16th January 2019
NEW POST-BREXIT 50 PENCE COIN
JAPAN TO RESTART IMPORTING IRANIAN OIL
Nikkei Asian Review reported on 15th January that Japan expects to restart imports of oil from Iran, which have been suspended under US sanctions, as early as this month, under an exemption agreed with the US in November.
AUSTRALIA: FLIGHT ATTENDANT SMUGGLED DRUGS IN ‘HIGHLY ORGANISED’ RING
The BBC on 16th January reported that Australian police say they have busted a “highly organised” drug ring which allegedly used a flight attendant from Malindo Air, a small Malaysian airline, to smuggle drugs into the country. The Melbourne-based Vietnamese syndicate had been operating for at least 5 years. 8 people, including 1 Malindo Air employee, were arrested in Melbourne.
ROMANIA LOSES €641 MILLION DUE TO CIGARETTE SMUGGLING IN 2018
See News on 15th January reported that the loss of revenue is similar to the one recorded in 2017, as the share of the black market of cigarettes in Romania edged up to 16.3% in 2018. In 2018, the Romanian authorities prevented over 112 million contraband cigarettes from reaching the country’s market, about 25% less than in the previous year. It says that tobacco is the second biggest contributor of revenue to Romania’s state budget, after the oil industry.
CANADA: QUEBEC MAN CAUGHT SMUGGLING 2.96 MILLION ILLEGAL CIGARETTES
The Whig News on 15th January reported that a man from Quebec has been charged by Ontario Provincial Police after he was caught smuggling 2.96 million illegal cigarettes in a U-Haul rented truck.
SMUGGLERS CAUGHT WITH 170 KG OF SHISHA TOBACCO IN SUITCASES AT MANCHESTER AIRPORT
The Yorkshire Evening Post reported on 15th January that 2 men from Leeds had been arrested in November after arriving on a flight from Oman via Dubai. They have been sentenced to 9 months’ in prison each, suspended for 2 years, and community service.
IRELAND: REGISTER OF BENEFICIAL OWNERSHIP AT DRAFT STAGE
On 15th January, the Law Society of Ireland reported that the drafting of legislation to establish a central register of beneficial ownership is at an advanced stage and will be concluded soon. This legislation is expected to assign separate legal responsibility to the Registrar of Companies.
NIGERIA AND THE GULF OF GUINEA: LEGAL LIMITS OF ARMED GUARDS ON BOARD SHIPS
On 16th January, an article from Akabogu & Associates said that voyages in West African waters, particularly the Gulf of Guinea, are considered dangerous and raises the question of whether shipowners are entitled to put armed guards on board their vessels to protect them from attacks by arms-bearing third parties. The International Maritime Organisation neither endorses nor condemns the use of armed personnel on board merchant ships, but leaves the decision to the shipowner subject to the law of the flag state. In Nigerian waters, the possession of a firearm – without a licence from the Nigerian president or the inspector general of police, unless the individual is in the armed forces – is prohibited, and licensed private guard companies may provide guard services, but cannot carry arms during their duties.
US IMPORT RESTRICTIONS IMPOSED ON CERTAIN ARCHAEOLOGICAL AND ECCLESIASTICAL ETHNOLOGICAL MATERIAL FROM BULGARIA, AND CERTAIN ARCHAEOLOGICAL MATERIAL FROM CHINA
On 14th January, Baker McKenzie reported an extension of import restrictions on certain archaeological and ecclesiastical ethnological material from Bulgaria. It also reported an extension of import restrictions on certain archaeological material from China.
CHEMICALS REGULATION: GOVERNMENT REVEALS BLUEPRINT FOR UK REACH POST-BREXIT
On 14th January, Burges Salmon LLP published an article saying that the UK government has published legislation to create a ‘UK REACH’ and a UK chemicals agency, which may include ‘significant costs’ for businesses. EU Regulation No. 1907/2006 on the Registration, Evaluation, Authorisation and Restriction of Chemicals governs the regulation of chemicals for the protection of human health and the environment. The article provides a guide to the new arrangements, beginning with a summary of when, if and how the REACH Amendment Regulations might come into force.
