24th April 2019
THE LAW GOVERNING CERTIFICATES OF ORIGIN
On 23rd April, Dubai-based law firm STA published an article which explains that a Certificate of Origin certifies and declares the countries involved in the production or manufacturing process of the products included in an export delivery, and says that importing countries rely on Certificates of Origin to determine appropriate duties, as well as, to evaluate the legality of the goods. They are issued by chambers of commerce, or by customs authorities or ministries, and come in 2 forms. Various international councils and guidelines were established to govern the authorisation of Certificates of Origin. The World Chambers Federation’s International Certificate of Origin Council, the Certificate of Origins Accreditation Chain, and ICC WCF Certificate of Origin Guidelines detail CO procedures and protocols for member trans-national chambers. The article briefly explains each of these and then looks at the legal position in the EU (including the UK) and the US, as well as in Dubai.
NORTH KOREA’S GHOST SHIPS HELP IT GET AROUND SANCTIONS
On 24th April, the Washington Post published a report saying that North Korea employs a fleet of “ghost” ships sailing around the globe to evade sanctions and buy and sell goods such as coal and oil, according to an in-depth report, with activities including meeting other ships in the middle of the ocean to transfer cargo, carrying and transmitting false ship identification numbers, and conducting backroom deals.
NICARAGUA’S BANCORP ASKS TO CEASE OPERATIONS IN CANADA AFTER US SANCTIONS
The Chronicle Herald in Canada reported that Bancorp has requested permission from Canada’s banking regulator to cease operations. It also mentions that Bancorp was created in 2015 as a subsidiary of Alba de Nicaragua, known as Albanisa. The company is a joint venture of Venezuela state oil firm PDVSA and Nicaragua’s own state-run Petroleos de Nicaragua.
NEW AML PRACTICE RULES FOR SCOTTISH SOLICITORS
On 24th April, Scottish Legal News reported that the Law Society of Scotland has unveiled changes to the Practice Rules which take effect from 3rd May, and which will provide Scottish solicitors with greater clarity on what is required of them in terms of interaction with the Society and AML compliance.
NEW LAW PROHIBITS LATVIANS FROM GAMBLING ON WEBSITES OF INTERNATIONAL ONLINE GAMBLING OPERATORS WHO OPERATE WITHOUT A LICENCE
On 24th April, European Gaming reported that Latvian citizens who used the services of unlicensed gambling casinos will face a fine of up to € 350 per incident. Players who avoid taxes for winnings can also be fined. There is a €20,000 penalty for Internet providers who fail to report information about the cases of illegal online gambling.
UKRAINE PROBES FERREXPO CHARITY OVER POSSIBLE MONEY LAUNDERING
Yahoo Finance on 25th April reported that Ukraine is investigating whether a charitable foundation, the Blooming Land Charitable Foundation, set up primarily to co-ordinate London-listed iron ore miner Ferrexpo Plc’s philanthropic activities was used to launder money and evade taxes.
CARDIFF CITY FC AND BACA AIR CHARTER ASSOCIATION CALL FOR URGENT ACTION TO CRACK DOWN ON ILLEGAL FLIGHTS
On 25th April, Blue Sky reported that Cardiff City Football Club and BACA – the Air Charter Association, have joined forces to call for urgent action on illegal flights following the tragic Piper Malibu crash that resulted in the deaths of footballer Emiliano Sala and pilot David Ibbotson. The pilot was not licensed to fly fee-paying passengers and the plane itself was not registered to undertake commercial flights.
ITALY – BT SCANDAL: PROSECUTORS ALLEGE SENIOR MANAGERS INVOLVED
ICAEW on 24th April reported that Italian prosecutors have accused senior finance executives at BT of being more involved in its £530 million accounting scandal than previously thought. Seized emails reportedly show that top executives at BT Plc – which encompasses virtually all the businesses and assets of the holding company BT Group – were involved.
