13th June 2019
OECD BENEFICIAL OWNERSHIP IMPLEMENTATION TOOLKIT TO FACILITATE TRANSPARENCY
On 19th May, Colin Biggers & Paisley in Australia published a briefing concerned with the OECD Beneficial Ownership Implementation Toolkit. The Toolkit provides examples for states of various approaches and considerations that have been or can be taken to ensure the availability of beneficial ownership information and offers practical suggestions to be taken into account when considering various policy options. It aims to highlight how different jurisdictions are reforming their legislation and regulations to align with new international transparency measures, and defines and describes the recommendations made by the FATF on transparency with regard to beneficial owners and links to OECD Global Forum tax standards. The Toolkit includes several checklists for use by national authorities.
HOW CAN A UK WITNESS BE MADE TO TESTIFY IN US LEGAL PROCEEDINGS?
On 29th May, law firm Finnegan published a blog post about the Convention on the Taking of Evidence Abroad in Civil or Commercial Matters (the “Hague Evidence Convention”), and the Evidence Act 1975, the Civil Procedure Rules in England and Wales, and the process that can be used for the purposes of foreign civil proceedings, and the ways to challenge it.
CHINA ISSUES NEW GUIDELINES FOR ITS COMMERCIAL SPACE SECTOR
China Knowledge on 13th June reported that China has introduced its first guidelines to regulate its commercial space sector. Companies have to obtain official permission before carrying out rocket research, development as well as production. Commercial rocket companies also have to establish a confidentiality system and follow state export control regulations when in doubt if they provide overseas services and products.
HOW TO ENSURE COMPLIANCE WITH US DEFENCE EXPORT REGULATIONS
On 13th June, Australian Defence Magazine published an article about the application of the US International Traffic in Arms Regulations (ITAR) and Export Administration Regulations (EAR) which are enforceable extra-territorially. It says that Australian businesses in areas spanning high-tech military to dual-use technologies must ensure their compliance with these regulations and standards. It provides a list of compliance steps every business should adopt if they are currently handling, or forecast to handle, US-controlled technology – assign a Technology Control Officer, develop a Technology Control Plan (TCP), educate your team through training as ignorance is no excuse when you are handling controlled technology, establish safeguards and security controls, higher management should be 100% on board with compliance in this area, internal and external auditing can ensure ongoing compliance, a process to detect and report suspected violations should be in place, and accurate and complete records should be maintained for all export control transactions.
https://www.australiandefence.com.au/news/how-to-ensure-compliance-with-defence-export-regulations
NORTH KOREA IS SANCTIONS-BUSTING BY EXCEEDING OIL IMPORT CAP, US TELLS UN IN NEW REPORT
CBS News on 12th June reported that an unpublished report claims that North Korea is importing more oil than is permitted by the UN, by using illicit ship-to-ship transfers on the high seas. It says that the report, along with 28 images, was submitted to the UN sanctions committee on 11th June. The report is supported by 25 other countries and calls for action by the Security Council. In the report, the US and Japan have documented at least 8 instances of illicit, sanctions-busting transfers and the graphs show satellite images of several of these.
UK: GAMESYS TO PAY £1.2 MILLION OVER AML AND SOCIAL RESPONSIBILITY FAILINGS
Calvin Ayre reported on 12th June that the Gibraltar-based online gambling operator had agreed to pay £1.2 million to resolve a regulatory probe into its social responsibility and AML shortcomings. The investigation involved 3 customers who were the subjects of police investigations but the company failed to conduct the necessary due diligence to determine the source of these customers’ gambling funds or ensure that their transactions were consistent with their risk profile. The Gambling Commission also found fault with its handling of these high-spending customers’ gambling activity.
https://calvinayre.com/2019/06/12/business/gamesys-penalized-uk-aml-social-responsibility-failures/
AUSTRALIA FINANCIAL CRIME WATCHDOG ORDERS AUDIT OF AFTERPAY BUY NOW, PAY LATER PROVIDER
On 13th June, KYC 360 reported that AUSTRAC has said it will audit buy-now-pay-later provider Afterpay Touch Group Ltd to ensure it was complying with AML/CFT laws. It said that the buy-now-pay-later sector had experienced rapid growth and new financial players needed to be educated about their obligations.
