8th January 2018
CHINA: $58 MILLION E-CIGARETTE SMUGGLING OPERATION BUSTED
Xinhua on 7th January reported that Customs in east China’s Zhejiang Province had arrested 27 suspects involved in an electronic cigarette smuggling case. It is said that over 470,000 cartons of cigarettes were confiscated, with another 30,000 cartons and 500 sets of tobacco heating devices seized from 3 cross-border smuggling gangs.
FATF EVALUATES THE UK’S AND ISRAEL’S AML/CFT PROGRAMMES
In an article on 7th January, the National Law Review summarises the conclusions of the recent FATF evaluations of the AML/CFT systems of the UK and Israel, as the reports are considered at a FATF meeting in Sydney. In the case of the UK, it notes concerns expressed by FATF about the UK’s policy decision to limit the role of the FIU in undertaking operational and strategic analysis, which has resulted in a shortage of human and IT resources, questioning the use of SAR information and the ability to share information with foreign FIU. It also warned that a large number of the 19,600 regulated entities engage in high- and medium-risk activities but are not subject to regular, cyclical supervision, and that DNFBP supervisors, in particular, lack a comprehensive understanding of ML/TF risks.
CROATIA IMPLEMENTATION OF THE 4TH ML DIRECTIVE
On 7th January, EUAC published a short article summarising the changes made to Croatia’s AML/CFT law by implementation of the EU 4th AML Directive.
JERSEY APPROVES US-STYLE LLC
On 4th January, Carey Olsen published a briefing saying that Jersey’s decision to allow the creation of limited liability companies (LLC) will allow the island to attract more US-based clients and offer more flexibility than the current partnership status based on English law. The briefing examines the options.
LITIGATION PRIVILEGE AND THE ‘DOMINANT PURPOSE’ TEST: ENRC DECISION APPLIED
On 7th January, a report from Lewis Silkin was concerned with correspondence between auction house Sotheby’s and experts it consulted about a painting it had sold but that was later claimed to have been counterfeit. In the course of subsequent proceedings, Sotheby’s disclosed its correspondence with the art experts, but withheld inspection on the grounds of litigation privilege. Consequently, an interim application was made to the High Court for inspection of that correspondence. The court ruled that the correspondence was not protected by litigation privilege and inspection was ordered.
IS A NORWICH PHARMACAL ORDER A MECHANISM TO OBTAIN EVIDENCE TO SUPPORT A PRIVATE PROSECUTION?
In a briefing from Edmonds, Marshall, McMahon (self-described as “private prosecution specialists”) says a recent High Court decision shows that Norwich Pharmacal Orders (NPO) are available to secure evidence to support private prosecutions in an appropriate case, but that great care must be exercised in deciding when and how to use this tool. The intended private prosecution was for alleged insider trading and fraud. An NPO is a court order for the disclosure of documents or information held by a third party which has been innocently mixed up in wrongdoing, forcing the disclosure of documents or information.
HOW TO CARRY OUT A RIGHT TO WORK CHECK IN THE UK
On 7th January, Morton Fraser issued a short guide in Q&A format, saying that, since 2016, the penalties for employing someone without the right to work in the UK have been significant, but following a set process can help businesses avoid issues. Notably, it says that the requirement applies to all employees regardless of their nationality and it is important that an employer applies their policy uniformly to avoid any potential claims of discrimination. This includes checking the right to work of any British employees, rather than simply targeting one group of employees for example.
GUATEMALA PULLS OUT OF UN CORRUPTION BODY
The Miami Herald on 8th January reported that Guatemala has said it was withdrawing from a UN-backed anti-corruption commission and giving its prosecutors a day to leave the country, as President Jimmy Morales moved to expel a body that has investigated him, his family and top government officials. During its 11 years’ operating in Guatemala, the commission has pressed corruption cases that have implicated more than 600 people, including elected officials, businesspeople and bureaucrats, and it said in November that it has won 310 convictions and broken up 60 criminal networks.