UK: EXPORT OF OBJECTS OF CULTURAL INTEREST REPORT 2017-18
On 24th April, the Department of Digital, Culture, Media and Sport published the 64th annual report on the Export of Objects of Cultural Interest by the Reviewing Committee on the Export of Works of Art and Objects of Cultural Interest. The report covers the period to 30th April 2018, during which 15 cases were considered by the Reviewing Committee. 12 were deferred by the Secretary of State following the recommendation of the Committee. The export deferred items included the Surrealist objects Lobster Telephone (White Aphrodisiac) and Mae West Lips Sofa, both Salvador Dalí and Edward James; a George I Palladian baby house; and a Roman figurine of a man wearing a hooded cloak. 7 items were bought by public institutions.
SEMION MOGILEVICH: AMERICA’S MOST WANTED RUSSIAN CRIMINAL MASTERMIND
UK FINANCIAL SERVICE REGULATORS’ BUSINESS PLANS: INFOGRAPHIC TIMELINE AND SUMMARY
On 24th April, Berwin Cave Leighton Paisner published an infographic timeline summarising the FCA, PRA and PSR business plans for 2019/20, together with key EU and UK financial services developments.
STATES OF JERSEY ANNUAL REPORT AND ACCOUNTS 2018
On 25th April, Jersey government has published the States of Jersey Annual Report and Accounts for 2018.
CONSULTATION LAUNCHED TO AMEND SWISS LAWS WITH VIEW TO DLT/BLOCKCHAIN TECHNOLOGY
On 24th April, CMS Law reported that the Swiss Federal Council on 22nd March launched a consultation on amendments to several federal laws to accommodate the needs of businesses using DLT/Blockchain technology. It is part of a larger initiative by the Swiss government to take a leading, innovative and sustainable position on DLT/Blockchain. By addressing various issues identified in the Swiss Federal Council’s report, the draft laws aim at increasing legal certainty, facilitating the application of the new technologies in business, and limiting the possibility of misuse. The proposed amendments cover several federal laws and address 3 major topics that the article details.
MEXICAN GANG LOS CUINIS MAY HAVE LAUNDERED MONEY THROUGH ARGENTINA AND URUGUAY
On 25th April, Insight Crime reported that Argentina officials are investigating the financial arm of a powerful Mexican cartel — showing the country’s eagerness to shed its notoriety as a money laundering hub for international drug traffickers. It says that both Uruguay and Argentina have long been branded safe havens for money laundering, which made them attractive to criminal organisations like Los Cuinis (labelled Mexico’s richest gang) looking to invest their earnings.
A SNAPSHOT OF NORTH KOREA’S SUPPLY CHAIN COAL ACTIVITY
On 9th March, the Stimson Center published a report saying that, despite increasing restrictions on the DPRK’s coal exports, the country’s larger coal mines have remained active from 2015 to 2019 and improvements have been made to its coal supply chain infrastructure. It takes a high-level look at 2 areas of North Korea’s coal industry: its mining in the South Pyongan Region, and its rail coal transfer stations located along the Taedong River, which flows through the region. It also examines a few of the key coal ports and the rail transfer yards along the Chinese and Russian borders. It concludes that efforts to circumvent sanctions, especially on coal exports, are likely to persist, and thus monitoring the coal industry and its supply-chain infrastructure and activities must continue.
SWISS IDEAS FOR FUTURE EU SANCTIONS
On 24th April, the European Council on Foreign Relations published a Commentary piece saying that sanctions for ‘misappropriation’ have proved their worth in forging ties with new leaders in Tunisia, Egypt, and Ukraine – but it is time to strengthen them? Several years after the enactment of the freezes on the Arab Spring countries and Ukraine, the article asks how have these measures fared? It says that little progress has been made in terms of restoring the assets to the states from which they were stolen – there are 3 stages in the process of asset recovery – asset freeze, asset identification, and return to the state of origin. The asset freeze is the only one that can be dealt with at EU level under the current legal framework; the subsequent stages are not in the hands of the EU. The article looks at the problems involved. For example, the ECJ has established the inadmissibility of freezing assets of individuals who are merely under investigation in their home countries, and has annulled several listings under the misappropriation regimes – and by the end of 2018 EU courts had dealt with a total of 35 cases.
