17th December 2018
COCAINE SURGE IN EUROPE FUELLED BY NEW GANGS AND VIOLENCE
On 16th December, the Gibraltar Chronicle reported that new gangs are muscling into cocaine markets in Europe, setting up smuggling networks straight from producers in Latin America to consumers, a business which used to be dominated by the mafia. This is according to a new report from the EMCDDA. New gangs from the Balkans, Morocco and elsewhere were joining Italy’s mafia – mainly the result of growing production in Latin America, especially by the biggest producer, Colombia. The port of Antwerp is now the single, biggest entry point for cocaine into Europe, with 41 tonnes seized in 2017 – in 2016 70.9 tonnes of the drug was seized in all in Europe. The report warns that other routes and trafficking modes, such as private aviation, may simply go undetected.
ALLEGED MOBSTER ACCUSED OF FLOODING SCOTLAND WITH CONTRABAND INCLUDING STOLEN FORRERO ROCHER AND PERONI
The Sunday Post on 17th December reported that an alleged mafia boss accused of channelling millions of euros worth of stolen goods through the mob’s Aberdeen outpost has been arrested in Italy on tax fraud charges. Arturo Salvatore di Caprio, former boss of the La Torre Camorra mafia clan, was accused of sending goods, including Ferrero Rocher chocolates and Peroni beer that were bought with dud cheques, to Scotland to be sold on.
INITIAL COIN OFFERINGS (ICO) AND INSOLVENCY LAW
The Faculty of Law at Oxford University on 17th December refers to a paper published in November which asks what happens if an insolvent debtor holds tokens and insolvency proceedings are opened? How can tokens be made available for the debtor’s creditors? How can post-commencement avoidance rules be enforced? And how can fraudulent transaction avoidance rules be enforced? The article refers to a new paper which focuses on ICO from the perspective of insolvency law and aims both at scrutinising some insolvency law aspects of ICO regardless of the jurisdiction involved and the insolvency proceedings adopted, and at developing a different view of this new phenomenon in order to understand the challenges that it poses in a more holistic way. It says that a first challenge is how to find out that the assets exist and how to make them available to the general body of creditors when the debtor is non-cooperative. Then a second challenge is the the risk that the debtor transfers the tokens after the insolvency proceeding. The author argues that problems stem from the fact that the issuance of tokens is creating a divide between the world where tokens are issued, offered and sold, and the world where law is enforceable.
SPOOFING IS NOT FRAUD ARGUE TRADERS SUBJECT TO CRIMINAL PROSECUTION
On 2nd December, an article from Katten Muchin Rosenman LLP said that former Merrill Lynch traders that were criminally charged with wire and commodities fraud for alleged spoofing activities earlier this year have sought to dismiss their indictments in a federal court. They claimed the defendants open-market orders were real and genuine, and any counterparty could have accepted them, and the defendants would have performed on their executed trades. Spoofing’ is where a person makes a buy order for a security and immediately cancels it without filling the order. Spoofing tends to increase the price of that security as other investors may then issue their own buy orders, which increases the appearance of demand for the security. The person then closes his/her long position, selling the security at the new, higher price.
1MDB SCANDAL: MALAYSIA CHARGES GOLDMAN SACHS AND 2 BANKERS
The BBC on 17th December reported that Malaysia has filed criminal charges against Goldman Sachs and 2 former employees, former bankers Tim Leissner and Roger Ng, in connection with a corruption and money laundering probe at the country’s investment fund, 1MDB. Malaysia has also brought charges against former 1MDB employee Jasmine Loo and financier Jho Low.
AUSTRALIAN FEDERAL POLICE CONTINUE TO HOLD ASSETS BELONGING TO MELBOURNE FAMILY OF SOUTH SUDANESE MILITARY OFFICIAL
Channel 9 News in Australia on 17th December reported that Titchiang Hoth Mai failed in her attempt to prevent the AFP from restraining a $1.5 million house and an Audi car as they investigate financial dealings of her brother, Ngouth Oth Mai. The investigation centres around a company called Sportscars, which was revealed during a hearing last month to have never traded or had any income. Ngouth Oth Mai is a director and major shareholder of the company.
NORWAY SCRAPS LOW-VALUE VAT IMPORT EXEMPTION IN JANUARY
VAT Live on 14th December reported that from January 2020, Norway is to remove the VAT and duties exemption for low-value imported packages. As a result, the importer will have to pay 25% Norwegian VAT and any duties for each package. It says that the importer can be either the non-resident e-commerce business, potentially requiring a local VAT registration, or the Norwegian customer.
