27th March 2019
COCAINE SMUGGLING GANG SENTENCED TO 120 YEARS OVER CORNWALL BOAT PLOT
A news release from the CPS on 26th March reported that a gang who tried to smuggle £112 million worth of cocaine into Cornwall on a boat have been jailed after a CPS/NCA prosecution. They were arrested by the NCA after a 60-feet catamaran was intercepted off the Cornish coast on 29th August 2018 with 1.4 tonnes of high purity cocaine on board.
BRITISH MEN AMONGST 7 ARRESTED IN MARBELLA FOR SMUGGLING 3 TONNES HASH TO COSTA DEL SOL MARINAS
On 26th March, Olive Press reported that the drug gang were headquartered in Marbella and led by a Spanish woman and her German partner. Officials seized 93 hash bales, as well as €630,000 in cash, a drone, 4 cars, a motorbike and 30 mobile phones. Drugs were discovered in the hulls of pleasure yachts, which the gang would sail from Gibraltar and Morocco to Costa del Sol marinas.
CAYMAN DEVELOPERS VULNERABLE TO MONEY LAUNDERING
On 26th March, the Cayman News Service considers the dangers mentioned in the mutual evaluation report of the Cayman Islands that developers who are selling their expensive properties directly to customers are not subject to any oversight, which the Caribbean Financial Action Task Force has said leaves them vulnerable to money laundering and terrorist financing. It says that many of the more expensive condos, especially those located on Seven Mile Beach, are sold to high net worth individuals, companies and investors directly by the people who developed them, and a significant amount of real estate in Cayman is sold without the involvement of real estate agents and is not subject to any oversight by a supervisory authority. The report was concerned about the non-registered agents as well as developers and lawyers dealing directly with purchasers. Around a quarter of real estate agents were not subject to any oversight before March 2017, when the Department of Commerce and Investment (DCI) was appointed as the supervisory body for the sector.
OWNERSHIP FIGURES FOR SCOTTISH PROPERTY REVEALED
The National on 27th March reported that new statistics on property ownership have been published – and show the US is the number one country for overseas investment in Scots real estate. The official statistics are based on land and property titles as listed on the land register at the end of December, where the legal owner or long-term commercial tenant had provided an address. The findings reveal that almost 104,300 properties – 6% of the country’s total – were linked to proprietors that were based outside of Scotland. 24,100 properties had one or more registered owners based overseas – that number represents just 1.4% of the overall total. Ireland was in 5th place at 1400 properties, followed by Jersey, Singapore, the Isle of Man, France and Canada, which rounds off the top 10. More than half – 61.9% – of all titles owned or leased by companies from outside the UK were accounted for by 4 Crown dependencies and overseas territories: Isle of Man, Jersey, BVI and Guernsey.
28th March 2019
LUXEMBOURG COURT DELIVERS SETBACK TO 9/11 FAMILIES’ IRAN CLAIMS
On 28th March, KYC 360 reported that a Luxembourg court has refused to enforce a US ruling that would have helped families of victims of the 9/11 attacks claim Iranian assets held with a Luxembourg-based clearing house.
SCOTTISH 5-A-SIDE FOOTBALL CLUB OPERATOR GOALS SOCCER ASKS FOR TEMPORARY SUSPENSION FROM TRADING ON AIM OVER VAT MISDECLARATION
On 27th March, Accountancy Daily reported that Scottish five-a-side football club operator Goals Soccer has revealed further details of ‘significant’ accounting errors, with around £12 million of VAT misdeclared, and has asked for temporary suspension from trading on AIM, pending clarification of the company’s financial position.
UK CONFIRMS COMMENCEMENT OF OPEN GENERAL EXPORT LICENCE IF NO BREXIT DEAL
On 27th March, the UK Export Control Joint Unit said that the post-Brexit export licence will come into force at 11pm on 11th April if the UK leaves the EU without a deal.
UK P+I CLUB OPENS DUTCH SUBSIDIARY DUE TO BREXIT
On 22nd March, the UK P+I Club for shipping published a Circular saying it had succeeded in its intention to establish a new European subsidiary in the Netherlands, to ensure that cover could be provided to Club Members with risks located in the European Economic Area (EEA). Its Rotterdam-based incorporated subsidiary, UK P&I Club N.V., (UKNV), has received authorisation from the Dutch National Bank to operate in the Netherlands and is ready to underwrite EEA risks. P+I Club Members who have no EEA risks will be unaffected by Brexit and will continue to be insured by and to receive certificates of entry from the Club’s London based holding company.
