OTHER THINGS YOU MAY HAVE MISSED – FEBRUARY 7

7th February 2019

ISLE OF MAN: VIEWS OF PUBLIC SOUGHT ON MEDICINAL CANNABIS AND INDUSTRIAL HEMP

On 6th February, an news release from the Department of Health and Social Care sought public responses to the use of cannabis products for medicinal purposes and the growing of hemp for industrial use, should change, with 2 parallel consultation to be launched.

https://www.gov.im/news/2019/feb/06/views-of-public-sought-on-medicinal-cannabis-and-industrial-hemp/

UK LOOKS INTO 140 UNEXPLAINED WEALTH ORDERS, MANY LINKED TO RUSSIANS

KYC 360 reported on 7th February that the NCA has considered up to 140 unexplained wealth orders to date, according to an official – though, so far, the agency has only used the fairly new instruments to target the property and jewellery of 2 politically exposed persons (PEP).

https://www.riskscreen.com/kyc360/news/update-uk-looks-into-140-unexplained-wealth-orders-many-linked-to-russians-nca/

PUTIN SAYS AMNESTY FOR RETURNING CAPITAL MAY BE EXTENDED

KYC 360 of 7th February reported that an amnesty designed to encourage the return of capital to Russia by allowing citizens living abroad to return to the country without facing tax or other penalties could be extended.

https://www.riskscreen.com/kyc360/news/russias-putin-says-amnesty-for-returning-capital-may-be-extended/

MALTA: TOURISM MINISTER KONRAD MIZZI WITHDRAWING LIBEL CASES RELATING TO ALLEGATIONS OF MONEY LAUNDERING IN PANAMA PAPERS

Newsbook and others reported on 6th February that Mizzi stated that he would be withdrawing the libels saying that the defendants would not be burdened with any costs, despite the libel suits were yet to be decided; and further said that they had already “lost their political credibility”.

https://www.newsbook.com.mt/artikli/2019/02/06/konrad-mizzi-to-drop-libel-cases-in-connection-to-panama-papers/?lang=en

SON OF FORMER KYRGYZ AMBASSADOR JAILED FOR 3 YEARS FOR US WEAPONS SMUGGLING

Rferl reported on 6th February that the son of the former Kyrgyz ambassador to the US has been sentenced to 3 years in a US prison after he pleaded guilty to trying to smuggle weapons to Chechnya.  He and another man were accused of trying to smuggle over 100 disassembled firearms to Chechnya.

https://www.rferl.org/a/son-of-ex-kyrgyz-envoy-jailed-for-three-years-for-us-weapons-smuggling/29755235.html

PROBLEMS EMERGE IN FRANCO-GERMAN EXPORT CONTROL PLANS

Janes.com on 6th February reported French media reports of local companies facing problems fulfilling export contracts due to more stringent export regulations in Germany, with critical components not cleared for export to end-users, resulting in delays as French suppliers seek substitute components or potentially have to cancel orders.

https://www.janes.com/article/86202/cracks-emerge-in-franco-german-export-control-plans

PAKISTAN: BID TO SMUGGLE THOUSANDS OF KITES AND DEADLY STRING TO UAE

The Express Tribune on 6th February reported that police have foiled a fresh attempt to smuggle thousands of kites and “deadly” string to the UAE through postal services.  Half of the kites and string reels were to be smuggled for the Basant festival in Dubai.

https://tribune.com.pk/story/1904862/1-via-courier-bid-smuggle-thousands-kites-deadly-string-uae-foiled/

CHEMICAL WEAPONS SANCTIONS FOR BRITISH OVERSEAS TERRITORIES ORDER 2018

On 29th January, Harneys published a short piece advising that this Order in Council came into force on 9th January and applies in Anguilla, the BVI and the Cayman Islands.  The Order implements in the territories an EU Council Decision and EU Regulation 2018/1542/EU

https://www.harneys.com/insights/chemical-weapons-sanctions-for-overseas-territories-order-2018/