UK: IMPORTS OF FIREARMS & AMMUNITION IMPORT LICENSING ARRANGEMENTS
The Department for International Trade on 15th November published Notice to Importers 2903 which sets out the licensing arrangements for imports of firearms and ammunition into the UK. It replaces all previous Notices to Importers on this issue. It has been updated to explain the new firearms marking requirements and information of firearms licensing when the UK leaves the EU.
A WATERSHED MOMENT FOR HEMP AND HEMP-BASED CBD IN THE US
An article published on 14th December by DLA Piper said that with the passage of the Agricultural Act of 2018 by both houses of Congress, industrial hemp and its derivatives, including hemp-based CBD, are positioned to move from an era fraught with legal uncertainty to full commercial legalisation across the entire nation. The 2014 Farm Bill legalised industrial hemp but many lingering questions remained regarding the relationship with the Controlled Substances Act, specifically with regard to the definition of “marijuana”; whether industrial hemp could be produced and sold commercially; whether industrial hemp could be sold in interstate commerce; and who was responsible for the regulation and enforcement of industrial hemp. The 2018 Farm Bill attempts to address each of these uncertainties.
EVOLVING NUCLEAR SAFEGUARDS AND THE FRONT END OF THE NUCLEAR FUEL CYCLE
In July 2018, the Stimson Center published a report saying that the point at which nuclear material becomes subject to comprehensive safeguards agreements with the International Atomic Energy Agency (IAEA) is commonly known as the “starting point of safeguards”. This report is said to be the product of 2 years of research studying the impact of evolving safeguards obligations on states, facility operators, and the IAEA at the front end of the nuclear fuel cycle. It describes how materials at the front end of the nuclear fuel cycle, over time, became subject to strengthened, supplemented, and clarified safeguards; explores the technical and political challenges to the implementation of these measures; and ends with recommendations for effective implementation of these safeguards in today’s circumstances.
THE UN ARMS TRADE TREATY AND DRONES
Another report from the Stimson Center, published in August, says that unmanned aerial vehicles (UAV), more commonly referred to as drones, have become a mainstay of military operations around the world. The UN Arms Trade Treaty (ATT) is the first treaty to establish legally binding standards for regulating the global trade in conventional weapons. The treaty was adopted by the UN General Assembly in April 2013 and aims to increase transparency and promote responsibility and accountability in international arms transfer decisions. Following the entry into force of the ATT in December 2014, key questions emerged as to whether drones fell under the ATT’s scope and how the treaty applied to concerns about drone use. Developments may challenge mechanisms aimed at regulating the transfer and use of conventional weapons systems, including armed drones.
SOUTH KOREA IMPORTS NO IRAN OIL IN NOVEMBER DESPITE SANCTIONS WAIVER
Hellenic Shipping News on 17th December reported that South Korea did not import any Iranian oil for the third straight month in November even though it has a waiver from sanctions targeting crude supplies. South Korea is usually one of Iran’s major Asian customers.
BITCOIN ATM MAY BE USED TO LAUNDER MONEY IN THE US
On 14th December, Bloomberg published an article saying that, even as crypto crashes, these machines are spreading — and they can be perfect vehicles for cleaning dirty cash.
A guide to cleaning cash –
- Walk up to a machine with a wad of cash.
- Enter the amount of Bitcoin you want to buy.
- Enter a burner phone number for a verification code to create an account.
- Scan a QR code or have one printed for new accounts.
- Plug in your cash and blindly accept whatever fees they charge.
- Shred your receipt and sleep soundly knowing your clean, shiny Bitcoin has made it to its criminal destination.
US NATIONAL STRATEGY FOR COUNTERING WMD TERRORISM AND THE 2006 VERSION
SANCTIONED RUSSIANS CAN ATTEND DAVOS AFTER PRESSURE FROM MOSCOW
The Wall Street Journal on 16th December reported that the World Economic Forum has said that sanctioned Russian businessmen may attend January’s Davos event, after Moscow threatened to boycott the annual gathering of the business and political elite.
UK AND ISLE OF MAN RENEW SANCTIONS MEASURES AGAINST KHALID SHEIKH MOHAMMED
On 17th December, the Isle of Man announced in a news release saying that the Office of Financial Sanctions Implementation (OFSI), part of HM Treasury, has renewed the final designation of Khalid Sheikh Mohammed. The renewal also has effect in the Isle of Man.
