THINGS YOU MAY HAVE MISSED – JUNE 26

Still away…and being hot and clammy weather does not help!

 

26 June 2019

New leak reveals hundreds of millions of dollars in secret payments by an Odebrecht division created primarily to manage the company’s bribes 

On 25 June, ICIJ provided an update on the scandal involving the Brazilian based company.  This included news of a whole division created to handle its bribery activity; more than $39 million in hidden payments linked to the massive Punta Catalina coal power plant in the Dominican Republic, despite two official investigations finding no irregularities; and hidden payments connected to other major infrastructure projects including the subway systems in Quito, Panama City and Caracas.

https://www.icij.org/investigations/bribery-division/

OFAC:  Publication of Amended ​North Korea Sanctions Regulations 

On 26 June, OFAC announced an updated version of its North Korean sanctions regulations and which updates references to descriptive text that appear in certain entries.

https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20190626_33.aspx

Russia has extended an embargo on food import sanctions from several states to 31 December 2020 

The EU Sanctions Blog on 26 June reported that the action was in response to the EU’s recently renewed economic sanctions targeting Russia’s finance, energy and defence sectors.  The ban affects the US, EU member states, Canada, Australia, Norway, Iceland, Albania, Montenegro, Liechtenstein and Ukraine.

https://www.europeansanctions.com/2019/06/russia-extends-food-embargo-against-eu-us-allies/

OFAC: Issuance of Amended Venezuela-related General License; Temporary Extension of Ukraine-related General Licenses 

On 26 June, OFAC announced the extension of the end dates for 3 General Licenses – for “Authorizing Certain Activities Involving Nynas AB”​ to extend its expiration date to October 25; and 2 General Licenses relating to the rundown of activity involving the GAZ Group (as well as adding a new authorisation for certain safety-related activity to one of the latter General Licenses).

https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20190626.aspx

SIPRI briefs Australia Group on proliferation risks of additive manufacturing

On 14 June, the Stockholm International Peace Research Institute reported that it had briefed the annual plenary meeting of the Australia Group — a major multilateral export control regime made up of 42 states and the EU — on the impact of additive manufacturing on  biological weapons proliferation and export controls.

https://www.sipri.org/news/2019/sipri-briefs-australia-group-proliferation-risks-additive-manufacturing 

See also the March 2019 SIPRI report: Arms Control and the Convergence of Biology and Emerging Technologies, which is said to provide a nuanced picture of the risks and challenges posed by this convergence.  It analyses the extent to which concerns arising from new technological developments can be dealt with through existing governance mechanisms. Based on the limitations identified, the authors recommend the action that needs to be taken by national governments, international organisations, academia, the private sector and the DIY community.

https://www.sipri.org/publications/2019/other-publications/bio-plus-x-arms-control-and-convergence-biology-and-emerging-technologies

And a March 2018 SIPRI report on controlling additive manufacturing and intangible transfers of technology

https://www.sipri.org/publications/2018/other-publications/challenge-emerging-technologies-non-proliferation-efforts-controlling-additive-manufacturing-and

UK-based TechnipFMC Agrees to Pay Around $300 Million to Resolve Foreign Bribery Probes in US and Brazil 

On 26 June, the Wall Street Journal reported that  TechnipFMC will pay about $82 million in the US, with the remainder of its penalties going to authorities in Brazil.  A former consultant to TechnipFMC also pleaded guilty to one count of conspiring to violate the FCPA for his role in the bribery scheme.  London-based TechnipFMC entered into a 3-year deferred prosecution agreement with the US DoJ to resolve allegations it bribed government officials in Iraq and Brazil.  TechnipFMC also said it was continuing to cooperate with an investigation by French authorities related to projects in Equatorial Guinea and Ghana.

https://www.wsj.com/articles/technipfmc-agrees-to-pay-around-300-million-to-resolve-foreign-bribery-probes-in-u-s-brazil-11561507288

https://www.traceinternational.org/TraceCompendium/Detail/944 

US TECH COMPANIES FIND WAYS AROUND HUAWEI BAN

On 25 June, the Wall Street Journal reported that a number of US tech companies had found ways to continue supplying Huawei without seemingly breaching US regulations.  For example, memory chip-maker Micron said it restarted some shipments to Huawei after determining they were in compliance with US law

https://www.wsj.com/articles/american-tech-companies-find-ways-around-huawei-ban-11561517591

