18th April 2019
PRIORITY IN INSOLVENCY –THE HMRC CROWN PREFERENCE PROPOSALS
Dentons published an article on 4th April about a consultation paper from HMRC on 26th February that proposes legislation that will give HMRC the elevated status to secondary preferential creditor in a company’s insolvency. If this is implemented, HMRC will have priority to recover certain taxes from insolvent businesses ahead of other creditors from 6th April 2020. This article sets out to consider if this would mean a return to the position abolished in 2003 (it determines that it is not a full return to that position), and the scope and rationale of the proposals, focusing on the impact on secured creditors in an insolvency. The consultation closes on 27th May.
A GUIDE TO THE LABUAN IBFC
The company that administers the Labuan International Business and Finance Centre in Malaysia has published a guide to the Centre, which has a 3% basic tax rate for businesses’ trading activity.
PRESIDENT ASSAD’S UNCLE WILL STAND TRIAL IN FRANCE ACCUSED OF USING SYRIAN STATE FUNDS TO BUILD UP $100 MILLION PROPERTY EMPIRE
The Daily Mail reported on 17th April that Rifaat al-Assad, 81, a former vice-president of Syria is accused of using funds from Syrian state coffers to build up a $100 million property empire. It says that his reported French fortune includes 2 Paris townhouses, a stud farm and chateau near the French capital and 79,000 square feet of office space in Lyon. He has been under investigation by French authorities since April 2014, and left Syria in 1984 after mounting a failed coup against his brother Hafez al-Assad, Bashar’s father.
2 UK AGENCIES OUTLINE PLANS TO FIGHT FINANCIAL CRIME IN 2020
KYC 360 on 18th April reported that the FCA said in a 2019/2020 business plan that its Office for Professional Body Anti-Money Laundering Supervision (OPBAS) would ratchet up pressure on associations and other organisations that don’t adequately police their members for failing to implement checks on financial crimes. FCA will separately extend its Senior Managers and Certification Regime (SMCR) to all entities in December, according to the plan. The regime, which already applies to banks, attempts to hold executives, including senior compliance officers, accountable for institutional violations of financial regulations. The NCA has published a 2019/2020 business plan under which it would “maximise new powers, for example Unexplained Wealth Orders and Account Freezing Orders, across all agencies to tack illicit finance”. NCA will also prioritise an ongoing overhaul of its technical capabilities to process and analyse SAR filed by British banks and other firms.
POLICE RECOMMEND INDICTING CZECH PM FOR FRAUD
On 18th April, EurActiv reported that Czech police believe billionaire Prime Minister Andrej Babiš should be indicted for alleged involvement in EU subsidy fraud worth €2 million, a spokesman said.
EUROPEAN BORDER AND COAST GUARD: STRONGER EU BORDERS WITH A NEW STANDING CORPS OF 10,000 BORDER GUARDS
A EU news release on 17th April reported that the European Parliament has adopted the proposal of the EU Commission to reinforce the European Border and Coast Guard Agency with a standing corps of 10,000 border guards by 2027. The Agency will also have a stronger mandate on returns and will cooperate more closely with non-EU countries, including those beyond the EU’s immediate neighbourhood. This reinforcement will give the Agency the right level of ambition to respond to the common challenges facing Europe in managing migration and its external borders. The EU Council now has to adopt the Regulation. The enhanced mandate of the European Border and Coast Guard will enter into force 20 days after publication of the text in the Official Journal. The new European Border and Coast Guard standing corps will be available for deployment from 2021, once it becomes fully operational and will reach its full capacity of 10,000 border guards by 2027.
EU COMMISSION WELCOMES EUROPEAN PARLIAMENT ADOPTION OF STRONGER AND MORE SECURE EU VISA RULES
A news release from the EU on 17th April said that the European Parliament has adopted the Commission’s proposal to reform the rules on Schengen visas, making it easier for bona fide travellers to obtain a visa to come to Europe for short stays, whilst strengthening security standards and reducing irregular migration risks.
THIRD COUNTRIES ALIGN WITH EU SANCTIONS IN RESPECT OF UKRAINE SANCTIONS
3 news releases on 17th April reported that Montenegro, Albania, Iceland, Norway, Moldova had agreed to align with various EU sanctions in respect of Ukraine.
UK ANTI-CORRUPTION ACTIVITY
On 17th April, the Home Office released a collection of material which brings together documents related to the government’s work to combat domestic and international corruption. It includes the first Anti-Corruption Newsletter, as well as legislation, strategy and progress updates.
