25th March 2019
80% OF YOUNG EELS FARMED IN JAPAN MAY HAVE BEEN SMUGGLED FROM TAIWAN
Kyodo News on 25th march reported that about 80% of young eels put into aquaculture pools in Japan in December and January may have been smuggled from Taiwan (which has banned exports since 2007) via Hong Kong, according to trade data and sources close to the matter. Japan imported some 6 tons of juvenile eels from Hong Kong in those two months, according to government data, but Hong Kong does not engage in eel fishing, raising suspicions about their origin.
ITALY AGREES TO RETURN NEARLY 800 CHINESE CULTURAL RELICS IN GOODWILL GESTURE DURING XI JINPING VISIT
The South China Morning Post on 24th March reported that artefacts had been ‘illegally exported’ and include a Majiayao red clay pot and Song dynasty porcelain. The return of the relics to China was ordered by the Court of Milan in November after a complex legal case over ownership of the pieces.
INDIA’S RELIANCE INDUSTRIES, OPERATOR OF THE WORLD’S LARGEST OIL REFINING COMPLEX, DENIES BREACHING US SANCTIONS ON IRAN
Hellenic Shipping News on 24th March reported that the company said its recent fuel exports to Venezuela were agreed to before Washington imposed sanctions in January, and that they were meant to settle Reliance’s crude oil imports from Venezuela. Reuters had reported that the conglomerate was selling fuels to Venezuela from India and Europe to sidestep sanctions that bar US-based companies from dealing with state-run PDVSA,
‘CONCIERGE’ FOR SUPER RICH MAKES UNUSUAL SIGHT AT NIRAV MODI HEARING
The Times of India reported on 24th March that Nirav Modi, wanted in India on fraud and money laundering charges amounting to $2 billion, has engaged Hallworth-Noble, owner of the London Concierge Company, to run his personal affairs. The company specialises in providing a range of concierge services such as organising shopping trips, restaurant bookings, holidays, sourcing gifts etc.
IRELAND: AIRCRAFT LEASING UPDATE – ARE YOU A ‘SCHEDULE 2 FIRM’?
On 20th March, Mason Hayes & Curran published an article saying that the Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Act 2018 amends existing anti-money laundering and counter terrorism-financing legislation (the AML/CTF Acts) by introducing a new category of activities to be covered by the scope of the legislation known as ‘Schedule 2 activities’, and are required to register with the Central Bank. The article explains who is required to register, the exemptions, and what registration entails, as well as the consequences of failing to register.
THE REQUIREMENT TO HAVE AN EEA DIRECTOR FOR IRISH REGISTERED COMPANIES
On 17th March, Irish law firm Matheson published a briefing that addresses one of the concerns about what a “hard” Brexit could mean in practice for Irish-registered companies and how they can mitigate these implications in relation to the requirement for such companies to have an EEA resident director; and then explores some practical solutions to assist in the mitigation of the risks associated with this Brexit issue. It explains that the Companies Act 2014 requires every Irish registered company to have at least one director who is resident in an EEA Member State failing which an insurance bond is required or a certificate (from the Registrar of Companies) that the company has a sufficient economic link is necessary. It is a criminal offence not to have at least one EEA resident director of an Irish registered company unless the company can satisfy the exemption requirements by providing either a Bond or a Certificate.
PRACTICAL UPDATE ON THE LUXEMBOURG REGISTER OF ULTIMATE BENEFICIAL OWNER
On 1st March, Loyens & Loeff published a briefing on the new law that entered into force on 1st March. The briefing clarifies certain aspects relating to the scope of the law in a circular issued by the Luxembourg Trade and Companies Register (RCS), the declarations to be made and the consultation of the public.
EXERCISE CAUTION IN US TAX REPORTING OF WINNINGS AND LOSSES
On 21st March, Duane Morris LLP published an article about the income tax treatment in the US of gambling winnings and losses. It emphasises that gambling winnings are fully taxable, but gambling losses are not simply an offset against winnings – winnings must be reported as “other income” and losses are separately reported.