UK: ENVIRONMENT AGENCY ‘LOSING WAR ON WASTE CRIME’
Police Professional on 24th April reported that the Environment Agency is losing the war on waste crime as more illegal sites are opening up than are being closed down, according to the chair of the organisation. She also said that waste crime is increasingly organised, involving career criminals engaged in sophisticated fraud. It involves illegal exports, fly-tipping and burning of waste, as well as tax avoidance.
THE REVAMP OF THE IRISH GAMING LAWS
On 23rd April, WH Partners published an article saying that, in March 2019, an Inter-Departmental Working Group on the Future Licensing and Regulation of Gambling appointed by the Irish Government presented a report recommending a significant reform of the Irish licensing and regulatory approach to gambling. This article takes a brief look at its key recommendations.
26th April 2019
MALAYSIA “IS HELPING IRAN EVADE SANCTIONS”
On 25th April, Haaretz in Israel reported that Western intelligence sources were saying that an unusual number of oil tankers have been sailing between the two countries, and that their alliance will support Iran’s economy, and that Iran is planning on funnelling funds from sales of its oil and natural gas reserves through Malaysia. It says that Malaysia’s involvement in aiding the Iranian nuclear programme has been going on since at least 2004, and that components for the programme were smuggled from Malaysia to Libya and Iran. In December 2018, the Malaysian government-owned national oil company, Petronas, signed a memorandum of understanding on cooperation with the National Iranian Oil Company to conduct joint research on gas fields. The current Malaysian Prime Minister became Petronas’ senior advisor after his loss in the 2003 general elections, and today the company is controlled by his son. Labuan has served as a point for receiving funds by a subsidiary of the National Iran Oil Company, and the US Treasury also sanctioned the First East Export Bank, located in Labuan, for helping fund the Iranian ballistic missile programme.
US FEDERAL RESERVE FINDS AML PROBLEMS AT US BRANCH OF JAPANESE BANK
American Banker on 25th April reported that the Federal Reserve Board is ordering Sumitomo Mitsui Banking Corporation to correct AML deficiencies in the Japanese bank’s US-based branch. The Fed issued an enforcement action against both the bank — one of the largest financial institutions in Japan — and the branch located in New York, citing deficiencies related to risk management and compliance with the Bank Secrecy Act.
SPAIN SEEKS EXTRADITION OF GEORGIAN FROM RUSSIA ON MONEY LAUNDERING CHARGES
On 24th April, EU-ICS reported that Spanish anti-corruption prosecutor’s office has sent an official request to the Russian authorities for the extradition of the Georgian so-called “thief-in-law”, Tariel Oniani, aka Taro. It is claimed that he and his accomplices engaged in illegal activities in Spain between 1995 and 2005, with earnings from enterprises including extortion, “protection” of businesses and drug trafficking allegedly laundered through his legally owned Spanish restaurant and construction business, say the Spanish authorities. The first arrest warrant for Oniani was issued by the Spanish prosecutor’s office back in 2005.
SPAIN: PUBLIC PROSECUTOR WILL APPEAL THE DECISION CLEARING FORMER BARCELONA PRESIDENT OF MONEY LAUNDERING
On 25th April, Marca in Spain reported that the public prosecutor will appeal the decision that saw former Barcelona FC president Sandro Rosell cleared of money laundering. He had spent 2 years in police custody for allegations of laundering TV rights with the Brazilian FA as well as a Nike contract.
