17th January 2019
OFAC EXTENSION OF TEMPORARY LICENCES FOR EN+, GAZ GROUP, RUSAL AND JSC EUROSIBENERGO
On 16th January, OFAC announced 3 new General Licenses authorising continued operations maintaining or winding down existing contracts with these concerns (on which the US Government has proposed ending sanctions measures after Oleg Deripaska reportedly reduced or ended his ownership or control).
NEW ZEALAND: 12 FOREIGNERS INVESTIGATED BY IMMIGRATION NZ OVER WMD FEARS
Newshub in New Zealand reported on 17th January that 12 foreigners who have applied to study or work in the country are under investigation by Immigration New Zealand, and 7 students have now been denied visas over concerns their study could contribute to a WMD programme.
NEPALIS IN TAX HAVENS, SWISS BANKS, MONEY LAUNDERING
On 17th January, the Nepali Times published an article containing excerpts from an investigation carried out by The International Consortium of Investigative journalists and Centre for Investigative Journalism Nepal and revealing the names of some of the top Nepal business people. It notes that records reveal that Nepalis started to deposit money in Swiss banks the year after the Maoist insurgency began in Nepal in 1996. The country with the biggest Foreign Direct Investment (FDI) in Nepal is not China, India or the United States as one may presume, but the BVI.
REVIEW OF EXPORT CONTROL ISSUES IS PART OF NECESSARY DUE DILIGENCE
An article from Tucker Arensberg on 16th January says that, in the context o mergers and acquisitions, one area that is frequently overlooked in a company’s due diligence checks of its planned purchase is export control exposure. The results can be devastating for both the seller and the buyer if export control compliance is not taken into account. It says that export control liability should be factored into the due diligence process, and suggests some questions that should be asked.
CHARCOAL SMUGGLING FINANCES SOMALI TERRORIST GROUPS
An article from the Maritime Executive on 16th January reminds one that terrorists are profiting from the illegal charcoal trade, saying that they are making over $7 million a year by smuggling charcoal illegally out of Somalia, according to estimates by the Royal Navy. Terrorist organisations like Al-Shabaab in Somalia, where there has been a UN ban on exporting charcoal since 2012, tax and smuggle an estimated 3.5 million bags of charcoal a year, which is often marketed as legitimate to buyers in Gulf nations. The estimated wholesale value of smuggled Somalia charcoal is said to be in the range of $150 million a year. It is also said that if charcoal smuggling continues unabated, it is possible that there will be no trees left in Somalia by the year 2060. 1½ million acacia trees are felled every year.
IMF: MALTA — AML/CFT ELEMENTS OF CONCLUDING STATEMENT OF THE 2019 ARTICLE IV MISSION
On 16th January, the EIN Newsdesk carried a news release from the IMF on the conclusion of the latest review of the financial systems of Malta by the IMF. Amongst other things, it says that there is a need to safeguard financial integrity by continuing the reforms and swiftly remedying identified deficiencies in the implementation of the AML/CFT framework; guarantee the long-term independence of the supervisor and increase supervisory capacity; and enhance monitoring of the non-bank financial sector and close remaining data gaps. It also says that a failure to effectively implement the AML/CFT framework could affect the business and financial environment and potentially imperil financial stability, as could a sharp correction in housing prices. The envisaged expansion of blockchain-related activities create significant ML/TF risks, it says. However, measures taken to implement the recently-enacted 50-point action plan (based on the latest National Risk Assessment) are steps in the right direction, and the mission supports its full implementation without delay, and authorities should guarantee that virtual asset service providers implement AML/CFT requirements in an effective manner and are monitored in line with the FATF standards.
BRITISH MAN HAS JAILED FOR SENDING FUNDS TO BROTHER WHO TRAVELLED TO SYRIA
On 17th January, KYC 360 reported that Sheffield-based Abdurahman Kaabar, 24, admitted sending money to his brother but denied knowing or suspecting it might be used to fund terrorism. Instead, he claimed he had provided the funds to enable his brother to obtain medical advice only. he was sentenced to a total of 8 years and given notification orders of 15 years – these require offenders to notify the authorities of any major changes such as new name or address after they are released from prison.
BELGIUM FINES 92-YEAR-OLD FRAUDSTER
KYC 360 on 17th January reported the case of “Betty W”, 92, who defrauded the Belgian tax authorities of millions of euros over many decades was given a 16-month suspended sentence and a €600,000 fine.