NEW RULES IN MEXICO MAY LIMIT CASH PAYMENTS FOR REAL ESTATE AND MANDATE ELECTRONIC PAYMENTS
KYC 360 on 25th March reported that Mexico is developing rules that would cap the amount of cash that can used to buy real estate, and the government was also considering rules that would require all its payments and collections to be processed electronically – with incentives for professionals such as doctors, lawyers and architects to accept electronic payments over cash.
UNION CUSTOMS CODE AMENDED TO INCORPORATE CAMPIONE D’ITALIA
EU Regulation 2019/474/EU amended the EU’s Union Customs Code to include the Italian municipality of Campione d’Italia, an Italian exclave in the territory of Switzerland, and the Italian waters of Lake Lugano, within the customs territory of the EU. Nevertheless, it remains outside the EU VAT territory.
UK REPORT FINDS FASHION INDUSTRY UNSUSTAINABLE AND SUGGESTS EXTENDED PRODUCER RESPONSIBILITY SCHEME
HKTDC on 25th March reported that the UK’s Environmental Audit Committee (EAC) of the House of Commons recently presented a report on the sustainability of clothing, finding that the fashion industry’s current business model is unsustainable, with over-consumption and climate change driving widespread environmental damage; and calls for a change of ‘exploitative and linear’ business models in fashion. The report considers the contributions of government policies and programmes to environmental protection and sustainable development. The Committee found that many retailers did not ensure full traceability in their supply chains to prove decent livelihoods and sustainably sourced materials. The report suggests introducing a mandatory traceability obligation.
WHY PROTESTERS ARE TAKING ON ALGERIA’S RULING SYSTEM
Defence Web on 22nd March published an article saying that protests that brought hundreds of thousands onto the streets in Algeria over the past month led President Abdelaziz Bouteflika to scrap plans to run for a 5th term. Protests drew on frustration among millions of Algerians who feel politically and economically excluded, and resentment against an ageing and secretive elite that has controlled Algeria since independence from France in 1962. Plans to diversify the economy away from oil stalled in a sclerotic system many saw as corrupt and riven with cronyism. The army remained Algeria’s most powerful institution, with an informal clique around the presidency amassing more influence, including Bouteflika’s younger brother Said; and an emerging business elite profiting from surging oil income also benefited. Algeria is Africa’s biggest country by landmass and has a population of more than 40 million, is a major oil and gas producer and OPEC member, and a top supplier of gas to Europe. Western states see Algeria as a counter-terrorism partner. Algeria also backs the Polisario Front independence movement in Western Sahara, in opposition to its neighbour Morocco.
GHANA: PILOT PROJECT ON CORRUPTION EDUCATION FOR JUNIOR AND SENIOR HIGH SCHOOLS
Graphic Online on 25th March reported that a pilot project on corruption education for junior and senior high schools is to begin in September this year. The project, which also includes anti-corruption lessons is aimed at building the integrity of young children as future leaders of the country.
UK LAW FIRMS HAVE BEEN PUT ON NOTICE THAT THEY WILL NEED TO SHOW HOW THEY ARE COMPLYING WITH AML RULES – OR FACE HEFTY SANCTIONS
On 25th March, a feature from the Law Society Gazette says that as the Solicitors Regulation Authority (SRA) renews its drive to clamp down on money laundering, law firms have been put on notice that they will need to show how they are complying with the rules – or face hefty sanctions. It says that, almost 2 years on from the introduction of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, the message from the regulator is clear: the legal profession is still not doing enough, and those ignoring this issue can expect to find themselves in front of a tribunal before long.
PET TRAVEL TO EUROPE AFTER BREXIT
On 25th March, DEFRA issued updated guidance on how to prepare for travel with your pet to any EU country after 12th April whether the UK leaves the EU with or without a deal.