VAT AND CHURCHES
A House of Commons Library briefing paper on 7th January examines how construction work for churches is treated for VAT in the UK, proposals for reform in this area, and the changes made in Budget 2012, removing the zero rate of VAT which had applied to alteration work on listed buildings. It also gives details of the current grant scheme for church repairs.
HOW ORGANISED CRIME PROFITS FROM DEFORESTATION IN COLOMBIA
Insight Crime on 7th January reported that 2 years after the signing of a peace deal between the Colombian government and the FARC, Colombia’s forests are under siege and experiencing heightened levels of deforestation promoted by various criminal actors looking to expand their illicit revenue streams – illicit mining and coca production.
REPORTED GABONESE COUP FIZZLES OUT BUT FOCUSES ATTENTION ON INSTABILITY CAUSED BY CONTINUING ABSENCE OF AILING PRESIDENT
Janes.com reported on 7th January that Gabonese authorities have quashed after a few hours an attempted coup which appeared to be spearheaded by just a handful of soldiers.
NOTES ON THE TAXATION OF WORKS OF ART IN THE UK
A Chapter in the 7th edition of The Private Wealth and Private Client Review published in September 2018 provides an overview of the taxation position of works of art. It says that the importance to the UK, especially London, of maintaining its position as the leading art market is a consideration for successive governments and to this end fiscal policy is comparatively benign; where possible, the government seeks to encourage private retention of works of art, thus reducing the public costs associated with keeping them in the UK. It concludes that it remains to be seen how much the changes in the relationship with European countries (i.e. Brexit) will affect the art market or if successive governments will continue in this comparatively benign approach.
OECD DEVELOPMENTS ON THE TAX FRONT
Another Chapter in the 7th edition of The Private Wealth and Private Client Review published in September 2018 provides an overview of OECD developments involving FATF and the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes, as well as another significant project that the OECD has been working on – the BEPS programme. BEPS is the umbrella term used for the OECD work on measures to inhibit the shifting of corporate profits to low-tax or no-tax jurisdictions where there is little or no economic activity.
EU COMMISSION LIFTS ‘YELLOW CARD’ ON THAI FISH EXPORTS
EU Observer on 8th January reported that the EU had lifted its ‘yellow card’ warning on Thai fish exports, saying the country had “successfully addressed shortcomings” in illegal, unreported or unregulated fishing. Thailand is the world’s third-largest exporter of seafood.
US THREATENS SWISS FIRM OVER INVOLVEMENT IN RUSSIA GAS PIPELINE
EU Observer on 8th January reported that the US has threatened to impose sanctions on Swiss engineering firm Allseas unless it pulls out of Russia’s project to build a new gas pipeline to Germany called Nord Stream 2. Allseas, which has an operational base in the Netherlands, is meant to lay 90 percent of Nord Stream 2 on the Baltic Sea bed by 2020.
COAL MINING TURNS INTO LAUNDERING: NEW FACTS ON MOLDOVAN LAUNDROMAT
Pravda Report in Russia on 8th January reported claims that Russian coal mine owner, Ruslan Rostovtsev, was involved in laundering over $400 million through his network of offshore and British companies.
NETHERLANDS: BRIBERY ALLEGATIONS OVER SALE OF RAILWAY LAND
The NL Times on 8th January reported that the Public Prosecutor is investigating the sale of NS land (NS is the state railway company) to a real estate entrepreneur in 2014.
CENTRAL BANKS IN NO RUSH TO ISSUE E-MONEY
MSN Money on 8th January reported that the Bank for International Settlement has released the results of a survey, saying that most central banks have no plans to issue a digital version of their currency after studies left them unconvinced of the merits of e-money. Only 5 central banks have progressed to e-money pilot projects. More than 85% of central banks say they are either unlikely or very unlikely to issue any type of digital currency in the next 3 years, and only one central bank said it was very likely to issue a digital version of its currency in the next 6 years.
