14th May 2019
TRUMP ADMINISTRATION MAY PREVENT US TRAVEL TO INDIVIDUALS WHO TRAFFIC IN PROPERTY CONFISCATED BY THE CUBAN GOVERNMENT
An April Client Alert from Hunton Andrews Kurth LLP reported that National Security Advisor John Bolton confirmed that the Trump administration will take actions to actively enforce Title IV of the Helms-Burton Act, which allows the Secretary of State to deny visas to individuals who traffic in confiscated property. It ha already activated Title III, which allows US businesses to sue over the loss of such property – and cases have already been launched seeking compensation from “new” owners. The article says that executives of foreign and US companies who “traffic” in “confiscated” property, and their family members, may be prevented from travelling to and/or entering the US on a long-term basis.
FINLAND: CUSTOMS INTERCEPTED ILLEGAL EQUIPMENT HEADING FOR IRAQ IN 2017
On 13th May, News Now Finland reported that Customs had revealed details of an illegal shipment intercepted at Helsinki Airport, heading for Iraq. In December 2017 customs officers inspected a consignment from a Finnish company with a destination of Iraq, imported from the US (its original stated destination). Officers found a mass spectrometer, a device used to measure the masses of isotopes, molecules, and molecular fragments. According to the Ministry of Foreign Affairs, a mass spectrometer is a dual-use device, meaning it can be used for both civilian and military purposes.
US DEPARTMENT OF COMMERCE TO ADD 12 FOREIGN ENTITIES AND INDIVIDUALS TO THE BANNED ENTITY LIST
Ajot.com on 13th May reported that the Bureau of Industry and Security (BIS) of the Department of Commerce has announced that it will add 12 foreign entities and individuals to the Bureau’s Entity List. This list contains the names of foreign parties that are subject to specific licensing requirements for the export, reexport, and/or in-country transfer of controlled items, ensuring that sensitive technologies do not fall into the hands of those who would threaten US national security or US citizens. Those who violate these rules are liable to criminal penalties and administrative sanctions. The additions include 4 entities with locations in both China and Hong Kong, and a further 2 Chinese, 1 Pakistani, and 5 UAE persons.
AMNESTY INTERNATIONAL PETITIONS ISRAELI COURT TO REVOKE SPYWARE COMPANY’S EXPORT LICENCE
On 13th May, the Times of Israel reported that Amnesty wants to stop sales overseas, saying NSO Group has sold to repressive regimes. The Pegasus software has been implicated in the Jamal Khashoggi case, amongst others.
FREEPORTS OR FREE CRIME?
An opinion piece in the Washington Times on 13th May attacked freeports, claiming that they contribute to some $899 billion laundered each year globally and are a threat to national security.
MANX-BASED BILLIONAIRE ARRESTED OVER DRUGS ALLEGATIONS
3FM etc on 13th May reported that the Island’s second-richest man has been arrested on drugs charges in the Caribbean. Alkivaides “Alki” David, worth around £2.6 billion was detained in St Kitts for allegedly importing cannabis, possessing the drug and intending to supply it, after an estimated 5,000 cannabis plants were ‘found’ in his private jet. However, it is claimed that the cargo was ‘pure hemp’, the legal and non-psychoactive strain of the plant, and it is believed the crop was intended for a new venture in the Caribbean for his SwissX company which specialises in CBD medicines.
BVI ECONOMIC SUBSTANCE REQUIREMENTS FOR LEGAL ENTITIES – OVERVIEW
On 9th May, Maples published a briefing saying that the Economic Substance Act is responsive to global OECD Base Erosion and Profit Shifting (BEPS) standards regarding geographically mobile activities. Requirements of this type are rapidly being implemented on a level playing field basis by all OECD-compliant ‘no or only nominal tax’ jurisdictions. The Economic Substance Act introduces certain reporting and economic substance requirements for ‘legal entities’ conducting ‘relevant activities’.
“WEIGHT AND QUANTITY UNKNOWN CLAUSE” IN BILLS OF LADING – IS IT EFFECTIVE IN CHINA?
Forwarder Law on 13th May reported that the clause in the Bill of Lading for container cargo is rather common in the marine industry but its effectiveness under Chinese law is always a highly arguable issue. After a recent case, the article says that the effectiveness of a “weight and quantity unknown clause” shall be determined on a case-by-case basis. Its effectiveness cannot be denied just because it is a “standard term” printed in advance, and neither can such clause be conveniently relied on to excuse the carrier from its liability.
