6th June 2019
JAPAN TARGETS ONLINE TAX EVASION WITH SPECIALISED AGENTS
On 6th June, Nikkei Asian Review reported that Japan will deploy about 200 specialists to detect undeclared income gained from cryptocurrency trades, monetised videos and other new economy staples. They will assist in tax evasion investigations, while also accumulating and sharing expertise with tax officials. Apart from cryptocurrencies and video streams, such tax evasion also occurs through money gained from private room lodgings, online auctions and various points that can be converted to cash.
UK: CAN YOU CHALLENGE A CRIMINAL CONVICTION IN A CIVIL CLAIM?
On 22nd May, Clyde & Co published an article posing this question. A recent case involved questioning the Law Reform (Miscellaneous Provisions) (Scotland) Act 1968, of which section 10(2) states that in civil proceedings, a person shall be taken to have committed an offence of which he has been convicted unless the contrary is proved. The claimant had been convicted of a traffic offence despite lodging a special defence of automatism, and later brought the civil action later brought a civil claim against the doctor who had prescribed the drug Tildiem, which he claimed had caused his condition. The claim failed, but the article says that the line between an abuse of process (as held in this case) and a successful section 10 claim was a narrow one.
JAPAN ARRESTS 7 CHINESE SUSPECTS IN RECORD DRUG SMUGGLING BUST INVOLVING SHIP-TO-SHIP TRANSFER
The Diplomat and others on 5th June reported that Japanese authorities have arrested 7 Chinese men on suspicion of smuggling what is believed to be a record amount of stimulants. Police arrested the men while they were unloading bags from their boat onto the beach. The amount involved is about the same as the annual total seized over the past 3 years. It says that drug smuggling has been on the rise, with more than 150 people arrested in 2018 for alleged stimulant smuggling from overseas.
MARSHALL ISLANDS IGNORES IMF WARNING AND CONTINUES COIN PROJECT
Cryptonews on 5th June reported that the Marshall Islands has announced that it has formed a non-profit organisation, called the SOV Development Fund. The country had announced the establishment of their national cryptocurrency, called ‘Sovereign’ (SOV) in 2018, but the IMF warned against such a move, calling it too risky to adopt a cryptocurrency as a second legal tender. The country replied then that it acknowledged the risk from issuing the SOV, but was confident that the advanced technology would provide sufficient risk mitigation.
KENT POLICE UNCOVER ‘MONEY LAUNDERING RING’ WITH POTENTIAL TO PUT £5.2 MILLION OF FAKE NOTES INTO UK ECONOMY
Kent Online on 5th June reported that a joint investigation by detectives from the Kent and Essex serious crime directorate is considered the biggest raid of its kind in the UK. At least 5 people were arrested as part of the alleged conspiracy to print fake notes at a business premises in Beckenham.
IRELAND: MAN WHO LOST CASE OVER €3.4 MILLION LINKED TO NORTHERN BANK ROBBERY CANNOT APPEAL
The Irish Times on 5th June reported that retired businessman Ted Cunningham has been refused an extension of time to appeal against the dismissal of his claim the State unlawfully seized £3 million from his home. Gardaí said it was part of the £26.5 million from the Northern Bank robbery in Belfast in December 2004. It was seized from his home in 2005.
UZBEKISTAN DEFEATS BID BY UK MINING COMPANY TO REVIVE BILLION-DOLLAR CLAIM
The Global Arbitration Review on 20th May published an article saying that the Paris Court of Appeal has rejected an insolvent UK mining company’s attempt to revive a billion-dollar investment treaty claim against Uzbekistan. It dismissed Oxus Gold’s application to partially annul an award that had rejected all but $10.3 million of its claims. Oxus originally claimed $1.3 billion when it brought the arbitration in 2011 with respect to the Khandiza base metals project.
THE GROWING POPULARITY OF PRIVATE TRUST COMPANIES (PTC) IN GUERNSEY
Collas Crill published a briefing on 20th May which sets out to explain the popularity of PTC, which it says can be a more palatable product for high net worth individuals who are not familiar with common law trusts. It says that PTC can be more challenging to set-up than a simple discretionary trust structure.
