22nd February 2019
AUSTRALIA DIALS BACK ON EFFORT TO CONTROL DUAL-USE EXPORTS
On 19th February, Nature reported on a review of Australian export laws that has pushed back against the government’s effort to tighten controls on technologies and research that might have dual military and non-military uses. Australian researchers, who were concerned that sweeping controls would restrict collaborative research, have welcomed the findings.
VENEZUELA STRUGGLES TO FIND BUYERS FOR ITS OIL AFTER US SANCTIONS
Oil Price.com on 21st February reported that Venezuela’s oil inventories are said to have swelled to a 5-year high – said to be a sign that Venezuelan oil buyers are now buying and that the country is struggling to sell its oil. Sanctions block all payments to PDVSA accounts, and buyers of Venezuelan crude are directed to deposit payments in a separate account, to which PDVSA doesn’t have access. US sanctions also ban US exports of naphtha to Venezuela, which the country uses to dilute its thick heavy oil to make it flow; and analysts expect that a shortage of diluents could accelerate from this month the already steadily declining Venezuelan oil production and exports. Added to this, other sources say that exports to Russia and China are said to be used to offset debt, generating no income for PDVSA.
LUXEMBOURG TO REVIEW CONTROLS OVER SPYWARE COMPANY HUMAN RIGHTS QUESTIONS
Delano on 21st February reported that Luxembourg is considering new due diligence legislation for companies based there, after Pegasus spyware developed by NSO Group, an Israeli company headquartered there was connected with the murder of the journalist Jamal Khashoggi in Turkey. A Canadian information and IT research lab has also linked Pegasus uses in countries with “dubious human rights records”. NSO Group, which rebranded as Q Cyber Technologies, maintains that its products were designed for investigation and prevention of crime and terrorism.
SPAIN: WEAPONS WORKSHOP FOR CAMPO DE GIBRALTAR DRUG TRAFFICKERS
Euro Weekly on 21st February published photos after police officers in the south of Spain have dismantled a crime ring that was supplying modified firearms to drugs traffickers in the Campo de Gibraltar. The Guardia Civil raided 2 clandestine workshops and arrested 10 people and seized 20 firearms, more than 12,400 cartridges, more than 100 silencers, €31,520 in cash and 2 vehicles, along with smoke grenades and night vision equipment. It is claimed that the crime group sold the weapons with state-of-the-art silencers manufactured in a metal machining company in the province of Madrid. More than 300 people have been arrested for arms trafficking in the Campo de Gibraltar area in the last 5 years with more than 3,150 firearms seized.
ZIMBABWE: 30 TONNES OF GOLD SMUGGLED TO SOUTH AFRICA IN 2018
On 21st February, Pindula reported that Zimbabwe is said to have lost over 30 tonnes of gold last year through smuggling.
MORE SMUGGLED ITEMS RETURNED TO EGYPT – FROM AUSTRALIA
On 21st February, Al-Bawaba reported that the fourth of 4 parts of an archaeological artefact has been returned by Australia – the other 3 parts, all illegally removed from Egypt – were recovered from Switzerland in 2017. The part in Australia had been exhibited at the Macquarrie Museum.
SOUTH AFRICA: FORGET CIGARETTE SMUGGLING – THE BIG MONEY IS IN STEALING COAL
On 21st February, the Ground Up website reported that coal theft is “the biggest game in town”, costing billions of rand a year, highly organised and a major concern to police. Coal theft is highly organised and backed by big money. The gangs behind the theft have sufficient cash to invest in fleets of trucks. The most common way of stealing coal requires the connivance of security and machine operators within the mines, and the coal is often sold back to the operator, Eskom. Another method of coal theft involves the “cloning” of trucks, where thieves dress up their trucks to look like those of legitimate operators.
CHINA STRENGTHENS AML/CFT REGIME WITH NEW GUIDANCE
On 22nd February, Regulation Asia reported that the CBIRC (China Banking and Insurance Regulatory Commission) has issued measures for financial institutions on combating money laundering, terrorism financing and tax evasion. This comes after the PBOC (People’s Bank of China) said that it plans to scrap its approval process for opening a corporate bank account nationwide this year. PBOC warned that some banks might allow corporate accounts to be used illegally, such as for money laundering and terrorist financing activities, and said it would rely on stronger oversight of abnormal accounts and suspicious transactions. The new measures mostly cover improvements to internal controls at banking financial institutions, improvements in the supervision mechanism, and clarifications on market access standards.