AIM TO MAKE EXAMPLE OF MAN CONVICTED IN ONE OF UTAH’S LARGEST PONZI SCHEMES
Deseret News in Utah on 25th April reported that Federal prosecutors want to come down hard on a Utah real estate magnate, Claud R. “Rick” Koerber, who bilked investors out of tens of millions of dollars in one of the state’s largest Ponzi schemes. After 9 years of court wrangling, including a dismissal and a mistrial, a jury found Koerber guilty of 15 counts of wire fraud, and he is due to be sentenced on 13th May. He used his businesses — Founders Capital, and related companies Franklin Squires Investments and Franklin Squires Cos. — as a $100 million Ponzi scheme from 2004 to 2008. Prosecutors say Koerber “preyed” on friends and fellow members of The Church of Jesus Christ of Latter-day Saints.
GLENCORE PROBED BY US CFTC FOR ‘CORRUPT PRACTICES’
On 26th April, KYC 360 reported that Glencore Plc has said that the Commodity Futures Trading Commission (CFTC) is investigating whether the miner and its units may have violated certain regulations through “corrupt practices”. Swiss-based Glencore said last July it received a subpoena from the DoJ requesting documents and records on compliance with the FCPA and AML statutes. The documents related to the company’s business in the DRC, Venezuela and Nigeria.
TAX TRANSPARENCY IN NORWAY
An article on VOX, the CEPR Policy Portal, is concerned with the transparency of income tax in Norway. It says that tax records became easily accessible online in Norway in 2001, allowing everyone in the country to observe the incomes of everyone else. The article offers evidence that people primarily went online to snoop on the incomes of friends, relatives, and other contacts. This game of income comparisons negatively affected the wellbeing of poorer Norwegians while at the same time boosting the self-esteem of the rich. In fact, it points out that tax records have been public in Norway since the 19th Century, but they have not always been easily accessible. However, in 2001, the Norwegian media digitised tax records and created websites that allowed any individual with internet access to search the entire country’s tax records easily and effortlessly. Every Norwegian could find out the incomes of anyone else in the country in a matter of seconds.
2 PHARMACEUTICAL COMPANIES AGREE TO PAY A TOTAL OF NEARLY $125 MILLION TO RESOLVE ALLEGATIONS THAT THEY PAID KICKBACKS
A news release from the DoJ on 25th April reported that 2 pharmaceutical companies – Astellas Pharma US Inc. (Astellas) and Amgen Inc. (Amgen) – have agreed to pay a total of $124.75 million to resolve allegations that they each violated the False Claims Act by illegally paying the Medicare copays for their own products, through purportedly independent foundations that the companies used as mere conduits. “Co-pays” are where a Medicare beneficiary obtains a prescription drug covered by Medicare and the beneficiary may be required to make a partial payment, which may take the form of a co-payment, co-insurance, or a deduction. The Anti-Kickback Statute prohibits a pharmaceutical company from offering or paying, directly or indirectly, any remuneration — which includes money or any other thing of value — to induce Medicare patients to purchase the company’s drugs, and this prohibition extends to the payment of patients’ copay obligations.
URUGUAY BEGINS EXPORTING MEDICAL MARIJUANA
On 25th April, EurActiv reported that, already the first country in the world to legalise recreational use of marijuana, Uruguay now aims to go further by becoming the first in Latin America to export it for medicinal purposes. US company Fotmer — the only one currently licensed to export — are cutting and drying the plant before it is exported to Europe, Canada and Australia. The list of medicinal marijuana exporters dominated by the UK, which according to UN data from 2016 had cornered more than two thirds of the market. The Netherlands (16.4%) and Austria (8.7%) are the other major players although a growing number of countries are investing in producing medical marijuana, which is legal in around 30 countries worldwide.
FAKE HEIRESS, ANNA SOROKIN, WHO FOOLED NEW YORK
On 26th April, RTE reported on a German-Russian woman who passed herself off as an heiress and now has been convicted of multiple charges in New York, for stealing over $200,000 and attempting to make off with millions more. Sorokin, 28, invented a new identity upon her 2016 arrival in the US, presenting herself as an heiress when she was in fact the daughter of a Russian truck driver who moved to Germany at the age of 16.
