1st July 2019
JAPAN RESTRICTS TECH EXPORTS TO SOUTH KOREA OVER WARTIME LABOUR ROW
On 30th June, Nikkei Asian Review reported that Japan is preparing to impose tougher restrictions on South Korean companies’ ability to buy semiconductor materials such as plastic used in flexible phone displays, apparently in reaction to Seoul’s stance on compensation for wartime labour. Korea was a province of Imperial Japan from 1910 (having been a protectorate from 1905) and suffered under its rule. During WW2 about 450,000 Korean male labourers were involuntarily sent to Japan (in addition, unknown thousands of Korean “comfort women” were taken for “service” in army brothels). The newspaper also says that Japan risks having its action interpreted as backtracking on commitments to free trade, as expressed in deals such as the Trans-Pacific Partnership.
INVESTORS SCRAMBLE TO SWERVE SWISS SHARE TRADING BLOCK AFTER EU ROW
On 30th June, NASADAQ.com reported that European stock investors and brokers were rushing to find workarounds before Swiss shares are blocked from trading on EU exchanges from 1st July after a collapse in talks to resolve a dispute between Brussels and Switzerland. In a row over a stalled partnership treaty, Switzerland said that it would trigger retaliatory measures against the EU for forbidding access to its stock markets. Some EU regulators and politicians want to end the UK dominance of European financial markets, raising speculation that they have opted for a tough line with Switzerland in order to set a precedent.
MYANMAR SAYS COMPLYING WITH INTERNATIONAL SANCTIONS AFTER ORDERING THE CLOSURE OF A NORTH KOREAN RESTAURANT
UPI on 30th June reported that the Pyongyang Koryo Restaurant in Yangon has closed, and all 21 North Korean nationals affiliated with the restaurant have been ordered to return home. It may have been one of the biggest North Korea-run restaurants in SE Asia and included a dining room on the first floor and a “VIP room” on the second floor. Myanmar holds traditionally friendly ties with North Korea, but in recent years have actively implemented North Korea sanctions.
WISCONSIN GUN MANUFACTURER ALLEGEDLY SHIPPED UNMARKED RIFLES AND PISTOLS TO AUSTRALIAN ARMS DEALER
On 29th June, the Journal Sentinel reported that a Wisconsin man has agreed to plead guilty in a scheme to ship illegal guns to an Australian weapons dealer using a crate with a false floor to fool customs officials. Andy Lloyd Huebschmann pleaded guilty to sending the dealer pistols, rifles and rifle parts to convert semi-automatic guns into fully automatic weapons. He owns Thureon Defense LLC and is licensed to manufacture and deal in guns. The dealer, Paul Munro, has been sentenced to 10 years in Australian prison for his role in the scheme. Authorities arrested Munro after he set up a deal in August 2016 to sell guns to an undercover officer.
IRELAND: CRACKDOWN ON COAL SMUGGLING ACROSS THE BORDER
Midwest radio on 30th June reported that the Revenue Commissioners will crack down on cross-border coal smuggling ahead of a hike in the carbon tax. CPL Fuels, one of Ireland’s largest coal merchants, estimates a fifth of the coal sold in the Republic was brought south without paying tax, evading €2,500 per load.
HONG KONG WELCOMES FATF ‘COMPLIANT’ RESULT BUT IMPROVEMENTS STILL NEEDED
Regulation Asia on 1st July reported that Hong Kong is said to have been found to be particularly effective in the areas of risk identification, law enforcement, asset recovery, counter-terrorist financing and international co-operation by FATF. The mutual evaluation report of Hong Kong was examined at the FATF Plenary on 20th June. However, the report, due to be published in September, says that Hong Kong still needs to prioritise efforts to prosecute money laundering linked to foreign predicates, increase its risk understanding, boost AML/CFT implementation by smaller institutions, and strengthen supervisory measures for some sectors.
TROIKA LAUNDROMAT: INSIDE EUROPE’S LATEST MONEY LAUNDERING SCANDAL
On 1st July, European CEO published a feature which it says highlights the brazen use of illegitimate funds within the world of the ultra-wealthy. The Troika Laundromat was unveiled when the OCCRP, together with Lithuanian news website 15min.lt, obtained more than 1.3 million financial documents relating to the activities of Russian private bank Troika Dialog and the now-defunct Lithuanian lender Ūkio Bankas.