DISCOVERY: IRISH SUPREME COURT TO CONSIDER REFORM
As discovery of relevant documentation in litigation in Ireland reaches what it calls “crisis point”, Matheson in an article on 21st March discussed the decision in a recent court case (in which the discovery process in Ireland was said to be in nothing short of a “crisis”), its forthcoming appeal, and comparable reform already underway in England and Wales. It notes that the Irish Government recently pledged its support for an initiative to promote Ireland globally as an international legal services hub. The initiative, propelled by the Irish legal community, suggests that court procedures should be reformed to make commercial dispute resolution in Ireland faster, more predictable, and more cost-effective, noting in particular that the time and cost associated with discovery should be reduced.
CAMBODIA CUSTOMS OUTLINE IVORY CRACKDOWN GUIDELINES
The Phnom Penh Post on 25th March reported that Cambodia has been pursuing ways to improve its law enforcement activities to prevent and crack down on the trafficking of elephant ivory and rhinoceros horn. It reported on 6 action plans, which include the establishment of an undercover customs network to identify suspected smugglers and obtain more information about trafficking in ivory and rhinoceros horn. Officials need to undergo training so they are able to assess the information printed on billing orders, invoices, packages and other documents and identify prohibited items. Custom and excise units have been told to enhance their cooperation with local authorities and experts from other organisations in order to better monitor, control and take legal action against all cases of ivory and rhinoceros horn trafficking.
UK HIGH COURT GRANTS DECLARATORY RELIEF REGARDING IMPORTS FROM MOROCCO RELATING TO WESTERN SAHARA
On 21st March, Monckton Chambers reported that the High Court has declared that HMRC acted unlawfully in granting preferential tariff treatment to products from Morocco which originated in Western Sahara. HMRC – acting pursuant to advice given by the European Commission – had treated such products are entitled to preferential tariff treatment. The High Court declared that this position was not tenable and that there was no such entitlement under the EU Morocco Association Agreement. Furthermore, the UK was not entitled to grant fisheries quotas for fishing in the territorial waters of Western Sahara under the EU-Morocco Fisheries Partnership Agreement.
ISLE OF MAN: CLIENTS’ ASSETS REPORTS – THEMATIC FEEDBACK AND UPDATES TO CAR PROCEDURES
On 25th March, a news release from the FSA said that it had published its thematic feedback on the first round of CAR submissions made for financial years ending on or after 1st January to 31st December 2017. It has also made some changes to the Clients’ Assets Report and Procedures. Clients’ Assets are held by, among others, regulated Investment Businesses, Fund Service providers, Trust and Corporate Service Providers (TCSP), and Money Service providers. The FSA received and considered the results of 125 Clients’ Assets Reports prepared by licence-holders, which were independently tested by auditors or accountants. The FSA says it is noted that changes are being made licence-holders as an outcome from the testing, to improve their systems and controls around segregation, record-keeping and reconciliations.
The FSA has also issued a set of FAQ on Client Asset reports and procedures –
PDVSA LOOKING TO HIRE REFINED PRODUCTS TANKERS AS SANCTIONS THIN AVAILABLE FLEET
Hellenic Shipping News on 25th March reported that Venezuelan state-owned PDVSA is seeking to extend the contracts of 3 petroleum tankers, and hire 5 additional tankers, to compensate for the loss of vessels due to US sanctions.
PROJECT TACKLES NON-TARIFF BARRIERS IN AFRICA
On 21st March, the UN Conference on Trade & Development reported that, with the African Continental Free Trade Area just one ratification away from entry into force, a project gets to work on a new online tool for reporting and resolving trade barriers – an online tool for private sector operators in 21 countries to report trade barriers they encounter in southern and eastern Africa. It is run by the Tripartite Regional Economic Communities and supported by UNCTAD. A report is said to show that shows that African countries could gain $20 billion per year by tackling the trade distorting effects of non-tariff measures at the continental level – way more than they could pick up by eliminating tariffs. As part of the African Continental Free Trade Area (AfCFTA) Protocol on Trade in Goods, regional leaders agreed to establish an African-wide mechanism for reporting, monitoring and eliminating non-tariff barriers.