NEW AML GUIDELINES FOR GAMBLING IN GERMANY
DLA Piper on 20th February reported that gambling supervisory authorities of the German states have recently published new guidelines on the interpretation and implementation of the new AML Act that transposes the 4th EU AML Directive.
BRAZIL PROSECUTORS OPEN MONEY LAUNDERING PROBE INTO PRESIDENT’S SON
On 22nd February, KYC 360 reported that the senator son of new Brazilian President Jair Bolsonaro is under investigation by federal authorities for money laundering in connection to unexplained increases in his net worth.
THE ECONOMIC SUBSTANCE REQUIREMENTS
On 19th February, McDermott Will & Emery published an article saying that, in order to address concerns raised by the EU Code of Conduct Group, a number of jurisdictions have recently taken steps to meet the EU tax good governance principles by introducing “substance” rules for companies that are resident, and carrying on certain activities, in their jurisdictions. Any companies in these jurisdictions should take urgent steps to ensure they are compliant. Although the terminology differs slightly amongst the 6 jurisdictions involved, the respective legislation applies generally to companies that are “resident” in one of these jurisdictions and carry on a “relevant activity”. The article considers the substance and impact of the requirements. The legislation is already in force in the jurisdictions, but there are still questions about how to interpret some of the requirements. More detailed guidance is likely to become available in each of the jurisdictions shortly.
BREXIT AND INCOTERMS: HOW 3 LETTERS CAN MAKE A BIG DIFFERENCE
On 20th February, Travers Smith published an article saying that the government’s Brexit advice urges businesses trading with the EU to review their contracts for the supply of goods – particularly those based on Incoterms – to ensure that they remain appropriate in the event of “no deal”. The article asks: what are Incoterms, why do they matter and what changes should you make in the light of Brexit? Incoterms are standard provisions drawn up by the International Chamber of Commerce (ICC) for use in contracts relating to international trade in goods. They are not obligatory but they are widely used in practice. It points out, for example, that liability to pay tariffs normally rests with the customer, not the supplier – so unless the customer contracts to have goods supplied on DDP (Delivery Duty Paid) terms (or similar), it is likely to be responsible for paying any tariffs imposed by the UK authorities, as well as carrying out any relevant customs formalities so that the goods are cleared for import.
For the current Incoterms 2010 see –
NO DEAL BREXIT & UK RESIDENT DIRECTORS OF IRISH COMPANIES
On 20th February, Beauchamps published an article saying that, with some exceptions, Irish companies are required to have at least one director who is resident in a member state of the European Economic Area (EEA). If the UK leaves the EU without a deal, Irish companies who rely on a UK resident director to fulfil this requirement will need to take action.
INTERNATIONAL CRIMINAL LAW AND SPORTS BETTING: WHAT IS THE GLOBAL LOTTERY MONITORING SYSTEM (GLMS)?
On 18th February, Nyman Gibson Miralis published an article about GLMS, which signed a MoU with Europol under which the entities share information and be in constant consultation over sport competition manipulations and related organised crime investigations. GLMS and Europol will also co-operate in running joint activities and implementing relevant projects, notably in the field of education and capacity building. GLMS comprises a network of sports betting operators within national lotteries, establishing a global and systematic surveillance system to detect unusual or suspicious betting patterns. By generating and facilitating alerts, it distributes and collects information to and from the members involved in the system.
UK COURT PREVENTS DISCLOSURE OF DOCUMENTS TO COMPLY WITH A US SUBPOENA
Macfarlanes LLP on 18th February reported that the High Court had ruled that a company was not permitted to deliver documents that it had obtained in the course of civil proceedings in the UK in order to comply with a subpoena from the US. The article says that this is an interesting case that sets a new precedent in the increasingly complex world on international disclosure.
SFO LOOKS AT INFORMANTS
On 21st February, Greenberg Traurig published a GT Advisory following comments by the SFO Director before the House of Commons Justice Committee that getting an ‘insider’ to help the SFO understand what was going on could be helpful in presenting cases to juries. The Advisory discusses the controversial history of ‘grassing’ (and being a “supergrass”) in the UK and describes the process of obtaining immunity and other protections. It explains the process under the Serious and Organised Crime Act 2005 by which an individual may be given protection from prosecution or a reduced sentence for co-operating with law enforcement, or given an undertaking that certain evidence will not be used against them.
