23rd January 2019
SRI LANAKA: ILLICIT CIGARETTE MARKET AND TAX IMPLICATIONS
On 23rd January, the Daily Mirror in Sri Lanka carried an article about a recent study by the academics of the University of Kelaniya and Open University of Sri Lanka which estimates that Sri Lanka lost Rs.18 billion in tax due to contraband cigarettes in 2018, despite law enforcement authorities having seized over 580 million illegal cigarettes smuggled into the country during the same year. According to the study, the higher price of legal cigarettes and Sri Lanka being an island with a slew of small fisheries harbours, which in most of the times go unmonitored by the law enforcement agencies, evidently help the thriving contraband cigarette market. About 25% smokers surveyed for the study admitted to smoking a contraband cigarette during a week.
REVIEW OF US AML AND SANCTIONS POLICY AND ENFORCEMENT IN 2018
On 22nd January, White & Case published a review which provides an overview and insights with respect to material developments in the US regarding Bank Secrecy Act/AML and economic sanctions policy and enforcement in 2018. It discusses key developments and trends in BSA/AML and economic sanctions policy and enforcement on an agency-by-agency basis, including rule implementations, enforcement actions and agency statements suggesting future priorities and actions. In addition, it discusses potential legislative changes to BSA/AML and economic sanctions policy under consideration by US lawmakers.
AUSTRALIA: REGULATORS BET ON TIGHTER CONTROLS AS ILLEGAL GAMING SET TO TOP $2 BILLION
The Financial Review reported on 23rd January that a study has revealed that illegal betting in Australia has grown 30% faster than legal gambling, was estimated to cost about $383 million a year in lost tax revenue and was a prime target of tax authority and police efforts to crack down on the nation’s $50 billion black economy. The Hong Kong-based anti-illegal betting taskforce of the Asian Racing Federation investigated the extent of illegal betting in Australia, New Zealand, Singapore, South Africa and South Korea and it is claimed that about 8 in 10 global sports bets are thought to be illegal. Australia’s illegal betting as a percentage of the total market is about 6%, the smallest in the region, and contrasts with South Korea at more than 60%.
BULGARIAN SOCIALIST MP ELENA YONCHEVA CHARGED WITH MONEY LAUNDERING
Novinite on 22nd January reported that Elena Yoncheva will be investigated for money laundering in particularly large amounts, appropriated by the already bankrupt CCB (Corporate Commercial bank or Corpbank).
US SECTION CUSTOMS DUTY 301 DUTY MITIGATION STRATEGIES
Baker McKenzie has published a briefing which suggests various strategies by which US importers may be able to mitigate the effect of those section 301 duties on merchandise imported into the US. These duties are the additional customs duties on approximately $250 billion worth of Chinese products when imported into the US, under authority of section 301 of the Trade Act of 1974.
In the latest TRACE podcast, Michelle de Kluyver of Addleshaw Goddard provides an overview of Brexit (for an international, probably mainly US, audience) and then drills down on its potential impact on specific compliance issues, including anti-bribery, AML and sanctions.
CANADA: NEW GUIDANCE FROM FINTRAC – EXPANDING SUSPICIOUS TRANSACTION REQUIREMENTS
On 21st January, Blakes published an article saying that the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) recently updated its industry guidance in respect of suspicious transaction reporting, saying that the Guidance effectively provides new regulatory requirements for the filing of STR and related compliance obligations.
CUSTOMS, VAT AND EXCISE REGULATIONS: LEAVING THE EU WITH NO DEAL
On 23rd January, HMRC published an updated collection which brings together regulations, explanatory memoranda, and an impact assessment in preparation for Day 1, if the UK leaves the EU with no deal.
DOJ REVERSES WIRE ACT OPINION AS IT APPLIES TO NON-SPORTS GAMBLING
On 23rd January, Greenberg Traurig published an article about the recent DoJ memo which reverses the 2011 opinion interpreting the Wire Act in its application to online gambling. The new opinion instructs that the Wire Act is applicable to any form of gambling that uses a wire communication and crosses state lines. As drafted, this includes online gambling and online lotteries.
AZOV SEA BLAZE “ILLUSTRATES THAT US SANCTIONS” ON RUSSIA WORK
EurActiv on 23rd January reported that 2 ships ablaze in the Black Sea region, leaving at least 10 crew members dead, caught fire while transferring fuel mid-sea after one vessel was barred from using its usual port in southern Russia due to US sanctions risk, sources told Reuters.
UK: INDEPENDENT REVIEW INTO SHARIA LAW
On 23rd January, the Home Office published the Government response to submissions to its consultation on sharia law.
CONFLICTS AND CORRUPTION IN CAMEROON DRAIN THE ECONOMY
Deutsche Welle on 23rd January published an article saying that Cameroon is finding it difficult to meet its financial commitments as the battle against armed separatists and corruption depletes the country’s resources. It says that, in addition to corruption and the battle against separatists fighting to create an English-speaking state, there is also the war against Boko Haram on Cameroon’s northern border with Nigeria and the spillover of the crisis in the Central African Republic (CAR). All of these combined are draining the state of its resources.
ESTONIANS EMBEZZLED MILLIONS FROM FINLAND THROUGH TAX EVASION IN CONSTRUCTION SECTOR
Postimees in Estonia on 23rd January reported that Estonian businessmen stole over €4 million euros from the Finnish state and used shell companies in Estonia to launder the money, with suitcases full of cash between Helsinki and Tallinn. The scheme benefited at the expense of cash-strapped construction workers who were sent to do the dirty work. Shell companies issued invoices for services that were never rendered – a so-called invoice factory scheme. The money paid out based on fake invoices was transferred to Estonian companies ran by straw men.
INTERNATIONAL POLICE CO-OPERATION ARRESTS SUSPECT BEHIND €10 MILLION THEFT
A Europol news release on 23rd January reported that the UK South East Regional Organised Crime Unit (SEROCU), in a joint operation with the Hessen State Police in Germany, the NCA and Europol, has arrested a 36-year-old individual on suspicion of fraud, theft and money laundering. The operation was launched following the theft of around €10 million in the IOTA cryptocurrency from over 85 victims worldwide since January 2018. The investigation began in early 2018 when the Hessen State Police received several reports from citizens of money been stolen from their cryptocurrency wallets. In July 2018, German authorities identified a possible suspect behind the fraud case living in the UK.