Day: April 17, 2019

17^th April 2019

SUPREME COURT RULES THAT UK COURTS THE CORRECT JURISDICTION TO BRING CLAIM AGAINST ZAMBIAN MINING SUBSIDIARY

On 17^th April, Gowling WLG published an article saying that, in a judgment that could have far reaching effects for UK incorporated companies with foreign subsidiaries, the Supreme Court has decided that 1,826 Zambian citizens are entitled to bring a group action in the UK courts in respect of alleged harm to their health and farming activities arising out of toxic discharges into waterways from the nearby Nchanga Copper Mine over many years.

https://gowlingwlg.com/en/insights-resources/articles/2019/vedanta-resources-plc-another-v-lungowe-others

https://www.dentons.com/en/insights/articles/2019/april/17/supreme-court-confirms-zambia-environmental-group-claims-can-proceed-against-parent-company

GUIDANCE: ARRESTED AND DETAINED VESSELS, AND ABANDONED SEAFARERS

The International Seafarers’ Welfare and Assistance Network (ISWAN) is a membership organisation which works to promote and support the welfare of seafarers all over the world.  It has produced guidance which aims to assist port welfare committee members and welfare agencies dealing with incidents of seafarers being abandoned and vessels being arrested or detained.  It outlines the responsibilities of the authorities and other organisations that might become involved when problems are identified aboard a vessel whilst in port.

https://www.seafarerswelfare.org/assets/documents/resources/Arrested-and-Detained-Vessels-and-Abandoned-Seafarers.pdf

MEXICAN PRESIDENT SAYS HE WILL RETURN STOLEN WEALTH TO THE PEOPLE

KYC 360 on 17^th April reported that Mexican President Andres Manuel Lopez Obrador has said he will create a “Robin Hood” institute to return to the people the ill-gotten wealth seized from corrupt politicians and gangsters – and would put confiscated goods such as real estate, jewellery and cars into the public’s hands.

https://www.riskscreen.com/kyc360/news/robin-hood-mexican-president-says-to-return-stolen-wealth-to-the-people/

CANADA HITS VENEZUELAN GOVERNMENT WITH MORE SANCTIONS

The Gleaner in Jamaica on 17^th April reported that Canada has imposed more sanctions on the government of Venezuelan President Nicolás Maduro – against 43 high-ranking Venezuelan officials, including regional governors, allegedly implicated in the undermining of democratic institutions.  Canada had already sanctioned 70 other people linked to Maduro’s government.

http://jamaica-gleaner.com/article/world-news/20190417/canada-hits-venezuelan-govt-more-sanctions

DERIPASKA SAYS HIS GAZ MOTOR GROUP MAY COLLAPSE DUE TO SANCTIONS

Bloomberg on 16^th April reported that Oleg Deripaska, the Russian billionaire, said his GAZ Group may not survive if the company is not removed from the US sanctions lists.  The main plant of the group in Nizhniy Novgorod was started in 1932 by the Soviet Union with the help of the Ford Motor Company, and Deripaska took control in the 2000s.  GAZ is still working with Volkswagen AG and the 2 companies recently held talks to deepen an 8-year-old car-making partnership.

https://www.bloomberg.com/news/articles/2019-04-16/deripaska-says-russian-car-group-may-go-bankrupt-under-sanctions

ISLAMIC STATE REPORTEDLY HAS AS MUCH AS $300 MILLION

On 17^th April, the website Celebrity Net Worth reported that a UN report from business intelligence consulting firm, Alaco says that the remaining money, much of it derived from “taxation, extortion, theft, oil smuggling,” and various other activities may allow it to maintain its operations into the future despite its officially proclaimed military defeats.

https://www.celebritynetworth.com/articles/how-much-does/islamic-state-reportedly-has-as-much-as-300-million-stashed-away/

UPDATE ON CAYMAN ISLANDS SUPERVISORY INSPECTIONS

On 9^th April, Walkers published an article about a recent Advisory from the Cayman Islands Monetary Authority summarising its findings from the on-site inspections it conducted of licensed entities last year.  It provides a summary of the key points.  There were 164 inspections in 2018, a 40% increase from 2017.  It says that the largest percentage inspected were banks with a class B licence (23%), while mutual fund administrators (17.7%), company managers (13.1%) and trusts (12.8 %) – together making up almost 50% of all inspections.  It is expected that as a result of the recent CFATF mutual evaluation report there will be changes to CIMA’s supervisory regime, the article says.