NATIONAL RISK ASSESSMENT OF MONEY LAUNDERING AND TERRORIST FINANCING RISKS IN CYPRUS

On 16th January, Harneys issued an article on the first NRA carried out in Cyprus as required under the provisions of the 4th AML Directive.  The Advisory Authority against Money Laundering and Terrorist Financing issued its report on Cyprus’ first NRA on 13th November, which was headed by the Central Bank of Cyprus (CBC) and the FIU, and was carried out and effectively completed as of the end of 2017.

https://www.harneys.com/insights/national-risk-assessment-of-money-laundering-and-terrorist-financing-risks-in-cyprus/

UK PARLIAMENT INQUIRY INTO ARMS EXPORT CONTROLS

On 7th February, the European Sanctions Blog reported that the Joint Committee on Arms Export Controls had begun taking evidence into an inquiry into UK arms export controls, and in particular end-user controls and compliance audits on them, and on the extent, adequacy and consistency of UK controls and oversight of arms brokering, licensing provisions applied to brokerage, and the pros and cons of establishing a register of brokers.

https://www.europeansanctions.com/2019/02/uk-parliament-committee-inquiry-on-arms-export-control/

https://www.parliament.uk/business/committees/committees-a-z/other-committees/committee-on-arms-export-controls/inquiries/parliament-2017/2017-strategic-exports-controls-annual-report-17-19/

UK PUBLISHED EXPORT LICENCE FOR DUAL-USE GOODS IF THERE IS NO BREXIT DEAL

On 7th February, Gowling WLG published an article saying that the UK’s ECJU had published a new Open Export Export Licence (OGEL) that will take effect on 29th March, if there is no Brexit deal.  Businesses making use of a licence can now apply for use of the new OGEL, should it be needed, as it would for exports to the EU if there was no deal.  It there is a deal, it is planned for the EU to continue to be treated as if an EU Member State, and for export controls to remain as before, until December 2020.

https://gowlingwlg.com/en/insights-resources/articles/2019/uk-publishes-no-deal-export-licence/?utm_source=insight&utm_medium=email&utm_campaign=insights

HMRC FLAGS ‘PHOENIXISM’ TAX AVOIDANCE SCHEMES

Accountancy Daily on 7th February reported that HMRC has issued a warning about so-called ‘phoenixism’ tax avoidance schemes that try to avoid an income tax charge for shareholders on distributions when winding up a company, and has detailed reasons why attempts to get around the new rules will not work.  Schemes try to receive favourable capital gains tax (CGT) rates rather than income tax treatment, by changing the way shareholders take value out of their companies.

https://www.accountancydaily.co/hmrc-flags-phoenixism-tax-avoidance-schemes

FIXED ODDS BETTING TERMINALS (FOBT)

On 7th February, the House of Commons Library published a briefing which looks at the controversy over fixed odds betting terminals.  It says that there are 32,956 such B2 machines in Great Britain and the gross gambling yield (GGY) from B2 was £1.7 billion.

https://researchbriefings.parliament.uk/ResearchBriefing/Summary/SN06946

REPORTING MISCONDUCT BY COMPANIES, DIRECTORS AND BANKRUPTS TO THE UK INSOLVENCY SERVICE

On 6th February, the Insolvency Service published updated detailed information about how to complain about misconduct to the Insolvency Service and what we will do about it.

https://www.gov.uk/government/publications/reporting-misconduct-by-companies-directors-and-bankrupts-to-the-insolvency-service

DRAFT EU EXIT LEGISLATION RELATING TO THE FINANCIAL SERVICES FRAMEWORK BETWEEN THE UK AND GIBRALTAR

On 6th February, HM Treasury published a news release which sets out the proposed amendments to UK legislation related to financial services passporting rights between the UK and Gibraltar, to be laid under the EU (Withdrawal) Act.

https://www.gov.uk/government/publications/draft-eu-exit-legislation-relating-to-the-financial-services-framework-between-the-uk-and-gibraltar