https://www.riskscreen.com/kyc360/news/australia-financial-crime-watchdog-orders-audit-of-afterpay/
EU SUGGESTS POSSIBLE WTO CHALLENGE TO FDII REGIME
On 10th June, Venable LLP published an article saying that the EU has submitted a letter to the US Treasury and the IRS, suggesting that the foreign-derived intangible income (FDII) regime may violate international trade law. The regime is intended to incentivise US businesses to operate domestically, and to maintain ownership of valuable intellectual property in the US, by reducing the tax rate on income derived in foreign markets.
GERMANY: DIRECTORS’ LIABILITY FOR PAYMENTS MADE TO COMPANIES IN INSOLVENCY
On 7th June, Taylor Wessing published a briefing saying that under German law, managing directors of limited liability companies are personally liable for payments that have been made despite insolvency. This can lead to widespread liability. A recent court case resulted in a ruling that shows that the rules on liability for payments made during insolvency are complex, and every managing director should redirect payments to accounts held in credit, if the company is illiquid.
US DEPARTMENT OF JUSTICE GUIDANCE ON FALSE CLAIMS ACT
On 4th June, Braumiller Law Group PLLC published a briefing saying that in May the DoJ issued guidance explaining how the DOJ awards credit to defendants who co-operate during a False Claims Act investigation. The Act imposes liability on persons and companies (which are typically federal contractors) who defraud governmental programmes.
https://www.braumillerlaw.com/department-of-justice-issues-guidance-on-false-claims-act/
The guidance is at –
https://www.justice.gov/jm/jm-4-4000-commercial-litigation%20-%204-4.112
SINGAPORE: IMPORT AND SALE OF TRANS FAT PRODUCTS BANNED FROM JUNE 2021
On 12th June, HKTDC reported that, as of June 2021, it will be prohibited to import or sell foodstuffs containing partially hydrogenated oils (PHO), which are known to contain high levels of trans fats. The move comes as part of a government bid to eliminate trans fats, a key contributor to the onset of coronary disease, from the local food chain.
ARMENIAN GOVERNMENT PRESENTS AMENDED TOUGH ANTI-CORRUPTION STRATEGY
The Arka News Agency on 13th June reported that Armenia’s government has presented another, edited version of its anti-corruption strategy for 2019-2022, though the article also says that corruption continued flourishing in Armenia in all areas.
http://arka.am/en/news/politics/armenian_government_presents_tough_anti_corruption_strategy_media
RISE IN REQUESTS FROM OVERSEAS FOR UK DRIVERS’ DETAILS
Auto Express on 10th June reported that the number of mutual legal assistance (MLA) requests for details of UK drivers is on the rise. The UK received 1,903 requests for driver’s details from foreign countries in 2017 an increase of around 17% on the previous year. EU prosecutors have been able to send requests since the EU Cross Border Directive came into force in 2015, although the UK did not adopt the Directive until 2017. The article suggests that, post-Brexit, the UK could enter into an Agreement on Mutual Recognition of Driver Disqualifications’ with EU Member States – as exists between the UK and Ireland and which means disqualified drivers from one of the countries can be disqualified in the other.
https://www.autoexpress.co.uk/car-news/107105/rise-in-requests-from-abroad-for-uk-drivers-details
KENYA CLOSES PART OF BORDER WITH SOMALIA OVER SECURITY CONCERNS
On 11th June, the East African reported that Kenya has closed its border with Somalia in Lamu indefinitely as security operations against Al Shabaab militants intensify. Authorities said illegal trade, including fake goods and human and drug trafficking, have been on the rise in the region.