https://www.walkersglobal.com/index.php/publications/99-advisory/1493-update-on-cayman-islands-supervisory-inspections

FULFILMENT HOUSE DUE DILIGENCE SCHEME REGISTERED BUSINESSES LIST

On 17^th April, HMRC published a list allowing one to check if the business that stores your goods in the UK is registered with the Fulfilment House Due Diligence Scheme if you’re a trader based outside of the EU.

https://www.gov.uk/government/publications/fulfilment-house-due-diligence-scheme-registered-businesses-list

THIRD COUNTRIES ALIGN WITH EU EGYPT SANCTIONS

A news release from the EU on 17^th April reported that North Macedonia, Montenegro, Serbia, Albania, Bosnia and Herzegovina, Iceland, Liechtenstein, Norway, Moldova and Georgia have agreed to align themselves with the EU sanctions regime in respect of Egypt.

https://www.consilium.europa.eu/en/press/press-releases/2019/04/16/declaration-by-the-high-representative-on-behalf-of-the-eu-on-the-alignment-of-certain-countries-concerning-restrictive-measures-directed-against-certain-persons-entities-and-bodies-in-view-of-the-situation-in-egypt/

THIRD COUNTRIES ALIGN WITH EU SYRIAN SANCTIONS

A news release from the EU on 16^th April reported that North Macedonia, Serbia, Albania, Bosnia and Herzegovina, Iceland, Liechtenstein, Norway, Moldova and Georgia have agreed to align themselves with the EU sanctions regime in respect of Syria.

https://www.consilium.europa.eu/en/press/press-releases/2019/04/16/declaration-by-the-high-representative-on-behalf-of-the-eu-on-the-alignment-of-certain-countries-concerning-restrictive-measures-against-syria/

THE ANGLOPHONE CAMEROON CRISIS: APRIL 2019 UPDATE

On 17^th April, the House of Commons Library published a briefing paper providing an update, saying that relations between the largely Anglophone regions of Cameroon and the country’s dominant Francophone elite have long been fraught.  Over the past 3 years, tensions have escalated seriously and since October 2017 violent conflict has erupted between armed separatist groups and the security forces, with both sides being accused of committing human rights abuses.

https://researchbriefings.parliament.uk/ResearchBriefing/Summary/CBP-8331

PERU’S EX-PRESIDENT ALAN GARCIA ‘SHOOTS HIMSELF’ MOMENTS BEFORE POLICE ARREST AMID MONEY LAUNDERING PROBE

The Daily Mail on 17^th April reported that the former President of Peru has reportedly shot himself in the neck just moments before police barged down his front door to arrest him.  Alan Garcia, 69, was supposed to face questioning for alleged money laundering but has been rushed to Casimiro Ulloa hospital in Lima after putting a bullet in himself, a police source has said. He is currently under investigation after allegedly accepting bribes from Brazilian construction titan Odebrecht in return for contracts during his most recent spell in office.

https://www.dailymail.co.uk/news/article-6932113/Perus-ex-president-Alan-Garcia-shoots-moments-police-arrest.html

UK: FRC TO TARGET AUDITORS’ WORK ON FRAUD

On 17^th April, ICAEW reported that auditors can expect to come under greater pressure from the Financial Reporting Council (FRC) in the coming year over their work on going concern and fraud risk, and will include “addressing the need for auditors to do more work now to assess whether companies are a going concern and to address the risk of fraud”.

https://economia.icaew.com/news/april-2019/frc-to-target-auditors-work-on-fraud

LEBANON SEIZES 142 KG OF ILLICIT DRUGS IN MAJOR BUST WITH HELP FROM SAUDI AUTHORITIES

On 15^th April, Customs Today reported that police in Lebanon have seized more than 800,000 pills of the stimulant Captagon worth about $12 million in an operation co-ordinated with Saudi authorities.  It says that Captagon is commonly used in the Syrian war, where fighters say it helps them stay awake for days and numbs their senses.  The drug is classified by the UN Office on Drugs and Crime as an “amphetamine-type stimulant” and usually blends amphetamines, caffeine and other substances.

http://www.customstoday.com.pk/lebanon-seizes-142-kg-of-illicit-drugs-in-major-bust-with-help-from-saudi-authorities/