OPIOID WARNING LETTERS ISSUED BY THE US DOJ TARGET PRESCRIBERS

An article from Sheppard Mullin on 7th February reported that US Attorney’s Offices across the country are issuing warning letters to physicians and other prescribers cautioning them about their opioid prescribing practices.  The FDA and the Federal Trade Commission have also been issuing their own warning letters to opioid marketers and distributors over the past several months, evidencing a concerted effort to combat the opioid epidemic on a number of fronts through various federal enforcement and regulatory efforts.

https://www.jdsupra.com/legalnews/compliance-risk-alert-opioid-warning-34990/

NEW ID CHECK RULES FOR UK ONLINE GAMBLING OPERATORS

Calvin Ayre on 7th February reported that UK online gambling operators are facing tough new rules for verifying the age of their customers and restrictions on demanding further identification before processing customer withdrawals.

https://calvinayre.com/2019/02/07/business/uk-online-gambling-new-identity-verification-rules/

SON OF FORMER MOLDOVA PRIME MINISTER TO HAND OVER NEARLY £500,000

A news release from the NCA reported that a London student who paid £390,000 up front in rent for a Knightsbridge penthouse must hand over nearly half a million pounds, following an investigation by the NCA.  Freezing orders for 3 HSBC accounts held by 22-year-old Vlad Luca Filat were granted in May 2018, after NCA financial investigators suspected the funds derived from illegal activity by his father, Vladimir Filat, the ex-Prime Minister of Moldova.

http://www.nationalcrimeagency.gov.uk/news/1565-son-of-moldova-s-ex-pm-renting-1000-per-day-knightsbridge-apartment-forced-to-hand-over-nearly-half-a-million-pounds

JERSEY ADOPTS ‘GOVERNMENT OF JERSEY’ IDENTITY

On 7th February, a news release advised that the Council of Ministers have formally adopted the “Government of Jersey” (‘Gouvèrnément d’Jèrri’ in Jèrriais) as the official identity for the government, both in the island and overseas – and which aligns the identity of the government with its legal status, clarifies the differences in roles and responsibilities between the government and the States Assembly.

https://www.gov.je/News/2019/Pages/GovernmentIdentity.aspx

PORTUGAL TO REVISIT PUNITIVE ONLINE GAMBLING TAX RATES

A report via The Lawyer and dated 30th January reported that the Portuguese government has established a new working group to consider the potential for changing the country’s online gambling tax system.

https://www.vda.pt/xms/files/06_Media/2019/Noticias_e_artigos/Portugal_to_revisit_punitive_online_gambling_tax_rates___EGR_Compliance___News.pdf

KEY ACTIONS TO PROTECT SUBMARINE CABLES FROM CRIMINAL ACTIVITY IDENTIFIED AT UNODC GLOBAL EXPERT MEETING

The UN Office on Drugs and Crime on 7th February reported that over 95% of global telecoms communication occurs through fibre-optic cables.   The bulk of these cables, on which we are so critically reliant, are merely the size of a garden hose and are just lying, unguarded, on the sea floor.  It says that it is estimated that roughly $10 trillion – approximately 4 times the GDP of the UK, twice the GDP of Japan and more than the GDP of India – of economic activity moves through submarine cables every day.  Almost all of the global network of submarine cables is privately owned and maintained. After a 2018 UN General Assembly Resolution, UNODC’s Global Maritime Crime Programme (GMCP) held an expert meeting with participants from 28 states in Sri Lanka on 30th January to map the public international law regime concerning submarine cables.

https://www.unodc.org/unodc/en/frontpage/2019/February/key-actions-to-protect-submarine-cables-from-criminal-activity-identified-at-unodc-global-expert-meeting.html?ref=fs1

FIRST OF ITS KIND DRUG BUST: 60 KG COCAINE PASTE WORTH €11 MILLION SEIZED AT MALTA FREEPORT

Malta Today on 6th February reported that Customs said the drugs were found in a container travelling from South America to the Middle East.  The container was declared to have been carrying 532 drums of water-proofing compound.

https://www.maltatoday.com.mt/news/national/92802/first_of_its_kind_drug_bust_60kg_cocaine_paste_worth_11_million_seized_at_freeport#.XFyUW3d2t9B

