20th March 2019
US DoJ CLARIFIES GUIDANCE ON USE OF MESSAGING SYSTEMS BY COMPANIES IN BRIBERY INVESTIGATIONS
On 20th March, the Wall Street Journal commented on revised guidance from the DoJ on its attitude to rewarding co-operation in foreign bribery investigations. It had said that evidence of good practice that could be rewarded included that companies should prohibit the improper destruction of business records, with steps such as “prohibiting employees from using software that generates but does not appropriately retain business records or communications” – this was taken to refer to messaging systems such as WhatsApp. The revised guidance does not use the word “prohibiting”. Instead it refers to “appropriate guidance and controls on the use of personal communications and ephemeral messaging platforms that undermine the company’s ability to appropriately retain business records or communications or otherwise comply with the company’s document retention policies or legal obligations”.
US: SUMMARY OF ARMS AND NON-PROLIFERATION TREATIES
On 19th March, USNI News published a US Congress report on both bilateral (US-Russia) and multilateral (e.g. Biological Weapons Convention) treaties and conventions to which the US is (or was) party.
USDA STEPS UP FIGHT AGAINST THREAT OF AFRICAN SWINE FEVER
Successful Farming on 19th March reported that the highly contagious and deadly African swine fever (ASF) that is spreading throughout China is becoming more of a concern every day for US officials, and that recently officials seized 1 million pounds of pork smuggled from China. Now the Secretary of Agriculture has released pdfs of information about the risk pathways, biosecurity on farms, signs and symptoms of the disease, and traveller tips.
KENYA: “FAKE $2 MILLION” SEIZED AT BARCLAYS BANK BRANCH
On 20th March, Business Daily reported that police had seized what was described as $20 million in what they said was fake currency at the Barclays Kenya Queensway Branch in Nairobi. Barclays said that one of its customers at the branch had kept the fake currency in a safe deposit box. The seizure came day after the Central Bank of Kenya issued a tough directive to banks on handling of illicit cash.
CHAIRPERSON AND COUNCILLOR AT THE INDEPENDENT COMMUNICATIONS AUTHORITY OF SA (ICASA) REMOVED AFTER LANDBANK CONVICTION
Times Live on 20th March reported that Rubben Mohlaloga has been removed from holding the positions of chairperson and councillor at the Independent Communications Authority of SA (Icasa). This follows his February sentence – an effective 20 years behind bars – for money laundering and fraud linked to a Land Bank scam.
LATVIA MAKING GOOD PROGRESS WITH IMPLEMENTATION OF MONEYVAL RECOMMENDATIONS, SAYS PRIME MINISTER
A news release from the Latvian Information Agency on 19th January reported that Latvia has been making good progress with implementation of recommendations offered by the Council of Europe’s Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (Moneyval), Prime Minister Krisjanis Karins told reporters. The Financial Sector Development Council had a meeting to discuss progress with implementation of Moneyval’s recommendations and other financial matters.
A PROBLEM FOR SINGLE-MEMBER US LLC
On 18th March, Greenspoon Marder published an article saying that under state law in many US states if an LLC is wholly-owned (i.e., a single member LLC) by one person, then not only can a creditor bypass any charging order protections under state law, but may also compel a transfer of the LLC interest to the creditor. However, if an LLC has at least a second member, then foreclosure is forbidden and the creditor may only seek a charging order.
CONSPIRACY THEORISTS AND CRIMINALITY
An article from Sydney Criminal Lawyers in Australia on 19th March reported that recent research by psychologists from the universities of Kent and Staffordshire has found that those who subscribe to conspiracy theories are more likely to commit low-level crimes, such as larceny.
TRUMP ADMINISTRATION OPENS DOOR TO PRIVATE LAW SUITS AGAINST CUBA
On 19th March, Greenberg Traurig published an article saying that, on March 19th, a never-before-used Cuban embargo measure goes into effect that makes it possible for US claimants to sue the Cuban government in US courts for confiscated Cuban property. The measures could be further expanded on April 17th to permit lawsuits against non-Cuban entities operating in Cuba.
NO COMMON LAW RULE AGAINST SET-OFF IN FREIGHT FORWARDING CONTRACTS
Forwarder Law on 19th March published an article about a recent High Court case which has further defined the limits of the common law rule against set-off from freight. It says that the rule against set-off from freight is a long standing and well-established rule that prevents a party from withholding freight, payable in respect of a carriage contract, on the basis of counter claims. The rule means that if a party wants to claim for damage to goods, they are required first to pay the freight and then pursue their claim separately. The rule has its origins in sea carriage but has since been extended to carriage by road and, more recently, air. In the recent case the Commercial Court refused to “extend” the rule to sums due under a freight forwarding contract. The article concludes that the decision demonstrates the continued judicial scepticism over the rule against set-off. That scepticism is likely to ensure that the rule will, as far as possible, be narrowly construed.
