OTHER THINGS YOU MAY HAVE MISSED – JULY 3

3rd July 2019

A DEALMAKER’S GUIDE TO CFIUS

On 18th June, US law firm Kirkland & Ellis announced publication of this book which is set out in Q&A format and deals in detail with the Committee on Foreign Investment in the United States (CFIUS) process used to review the national security implications of foreign investments in US companies or operations.  Amongst other things it examines the CFIUS basics, including what types of transactions CFIUS reviews and what types of transactions CFIUS may not review.

https://www.kirkland.com/publications/book/2019/06/a-dealmakers-guide-to-cfius

LABORATORIES IN THE CLOUD

A fascinating article in the Bulletin of the Atomic Scientists on 2nd July reported on discussions at the Australia Group – meeting to discuss updates to their lists of restricted exports of materials and equipment that could potentially be misused to develop chemical and biological weapons – on the new group of experimental biology platforms known as “cloud labs”.  The first was Transcriptic, founded in 2012 and backed by Google Ventures and the founders behind Pay Pal, and which now employs 40 people and occupies a 22,000 square-foot facility in the heart of Silicon Valley.  A robotic biology lab to do all the time-consuming pipetting, running gels, transfecting cells, growing bacteria, amplifying DNA, sequencing required.  The article says that cloud labs may offer up endless possibilities for experimentation, and offer up the tools of genetic engineering to a broad array of people, but not all research will necessarily be for good purposes, and gives the example of potential experiments for one, or a few, point mutations that would confer resistance on a pathogen against therapeutically useful antibiotics.  Sophisticated AI and robotics provide a new avenue for misuse, the article says.  Discussions on cloud labs are at an early stage within the Australia Group and countries are still weighing potential policy options.  Aside from self-regulation, one policy option would be to introduce some form of export control – but this would pose significant challenges to export regulators as a large portion of the control measures would have to cover ill-defined “intangibles”.

https://thebulletin.org/2019/07/laboratories-in-the-cloud/

NORTH KOREA SANCTIONS-VIOLATING SHIPS TO BE RELEASED BY SOUTH KOREA

On 2nd July, UPI reported that South Korea has decided to release ships seized for North Korea sanctions violations – the government saying that it has received approval from the UN Security Council to release the Hong Kong-flagged Lighthouse Winmore and the South Korean P-Pioneer.  They were seized after being found to have been involved in illicit ship-to-ship fuel transfers, or transshipments, with North Korean vessels.  The owner of the Lighthouse Winmore, Taiwanese national Chen Shih-hsien, recently committed suicide after Taiwanese authorities froze his assets and sentenced him to prison.  The ships were released on the grounds the owners pledge to no longer engage in illicit transhipments.

https://www.upi.com/Top_News/World-News/2019/07/02/North-Korea-sanctions-violating-ships-to-be-released-in-the-South/7821562080292/

NEW JERSEY MAN SENTENCED FOR SMUGGLING SCORPIONS, MILLIPEDES, OTHER LIVE INSECTS FROM AFRICA

On 2nd July, True Jersey reported that in July 2015, a bunch of live scorpions and millipedes from Tanzania escaped from their package in a UPS truck.  At the time, Wlodzimie Lapkiewicz, 30, told a US postal inspector he ordered the scorpions, millipedes and mantis eggs for his personal use and authorities gave him a warning, but didn’t charge him with a crime.  However, a federal investigation found that he continued to import live insects and other invertebrates from other countries with the intent to sell them.  He has now been sentenced to 6 months home confinement and 4 years of probation after pleading guilty to smuggling wildlife.

https://www.nj.com/news/2019/07/nj-man-sentenced-for-smuggling-scorpions-millipedes-other-live-insects-from-africa-into-us.html

FRANCE RETURNS SMUGGLED ARTEFACTS BACK TO PAKISTAN

The Express Tribune on 2nd July reported that French authorities have handed over a large number of smuggled archaeological artefacts of Balochistan back to Pakistan.  The relics were smuggled from Pakistan, and seized by customs at the Paris airport in 2006 and 2007.

https://tribune.com.pk/story/2004755/1-france-returns-smuggled-artefacts-back-pakistan/