REGULATING MOBILE MONEY: WHAT’S AT STAKE
The LSE Business Review on 25th March reported that a new analysis suggests a trajectory and policy recommendations. The briefing gives an overview of the regulation landscape, introduces the key points of the mobile money regulation debate and describes regulation trajectories. It is informed by our broader research programme focused on mobile money in 90 countries and the complementary in-depth comparative research on regulation of mobile money. Amongst the matters examined is AML, saying that a tiered approach to KYC is proposed because it allows the financial regulator to distinguish between lower- and higher-risk scenarios.
REPORT: ACTION NEEDED TO ADDRESS CONFISCATION OF CONTRACTOR-OWNED PROPERTY AND CONTRACTOR MISTREATMENT IN AFGHANISTAN
The Special Inspector General for Afghanistan Reconstruction (SIGAR) published a report in March which said that Afghan National Defense Security Forces (ANDSF) personnel confiscated contractor-owned property under US Army Corps of Engineers (USACE) operations and maintenance (O&M) contracts. The review of USACE data found that ANDSF personnel had confiscated more than $780,000 in property and equipment intended to support O&M at ANDSF facilities since the start of the northern and southern O&M contracts. The objectives of the review were to determine the extent to which contractor-owned property and equipment was confiscated by ANDSF personnel; how ANDSF personnel mistreated and threatened contractor personnel at O&M work sites; and what action USACE and Combined Security Transition Command Afghanistan (CSTC-A) took to address property confiscation and contractor mistreatment.
NOKIA’S SHARES PLUNGE AFTER WARNING OF POSSIBLE COMPLIANCE ISSUES
The Wall Street Journal on 22nd March reported that Nokia warned it could face penalties for compliance issues, prompting its shares to fall as much as 7% and adding another challenge as it struggles to compete with China’s Huawei. The Finnish company said it was “made aware of certain practices relating to compliance issues” at Alcatel-Lucent, the former French rival that Nokia bought for $17 billion in 2016. Nokia indicates that, even years after it completed the acquisition of Alcatel Lucent, it is still digging up stuff that may present some kind of threat to the company.
UK CRACK COCAINE INCREASE: INQUIRY FINDINGS
On 25th March, the Home Office published a report on the findings of a Public Health England and Home Office investigation into the increase in crack cocaine use in England. The organisations led an inquiry based on a series of interviews and focus groups. Across all of the 6 areas visited, there was general agreement among service users and treatment workers that crack use had increased in recent years.
IRELAND: FRAUD ON THE RISE, LATEST CRIME FIGURES SUGGEST
RTE on 25th March reported that the latest crime figures revealed a significant increase in fraud offences. Fraud and related offences increased by more than 18% in the last quarter of last year when compared to the same period in 2017.
MALTA IN THE EYE OF A FINANCIAL TEMPEST
Deutsche Welle on 25th March carried an article asking could a nation of 450,000 pose a threat to global efforts to track money laundering and enforce economic sanctions? Probes by local magistrates, US prosecutors and EU politicians are all asking the same question. A recent European Commission report on Malta warned that the country had made “limited progress in addressing the 2018 Country Specific Recommendations (CSR) concerning money laundering, corruption and financial supervision”; a EU Parliament report described “systemised and serious deficiencies” in the rule of law in Malta, while a police investigation in Italy has alleged that the Sicilian mafia infiltrated companies in the online gaming sector some based in Malta to launder money.
NEW REPORT WARNS OF 6 CORRUPTION THREATS TO PEACE IN SOUTH SUDAN
Gurtong Trust, a non-profit organisation aimed at removing all ethnic, political or personal obstacles on the way to unity, peace and mutual respect among South Sudanese, reported on 25th March that the Enough Project, which supports peace and an end to mass atrocities in Africa’s deadliest conflict zones, has produced a report that identifies 6 deficits in the country’s economic governance that currently inhibit lasting peace – including endemic corruption, and a lack of accountability and transparency in the economy, and the absence of justice for corruption and disregard for community involvement.