ZURICH TO PAY $5.1 MILLION PENALTY TO US IN TAX EVASION CASE
Reuters on 26th April reported that the DoJ said that Zurich Insurance will pay a penalty of $5.1 million over a case involving insurance policies and accounts used by US customers to evade taxes 2008 to 2014.
US TRUCKING BUSINESS SETTLES SECURITIES FRAUD CASE FOR $42.2 MILLION
On 26th April, JG Indiana reported that Celadon Group Inc – an Indianapolis-based trucking company – has agreed to pay $42.2 million in restitution to settle securities fraud charges stemming from falsely reporting inflated profits and assets to investors.
ARIZONA BUSINESS IN TELEMARKETING-RELATED FRAUD AND IDENTITY THEFT SCHEME TARGETED SENIOR CITIZENS
A news release from the DoJ on 25th April reported that 2 owners of an Arizona business have been charged for overseeing a scheme to forge hundreds of thousands of counterfeit documents containing improperly obtained personal information, primarily relating to senior citizens, which they allegedly sold to their clients, who then allegedly provided this information to telemarketers.
US TRAVEL BAN ON CHECHEN PRIME MINISTER
Rferl on 25th April reported that the US has imposed an entry ban on Muslim Khuchiyev, the prime minister of Russia’s North Caucasus Chechen Republic – under provisions that involve where “credible information [exists] that foreign officials have been involved in significant corruption or a gross violation of human rights”.
MULTI-AGENCY OPERATION LEADS TO ARREST OF WOMAN SUSPECTED OF FACILITATING HUNDREDS OF UK PASSPORT APPLICATIONS FOR CRIMINALS
An NCA news release on 25th April reported that a 37 year-old woman believed to have helped Albanian organised crime groups obtain around 500 UK passports has been arrested by the NCA.
IRA SMUGGLERS ENLISTING NORTH KOREAN SCIENTISTS TO WORK ON GREEN DIESEL SCAM
The Irish Mirror on 26th April reported that border smugglers are working with North Korean scientists to crack dye markers in fuel to make millions from the Brexit mayhem. Security sources north and south of the border have told the Irish Mirror the former Provisional IRA-linked criminals are back in business. The cost of agricultural diesel is significantly cheaper than normal fuel. Sources have also claimed in recent months there has been a significant rise in the dumping of sludge from these factories – the toxic by-product left over when the smugglers attempt to “clean” the fuel.
GEORGIA: GAMBLING REFUGE FOR MIDDLE EASTERN PLAYERS
A guest post on Calvin Ayre on 26th April says that Georgia has, over the last 2 decades, managed to become a gambling refuge for pretty much every Islamic state in the Middle East. It says that the gambling industry itself first found its way to Georgia in the 19th Century, but the very first casino was opened in the capital, Tbilisi, in 1920, followed by the second largest city in Georgia, Batumi in 1989. The post provides a potted analysis of the industry and its background. The revenue report of Georgian casinos in 2014 was $500 million – but researchers were surprised to find out that almost 70% of that revenue was generated through online gambling activities, not offline. Most land-based casinos in Georgia are located in Batumi, the vacation centre on the Black Sea.
JERSEY: UNCOMPLETED FORM DELAYS EXTRADITION OF FRAUDSTER FOR 2 YEARS
Jersey Evening Post on 25th April reported that the extradition of an Island fraudster, Russell Stephen King, hiding in Bahrain was delayed by years because prosecuting officials forgot to complete a simple risk assessment form.
POLITICAL MEDDLING AND POOR TRAINING SPUR GRAFT IN PAPUA NEW GUINEA
An article from OCCRP on 25th April reported that a newly-published discussion paper on corruption in Papua New Guinea’s public sector found that low-level officials are often poorly informed about laws and regulations and are under intense pressure to grant favours to businesses, politicians and clan affiliates, contributing to existing patterns of corrupt behaviour in the developing country. Papua New Guinea (PNG) is one of the poorest countries in the Pacific, with nearly 40% of its population living below the national poverty line – while the country recently has started reaping the benefits of oil and gas extraction.