PHILIPPINES PRESIDENT DUTERTE SHOWING SIGNS THAT HE MIGHT RELAX HIS STANCE AGAINST GAMBLING EXPANSION
Calvin Ayre on 13th May reported that the gambling industry of the Philippines might finally be getting a break. After years of railing against gambling, President Rodrigo Duterte is finally showing signs that he might relax his stance against gambling expansion, saying “…I will not meddle with it anymore, just do not enter. I cannot control it, really… I will let you in, but not extortion or drugs”.
IRELAND: A PRACTICAL CROSS-BORDER INSIGHT INTO PUBLIC INVESTMENT FUNDS
On 13th May, law firm Matheson published the Irish chapter of the International Comparative Legal Guide to private investment funds. The guide provides corporate counsel and international practitioners with a comprehensive worldwide legal analysis of the laws and regulations of public investment funds. The 4 chapters are designed to provide readers with an overview of key issues affecting public investment funds, particularly from the perspective of a multi-jurisdictional transaction.
CHINA AND NORTH KOREAN SANCTIONS: THE OPENING OF THE JIAN-MANPHO BRIDGE EVIDENCE OF LACK OF CHINESE COMMITMENT?
On 13th May, Project Alpha published an article saying that he opening of the Jian-Manpho bridge linking China and the DPRK reflects an increased Chinese willingness to openly engage with the North Korean economy. It says that the simultaneous opening of a third economic co-operation corridor near Manpho and a sudden rise in bilateral agreements might mean China’s patience with “maximum pressure” is wearing thin and that Chinese businesses want to re-establish ties with North Korea before South Korea does so.
PUSH PAYMENT FRAUD AND FREEZING INJUNCTIONS
On 13th May, Walker Morris published a briefing which highlights the latest case concerning an injunction to freeze bank accounts used to deposit the proceeds of push payment fraud. It says that the case will be of interest to lenders and their customers, who are increasingly at risk of this type of fraud. It explains that “push payment fraud” is when the payer obtains the payee’s account details and instructs their bank or other payment service provider to send (or push) money to it. A push payment fraud will therefore involve the fraudster somehow persuading the customer/victim to organise a transfer from its account to the fraudster’s account. It says that the case, and a previous one, will be welcomed by lenders and private claimants alike as they demonstrate the courts’ understanding of push payment fraud and their ability to offer a remedy for victims even in spite of the anonymity (initially, at least) of the fraudsters and the seemingly voluntary nature of the payment.
UK PENALTY FOR UNLICENSED BROKERING OF BODY ARMOUR
On 14th May, Notice to Exporters 2019/06 from the Department for International Trade detailed the compound penalty of £10,234 (a type of out of court settlement) issued by HMRC to an unnamed exporter in relation to unlicensed trading of body armour. The goods were not exported from the UK, but the transaction involved a UK national, and such brokering requires a trading licence under the Export Control Act 2008.
UN-SANCTIONED SHIP ARRIVES IN HOT SPOT FOR NORTH KOREAN COAL SMUGGLING
NK Pro on 14th May reported that a UN-sanctioned coal smuggling vessel which continues to sail around the Chinese coast returned the Golf of Tonkin near Vietnam, one of the DPRK’s favoured areas for illicit ship-to-ship transfers, the NK Pro ship tracker shows. The designated Hua Fu appears active despite being on the UN’s blacklist.
FATF BUSINESS BULLETIN – MAY 2019
The latest Business Bulletin from FATF is about the 2019 Private Sector Consultative Forum was held in early May 2019 at the UN Office on Drugs and Crime Headquarters in Vienna. Over 300 private sector representatives, including from the financial sector, civil society, and FATF members and observers, participated in this year’s Private Sector Consultative Forum. Over the 2 days of the Forum, participants held constructive discussions on the issues detailed in the Bulletin. It also reports on the FATF/MONEYVAL Joint Experts’ Meeting and Terrorist Financing Prosecution Workshop held alongside one another in Tel Aviv in March. The Bulletin also mentions other recent developments, including mutual evaluation reports and updates.