PRESSURE MOUNTS ON HONG KONG TO REMOVE ECONOMIC CRIMES FROM NEW CHINA EXTRADITION LAW
The Hong Kong Free Press on 20th March reported that a member of the Standing Committee of China’s top legislature has said that Beijing has no opinion over whether the Hong Kong government should remove economic crimes from a list of offences included in extradition law reform. The business sector has voiced concern about the proposal, which would allow the city to accept extradition requests from the mainland and Taiwan, including for offences relating to financial crime. The 46 crimes listed in the plan include offences relating to fiscal matters, taxes or duties, offences relating to securities and futures trading, as well as crimes relating to false or misleading trade descriptions, among others.
GUATEMALAN JUDGE ORDERS ARREST OF FORMER ATTORNEY GENERAL ON CHARGES INCLUDING EMBEZZLEMENT
Reuters on 20th March reported that the warrant for the arrest of Thelma Aldana cited charges of embezzlement, lying and tax fraud. Aldana has denied wrongdoing. She said that her presidential candidacy, approved by electoral authorities, had granted her immunity and that she would not take action against the arrest order. The President, Jimmy Morales, has fought back against an UN-backed anti-corruption body that, along with Aldana, sought to impeach him in a campaign financing investigation.
NEW ZEALAND PONZI SCHEME: FOREX TRADER ADMITS DEFRAUDING CLIENTS OF $7 MILLION
The New Zealand Herald on 20th March reported that Kelvin Clive Wood, 69, an Auckland foreign exchange broker has admitted running a Ponzi scheme to defraud his clients of more than $7 million.
JUNCKER UNDER ATTACK FOR DISMISSING CONCERNS THAT CONTROVERSIAL ART STORAGE FREE PORTS MAY BE ENABLING MONEY LAUNDERING
The BBC on 20th March reported that MEPs have criticised the response of the European Commission president to allegations about “freeports” – tax-exempt warehouses for high-value goods close to ports and airports. They include one in Luxembourg which was authorised when Mr Juncker was prime minister of Luxembourg. Freeports were originally designed as bonded warehouses to exempt goods in transit from import duties or sales taxes such as VAT., but they are now used to store high-value items such as paintings, precious stones, gold and antiquities for indefinite time periods. Ownership of the goods can also legally be traded, transferring large sums without any public disclosure of information about transactions.
UN PEACE OPERATIONS AND ORGANISED CRIME
On 20th March, ETH Zurich published a paper which said that, despite organised crime being recognised as a serious threat to international peace and security, UN missions still lack clear mandates to tackle the problem. It said that several studies and UN reports over the past 2 decades have demonstrated how armed groups — including extremist movements — resort to illicit trafficking to finance their activities and detailed how organised crime can be an important driver of conflict and instability, particularly when it penetrates and/or co-opts States institutions at the local and national levels. Organised crime, it says, is recognised as a serious threat to international peace and security. It remarks that a 2016 external review of the UN Police Division also suggested that a better evaluation of organised crime at headquarters was needed to help support field missions. In eventually created in MINUSMA its first dedicated (but multinational) serious organised crime (SOC) Support Unit. This consisted of more than 20 individual police officers dedicated to supporting the Malian authorities with training and equipment. Similar units have been created in the UN operations in the Central African Republic (MINUSCA) and the Democratic Republic of the Congo (MONUSCO). However, it says that going forward, peace operations need to be both more ambitious and more realistic about their approach to organised crime.
UK REGULATOR TARGETS HUNDREDS OF LAW FIRMS IN NEW AML ASSAULT
The Law Society Gazette on 20th March reported that the Solicitors Regulatory Authority is to demand that hundreds of firms explain exactly what they are doing to comply with money laundering rules – with tough penalties promised for those falling short, with plans to write to an initial 400 firms asking them to demonstrate compliance with the government’s Money Laundering Regulations 2017.
SINGAPORE REJECTS SRI LANKAN LEADER’S ALLEGATION ON TRADING SCAM SUSPECT
The Daily Mail on 20th March reported that Singapore has rejected the Sri Lankan President’s allegation that it was sheltering a former central bank chief wanted for fraud, saying it had failed to provide documents to support its extradition request. Sri Lanka had accused Singapore of sheltering Arjuna Mahendran, wanted in connection with a high-profile $74 million insider trading scam.
ELECTRONIC SALES SUPPRESSION: RESPONSE TO A CALL FOR EVIDENCE
On 19th March, the Chartered Institute of Taxation published its response to a HMRC call for comments on electronic sales suppression fraud affecting VAT.
JERSEY ECONOMIC SUBSTANCE REQUIREMENTS – THE COMPANY AND BANKING AND FINANCE PERSPECTIVES
On 19th March, Olswang published 2 new articles.