DUBAI DEVELOPMENT AUTHORITY – NEW “ULTIMATE BENEFICIAL OWNERSHIP” REQUIREMENTS

On 2nd July, Clyde & Co published a briefing on the requirements relating to disclosure of Ultimate Beneficial Ownership – i.e. an individual, who owns or controls 25% or more of a “Business Partner” in the DDA Free Zone, either directly or indirectly – in the DDA Free Zone, and which looks at the changes affecting companies operating in the DDA.

https://www.clydeco.com/insight/article/dubai-development-authority-new-ultimate-beneficial-ownership-requirements

HIGH COURT ORDERS RUSSIAN CLAIMANT TO PROVIDE SECURITY FOR COSTS DESPITE EVIDENCE OF ASSETS IN SWITZERLAND AND CYPRUS

On 1st July, Herbert Smith Freehills published an article saying that the High Court in London has granted an order for security for costs against a Russian claimant, on the basis that there was a real risk that any costs order against it would have to be enforced in Russia, where the court said there was a real risk of substantial obstacles to enforcement – even though there was evidence that the claimant also had assets in Switzerland and Cyprus, where there was no such risk.  The article says that the decision is of interest in illustrating the court’s approach to an application for security for costs against a claimant resident in a non-convention country (i.e. one that is not bound by the various regimes for mutual enforcement of English judgments, namely the recast Brussels Regulation or the Brussels, Lugano or Hague Conventions), but where there is evidence that the claimant has assets in a convention country.

https://hsfnotes.com/litigation/2019/07/01/high-court-orders-russian-claimant-to-provide-security-for-costs-despite-evidence-of-assets-in-switzerland-and-cyprus

WHITE PAPER ON EU WHISTLEBLOWER PROTECTION DIRECTIVE

On 2nd July, WhistleB published a white paper, saying that the Directive is perhaps the biggest event in the world of whistleblowing and set to have wide-reaching impact on both the public and private sectors.  It says that it is anticipated it will be approved by EU ministers in September, having been passed in April.  It will give greater protection to whistleblowers in the EU, and any organisation with over 50 employees or more and is based in the EU will need to comply with the Directive.

https://whistleb.com/blog-news/white-paper-eu-whistleblower-protection-directive/

ITALY: INSURANCE REGULATOR REQUIRES FROM PROVIDERS A STRUCTURED SET OF INFORMATION FOR THE SUPERVISION OF MONEY LAUNDERING AND TERRORISM FINANCING RISKS

On 27th June, DLA Piper published an article saying that on 19th June the Italian Institute for the Supervision of Insurance (IVASS) issued 2 Letters to the Market requiring life insurers operating in Italy to send a structured set of information for the supervision of money laundering and terrorism financing risks in 2018.

https://www.dlapiper.com/en/global/insights/publications/2019/06/anti-money-laundering-letters-to-the-market-from-ivass/

FRANCE MOVES TOWARD US MODEL BY ENDORSING CORPORATE-LED INVESTIGATIONS

On 3rd July, KYC 360 reported that French authorities are encouraging companies to conduct internal investigations when seeking to settle allegations of certain financial crimes.  Guidance explaining how such investigations can help companies secure negotiated settlements has been published.  French authorities now say corporations that discover potential violations should cooperate by conducting internal investigations and by sharing results with investigators if they want to be eligible for a settlement.

https://www.riskscreen.com/kyc360/news/france-moves-toward-u-s-model-by-endorsing-corporate-led-investigations/

GERMANY: IMPLEMENTATION OF 5TH MONEY LAUNDERING DIRECTIVE AND THE CRYPTO MARKET

A briefing from Bird & Bird on 2nd July reported that the German Ministry of Finance (BMF) has published a draft proposal to implement the 5th EU AML Directive.  It says that the BMF proposals by far exceed the EU requirements regarding the crypto sector, thus proposing (another) German special path, and takes an ultimately more comprehensive approach to regulate the crypto market.  The new regulations shall become effective as of 1st January 2020.

https://www.twobirds.com/en/news/articles/2019/germany/implementation-of-the-fifth-anti-money-laundering-directive

TAIWAN’S HUAWEI SUPPLIERS FEAR US BAN COULD RENDER THEM NON-VIABLE

HKTDC on 3rd July reported that, with the US-China trade war now zeroing in on individual mainland businesses, long-term Taiwan-based contributors to Huawei’s supply chain fear the blacklisting of the company could have serious repercussions on their balance sheets.