DELAY TO TAX HAVENS’ PUBLIC REGISTERS ‘RISKS NATIONAL SECURITY’
The Guardian on 21st February reported that, according to the House of Commons Foreign Affairs Select Committee, the UK government is undermining national security by delaying the introduction of publicly available share ownership registers in Britain’s major tax havens such as the BVI. The Committee discovered that the UK had delayed implementation to 2023, 3 years later than planned.
GERMAN BILL TO GIVE CUSTOMS MORE POWER, TACKLE UNDECLARED WORK AND CHILD BENEFIT FRAUD
On 21st February, EurActiv reported that the German Finance Minister has presented a Bill for German customs to be given more employees and powers. Customs officials will be able to support the police in cases of suspected exploitation, forced labour and human trafficking – officials will be able to more easily monitor suspects’ telecommunications and, in the case of letter-box companies, intervene when it is unclear where a company’s real workplace is. The construction sector is also in the spotlight because those actually responsible for the workers are sometimes concealed by sub-contracting companies, used in order to evade taxes and charges. In recent years, German customs have had an increasing number of tasks – these have included monitoring undeclared work and minimum wages, collecting road tax and fighting against money laundering, and an additional 3,500 positions will now be created.
CHINA RESTRICTS IMPORTS OF IRON, STEEL AND ALUMINIUM WASTE
HKTDC on 22nd February reported that several waste metals have been re-categorised as restricted in line with a recent joint directive which reassigns 8 solid waste varieties – including iron, steel and aluminium. The change in status takes effect as of 1st July.
PAKISTAN REMAINS ON FATF GREY LIST, POSITION WILL BE REVIEWED LATER
India Today on 22nd February reported on the outcome of the recent FATF Plenary. India wanted Pakistan to be placed on the ‘black list’, a move that would negatively impact the Pakistani economy.
MOLDOVAN POLITICIAN “SUSPECTED OF $600 MILLION MONEY LAUNDERING SCHEME”
TASS in Russia on 22nd February reported that Moldovan politician Vladimir Plahotniuc has been allegedly implicated in laundering funds from Russia to the tune of more than $564 million, Interior Ministry Spokeswoman Irina Volk told TASS.
COURT ORDERS FOOTBALLER JAY JAY OKOCHA’S ARREST OVER ALLEGED TAX FRAUD
On 22nd February, the Daily Post in Nigeria reported that a Lagos High Court has issued a bench warrant for the arrest of a former Super Eagles international, Austin Okocha, popularly known as Jay Jay Okocha, for failure to appear in court severally to answer questions on why he has allegedly failed to pay his income taxes.
JERSEY’S TAX LAWS ‘NO LONGER FIT FOR PURPOSE’
ITV News on 22nd February reported that Jersey’s tax laws are “no longer fit for purpose” according to a scrutiny report. Many of the current tax laws date back to 1961 and the Government has drafted an updated law.
POLICE INTERCEPT CARGO SHIP SMUGGLING €100 MILLION WORTH OF COCAINE INTO SPAIN
Customs Today on 21st February reported that a ship carrying a 3.3 tonne consignment of cocaine with a €100 million street value was recently intercepted almost 288 km off the Portuguese coast. In Spain, Guardia Civil and Policia Nacional officers, together with officials from tax authority Hacienda who planned the joint operation, were waiting for the Panama-registered ship.
EAST LONDON HEALTH SUPPLEMENTS COMPANY SHUT DOWN
On 20th February, the Insolvency service in the UK said that an East London health supplements company that secured £128,000 from elderly and vulnerable customers has been shut down by the courts. GoNutri Limited was wound up in the High Court on 12 February 2019 for trading with a lack of commercial probity, objectionable trading practices and improper sales techniques. Using a call centre based abroad to push the products, sales operatives occasionally misled customers in thinking they were representing health centres in the UK or other parts of the NHS. Products were sold at highly inflated prices and the same item could sell for different prices, ranging anywhere from £11 up to £49.99. Some customers were told that they hadn’t paid for items and were forced to pay multiple times for a single product, while others were sent items they hadn’t requested before being hounded into paying for them.