FBI INTERNET CRIME CENTER REPORTS $2.7 BILLION FRAUD IN 2018
Baker McKenzie on 25th April reported that the FBI’s Internet Crime Center (IC3) has released its annual Internet Crime Report, revealing a dramatic spike in the amount of financial losses incurred in 2018 from internet-enabled theft fraud and exploitation. There were 351,937 complaints received by IC3 in 2018. IC3 also estimated that in 2018 there was a total of $2.7 billion in financial losses from online cyber-criminals, which is nearly double the $1.4 billion of 2017.
GANG TURNS VENEZUELA’S LARGEST LANDFILL INTO CRIMINAL FORTRESS
Insight Crime on 25th April reported that Venezuela’s largest garbage dump – La Bonanza landfill, near Caracas – has become a lawless territory where waste has become the raw material for a lucrative and growing criminal industry – the scene of a range of criminal activities, including extortion, vehicle theft, homicide, drug trafficking and kidnapping.
US DRUG PROBE LANDS GUATEMALA PRESIDENT IN HOT WATER
Insight Crime on 25th April reported that evidence emerged showing that President Jimmy Morales used a helicopter owned by a presidential candidate recently arrested in the US on drug charges. Morales, who will be replaced after elections this year, reportedly used a helicopter owned by candidate Mario Amilcar Estrada Orellana for official business in January 2018 and possibly on at least one other occasion.
US COURTS OPEN TO LAWSUITS FOR “TRAFFICKING” IN CONFISCATED CUBA PROPERTY
On 25th April, Dentons published a briefing saying that from May 2nd US nationals will be able to file lawsuits in federal court against any individual or entity that “traffics” in property confiscated by the Cuban government on or after January 1st 1959 — a time span of more than 60 years. It says that the broad definition of what it means to “traffic” in confiscated property potentially encompasses a wide range of conduct for which a plaintiff could be entitled to substantial damages. This, it says, presents a novel — and potentially significant — US legal risk to many foreign companies, even if they do not directly do business in or with Cuba. The article notes that, in addition to some of the challenges mentioned in the article in using the provisions, certain countries, like Canada and Mexico, as well as the EU, have enacted so-called blocking statutes barring compliance with US sanctions on Cuba.
MEXICO TRUST-BUSTER DRIVES ANTI-CORRUPTION EFFORTS
A blog post on the FCPA Blog on 25th April was about Mexico’s antitrust authority, COFECE. It has extensive powers, and implements a strengthened competition regime. While COFECE doesn’t have jurisdiction for anti-corruption matters, its focus is increasingly on bid-rigging in public procurement, acknowledging that the complex design and regulatory requirements of public tenders in Mexico help trigger a negative feed-back loop between corruption and anticompetitive conducts. The post says that abnormal profits are generated when public servants favour certain participants or give them undue advantages through the use of privileged information in exchange for bribes. This in turn facilitates collusion, generating a vicious cycle between corruption and lack of competition. It is said that the government overpays by around 30% due to corruption and lack of competition in public procurement processes. The post concludes by saying that COFECE has also been spearheading the adoption of compliance programmes by companies and will likely continue to be a key institution in the evolution of anti-corruption efforts in Mexico.
AGENCY AGREEMENTS IN IRELAND
On 25th April, an article from Eversheds Sutherland said that agency agreements can be beneficial for companies who wish to have a presence in the Irish market without committing themselves fully. When a company decides to appoint an agent, it is important to consider all potential implications of such an arrangement, as there can be significant cost implications on termination of a commercial agency. The article explores the benefits of appointing a commercial agent; some of the characteristics of a commercial agency so that a company can identify whether an existing/future arrangement is in fact a commercial agency; and the consequences of termination of a commercial agency.