that Nelson Martinez, the jailed former head of Venezuela’s state-run oil giant PDVSA who was arrested last year as part of anti-corruption purge, has died in state custody.
BALANCING HMRC POWERS AND TAXPAYER SAFEGUARDS: HOUSE OF LORDS REPORT
On 12 December, Berwin Leighton Paisner published an article saying that while HMRC has to strike a balance between controlling tax non-compliance and treating taxpayers fairly, a Lords’ Committee has issued a report saying that the balance has tipped too far in favour of HMRC.
FORMER JERSEY LAWYER JAILED FOR FRAUDULENTLY USING CLIENTS’ MONEY
This is Jersey on 13 December reported that a former lawyer, Kevin Robert Manning, who was barred from his profession after an investigation by the Jersey Law Society found he was fraudulently moving money around his client and business accounts, has been jailed for 3 and a half years.
EU REPORT: 63% OF COUNTERFEIT CUSTOMS SEIZURES ARE SMALL PARCELS
The World Intellectual Property Review on 12 December reported that a report from the EU Intellectual Property Office revealed that 63% of all EU customs seizures of counterfeit and pirated goods are of small parcels sent through postal or courier services. While figures show that these small shipments tend to be in packages of ten or fewer items, over 50% of all global seizures of counterfeits sent by post contained just one item. Fake consumer goods including shoes, sunglasses and jewellery were among the list of items most likely to be sent in small parcels. The report stated that small parcels used by counterfeiters for trafficking are shipped either through postal or express services, creating “significant challenges” for customs authorities.
MISUSE OF SMALL PARCELS FOR TRADE IN COUNTERFEIT GOODS
SPANISH CIVIL GUARD OPERATION AGAINST ARMS TRAFFICKING: SEIZED MORE THAN 300 WEAPONS
A news release from the Spanish civil guard on 12 December reported that it has seized 322 firearms and more than 50,000 cartridges. Weapons include guns AK47 assault, submachine guns, guns and more than 250 fully functional handguns, and there were 4 arrests.
BARCLAYS BANK GIVES CUSTOMERS POWER TO BLOCK GAMBLING TRANSACTIONS
Ekklesia on 12 December reported that Barclays has become the UK’s first high street bank to give its customers the power to block gambling transactions and other retail payments using their debit cards.
TRENDSPOTTER MANUAL: A HANDBOOK FOR THE RAPID ASSESSMENT OF EMERGING DRUG-RELATED TRENDS IN THE EU
On 13th December, the European Monitoring Centre for Drugs and Drugs Addiction published this user-friendly guide, taking the reader, step by step, through the trendspotter methodology developed by the EMCDDA to explore emerging drug trends, new patterns of use, developing drug markets and technologies.
ORDER BRINGS THE COMPOUNDS KNOWN AS PREGABALIN AND GABAPENTIN UNDER PERMANENT CONTROL AS CLASS C DRUGS IN UK
The Misuse of Drugs Act 1971 (Amendment) Order 2018 brings the compounds known as Pregabalin and Gabapentin under permanent control as Class C drugs under the 1971 Act. Gabapentin and pregabalin are drugs used to treat epilepsy but misuse of these drugs has been associated with avoidable deaths. The Advisory Council on the Misuse of Drugs has recommended additional safeguards. The Order comes into force on 1st April.
KENYA AND JERSEY SIGN DEAL FOR RETURN OF GRAFT MONEY
On 13th December, VoA carried an article saying that Kenyan officials have signed an agreement with Jersey that will pave the way for the return to Kenya of about $5 million stolen from government coffers.
NIGERIA FILES $1.1 BILLION LONDON LAWSUIT AGAINST SHELL, ENI OVER OIL DEAL
Reuters on 13th December reported that lawyers for the Nigerian government said they had filed a $1.1 billion lawsuit against Royal Dutch Shell and Eni in a commercial court in London in relation to a 2011 oilfield deal. The OPL 245 oilfield is also at the heart of an ongoing corruption trial in Milan in which former and current Shell and Eni officials are on the bench.
LEBANON: WASTE MANAGEMENT CRISIS
On 13th December, Deutsche Welle carried a video report saying that the waste crisis in Lebanon is a constant problem. It is said to be due to the combination of corruption, poor governance and weak infrastructure seen in many countries. The article asks what can be done with the massive amounts of garbage, produced in a globalised world?
UK: FIRST-EVER FRAUD PROSECUTION FOR PENSIONS REGULATOR
On 12th December, ICAEW reported that an accountant, Roger Bessent, has been charged with fraud and for making employer-related investments. The Pensions Regulator (TPR) claims that Bessent, ACCA, used his position as director of pension scheme trustees Gleeson Bessent Trustees to transfer more than £200,000 to accounts controlled by him.
