31st January 2019
SARASOTA BUSINESSMAN IN EXPORT LICENCE VIOLATIONS PLEA AGREEMENT
The Business Observer reported that Satasota businessman and entrepreneur Eric Baird, after a years-long federal investigation into 166 administrative violations of US export control laws, has been placed on probation for 2 years under a plea agreement. The settlement included a $10 million fine, which Baird paid and a 5-year denial of export privileges, of which 1 year is suspended. His company provided foreign customers with a US address that they used to acquire US-origin items for export without alerting US merchants of the items’ intended destinations.
US FIREARM EXPORTS AREN’T BEING DECONTROLLED
An article in Forbes magazine on 30th January says that the government decided that there were too many commonplace items on the US Munitions List (USML), which — under the International Traffic in Arms Regulations (ITAR) — defines what qualifies as a defence export – with a licence for the export of a rifle to the UK had to undergo the same kind of scrutiny as the export of a tank to Saudi Arabia.
UKRAINE: SBU PREVENTS ILLEGAL EXPORT OF HELICOPTER ENGINES
The Kyiv Post on 30th January reported that the State Security Service has blocked the illegal export of aircraft engines from the country. The engines are subject to mandatory state export control. In the case, a Middle East country sent 4 engines for Mi. 24 attack helicopters to a Ukrainian commercial entity for repairs. Following the refusal of the customer to pay the cost of the work performed, the property became the property of the state and was transferred to a commercial entity for sale.
UKRAINE: THE ART OF CROWDFUNDING WAR
An article from Bloomberg Businessweek says that volunteers and non-profit organisations have been the backbone of Ukraine’s fight against Russia, and asks what happens when ordinary citizens conduct a war? It relates stories of private individuals, in Ukraine and abroad, paying for equipment and financing the war, as well as volunteering to fight in the Donbass region.
THAILAND: CASE AGAINST WILDLIFE TRAFFICKING ‘KINGPIN’ DISMISSED
The Bangkok Post on 30th January reported that A suspected wildlife trafficking kingpin – Boonchai Bach, a Vietnamese national with Thai citizenship – accused of smuggling $1 million worth of rhino horns to Thailand has had the case against him dismissed, in a surprise court verdict slammed by conservationists. He was arrested in January 2018 after police caught an airport quarantine official attempting to remove the horns from the quarantine section of a Bangkok airport. The case was dismissed by a judge because of a lack of evidence after a key witness changed his testimony linking Mr Boonchai to the crime.
UPDATE ON BERMUDA PRIVATE TRUST COMPANIES
On 31st January, Carey Olsen published a detailed briefing which considers how recent changes to the regulation of financial services in Bermuda have affected private trust companies. It says that amendments were made primarily to ensure that Bermuda’s legal framework remains up to date with international standards, which are aimed at maintaining the international financial system’s integrity, and they include changes to AML/CFT and record-keeping requirements.
COUNCILLORS SAY MONEY IN SUITCASES, SHOPPING BAGS USED TO PAY TAXES AT VANCOUVER CITY HALL
The Vancouver Courier on 30th January reported that citizens are bringing money in suitcases and in reusable shopping bags into city hall to pay taxes, according to accounts from 2 city councillors, including one who says she saw this happen “a few times” last year.
LOUIS VUITTON WORKER STOLE CUSTOMERS’ PASSPORT DETAILS FOR BOGUS TAX REFUNDS SCAM
KYC 360 on 31st January reported that a Louis Vuitton sales assistant at Selfridges, Manchester, has been jailed for 2½ years over her role in a scheme which involved using the stolen details of unsuspecting customers to make fake VAT claims and cash in on the refunds. She copied the passport details from legitimate tax reclaim forms of international travellers and used them on fake claims, which she and her sisters would post at Manchester Airport.
OFAC SETTLEMENT WITH ELF COSMETICS FOR IMPORTATION OF FALSE EYELASH KITS FROM SUPPLIERS USING MATERIALS SOURCED BY FROM THE DEMOCRATIC PEOPLE’S REPUBLIC OF KOREA
On 31st January, OFAC announced a settlement of $996,080 with e.l.f. Cosmetics Inc of Oakland, California. ELF has agreed to settle its potential civil liability for 156 apparent violations of the North Korea Sanctions Regulations that involved the importation of false eyelash kits from 2 suppliers located in China that contained materials sourced by these suppliers from the Democratic People’s Republic of Korea. OFAC determined that ELF voluntarily self-disclosed the apparent violations and that the apparent violations constitute a non-egregious case.
