OTHER THINGS YOU MAY HAVE MISSED – MARCH 2

2 March 2019

EU COUNTRIES REVOLT AGAINST COMMISSION’S DIRTY MONEY LIST

On 1 March, Politico reported that the Commission last month published a list of 23 countries that it says are too lax on money laundering, including Saudi Arabia, Panama, and several US territories such as the US Virgin Islands.  The list, which needs the support of both the European Parliament and Council of the EU to come into effect, generated intense backlash and behind-the-scenes lobbying from the US and Saudi Arabia. EU government representatives agreed to block the blacklist when they meet at a Council meeting.  EU ambassadors will formalise that decision next week. The EU home affair ministers would then sign off on the rejection when they meet next.

https://www.politico.eu/article/eu-countries-revolt-against-commission-dirty-money-list-vera-jourova/

IRANIAN COMPANY WINS $87 MILLION FRAUD CLAIM OVER OIL RIG DEAL

On 2 March, the Fars News Agency in Iran reported that a court in London had handed a victory to an Iranian oil and gas engineering company on Friday, accepting its claim that it was a victim of a fraud.  It says that in 2011, sanctions made it difficult for Iran to rent oil drilling rigs, so the Iranian Offshore Engineering and Construction Co (IOEC) approached one of  the defendants and asked him to find one to buy. The deal had to be routed through a trading company registered in Turkey. Even though the rig was never delivered to Iran, IOEC ended up paying out all of the $87 million – including a $20 million premium because of the cost of evading sanctions.

MEXICO FREEZES SUSPICIOUS UNIVERSITY FUNDS RECEIVED VIA SWITZERLAND

On 2 March, Swissinfo reported that Mexico has frozen $156 million of a large public university’s funds (The Autonomous University of the State of Hidalgo) while it investigates suspected money laundering. The university received the money via Switzerland from accounts in 22 countries, according to a government agency.  In addition to Switzerland, the remittances came from Spain, UK and other countries.

http://www.swissinfo.ch/eng/latest-news/money-laundering_mexico-freezes-suspicious-university-funds-received-via-switzerland/44795942

US DOJ IS FURTHER DELAYING ENFORCEMENT OF ITS NEW OPINION ON THE SCOPE OF THE WIRE ACT

Calvin Ayre on 2 March reported that the US Department of Justice is further delaying enforcement of its new opinion on the scope of the Wire Act to give online gambling operators more time to bring their operations into compliance – extending its original 15 April deadline by 60 days.

https://calvinayre.com/2019/03/02/business/us-dept-justice-delays-wire-act-enforcement-mid-june/

SYNTHETIC ‘PINK COCAINE’ CROSSING FROM ARGENTINA INTO URUGUAY

On 1 March, Insight Crime reported that Anti-drug officials in Uruguay are warning citizens about the arrival of a new kind of alleged pink cocaine from Argentina, underscoring how the synthetic drugs market in Argentina may be spreading to neighboUring countries.  The drug is actually a synthetic drug known as 2C-B, a stimulant and hallucinogenic drug similar to MDMA. It says that the emergence of synthetic drugs in Argentina and Uruguay follows a regional trend of criminal groups adapting to the growing demand of such drugs – although Argentina has not been a flashpoint for their consumption, its local drug market is following regional shifting dynamics.  Argentina has increasingly become a key transshipment link for South America’s cocaine trade, domestic trafficking, and local consumption have also increased.

https://www.insightcrime.org/news/brief/argentina-synthetic-pink-cocaine-market-crossing-borders-uruguay/

WHY THE EU’S TOBACCO TRACK AND TRACE SYSTEM FAILS TO LIVE UP TO WHO REQUIREMENTS

On 26 February, an article from Illicit Trade said that the EU is set to implement a system to track and trace tobacco products all along the supply chain this May, in line with the Tobacco Products Directive 2014.  The EU also maintains that the system fulfills the requirements of the WHO Framework Convention on Tobacco Control (FCTC) Protocol to Eliminate Illicit Trade in Tobacco Products, to which the EU is a party. However, criticism has come from from MEPs and public health bodies, who argue that the scheme is not  independent from the tobacco industry.

https://www.illicit-trade.com/2019/02/why-the-eus-tobacco-track-and-trace-system-fails-to-live-up-to-who-requirements/

 