DUTCH AUTHORITIES SEIZE €12 MILLION IN DUTCH-RUSSIA MONEY LAUNDERING CASE
On 30th June, the Zurich Weekly News Review reported that authorities have seized around €12 million. The money was in bank accounts in Switzerland and Germany and invested in real estate in the Netherlands and Germany. Investigations focuses on 3 Dutch companies allegedly used by Russian criminals to launder money through the rental of the property. The suspect companies were part of a Dutch foundation, which in turn was managed by a Dutch holding company.
Analytiqa has produced a short briefing outlining the advantages of becoming an Authorised Economic Operator (AEO). It describes it as increasingly considered as a must-have capability, leaving any organisation who has not achieved accreditation in danger of being omitted from future tender lists (as logistics service providers) or facing the prospect of delays in their supply chain (as manufacturers and retailers).
HMRC GUIDANCE ON THE CORRECT TREATMENT FOR THE DEDUCTION OF IMPORT VAT BY NON-OWNERS OF GOODS
On 27th June, Baker McKenzie published an article saying that in April HMRC published new guidance in Revenue and Customs Brief 2 (2019) setting out their view on the deduction of import VAT by a person who does not own the imported goods saying that businesses should review their current arrangements and any proposed post-Brexit structure to ensure there is no unintended VAT cost on imports.
IRELAND: CENTRAL REGISTER OF BENEFICIAL OWNERSHIP DELAYED
Dillon Eustace on 27th June reported that it has been confirmed that the opening of the registered of beneficial owners has been postponed temporarily. Under Part 3 of the relevant Regulation existing companies will be required to submit information in relation to their beneficial owners to the RBO before 22nd November.
MALTA: ALL FOUNDATIONS AND ASSOCIATIONS HAD TO SUBMIT BENEFICIAL OWNERSHIP INFORMATION BY 30TH JUNE
On 27th June, MAMO TCV Advocates published an article saying that the Registrar for Legal Persons has announced that all foundations and associations which qualify as voluntary organisations – including voluntary organisations, religious organisations, sports organisations, co-operatives, civil partnerships and other legal organisations – are required to submit information on their beneficial ownership by the 30th June.
ANOTHER SUCCESSFUL ENFORCED PRIVATE SALE OF A VESSEL IN MALTA BY COURT APPROVAL
Ganado Advocates on 27th June published an article saying that Malta continues to attract vessels to its shores for court-approved sales, after another sale instigated by the enforcing mortgagee. The article also said that, apart from the approval of the sale itself, the Court addressed a number of interesting legal points.
LAW TO SUSPEND CANADA’S WTO OBLIGATIONS CONCERNING SAFEGUARDS RECEIVES ROYAL ASSENT
Tereposky & DeRose LLP published an article on 22nd June saying that a Bill has received Royal Assent and became law in Canada. This legislation temporarily repeals the provisions in Canadian law that implement Canada’s obligation under Article 7.5 of the WTO Agreement on Safeguards, which requires government authorities to observe a 2-year “cooling off” period after imposing safeguard measures on imported products before they can impose another round of safeguard measures on the same products. This is said to allow it to initiate one or more successive rounds of safeguard measures within the next 2 years against imports of the same steel products that were the subject of the 2018-2019 safeguard measures (i.e. heavy steel plate, concrete reinforcing bar (rebar), energy tubular products, hot-rolled sheet, pre-painted steel, stainless steel wire, and wire rod).
NETHERLANDS PLAN TO BAN CASH PAYMENTS OVER €3,000
On 1st July, NL Times reported that the ministers of finance and security have submitted proposals to parliament to ban cash payments of over €3,000, and to withdraw €500 banknotes. The government is also said to be considering creating a “black list” where banks can register clients that they suspect are involved in money laundering.
NUMBER OF FRAUDULENT VISA APPLICATIONS TO NEW ZEALAND NEARLY DOUBLES
Radio New Zealand on 1st July reported that fraudulent visa applications are on the rise in India, SE Asia and Eastern Europe, according to Immigration New Zealand (INZ). It said it had seen an 88% rise in fraud last year and that was likely the tip of the iceberg, as those were only the confirmed cases.
IRISH MINISTRY FOR JUSTICE RULES OUT PROSCRIBING ORGANISED CRIMINAL GANGS
The Irish Times on 1st July reported that the Minister for Justice has ruled out proscribing organised crime gangs like the Kinahan cartel or the Hutch faction. Proscribing such organisations would allow the Garda to charge gangland figures with an offence of membership. Currently, paramilitaries can be convicted for being a member of an unlawful organisation – the IRA and its various breakaway groupings.
