26th February 2019
HONG KONG’S EXPORT RULES FOR BABY MILK FORMULA TO STAY IN PLACE
The Hong Kong Free Press on 26th February reported that the Hong Kong government has announced that export controls on baby milk formula will remain in place as parallel trading activity persists. The policy was implemented in March 2013 following protests over the mass purchase of baby milk powder in Hong Kong by Chinese tourists and parallel traders. Shelves were emptied owing to safety concerns over such products in the mainland. Exporting of the product for personal use is limited to 1.8 kg (about 2 cans) per person per 24 hours. The number of convicted cases in breach of the export control has maintained at around 3,800 per year since 2016.
TUNISIA: CUSTOMS SEIZE 98,000 PACKETS OF CIGARETTES
Hellenic Shipping News on 18th February reported that customs officials seized a total of 98,000 packs of cigarettes in operations at La Goulette port in Tunis and on Tunisia’s southern border near Remada. The destination for the cigarettes is thought to be Italy. Cigarette smuggling is a lucrative trade in southern Tunisia and across north Africa.
UN: NORTH KOREA’S OIL SMUGGLING BLOWS PAST IMPORT CAP
The Nikkei Asian Review on 26th February reported that North Korea likely received far more petroleum in 2018 than allowed under UN sanctions, with Russia and China appearing to look the other way on illicit transfers of oil at sea, according to a UN report, with ship-to-ship transfers having become increasingly sophisticated.
SWEDBANK HIRES EY TO CONDUCT FORENSICS INTO MONEY LAUNDERING
Consultancy Europe reported on 26th February reported that, in the wake of the Danske Bank affair, Swedbank, one of the largest banks in Sweden, has hired EY to investigate the bank’s possible involvement in large-scale money laundering.
https://www.consultancy.eu/news/2411/swedbank-hires-ey-to-conduct-forensics-into-money-laundering
IRELAND: EXPRESS TRUST TRUSTEES MUST NOW SET UP BENEFICIAL OWNERSHIP REGISTERS
Law firm Arthur Cox published a briefing saying that the Irish The Department of Finance has taken the first step towards implementing a central register of the beneficial ownership of trusts, as required by the Fourth and Fifth Money Laundering Directives. As of 29th January, a trustee of an express trust must now collate information on the beneficial owners of that trust, and establish a register containing that information.
http://www.arthurcox.com/wp-content/uploads/2019/02/Beneficial-Ownership-of-Trusts-Feb-2019.pdf
CALIFORNIA BANK VICE PRESIDENT BUSTED IN UNDERCOVER STING
KYC 360 on 26th February reported that a court had sentenced a vice president of East West Bank to 2 years in prison for conspiring to launder more than $25,000 in suspicious funds through cashier’s cheques. Vivian Tat co-ordinated with bank client Ruimin Zhao and her husband, Raymond Tan, to convert cash provided by a federal informant. The latest convictions flow from Operation Phantom Bank which, since 2015, has resulted in 6 indictments of 25 defendants purportedly linked to organised crime, narcotics trafficking and international money laundering.
SOUTH AFRICA PROPOSES WITHHOLDING TAX ON GAMBLING WINNINGS
On 21st February, Cliffe Dekker Hofmeyer published an article saying that a gambling tax, first announced in 2011, and which was due to be introduced in 2013, may now be on its way. In the 2019 Budget, the Minister announced that South African government intends to publish draft legislation pertaining to a gambling tax for public comment in 2019.
CIVIL RECOVERY PROCEEDINGS UNDER PART 5 OF POCA: FUNDING THE DEFENCE
On 25th February, Carmelite Chambers published a briefing, from a lawyer’s perspective, on defending civil recovery cases under Part 5 of the Proceeds of Crime Act 2002. It starts by explaining that the litigation leading to a Civil recovery Order usually starts with the NCA securing, without notice, a Property Freezing Order freezing the assets that may become the subject of a final order. The end result is often what is in effect, a criminal trial in the High Court, with the defendants facing allegations that they probably were involved in drug trafficking, corruption, mortgage fraud and so on. It says that, a first, civil legal aid was available for these cases but this simply did not properly work and rates were so poor and the mechanics so cumbersome that eventually a scheme was introduced to permit access to the funds frozen by the PFO to those defending in such cases. However, the whole area of funding has become something of a specialism in itself. The briefing considers how funding may be provided, and the potential problems and pitfalls.