MOLDOVA: ABOUT TO GET ELECTED – AFTER A $1 BILLION BANK FRAUD
Bloomberg on 22nd February carried feature on Ilan Shor, an Israel-born businessman was sentenced to seven years and six months in jail for his alleged part in a $1 billion bank fraud in Moldova that cost its taxpayers the equivalent of 12% of the economy. Free on bail while he appeals his conviction, Shor is now a popular city mayor. He denies benefiting from the fraud and has named a political party after himself to run in the country’s parliamentary election. The same fraud led to Prime Minister Vlad Filat being convicted and jailed, though he maintains his innocence. Its alleged architect its alleged architect, Veaceslav Platon, is also accused of being a Russian agent. Platon is a dual-national, as a Russian citizen married to a former Miss Ukraine. He was jailed for 18 years in 2017, and has also been named in a separate anti-corruption investigation into a $20 billion money laundering scheme known as the “Russian Laundromat”. He too maintains his innocence.
IRAN’S OBJECTIVES AND CAPABILITIES: DETERRENCE AND SUBVERSION
An Occasional Paper from RUSI on 19th February explores Iran’s foreign policy objectives through a strategic lens, considering strengths, weaknesses, and proxy relationships. It refers to a strong deterrence posture founded on increasingly accurate rocket and ballistic missile technology, based in Iran and in Lebanon, which in the event of war will be used to strike US bases and economic infrastructure in the Gulf, and Israeli towns and critical national infrastructure. It also says that Iran’s support for Hamas and the Houthis is primarily an attempt to fix Israel, Saudi Arabia and the UAE in costly conflicts, which causes substantive political damage to its adversaries, reducing the strength of any potential coalition facing Iran.
CASH CONTROLS (AMENDMENT) (EU EXIT) REGULATIONS 2019
Now approved by the relevant Committees, this SI amends retained EU law to ensure that it works to collect information from individuals who are carrying cash in excess of £10,000 into or out of the UK in the event that the UK leaves the EU without an agreement.
MEDELLIN RAZES PABLO ESCOBAR’S HOME IN SYMBOL OF REBIRTH
The Miami Herald on 22nd February reported that a 6-floor apartment building in Medellin that Pablo Escobar once called home was demolished and officials hope it will dampen some of the fervour for the notorious drug lord’s criminal life and instead showcase the city’s rebirth.
US BANK REGULATOR REPRIMANDS JAPAN’S MUFG OVER MONEY LAUNDERING LAPSES
Reuters reported on 22nd February that the Office of the Comptroller of the Currency (OCC) said that it had reprimanded MUFG Bank, Ltd. for lapses in its AML and other compliance issues at its New York, Chicago and Los Angeles branches and dating back to 2016.
SFO ABANDONS ROLLS-ROYCE AND GSK INVESTIGATIONS
Reuters on 22nd February reported that the SFO has abandoned 2 of its largest and longest investigations, into alleged bribery at aero-engine maker Rolls-Royce and drugs maker GlaxoSmithKline. Rolls-Royce paid almost £500 million under a Deferred Prosecution Agreement (DPA) with the SFO in 2017 re payments to middlemen to secure orders in countries such as Indonesia, Russia, India, China and Nigeria. GSK had been fined £343 million in China in 2014 for paying bribes to doctors to use its drugs.
FATF GIVES IRAN UNTIL JUNE TO STRENGTHEN AML RULES
In its take on the outcome of the FATF Plenary, the Tehran Times on 22nd February reported that FATF had already given Iran until February 2019 to complete an action plan of reforms that would bring it in line with global norms, or face consequences. Now, If the shortcomings were not remedied by June, currently suspended countermeasures would automatically kick in.
30 PEOPLE SUSPECTED IN UKRAINIAN MONEY LAUNDERING THROUGH AUSTRIAN MEINL BANK
UA Wire on 22nd February reported that the Austrian Prosecutor’s Office has identified 30 suspects in the case of Ukrainian money being laundered through Meinl Bank, and it is known that the list includes Ukrainian citizens. It says that the case has to do with money disappearing from Ukrainian banks’ correspondent accounts in Austria – according to the Deposit Guarantee Fund, $385 million and €75 million were withdrawn illegally from the correspondent accounts at Meinl Bank.
CHINA’S PEER-TO-PEER LENDERS FACE CRISIS, INVESTORS FACE RUIN
A feature in Deutsche Welle on 22nd February said that a major upheaval is underway in China’s peer-to-peer (P2P) finance sector after numerous cases of fraud and negligence. As loans helped finance cars and property, the article asks could the crisis worsen the country’s economic slowdown?