BELGIUM: THE NEW PRIVATE LIMITED LIABILITY COMPANY
On 21st March, DLA Piper published a briefing concerned with the new regime of the private limited liability company (besloten vennootschap (BV) / société à responsabilité limitée (SRL)) (BV/SRL). It says that the BV/SRL replaces the current BVBA/SPRL, and that the BV/SRL is expected to become the new ‘by-default’ Belgian company type. The he BV/SRL does not have a registered share capital, and is no longer obliged to create a legal reserve fund through accumulation of its profits.
PODCAST: COMPLIANCE AND ENFORCEMENT PREDICTIONS
In the latest TRACE podcast, a panel of former prosecutors discusses trends and makes predictions about FCPA compliance and prosecutions over the next few years.
In the TRACE podcasts, President Alexandra Wrage explores the world of financial crime – corruption, fraud, money laundering and sanctions. Through interviews with investigative reporters, business people and prosecutors, she examines different angles of financial crime and explores what motivates people to break the law, how wrongdoers cover their tracks and what can be done to put a stop to the looting.
INDIAN MISSILE DESTROYS LOW-ORBIT SATELLITE
On 28th March, the Telegraph in India reported that India said it had used a homegrown missile to destroy a satellite 300 km above the Earth, demonstrating a technology intended to bolster defence through deterrence and hitherto available only with China, Russia and the US.
CANADIAN FEDERAL BAN ON IMPORT, SALE AND USE ETC OF ASBESTOS NOW IN FORCE
On 28th March, McCarthy Tétrault LLP reported that in December the Prohibition of Asbestos and Products Containing Asbestos Regulations came into force, which prohibit the import, sale and use of asbestos, as well as the manufacture, import, sale and use of products containing asbestos, subject to certain exceptions. The article provides a potted history of asbestos in Canada. There is currently no mining of asbestos in Canada. The last 2 remaining asbestos mines, both located in Québec, ceased operations in 2011. It identifies the key elements of the new Regulations. It says that related amendments to the Export of Substances on the Export Control List Regulations (ESECLR) have been made, which prohibit the export of all forms of asbestos, subject to certain exceptions.
US SEEKS UN SANCTIONS AGAINST PAKISTAN GROUP LEADER MASOOD AZHAR
On 28th March, Rferl reported that the US is seeking to place head Masood Azhar, the leader of the Pakistan-based Jaish-e-Mohammad (JeM) militant group blamed by India for a suicide attack that killed dozens of Indian soldiers in Kashmir last month on the UN sanctions blacklist. The UN Security Council added JeM itself to the UN sanctions black list in October 2001 for its association with Al-Qaeda, Osama bin Laden, and the Taliban.
US SQUABBLES OVER NEW IRAN SANCTION WAIVERS
Oil Price.com on 27th March reported that US sanctions on Iran’s oil sector and the waivers of said sanctions are causing rifts among the US administration — pitting the National Security Council and the State Department against each other as the deadline for waiver extensions draws near.
INDONESIA: 5 SMUGGLERS ARRESTED FOR ILLEGAL TRADING OF KOMODO DRAGONS VIA FACEBOOK
Indonesia Expat on 28th March reported that the news of the illegal trading of Komodo dragons came only a day after authorities seized more than 5,000 pig-nosed turtles from smugglers in Papua, and the previous week, a Russian tourist was also caught smuggling a baby orangutan at Denpasar’s airport.
MALTESE ARMED FORCES TAKE CONTROL OF HIJACKED TANKER
On 28th March, the BBC reported that Malta’s armed forces have taken control of a tanker that was allegedly seized by migrants off Libya. Elhiblu 1 docked in Valletta, and more than 100 migrants on board are expected to be handed over to police.
TRANSPARENCY INTERNATIONAL QUESTIONS THE SOURCE OF FUNDS FOR SRI LANKA OIL REFINERY PROJECT
On 27th March, News Lanka reported that Transparency International Sri Lanka (TISL) says it believes the controversy surrounding the proposed US$3.85 billion oil refinery in Mirijjawila, Hambantota, could have a negative impact on Sri Lanka’s efforts to remove itself from the FATF, ‘Grey List’ of countries vulnerable to money laundering and terrorism financing.
NEW REGULATORY AML SUB-COMMITTEE FOR LAW SOCIETY SCOTLAND
On 28th March, Law Society Scotland reported that a brand new regulatory AML sub-committee is being set up to ensure that the Law Society can meet its increasing statutory obligations as a responsible and effective AML regulator.