PROSECUTING A COMPANY IN ITS ABSENCE
On 16th January, 6 KBW College Hill published a post which starts by reiterating the basic position in law: the court must not proceed unless it is satisfied that the defendant has waived the right to attend, and that the trial will be fair despite the absence, and then mentions the relevant leading case of R v Jones from 2005. Then it poses the following connected questions – How do these provisions apply, if at all, to the prosecution of a corporate defendant in its absence; and if a company does not co-operate with any prosecution, what shape might any trial take? Its conclusion? “The courts are unlikely to allow unscrupulous companies to kibosh any trial by simply not turning up”.
TACKLING ILLICIT FINANCE: LAWYERS UNDER THE SPOTLIGHT IN UK
On 15th January, Kingsley Napley published an article in the light of the recent NCA report on SAR submitted during 2018. That report focussed, amongst other things, on the relatively small proportion of SARs made by lawyers. The article asks if this a fair criticism and, if so, what is the reason for it? It says that the purported (it says) role of professionals as “facilitators” of money laundering is a current theme (as emphasised in a FATF publication last year) – as mentioned in the NCA Strategic Assessment for 2018. It argues that the rise in the volume of SAR submitted by the financial sector, and defensive reporting by businesses in that sector, render the decline by 300 in the number of SAR made by the legal sector is, statistically speaking, almost meaningless, and reflects the reality – that the number of occasions on which lawyers are required to report suspicions is fairly stable.
On 14th January, another law firm, MacFarlanes, in its blog also published an posting on the same topic, asking “where are the suspicious activity reports”? It says that lawyers and accountants are being singled out for criticism by both FATF and the NCA for not submitting enough reports. Another comment is that with SAR from lawyers in 2018 represented just 0.57% of the total submitted and those by accountants only 1.11%, the authorities consider this is far too few considering the client base and transactions those professions are often involved with.
SHANNON AIRPORT WELCOMES OPPORTUNITY TO EXTEND US PRE-CLEARANCE FACILITIES
Blue Sky on 17th January carried an article saying that Shannon Airport in Ireland has welcomed the proposed changes to Ireland/United States Preclearance agreement which it says will allow it to enhance its US Preclearance service at Shannon for its airline customers and their passengers, in particular, its business jet customers. The Airport’s Director of Operations is quoted as saying that in August 2009, Shannon became the first airport in Europe to have full US Preclearance and operated a US Pre-inspection facility since 1986. Shannon Airport was the first airport in the world to offer full US pre-clearance for private aircraft and is still the only airport in either Europe or the Middle East with this unique service.
EU ENVOYS AGREE SANCTIONS ON RUSSIANS ACCUSED OF SKRIPALS’ POISONING
EurActiv on 17th January reported that EU ambassadors have agreed to impose sanctions (travel bans and asset freezes) on 9 individuals and 1 entity accused of chemical weapons attacks, including 2 Russian men (Alexander Petrov and Ruslan Boshirov, said to be GRU agents) blamed for poisoning a former Russian double agent in Britain.
EU IMPOSES SAFEGUARD MEASURES WITH IMPORT DUTIES ON RICE FROM CAMBODIA AND MYANMAR
On 16th January, the EU issued a news release saying that an investigation had confirmed a significant increase of imports of Indica rice from Cambodia and Myanmar into the EU that has caused economic damage to European producers. The European Commission has therefore decided to re-introduce import duties that will be steadily reduced over a period of 3 years.
EU A STEP CLOSER TO ADOPTING NEW RULES THAT WILL BOOST THE EXPORT OF GENERIC MEDICINES AND BIOSIMILAR PRODUCTS TO THIRD COUNTRIES
On 16th January, a news release announced agreement on a draft Regulation which would introduce an exception for manufacturing for export purposes (a manufacturing waiver) to the protection granted to an original medicine by a supplementary protection certificate (SPC). This would allow EU-based makers of generics and biosimilars to manufacture a generic or biosimilar version of an SPC-protected medicine during the term of the SPC if done exclusively for the purpose of exporting to a non-EU market where protection has expired or never existed. Once the European Parliament agrees on a negotiating mandate, the Romanian presidency will start negotiations with the Parliament with the aim of adopting the Regulation.