HMRC LIST OF DELIBERATE TAX DEFAULTERS
On 17th December, HMRC published an updated list of those who have received penalties either for deliberate errors in their tax returns, or deliberately failing to comply with their tax obligations.
EU TAX TRANSPARENCY: MEMBER STATES EXCHANGED INFORMATION IN 2017 ON NEARLY 9 MILLION FINANCIAL ACCOUNTS WITH A TOTAL BALANCE OF ALMOST €3 TRILLION
On 17th December, a report from the EU Commission said that EU transparency rules lead to Member States compiling and sharing data from 8.7 million financial accounts with a total value of €2,900 billion in 2017. It also said that, between 2015 and 2017, Member States shared information on over €120 million in income and capital belonging to nearly 16 million taxpayers resident in one country but receiving income from another. The first rules governing the automatic exchange of tax information came into force in 2015 with Member States being obliged to inform each other of the financial account information of individuals who are tax resident in another Member State.
PODCAST: HOW DOES CFIUS WORK?
The FCPA Compliance Report on 17th December published a podcast interview with Doreen Edelman, a partner at Lowenstein Sandler. and a noted trade law and trade policy expert. The subject is the Committee on Foreign Investment in the United States rules or CFIUS. The CFIUS Pilot Program went live in November. How long does the CFIUS process take? Why should you discuss with CFIUS counsel whether the structure of the transaction and the critical technology at issue may fall outside of the CFIUS parameters? How the compliance professional should work with CFIUS counsel?
For more information on CFIUS see –
UK MODERN SLAVERY ACT 2015 REVIEW: FIRST INTERIM REPORT
On 17th December, the Home Office published the first report from the independent review of the Modern Slavery Act 2015 covering the role of the Independent Anti-Slavery Commissioner. One of the recommendations made is that the Commissioner’s focus should be primarily on tackling modern slavery domestically, but there will need to be some continued international angle; and this international role should be focussed on countries of direct strategic importance to the UK on modern slavery. This work should be analytical and advisory, as opposed to project delivery or representation of the UK Government’s interests.
NORTHERN IRELAND: FORMER ANIMAL CHARITY BOSS AVOIDS JAIL OVER £40,000 FRAUD
The Belfast Telegraph on 17th December reported that Stephen Philpott, 55, was sentenced to 9 months suspended for 2 years at Newry Crown Court. The offences took place between January 2007 and November 2014. He was charged with receiving rental payments but “failed to account for the said payments and failed to bring notice of the said payments to the attention of the USPCA, with the intention, by means of the abuse of that position to make a gain for yourself or another or to cause loss to the USPCA or to expose the USPCA to a risk of a loss”. The court heard the rental income was £400 per month and the total amount unaccounted for over the offending period was £40,000, which has since been repaid to the charity.
INSIDER TRADING IN THE US: ARE INSOLVENT FIRMS DIFFERENT?
The blog from the Faculty of Law at Oxford University on 17th December carried a post asking are insolvent firms different from solvent firms with respect to insider trading law and policy under US law? Formally, the law does not change; but economic realities and non-securities law duties do. As a result, the insider trading landscape changes considerably. The law is more permissive in some ways, and more constraining in others, as troubled instruments trade.
PHILIPPINES SEEKS FRAUD CHARGES AGAINST JAPAN CASINO MOGUL
Reuters on 17th December reported that the Philippine DoJ has recommended the filing of charges against Japanese pachinko billionaire Kazuo Okada for allegedly misappropriating over $3 million from the operator of the Okada Manila casino.
CHARITY COMMISSION WARNING OVER CEO GIFT CARD SCAM
Accountancy Daily on 17th December reported that Action Fraud is reporting a new variation on CEO fraud whereby charities are targeted by fraudsters purporting to be the CEO (or a similar senior position within the charity) requesting that gift card vouchers be purchased for staff as a form of Christmas gift. Once the vouchers have been purchased, the fraudster requests copies of the cards and their codes, allowing the fraudster to spend up to the value of the card.