SWEDBANK SACKS CEO AFTER MONEY LAUNDERING ALLEGATIONS
Reuters on 28th March reported that Swedbank dismissed Chief Executive Birgitte Bonnesen just before its annual shareholder meeting, after mounting investor criticism over allegations the bank was involved in money laundering in the Baltics. Bonnesen has repeatedly said she has confidence in the bank’s AML procedures and that Swebank had reported suspicious transactions to authorities.
MALAYSIA: CASH TRANSACTION LIMIT IN THE WORKS TO CURB MONEY LAUNDERING
Malaysiakini on 27th March reported that a policy to limit cash transactions is in the works, with a series of public consultations to obtain feedback.
PARMALAT v CITIGROUP: 15 YEARS AFTER ITALIAN SCANDAL COURT FIGHT RAGES ON
The Wall Street Journal on 27th March reported that Europe’s biggest corporate fraud, which cost investors billions of euros and ensnared many of the world’s largest investment banks, is still reverberating, 15 years after it first emerged that the Italian dairy giant had cooked its books for more than a decade. An Italian court has ruled in favour of the Parmalat owner in a longstanding dispute with Citigroup Inc.
CHINA TO PROSECUTE FORMER INTERPOL CHIEF
The BBC on 27th March reported that Meng Hongwei, the former Chinese head of Interpol, will be prosecuted in his home country for allegedly taking bribes. He has also been expelled from the party and stripped of all government positions.
DEFRA GUIDANCE ON CITES
On 28th March, BIFA said that, in response to a recent BIFA event hosted in Dover, and subsequent conversations, DEFRA have issued the following guidance to be used in the event of the UK leaving the EU without a deal. It also says that the Convention on International Trade in Endangered Species (CITES) which is much wider ranging than people might have thought.
SELLING AND STORING TOBACCO PRODUCTS FROM 20th MAY
On 27th March, HMRC issued updated guidance on what you need to do from 20th May if you sell or store tobacco products in the EU. From 20th May, all unit packets (except existing stock) of cigarettes and hand rolling tobacco manufactured or imported in the EU must have unique identifiers on the packaging, have 5 specific security features on the packaging, and be scanned at certain points in the supply chain. From May 2024, this will apply to all products containing tobacco.
HMRC WINS £40 MILLION BATTLE AGAINST TAX AVOIDANCE PROMOTERS
On 27th March, a news release from HMRC has won a legal case over tax avoidance scheme promoter Hyrax Resourcing Ltd, which will help it collect over £40 million in unpaid taxes. The company will have to disclose the details of their tax avoidance scheme to HMRC, along with the names and addresses of 1,180 high earners who used it, having not complied with the Disclosure of Tax Avoidance Schemes (DOTAS) rules, which requires promoters to tell HMRC about the schemes they sell. The Hyrax scheme was a successor to the K2 arrangements which became widely known about in 2012.
EU AUTHORITY RENEWS RETAIL BINARY OPTIONS BAN
Decision 2019/509/EU of the European Securities and Markets Authority (ESMA) on 22nd March renewed the temporary prohibition on the marketing, distribution or sale of binary options to retail clients.
EU REPORT ON TRADE DEFENCE
On 28th March, the EU published its annual report on trade defences which says that the EU shields 320,000 direct jobs across Europe from unfair foreign competition through its trade defence measures. The EU says that the use of trade defence is based on WTO rules. The EU uses these instruments and applies a number of extra conditions to the WTO rules to make sure their use is measured. The main highlights of the report include a major overhaul of EU trade defence legislation, continued high EU trade defence activity, resolute action to safeguard EU steel producers and strong and continuous defence of EU exporters targeted in foreign investigations. Since November 2014, the Juncker Commission put in place 95 trade defence measures. Two-thirds of all the 135 measures in place concern imports from China.
UK DEVELOPMENT AID: ANTI-CORRUPTION MEASURES
On 27th March, the House of Lords Library produced a briefing pack for a forthcoming debate on what steps Her Majesty’s Government take to ensure that anti-corruption measures are supported as part of aid to developing countries, and countries recovering from natural disasters, and the reconstruction of former conflict areas.
SACKLER BILLIONS TARGETED IN NEW YORK FRAUD LAWSUIT
On 28th March, the BBC reported that the wealthy Sackler family is facing new charges in New York that it fraudulently transferred money from Purdue Pharma, the firm it owns that makes opioid painkillers. Purdue is facing thousands of lawsuits over how it marketed OxyContin, but only a handful have named the Sacklers. The Sackler family is worth $13 billion according to Forbes magazine and have made millions of dollars’ worth of donations to the arts, education and science, mainly in the US and the UK.