CANADA’S CREEP UP CORRUPTION LIST A CAUSE FOR CONCERN FOR REGULATORS, BUSINESS
KYC 360 on 6th June reported that the highly publicised misconduct of 2 large Canadian corporations is shining an uncomfortable spotlight on the Canadian business community. Allegations of corruption and bribery plaguing SNC-Lavalin and Bombardier Inc.
JERSEY INTERNATIONAL SAVINGS PLANS
Collas Crill on 29th May published a briefing saying that on 1st January, Jersey introduced a new type of savings product called an International Savings Plan (ISP). The briefing supplies a Q&A about ISP and how they may be useful for a business. An ISP aims to complement Jersey’s existing approved pension framework, and also provide an alternative when a pension scheme might not be suitable.
KEY FEATURES OF THE UN CONVENTION AGAINST CORRUPTION
On 3rd June, Nyman Gibson Miralis published a briefing saying that the Convention is the only legally binding universal anti-corruption instrument and the vast majority of UN Member States are parties to the Convention. Key areas of the Convention include preventive measures, criminalisation and law enforcement, international co-operation and asset recovery. It covers many different forms of corruption, including bribery, trading in influence, abuse of functions, and various acts of corruption in the private sector.
EU RECOMMENDS AML MEASURES FOR 6 COUNTRIES
KYC 360 on 6th June reported that the European Commission has sent requests to 6 Member States to bolster their AML supervisory and enforcement efforts in light of recent bank scandals and the risks of crypto-assets – Denmark, Estonia, Latvia, Malta, Bulgaria and Sweden. The requests called for Estonia to expand the capacities of the nation’s AML supervision; that Latvian officials ensure the effective implementation of a plan that would strengthen information-sharing and highlight risk-based supervisory strategies; and a warning for Malta of the money laundering risks it faces from it sizable financial and gaming sectors as well as from its efforts to woo cryptocurrency operators.
ICO: LEGAL CLASSIFICATION OF TOKENS – HYBRID FORMS
On 5th June, Bird & Bird published Part 5 of a 5-part series on Initial Coin Offerings (ICO), concentrating on the legal position in Germany. In this article it is explained that a token may have features of security token, currency token and/or utility token. These hybrid forms require a case by case assessment of applicable regulation.
FRENCH WEAPONS EXPORT UP 30%
On 6th June, EU Business reported that France exported some €9.1 billion worth of weapons in 2018, a 30% increase on 2017. The biggest client last year was Qatar with $2.7 billion, followed by Belgium, Saudi Arabia and Spain.
EUROPEAN COMMISSION REPORTS ON THE EU CHARTER OF FUNDAMENTAL RIGHTS AFTER 10 YEARS
A news release from the EU on 5th June announced the annual report on how the EU institutions and Member States have been applying the EU Charter of Fundamental Rights, together with the results of a survey of citizens’ awareness of the Charter. This year marks the 10th anniversary of the Charter. It says that the Charter is not yet used to its full potential by the enforcement chain and awareness remains low.
UKRAINE’S GOVERNMENT-OWNED PRIVATBANK SUES ITS FORMER OWNERS FOR MONEY LAUNDERING AND FRAUD
The 107-page complaint filed in this case is available at –
VENEZUELA SHIPWRECKS REVEALED SEX TRAFFICKING RING
On 6th June, Insight Crime carried an article saying that the sinking of 2 boats sailing from Venezuela to Trinidad and Tobago has unveiled a criminal ring implicating high-level law enforcement officials in the trafficking of migrants and children for sexual exploitation. 9 people were later arrested on human trafficking charges after one survivor, along with family members of the victims, spoke to authorities. It is reported that those arrested included 2 soldiers, allegedly from the Bolivarian National Guard (GNB), and an official from Venezuela’s maritime authority (INEA). There are allegations of officials from Venezuela’s criminal investigation unit (CICPC) and the Trinidadian Coast Guard.