ARMED DRONES IN THE MIDDLE EAST: PROLIFERATION AND NORMS IN THE REGION
A RUSI report on 17th December seeks to contribute to the existing knowledge base on unmanned aerial vehicle (UAV) proliferation and its broader implications by focusing specifically on the Middle East. It seeks to answer 2 questions: what are the flows of UAV technology from and to the Middle East and their uses?; and which norms, practices and methodologies are exported to and/or used by Middle Eastern powers in the deployment of UAV technology? The focus of the study is on UAV that fall under the ‘Category 1’ and ‘Category 2’ definitions of the Missile Technology Control Regime. In the Middle East, the countries that operate or simply possess these drones are Jordan, Iraq, Israel, Saudi Arabia, the UAE, and Turkey.
INDIAN POLICE RAID 7 ONLINE LOTTERY CENTRES AND ARREST 11 PEOPLE ACCUSED OF TAX EVASION
Calvin Ayre on 17th December reported that police in Mumbai have raided 7 online lottery centres, and arrested 11 people accused of evading payment of the 28% goods and services tax (GST).
PENSION SCHEME TRUSTEES: HMRC SIMPLIFIES AML REPORTING REQUIREMENT
An article from Gowling WLG on 17th December reported that HMRC has changed its policy on how affected pension schemes can satisfy the reporting obligation. It says that this is a welcome simplification for those occupational pension schemes that fall within the scope of the regulations.
FRAUDSTERS ARE ENTITLED TO MAKE USE OF THE LAW OF ADVERSE POSSESSION
In Rashid v Nasrullah, the Court of Appeal has held that the law of adverse possession can be used to obtain ownership of a property even if the possession came about due to previous fraudulent activity. An article from Shoosmiths on 14th December provided detail.
ORGANISED CRIME: 22 ARRESTS IN FRENCH OPERATION AGAINST “THIEVES IN LAW” SUPPORTED BY INTERPOL
A news release from Interpol on 17th December reported that an operation led by the French Gendarmerie Nationale targeting Eurasian organised crime networks has seen 22 arrests, including Armenian, Azerbaijani and Georgian high-profile suspects from the Eurasian criminal hierarchy known as Thieves in Law (вор в зако́не) They are suspected of organising a string of break-ins and thefts across Europe, as well as money laundering.
PHILIPPINES: NEW SMUGGLING METHOD
The Manila Times on 17th December reported what was said to be a new smuggling method at Mindanao Container Terminal (MCT), enabling the avoidance of inspection by the Bureau of Customs. A member of parliament says that the “swinging” method sees containers sneaked out of the port to be unloaded in nearby warehouses. The same containers will then be brought back to the MCT for dummy inspection and documentation. It is said that the ruse works because BoC officials moved the mobile x-ray machine out of the inspection area. The article also notes that a total of 154 containers were illegally withdrawn from the MCT in July without paying customs duties and taxes, the BoC said. Also, in another smuggling attempt, containers loaded with 51,000 tons of waste from South Korea were brought to the port of Tagoloa in July.
COLOMBIA COURT FINES ODEBRECHT CONSORTIUM $250 MILLION
Baker McKenzie on 17th December reported that a Colombian tribunal has fined a consortium led by Brazilian construction firm Odebrecht $250 million and banned it from government contracts for 10 years, saying the group used corrupt tactics to win infrastructure contracts.
ACCESS TO UK COURT DOCUMENTS BY AN INTERESTED THIRD PARTY
On 17th December, an article from Dentons posed the question: what court documents can you gain access to as a third party interested in a case? More importantly, what can third parties get access in relation to a case in which you are a party? It says that the recent Court of Appeal decision in Cape Intermediate Holdings v. Dring considers these issues, in particular explaining the extent of the court’s discretion both under the CPR and under its inherent jurisdiction. The decision overturns a first instance order, which granted a non-party broad access to court documents, and restores the limited boundaries to the court’s discretion. The article explains that the general rule is that, without the court’s permission, a non-party can obtain statements of case and judgments or orders. With the court’s permission, it can obtain “from the records of the court a copy of any other document filed by a party, or communication between the court and a party or another person”. This, the article says, demonstrates the common law principle of open justice. However, the general rule and CPR prompt further queries, such as what ar “records of the court” (the article suggests that this would include most documents throughout the life of a case, such as witness statements, disclosure, expert reports, skeleton arguments, trial bundles and any evidence for interlocutory applications – all of which are, or at least may be, “filed” at court).
PODCAST: ANTI-BRIBERY AND CORRUPTION IN ECUADOR
In the latest TRACE podcast, Bruce Horowitz of TRACE Partner Firm Paz Horowitz Abogados in Quito talks about current anti-bribery challenges and enforcement trends in Ecuador.