FORMER IVORIAN LEADER LAURENT GBAGBO ACQUITTED OF WAR CRIMES
Defence Web on 16th January reported that the International Criminal Court acquitted former Ivorian leader Laurent Gbagbo of war crimes ordering his immediate release (after 7 years in custody) to the joy of dancing supporters and frustration of victims of atrocities. A judge in The Hague said that the prosecution had failed to prove accusations against Gbagbo and co-defendant Charles Blé Goudé, a former political youth leader.
SALE OF ARMED UAV GROWING TO THE MIDDLE EAST
Defence Web on 16th January reported that countries in the Middle East are increasingly buying armed unmanned aerial vehicles, especially from countries like China and Turkey which are stepping in to fill a gap created by the US strict UAV export controls.
EXCHANGE CONTROL RULES GIVES SOUTH AFRICA ADVANTAGE IN COMBATING TRANSFER PRICING ABUSE
Business Day on 17th January carried an article which claimed that an advantage South Africa has over many other countries in combating transfer pricing abuses is its exchange control regulations. For example, if a South African entity wished to transfer its intellectual property to a subsidiary located in a tax haven, it would require consent for such transfer. Companies that do not comply with the transfer pricing rules would have an adjustment made to their taxable income, resulting in income tax being imposed at a rate of 28%, plus dividends tax at a rate of 20% may be levied on such a transfer pricing adjustment. Furthermore, penalties of up to 200% may also be levied as well as interest on the unpaid tax. The normal 3-year time period for raising an additional assessment does not apply where there has been fraud, misdeclaration or misrepresentation.
OVER 9,000 IRISH MOTOR INSURANCE POLICIES WERE ISSUED THROUGH ‘GHOST BROKERS’
On 17th January, the Irish Times reported that unlicensed middle men have diverted €23 million away from insurance companies. It explains that “ghost brokers” are unlicensed and unregulated middle men acting as agents for motorists when dealing with insurance companies, and frequently use social media outlets such as Facebook to advertise their services. They promise motorists large discounts on their premiums, and it is said that some 98% of their target customers are foreign-born nationals living in Ireland. An anti-fraud conference also heard many examples of insurance frauds based on staged crashes and exaggerated claims, and about “fraud tourism” – foreign nationals coming to Ireland specifically to fake crashes and then sue insurance companies.
MAN TO STAND TRIAL FOR SMUGGLING €26 MILLION PICASSO PAINTING OUT OF SPAIN
Customs Today on 17th January reported that the picture was seized by the French authorities from Jaime Botin’s yacht in Corsica in 2017 although Botin insisted that he was taking it to Geneva, intending to store it at the Freeport warehouse complex. Botin, brother of Emilio Botin – founder of the Santander bank and uncle to the current president Ana Patricia Botin – is accused of taking the picture outside Spain in order to sell it, despite knowing that it was classed as not-exportable.
IRELAND UPDATES TRADE MARK LAWS
On 17th January, Out-Law published an article saying that changes made to trade mark laws in Ireland give businesses greater scope to protect innovative brands, but put greater onus on those businesses to proactively preserve their trade mark rights.
WHERE DOES THE MONEY GO FOR BLOCKCHAIN INVESTMENTS?
An article from Coinworks on Medium on 28th October sought to answer the question: where are the venture capitalists investing into in the blockchain space?
A FORGOTTEN CONFLICT: NAGALAND IN INDIA
On 17th January, a Commentary from War on the Rocks focussed on attempts since 2015 between the government of India and the largest Naga rebel organization, the National Socialist Council of Nagaland — or Isak-Muviah — (NSCN-IM), to reach an agreement on the framework for a peace accord. The Nagaland dispute is called one of the world’s longest-running unresolved disputes. Since 1952, Naga rebels in northeastern India have engaged in a violent insurgency against the government of India, fighting for a separate “Nagalim” or “Great Nagaland” for all Naga people. Nearly 4 years after an announcement on an agreement the road to a lasting peace remains challenging, the Commentary says. It relates the background to the situation and attempts made to resolve it. The conflict dates back to 1881, when British colonists annexed the Naga hills to control strategic trade routes in India’s north-east and into Burma (current-day Assam, Manipur, and Myanmar). The article says that Nagaland and her neighbours are no longer a backwater of the British Empire, but a strategic region linking South and South-east Asia.
HUAWEI TARGETED IN US CRIMINAL PROBE FOR ALLEGED THEFT OF TRADE SECRETS
Adding to the Chinese telecoms company’s problems, on 16th January the Wall Street Journal reported that federal prosecutors are pursuing a criminal investigation of China’s Huawei Technologies for allegedly stealing trade secrets from US business partners, including technology used by T-Mobile US Inc to test smartphones.