AUSTRALIAN LOSSES DUE TO INVESTMENT SCAMS SURPASS $18 MILLION IN FIRST 5 MONTHS OF 2019
Finance Feeds on 13th June said that Australians are reported to have lost $18.57 million during the first 5 months of 2019. Australians submitted 436 reports about investment scams in May, taking the number of such reports for the January-May 2019 period to 1,956. It says that the large majority of investment scams are still focused on traditional investment markets like stocks, real estate or commodities. 2 other types of investments where scams are prevalent are cryptocurrency trading and binary options.
https://financefeeds.com/australian-losses-due-investment-scams-surpass-18m-first-five-months-2019/
UK’S PROSCRIPTION OF HIZBULLAH: ALL TALK AND NO ACTION?
On 12th June, a Commentary from RUSI said that the UK Home Secretary’s proscription of the organisation in February raised expectations, but those that cheered are likely to be disappointed. The Home Secretary had said that it was no longer able to distinguish between Hizbullah’s already banned military wing and the political party and he had thus decided to proscribe the group in its entirety. But what, asks the Commentary, does this action mean in practice? It says what happens next, now that the UK has taken this step? The short answer seems to be ‘nothing much’, and a question in Parliament in April provided an entirely unconvincing and unenlightening response.
https://rusi.org/commentary/uk’s-proscription-hizbullah-all-talk-and-no-action
OECD: SWEDEN MUST URGENTLY IMPLEMENT REFORMS TO BOOST FIGHT AGAINST FOREIGN BRIBERY
A news release from the OECD on 12th June advised that the OECD Working Group on Bribery has since 2012 repeatedly urged Sweden to reform its laws to ensure the investigation and prosecution of companies that bribe foreign public officials to obtain advantages in international business. Sweden’s legal provisions to hold companies liable for foreign bribery do not fully meet the requirements of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. Swedish authorities confirmed that new legislation to implement the OECD Working Group on Bribery’s key recommendations will enter into force on 1st January 2020.
THE 10th ANNIVERSARY OF THE FOUNDATIONS (JERSEY) LAW
On 12th June, Ogier published an article saying that the birth and growth of the Jersey foundation is a clear example of how the Island’s legislature, financial services industry and regulator have worked together to broaden the Island’s appeal to an international market. The 2009 Act was the first of its kind for offshore jurisdictions when it came into being, but which has since been followed in Guernsey, the Isle of Man and, to some extent, in the Cayman Islands. There are almost 400 foundations currently registered in Jersey serving a wide variety of purposes. The Jersey foundation was intended as an alternative to the Island’s trusts, not as a competitor to them – and there are some key differences.
https://www.ogier.com/publications/ten-years-of-the-jersey-foundation
ST. PETERSBURG CUSTOMS OFFICERS ACCUSED OF TAKING BRIBES
On 13th June, Crime Russia reported that employees with the Baltic Customs in St. Petersburg are suspected of systematically receiving bribes from local entrepreneurs, RenTV informs, citing the press service of the Investigative Committee of the region. It says that investigators believe the Deputy Head of the customs checkpoint instructed the state customs inspector to extort money from merchants in exchange for the transit of companies’ goods through Turukhtanny customs terminal.
https://en.crimerussia.com/corruption/st-petersburg-customs-officers-taken-for-monthly-bribes/
HOMEMADE GUN FACTORIES SELL CHEAP WEAPONS TO BRAZILIAN CRIMINALS
Insight Crime on 12th June reported that, despite the loosening of gun ownership laws in Brazil, the country is seeing a boom in illegal gun factories, with homemade weapons taking up a significant percentage of the country’s total seizures. One “factory” recently raided had apparently been operating for more than 20 years.
https://www.insightcrime.org/news/brief/homemade-gun-factories-sell-cheap-weapons-brazil/
ROCKING HORSE EXPOSES ARGENTINA’S RISING SYNTHETIC DRUG MARKET
Insight Crime on 13th June published an article saying that the seizure of a rocking horse stuffed 2 kg of methamphetamine travelling from Belgium to Argentina has exposed yet more evidence of the growing market for synthetic drugs in Latin America.