EL SALVADOR TYCOON AND FORMER ATTORNEY GENERAL ACCUSED OF HEADING ORGANISED CRIME STRUCTURE

On 7th February, Insight Crime reported that a court in El Salvador has ruled that a corruption network run by a former attorney general and powerful businessman constituted an organised criminal structure, officially confirming what many had believed for years.  Officials said Luis Martínez and prominent businessman Enrique Rais had created an organised criminal association.

https://www.insightcrime.org/news/brief/el-salvador-businessman-ex-ag-organized-crime/

ISLE OF MAN – BREXIT PREPARATION LEGISLATION AT FEBRUARY TYNWALD

The Order Paper for the February sitting of the Island’s parliament contains a number of statutory documents made under its EU withdrawal Act.

http://www.tynwald.org.im/business/opqp/opqp/2019-PP-0007.pdf

ISLE OF MAN FORMALLY REVOKES ERITREA SANCTIONS LEGISLATION

An Order before the February sitting of the Isle of Man’s parliament formally revokes its Eritrea sanctions regime, with effect from 12th December 2018.

http://www.tynwald.org.im/business/opqp/sittings/20182021/2018-SD-0330.pdf

ISLE OF MAN ADDS TO SOMALIA SANCTIONS LEGISLATION

An Order before the February sitting of the Isle of Man’s parliament on 19th February applies into Island law EU Regulation 2018/1933, with effect from 13th December 2018, maintaining its sanctions regime in line with that of the UK.

http://www.tynwald.org.im/business/opqp/sittings/20182021/2018-SD-0333.pdf

FINANCIAL INSTITUTIONS ALERT: MARIJUANA-RELATED BUSINESSES

On 7th February, Wilmer Hale published a briefing on developments in the marijuana industry and the implications for financial institutions.  It says that the myriad — and conflicting — state, federal and international laws governing the burgeoning marijuana industry have created a complicated legal landscape for financial institutions.  In the US, most states have legalised some form of marijuana use, but the manufacture, sale and distribution of marijuana nevertheless remains illegal under federal law.  The briefing examines the fragmented legal and regulatory landscape governing the marijuana industry as well as notable recent developments and their implications for global financial institutions.  Amongst other things, it points out that the laws of some EU states, such as Germany, provide that extraterritorial activity is generally not a basis for a money laundering conviction unless the activity is illegal both in the country where the activity takes place and in the EU member country  – but that the 6th AML Directive will prohibit EU states from applying the double criminality criterion in cases of illicit trafficking in narcotic drugs and psychotropic substances (including the cultivation of cannabis).  In the UK, there is a statutory exemption to POCA for certain predicate acts that are legal where they occurred, but that exemption does not apply to marijuana possession, cultivation or sales given the prison sentences permissible for such crimes.

https://wilmerhalecommunications.com/26/3116/february-2019/developments-in-the-marijuana-industry-and-the-implications-for-financial-institutions.asp?sid=eea9e18f-27ad-484e-b6f7-c54743e6c579

WHAT IS BLOCKCHAIN?  10 PAPERS FOR A HIGH-LEVEL INTRODUCTION TO THE PRACTICAL APPLICATION OF BLOCKCHAIN TECHNOLOGY

Lex Mundi in the US has produced a set of 10 papers which is designed to provide in-house counsel and key stakeholders with a high-level introduction to the practical application of blockchain technology in specific practice areas and industries.

https://www.lexmundi.com/lexmundi/Blockchain_White_Paper_Series.asp

WHY UK LIMITED COMPANIES WILL LOSE LEGAL STATUS IN GERMANY AFTER BREXIT

A paper from law firm Huessen on 21st January says that UK Limited companies (usually in the form of the “Private Company Limited by Shares”) will lose their legal acceptance in Germany on Brexit. Measures to avoid unlimited personal liability of the shareholders – which is the result of non-recognition of the UK Limited in Germany – must be taken before the effective date of Brexit it says.  It begins by saying that, in the UK, a foreign company which has once been effectively formed in accordance with the regulations of its home country is recognised if it has its registered office in the UK.  The continental European understanding, which also applies in Germany, is a different one.