BVI court finds share transfer to avoid US sanctions is not unjustified dissipation

On 26 June, the EU Sanctions Blog reported that the Eastern Caribbean Supreme Court sitting in the BVI considered whether a transfer of shares owned by US-designated Renova Group was an unjustifiable dissipation of assets providing grounds for a freezing order; and the Court held that the transfer of shares by the Renova Group in order to avoid the impact of US sanctions was not an unjustified dissipation of assets.

https://www.europeansanctions.com/2019/06/bvi-court-finds-share-transfer-to-avoid-us-sanctions-is-not-unjustified-dissipation/

Money Laundering in UK Professional Services Sectors Not Understood

An Occasional Paper published by RUSI on 25 June claimed that UK officials and professional services providers are failing to share sufficient information on the risks posed by money launderers seeking to exploit businesses in the UK.  This followed three workshops convened in February and March that included representatives of law enforcement agencies, the professional services sector and NGO and news outlets.  It notes that reporting obligations and guidance under the Proceeds of Crime Act 2002 rely on the identification of specific proceeds of crime, which may not be immediately possible where professional services, rather than banking and direct finance activities are involved.  It makes a series of recommendations to address the challenges identified, including: more innovative ways to share and analyse data; greater proactive use of third-sector information; and examination of the reporting requirements in relation to the Section 329 ‘arrangements’ offence under POCA, which is the one most likely to be identified by the professional services sector. 

https://rusi.org/publication/occasional-papers/examining-unknowns-money-laundering-risk-uk-professional-services

Tanzania issues new rules to tighten foreign currency exchange controls    

KYC 360 on 26 June reported that Tanzania has tightened its currency controls with new regulations on foreign exchange bureaus, in what authorities say is an ongoing fight against money laundering and currency speculation.  The action comes after the government revoked the licences of around 100 bureaux and temporarily shut a newspaper for using unofficial data on exchange rates.     

https://www.riskscreen.com/kyc360/news/tanzania-issues-new-rules-to-tighten-foreign-currency-exchange-controls/

What expenditure falls within ‘ordinary and proper course of business’ exception in freezing orders? 

On 25 June, RPC published an article saying that the cost of pursuing related arbitration proceedings and fighting extradition proceedings could be costs incurred in the ‘ordinary and proper course of business’ according to the Court of Appeal in England and Wales in a recent case.  It is said that the Court of Appeal summarised the authorities relating to the meaning of an ‘ordinary’ and ‘proper’ course of business (mostly in the context of freezing injunctions). RPC says that this This guidance provides a further, useful example of the application of a difficult test.

https://www.internationallawoffice.com/Newsletters/Litigation/United-Kingdom/RPC/What-expenditure-falls-within-ordinary-and-proper-course-of-business-exception-in-freezing-orders

2 Years Since Sapin II: Is France Now a Player in the Global Anti-Corruption Enforcement Arena?

Baker Hostetler posed this question in an article published on 24 June.  Sapi II is the law on Transparency, Fighting Corruption and Modernising Economic Life, which is said to have strengthened enforcement in French law.  The principal measures of the law are intended to place French regulators on an equal footing with their US and UK counterparts. The Law was enacted partly to reduce the risk of foreign authorities bringing enforcement actions against French companies.  The article examines the AFA and the resolution of five enforcement actions, and comments on the anticipated trajectory of French global anti-corruption enforcement. The article concludes that the law has established France as a player in the anti-corruption enforcement world and give the French enforcement regime flexibility without sacrificing justice.  It advises that companies should therefore allocate significant resources to enhance their compliance programmes and be prepared for the increased risk of scrutiny by French authorities.

https://www.bakerlaw.com/alerts/two-years-since-sapin-ii-is-france-now-a-player-in-the-global-anti-corruption-enforcement-arena

Turkey has used a ballistic missile, the Bora, for the first time in combat

On 26 June, Arms Control Wonk published a podcast following the first use of a ballistic missile in combat, in Syria.  It therefore joins Iran and others in using such missiles. The missile itself is a product of a joint development programme with China.  The missile is also available for export, and the use is also said to be the first combat use of the Chinese-based system.