IRELAND: CAB RAIDS ARE ‘A MAJOR DISRUPTION’ TO CORK GANG
On 17th April, the Irish Examiner reported that the Criminal Assets Bureau seized 10 vehicles, 4 Rolex watches, and more than €30,000 in cash in a series of early morning raids targeting a Cork-based organised crime gang. The operation has been described as “a major disruption” to the activities of a gang known to be involved in fraud, theft, and deception and is suspected of extorting large sums of money from elderly and vulnerable people. The raids were carried out as part of Operation Thor, the ongoing Garda operation which targets organised crime gangs.
BOX LINES LAUNCH DIGITAL CONTAINER SHIPPING ASSOCIATION
Lloyds Loading List on 17th April reported that 4 of the world’s largest container lines are joining forces to establish standards that can be used across the industry. The aim is to develop a blueprint for developing new services. The association, which will be based in the Netherlands, has been established by Maersk, Hapag-Lloyd, Mediterranean Shipping Co and Ocean Network Express with the intention of setting standards for the digitalisation of container shipping.
$20 BILLION OF US EXPORTS ON THE EU RETALIATION LIST IN AIRCRAFT SUBSIDY DISPUTE
Sandler Travis Rosenberg on 18th April reported that the EU Commission has published a preliminary list of US products on which the EU could impose additional tariffs of up to 100% in a long-running transatlantic dispute over aircraft subsidies involving Airbus and Boeing. The list covers hundreds of items, including aircraft, auto parts, tractors, handbags, video game consoles, chemicals, and food products, with an annual import value of $20 billion. Comments on this list may be submitted through May 31st.
CORRUPTION ALLEGED IN KYRGYZSTAN PASSPORT DEAL
On 18th April, OCCRP reported that the winning bid of $13.4 million for production of new biometric passport is at the centre of a major corruption probe. Early this month, Kyrgyzstan’s state security agency, known as the GKNB, accused both current and former government officials of accepting bribes from the winner in the form of payment for international travel. The focus of the investigation is the State Registry Service, the agency that issues passports to citizens and put out the tender. 3 officials from the agency have been detained, and 1 of them, according to Kyrgyz media, is also the head of the tender commission that decided on the bid, though this has not been officially confirmed. Investigations also involve Garsu Pasaulis, the Lithuanian company that won the contract, and a Belgian company (Semlex Europe) and Belgian citizen behind the company – said to be under investigation in Belgium and the Comoro Islands.
SHIP SUSPECTED OF CARRYING NORTH KOREAN COAL IS UNDER INVESTIGATION
The Yonhap News Agency on 18th April reported that a Togo-flagged ship has been under investigation in South Korea on suspicion of carrying North Korean coal in a potential violation of UN sanctions, an opposition lawmaker said. It is believed to have come from Russia’s Nakhodka, entered the South Korean south-eastern port of Pohang in February to unload 3,217 tons of North Korean coal. It has become the 6th ship whose departure from a South Korean port was suspended or denied due to suspected shipments of North Korean coal or ship-to-ship oil transfer in international waters.
FORMER AIR CHINA FLIGHT ATTENDANT PLEADS GUILTY TO SMUGGLING MYSTERY PACKAGES THROUGH JFK FOR CHINESE MILITARY OFFICIALS
The New York Daily News on 17th April reported that Ying Lin, who was employed by the international air carrier from 2002 to 2016, pleaded guilty to acting as an agent of a foreign government at a hearing held in federal court. She admitted she and her colleagues smuggled packages, whose contents remain a mystery, from JFK to Beijing “at the direction of officials and my employer, Air China”. A naturalised US citizen, Lin faces a maximum sentence of 10 years in federal prison and possible immigration consequences.
SPANISH NAVY RESCUES STRICKEN VESSEL FROM PIRATES
On 18th April, Ports Technology reported that a warship has rescued the crew of a cargo ship held captive by pirates in the Gulf of Guinea for 4 days. The captain and the 12 crewmembers, all Nigerian, had been held hostage by the AK-47 wielding pirates for 4 days, during which all on-board money and valuables had been stolen.