WITH US SANCTIONS REINSTATED, BRI CHINESE INVESTMENT IN IRAQ OIL SECTOR SOARS
HKTDC on 14th May reported that China steps up development funding for Iraqi oil and gas projects, while also increasing the level of anticipated fuel imports. In recent years, Iraq’s oil and gas sector has been boosted by significant investment from China within the framework of the wider Belt and Road Initiative (BRI). For example, China Petroleum Engineering and Construction Corporation (CPECC) signed a $280 million contract in February with Iraq’s Basra Gas Company (BGC) to construct a natural gas liquids plant in the Iraq’s southern Basra province. According to the Director General of SOMO, Iraq’s state-owned marketing company, the country aims to supply China with about 60% more crude this year than in 2018.
US EXECUTIVE IN HAWAII SENTENCED FOR CONSPIRACY TO VIOLATE FOREIGN CORRUPT PRACTICES ACT
A DoJ news release on 14th May advised that Frank James Lyon, 53, the owner of a Hawaii-based engineering and consulting company was sentenced to 30 months in prison yesterday for his involvement in an international bribery conspiracy. Between 2006 and 2016, Lyon and his co-conspirators paid bribes to foreign officials in the Federated States of Micronesia (FSM) and to Hawaii state officials in exchange for those officials’ assisting Lyon’s company in obtaining and retaining contracts valued at more than $10 million. The bribes included, among other things, cash to FSM officials and Hawaii officials, and vehicles, gifts and entertainment for FSM officials. In a related matter, Master Halbert, 44, a Micronesian citizen and government official, pleaded guilty in April to one count of conspiracy to commit money laundering and is scheduled to be sentenced on July 29th.
US AUTHORITIES ARREST 50 IN ALLEGED MARRIAGE FRAUD SCHEME
VoA on 14th May reported that US authorities in Texas say they have arrested 50 people (other sources say more) in connection with what prosecutors are calling a “large-scale marriage fraud scheme” aimed at circumventing immigration laws, and involving people located in Texas and Vietnam. The users paid between $50,000 and $70,000 to obtain permanent resident status.
BELGIAN CORRUPTION CASES ARE NOT INVESTIGATED
The Brussel Times on 14th May carried a report containing criticism and saying that several forms of corruption are not even being investigated, according to an internal police report. In respect of the Central Office for the Repression of Corruption (OCRC), there was insufficient staff and the management left a lot to be desired. It is said that Commissioner-General Marc De Mesmaeker understood the difficulties within the anti-corruption services, and he is calling on the next government to establish a new recruitment policy to solve the problem.
BULGARIAN FARM MINISTER RESIGNS AMID GUEST HOUSES PROBE
Reuters on 14th May reported that Bulgarian Agriculture Minister Rumen Porozhanov resigned, the latest high-level official to step down in scandals involving purchases of luxury properties and the building of guest houses with EU aid for private use. A deputy economy minister had to quit his post last month and was charged with crimes against the financial interest of the EU after media reports said he and his family were the only users of an expensive holiday estate built with EU aid.
LARGEST BELGIAN POLICE OPERATION IN 20 YEARS BUSTS CRIMINAL GANG
The Brussel Times on 14th May reported that, in a fraud case against a criminal organisation within the Traveller community, 13 suspects appeared before the Council Chamber, the federal prosecutor’s office stated. Some 1,200 police officers, including 820 federal police investigators, air support and special federal police units were taking part to carry out more than 200 raids. The operation was supported by French police near the Belgian-French border. Stolen vehicles and goods were seized, as well as an automatic weapon, handguns, rifles, luxury cars, watches, jewels, €1 million in cash and a total of 90 caravans, 91 vehicles and 34 properties. The normal form of fraud involved criminals posing as buyers who would respond to an advert placed by an individual wishing to sell a car. A fraudulent bank transfer would be made in the buyer’s presence and proof of the transaction displayed on a phone or tablet. The vehicle would then quickly be taken by the buyer and driven abroad. The losses resulting from the car thefts exceed €6.5 million.
75 KENYAN TAX OFFICIALS ARRESTED
On 14th May, Public Finance International reported that anti-corruption officials have arrested 75 Kenyan tax agency staff on suspicion of abetting tax evasion and bribery, the latest effort by authorities in the country to battle graft. 41 Kenya Revenue Authority suspects were due in court on charges of being part of a tax evasion racket, and a further 48 public officials have been ordered to surrender to the police, including others from the KRA and officials from the Customs and Border Control Department.