7 PEOPLE ARRESTED FOR ATTEMPTING TO SMUGGLE 16 MILLION COUNTERFEIT CIGARETTES FROM POLAND TO DENMARK

Customs Today on 17^th April reported that Danish law enforcement arrested the people, who are thought to be connected to a wider-ranging smuggling network.

http://www.customstoday.com.pk/danish-police-arrest-seven-in-raid-on-smuggling-network/

MEMBER OF HONG KONG’S ENDANGERED SPECIES BOARD FINED FOR IVORY TRADING

On 15^th April, Customs Today reported that a Hong Kong ivory trader fined for illegal ivory possession sits on a government advisory group for protecting endangered species, records showed, potentially an embarrassing blow as Hong Kong fights ivory smuggling.

http://www.customstoday.com.pk/member-of-hong-kongs-endangered-species-board-fined-for-ivory-trading/

HIGH COURT REFUSES TO REMOVE CHARGE DESPITE MORTGAGE FRAUD AND VOID TRANSFER

An article from Walker Morris on 16^th April reported that, in a recent case, the High Court considered ‘exceptional circumstances’ which may justify a court not making an order for alteration of HM Land Register despite a transfer being void for fraud.  It says that lenders will welcome this High Court decision which emphasises how difficult it can be for a claimant – even a clear victim of fraud – to have a registered legal charge removed from the register.

https://www.walkermorris.co.uk/publications/high-court-refuses-to-remove-charge-despite-mortgage-fraud-and-void-transfer/

https://www.rferl.org/a/29881985.html

THE GHOST SHIPS OF LAGOS: HOW WRECKS HAVE BECOME A HAVEN FOR CRIME ON NIGERIA’S COASTLINE

Hellenic Shipping News on 17^th April carried an article about the (perhaps “hundreds” of) wrecks of ships are found in Lagos.  It says that experts say the wrecks act as groynes, halting the flow of sand down shore and accelerating erosion.  There are also suspicions that amid lax marine laws, companies treat Lagos’ waters as a ship graveyard, avoiding the expense of properly disposing of old vessels.  Lack of regulation has also helped illicit activity thrive, turning the ghost ships into hideouts for sea criminals.

https://www.hellenicshippingnews.com/the-ghost-ships-of-lagos-how-wrecks-have-become-a-haven-for-crime-on-nigerias-coastline/

PODCAST: SURPRISING BRIBERY SCHEMES

In the latest TRACE podcast, Rupert Younger of Oxford’s Centre for Corporate Reputation and Alexandra discuss some novel bribery schemes at Berkeley’s 2019 “Fraudfest”.  (The sound quality reflects the conference setting).

https://traceinternational.org/bribe_swindle_or_steal

 

On 17^th April, a news release advised that OFAC had designated Laureano Ortega Murillo, the son of Nicaraguan President Daniel Ortega and Vice President Rosario Murillo, as well as Nicaraguan bank Banco Corporativo SA (BanCorp), pursuant to an Executive Order which targets corrupt financial operations and Ortega regime support networks.

https://home.treasury.gov/news/press-releases/sm662

https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20190417.aspx

On 17^th April, OFAC advised a number of changes to licensing arrangements for transactions involving Venezuela.  It also lists the Central Bank of Venezuela.  A new FAQ asks: will the designation of Banco Central de Venezuela, or the Central Bank of Venezuela, restrict the ability of US persons to engage in or facilitate the provision of humanitarian assistance or non-commercial, personal remittances to Venezuela?  The basic answer provided is no, as OFAC is committed to ensuring that humanitarian assistance and non-commercial, personal remittances can flow to the people of Venezuela.  Also designated was Iliana Josefa Ruzza Terán, a director of Banco Central de Venezuela.

https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20190417.aspx

https://home.treasury.gov/news/press-releases/sm661

https://www.rferl.org/a/29884290.html 

Following the publication of the mutual evaluation report on China, FATF has issued an update schedule of AML/CFT ratings for those countries that have been evaluated.

http://www.fatf-gafi.org/publications/mutualevaluations/documents/assessment-ratings.html