RETAILER LIABLE FOR UK EXCISE DUTY THAT BECAME PAYABLE BEFORE IT ACQUIRED THE GOODS
An article from Out-Law on 25th March reported that 2 recent cases decided retailer can be liable for unpaid excise duty that became payable prior to its acquisition of goods. HMRC accepted that it has a legal obligation to pursue payment from the earliest identifiable holder of the goods after the date on which excise duty became due. In the cases it was held that retailers who acquire goods on which the required duty has not been paid, or payment cannot be evidenced, can be liable for payment of that duty – and unless a person that has held the goods at a static location is able to evidence either duty payment or an earlier holder in their supply chain, HMRC can exercise its discretion to assess that person for the excise duty on those goods.
ASIA-PACIFIC CUSTOMS AGENCIES TO CRACK DOWN ON ILLEGAL WASTE TRADE
On 25th March, the Korea Times reported that a coalition of customs authorities from 14 countries in the Asia Pacific region will initiate an 8-week crackdown on the illegal trade of waste, the Korean Customs Service (KCS) said. Participating countries include Korea, China, the Philippines, Vietnam, Thailand, Malaysia, Japan, Australia, India, Bangladesh, Cambodia, Singapore, Afghanistan, Sri Lanka, and the Maldives. Only importers have been punished thus far, but exporters will no longer be able to avoid accountability in their home countries as detailed data logs will be handed over to respective government authorities.
US CITIZEN LED AN INTERNATIONAL COUNTERFEIT CURRENCY OPERATION HEADQUARTERED IN UGANDA
On 25th March, Baker McKenzie reported that Ryan Andrew Gustafson (aka Jack Farrel, and Willy Clock), 31 a US citizen who resided in Uganda pleaded guilty in federal court to charges of conspiracy to manufacture/pass/transfer/sell counterfeit currency, conspiracy to launder money, and committing counterfeiting acts outside the US. The court was advised that Ryan Gustafson was leading an international counterfeit US currency operation headquartered in Uganda, which flooded the US and Uganda with more than $2 million in counterfeit Federal Reserve Notes.
FROM COLOMBIA TO LEBANON TO TORONTO: HOW A DEA PROBE UNCOVERED HEZBOLLAH’S CANADIAN MONEY LAUNDERING OPS
The Globe & Mail on 25th March carried an article which, it says, explains untold international details behind recent RCMP investigations, missed early warnings, and lessons from Australian police, that could jump-start Canada’s late response to these growing risks, sources say.
SHIPPING RADIOACTIVE SOURCES BETWEEN THE UK AND EU AFTER BREXIT
On 25th March, DEFRA issued guidance on what operators need to do to move radioactive sources between the UK and EU if the UK leaves without a deal. There is no change to the processes for shipments of radioactive sources between the UK and the rest of the world.
FORMER HONG KONG OFFICIAL PATRICK HO GETS 3-YEAR SENTENCE IN US BRIBERY AND MONEY LAUNDERING CASE
The South China Morning Post on 25th March reported that he was given credit for time already served so will spend an additional 20 months behind bars, and must pay a US$400,000 fine. The case involved a multimillion-dollar bribery scheme and top African leaders. He was arrested in November 2017, and in December 2018, a federal jury convicted him on 7 counts of bribery and money laundering over oil rights for oil company CEFC in Chad and Uganda. Ho was found to have offered US$2.9 million in bribes to Chad President Idriss Déby, Senegalese diplomat Cheikh Gadio and Uganda’s foreign minister, Sam Kutesa.