UN DELEGATE SAYS THERE’S CONFLICT ON WEALTH IN LIBYA AND 10 COUNTRIES ARE INTERVENING IN CRISIS
The Libyan Express on 28th March reported that the UN delegate to Libya says corruption and fight over resources among rival factions are core issues impeding progress in resolving the country’s turmoil. He slammed the intervention of 10 countries – which he didn’t name – in Libya, saying he had told the UN Security Council and its panel of experts.
UK CURRENT ARMS EMBARGOES AND OTHER RESTRICTIONS
On 27th March, a news release from the Department of International Trade provides updated details of arms embargoes, trade control restrictions, defence export policies and restrictions on terrorist organisations.
12 PEOPLE, INCLUDING 2 UK AND A DUTCH NATIONAL LIVING IN LONDON, HAVE BEEN ARRESTED IN MADEIRA AS PART OF AN INVESTIGATION INTO DRUG SMUGGLING ON A CRUISE SHIP
On 28th March, the NCA issued a news release following a joint operation involving the NCA and Judicial Police of Portugal. The 6 men and 6 women all aged between 20 and 52, were detained after the cruise ship MSC Opera arrived into Funchal from the Caribbean. Approximately 18 kg of cocaine were recovered by Portuguese officers, contained in bowls and crisp packets.
VICTIMS OF PONZI SCHEME WITH LINKS TO GUERNSEY TO SHARE AT LEAST £785,000 COMPENSATION
The Guernsey Press on 28th March reported that the Royal Court concluded that compensation orders would be made in connection with the Lumiere Wealth scandal to victims of former financial adviser Christopher Byrne on a percentage basis of the overall total lost. The highest percentage of compensation went to an 81-year-old partially blind woman who lost almost £1.5 million to the fraudster, to whom the Jurats ordered 50% of the available compensation would be paid. Smaller investors would receive as little as 1%. Many of the investors were elderly people drawn to the fund by promises of higher-than-average returns. They were not told that the fund was classed as moderate to high risk, or that Byrne was part of a lucrative commission scheme for promoting it.
TROIKA LAUNDROMAT MONEY LEADS TO SPANISH “PARADISE”
On 28th March, OCCRP published an article about the elite community of S‘Agaro along Spain’s rocky and beautiful Costa Brava coast. Reporters investigated S’Agaro while tracing transactions associated with the Troika Laundromat – a scheme that allowed billions of dollars to flow out of Russia through a vast network of offshore companies between 2006 and 2013.
RUSSIAN SENATOR AND HIS SUPERYACHT SPENDING SPREE
In another article linked to the Troika Laundromat, OCCRP on 28th March said that between 2006 and 2012, then-senator Valentin Zavadnikov spent tens of millions of dollars to build and maintain 2 lavish superyachts, the Celestial Hope and the Quinta Essentia. It says that the yachts were paid for by companies within the Laundromat, and that over 7 years, the Troika Laundromat companies channelled at least $137 million into yachting-related expenditures and businesses linked to Zavadnikov.
PAKISTAN: CUSTOMS’ OFFICIALS SEIZE SEVERAL SACKS OF HAZARDOUS CHINESE SALT
On 27th March, ARY News reported that a customs team in Karachi found hazardous Chinese salt ‘Ajinomoto’ in large quantity along with other items. The customs’ officials seized 1500 bags of salt. A court had already banned selling and consumption of this salt. In January 2018, the Punjab Food Authority (PFA) had banned Ajinomoto after the authority’s scientific panel found it hazardous for health. It was said that the Chinese salt contains monosodium glutamate (MSG) which can cause headaches, fatigue, palpitations, nausea and vomiting, sweating, flushing and numbness of the face, more so among people who are sensitive to it.
ANALYSIS OF THE LIKELIHOOD OF ENFORCING FOREIGN JUDGMENTS AGAINST FOREIGN PARTIES BEFORE THE MAURITIAN SUPREME COURT
On 27th March, an article from Appleby which provides an analysis of the likelihood of enforcing foreign judgments against foreign parties before the Mauritian Supreme Court. Mauritius law provides broadly for the enforcement of foreign judgments by both legislation and case law.
UK: BRAZILIAN PONZI SCHEME SOLICITOR STRUCK OFF
Legal Futures on 28th March reported that Charles Valentine Fraser-Macnamara, a solicitor prosecuted for his involvement in a Ponzi scheme – and for the second time over the same set of facts – has this time been struck off. The Solicitors Disciplinary Tribunal decided that he profited from, and/or misled members of the public into investing in, a company called Ecohouse Developments when he knew it was “operating a Ponzi scheme”.