https://www.multilaw.com/Multilaw/Multilaw_News/Jurisdiction_News/Brexit_collapse_of_UK_Limited_Companies_in_Germany.aspx

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IRAN SANCTIONS UPDATE

On 4th February, Hill Dickinson published a timely update – covering everything from JCPOA and the US “snap back”, to the recently formed European SPV (INSTEX), its Blocking Regulation and the temporary waivers granted by the US.

https://www.hilldickinson.com/insights/articles/iran-sanctions

GERMAN FEDERAL COURT BANS THIRD PARTY FUNDING IN ACTIONS FOR “CONFISCATION OF PROFITS”

White & Case on 6th February published a paper about a case where the concept of “confiscation of profits” was involved.  This German legal principle aims at taking away unlawfully made profits from a wrongdoer.  Such an action does not require a damage on the plaintiff’s side, but relates solely to the profits made by the defendant, the profits of which are confiscated and go into the federal budget – albeit that the action may be one launched by, for example, a consumer’s group (as in case).  Whilst the court has said third party litigation funding is prohibited in such cases, the paper says that the good news for litigation funders is that the decision is not likely to affect the general principle established by the German Federal Court of Justice, according to which, litigation funding is admissible in civil proceedings.

https://www.whitecase.com/publications/alert/german-federal-court-justice-prohibits-third-party-funding-actions-confiscation

UKRAINE INTRODUCES NEW TAXATION RULES FOR AVIATION FUEL TO PREVENT TAX AVOIDANCE

In January, a paper from Kinstellar reported that a new set-up has been designed to prevent tax avoidance, as previously low rates of excise duty has led to the situation in Ukraine where aviation fuel is systematically used to produce diesel fuel for ordinary cars, thus creating a widespread tax-evasion scheme.  The excise duty-rate on aviation fuel (Jet A1, used by jets and turboprops, is essentially kerosene, which is very close to gas oil or derv fuel, and can be used as such) has been greatly increased. To qualify for the discounted excise duty, aviation fuel suppliers must provide the tax office with numerous primary accounting documents for each fuel delivery.  This imposes an additional administrative burden on suppliers, airlines and tax officials.

https://www.kinstellar.com/insights/detail/844/ukraine-introduces-new-taxation-rules-for-aviation-fuel-to-prevent-tax-avoidance

FRAUD IN PACKAGING RECYCLING IN THE UK: CLAMPDOWN ON “WASTE CRIME”

A paper from Kingsley Napley on 6th February followed a n Independent Review into Serious and Organised Crime in the Waste Sector, which was commissioned in June 2018 with a report published in November 2018.  An NAO report had highlighted that the self-reporting nature of the regulatory system governing packaging recycling, combined with reduced oversight from the Environment Agency, has left the industry open to fraud.  It says that the Environment Agency has indicated a new appetite to pursue investigations against organisations suspected of fraudulent activity, with a stated intention is to prosecute serious regulatory breaches, using wide-ranging statutory powers of investigation it is afforded under the Environment Act.

https://www.kingsleynapley.co.uk/insights/blogs/criminal-law-blog/fraud-in-packaging-recycling-environment-agency-is-clamping-down-on-waste-crime#page=1

ENGLISH HIGH COURT DISMISSES $45 MILLION FRAUD CLAIM WHERE PROCEEDINGS ALREADY UNDERWAY IN ANOTHER JURISDICTION

The UK Finance Disputes and Regulatory Investigations Blog published a post on 6th February, saying that where a claimant has already issued related Court proceedings in another jurisdiction, the English Court is unlikely to be the appropriate forum for the trial of a claim, according to the recent High Court decision involving the PNB bank of India, which had already issued Court proceedings in the USA and India.  The Judge found no good reason why the defendants should be concurrently sued in England for overlapping claims.  The post concludes that this case confirms the well-established rules relating to jurisdiction.