NORTH KOREA’S ILLICIT TRANSACTIONS SHOW A ‘PATTERN OF EXTRAVAGANCE’
Stuff in New Zealand on 1st July reported that UN sanctions prohibits North Korea from purchasing certain luxury goods – such as jewellery, yachts and limos, like the one Kim used to ferry him around Pyongyang last October, when Pompeo visited to press Kim to follow through on his pledge to relinquish North Korea’s nuclear arsenal. It details comments of the former co-ordinator of the UN panel devoted to documenting North Korea’s clandestine purchase and sale of banned goods. It details an investigation into the origin of a Mercedes car, said to have been transported via a shipping container from California to China, at the direction of George Ma, a Chinese businessman, according to a UN report. A 2016 UN report said Ma’s company had previously been involved in shipping “arms-related material” to the Republic of the Congo.
TRENDS IN ARMED CONFLICT, 1946–2018
On 1st July, a report from ETH Zurich saying that the number of armed conflicts in 2018 was slightly higher than 2017 and much higher than 10 years ago, but the number of fatalities occurring in these conflicts was below average for the post–Cold War period. A key issue remains internationalised conflicts – civil wars with external parties involved – where a majority of fatalities in 2018 has been recorded. It says that most armed conflicts remain small, but a few escalate into wars, with long-lasting and devastating effects. The current situation, with a shrinking number of wars and a record-number of small conflicts, highlight the role of conflict management and prevention. The top priority in the years forward should be to solve or at least prevent escalation of the many minor conflicts that currently are active.
CLAIMS MANAGEMENT COMPANY BOSS FACES £1.4 MILLION CONFISCATION ORDER OVER ILLEGAL PI DATA
Legal Futures on 1st July reported that David Cullen, who was the managing director of No.1 Accident Claims in Manchester 2010-2012, when the company was liquidated, has been found guilty of illegally obtaining people’s personal data and selling it to personal injury solicitors has been fined for breaches of data protection and issued with a £1.4 million confiscation order. The business profited from selling illegally obtained personal data belonging to people who had been in road accidents to solicitors.
THE RISE AND RISE OF M&A COMPLIANCE DUE DILIGENCE
Global Compliance News on 28th June reported on a new report from Baker McKenzie which assesses the challenges and risks that regional and multinational organisations face in relation to compliance due diligence (CDD) across both merger and acquisitions and joint ventures. Pre-transactional CDD encompasses a range of issues, including antitrust, employment, money laundering, data privacy, cybersecurity, bribery and corruption, sanctions, environmental and supply chain compliance. Along with commercial, financial and tax and traditional legal due diligence, CDD should be — and increasingly is — one of the key pillars of any deal.
SUSPENSION OF MSC’S C-TPAT STATUS FOLLOWING COCAINE SEIZURE IN PHILADELPHIA
On 1st July, the NCBFAA reported that following the seizure of 17.5 tons of cocaine worth more than $1 billion from the MSC Gayane containership in the Port of Philadelphia., US Customs and Border Protection has suspended MSC’s CTPAT status; and MSC vessels may be subjected to additional screening which could delay the release of cargo.
MONEYVAL WELCOMES SERBIA´S REMOVAL FROM FATF’S “GREY LIST”
On 24th June, the Council of Europe reported that the Council of Europe´s AML/CFT body MONEYVAL welcomed that FATF decided at its plenary meeting held in Orlando that Serbia will no longer be subject to the FATF’s monitoring under its ongoing global AML/CFT compliance process.
EU LAUNCHES BARTER MECHANISM TO GET AROUND US SANCTIONS ON IRAN
On 1st July, Insurance Marine News reported that the EU announced on June 28th that it was launching INSTEX – an alternative financial mechanism to facilitate international commerce with Iran and thus getting around sanctions. INSTEX is targeted at trade in essential goods – food, medicine, humanitarian aid – but is not expected to handle payments for Iranian oil. The US opposes INSTEX, and it is said that few Europe-based multinational corporations were expected to renew business ties with Iran using INSTEX.
BIMCO PUBLISHES CYBER SECURITY CLAUSE
The UK Defence Club reported on 18th June that, as cyber crime is becoming an ever more prevalent risk for the shipping industry, the Baltic and International Maritime Council (BIMCO) has published a Cyber Security Clause for use in charterparties and other contracts. The clause has been drafted in general terms so that it can easily be adopted into any contract and also, for instance, in a chain of charterparties to ensure that the various parties’ obligations are back to back. The IMO has given shipowners and managers until 2021 to include cyber security management procedures in their Safety Management Systems, as defined in the International Safety Management (ISM) Code. Cyber security guidance has been issued by various key bodies including the IMO, BIMCO and Intertanko.