AN INTERNATIONAL GUIDE TO ANTI-CORRUPTION LEGISLATION

On 1 March, Clifford Chance produced an article saying that anti-corruption laws around the world continue to converge, partly as a result of international anti-corruption conventions, but there remain substantive differences in the scope of offences and the way in which they are expressed, as well as in the definition of key terms.  This guide, by focusing on 10 key questions, aims to elucidate both the differences and the similarities in anti-corruption laws around the world.

https://www.cliffordchance.com/briefings/2019/03/an_internationalguidetoanti-corruptio.html

OTHER THINGS YOU MAY HAVE MISSED – MARCH 1

1 March 2019

ACCOUNTANT JAILED FOR £400,000 VAT SCAM

The Accountancy daily on 1 March reported that Rakesh Sidhpara, an accountant who tried to avoid going to jail by forging a medical report from a Cypriot hospital has been jailed for a £400,000 VAT scam.  He claimed more that 100 fraudulent repayments through hijacked and fake businesses.

https://www.accountancydaily.co/accountant-jailed-ps400k-vat-scam

EXXONMOBIL MAKES BIGGEST NATURAL GAS DISCOVERY IN 2 YEARS OFF THE COAST OF CYPRUS

CNBC on 28 February reported that ExxonMobil announced that it has made the world’s third biggest natural gas discovery in 2 years off the coast of Cyprus in the Eastern Mediterranean.  The article says that the gas finding now has energy analysts wondering how thorny it will be working with Cyprus – and the reaction of Turkey.

https://www.cnbc.com/2019/02/28/exxonmobil-makes-big-natural-gas-discovery-off-the-coast-of-cyprus.html?&qsearchterm=exxon%20mobil

https://euobserver.com/tickers/144301

AFTER SAUDI KING LETTER EU STATES MOVE TO BLOCK DIRTY-MONEY LIST    

KYC 360 on 28 February reported that the adoption of a EU money laundering blacklist, which includes Saudi Arabia as well as Puerto Rico and 3 other US territories, could be blocked by EU governments.

https://www.riskscreen.com/kyc360/news/after-saudi-king-letter-eu-states-move-to-block-dirty-money-list/                                    

AFRICA’S YOUNG FOOTBALLERS CAUGHT IN A WEB OF CRIME AND ABUSE

ENACT Observer on 26 February reported that young African soccer players are exposed to organised criminality and exploitation, particularly at the hands of unscrupulous agents.

https://enactafrica.org/enact-observer/africas-young-footballers-caught-in-a-web-of-crime-and-abuse

STIFFER PENALTIES NEEDED TO CURB COUNTERFEITS IN EAST AFRICA

An article in ENACT Observer on 28 February said that manufacturers in East Africa have called for stiffer penalties against the flourishing trade in counterfeit goods following an influx of these items across regional markets.  While some counterfeit products are manufactured locally, large volumes are imported from countries including China, India, UAE, Indonesia, Taiwan and Thailand.

https://enactafrica.org/enact-observer/stiffer-penalties-needed-to-curb-counterfeits-in-east-africa

WILL A NEW TREATY BOOST AFRICA’S FIGHT AGAINST MARITIME CRIME?

On 14 February, ENACT Africa published an article saying that, in September 2018, the UN launched formal discussions for a treaty on the conservation of marine biodiversity on the high seas.   The article says that nowhere could benefit more than Africa. The Treaty would cover not just the “high seas”, but also to ‘the seabed and ocean floor and subsoil thereof, beyond the limits of national jurisdiction’.  It says that until now all States, whether coastal or landlocked, [have] freedom of navigation, overflight, freedom to lay submarine cables and pipelines, to construct artificial islands and other installations permitted under international law, freedom of fishing, and freedom of scientific research”.  This has been a grey area in international law, it says, notably leaving the high seas open to criminals.

https://enactafrica.org/enact-observer/will-a-new-treaty-boost-africas-fight-against-maritime-crime

EXPLAINED: THE CASE THAT COULD BRING DOWN CANADA’S JUSTIN TRUDEAU

On 1 March, the Guardian provided an explanation of the SNC-Lavalin case, in which the company  is accused of paying C$48 million worth of bribes in Libya to Muammar Gaddafi’s family, in order to secure lucrative contracts.

https://www.theguardian.com/world/2019/mar/01/explained-the-case-that-could-bring-down-canadas-justin-trudeau