FORMER ROMANIAN FOOTBALL LEAGUE HEAD, MEDIA MANAGER SENTENCED TO JAIL FOR CORRUPTION
Romania Insider on 16th January reported that Dumitru Dragomir, former president of the Romanian Professional Football League (LPF) and Ioan Bendei, a former manager of local telecom group RCS&RDS, were both sentenced to 4 years in jail for bribery (subject to appeal).
PHILIPPINES: ‘HIGH-PROFILE’ CHINESE FUGITIVE WANTED FOR CORRUPTION ARRESTED
GMA News Online on 16th January reported that Xie Haojie, 49, was turned over to Chinese police. He is said to have fled China and hid in the Philippines from March 2018. He is under investigation in China for allegedly embezzling public funds and taking bribes in his capacity as general manager of a state-owned enterprise.
US CUSTOMS SCRUTINISING IMPORTS THAT USE THE “FIRST SALE” VALUATION METHODOLOGY
Sandler Travis Rosenberg on 16th January reported that the use of the first sale rule has increased dramatically over the past several months as companies seek to lessen the impact of the additional tariffs on imports from China. But US CBP is said to be scrutinising imports that use this valuation methodology more closely as part of a broader increase in enforcement efforts. The article cautions that importers should therefore review transactions taking advantage of the first sale rule to ensure they are consistent with CBP requirements. It explains that under the rule, the declared value of a qualifying transaction may be based on the purchase price between the middleman/vendor and the manufacturer rather than the importer and the middleman/vendor.
CORPORATE GOVERNANCE AND DIRECTORS’ DUTIES IN IRELAND
On 16th January, law firm Matheson has made available the Thomson Reuters Practical Law Q&A guide to Corporate Governance and Directors’ Duties in Ireland. This is said to give an overview of corporate governance trends in Ireland, corporate governance legislation and the authorities that enforce it. The guide also covers corporate social responsibility and reporting, board composition, and in-depth analysis on directors’ duties and liabilities.
UK TAX ON OFFSHORE INTANGIBLES: ‘SERIOUS’ COMPLIANCE ISSUES
Out-Law on 16th January published an article saying that the new UK tax charge on multinationals using intangibles held in low tax jurisdictions to generate UK revenue could give rise to “serious” compliance issues for non-UK companies as well as their UK affiliates.
HOUSING OFFICER AT LOCAL AUTHORITY JAILED FOR £300,000 FRAUD DESPITE NO PERSONAL BENEFIT
The Local Government Lawyer on 15th January reported that Stuart Burrell, a former Southend-on-Sea Borough Council housing officer who is also a noted escapologist, has been jailed for a fraud from which the court accepted he did not personally benefit. He forged invoices and letters from housing suppliers saying he wanted to help “put a roof over people’s heads”. The court was told how he cut corners to give public funding to 2 Southend housing projects after rule changes meant they may not have been eligible.
15 JAILED OVER MULTIBILLION-DOLLAR FRAUD IN CHINA
On 16th January, Xinhua reported that a court in Shanghai has imprisoned 15 people for fraud valued at about $6.4 billion. The main suspects, Huang Jialiu and Wei Yanping, were sentenced to life in prison and ordered to pay fines, while 13 others received jail terms ranging from 9 to 15 years. The fraudsters were executive staff with 3 companies including Shanghai Kuailu Investment Group. The companies used counterfeit documents to pool funds from private investors through the Internet and brick-and-mortar stores between 2014 and 2016.
13 CAR THIEVES WITH EXPENSIVE TASTE ARRESTED BY FRENCH GENDARMERIE
A news release from Europol on 16th January reported a swoop on a criminal network behind the trafficking of high-value vehicles, estimated of having generated €4 million in criminal revenue. There were 13 house searches in Nimes (France), which resulted in the arrest of 13 suspects and the seizure of 26 vehicles, as well as several tens of thousands of euros frozen on bank accounts. Cars were stolen in Belgium, Germany or the Netherlands, the vehicles were ringed and sold locally in Nimes. The suspects focused on stealing prestigious brands, like Porsche and Lamborghini.