https://www.lexology.com/library/document.ashx?g=eb2b668e-949c-4890-8a5e-aedd4e876b18
6 HIGHLIGHTS OF DAC6 – A NEW EU INFORMATION REPORTING REGIME
On 22nd February, Eversheds Sutherland published a briefing about the transaction reporting requirement issued under EU Directive 2018/822/EU, which has the goal of providing early access for tax authorities to information about tax planning and sharing of that information among EU Member States. The article explains that the Directive is dubbed “DAC6” because it is the 6th iteration of the Directive on Administrative Cooperation (originally Directive 2011/16/EU), and it requires additional exchanges of information for cross-border arrangements that meet certain hallmarks or characteristics and may apply to ordinary business transactions. Under DAC6, intermediaries of a company that engages in what the Directive terms a cross-border arrangement that meets at least one pre-determined hallmark will be required to report the transaction to the tax authority of the appropriate Member State. In some cases, the company itself may be required to report such arrangements. Each Member State will automatically exchange and communicate the information to the competent authorities of all other Member States through a centralised database. The briefing highlights 6 factors to bear in mind about DAC6. It says that DAC6 represents a major compliance obligation, requires transaction-by-transaction reporting within a short time frame of 30 days, and its broad definition of cross-border arrangement allows it to cover steps leading up to the implementation of an arrangement.
https://www.lexology.com/library/document.ashx?g=b4ca67f3-117b-40dd-a325-47ac8bf60e19
BELARUS: EU PROLONGS ARMS EMBARGO AND SANCTIONS AGAINST 4 INDIVIDUALS FOR ANOTHER YEAR
On 25th February, a news release advised the extension of EU sanctions against Belarus to (at least) 28th February 2020.
ROMANIAN COURT FREES FORMER MINISTER SENTENCED FOR CORRUPTION
Romania Insider on 26th February reported that the Supreme Court freed former minister of energy Constantin Niţă, whose case will be re-tried starting April 15th. This is a further case following the Constitutional Court’s ruling on irregularities in the formation of 5-judge panels. In June 2018, he had been sentenced to 4 years in prison for influence peddling.
https://www.romania-insider.com/index.php/court-frees-constantin-nita-feb-2019
FATF TO VISIT SRI LANKA IN MAY TO REVIEW COMPLIANCE WITH AML/CFT STANDARDS
Colombo Page on 26th February reported that FATF has made the initial determination that Sri Lanka has completed its action plan and warrants an on-site assessment to verify that the implementation of AML/CFT reforms has begun and is being sustained, and that the necessary political commitment remains in place to sustain implementation in the future. Since October 2016, the country had been subjected to a review of the International Cooperation Review Group (ICRG) of the FATF to assess the progress of AML/CFT effectiveness in the country. After finding that Sri Lanka has not made sufficient progress in 4 areas, namely International Co-operation, Supervision, Legal Persons and Arrangements and Targeted Financial Sanctions on Proliferations (North Korea and Iran), FATF added it to its “grey list”.
http://www.colombopage.com/archive_19A/Feb26_1551151365CH.php
CONSEQUENCES OF UNILATERAL US SANCTIONS AND GROWING MARKET COMPETITION TO ENERGY MARKET IN EUROPE
A paper from ETH Zurich on 25th February examined how unilateral sanctions function as a tool of US policy towards Russia; the economic impact of these sanctions; and the effects of US LNG exports to Europe. It says that the increased use of economic instruments of power in US policy towards Russia is negatively affecting European and German interests. It concludes that the impact on Russia’s current oil and natural gas production and energy exports has so far been rather minimal. However, US measures have dissuaded companies from investing in expensive projects and developing new large deposits, instead encouraging them to concentrate on boosting production from previously developed fields and re-opening small fields. As a result, current production and exports of crude oil and natural gas increased despite the sanctions. As a response, the article suggests that the European Council should swiftly add all the relevant US legal bases to the annex of the EU “blocking legislation”; and that the EU and Germany should continue to focus on diversification, including higher LNG imports, not least as a political signal to Washington and Moscow.
EU COMMISSION PUBLISHES ADDITIONAL “NO-DEAL” BREXIT GUIDANCE ON CIVIL JUSTICE COOPERATION
On 25th February, Dentons published an article saying that in January the EU Commission published a replacement notice on the impact of a No-Deal Brexit on the rules of civil justice and private international law. The Client Alert provides an overview of the key points in the EU Commission’s update and highlights some of the potential repercussions of the UK becoming a “third country” from exit day as well as departure on a No-Deal basis. The Commission’s No-Deal updated notice applies to all disputes i.e. from financial markets to real-economy disputes and beyond. It explains that important Regulations likely affected by a No-Deal Brexit include the Brussels I Regulation, the Lugano Convention, the Insolvency Regulation, the Hague Conventions and the Rome Regulations, among others – and the Alert briefly explains the effect of each of the main Regulations.