https://www.insightcrime.org/news/brief/rocking-horse-argentina-rising-synthetic-drug-market/
BUSINESSES ACROSS THE WORLD NOW FACING GREATEST RISK EVER FROM PRINT SUPPLY FRAUD
Illicit Trade on 11th June reported a study by HP which revealed that the availability of counterfeit printer products, which are estimated to cost the world economy some $3 billion every year, is being driven by an increasingly broad supplier ecosystem, a lack of certainty among buyers that their purchases are genuine, and an absence of awareness of the risks of using counterfeit goods. The Middle East, Eastern Europe and Africa have been particularly affected, with only three-quarters of businesses surveyed in those areas feeling confident their purchases of print supplies were genuine.
UK GOVERNMENT APPROVED EXPORT OF CROWD CONTROL EQUIPMENT TO HONG KONG
An article on Ekklesia on 13th June said that Pictures from on the ground in Hong Kong suggest CS grenades, manufactured by the UK-based Chemring Group are being used by the police against protesters, the Omega Research Foundation has reported. The UK has granted a number of licences allowing the export of a wide range of crowd-control equipment, including CS hand grenades, anti-riot shields, body armour, and crowd control ammunition to Hong Kong. These include 2 OGEL in 2015 and 2016, allowing an unlimited quantity of material to be exported for 5 years, and the most recent licence was granted in December 2018 (the latest month for which data is available).
http://www.ekklesia.co.uk/node/28433
GULF OF GUINEA PIRACY CONTINUES TO THREATEN SEAFARERS
Ship Management on 11th June carried an article saying that members of the shipping community, flag states and agencies from Gulf of Guinea gathered at the headquarters of the International Maritime Organization (IMO) for a day-long symposium on Maritime Security in the Gulf of Guinea. One attendee is quoted as saying that the high level of piracy and armed robbery attacks in the Gulf of Guinea is not acceptable – yet it is happening every day and this is not business as usual. Concerns raised by industry were supported by figures from the International Maritime Bureau showing that the number of attacks in the Gulf of Guinea region had doubled in 2018. There has also been a marked increase towards kidnapping for ransom and armed robbery incidents. Speakers emphasised the region was starting to build capacity and joint co-operation to fight maritime crime and the international community is also sponsoring long-term capacity building and partnerships. However, the shipping industry, seafarer groups and Flag States are keen to identify actions that can have an immediate impact.
http://shipmanagementinternational.com/gulf-of-guinea-piracy-continues-to-threaten-seafarers/
INNOVATION AND THE FIGHT AGAINST FINANCIAL CRIME: HOW DATA AND TECHNOLOGY CAN TURN THE TIDE
Refinitiv (the company behind the widely-used World-Check) has produced a report looking at how emerging technologies and new collaborations are helping to turn the tide against financial crime. It starts by saying that, with the UN estimating that just 1% of criminal funds flowing through the international financial system every year are detected and dealt with by law enforcement agencies, new approaches are clearly needed. Refinitiv has undertaken an independent survey of over 3,000 managers in compliance-related roles about the current and potential uses of such emerging technologies. The survey undertaken by the company appears to show that innovation is already having an impact with organisations that use new technologies being almost twice as successful at performing KYC checks on the identity of clients. However, as with previous surveys, this survey reveals that many companies still need to address fundamental risk management issues.
IRS ENFORCEMENT UNIT RELYING MORE ON ANALYTICS TO SPOT CRIME
The Wall Street Journal on 12th June reported that the chief of the IRS criminal investigations division has said that his office is placing a higher priority on data analytics in the investigation of potential wrongdoers. He said that the IRS has made investments in artificial intelligence-based technologies, such as machine learning, and is also looking at what other agencies are doing.
THE MOST AND LEAST PEACEFUL COUNTRIES WORLDWIDE
https://www.statista.com/chart/18339/countries-ranked-by-peace-level/
https://www.statista.com/chart/14146/the-most-and-least-peaceful-countries-worldwide/
JAIL IN FUTURE FOR CARNIVAL CRUISE LINE EXECUTIVES OVER COMPLIANCE FAILURES?