PAKISTAN TERRORISM SANCTIONS GUIDELINES PUBLISHED
The Ministry of Foreign Affairs has published guidelines for compliance with UN SCR 1267 and 1988 that target ISIL/Da’esh/Al-Qaida and the Taliban. It is said that the Guidelines would particularly help officials in various Ministries, Departments and Agencies at the Federal and Provincial levels to understand the provisions of the sanctions regimes; understand the domestic enabling legislation to implement the resolutions in Pakistan; and provide a common understanding of the obligations of each stakeholder and of the operational issues for implementation of relevant UN SCR.
SUDAN: FORMER PRESIDENT OMAR AL-BASHIR MOVED TO PRISON
The Guardian reported that the recently-ousted former President, 75, had been moved to Khartoum’s grim high-security Kobar prison from the presidential residence, as military rulers announced steps to crack down on corruption.
UK: HIGH VALUE DEALER GUIDANCE FOR MONEY LAUNDERING SUPERVISION
On 18th April, HMRC published updated guidance designed to help high value dealers meet their requirements for money laundering supervision, including customer due diligence, record-keeping and reporting suspicious activity.
REGULATION OF ESTATE AGENTS IN UK
On 18th April, the House of Commons Library published a briefing paper which provides an outline of the current regulation of estate agents in England and Wales only. The situation is very different in Scotland, where there are different property laws – in Scotland, there is a much earlier legally binding agreement between the buyer and seller of a property.
UK COMPANY AUDITS: PROBLEMS AND SOLUTIONS
On 18th April, the House of Commons published a briefing paper which explains how audit works, the problems the industry faces and how it is being reformed after recent scandals.
UK OFFICIAL SECRETS ACT 1989: DISCLOSURE OF OFFICIAL INFORMATION
On 18th April, the House of Commons published a briefing paper which says that 11th May marks 30 years since the Official Secrets Act 1989 received Royal Assent. Among other provisions, replaced section 2 of the Official Secrets Act 1911 that had made it an offence to disclose any official information without lawful authority. The 1989 Act replaced the ‘catch-all’ section 2 and created offences associated with the unauthorised disclosure of information in a number of categories.
US AUTHORITIES CLAMP DOWN ON $2.3 MILLION CRYPTOCURRENCY MONEY LAUNDERING IN NEW YORK
On 18th April, FX Street reported on charges for 3 suspects who were using debit cards preloaded with Bitcoin and withdrawing large sums of cash at ATM in New York and New Jersey. The men were also charged with operations of bogus storefronts on the dark web that sold illegal drugs. When they mailed the counterfeit drugs to purchasers, the defendants had used return addresses that falsely identified the sender as a New York City business, including multiple Manhattan law firms.
SENIOR ARMENIAN OFFICIAL INDICTED IN CORRUPTION PROBE
On 18th April, Azatutyun reported that the National Security Service (NSS) has brought corruption charges against a senior government official and political ally of Prime Minister Nikol Pashinian who actively participated in last year’s “velvet revolution”. The NSS said that Davit Sanasarian, the head of the State Oversight Service (SOS), will therefore be suspended pending investigation – but it decided not to arrest him for now.
ANGER IN GAMBIA AS THE EXTENT OF JAMMEH-ERA CORRUPTION AND BRUTALITY SURFACES
Deutsche Welle on 18th April reported that the extent of corruption and brutality during Gambia’s Yahya Jammeh-era is starting to surface via a truth and reconciliation commission. Ex-strongman Yahya Jammeh amassed a fortune while the people of the small West African state went without even the basics. An investigation by OCCRP has revealed that he and his cronies had looted or misappropriated at least $975 million in public funds. The Ministry of Justice puts the figure at $304 million.
IRELAND: MAN WANTED IN HUNGARY OVER FRAUD MAY ESCAPE EXTRADITION
The Irish Times on 18th April reported that a Judge refused to extend period as reasons for delay offered by Budapest were ‘vague’.
FOREIGN OFFICE STATEMENT ON TITLE III OF THE HELMS-BURTON ACT ON CUBA
A news release from the FCO on 18th April says that the UK shares the concerns expressed by the EU about the US announcement that it will lift the waiver of Title III of the Helms-Burton Act. It says that the extraterritorial application of Title III sanctions is considered to be illegal under international law, and threaten to harm UK and EU companies doing legitimate business in Cuba by exposing them to liability in US courts.
RUSSIA’S PRESSURE ON GEORGIA CONTINUES
A RUSI Commentary on 18th April says that Russia’s pressure on Georgia continues, both through the gradual seizure of more territory and through massive propaganda campaigns – more than a decade after the war that saw Russia occupy some 20% of the country. It says that Russia continues to violate Georgian sovereignty and territorial integrity with its aggressive ‘borderisation’ policy, a strategy which entails the gradual annexation of further Georgian territory through the expansion of its already illegal occupation zones.
