24 January 2019
CURRENCY CONTROL REGIME IN UKRAINE
On 23rd January, Redcliffe Partners published an article about the revised currency controls in place in Ukraine from 4th January, and which take effect from 7th February. Whilst some what it calls outdated controls are dispensed with and a liberalisation of the currency control regime but with financial monitoring, as well as a tightening of tax legislation, such as through BEPS and similar measures. It explains the main changes, saying that the most important are the extended term for settlement under export/import contracts – extension from 180 to 365 days, and abolition of foreign economic sanctions for breach of the deadline; and abolition of individual national bank licences – being replaced with a general cap (limit) for certain cross-border payments, with a general cap for making payments to non-residents. It also highlights the remaining restrictions, including investments abroad being subject to a €2,000,000 cap for legal entities and €50,000 for Individuals
ARMENIA, UNDER NEW LEADERSHIP, RE-OPENS PANAMA PAPERS CASE
Hetq on 23rd January reported the re-opening of a probe into a powerful political figure months after a new government came into office on the heels of a peaceful revolution. Armenia’s Special Investigative Service (SIS) is said to be investigating Mihran Poghosyan, 42, over his interests in 3 offshore companies. Under Armenian law, it is illegal for government officials to manage overseas business. SIS is also investigating possible money laundering, according to the report. Poghosyan denied any role in 3 Panama-registered companies – Sigtem Real Estates Inc., Hopkinten Trading Inc. and Bangio Invest S.A. – despite documents from the Panama Papers.
THE FUTURE OF UK SANCTIONS POLICY INQUIRY
On 23rd January, the House of Commons Foreign Affairs Committee published oral and written evidence submitted to this inquiry which explored the strengths and weaknesses of the UK’s current sanctions regime, and discussed some of the key challenges and opportunities for the UK as it prepares to implement an independent sanctions policy.
UK: EXPORT CONTROL (AMENDMENT) (EU EXIT) REGULATIONS 2019
On 23rd January, the DIT published a news release saying that the Regulations are made to address inoperabilities and deficiencies of UK law arising from the withdrawal of the UK from the EU and to ensure EU-derived domestic export control legislation operates effectively post-exit.
IRISH-BASED COMPANY ADMINISTERS UN INTERNATIONAL CIVIL AVIATION ORGANISATION (ICAO) INTERNATIONAL REGISTRY OF MOBILE ASSETS
An article from Blue Sky about Aviareto, a joint venture between SITA and the Irish Government, is celebrating its 1 millionth registration of aircraft assets. It points out that Aviareto holds the contract with the ICAO to operate the International Registry of Mobile Assets, which is used to record the financial interest in airframes, aircraft engines and helicopters. Financial interests in aircraft from across the world are registered in Ireland with Aviareto and to date over half a trillion dollars’ worth of assets have been securely registered. It says that recording financial interests with Aviareto ensures a clear priority is established between competing interests. Essentially, it establishes who gets paid first. This is particularly important in the case of defaults and disputes. Aviareto has run the registry since 2006 following a global tendering process run by ICAO.
PROJECT EAGLE: CRIME AGENCY IDENTIFIES 8 FURTHER POTENTIAL SUSPECTS IN NORTHERN IRELAND £1.2 BILLION PROPERTY FRAUD
The Irish Times on 24th January reported that the Public Prosecution Service has confirmed it has received a file of evidence from the NCA which contains the names of 8 potential suspects linked to allegations surrounding the £1.2 billion sale of Nama’s property portfolio. None of the 8 suspects has been publicly identified. It is the latest development in the NCA’s long-running and complex investigation into the controversial sale by Nama of its former Northern Ireland portfolio – known as Project Eagle – to US investment fund Cerberus in 2014.
UK: FURTHER ARREST MADE OVER £41 MILLION FARNBOROUGH COCAINE SEIZURE
The Breeze reported on 24th January that a man from Bournemouth’s been arrested by the NCA in connection with the seizure of half a tonne of cocaine on a private jet at Farnborough Airport last year.