https://www.jdsupra.com/legalnews/stark-warning-or-smart-positioning-the-67930/
AFGHANISTAN LAUNCHES NEW EXPORT ROUTE TO INDIA THROUGH IRAN
Customs Today on 26th February reported that Afghanistan began exports to India through an Iranian port, as the landlocked, war-torn nation turns to overseas markets to improve its economy. Officials said 23 trucks carrying 57 tonnes of dried fruits, textiles, carpets and mineral products were dispatched from western Afghan city of Zaranj to Iran’s Chabahar port. The consignment will be shipped to the Indian city of Mumbai.
http://www.customstoday.com.pk/afghanistan-launches-new-export-route-to-india-through-iran-2/
NEW ZEALAND CUSTOMS SEIZE $55 MILLION OF METH HIDDEN IN GOLF CARTS
On 26th February, Customs Today reported that 2 men – a Taiwanese national, 39, and a Chinese national, 27 – are scheduled to appear in court after allegedly attempting to smuggle 110 kg of methamphetamine and 2 handguns into New Zealand inside golf cart batteries.
http://www.customstoday.com.pk/customs-seize-55m-of-meth-hidden-in-golf-carts/
2 YEARS AFTER PANAMA PAPERS STILL NO COURT CASE FOR MR MOSSACK AND MR FONSECA
In his blog on 25th February, Kenneth Rijock reports that 2 years after partners Jurgen Mossack and Ramón Fonseca Mora were arrested, on money laundering charge, the investigation is said to be incomplete, and there’s no sign the case will ever go to trial.
http://rijock.blogspot.com/2019/02/two-years-after-their-arrest-for-money.html
NORTHERN IRELAND WOMAN CALLS POLICE AFTER DRUG DEALER SOLD HER BROWN SUGAR INSTEAD OF COCAINE
Illicit Trade on 25th February repeats the story of a woman who, after discovering she had been ripped off after handing over £200 for the sugar, the woman called emergency services to report that she had been the victim of a crime.
SWEDBANK REPLACES EY WITH FORENSIC AUDITORS TO INVESTIGATE MONEY LAUNDERING REPORT
Reuters on 26th February reported that the bank had replaced the recently appointed EY with external forensic auditors to investigate information in a media report linking the bank to the Danske Bank money laundering scandal. UK-based FRA specialises in forensic accounting, data analytics and financial investigations and has experience in regulatory probes, AML and terror financing cases. A report to the board is due for 28th March.
GERMAN HEALTHCARE COMPANY AGREEMENT WITH US AUTHORITIES OVER FOREIGN BRIBERY ALLEGATIONS
On 26th February, the Wall Street Journal reported that German health-care company and provider of dialysis products and services Fresenius Medical Care AG had said in a regulatory filing that it had reached agreement in principle with US authorities regarding a long-running foreign-bribery investigation that involved an anonymous whistleblower complaint, and are believed to relate to alleged widespread bribery in Latin America.
US RIGHT WING TERRORISM AND ‘THE ENEMY WITHIN’
Cipher Brief on 26th February reported that, in the wake of the arrest earlier in February of an active US Coast Guard officer who apparently plotted to kill Democratic politicians and members of the media, between 2009 and 2018, 73.3% of all domestic extremist-related killings in the US have been perpetrated by right-wing extremists – and not jihadists. The piece argues that, by every metric, right-wing extremism is the most serious terrorist threat facing the US although jihadists still garner the lion’s share of media attention.
https://www.thecipherbrief.com/column/soufan-center/right-wing-terrorism-and-the-enemy-within
PROSUR: CHILE TO HOST FIRST SUMMIT FOR NEW SOUTH AMERICAN UNION
On 25th February, Crowell Moring reported that the Colombian President announced on January 14 the creation of a new union called PROSUR. President Duque explained that PROSUR would function as an organisation for regional co-ordination and co-operation of public policy, defence of democracy, promotion of the separation of powers, and the fostering of market economies among South American countries. Venezuela has been the only South American nation not invited to participate at the summit. The creation of PROSUR could strengthen trade ties and foster stronger collaboration throughout the region and it also could lead to the creation of a free trade zone.
https://www.cmtradelaw.com/category/prosur/
ECUADOR CRACKING DOWN ON CORRUPTION
On 25th February, Crowell & Moring reported the first meeting for the creation of the International Anti-Corruption Commission. Attendees included the diplomatic corps, members of multilateral organisations, and civil society representatives. Its 3 objectives are said to be corruption prevention; the investigation of alleged cases of corruption; and combating and prosecuting acts of corruption – including the repair and recovery of assets accrued through money laundering.
https://www.cmtradelaw.com/category/latin-america/
FIRST TRUCK COMPLETES EUROPE-CHINA DELIVERY IN 12 DAYS
EurActiv on 26th February reported that the first overland delivery of European goods bound for China arrived safe and sound, in a good omen for Europe’s hopes of making the China’s ambitious Belt and Road initiative a 2-way street. It took was 12 days for a Dutch truck laden with automobile lubricant to make a 7,400 km journey from Germany to western China, via Poland, Belarus, Russia and Kazakhstan.