VIRTUAL CURRENCIES: FRAUD AND MONEY-LAUNDERING ISSUES IN THE UK

On 24 January, Ramparts European Law Firm published an article in Q&A form, including: how are transactions using virtual currencies as the medium of exchange taxed in your jurisdiction?

https://www.lexology.com/library/detail.aspx?g=20736649-246a-4526-8ad0-3b4f309fc88d

UKRAINE’S SPECIAL PARLIAMENTARY COMMISSION TO STUDY MILITARY-PROCUREMENT SCANDAL

112 UA on 28 February reported that the Commission was to investigate a corruption scheme to smuggle spare military-equipment parts from Russia in 2015.  State defence facilities are said to have purchased the smuggled spare parts from private companies at highly inflated prices.

https://112.international/ukraine-top-news/parliamentary-commission-investigating-embezzlement-at-ukraines-army-to-study-abuse-at-ukroboronprom-37429.html

US STATE AND COMMERCE DEPARTMENTS SHOULD SHARE WATCH LIST INFORMATION

The Government Accountability Office on 1 March said that proposed changes would transfer export control responsibility for firearms, artillery and explosives to the Commerce Department for many of these items.  Different laws and regulations would apply to the items transferring to Commerce. It says that State and Commerce also use different watch lists to screen potential exporters.  Commerce does not have direct access to State’s watch list, which contains information from past screenings of export licences. The GAO recommends that if the changes are made, State and Commerce should develop a process for sharing State’s watch list.

https://www.gao.gov/products/GAO-19-307

UK: MPs IN RENEWED ATTEMPT TO FORCE MONEY LAUNDERING CRACKDOWN

On 1 March, the BBC reported that a group led by Tory MP Andrew Mitchell and Labour’s Margaret Hodge have launched a fresh move to make UK Overseas Territories and Crown Dependencies introduce a beneficial ownership register.  More than 40 MPs have signed an amendment to the Financial Services Bill requiring the UK to help all overseas territories and Crown dependencies set up a publicly accessible register of the beneficial ownership of companies within their jurisdictions.  If passed, it would oblige them to do so by the end of 2020. The UK says it is committed to “influencing” overseas territories and Crown Dependencies when it comes to beneficial ownership registers, with the aim of them becoming the global standard by 2023.

https://www.bbc.co.uk/news/uk-politics-47422975

EUROPEAN COMMISSION WARNS UK OVER DIVIDEND TAX AVOIDANCE

On 1 March, The Times reported that the EU has accused Britain of enabling tax avoidance by big business in a move that may foreshadow a post-Brexit battleground.  In its annual report on the UK, the European Commission drew particular attention to dividend tax arrangements, which it claimed made Britain attractive for “treaty shopping” and “aggressive tax planning”.

https://www.thetimes.co.uk/article/european-commission-warns-britain-over-dividend-tax-avoidance-xck2dt5hq

REPORT: EU NAVAL CAMPAIGN INEFFECTIVE AGAINST SMUGGLERS

EU Observer on 1 March reported that leaks from a report show that the EU’s naval operation Sophia is unable to fully carry out its mandate.  Politico Europe says the papers show that Sophia is understaffed, underequipped, and underfunded in its efforts to crack down on migrant smugglers emanating from Libya.

https://euobserver.com/tickers/144298

FATF BUSINESS BULLETIN – MARCH 2019

On 1 March, FATF issued its latest Bulletin which provides a brief update on outcomes from the February 2018 FATF plenary meeting that are relevant for the private sector.

http://www.fatf-gafi.org/media/fatf/documents/bulletin/FATF-Business-Bulletin-March-2018.pdf

HIZBALLAH, ANSAROUL ISLAM AND JAMAAT NUSRAT AL-ISLAM WAL-MUSLIMIN

On 1 March, the Home Office issued a news release saying that an order proscribing Hizballah, Ansaroul Islam and Jamaat Nusrat al-Islam Wal-Muslimin came into force at midnight, outlawing the 3 organisations from 1 March.

https://www.gov.uk/government/news/hizballah-banned-in-the-uk

UK EXTENDS SCHEDULE 23 HMRC VAT DATA-GATHERING POWERS TO “POSTAL OPERATORS

The Finance Act 2011, Schedule 23 (Data-gathering Powers) (Amendment) (EU Exit) Regulations 2019 also provides that the power to require a postal operator to provide relevant data is only exercisable by HMRC in relation to the discharge of HMRC’s tax functions relating to VAT.  The change will take effect when further regulations bring the change into effect.