ANNUAL EU TERRORISM REPORT WARNS AL-QAEDA AND FAR-RIGHT ON THE RISE AS IS STUMBLES
Homeland Security Today on 27th June reported on Europol’s 2019 edition of its annual EU Terrorism Situation and Trend Report (TE-SAT). It says that the report is accepted as a benchmark in discussions about EU counter-terrorism policies and academic studies. TE-SAT underlines that terrorism still poses a real and present danger to the EU.
US MILITARY ASSISTANCE TO BURKINA FASO COUNTER TERRORISM COMPANY
On 1st July, the Security Assistance Monitor published an infographic about the the Counter Terrorism Company (CTC), which will support the US effort to improve Burkina Faso’s ability to defend against regional threats, establishing the country as a base for US counter-terrorism operations. In addition to aiding regional efforts, the CTC is responsible for countering and deterring terrorism within Burkina Faso, which has spiked at alarming rates in recent years. Burkina Faso holds a strategic position in West Africa and the Sahel region, abutting both Niger and Mali, where armed groups, including Al-Qaeda and Islamic State affiliates, have established a strong presence. The infographic highlights equipment provided to the CTC for FY2019, and the “train and equip package” includes small arms, vehicles, and night vision devices, totalling $7,490,000 in value.
US HOUSE OF REPRESENTATIVES FOREIGN AFFAIRS COMMITTEE ENDORSES NORD STREAM 2 SANCTIONS
On 1st July, the EU Sanctions Blog reported that the Committee had endorsed a Bill which would impose sanctions on Nord Stream 2, a pipeline currently in construction which will transport natural gas from Russia to Germany across the Baltic Sea. The article details some of the potential implications of the Bill, but points out that this is only the first legislative step.
EU COURT TELLS GERMAN COURT LTTE TERRORISM SANCTIONS LISTING WAS INVALID
On 1st July, the EU Sanctions Blog reported on an a case referred to the ECJ by a regional court in Germany, where an individual had been convicted of financing terrorism from 2007 to 2009 by collecting €70,000 of donations for the LTTE (aka Tamil Tigers). He had argued that the conviction was invalid because the designation of the LTTE at the time was invalid. The ECJ has concurred, saying that the EU had not taken into account the fundamental change of circumstances (a military defeat of the LTTE) in its statement of reasons for listing. The German court will now apply the ECJ’s ruling in the German trial.
UK PARLIAMENTARY COMMITTEE CALLS FOR EVIDENCE OF HARM CAUSED BY GAMBLING
On 1st July, the House of Commons Select Committee on the Social and Economic Impact of the Gambling Industry called for the submission from interested parties, asking such questions as – how effective is the Gambling Act 2005 in achieving its aims of preventing gambling from being a crime or disorder, ensuring that gambling is conducted in a fair and open way, and protecting children and other vulnerable person from being harmed or exploited by gambling?; does the Act need updating?; should gambling operators have a legal duty of care to their customers?; and what are the social and economic costs of gambling? Submissions are required by 6th September.
EUROJUST HELPS REVEAL FAKE ORGANIC FOOD FRAUD
On 1st July, a news release from Eurojust reported that in close co-operation with Eurojust, Italian and Serbian national authorities unravelled a transnational large-scale fraud in the production and trade of allegedly organic food and beverages from rotten apples. 9 people were arrested, illegal assets worth €6 million as well as 1,411 tonnes of adulterated product with an estimated value of almost €5 million were seized. 6 companies involved in the criminal activities were searched in the countries concerned.
NEW EU-WIDE SYSTEM TO RESOLVE TAX DISPUTES BETWEEN MEMBER STATES APPLIES FROM 1 JULY
A news release from the EU on 1st July reported that new EU rules come into force to ensure quicker and more effective resolution of tax disputes between Member States, saying that this makes life easier and offering much more tax certainty for businesses and individuals experiencing double taxation issues. Estimates show that 2,000 such disputes are currently pending in the EU, out of which around 900 are over 2 years old. A link is provided to the new EU Directive on tax dispute resolution mechanisms. It applies to complaints submitted from 1st July 2019 onward, relating to questions of dispute in matters of income or capital earned in a tax year commencing on or after 1st January 2018. The competent authorities can also agree to apply the Directive to any complaint submitted prior to that day or to earlier tax years.
COMPANY FINED £350,000 AFTER ISRAELI FORMER BOSS CHANGED NAME IN BID TO CONCEAL US FRAUD INDICTMENT
On 1st July, the Daily Mail reported that the LSE has fined “Internet of things” company, Telit Communications £350,000 after former boss Oozi Cats concealed that he was wanted for fraud in the US – after it emerged in 2017 that Cats, a 58-year-old Israeli businessman, also went by the name Uzi Katz. But the LSE agreed to waive the £350,000 fine after recognising that Cats, who is no longer employed by Telit, also misled all of his colleagues.