UK: INTERCEPTION OF NON-COMPLIANT SOLID WOOD PACKAGING MATERIAL AND OTHER MATERIAL IMPORTS
On 13th December, the UK Forestry Commission published an updated guide, an infographic illustrating the top British ports and associated top international trading supply regions, where non-compliant wood-based material has been intercepted. They show where non-compliant solid wood packaging and other wood-based materials have been intercepted during import inspections carried out by the Forestry Commission Plant Health Service. They are intended to help traders consider their own supply and import compliance arrangement to prevent quarantine pests and diseases from spreading to our forests and woodlands.
EU: NEW RULE TO MAKE LARGE ONLINE MARKETPLACES RESPONSIBLE FOR CALCULATING, COLLECTING AND REMITTING VAT ON CERTAIN B2C CROSS-BORDER TRANSACTIONS BELOW €150
VAT Live on 13th December reported that on 12th December, the European Commission published details of the new rule. Where goods are imported by an EU or non-EU merchant, and then sold via a marketplace in another EU country, the marketplace will become the principal, and take over the sales VAT settlement.
ITALY HITS MULTI-MILLION DOLLAR GOLD SMUGGLING OPERATION
OCCRP on 13th December reported that authorities had arrested 14 alleged members of a transnational gold smuggling ring in Italy, Romania and Turkey for criminal association, money laundering and trafficking stolen goods. The organisation is said to have 29 members of Turkish, Italian, Chinese and Romanian origins. Police said the organization was headed by a Turkish citizen.
GERMAN POLICE DISMANTLE AN ORGANISED CRIME GROUP SUSPECTED OF INTERNATIONAL MOTOR VEHICLE CRIME
On 13th December, Europol reported that the operation revealed the registration of vehicles in addition to falsified Slovenian and Austrian documents as well as falsified registration certificates from Belgium, France, the Netherlands, and Sweden. The investigations covered various EU Member States (Austria, Belgium, France, Italy, Lithuania, Poland, the Netherlands, and Sweden) as well as Algeria. Overall 23 suspects of different nationalities were identified and accused of different crimes; among them theft, fraud, falsification of documents and violations of the arms act as well as bribery.
BANK IS ENTITLED TO ‘ARREST’ A SHIP WITHOUT PROVIDING THE SAME CROSS-UNDERTAKING IN DAMAGES TYPICALLY REQUIRED BY THE COURTS WHEN GRANTING A FREEZING ORDER
An article from Out-Law on 13th December reported that NatWest had seized a vessel belonging to Stallion Eight Shipping Co SA as part of a dispute over the outstanding balance of a substantial mortgage over the ship. The right to ‘arrest’ a ship in order to obtain security for a claim against the ship’s owner, or against the vessel itself in some circumstances, is long established in England and in many other countries.
ADVISING INDIVIDUALS IN CROSS-BORDER INVESTIGATIONS: THE LIMITS OF DOUBLE JEOPARDY
A blog post from Corker Bining on 12th December was concerned with situations where an individuals may be tempted (or advised) to enter into plea negotiations in one jurisdiction on the basis that a guilty plea in that jurisdiction will act as a barrier to prosecution elsewhere. Unfortunately, it says, the doctrine of double jeopardy does not always protect individuals in this black and white fashion. It warns, for example, that where the previous trial occurred overseas, the offence for which the defendant was convicted or acquitted will nearly always be different from the offence under investigation in the UK – but the accused can argue that the UK court should exercise its discretion to stay the proceedings as an abuse of process. Similar protection is found in UK and EU law. However, the post warns that taking advantage of one country’s enthusiasm for expediting its investigation or entering plea deals, the UK courts will never regard an overseas conviction alone as an insurmountable obstacle to a new prosecution in the UK on the same or similar facts. Double jeopardy has its limits.
UK GETTING TOUGH ON REPORTING MONEY LAUNDERING AND SANCTIONS BREACHES?
A further post from Corker Bining on 12th December commented on the recent launch of the multi-agency National Economic Crime Centre (NECC), and the speech by Ben Wallace, the Minister of State for Security, where he declared a crackdown on “professional facilitators” of money laundering and sanctions offences. In the light of a low level of prosecutions, the blog post asks how are the offences of failure to report money laundering and sanctions breaches interpreted in practice, and what are the proposals for reform? It calls for better guidance and interpretation from Government and the appellate courts, so that those burdened with the obligation to report have clarity and do not produce low quality reports generated from a fear of being exposed to criminal liability. It also refers to the Law Commission suggestion that the interpretation of “reasonable grounds to suspect” should be regarded as a cumulative test, incorporating both subjective and objective elements (as explained in the Saik case), and it would require a defendant to be proved to have actually suspected that the property was criminal in order to be convicted, and for that suspicion to be based on objective grounds.