https://www.finance-disputes.co.uk/2019/02/english-high-court-dismisses-us-45-million-fraud-claim-where-proceedings-already-begun-in-court-in-another-jurisdiction/#page=1

MATERIAL SEIZED DURING A CRIMINAL INVESTIGATION IS DISCLOSABLE IN CIVIL PROCEEDINGS 

A briefing from MacFarlanes on 5th February reported on a case involving the use of “section 2” powers (i.e. s.2 of the CJA 1987), under which the Director of the SFO can require a person under investigation to answer questions and provide information or produce certain documents.  Non-compliance is a criminal offence.  It says that the impact of section 2 investigations and document-gathering is now also being felt in the civil sphere.  In a recent case, the judge ruled that material seized by the SFO under section 2 powers and subsequently returned to the defendant, could be disclosed by that defendant in civil proceedings, notwithstanding the various restrictions and confidentiality obligations attached to it.

https://blog.macfarlanes.com/post/102fef0/material-seized-during-a-criminal-investigation-is-disclosable-in-civil-proceedin

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MALDIVES EX-PRESIDENT TO BE CHARGED WITH MONEY LAUNDERING

Baker McKenzie on 7th February reported that Police in the Maldives have asked the country’s prosecutor general to charge a former president, Yameen Abdul Gayoom and his former Legal Affairs Minister Azima Shakoor, with money laundering charges.  The case stems from an allegedly shady deal to lease islands for tourist resort development and the discovery of $1 million in Yameen’s bank account.

http://www.riskandcompliancehub.com/maldives-ex-president-to-be-charged-with-money-laundering/

SPANISH SENATORS DEMAND INVESTIGATION OF TURKISH IMPORTS AND ALLEGED STOLEN SYRIAN OLIVE OIL

On 5th February, Customs Today reported that 2 Spanish senators have formally asked the Government and the European Commission if either entity is aware of any stolen Syrian olive oil currently being imported and sold in Spain – amid numerous reports that Turkey was illegally smuggling Syrian olive oil over its border to be packaged and sold as Turkish olive oil.

http://www.customstoday.com.pk/spanish-senators-demand-investigation-of-turkish-imports/

UKRAINIAN ANTI-CORRUPTION AUTHORITY ASKS COURT TO FREEZE NASIROV’S ASSETS IN UK

112 UA on 7th February reported that the Special Anti-Corruption Prosecutor’s Office (SAP) has asked a district court in Kyiv to arrest $300,000 that belong to Roman Nasirov, the ex-head of the State Fiscal Service of Ukraine.

https://112.international/politics/ukrainian-anti-corruption-authority-asks-court-to-freeze-nasirovs-assets-in-uk-36804.html

JORDAN CHARGES 29 IN FAKE CIGARETTES SCANDAL

On 7th February, the Times of Israel reported that a former customs chief, an ex-minister and a top businessman in Jordan were among 29 suspects charged with corruption in a case involving fake cigarettes.  More than a dozen companies and firms were also charged.  Included are prominent businessman Awni Mutee, ex-customs chief Waddah al-Hamoud and former water minister Munir Oweis.

https://www.timesofisrael.com/jordan-charges-29-in-fake-smokes-scandal/?src=ilaw

GENEVA PROSECUTOR CLOSES OBIANG CASE AND SELLS OFF LUXURY CARS

Swissinfo on 7th February reported that the Geneva Prosecutor’s Office has closed an investigation into Teodorin Obiang, the son of the president of Equatorial Guinea, regarding money laundering and mismanagement of public assets.  Equatorial Guinea has agreed to pay Geneva authorities $1.3 million in “procedural costs”, involving requests for legal assistance to the US, the Cayman Islands and Marshall Islands, France, the Netherlands, Monaco and Denmark.  A total of 25 vehicles seized in Geneva will be sold and the proceeds given to a social programme in Obiang’s home country.  In 2017, Obiang was sentenced to 3 years’ probation for embezzlement and corruption in France.

https://www.swissinfo.ch/eng/equatorial-guinea_geneva-prosecutor-closes-obiang-case–sells-off-luxury-cars-/44740962