PIRAEUS PORT TURNED INTO A GATE FOR COUNTERFEIT AND UNDERVALUED CHINESE GOODS
PortSEurope on 24th January reported that Greece will be fined more than €200 million by OLAF for its failure to stop a massive tax fraud by Chinese criminals importing extremely cheap footwear and clothing items through the country’s largest port of Piraeus. Piraeus Port Authority SA (PPA) is majority-owned and operated by China’s state owned COSCO Shipping Ports Limited since 2016. Tax evasion is carried out through the customs regime which allows the importer, usually Chinese, to pay the duty at the entry gate of the EU putting products into free circulation throughout the EU. The second issue concerns underpriced counterfeit products imported from China.
EU TAKES ACTION AGAINST UK OVER TAX EXEMPTIONS FOR SOME COMMODITY MARKETS
On 24th January, Reuters reported that the EU is to take legal action against the UK over tax exemptions it grants to some commodity markets, waivers that Brussels considers in breach of EU rules. Under EU rules, countries require EU authorisation not to charge sales tax on products and services. In 1977, the UK obtained a waiver to charge a zero-rate VAT on some commodity markets, but has since unlawfully extended its scope to other markets.
SUDAN’S PROTESTS: SOMETHING NEW?
On 24th January, a Commentary from RUSI looks at recent developments in Sudan. It says that the unrest that flared up in the country in December 2018 could be more than a flutter, and thus amount to something very different. Protestors’ concerns are easy to identify, it says, national insolvency, debt and a lack of hard currency are distorting local markets, contributing to spiralling inflation and shortages in staple commodities from wheat to pharmaceutical goods to fuel. Bakeries are empty, subsidies have been drastically cut and volatile prices are disrupting supply chains and service delivery. It says that dividends from the partial lifting of US sanctions in 2017 have been disappointing, and yields from a burgeoning gold market remain meagre given that most artisanal mines – responsible for 90% of national production – operate outside the government’s control.
US AND RUSSIA SPAR OVER ACCUSED CRYPTO-LAUNDERER
OCCRP on 24th January reported that a dispute between Russia and the US over the fate of a fallen cryptocurrency king has escalated to the Kremlin, where President Vladimir Putin raised the matter with Greek Prime Minister Alexis Tsipras. At issue is who will prosecute Alexander Vinnik, a Russian citizen accused of helping launder at least $4 billion through one of the world’s largest bitcoin exchanges, BTC-e. He was arrested in Greece in 2017.
BEHIND THE CORPORATE VEIL: NEW OWNERSHIP RECORD RULES IN CANADA
The Lawyer on 24th January carried an article about new legislation to require private corporations to track and record individuals with significant control over the corporation, and which is expected to come into force this Summer.
FUTURE OF PAYMENTS EXAMINED IN AUSTRALIA
An article from Out-Law on 24th January reported that alternatives to cash, including digital currencies, could be explored more closely in Australia under plans to modernise the payments system in the country. The tentative proposal was set out by the Australian Payments Council (APC), an industry-led body that engages with an arm of Australia’s central bank to help shape national policy on payments, as it launches a public consultation.
HONG KONG CUSTOMS SEIZE BIGGEST AIR CARGO HAUL OF KETAMINE IN A DECADE
The South China Morning Post on 23rd January reported that HK$57 million worth of the drug found in shipment marked ‘vehicle parts’. The 120 kg haul discovered when consignment from Malaysia was selected for routine inspection at airport cargo terminal.
FORMER NBA EXECUTIVE PLEADS GUILTY IN MULTIMILLION-DOLLAR FRAUD SCHEME
Baker McKenzie on 24th January reported that Jeffrey R. David, the former Sacramento Kings executive and rising NBA star schemed to steal $13.4 million from the franchise and sponsors.