MALTA: CUSTOMS OFFICIALS MAKE €32.4 MILLION COCAINE SEIZURE AT FREEPORT
Newsbook in Malta on 19th March reported that it is understood that during an inspection, officials from the Container Monitoring Unit flagged up of 12 refrigerated containers going through Malta Freeport. Follows scans of the fruit containers, 3 contained a number of hidden packages, while a fourth was also discovered to contain a further suspicious package hidden within an inner compartment. Officials found a total of 240 packages of a combined weight of 288 kg. It is understood that the 4 containers had all originated from South America, transiting through Malta to another EU Member State.
VIETNAM: CUSTOMS WILL STRICTLY CONTROL GOODS TRANSITED AND TEMPORARILY IMPORTED FOR RE-EXPORT TO CAMBODIA
Customs News in Vietnam on 18th March reported that the Customs agency will strengthen the control acts of transiting and temporarily importing for re-export of a number of key commodities from Vietnam to Cambodia, to promptly detect the abuse of incentive policies for these commodities that implement trade frauds, smuggling and transportation of banned goods and goods infringing intellectual property rights into Vietnam; prevent the act of partly withdrawing goods transited and temporarily imported for re-export to be consumed in Vietnam. This, it said, is after loopholes were detected in current controls.
ARGENTINA DISMANTLES PILL RING THAT SOLD OPIOIDS TO US CUSTOMERS
Insight Crime on 19th March reported that authorities in Argentina have dismantled an organisation illegally selling opioids and counterfeit medicines online to US customers, revealing a number of legal loopholes exploited by these criminal groups. It mainly operated from Buenos Aires, illegally sold opioids without prescriptions — as well as counterfeit medicines from Romania and India — through its website named Goldpharma. The drugs were bought by US customers, and, more recently, local clients.
VENEZUELA SUSPENDED OIL EXPORTS TO INDIA: VIEWS RUSSIA AND CHINA AS ITS MAIN EXPORT DESTINATIONS
On 20th March, the Hellenic Shipping News reported claims that Venezuela has suspended its oil exports to India and views Russia and China as its main export destinations. The Indian market has been crucial for Venezuela’s economy because it has historically been the second-largest cash-paying customer for the OPEC country’s crude, behind the US.
UK OFFSHORE TAX EVASION CLAMPDOWN PRODUCES 5.67 MILLION FINANCIAL RECORDS
Accountancy Daily on 20th March reported that the crackdown on tax avoidance and evasion by individuals with offshore financial interests has resulted in over 3 million reports from overseas tax authorities to HMRC about UK residents holding funds offshore as a result of data generated through the Common Reporting Standard (CRS) – which sees over 100 jurisdictions automatically exchanging financial account information between tax authorities, with the intention of making it harder for people to hide money abroad as it gives HMRC much more detailed insight into offshore non-compliance.
UK: ‘CONVOLUTED’ FINANCIAL TRANSACTIONS SEE 2 CHARITY TRUSTEES REMOVED
Accountancy Daily on 20th March reported that the founding trustees of The Suyuti Institute, a Birmingham based charity, have been disqualified by the Charity Commission, and following their removal, and after an investigation it found them responsible for misconduct and mismanagement in its financial affairs.
PODCAST: ADDRESSING DOPING IN SPORT
In the latest TRACE podcast, Paul Massaro of the Helsinki Commission discusses the scope of doping in international sport, the foreign policy implications and the Rodchenkov Anti-Doping Act (RADA) offered in response.
KARADZIC HANDED LIFE SENTENCE FOR BOSNIA WAR CRIMES
EurActiv on 20th March reported that former Bosnian Serb leader Radovan Karadzic, 73, will spend the rest of his life in jail for the “sheer scale and systematic cruelty” of his crimes in the war that tore his country apart a quarter of a century ago, judges at the UN war crimes tribunal said.
UK: EXPORT DRUGS AND MEDICINES – SPECIAL RULES
The Home Office on 20th March published updated guidance explaining how you must get permission to export certain drugs and medicines. You need permission to export controlled drugs like opioids, certain stimulants or psychotropic substances; certain drugs that can be used in lethal injections outside the EU (such as in the US); and medicines for humans or animals. It explains that there is a different process if you ravel with controlled drugs for personal use. For example, taking medicine with you on holiday.
ITALY’S 5-STAR PARTY HIT AS ROME PARTY FIGURE ARRESTED FOR GRAFT
Reuters on 20th March reported that – Marcello De Vito, the president of Rome’s city council and de facto deputy mayor – a senior figure in Italy’s ruling 5-Star Movement was arrested on suspicion of corruption, dealing an embarrassing blow to group that has always tried to project a squeaky clean image.