BROADER IMPLICATIONS OF SEC CHARGES AGAINST CELEBRITIES FOR UNLAWFULLY TOUTING ICO
An article from Paul Hastings on 13th December on the cases involving professional boxer Floyd Mayweather Jr. and music producer and actor Khaled Khaled, (aka DJ Khaled) for promoting investments in Initial Coin Offerings (ICO) without properly disclosing their financial ties to the ICO issuers. It says that the SEC has a long history of bringing actions against promoters of securities of various types and now applies that same enforcement of unlawful touting to the sphere of cryptographic tokens. It cautions that those in such situations run the risk of being charged with scalping, investment adviser registration violation, broker registration violation, and/or, most serious, pure securities fraud.
FinCEN ISSUES REVISED PROPERTY GTO INCLUDING LOWER PURCHASE THRESHOLDS AND VIRTUAL CURRENCIES
Crowell Moring on 11th December published an article saying that FinCEN issued revised Geographic Targeting Orders (GTO), in November, once more expanding its scrutiny of “all-cash” purchases (i.e., those without bank loans or other external financing) in the luxury residential real estate market. FinCEN broadened the geographic scope of the orders, lowered the purchase amount threshold for each covered area, and added purchases that involve virtual currencies to the mandatory reporting list. Along with the GTO, FinCEN also released FAQ to clarify, among other things, the methods of payment covered and requirements for verification of beneficial ownership information. The article details the extended scope of the GTO and considers some practical considerations.
THE IMPACT OF ILLICIT TRAFFICKING AND JIHADIST INFILTRATION INSIDE ITALIAN SEAPORTS
A report, now available in English, resulted from research activity that allowed the research group to highlight some of the illicit entry activities that take place in the Italian seaport infrastructure – recent cases have indicated an increase in this kind of trafficking of cigarettes (especially of the illicit/cheap whites kinds) through seaport border points; cocaine trafficking (said to have been monopolised by the Calabrian mafia ‘Ndrangheta, thanks to the solid ties that the organisation was able to establish with the South American drug cartels); heroin trafficking, which it says has thrived particularly in the Adriatic area; marijuana trafficking; hashish trafficking from North Africa; and the infiltration of illegal immigrants on trucks on cargo and container ships is said to be relatively widespread. However, firearms trafficking is affected by the fact that shipments of weapons would be easily uncovered with the use of the X-ray scanner technology in use with the customs authorities that operate in the ports, during the inspection of goods – and so more likely takes place away from the major ports and control points. The report considers terrorism threats, in the ports and at sea. The report makes various recommendations and says that that cross-border as well as internal co-operation is essential to address the criminal activities outlined in the report.
MONEYVAL COMMENCES AML/CFT MUTUAL EVALUATION PROCESS IN GEORGIA
On 13th December, the Council of Europe announced that MONEYVAL has commenced its 5th round mutual evaluation of Georgia with a 2-day training on the evaluation process for the authorities and representatives from the private sector – such training is provided by the MONEYVAL Secretariat 1 year in advance of the onsite visit.
WHITE HOUSE RELEASE OF ITS FIRST-EVER NATIONAL STRATEGY FOR COUNTERING WMD TERRORISM
Homeland Security Today on 11th December reported that the Administration pledged to shore up efforts at home while providing equipment, training and “related assistance as appropriate” to foreign countries. The strategy warned that artificial intelligence and other technology poses unforeseen security implications “beyond our current understanding”, and said that it will need to share technology and intelligence with foreign partners in the fight against WMD.
US STATE DEPARTMENT NEEDS TO REVIEW US APPROACH TO COUNTER-NARCOTICS ASSISTANCE TO OTHER COUNTRIES
Homeland Security Today on 13th December reported that US watchdog, the Government Accountability Office, was asked to review US counter-narcotics assistance to Colombia, which has cost some $10 billion since 1999. Despite this, according to the DEA, over 90% of cocaine found in the continental US is of Colombian origin and cocaine use in the US is concurrent with production increases in Colombia. The GAO recommended that the State Department evaluate the effectiveness of eradication and interdiction in reducing the cocaine supply in Colombia and undertake a comprehensive review of the US counter-narcotics approach in Colombia that considers the relative benefits and limitations between eradication, interdiction, and alternative development efforts.