UK: COURT OF APPEAL CONFIRMS SHIP ARRESTOR DOES NOT HAVE TO PROVIDE CROSS-UNDERTAKING IN DAMAGES (AS WOULD BE THE CASE IF FREEZING ORDER FOR ASSETS)
On 24th January, Ince & Co published a briefing about a recent court case, saying that a decision has upheld the Admiralty Court’s decision not to order an arresting party to provide a cross-undertaking in damages. In doing so, both the first instance and appellate court have confirmed the traditional position under English law, which is that there is no right to damages in circumstances in which an arresting party acts in good faith and without gross negligence, but is later unsuccessful in pursuing the claim. The claimants had sought a court order that the vessel should be released from arrest if there was no cross-undertaking from the bank involved – this to be similar to that normally offered in the case of freezing orders and would, if granted, allow the Owners to subsequently recover damages for any losses sustained as a result of the arrest without having to show wrongful arrest.
THE EU FIGHT AGAINST TAX FRAUD
On 24th January, the EU Parliament Research Service published a briefing paper saying that tax policy, and the fight against tax fraud, have gained particular exposure over the past 5 years as a result of the light shed by repeated tax leaks and the related journalistic investigations. It looks at the current state of play, public expectations, EU action and proposals and potential for the future.
USING AML MEASURES TO CURB PENSION FRAUD IN NIGERIA
In an article in KYC 360 on 24th January, looked at a revised approach involving a strong due diligence element to the processing of death benefits in one of Africa’s most populous states. However, the article argues, to reduce the fraud risks the National Pension Commission should direct pension fund administrators to adopt CDD measures, record keeping measures, transaction monitoring measures and reporting measures. They should also be mandated to apply a risk-based approach to their compliance programmes. Additionally, it says, management should consider the staffing resources and the level of training necessary to promote adherence with these policies, procedures, and processes.
WHITE HOUSE HINTS IT MAY ALLOW LAWSUITS OVER CUBAN-CONFISCATED PROPERTIES
On 24th January, Crowell Moring published an article saying that on 16th January the White House announced that it was considering allowing the suspension of Title III of the Helms-Burton Act to lapse, thereby opening the floodgates to litigation over property confiscated by Fidel Castro and the Cuban government 60 years ago. The article provides a history of the Act and discusses what to expect.
MARRIOTT TEACHES 500,000 FRONT LINE HOTEL WORKERS HOW TO SPOT SIGNS OF HUMAN TRAFFICKING
Illicit Trade on 24th January reported that US global hotel chain Marriott has taught 500,000 of its workers how to spot the signs that a guest might be a victim of human trafficking, and what they should do in the event they are faced with such a scenario. The company rolled out mandatory human trafficking awareness courses for staff members working at its managed and franchised sites across the world in January 2017 – and announced the milestone figure during National Slavery and Human Trafficking Prevention Month in the US.
US: INDIVIDUALS REMAIN FOCUS AFTER DOJ REVISIONS TO YATES MEMO ON INDIVIDUAL ACCOUNTABILITY
An article on 24th January from US law firm, King & Spalding, said that recent changes to Justice Department policy on prosecuting corporate individuals reveal more continuity than rupture with prior policy and underscore DoJ’s focus on individual accountability. King & Spalding attorneys examine the changes and provide a revised manual provisions with added comments interpreting the changes.
INADEQUATE CONTROLS ARE THE ACHILLES HEEL FOR FOREIGN BANKS IN THE US
On 24th January, Forbes published an article saying that high-profile enforcements have highlighted the legal and reputational risks to foreign financial institutions operating in the US that fail to implement robust systems for AML, KYC and OFAC compliance.
IMF SAYS GROWTH OF BLOCKCHAIN IN MALTA POSES SIGNIFICANT RISKS
The Coin Telegraph on 24th January reported that a mission from the IMF has judged that the growth of blockchain in Malta has created significant risks of money laundering and terrorism financing in the island’s economy. It is said as being high in the IMF’s list of concerns regarding possible AML compliance violations.
COMMUNITY INTEREST COMPANIES (CIC): AN INTRODUCTORY GUIDE
On 21st January, Burges Salmon published an article which takes a look at Community Interest Companies – what they are, the purposes they can be used for and how to set them up. They are a type of corporate vehicle which was introduced under UK company legislation in 2005, specifically for social enterprises and/or ‘not for profit’ projects. It has the well-established form of a normal limited company, either limited by shares or limited by guarantee, and is subject to the regulation of both Companies House and the CIC Regulator.