UK SUPREME COURT ALLOWS ‘REASONABLE DILIGENCE’ APPEAL IN FRAUD CLAIM
The Law Society Gazette on 20th March reported that a person who applies to set aside a judgment on the basis of fraud does not have to demonstrate that the fraud could not have been spotted with reasonable diligence, the Supreme Court has ruled – resolving a conflict between the principles that fraud unravels all and that there must come an end to litigation. The case involved a Coventry property owner who had been defrauded by a cousin in an agreement transferring the ownership of dilapidated buildings to a company.
7 TERRITORIES RECEIVE CLEAN BILL OF HEALTH ON TAX TRANSPARENCY
Low Tax from Wolters Kluwer reported on 20th March Hong Kong, Liechtenstein, Luxembourg, the Netherlands, North Macedonia, Spain, and the Turks and Caicos Islands have been rated “Largely Compliant” with international tax transparency standards following a peer review by members of the OECD Global Forum. This comes as the OECD published 7 new peer review reports assessing the territories’ efforts to comply with international tax transparency standards on the exchange of information on request.
GUERNSEY SIGNS MoU WITH FCA TO ENSURE FUNDS ACCESS AFTER BREXIT
Low Tax from Wolters Kluwer reported on 20th March that Guernsey FSC has signed a MoU with the UK’s Financial Conduct Authority to ensure market access for Guernsey investment funds into the UK after Brexit.
HIGH COURT: YEAR-LONG WAIT IN TAX FIRST-TIER TRIBUNAL CASE ‘FRANKLY UNACCEPTABLE’
Out-Law on 20th March published an article saying that a wait of up to a year for a case to be heard in the First-tier Tribunal (FTT) was described as “frankly unacceptable” by the High Court. It also says that the backlog of tax disputes waiting to be heard by the FTT reached 28,800 last year, more than double the 2009-10 figure – the third year in a row that the number has increased. The judge made the comments as he granted an injunction requiring HMRC to temporarily reinstate an approval that a wholesaler of alcohol needed in order to trade.
ARGENTINA’S FORMER PRESIDENT FACING MORE GRAFT CHARGES
On 20th March, Baker McKenzie reported that former president Cristina Kirchner was charged with a new corruption case for the second day running, this time related to irregularities in the concession of subsidies for train and bus operators. The 66-year-old senator was already facing numerous allegations before she was indicted on Monday for the fraudulent import of liquid gas.
ASIAN FISHING FLEETS COMMIT YET ANOTHER ILLEGAL FISHING INCIDENT IN ARGENTINE WATERS
On 20th March, the Center for International Maritime Security reported on an incident, an operation that highlights how Asian fleets are willing to travel long distances in order to make a profit, and how Latin American navies and coast guards need to be more focused than ever before on combating unauthorised fishing. It says that the incident highlights one obvious fact: illegal, unauthorised and unregulated (IUU) fishing does not occur simply because Latin American and Caribbean fishing vessels break the law, but vessels from elsewhere, particularly large fleets from Asian nations, are willing to travel long distances in order to make a profit and satisfy their nation’s demands.
ART AND MONEY LAUNDERING WHY THE GLOBAL ART MARKET NEEDS REGULATION
On 20th March, the Artlyst website published an article by Peter D. Hardy a partner at Ballard Spahr, writing for the firm’s blog. He says that high-end art, antiquities, and antiques have become more and more attractive to money launders. Prices for paintings and objects have seen an upward growth trend as more vigilant global enforcement agencies crack down on previously unregulated markets such as real estate. The article asks if AML controls should go beyond banks and the stock market and be applied to Sotheby’s, Christie’s and Phillips the world’s leading auction houses as well as the major art fairs which have dominated the art market for many years.
LITHUANIAN PLEADS GUILTY IN US TO MASSIVE FRAUD AGAINST GOOGLE, FACEBOOK
Reuters on 20th March reported that a Lithuanian man, Evaldas Rimasauskas, 50, pleaded guilty to US charges that he helped orchestrate a scheme to defraud Facebook Inc and Alphabet Inc’s Google out of more than $100 million.
BANGLADESH: SHIPMENT DELAYS RAISE FRAUD RISKS
In its 21st March edition, the Daily Star reported that shipment delays and late presentation of documents in the export-import process raise the risks of fraudulence and money-laundering in Bangladesh, according to a survey. In 47% of cases, nominated banks in Bangladesh received discrepancy notices whereas local issuing banks served such notices on their foreign counterparts in 48% of cases in 2018. The Bangladesh Institute of Bank Management (BIBM) conducted the survey. Due to the concerns over issues of trade-based money laundering, compliance requirements, and other financial crimes, the central bank has toughened requirements to enhance trade quality, a deputy governor of the Bangladesh Bank said.