SAUDI ARABIA ESCALATED ITS MISSILE PROGRAMME WITH HELP FROM CHINA
CNN on 5th June reported that the US government has obtained intelligence that Saudi Arabia has significantly escalated its ballistic missile program with the help of China. Intelligence indicates Saudi Arabia has expanded both its missile infrastructure and technology through recent purchases from China. Saudi Arabia is barred from purchasing ballistic missiles from the US under regulations set forth by the MTCR, an informal, multi-country pact aimed at preventing the sale of rockets capable of carrying WMD. Saudi Arabia originally obtained missiles from China and public reports speculated that more purchases may have been made as recently as 2007.
CONTROVERSIAL ARMS TRADE AND INVESTMENTS OF DUTCH BANKS
On 6th June, a report was published by PAX and Profundo from a coalition of organisations – Amnesty International, FNV, Milieudefensie, Oxfam Novib, PAX and World Animal Protection – known together as the FairBank Guide. It examines the investments of Dutch banks in companies involved in controversial arms trade. The aim of the Fair Bank Guide is to encourage corporate social responsibility by bank groups. Amongst the conclusions of the report is that 50 countries should be considered ‘states at risk’, as the sale of military goods to these states is a risk for civilians. They face significant risks of violation of their human rights. It recommends that the banks involved should embed the following elements (much more) strongly in their policies and ask an investee to account for its management of the following risks when it comes to arms sales:
- The risk of human(itarian) rights violations
- The risk of fuelling an armed conflict
- The risks of selling military goods to a corrupt state
- The risks of selling military goods to a fragile state
- The risks of selling military goods to a state that spends a disproportionate share of its budget on military goods.
They should apply the policy to all activities and investments, including assets managed for third parties as well as passive investments; and apply the policy without exceptions for companies with other than military activities.
SINGAPORE: COUNTERFEIT GOODS IN TRANSIT AND LIABILITY FOR TRADE MARK INFRINGEMENT
On 6th June, Bird & Bird published an article saying that the Singapore Court of Appeal has clarified that liability for trade mark infringement can be established notwithstanding the fact that the infringing goods were merely in transit and never intended for entry into the Singapore market; it also clarified that freight forwarders which did not know, or had no reason to believe, that there were signs on goods which they are importing or exporting will not be held liable for trade mark infringement.
COCAINE TRAFFICKING REACHING RECORD HIGHS, SAYS EU DRUG AGENCY
On 6th June, EurActiv reported that cocaine seizure in the EU reached record highs in 2017 and the trafficking of synthetic drugs has also increased, according to this year’s European Drug Report. A closer look into Berlin’s drug help centre shows how drug consumption is linked to mental health. The report says that approximately 96 million Europeans aged 15-64 have already used illegal drugs. More than 140 tonnes of cocaine was seized in 2017, twice the amount seized in the previous year. Whether this means more cocaine is being imported into Europe or whether more is being discovered is not clarified in the report.
RAILWAY TICKET FRAUD CASE SOLVED WITH THE SUPPORT OF EUROJUST
A news release from Eurojust on 6th June says that an organised crime group involved in railway card fraud was taken down through a joint action by UK and Romanian authorities, co-ordinated by Eurojust. Simultaneous raids were carried out in London and Bacau and 18 suspects were arrested.
EU COMMISSION REFERS AUSTRIA AND SPAIN TO EU COURT OVER TAXATION
2 news releases on 6th June reported that the European Commission had referred 2 Member States to the CJEU –
Austria for its failure to align with EU VAT rules for travel agents; and
Spain for imposing disproportionate sanctions for failure to report assets held abroad.
UK: EXPORT CONTROL (AMENDMENT) ORDER 2019
This Order, SI 2019/989, amends the Export Control Order 2008 to update references to the relevant EU Regulation; updates Schedule 2 to the 2008 Order which lists military goods, software and technology subject to export controls (“the UK list”); and removes controls affecting Eritrea following the lifting of UN and EU sanctions.
UK: TRADING IN DRUG PRECURSORS IF THERE’S NO BREXIT DEAL
On 6th June, the Home Office published a news release advising how trading in drug precursor chemicals would be affected if the UK leaves the EU with no deal.