SUSPENDED SENTENCE FOR BANKRUPT WHO HID ASSET
Accountancy Daily on 31st January reported that a bankrupt tiler from Cardiff has been given a suspended prison sentence after he tried to hide a property asset which should have been used to pay his debts, including a £100,000 tax bill.
STRATEGIC TRADE REVIEW ISSUE 7 PUBLISHED
On 31st January, the latest edition of this publication (which must be good, it published an article by me last year!). The articles include –
REDUCING PROLIFERATION RISK THROUGH EXPORT CONTROL OUTREACH
Export control capacity-building programmes have evolved to take into account proliferation risks as well as a partner’s ability to effectively absorb assistance when deciding how to allocate limited outreach resources. This article begins by reviewing which export control elements, like licensing and enforcement, might be deemed essential to system functionality in the face of known proliferation procurement methods; and includes a list of lessons learned from US and EU programmes’ adoption of the “maturity model-based approach” to system development similar to the one in the World Customs Organization’s 2015 Strategic Trade Control Enforcement (STCE) Guide.
MORE UK DRAFT LEGISLATION TO CONTINUE SANCTIONS AFTER BREXIT
On 31st January, 3 more sets of regulation have been published that would allow for the UK to continue the current EU sanctions regimes (albeit as “UK” regimes) after (if?) it leaves the EU – these cover Burma/Myanmar, Venezuela and Iran (for human rights abuses).
IRAN HUMAN RIGHTS, VENEZUELA AND BURMA SANCTIONS: GUIDANCE
Meanwhile, the Home Office issues guidance on the Iran (Sanctions) (Human Rights) (EU Exit) Regulations 2019, if the UK leaves the EU without a deal. It provides guidance on best practice for complying with the prohibitions and requirements, enforcing them, and circumstances where they do not apply.
HOME-GROWN TERROR A WORSENING THREAT FOR KENYA
Defence Web on 29th January reported that incidents in recent years suggest a trend of home-grown terrorists acting against their own country, and is increasingly a local problem, with logistical support from Somalia. It says that Al-Shabaab influence and cells may have penetrated many parts of Kenya. The article says that as Kenya is a hub in Africa for businesses, diplomatic activity and most importantly, tourism, by striking Kenya’s capital city, al-Shabaab benefits from tremendous media coverage.
ZIMBABWE ANTI-CORRUPTION COMMISSIONERS RESIGN
Pindula in Zimbabwe on 31st January reported that earlier in January, the ZACC commissioners were reportedly summoned by the President and advised that they had been ineffective and that the commission would be dissolved. The commissioners were reportedly involved in corruption themselves, and the article says that they have been asked to resign.
AMENDMENT TO UK OPEN GENERAL IMPORT LICENCE (OGIL) FOR NUCLEAR MATERIALS
On 31st January, the Department of International Trade published a Notice to Importers notifying the introduction of import licensing controls on the import of nuclear materials from the EU. This import licensing control comes into force on 29th March. If a Brexit transition agreement is reached with the EU before 29th March then this amendment will be revoked. The change involves uranium ores and concentrates, plutonium, uranium 233, uranium enriched in the isotopes 233 or 235, natural uranium and mixtures, compounds and alloys, and spent or irradiated nuclear reactor fuel elements. Notice to Importers 2915 explains that the UK’s Office for Nuclear Regulation (ONR) is responsible for the licensing of imports of nuclear materials, and currently licences to import the following nuclear materials are required from outside of the European Community.
MONEY LAUNDERING CHARGES SAID TO HAVE BEEN FILED AGAINST FORMER HEAD OF THE NIGERIA INTELLIGENCE AGENCY (NIA) AND HIS WIFE
Kenneth Rijock in his blog on 30th January reported that they had been charged after millions were found in their flat, which was itself reportedly bought with stolen funds.