PERU ATTORNEY GENERAL TO QUIT AMID ODEBRECHT GRAFT INVESTIGATION
Baker McKenzie on 8th January reported that the Peruvian Attorney General said he would resign amid a mounting public outcry over his handling of the high-profile corruption investigation involving Brazilian builder Odebrecht – after he dismissed 2 lead prosecutors from the inquiry, a move that prompted widespread scorn and a threat from the President to suspend him.
LAW SOCIETY PRACTICE NOTE ON NON-DISCLOSURE AGREEMENTS AND CONFIDENTIALITY CLAUSES IN AN EMPLOYMENT LAW CONTEXT
Local Government Lawyer on 8th January reported that the Law Society of England and Wales has published a practice note on non-disclosure agreements (NDA) and confidentiality clauses in an employment law context, saying that it should be read by all solicitors who draft non-disclosure agreements and confidentiality clauses in an employment law context, whether that is for their own firm or for a client. Notably, the Practice Note says that where 2 or more mandatory principles come into conflict, the principle which takes precedence is the one which best serves the public interest in the circumstances, especially the public interest in the proper administration of justice.
SCIENTISTS DEVELOP 80% ACCURATE WRITTEN TEXT LIE DETECTOR
Police Professional on 8th January reported that false robbery reports have been successfully identified with 80% accuracy by the technology, known as VeriPol. It does this through a combination of automatic text analysis and machine learning techniques to recognise patterns that are more common with false claims, such as the types of items reported stolen, finer details of incidents and descriptions of a perpetrator. It is now currently being used across Spain to detect false statements.
VENEZUELAN CRUDE OIL SALES TO US DROP TO LOWEST IN ALMOST 30 YEARS
Hellenic Shipping Report on 8th January reported that Venezuelan crude exports to the US last year fell 15% to the lowest annual average in nearly 3 decades, as fast-declining oil output and financial sanctions continued to hit sales.
EX-READING FOOTBALLER ACCUSED OF MONEY LAUNDERING
The BBC on 8th January reported that a former Premier League and Nigeria international footballer, Sam Sodje, 39, is accused of having laundered more than £30,000 linked to an international fraud, a court has heard. He is alleged to have funnelled the cash through his own bank account after companies were tricked into handing over money. The jury heard the funds were paid into an account in London belonging to Mr Sodje’s 38-year-old brother Akpo Sodje, also a former professional footballer and now believed to be in Dubai.
DEA AGENT ALLEGEDLY LINKED TO COLOMBIAN MONEY LAUNDERING SCHEME
CNN on 8th January reported that a DEA agent is under investigation in connection with a scheme to launder millions of dollars for Colombian drug traffickers. He is said to have received cash payments from an account containing hundreds of thousands of dollars in drug money, and also directed additional money to be deposited into the accounts of his family members.
HOW THE SINALOA CARTEL IS USING CHINESE CHEMICALS TO FUEL AMERICA’S OPIOID CRISIS
On 8th January, VICE News carried an article saying that the cartel has found a way to meet demand for heroin that doesn’t involve fields of poppies. Powerful synthetic opioids such as fentanyl were involved in more than 40% of the record 70,000 fatal overdoses in the US. It says that there is growing evidence that illicit fentanyl is being produced primarily in Mexico in clandestine cartel labs, with precursor chemicals sourced from China.
IRELAND: DATA WATCHDOG WARNS IRISH BUSINESSES MUST PREPARE FOR ‘NO DEAL’ BREXIT
Out-Law on 8th January reported that Irish businesses should understand what personal data they transfer to the UK at the moment and take steps to ensure the data transfers can continue if the UK leaves the EU without a withdrawal agreement, Ireland’s data protection watchdog has said.
TAIWAN INVESTIGATES BASF EMPLOYEES OVER TRADE SECRETS THEFT
World Intellectual Property Review on 8th January reported that Taiwanese authorities are investigating 6 current and former employees of German chemical company BASF who are accused of leaking company secrets to a Chinese rival. They are suspected of selling confidential information concerning electronic manufacturing processes and technology to Chinese company Jiangyin Jianghua Microelectronics Materials.