https://www.armscontrolwonk.com/archive/1207641/first-combat-use-turkeys-bora-missile/

ISLE OF MAN FORMALLY REVOKES MALDIVES SANCTIONS LEGISLATION

A news release from the Isle of Man on 26 June announced the formal revocation of the Order and Regulations that had given effect to the EU sanctions regime in the Island.

https://www.gov.im/news/2019/jun/26/european-union-maldives-sanctions-revocation-order-2019-and-maldives-sanctions-revocation-regulations-2019/

Claim that one third of used cooking oil in Europe is fraudulent

EurActiv on 26 June reported industry claims that one-third of the used cooking oil (UCO) used in Europe’s biofuels market is more than likely fraudulent, and Brussels is being urged to “think again” about how the entire supply chain is monitored.  It is said that the approximately 70 countries that supply Europe with UCO do not have the capacity to collect, process, certify and export the nearly 3.5 billion litres that will be consumed in 2019. The UK and the Netherlands have recently launched official investigations into companies which have allegedly been selling unsustainable biodiesel containing palm oil.  Critics suggest that there is a hidden link between UCO and palm oil, which the EU has decided to phase out. The European Court of Auditors published a report in 2016 and warned about the hidden dangers of double-counted biofuels and particularly UCO.

https://www.euractiv.com/section/all/news/industry-source-one-third-of-used-cooking-oil-in-europe-is-fraudulent/

EU AMENDS NORTH KOREA SANCTIONS

EU Regulation 2019/1083/EU has amended Regulation 2017/1509 to replace Annex II of that Regulation.  Annex II includes all the dual-use items contained in Annex I to the EU Dual-Use Regulation, plus other items, materials, equipment, goods and technology which could contribute to DPRK’s nuclear-related, other WMD-related or ballistic missile-related programmes.

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.L_.2019.171.01.0008.01.ENG&toc=OJ:L:2019:171:TOC

FATF PUBLISHED NEW GUIDANCE ON THE RISK-BASED APPROACH FOR LEGAL PROFESSIONALS, THE ACCOUNTING PROFESSION AND TCSP

On 26 June, FATF published 3 sets of guidance following the recent Plenary.  One each for legal professionals, the accounting profession and trust and corporate service professionals –  for a sound assessment of the money laundering and terrorist financing risks, and applying the necessary checks and controls.

http://www.fatf-gafi.org/media/fatf/documents/reports/Risk-Based-Approach-Legal-Professionals.pdf

http://www.fatf-gafi.org/media/fatf/documents/reports/RBA-Accounting-Profession.pdf

http://www.fatf-gafi.org/media/fatf/documents/reports/RBA-Trust-Company-Service-Providers.pdf

Export chemicals from the UK: licences and special rules 

On 26 June, the Home Office published a news release advising that, amongst other things, that export rules cover single substances as well as mixtures (also called preparations), e.g. paints, inks, glues or oils.  It also points out that, currently, there are no special rules for exports to within the EU, except for certain controlled chemicals (such as for military use or potential military use). The special rules apply to ozon-edepleting chemicals, those with a military use, drug precursors and radioactive substances.

https://www.gov.uk/guidance/export-chemicals-licences-and-special-rules

Malaysia Customs seizes 5,255 baby tortoises destined for India

On 26 June, The Star reported that the  Customs Department has seized 5,255 baby tortoises from two suspects on transit to India from China.

https://www.thestar.com.my/news/nation/2019/06/26/customs-seizes-5255-baby-tortoises-destined-for-india/

China bans all meat from Canada alleging forged customs certificates

CNN on 26 June reported that the Chinese government has announced a suspension on imported meat products from Canada over claims of forged customs documents, the latest sign of worsening relations between the two countries.

https://edition.cnn.com/2019/06/26/asia/canada-china-meat-intl-hnk/index.html

Author: raytodd2017

Chartered Legal Executive and former senior manager with Isle of Man Customs and Excise, where I was (amongst other things) Sanctions Officer (for UN/EU sanctions), Export Licensing Officer and Manager of the Legal-Library & Collectorate Support Section

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