BILLIONAIRE JAPANESE PACHINKO KING KAZUO OKADA RELEASED UNCONDITIONALLY BY HONG KONG’S ANTI-CORRUPTION AGENCY
The South China Morning Post on 22nd February reported that the tycoon had been granted bail after being arrested for unspecified offences last year. He achieved prominence by building an empire specialising in gaming, most notably for manufacturing pachinko machines, a Japanese pinball game. He has also been exploring the casino business in recent years.
COMMON TRAVEL AREA GUIDANCE
On 22nd February, the Department for Exiting the EU published guidance to UK and Irish Citizens on their rights under the Common Travel Area arrangements (n.b. the CTA also applies to the Isle of Man and Channel Islands). The CTA established cooperation between respective immigration authorities enabling British and Irish citizens to move freely between, and reside in, these islands.
IRELAND: EXTRADITION OF ‘CONTROLLING MIND’ BEHIND £20 MILLION TAX SCAM ORDERED
The Irish Times on 22nd February reported that the High Court was told there is not ‘a snowball’s’ chance Daniel O’Connell, 65, can pay sum being sought. Nevertheless, he is wanted in the UK for failing to pay a confiscation order amounting to almost £13 million relating to a VAT evasion case.
THE COCAINE COWBOYS
An interesting article on OCCRP on 22nd February about plans to import hundreds of kilos of cocaine into northern Italy and Slovakia, and use legal goods to disguise the drug shipments – and a drug trafficker who worked with the ‘Ndrangheta, one of the world’s most powerful organised criminal groups, to open a major new cocaine route into Europe. This report is based on 2 indictments from courts in Venice and Milan and interviews with detectives and prosecutors. There is also alleged co-operation from corrupt customs officials in Slovakia, as well as from the SIS, Slovakia’s intelligence agency. Arrests were made in 2018.
ALBANIANS PROTEST AGAINST GOVERNMENT, OPPOSITION MPS RESIGN
On 22nd February, OCCRP reported that thousands have rallied against the Albanian government, claiming it is corrupt and linked to organised crime, as opposition lawmakers resigned from parliament, demanding an early election.
UK GAMBLING REGULATOR CONSULTING ON RESTRICTIONS ON USE OF CREDIT CARDS
Out-Law on 22nd February reported that online gambling operators could be restricted or even prohibited from accepting deposits from customer credit cards in future under plans being considered by the British gambling regulator.
HUNGARY COURT SENTENCES EX-RULING PARTY LAWMAKER TO PRISON FOR GRAFT
On 22nd February, Baker McKenzie reported that a Hungarian court sentenced a former lawmaker, Roland Mengyi, to 3 years in prison for graft, state news agency MTI reported, marking a rare conviction for corruption against a member of Prime Minister Viktor Orban’s Fidesz party. He was convicted of attempted misuse of public funds and abuse of office in 2015, in a case involving several others who were not public office.
ISLE OF MAN: EUROPEAN UNION AND TRADE ACT 2019 NOW ONLINE
On 22nd February, the European Union and Trade Act 2019 was added to the Isle of Man legislation website. This Act, equivalent to the UK’s EU withdrawal Act, governs the treatment of existing EU law (that forms part of Island law) on and after exit day, and the treatment of it, and any newly applied EU law, after then.
ISLE OF MAN RELEASES ITS “NO DEAL BREXIT” GUIDE
UK: GOVERNMENT DRUGS ADVISORY BODY TO REVIEW IMPACT OF MEDICAL CANNABIS RESCHEDULE
The Pharmaceutical Journal on 20th February reported that the Advisory Council for the Misuse of Drugs (ACMD) has been asked by the Home Office to begin a long-term review into cannabis-based products for medical use. The review will assess the impact of medical cannabis being moved from Schedule 1 to Schedule 2 of the Misuse of Drugs Regulations (MDR) 2001, and will also look at whether any further legislative amendments are needed. This follows a short-term review completed last year, and a legislative change from 1st November that relaxed some cannabis use, but recommended that synthetic cannabinoids remain in Schedule 1. The new review is to be completed by November 2020.
MHRA EXPERT WORKING GROUP LAUNCHES REVIEW OF OPIOID USE
On 18th February, the Pharmaceutical Journal reported that a committee within the Medicines and Healthcare products Regulatory Agency (MHRA), has launched a review looking into the risks and benefits of opioid medicines. It will look at data on the use of opioid-containing medicines in the UK, both prescribed and over the counter (OTC), and consider whether efforts to minimise the risks of OTC and prescription opioid use have been effective, as well as the benefits and risks of using opioid-containing medicines.