On 17^th April, FATF published the mutual evaluation report on the AML/CFT regime in China.  An IMF staff-led assessment comprehensively reviews the effectiveness of China’s measures and their level of compliance with the FATF Recommendations.   The FATF adopted this report at its February 2019 Plenary meeting.  Hong Kong and Macau were not included in the evaluation.  It says that the lack of coverage of designated non-financial businesses and professions (DNFBP) by the AML/CFT framework is a significant vulnerability.  The absence of coverage of domestic politically exposed persons (PEP) is another significant vulnerability, which is particularly noteworthy in the context of a country where corruption is a major predicate offence and state-owned-enterprises play a dominant role in the economy.  It also notes that a large amount of illicit proceeds flows out of China annually.  An incomplete understanding of risk impacts negatively on the effectiveness of several aspects of China’s AML/CFT arrangements, and there are significant weaknesses in both technical compliance and effectiveness with respect to the transparency of legal persons and legal arrangements and the framework and practices related to targeted financial sanctions.  Shortcomings in the AML/CFT legal framework related to the coverage of online lending institutions, DNFBP, domestic PEP, terrorism financing sanctions, and the criteria for reporting suspicious transactions should be addressed.  Also amongst the report findings is that China should review the functioning of its FIU to ensure that all information received, analysed and disseminated by all 3 FIU components is readily available and accessible both at the central and provincial levels

http://www.fatf-gafi.org/publications/mutualevaluations/documents/mer-china-2019.html

This Guide is from TerraLex and draws together contributions from tracing experts across a number of territories.  It covers a number of countries, plus Hong Kong and a number of individual US states.  It is arranged in Q&A form, asking: Is any information about assets publicly available?; What steps can be taken to obtain information to identify asset holders (whether third party or wrongdoer/adverse party) or the assets?; Can steps be taken to protect/preserve assets on an interim basis?; What are the requirements for obtaining a freezing injunction (if available)?; What assets can be frozen and do they have to be within the jurisdiction?; What about a search order?; Can a freezing injunction or search order be obtained in support of proceedings outside of the jurisdiction?; and Can a freezing injunction obtained from a foreign court be enforced against assets in the jurisdiction?

https://www.rpc.co.uk/-/media/rpc/files/perspectives/terralex-guide-to-tracing-assets-around-the-world-2018.pdf

In an article published on 12^th April, Bryan Cave Leighton Paisner commented on corporate hospitality; a problematic area that remains wholly untouched by any case law despite the implementation of the Bribery Act almost 8 years ago.  It says that a vacuum of legal precedent exists in relation to corporate hospitality.  The Act does not directly refer to the topic nor has any relevant case law emerged since it came into force.  The sole source of guidance on which companies can reasonably rely is the guidance issued by the MoJ of March 2011.

The MoJ guidance is available at –

https://www.justice.gov.uk/downloads/legislation/bribery-act-2010-guidance.pdf

https://www.bclplaw.com/en-GB/thought-leadership/how-far-is-too-far-for-the-uk-bribery-act.html

On 29^th March, Allen & Overy published an article saying that the Directive entered into force on 9^th July 2018, with an implementation deadline of 10^th January 2020 (which may include the UK, depending on the terms of the Brexit transition period) and an implementation date of 10^th January 2019 for provisions relating to anonymous safe deposit boxes.  Among the changes introduced by the Directive is the requirement to provide wider access to each Member State’s central register of beneficial ownership of corporate entities – so that they can now be accessed by the general public without the need for them to show a ‘legitimate interest’.  The article includes a table that provides an overview of how some Member States are implementing the requirement to maintain UBO Registers in their national law.

http://www.allenovery.com/publications/en-gb/Pages/European-implementation-of-5MLD-and-Ultimate-Beneficial-Ownership-(UBO)-Registers-Q4-2018.aspx

On 19^th January, an article in the Americas Quarterly, sponsored by Philip Morris International, sets out to show how illegal tobacco has become a vehicle to finance organised crime and terrorist groups.  It says that worldwide the OECD estimates that trade in counterfeit and pirated goods alone is an almost $500 billion business a year globally and the number continues to increase.  The article says that, according to a report from KPMG, 15.6% of the cigarettes consumed in the Americas are illegal, representing a volume of almost 40 billion illegal cigarettes, and governments in the region are losing an estimated $4.6 billion in tax revenue every year due to the illegal tobacco trade.  By avoiding taxes, illegal tobacco products are vastly profitable.  The article points the finger at free zones, saying that criminals based in Panama’s Colon Free Zone supply up to 80% of all illegal cigarettes consumed between the Rio Grande and the Amazon rivers.  It also says that new players in the illicit trade arena intend to smuggle smoke-free products, mainly through e-commerce platforms and social media channels.

https://www.americasquarterly.org/content/a-4-billion-problem-for-the-americas