OFAC: POST-ACQUISITION DUE DILIGENCE
On 28th March, an article from Clifford Chance reported that OFAC had announced its fifth settlement of 2019 – with Stanley Black and Decker, Inc. (“Stanley”) and its China-based subsidiary, Jiangsu Guoqiang Tools Co. Ltd – and continued its theme of providing guidance to companies on the need for more than minimal acquisition and post-acquisition due diligence and compliance monitoring.
IMO: ADDRESSING FRAUDULENT REGISTRATION
On 28th March, Hellenic Shipping News reported that IMO’s Legal committee will discuss a number of proposed measures to prevent fraudulent registration of ships and other deceptive shipping practices, during its 106th session (27th-29th March). This follows reports of fraudulent use of their flag by a number of IMO Member States.
SOUTH-EAST ASIA PORTS ON THE CUSP OF CHANGE
A longer article from Loadstar on 28th March was concerned with the increasing ability of Asia’s secondary ports to handle some of the largest box ships, which is leading container lines to increase direct port calls in the region.
AUSTRALIAN NATIONAL SENTENCED FOR ILLEGALLY EXPORTING AIRCRAFT PARTS TO IRAN
Homeland Security Today on 23rd March reported that an Australian national has been sentenced to 2 years in federal prison transactions with Iranian entities without a licence from the US Treasury. Following completion of his prison term, he will be subject to deportation. David Russell Levick, 57, as general manager of ICM Components Inc, in Australia, solicited purchase orders and business for aircraft parts from a representative of a trading company in Iran. The Iranian business partner also operated and controlled companies in Malaysia that acted as intermediaries for the Iranian trading company. Levick then placed orders with US companies on behalf of the Iranian partner for the aircraft parts and other items that the Iranian partner was prohibited from directly purchasing from the US without the permission of the US government.
ALL ISIS HAS LEFT IS MONEY – LOTS OF IT
An article in The Atlantic on 24th March says that ISIS remains a financial powerhouse: it still has access to hundreds of millions of dollars, according to experts’ estimates, and can rely on a tested playbook to keep money flowing into its coffers. That continued wealth has real risks, threatening to help it retain the allegiance of a committed core of loyalists and wreak havoc through terrorist attacks for years to come. The Islamic State’s financial strength offers a window into the broader challenge facing the US and other governments. The main weapons at its disposal are not air strikes and artillery barrages, but subtler tools, such as sanctioning IS–linked businesses, denying them access to the international financial system, and quietly co-operating with governments across the globe. It also says that Islamic State’s loss of territory has freed it from the costs associated with trying to build its self-declared “caliphate,” allowing it to focus exclusively on terrorist activity. A key source of the group’s income is the extortion of oil-supply lines across the region, and the IS is also still sitting on the massive windfall that it built up during the height of its power. Some of those funds appear to have been invested in legitimate commercial enterprises.
WALES: FISH FEED BOSS ANTHONY SMITH ADMITS £4.7 MILLION GRANTS FRAUD
The BBC on 28th March reported that a businessman has pleaded guilty to defrauding the EU and Welsh Government after claiming £4.7 million in grants to develop an alternative to fish feed. The venture was supposed to create up to 120 jobs, but Anthony Smith, 72, created 7 positions and used the money for other purposes. He pleaded guilty to 2 counts of fraudulent trading.
US TREASURY “HIRES AUDITOR TO CHECK RUSAL COMPLIANCE WITH TERMS OF SANCTIONS DEAL”
Russian news service Tass reported that a firm hired by the US Treasury is auditing Russian aluminium giant Rusal, according to Reuters. This is described as the first glimpse of how US Treasury is policing whether Rusal and its parent company En+ are adhering to the deal.
TRIBUNAL CONSIDERS TEST OF ‘FINANCIAL EXTREMITY’ FOR NOT PAYING DISPUTED VAT IN UK
An article from Out-Law on 28th March was concerned with the test for non-payment of owed VAT – “financial extremity”, which is beyond “hardship”. Usually disputed VAT has to be paid before a taxpayer can appeal to the tax tribunal, but a taxpayer can apply to HMRC to not be forced to pay the VAT on the basis that paying it would cause ‘hardship’. In the case in question, the argument was accepted so the disputed tax, amounting to around £300,000 was not paid. However, the business then lost the case, and wished to appeal to the Upper Tribunal. The article points out that in order to not have to pay the tax owed, a different provision uses the basis that “financial extremity might reasonably be expected to result”. The judge had to consider the rules for what constituted “financial extremity”.