DUTCH SHELL FIRMS USED TO PAY MILLIONS IN BRAZILIAN BRIBES, SAY PROSECUTORS
Reuters on 26th February reported that prosecutors have raided locations across the Netherlands as part of an investigation into the alleged use of shell companies to distribute $100 million in bribes on behalf of Brazilian conglomerate Odebrecht SA.
CORRUPTION SCANDAL IN UKRAINE’S DEFENCE PROCUREMENT: TOP NATIONAL SECURITY AND DEFENSE COUNCIL OFFICIAL SUSPENDED FROM OFFICE
On 26th February, UNIAN reported that Oleh Hladkovsky, First Deputy Secretary of the National Security and Defense Council, has been suspended pending the probe opened following a journalistic investigative report on corruption schemes in defence procurement.
https://www.unian.info/politics/10461072-corruption-scandal-in-ukraine-s-defense-procurement-top-nsdc-official-suspended-from-office.html
SINGAPORE: MAN JAILED FOR MONEY LAUNDERING OFFENCES IN $40 MILLION SKILLSFUTURE SCAM
On 26th February, the Straits Times reported that a driver who was linked to a SkillsFuture scam involving nearly $40 million, dealt with almost $1.1 million of the ill-gotten gains, a district court heard, and he earned personal benefits totalling more than $108,000. The article reminds one that the affair has been described as the largest case of fraud perpetrated against a public institution in Singapore. SkillsFuture Singapore (SSG) oversees the SkillsFuture initiative which is aimed at promoting lifelong learning.
SEYCHELLES CHALLENGED BY EU ON IBC TAX REGIME
Tax News on 26th February reported that the EU’s Code of Conduct Group (Business Taxation) has written to authorities in Seychelles to warn that new provisions to the territory’s tax regime are considered harmful. The Code Group considers that changes to the tax settings for International Business Company (IBC), which ensure that foreign income is exempt from tax, are harmful. Changes mean that only Seychelles source income of a Seychelles IBC would be subject to tax; and an IBC that earns only income overseas and derives no income from activities in Seychelles can avoid taxation entirely.
https://www.tax-news.com/news/Seychelles_Challenged_On_IBCs_Tax_Regime____97032.html
CAN THE US OFFER NORTH KOREA EXEMPTIONS WITHOUT DISCREDITING THE CURRENT SANCTIONS REGIME?
On 26th February, RUSI published a Commentary saying that a way around the dilemma may exist. It suggests that an option for President Trump to ensure both strict implementation of current sanctions obligations, alongside the immediate pursuit of limited and targeted economic engagements, could lie in “humanitarian” exemptions, rather than “sanctions relief”.
https://rusi.org/commentary/sizing-sanctions-second-trump–kim-jong-un-summit
FINANCIAL INSTITUTIONS AND GOLDEN PASSPORTS
On 26th February, Foodmans CPAs & Advisors published an article on the use (and potential misuse) of the so-called “golden passports” to obtain citizenship by investment. This follows the publication in October of a report where OECD analysed over 100 CBI and RBI arrangements from jurisdictions that are committed to the Common Reporting Standard (CRS) and concluded that some jurisdictions put the integrity of the CRS at risk because they provide a low personal tax rate on income from foreign financial assets without requiring an Individual to spend a significant amount of time in the jurisdiction offering the arrangement.
https://www.jdsupra.com/legalnews/financial-institutions-and-golden-70969/
MALAYSIA: “DON’T EVEN THINK ABOUT RELEASING PLASTIC WASTE SHIPMENTS”
On 26th February, the Straits Times reported that the Customs Department has issued a stern warning to shipping agents at seaports against releasing any containers bearing imported plastic waste. The warning came about following the government’s ban on the import of plastic waste, which took effect in July last year. Its Director General said that the department will not release the containers for as long as one does not possess the approved permit (AP).
CHINA: FORMER VICE-GOVERNOR SENTENCED TO 20 YEARS IN JAIL FOR CORRUPTION
Baker McKenzie on 26th February reported that the former vice-governor of the eastern Anhui province, Zhou Chunyu, 50, has received a jail term of 20 years and a fine of $53.7 million for corruption. He was convicted of taking bribes, concealing overseas deposits, abusing power, and insider trading.
INDIA’S KIDNAP FOR RANSOM RISK RISES ON THE BACK OF A GROWING MIDDLE CLASS
A podcast from Control Risks on 26th February deals with data which shows that the Indian states with the greatest levels of investment have seen the sharpest increases in financially motivated kidnap.
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