GREEK CRUISING TAX IS NOW OPERATIONAL BUT BESET WITH ISSUES
All at Sea reported on 14th May that the Greek Cruising Tax, known as the TEPAI, was due for implementation on 2nd April following the first attempt to introduce it in 2014, and on 9th May the Greek Government finally put the tax into operation. However, problems reported included the lack of any method of registering or paying the tax, despite promises that all would be in place, and the proposed manual system comprising duplicate forms at the Port Police and Customs which could not be used as they had no stock. It also says that if you use an internet browser that uses ‘Autofill’ as it keeps overwriting field with the wrong information.
The Recreational and Daily Tour Cruise Ships Fee (TEPAI) is imposed on all private and professional leisure ships and professional tourist day ships, of a total length of over 7 meters, regardless of flag, in Greek territorial waters. A set of FAQ is available at –
UK: £720,000 MATERNITY FRAUD
On 14th May, the Express & Star reported that at least 167 fake applications for the benefit payout were made after a criminal gang hijacked the identities of innocent women during a 4-year long fraud, Wolverhampton Crown Court was told. Around £450,000 was paid into bank accounts controlled or used by those involved in the racket. An Army chef whose husband was the brains behind a plot has been jailed.
FORMER AUTONOMY CFO SUSHOVAN HUSSAIN SENTENCED TO 5 YEARS IN A US PRISON FOR FRAUD OVER THE 2011 SALE TO HEWLETT PACKARD
The Register reported on 14th May that a statement from the US Attorney’s Office for the Northern District of California denounced Hussain for having used “sophisticated accounting methods to falsely inflate Autonomy’s revenues to make it appear Autonomy was growing when it really was not”. In total, it said Hussain was ultimately responsible for Autonomy’s revenues having been over-inflated by $193 million between 2009 and the first half of fiscal 2011. Hussain’s is facing to a civil trial in London. His co-defendant, one-time Autonomy CEO Mike Lynch, has also been charged in the US, as has Autonomy finance vice-president, Stephen Chamberlain.
ISLE OF MAN FRAUDSTER PLEADS GUILTY TO INVESTMENT SCAM
International Adviser on 14th May reported the case of Paul Deighton, an accountant based in the Isle of Man, who stole £607,537 from investors through a Ponzi scheme. He used his accountancy firm, Haven Administration, to take money from individuals and companies. The fake investment opportunity, for which he offered highs return for little risk, ran between January 2013 and April 2019.
US AND LOCAL POLICE RAID VILLAS IN DOMINICAN REPUBLIC IN HUNT FOR VENEZUELAN MONEY LAUNDERER
In his blog, Kenneth Rijock reported that law enforcement agents from the Dominican Republic and the US have conducted a raid on 2 luxury villas in the resort town of Punta Cana, looking for the international fugitive Venezuelan money launderer, Samark López Bello. He is reportedly in Venezuela and has been designated by OFAC.
UK: TENFOLD INCREASE IN KIDS BEING USED AS “MONEY MULES” TO SHIFT CASH FOR CRIMINALS
On 14th May, Baker McKenzie reported a Mirror story saying that Barclays Bank told Mirror Money it has seen a tenfold increase in money mules aged 16 years and under since 2016. Barclays’ figures follow research by Cifas, the UK’s fraud prevention service, that showed the number of under-21s in money mule cases rose to 9,636 in the first 9 months 2018.
BANGLADESH: SUSPICIOUS TRANSACTION REPORTS UP 64%
On 14th May, the Daily Star in Bangladesh reported that banks and financial organisations sent a record number of suspicious transaction and activities reports to the Bangladesh FIU last fiscal year. In fiscal 2017-18, it received a total of 3,878 STR and SAR from reporting agencies, up 64.50% year-on-year, according to the BFIU annual report.
US INSIDER TRADING LAW ALERT – “TIPPING”
On 14th May, Wilmer Hale published a Client Alert saying that 2 recent developments could lead the government to take a more aggressive stance on tipping charges in the future, and both finance professionals and lawyers need to be aware that the ground may be shifting under them. It says that 2 legal developments give the government greater flexibility to successfully litigate future insider trading cases, particularly those involving “tipping”. Tipping occurs when an insider, the “tipper,” gives material, non-public information to another person, the “tippee,” and the tippee then trades on that information.