US: CHARGES AGAINST 60 MEDICAL PERSONNEL FOR ILLEGAL PRESCRIBING AND DISTRIBUTING OF OPIOIDS DEMONSTRATES CONTINUED FOCUS ON COMPLIANCE THROUGHOUT SUPPLY-CHAIN
On 18th April, an article from Dorsey & Whitney LLP says that the Federal Government announced enforcement actions against 60 defendants in eleven federal districts, including 31 doctors, 7 pharmacists, 8 nurse practitioners, and 7 other licensed medical professionals for allegedly prescribing and distribution opioids and other dangerous narcotics and for health care fraud schemes. The charges involve over 350,000 controlled substances prescriptions and over 32 million pills. The action was led by the ARPO Strike Force was formed in December and includes a team of federal agents and prosecutors to combat the opioid epidemic in the worst hit area of the country.
SCOTLAND: NEARLY 30 PEOPLE CHARGED IN A POLICE CRACKDOWN ON “MONEY MULES” WHO KEEP CASH IN THEIR BANK ACCOUNTS FOR CRIMINALS
The BBC on 18th April reported that the operation was initially into vishing fraud, where people are duped into revealing their bank details. Detectives found that children were being recruited through social media sites to launder money for the gangs. Police Scotland has now sent a warning to all schools in Scotland saying young people are increasingly being asked by fraudsters to receive and send money through their own accounts.
DOES CORRUPTION IN MOZAMBIQUE FOLLOW THE PATTERN?
An article on Real Clear World poses this question on 18th April. It reflects on the background to the scandal, saying that the story starts in 2010. The government decided, based on its intelligence service findings and endorsed by the World Bank, that Mozambique needed to build a modern fishing fleet and a coastal monitoring and surveillance security system to control its offshore Exclusive Economic Zone – and no-one argued with this decision, it seems. It also said that Mozambique also needed to protect territorial waters from piracy, illegal fishing, and drug and arms traffickers, not to mention terrorists.
NEW ZEALAND FAKE ONLINE GAMBLING WEBSITES
On 18th April, Calvin Ayre reported that there are now at least 13 international gambling sites that use New Zealand website addresses, according to authorities, and at least one is using the official coat of arms of the country, making it appear to be more legitimate to unwitting gamblers. They are all registered as “nz” domains; but none are run from with the country. The Department for Internal Affairs (DIA), it has already reached out to the website hosting providers in order to try and have the sites taken down. There is talk of New Zealand adopting a policy similar to that of Australia, which requires anyone requesting an “au” domain to provide proof of address, physical or legal, in Australia.
SRI LANKA TO SLASH CUSTOMS INSPECTIONS AFTER BLOCKING IDENTITY THEFT
The Economy Next website on 18th April reported that Sri Lanka Customs will halve the number of physical inspections at the border but all importers, exporters, forwarding and clearing agents must re-register on a new computer system. Sri Lanka Customs is proposing to identify highly compliant and low risk traders and provide them preferential treatment during cargo clearance. It is said that re-registration, in tandem with online document processing and e-signatures will minimize the misuse of Trader Identification Numbers (TIN) by third parties.
CHINA CUSTOMS SEIZE 670 FROGS BEING SMUGGLED FROM HONG KONG
On 18th April, China.org reported that Customs seized 670 White’s tree frogs from 2 men who tried to bring them in from Hong Kong. The frogs were stored in 67 plastic boxes, with 10 frogs in each box. The men claimed they caught the frogs in the river in Sheung Shui, which is part of the Hong Kong Special Administrative Region, and decided to use them as bait for fishing.
FinCEN PENALISES P2P VIRTUAL CURRENCY EXCHANGER FOR VIOLATIONS OF AML LAWS
A news release from FinCEN on 18th April reported that a civil penalty has been imposed against Eric Powers for wilfully violating the Bank Secrecy Act’s (BSA) registration, program, and reporting requirements. He failed to register as a money services business (MSB), had no written policies or procedures for ensuring compliance with the BSA, and failed to report suspicious transactions and currency transactions. He operated as a peer-to-peer exchanger of convertible virtual currency. FinCEN notes that this is its first enforcement action against a peer-to-peer virtual currency exchanger and the first instance in which it has penalized an exchanger of virtual currency for failure to file CTR