VAT: EUROPEAN LAW ON VAT RATES
On 17th January, the House of Commons Library Service published a briefing which says that all Member States have limited discretion in setting VAT rates under EU VAT law. This briefing discusses the development of EU law in this area, and the implications this has for the UK setting its own VAT rates.
INVESTIGATIVE REPORTER WHO EXPOSED CORRUPTION IN SOCCER SHOT DEAD IN GHANA
Buzz Feed on 17th January reported that an investigative journalist, a member of the Tiger Eye investigative reporting team, who helped expose corruption in soccer in Africa has been shot dead in Ghana. Ahmed Hussein-Suale was shot twice in the chest and once in the neck by unidentified assailants on motorbikes.
ESTONIA SCRAPS KEY PART OF NEW AML LEGISLATION
On 17th January, Reuters reported that Estonia scrapped a key part of planned legislation drafted in the wake of a scandal involving Denmark’s Danske Bank because it was not specific enough. It was intended to force people suspected of benefiting from suspicious financial transactions to prove that their wealth came from legitimate sources.
PERU “FAILING TO COMBAT ILLEGAL LOGGING IN AMAZON”
OCCRP on 17th January said that a new report from Global Witness claimed that the Peruvian government is eroding its ability to protect the Amazon from illegal logging by succumbing to corporate pressure, and that the government has conceded to the timber industry’s demands to weaken the powers of its forest watchdog, the Organismo de Supervision de los Recursos Forestales y de Fauna Silvestre (OSINFOR). The report claims that up to $112 million of illegal timber is now laundered through fraudulent permits and inadequate oversight.
SFO LAUNCHES PROBE INTO NORTH WEST CONSTRUCTION SITE DEVELOPMENTS
Construction Enquirer on 17th January reported that the SFO has opened an investigation into a suspected fraud concerning 3 property developments in Manchester and Liverpool, including New Chinatown in Liverpool.
IRELAND: FEARS ALLAYED FOR AUGHINISH ALUMINA IN LIMERICK AS US SANCTIONS VOTE FAILS
The Limerick Leader on 16th January reported on the sense of relief after the US Senate failed to block an agreement to suspend or remove sanctions imposed on the Rusal aluminium company because of links to Oleg Deripaska. A Irish subsidiary is a major employer in Limerick.
ISRAEL BAR ASSOCIATION CHIEF RESIGNS AMID SEX CORRUPTION SCANDAL
The Times of Israel on 17th January reported that Efi Nave is suspected of advancing judicial appointments for sexual favours.
HOW SBOBET GETS CREATIVE TO AVOID THE POLISH GAMBLING BLACKLIST
On 17th January, Calvin Ayre reported that at least one international operator is getting creative in its attempts to evade Poland’s digital censors.
COURT OF APPEAL: DEBT UNDER ENGLISH LAW CANNOT BE DISCHARGED BY A FOREIGN RESTRUCTURING PROCEEDING
On 17th January, Out-Law published an article about a recent case involving Russian bank, Sberbank, saying that the Court of Appeal has said that English courts will not indefinitely delay a case, preventing English creditors from pursuing claims in insolvency proceedings abroad, especially when the foreign proceedings had ended. It said that an English debt can only be discharged by an English law process.
BULGARIAN AND LIBYAN PRIME MINISTERS INTERVENE TO END OIL TANKER ROW
The Hellenic Shipping News on 17th January reported that the prime ministers of Bulgaria and Libya have said they are working for a “positive outcome” to a dispute over the alleged illegal seizure and sale in Bulgaria of a Libyan oil tanker – the 61,000-ton “Badr” was detained in Bulgaria’s Black Sea port of Burgas in November 2017. The vessel is owned by the state-run Libyan General National Maritime Transport Company, and was held by the Bulgarian company Bulgargeomin, which claimed it as collateral for a $9.2 million state company debt dating back to 1989. The regional court in Burgas refused to honour Bulgargeomin’s claims or to allow the sale of the “Badr” vessel. However, the vessel remained moored in the port of Burgas for over a year. The tanker then left with a new crew, a new name and a Panamanian flag. In retaliation, Libya’s maritime authorities ordered the seizure of all Bulgarian ships entering its ports, and this threat prompted Bulgarian prosecutors to open an investigation.