http://www.legislation.gov.uk/uksi/2019/397/contents/made

SANCTIONS (AMENDMENT) (EU EXIT) (NO 2) REGULATIONS 2019

These Regulations make amendments to a number EU sanctions Regulations as they will apply in the UK post-Brexit.

http://www.legislation.gov.uk/uksi/2019/380/made

UK PROSCRIBED TERRORIST GROUPS OF ORGANISATIONS

On 1 March, the Home Office issued an updated list of organisations banned in the UK.

https://www.gov.uk/government/publications/proscribed-terror-groups-or-organisations–2

NO-DEAL WOULD HOBBLE FIGHT AGAINST CRIME, THE LAW SOCIETY WARNS IN NEW BREXIT GUIDANCE

The Law Society Gazette on 1 March reported that the Law Society has highlighted the damage that crashing out of the EU without an agreement could do to the criminal justice system; saying that a no-deal Brexit will make it harder to investigate cross-border crime and arrest suspects, and harder for victims to get compensation.

https://www.lawgazette.co.uk/news/no-deal-would-hobble-fight-against-crime-society-warns-in-new-brexit-guidance/5069461.article

INCREASED VAT RECOVERY FOR FINANCIAL INSTITUTIONS IN EVENT OF NO-DEAL BREXIT

On 1 March, an article from Out-Law says that changes to the UK VAT legislation in the event of no-deal Brexit will bring the VAT treatment of financial service supplies made to clients in the EU in line with the current treatment of those supplies to clients in the rest of the world.

https://www.out-law.com/en/articles/2019/March/vat-recovery-for-financial-institutions-in-event-of-no-deal-brexit/

https://www.gov.uk/government/news/vat-recovery-for-financial-services-exports-in-a-no-deal-scenario

GIBRALTAR: UNILATERAL SPANISH CONTINGENCY MEASURES

A news release from Gibraltar on 28 February said that  Spain announced a series of unilateral contingency measures which will take effect in the event of a no deal Brexit in respect of the UK and Gibraltar. The legislation is expected to be approved by the Spanish Council of Ministers and then by the Parliament.  The legislation will be unilateral and of a temporary nature, given that the future relationship will be defined once the UK becomes a third country.

https://www.gibraltar.gov.gi/new/sites/default/files/press/2019/Press%20Releases/140-2019.pdf

https://www.jurist.org/news/2019/03/spain-government-to-protect-resident-british-citizens-in-no-deal-brexit/

UK’S “RIGHT TO RENT” POLICY INCOMPATIBLE WITH HUMAN RIGHTS LAW

Jurist on 1 March reported that the High Court had ruled on the “right to rent” policy that required private landlords to verify the immigration status of prospective renters.  Under this policy, landlords who rented to undocumented tenants could face unlimited fines or prison time. This policy was a key aspect of the “hostile environment” scheme developed by current-Prime Minister Theresa May during her tenure as Home Secretary from 2010-2016.  A nonprofit immigrant-advocacy group, challenged the “right to rent” policy on the grounds that it violated human rights law.

https://www.jurist.org/news/2019/03/uk-court-strikes-right-to-rent-immigration-housing-policy/

UK: COURT OF APPEAL REFUSES TO INTERFERE WITH FREEZING ORDER RESTRICTIONS

An article from Out-Law on 1 March says that the Court of Appeal has upheld the terms of a post-judgment freezing order, preventing the person subject to that order from making payments ‘in the ordinary course of business’.  A freezing order was granted against BVI law firm Michael Wilson and Partners (MWP) in 2014.

https://www.out-law.com/en/articles/2019/March/court-of-appeal-refuses-to-interfere-with-freezing-order-restrictions/

AUSTRALIA: POLICE ARREST COMPANY DIRECTOR IN NAB BANK FRAUD SCANDAL INVESTIGATION

On 1 March, Baker McKenzie reported that the director of a company at the centre of an alleged $40 million corporate fraud scandal involving National Australia Bank has been arrested and charged with more than 50 bribery and corruption offences.  Helen Rosamond, 43, is the owner and director of Human Group, an events and human resources company that has held lucrative contracts with NAB going back 12 years and worth almost $120 million.

http://www.riskandcompliancehub.com/australia-nsw-police-arrest-company-director-in-nab-fraud-scandal-investigation/