INDIA TO AUCTION FUGITIVE BILLIONAIRE MODI’S ART COLLECTION
Reuters on 25th March reported that Indian tax authorities are to auction rare oil paintings that were once part of fugitive billionaire jeweller Nirav Modi’s collection and have been seized by the government. The sale in Mumbai of some 68 works is expected to fetch anywhere between $4.4 million and $7.3 million). Modi, who fled to the UK and is facing extradition to India, is accused in connection with a $2 billion loan fraud at state-run Punjab National Bank. Modi denies the charges and says that he believes they are politically motivated.
US DoJ UNLIKELY TO CHANGE STANCE OVER WIRE ACT
On 25th March, Calvin Ayre reported that the move by the DoJ to squash a lawsuit against it shows exactly how it feels about the backlash it has received for its reversal on the Federal Wire Act. New Hampshire, fearing the effect on its state lottery, filing the case after the DoJ decided to change its stance on the Wire Act, and the DoJ is now looking to have the suit dismissed.
SOUTH KOREA COURT ORDERS SEIZURE OF MITSUBISHI ASSETS OVER WARTIME CLAIMS
Jurist on 25th March reported that a South Korean district court has ordered the seizure of Mitsubishi Heavy Industry Ltd assets in South Korea after the company refused to compensate Koreans following a supreme court decision of a wartime labour case. In its November 2018, the high court ordered the company to compensate each of 5 Korean victims of up to $132,000 after finding that the right of victims of WW2 forced labour to seek compensation was not annulled by a 1965 treaty. Around 780,000 Koreans were conscripted into forced labour by Japan during Japan’s 1910-1945 colonial rule of the Korean Peninsula, not including women forced into sexual slavery by Japanese troops. Japan maintains that the issue of claims has already been settled as part of the 1965 treaty.
POLISH LAW ENFORCEMENT DETAINS TRANSNATIONAL DRUGS TRAFFICKING CRIME GROUP
On 25th March, a news release from Europol said that a cross-border crime group smuggled drugs from Spain to Germany and the UK and from Poland to Norway and Sweden. Over several years, the group managed to smuggle up to 4 tonnes of narcotic substances and psychotropic drugs across Europe. Now a joint law enforcement operation stopped the smuggling of nearly 800 kg of hashish and 50 kg of cocaine, with 13 people detained by the National Prosecutor’s Office in Poland.
JERSEY INTERNATIONAL SAVINGS PLANS (ISP)
On 25th March, Appleby published a briefing on ISP introduced into Jersey law on 6th December, and designed to enable multi-national and international companies to establish savings plans providing benefits to their employees resident outside of Jersey. This might include a pay-out upon the end of employment or ill health. Depending on requirements, an ISP can provide either an alternative to or complement traditional benefits such as a pension scheme.
HOW ARTIFICIAL INTELLIGENCE CAN HELP CRACK MORE PANAMA PAPERS STORIES
An article from ICIJ on 25th March published an article which asked what would the research into the leaked data look like if we were to deploy machine learning algorithms on the Panama Papers? Can we teach computers to recognise money laundering? Can an algorithm differentiate a legitimate loan from a fake one designed to shuffle money among entities? Could we use facial recognition to more easily pinpoint which of the thousands of passport copies in the trove belong to elected politicians or known criminals? The article says that the answer to these questions is yes. The article details collaboration between the author and a lab at Stanford University.
REPORT FINDS EXPONENTIAL GROWTH IN UNMANNED AERIAL SYSTEMS INDUSTRY
Homeland Security Today on 23rd March reported that the Association for Unmanned Vehicle Systems International (AUVSI) and the Danish Technological Institute (DTI) have released a new report, “Global Trends of Unmanned Aerial Systems”. The report analyses data and finds that 80% of patents associated with unmanned aircraft systems (UAS) technologies have been published since 2016, demonstrating the exponential growth of the unmanned systems industry. The US leads the market for UAS platforms with 628 unique UAS models, China comes next, but only accounts for half as many platforms as the US corresponding to a total of 309 unique UAS models.