11 ARRESTED IN PSNI £16 MILLION CHINESE MONEY LAUNDERING PROBE
On 1st July, the Belfast Telegraph reported that 11 people have been arrested and around £16 million in cash has been laundered through bank accounts and out of the province since January 2018. Police say it believes that the majority of this money is derived from a range of criminal activity carried out by Chinese organised crime groups.
CAB SEIZES DUBLIN HOME OF COUPLE AFTER IT CLAIMED PROPERTY WAS ACQUIRED WITH PROCEEDS OF CRIME
On 1st July, the Irish Independent carried a report and video as Kenneth Carpenter and Elaine Byrne handed over the keys to their home following a High Court order issued in December.
HOW MEXICAN CARTEL LEADER FOUND SAFE HAVEN AS CATTLE RANCHER IN BOLIVIA
An article on OCCRP on 1st July reported that José González Valencia, a man of many names, is said to be a member of Cartel Jalisco Nueva Generación (CJNG), and also allegedly a member of the cartel’s finance and money-laundering group, Los Cuinis, named after a fast-breeding Mexican squirrel. However, in Bolivia, where he spent over 2 years evading justice, he was known as Jafett Arias Becerra, a respectable cattle rancher. This was despite a US reward of up to $5 million for information leading to his capture. Bolivia admits its fertile Santa Cruz region, known as “Bolivia’s barn,” is a popular hideout for drug traffickers. González Valencia flew in and out of Bolivia multiple times in 2016 and 2017, raising questions about how it was so easy for him to live comfortably as a wealthy cattleman when he was wanted by the US on charges of conspiracy to distribute large amounts of cocaine.
SAGA OF CORRUPTION IN RUSSIAN FUNERAL BUSINESS CONTINUES
On 1st July, OCCRP carried a report into the corruption and organised-crime laden expansion of a $412.5 million funeral business empire, revealing links between businessmen and high-ranking Russian officials. It refers to an article which tracks 2 groups of businessmen who used violence and links to influential political figures and organised crime to facilitate the expansion.
PAKISTAN EX-PRESIDENT ASIF ALI ZARDARI ARRESTED IN MONEY LAUNDERING CASE
Baker McKenzie on 1st July reported that Pakistan’s anti-corruption body had arrested jailed former president Asif Ali Zardari in a corruption case. He was already in the custody of the National Accountability Bureau (NAB) in a multi-million dollar money laundering case along with his sister.
LATEST DEVELOPMENTS IN BERMUDA ECONOMIC SUBSTANCE REGIME
On 1st July, an article from Appleby reported that outlines the latest developments, as the Economic Substance Amendment Act came into force on 28th June.
FACT SHEET ON US WEAPONS SALES TO HONDURAS
Lobby group Global Exchange has produced this short factsheet details legal weapons sales to the troubled country, also saying that nearly half of illegal guns in Honduras – or more than half, according to Honduran investigators – came from the US.
SOURCES AND SCOPE OF EUROPEAN UNION LAW
On 1st July, the EU Parliament produced an updated factsheet saying that the EU has legal personality and as such its own legal order which is separate from international law. Furthermore, EU law has direct or indirect effect on the laws of its Member States and becomes part of the legal system of each Member State. The European Union is in itself a source of law. The legal order is usually divided into primary legislation (the Treaties and general legal principles), secondary legislation (based on the Treaties) and supplementary law. It also looks at the role of the EU Parliament.
UK: DRAFT REGISTRATION OF THE OVERSEAS ENTITIES BILL — BACKGROUND AND KEY CONCERNS
A blog post from Corker Bining on 1st July provided key information on the Bill, and sets out the background to the Bill, how it will work in practice and the identified issues with it.
THE CURRENT STATUS OF ELECTRONIC SIGNATURES FOR REAL ESTATE TRANSACTIONS IN SCOTLAND, ENGLAND AND WALES
A useful summary of the current situation is contained in a briefing from Dentons on 1st July. It looks at the current legal framework for the use of electronic signatures and in particular the barriers to their adoption in real estate transactions in Scotland, England and Wales. It starts with EU law, which defines a Simple Electronic Signature, an Advanced Electronic Signature, and a Qualified Electronic Signature. It concludes that, although much has progressed legislatively to allow electronic signing to permeate the world of real estate transactions, we are not yet at a point where we can buy land or buildings “online”.