THE ARMED GROUPS PROPPING UP VENEZUELA’S GOVERNMENT

Insight Crime on 1 March reported on 3 main government-backed groups: the Bolivarian National Guard (Guardia Nacional Bolivariana – GNB); the Special Action Forces (Fuerzas de Acciones Especiales – FAES) of the national police (Policía Nacional Bolivariana – PNB); and what are known as “colectivos” – groups that supported former President Hugo Chávez that over the years have grown increasingly armed and prone to engage in criminal activities.

https://www.insightcrime.org/news/analysis/armed-groups-propping-venezuelas-government/

DOJ CHARGES 2 MORE BUSINESSMEN WITH BRIBERY IN CONNECTION WITH VENEZUELAN BRIBERY SCHEME

On 1 March, Buckley, in its FCPA Scorecard Blog, reported that the US DoJ had indicted a former sales representative, Rafael Enrique Pinto Franceschi, and the president of a US-based company, Franz Herman Muller Huber, with conspiracy to commit bribery, wire fraud, and money laundering, and substantive wire fraud, for their alleged roles in a scheme to corruptly secure business advantages, including contracts and payment on past due invoices, from Venezuela’s state-controlled energy company, PDVSA, 2009-13.

https://buckleyfirm.com/blog/2019-03-01/doj-charges-two-more-businessmen-bribery-connection-venezuelan-bribery-scheme-0

LONDON-BASED OIL AND GAS SERVICES COMPANY SETS ASIDE $280 MILLION FOR BRIBERY SETTLEMENTS

On 1 March, Buckley, in its FCPA Scorecard Blog, reported that TechnipFMC had set aside $280 million as an estimate for the settlement of investigations by US, Brazilian, and French authorities regarding potential violations of anti-corruption laws in several countries.  The company’s predecessor, Technip SA, previously paid $338 million to settle FCPA charges.

https://buckleyfirm.com/fcpa-scorecard

FINANCIAL CRIME HORIZON SCANNING BOOKLET: Q1 2019

On 1 March, Eversheds Sutherland published the latest edition of a booklet that summarises key financial crime related legal and regulatory changes expected over the next 18 months to 2 years, as well as providing electronic links to key resources.

https://www.eversheds-sutherland.com/global/en/what/articles/index.page?ArticleID=en/Fraud_and_financial_crime/Horizon_Scanning_Q1_2019

CONSTITUTIONAL COURT RULING UNDERMINES ANTI-CORRUPTION ACHIEVEMENTS IN UKRAINE

On 1 March, Transparency International reported that on 26 February, the Constitutional Court of Ukraine struck down Article 368-2 of the Criminal Code – the provision on illicit enrichment. It says that this decision greatly weakens the country’s anti-corruption efforts, undermines up to 65 open investigations and has a direct impact on 4 cases against high-ranking officials that were already before the courts.  The National Anti-Corruption Bureau of Ukraine called the Court’s decision a politically motivated move that will severely impact their current investigations.

https://www.transparency.org/news/pressrelease/constitutional_court_ruling_undermines_anti_corruption_achievements_in_ukra

UN PROVIDES REASONS FOR ADDING USAMA BIN LADEN’S SON TO SANCTIONS LISTS AS UK ADDS HIM TO ITS SANCTIONS LISTS

The UN has issued its reasons for adding Hamza Usama Muhammad bin Laden to its Al-Qaida/ISIL sanctions lists on 28 February.  Meanwhile, on 1 March, HM treasury added him to its Consolidated List.

https://www.un.org/securitycouncil/content/hamza-usama-muhammad-bin-laden

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/782750/Notice_ISIL_01032019.pdf

US government is offering $1 million for help tracking down the son of the late terrorist leader Osama bin Laden

http://time.com/5541597/us-reward-bin-laden-son/

OFAC DESIGNATES 6 VENEZUELAN GOVERNMENT OFFICIALS OVER “OBSTRUCTION” OF AID

On 1 March, OFAC designated Richard Jesus Lopez Vargas; Jesus Maria Mantilla Oliveros; Alberto Mirtiliano Bermudez Valderrey; Jose Leonardo Norono Torres; Jose Miguel Dominguez Ramirez; and Cristhiam Abelardo Morales Zambrano.  They are accused of being associated with the obstruction of humanitarian aid deliveries into Venezuela on February 23.

https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20190301.aspx

https://home.treasury.gov/news/press-releases/sm619