SPORTS INTEGRITY UNIT TO BE FORMED IN AUSTRALIA
Calvin Ayre reported on 31st January news that, as a crackdown continue on illegal gambling, with a new set of strict codes to be introduced for the sports sector, a new national watchdog is to set up, designed to eliminate cheating and match-fixing in sporting events.
ROMANIA’S “SNOWBALL” SCAM
On 31st January, OCCRP published a report saying that “Snowballing” describes a VAT avoidance system used by an organised crime group that Romanian prosecutors allege is associated with the country’s most powerful politician. It involves importing the equipment into Romania, but then exporting it to neighbouring Bulgaria and re-importing it back before selling it to customers. This allows the customers to be classified as “importers,” freeing them from the obligation to pay VAT. The scheme hinged on the definition of “re-seller”. Under the law, the importer doesn’t pay the VAT unless and until it re-sells the item to the final consumer. A case has just gone to trial in Romania’s courts, where a Romanian company and 2 well-connected Romanians are charged with tax evasion. If convicted, the defendants face up to 15 years in prison, and prosecutors seek to recover the €1.2 million in taxes from the defendants.
US CUSTOMS OFFICERS SEIZE LARGEST AMOUNT OF FENTANYL IN CBP HISTORY
On 31st January, a news release from US Customs and Border Protection reported that officers at the Nogales Commercial Facility seized nearly $4.6 million in fentanyl and methamphetamine totalling close to 650 lb from a Mexican national when he attempted to enter the US through the Port of Nogales.
AUTHORITIES IN NORTHERN IRELAND SEIZE NEARLY 5 MILLION CIGARETTES
TJI reported on 30th January that a crime task force has seized a total of 4,886,580 cigarettes and 695.93 kg of hand-rolling tobacco (HRT) worth an estimated £1.8 million in lost tax in Banbridge, Carryduff and Ballyclare.
GOVERNMENT TO BOOST INSPECTION OF HUGE NUMBER OF CONTAINERS OF SCRAP MATERIALS AND WASTE WHICH BUILDING UP AT SEAPORTS IN VIETNAM
Vietnam News on 31st January reported that It is estimated that as of January 25th, more than 24,000 containers had been piled up at seaports for more than 90 days. The problem has been partly blamed on the lack of co-operation between governmental agencies when tightening rules on imports of environmentally harmful scrap and waste, which has caused problems for even honest businesses. The prolonged congestion has forced many businesses to suspend their operations or even close due to a shortage of necessary scrap materials.
PHILIPPINES: CUSTOMS UNCOVERS ILLEGAL FACTORY FOR INSECTICIDES
The Manila Times on 31st January reported that officers accidentally discovered a clandestine factory manufacturing fake and toxic insecticides during a post-audit inspection.
ITALY SEIZES 644 KG OF COCAINE HIDDEN IN HONDURAN COFFEE
ABC WLOS News on 30th January reported that the cocaine, hidden in bags of Honduran coffee, comprised one of the largest drug hauls in Italy in recent years. The cocaine, in 582 blocks, was hidden inside sacks of coffee in a container aboard a Portuguese-flagged cargo ship. Police said the container originated in Honduras, and was transferred in Costa Rica to another ship bound for Spain.
DUBAI HAS BECOME A “MONEY LAUNDERING PARADISE” SAYS TRANSPARENCY INTERNATIONAL
Baker McKenzie on 31st January reported that, in its latest Corruption Perceptions Index, anti-graft campaigning group Transparency International says that “Dubai has become an active global hub for money laundering … where the corrupt and other criminals can go to buy luxurious property with no restrictions.”
UKRAINE BLOCKS ILLEGAL EXPORT OF 250 PISTOLS
In a news release dated 1st February, the SBU in Ukraine reported that the dealers involved planned to certify them as “hunting” or “sports” items. In fact, they were 250 rifle-bored CZ Scorpion pistols.
EU OFFICIAL “DEMANDS LUXEMBOURG FREEPORT CLOSE AMID MONEY LAUNDERING ALLEGATIONS”
The Hyperallergic website on 31st January carried a report saying that the European Commission president Jean-Claude Juncker has referred the case, which concerns a high-security facility housing art and luxury goods, to the European commissioner of economic and financial affairs. A German MEP had singled out for criticism Luxembourg’s system of freeports: tax-free warehouses where the rich can store valuable assets like art, cars, wine, and jewellery.