On 12th June, the Corporate Counsel from Law.com reported that a US district judge said she would consider punishing individual executives with criminal fines and prison time over the world’s largest cruise line failing to implement meaningful compliance reforms with a chief compliance officer. It says that Carnival Corporation executives have until autumn to hire a chief compliance officer and begin meaningful compliance reforms.
WILL THE UK IVORY ACT WORK IN PRACTICE?
On 13th June a blog post on the Art Law & More website from Boodle Hatfield posed this question. The Act is due to come into force later in 2019. It will introduce a total ban on dealing in items containing elephant ivory, regardless of their age, within the UK, as well as export from or import to the UK, with a narrow and carefully defined set of exemptions, and a new compliance system to allow owners to continue to trade in exempt items. One commentator predicts long and costly legal proceedings, as he claims the Act’s powers breach both the First Protocol to the European Convention on Human Rights, and Article One, to Article 17 (2) of the Universal Declaration of Human Rights, as well as the Human Rights Act of 1998, all forbid the arbitrary confiscation of private property, yet this will be the effect of the Act on a large quantity of ivory objects.
https://artlawandmore.com/2019/06/13/a-view-from-the-market-will-the-ivory-act-work-in-practice/
FATF MEETING WITH IMF, UN AND WORLD BANK IN FLORIDA
On 16th-20th June representatives from the 205 members of the FATF Global Network, the IMF, UN, World Bank and others will meet for FATF Week in Orlando, Florida. They will discuss a range of important issues, focused on protecting the integrity of the financial system and contributing to global safety and security – this includes further progress in the regulation of virtual assets. In addition, FATF will receive reports from organisations including the IMF, World Bank, United Nations, OECD, OSCE, Egmont Group of Financial Intelligence Units, CARIN, EBRD, ECB, Europol, GIFCS, IAIS, the 9 FATF-Style Regional Bodies and others.
http://www.fatf-gafi.org/publications/fatfgeneral/documents/plenary-june-2019.html
VALUE ADDED TAX (FINANCE) (EU EXIT) (REVOCATION) ORDER 2019
This Order revokes the 2019 Order as a decision has been made to make these changes in another instrument which will come into force with effect from a specified date to provide certainty to business. The 2019 Order would have extended the scope of the UK VAT exemption for the management of special investment funds to fully reflect the scope of the exemption under EU law with effect from the UK’s exit from the EU. the 2019 Order is being revoked so that new legislation can be laid at a later date that will make the changes that the Finance Order would have made, but with effect from 1st April 2020 rather than EU Exit Day.
https://www.legislation.gov.uk/uksi/2019/1014/pdfs/uksiem_20191014_en.pdf
UK AND EU LAW ENFORCEMENT BOOST CO-OPERATION ON DNA DATABASES
A news release on 13th June reported that law enforcement agencies in the UK and across the EU will be able to search for matching samples on each other’s DNA databases, following the UK implementation of the EU-wide Prüm Convention DNA network agreement will facilitate better co-operation between police forces and law enforcement agencies.
https://www.gov.uk/government/news/uk-and-eu-law-enforcement-boost-co-operation-on-dna-databases
SUDAN’S PUBLIC PROSECUTORS CHARGE FORMER PRESIDENT BASHIR WITH CORRUPTION
Reuters on 13th June reported that Sudan’s state prosecutor’s office said jailed former president Omar al-Bashir, deposed in April, had been charged with corruption after the completion of an investigation.
US TO SEND PROSECUTOR TO KENYA TO BOOST WAR ON GRAFT AND PLEDGES SUPPORT
The Standard on 13th June reported that the US has agreed to send to Kenya one of its top prosecutors to support the country in the ongoing war against corruption.