JERSEY APPROVES US-STYLE LLC
Appleby in an article dated 17th January said that the Limited Liability Companies (LLC) Law is expected to come into force in early 2019 and is designed to allow fund managers and investors to use a LLC structure which they will be familiar with from the US and certain other international finance centres. It provides an overview and says what the key features are.
NORTH KOREA’S LESS-KNOWN MILITARY THREAT: BIOLOGICAL WEAPONS
On 15th January, the New York Times carried an article that starts by saying that pound for pound, the deadliest arms of all time are not nuclear but biological. However, it says that the Trump administration has given scant attention to North Korea’s pursuit of living weapons — a threat that analysts describe as more immediate than its nuclear arms. According to an analysis issued by the Middlebury Institute of International Studies at Monterey last month, North Korea is collaborating with foreign researchers to learn biotechnology skills and build machinery. As a result, the country’s capabilities are increasing rapidly.
MAERSK TO BEGIN RANDOM CHECKS OF CONTAINERS IN US OVER SAFETY FEARS
On 16th January, Loadstar reported that the shipping line is to begin physically inspecting container contents in North America as part of its efforts to stem the increasing numbers of fires that break out inside boxes during transit, as well as boxes in which cargo moves or is damaged due to not being lashed correctly. The Maersk initiative comes as global shipping insurer the TT Club has launched its #Fit4Freight campaign in conjunction with the Global Shippers Forum, the World Shipping Council and ICHCA. It is reported that statistics indicate that as much as 66% of incidents related to cargo damage in the intermodal supply chain can be attributed in part to poor practice in the overall packing process, including not just load distribution and cargo securing, but also poor practice in the workflow from classification and documentation through to declaration and effective data transfer.
PODCAST: COMMON DUE DILIGENCE CHALLENGES
In the latest TRACE podcast, Pia Vining of TRACE discusses the 5 most common due diligence challenges her team sees and the growing sophistication of the international community of third party intermediaries.
GEORGIANS ASK ‘WHY OLIGARCH IVANISHVILI’S ATTACKING TBC BANK’
BNE Intellinews on 16th January carried an article saying that Georgia’s chief prosecutor was personally asked last year by the chairman of ruling party Georgian Dream, billionaire oligarch Bidzina Ivanishvili, to investigate London-listed TBC Bank’s operations over the past 15 years. Various media outlets in Georgia have reported that the request for investigations into TBC seems politically motivated. Georgian-Russian dual national Ivanishvili, a former prime minister of Georgia is also its richest person. It says that the matter appears to relate to the $2.5 billion Anaklia deep-water port on the Black Sea coast — seen as Georgia’s most important project.
GOLDMAN BOSS APOLOGISES FOR 1MDB SCANDAL
On 16th January, the BBC reported that Goldman Sachs new boss has apologised to Malaysia for the role an ex-partner played in the corruption scandal but distanced the bank from the scheme, which saw billions embezzled from the state development fund, 1MDB.
IRAN WORKING ON CRYPTOCURRENCY – “CRYPTO-RIAL”
The Tehran Times on 16th January reported that the Central Bank of Iran has been working with domestic knowledge-based companies to develop a digital currency, called crypto-rial, supported by HyperLedger Fabric technology. development of A rial-based national cryptocurrency is said to have been achieved and when the CBI approves the uses of national cryptocurrency, it will be issued to financial institutions such as banks to test payments and internal and interbank settlements. However, the article notes that the US sanctions affecting a number of cryptocurrency exchange platforms, including Binance and Bittrex, restricted Iran from receiving services. FinCEN is also said to have issued a warning in an Advisory to assist US banks and other financial actors such as cryptocurrency exchanges in identifying “potentially illicit transactions related to the Islamic Republic of Iran”.