TRAVELLING WITH A EUROPEAN FIREARMS PASS IF THERE’S NO BREXIT DEAL
On 6th June, an updated news release explains how travelling with a European Firearms Pass would be affected if the UK leaves the EU with no deal. It says that if the UK leaves the EU without a deal, UK residents travelling to EU countries with their firearm or shotgun after 31st October should contact the authorities of the countries concerned for information about their licensing requirements. UK residents will no longer be able to use a European Firearms Pass and should check the requirements of the EU country involved.
MALTA NEEDS BIGGER INSTITUTION TO DEAL WITH LARGE SCALE MONEY LAUNDERING, FINANCE MINISTER SAYS
Malta Today on 6th June reported that the government looking at possible institutional arrangements to address money laundering at a large scale carried out in banks once detected by the MFSA and FIAU.
HONG KONG IS TRYING TO SHAKE ITS REPUTATION AS A HAVEN FOR DIRTY MONEY, BUT HAS IT DONE ENOUGH?
A long article in the South China Morning Post on 6th June posed this question. It says that the city has stepped up efforts to put end to money laundering, and much has changed but that technological advances have not ended the practice. Hong Kong will be assessed by FATF this Summer, the first major assessment since 2009. The Post Magazine set out to see what it would take to clean a fictional million dollars of dirty money.
IRELAND: POLICE RAIDS OVER HORSE MEAT FOR EXPORT INVESTIGATION
On 6th June, the BBC reported that the Gardaí investigating suspected horse meat fraud have searched premises across 5 counties – part of an investigation into suspected “tampering with identification passports and microchips of horses presented for slaughter”.
UK: LAW FIRM BANK ACCOUNT CHECK TO BORROWERS
On 6th June, the Mortgage Finance Gazette reported that a process whereby mortgage borrowers can check their law firm’s bank details before transferring funds has been launched by LMS – a conveyancing solutions provider. The Bank Account Check has been successfully operating as a direct service for law firms since 2016. It will allow consumers to confirm their law firm’s bank details before transferring any funds required, and so help to combat push payment fraud. The next step of the Bank Account Check roll out will be to offer law firms the opportunity to feature the service on their own website.
For more information see –
FORMER MP NATALIE MCGARRY JAILED OVER £25,000 EMBEZZLEMENT
The Evening Standard on 6th June reported that a former SNP MP who embezzled more than £25,600 from pro-independence groups has been jailed for 18 months. She spent the money on rent, a holiday to Spain with her husband, and other lifestyle spending.
BERMUDA: BENEFICIAL OWNERSHIP REGISTER TO REMAIN SECRET
Baker McKenzie reported on 6th June that the Information Commissioner said the Bermuda Monetary Authority was right to refuse The Royal Gazette access to the register after a public access to information request was made in February 2017.
FORMER UKRAINIAN PRESIDENT YUSHCHENKO SUSPECTED IN CORRUPTION SURROUNDING RESIDENTIAL COMPLEX
Rferl on 6th June reported that Former Ukrainian President Viktor Yushchenko has been served charges of suspected abuse of power and possession of state property in what investigators call the illegal privatisation of a residential complex near Kyiv that served as a residence for his prime minister and successor Viktor Yanukovych.
COUNTERFEIT AND SMUGGLED CIGARETTES COST EU MEMBER STATES €10 BILLION IN LOST TAX REVENUE LAST YEAR
Illicit Trade on 6th June reported that the figure was up €369 million on 2017, despite the total number of counterfeit and smuggled cigarettes consumed in EU nations falling 1.1 billion to 43.6 billion.
ASSESSING THE RISKS OF CHINESE INVESTMENTS IN SUB-SAHARAN AFRICAN PORTS
A report from the Center for Strategic and International Studies on 4th June says that Chinese investments in sub-Saharan African ports present potential threats to US influence in sub-Saharan Africa as well as African sovereignty. It identifies some of the strategic risks posed by the 3 stages of Chinese infrastructure projects, enabling Beijing to potentially restrict access to its rivals, exploit ports during conflict, and collect intelligence. The 46 ports identified in this data align with broader Chinese military, commercial, and political objectives. However, it says that not all Chinese port investments, however, pose a direct security risk to US or African interests – most are likely pursued for commercial gain.