VAT: REVERSE CHARGE FOR RENEWABLE ENERGY CERTIFICATES
On 13th June, a news release from HMRC advised a measure will introduce a reverse charge for supplies of renewable energy certificates – an anti-fraud measure which removes the opportunity for fraudsters to charge VAT and then go missing before paying it in Missing Trader Intra-Community (MTIC) VAT fraud. It comes into force on 14th June.
https://www.gov.uk/government/publications/vat-reverse-charge-for-renewable-energy-certificates
UK CRIMINAL LEGAL AID REVIEW
On 13th June, a news release from the MoJ which provides details of the Ministry of Justice’s review of criminal legal aid, announced in December 2018. The government is committed to delivering a final report, including any recommendations, towards the end of the summer 2020.
https://www.gov.uk/guidance/criminal-legal-aid-review
IRELAND: INSURANCE FRAUD PUNISHABLE WITH FINES OF UP TO €100,000, AND/OR PRISON FOR UP TO 10 YEARS
An article in the Irish Examiner on 13th June contained a reminder that insurance fraud is now punishable with fines of up to €100,000, and/or prison for up to 10 years. The Gardaí is working closely with the insurance industry to investigate people giving false or misleading evidence or verifying affidavits.
https://www.irishexaminer.com/breakingnews/business/–930648.html
TAIWAN CUSTOMS SEIZES RECORD HAUL OF MARIJUANA AS CHECKS ON US AND CANADA FLIGHTS TIGHTEN
On 13th June, the Taiwan News reported that Taiwan Customs seizes 37 kg of marijuana in a single seizure – a new record for cannabis seizures from an individual airport passenger smuggling the drug. As marijuana has been legalised in more than 10 US states such as California, Colorado, and Oregon, as well as in Canada, the US and Canada are no longer categorized by Taiwan as low-risk countries for drugs.
https://www.taiwannews.com.tw/en/news/3723402
CUSTOMS OFFICIALS CONFISCATE 462,000 SMUGGLED CIGARETTES AT LUXEMBOURG AIRPORT
RTL Today on 13th June reported that Customs officials found a total of 2,310 cartons of cigarettes hidden in ovens. The cigarettes came from Hong Kong and were heading to the UK.
https://today.rtl.lu/news/luxembourg/a/1362141.html
FLORIDA: BILL TO ALLOW FOREIGN DRUG IMPORTATION INTO THE STATE
On 13th June, Jurist reported that the Florida Governor has signed into law a Bill allowing foreign drug importation into the state through 2 programmes. The Bill comes alongside his efforts to control prices of prescription drugs in the state. Currently, it is illegal to import prescription drugs from other countries, including Canada. Drugs are typically cheaper because many countries impose caps on the drug’s price, while the US does not. The Bill sets up the Canadian Prescription Drug Importation Program (CPDI Program) and the International Prescription Drug Importation Program (IPDI Program).
MOROCCO TO LAUNCH NATIONAL STRATEGY TO FIGHT MONEY LAUNDERING
Baker McKenzie on 13th June reported that the upcoming launch of a national strategy in Morocco to fight money laundering as well as terrorism financing. The strategy would facilitate a better coordination of actions between different departments. Morocco is also about to adopt the national risk assessment report that will be transmitted to relevant administrations in order to trigger appropriate measures.
http://www.riskandcompliancehub.com/morocco-to-launch-national-strategy-to-fight-money-laundering/
FCA FINAL REPORT INTO RBS TREATMENT OF SME CUSTOMERS TRANSFERRED TO ITS GLOBAL RESTRUCTURING GROUP (GRG)
A release on Mondo Visione on 13th June reported that the FCA has published the final report on its investigation in to Royal Bank of Scotland’s (RBS) treatment of small and medium-sized enterprise (SME) customers transferred to its Global Restructuring Group (GRG). This follows the update provided in July 2018 on the investigation. It said that it was important to recognise that the business of GRG was largely unregulated and the FCA’s powers to take action in such circumstances, even where the mistreatment of customers has been identified and accepted, are very limited. It says that the FCA consulted with independent, external leading counsel who confirmed that the FCA’s conclusions were correct and reasonable. The FCA also found no evidence that RBS artificially distressed and transferred otherwise viable SME businesses to GRG to profit from their restructuring or insolvency.
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