AFRICA: HOW MULTINATIONALS AVOID PAYING THEIR TAXES
On 16th January, All Africa carried an article about 2 recent studies which expose in new detail how multinational corporations avoid paying tax in a developing nation. They use actual corporate tax returns in a developing country for the first time to analyse how multinationals take profits earned in one country and shift them to a “tax haven”. Firms operating in South Africa but owned by a parent in a tax haven are shown to avoid taxation “on as much as 80% of their true income”. One study finds that a small number of the biggest multinationals – pre-eminently in the mining and financial industries – is responsible for the vast bulk of “profit-shifting”. It also gives a breakdown of the most frequently used tax havens. The OECD has said that “aggressive tax planning” by multinationals is one of the factors contributing to losses of somewhere between 4% and 10% of global corporate income tax revenue.
NCA RECOVERS £1.7 MILLION OF ASSETS AS PROCEEDS OF DRUG TRAFFICKING AND MONEY LAUNDERING
A news release from the NCA on 16th January advised that the NCA has used proceeds of crime powers to seize property worth £1.7 million from associates of an organised crime group involved in drug supply in Staffordshire and the West Midlands. 9 men and 4 women connected to the group were sentenced at Stafford Crown Court in December for their involvement in a large-scale conspiracy to supply cocaine. 6 properties were seized using a Civil Recovery Order.
APPLYING CONVENTIONAL ARMS CONTROL IN THE CONTEXT OF UNITED NATIONS ARMS EMBARGOES
This 2018 report from the UN Institute for Disarmament Research (UNIDIR) says that the past decade has witnessed the highest number of UN arms embargoes running concurrently across the globe. The report provides a brief overview of the evolution of the use of arms embargo measures throughout UN sanctions history. It also examines some of the challenges related to benchmarking and other processes used to reassess and adjust sanctions regimes and offers a comprehensive overview of sources of information used by Member States to inform these processes. The report introduces preliminary observations for potential approaches to more systematically integrate the analysis of national weapons and ammunition management (WAM) capacities into assessments of arms embargoes, and a more robust use of arms control obligations to support the objectives of embargoes and sanctions regimes. It uses 5 cases studies – Libya, CAR, Somalia, Liberia and the Ivory Coast.
LAW SOCIETY RESPONSE TO FATF REPORT ON UK AML/CFT
On 16th January, the Law Society of England & Wales issued a news release about the mutual evaluation report on the UK published in December. It lists the key highlights and recommendations. It also points out that the FATF process for the UK is not over: 2 more reviews are expected within the next 5 years – a technical compliance review in 2021 and an effectiveness review in 2023. It says that neither review is likely to be strenuous, but focus will be placed on the weaknesses identified last year, primarily UKFIU resourcing and the supervisory regime.
THE EVOLUTION OF EXTREME-RIGHT TERRORISM AND EFFORTS TO COUNTER IT IN THE UK
In the January 2019 edition of the CTC Sentinel, this article which says that the focal point has been National Action — a small, overtly national socialist group that in December 2016 became the first extreme-right group to be banned in the UK since 1940 and the first ever such group to be proscribed as a ‘terrorist’ organisation. British authorities were subsequently confronted with a new networked threat posed by clusters of activists who continued to operate clandestinely after the ban, as well as a larger and more nebulous threat from extreme right-wing ‘lone actors’ and have responded with an increasingly co-ordinated and multi-layered approach. It concludes that the threat posed by extreme-right terrorism has increased not just in the UK but across Western Europe.
REVISITING THE IDEOLOGICAL ORIGIN OF THE ISLAMIC STATE
Another article in the January 2019 edition of the CTC Sentinel is concerned with the background to IS, saying that it is not just an offshoot or development of Al-Qaida. Despite its history as a local Al-Qaida affiliate in Iraq (it did grow out of it – but their common history is said to have ended in 2014), the Islamic State developed from an ideological and cultural trend born in late-1980s Afghanistan that was always in tension with the core idea and identity of Al-Qaida. In fact, the article argues, the ideological vision of the Islamic State developed in some ways in opposition to Al-Qaida. Furthermore, the Islamic State’s predecessor group was later only incorporated into Al-Qaida due to the strategic gains both groups hoped to benefit from as a result of a merger.