http://economists-pick-research.hktdc.com/business-news/article/Economists-Pick-International-Market-News/Taiwan-s-Huawei-Suppliers-Fear-US-Ban-Could-Render-Them-Non-Viable/imn/en/1/1X308LSH/1X0AHLRI.htm

CHINESE-AMERICAN GUILTY IN US OF EXPORTING MILITARY-GRADE SEMICONDUCTORS

The Korea Times on 3rd July reported a South China Morning Post article saying that a Chinese-American electrical engineer faces up to 219 years in prison after a federal jury found him guilty of illegally shipping semiconductors with military applications to China.  Shih Yi-chi, a 64-year-old part-time Los Angeles resident and former president of a Chinese semiconductor company, and a naturalised US citizen, was found guilty.

http://www.koreatimes.co.kr/www/world/2019/07/672_271678.html

ALGERIA CRACKS DOWN ON CORRUPTION

Prensa Latina on 2nd July reported that the Algerian Justice Minister has expressed the State strong crackdown on corruption and assured that stolen public funds will be restored by judicial means, following the resignation of then President Abdelaziz Bouteflika in early April.

https://www.plenglish.com/index.php?o=rn&id=43990&SEO=algeria-cracks-down-on-corruption

AFRICAN EX-MILITARY LEADERS THAT RUN FOR OFFICE IN POST-CIVIL WAR SOCIETIES

ETH Zurich published an article on 3rd July saying that in many African countries where civil war raged not so long ago, former warlords are running for office in elections. It assesses the effect that these warlord democrats have on democratisation and security.  This has led to so-called warlord democrats (WD) – the former military and political leaders of armed groups, who now take part in national elections.  This having been observed in observed in countries ranging from the Democratic Republic of Congo (DRC) (Jean-Pierre Bemba), Rwanda (Paul Kagame) and Liberia (Prince Johnson), to Sierra Leone (Julius Maada Bio), South Sudan (Salva Kiir) and Mozambique (Afonso Dhlakama).  The article asks what effect does the electoral participation of WD have on post-civil war security?  A case study looks at the situation in Liberia.

Dem-Warlords

https://isnblog.ethz.ch/politics/yesterday-warlord-today-presidential-candidate-ex-military-leaders-running-for-office-in-post-civil-war-societies

FREE PORTS WON’T HELP BREXIT BRITAIN’S ECONOMY

An article from Port Strategy on 27th February about research by the University of Sussex-based UK Trade Policy Observatory shows that the creation of free ports with relaxed customs rules and duties would have little impact on economic growth in a post-Brexit UK.  It notes that UK free zones were in operation from 1984 – when areas of Birmingham, Belfast, Cardiff, Liverpool, Prestwick and Southampton were designated to become the UK’s first free zones (the Isle of Man also had one) – until July 2012, when the UK stopped renewing the licenses for free zones. Prior to 2012, there were 5 free zones in the UK – located in Liverpool, Prestwick, Sheerness, Southampton and Tilbury – which were classed as ‘control Type II free zones’ – the Isle of Man continued, and continues, to have a free zone, or at least the potential to have one, if certain criteria were met to comply with the most recent EU requirements.

https://www.portstrategy.com/news101/world/europe/free-ports-wont-help-brexit-britains-economy

DOUBLE TAXATION DISPUTE RESOLUTION (EU) REGULATIONS – HMRC CONSULTATION

On 2nd July, the Chartered Institute of Taxation said that HMRC has published a consultation paper on draft regulations for the implementation of Council Directive (EU) 2017/1852 on tax dispute resolution mechanisms.  The regulations would support an improved mechanism to tackle double taxation within the EU by introducing a more robust system of dispute resolution involving Member States.  The Directive lays down rules on a mechanism to resolve disputes between Member States when those disputes arise from the interpretation and application of agreements and conventions that provide for the elimination of double taxation of income and, where applicable, capital.  It applies to any complaint submitted from 1st July 2019 onward relating to questions of dispute relating to income or capital earned in a tax year commencing on or after 1st January 2018, and Member States (which still included, and still includes – so far – the UK) were required to bring into force the laws, regulations and administrative provisions necessary to comply with this Directive by 30th June.

https://www.tax.org.uk/policy-technical/open-consultations/double-taxation-dispute-resolution-eu-regulations-hmrc

GAMING ACCOUNTS FOR 13.2% OF MALTA ECONOMIC ACTIVITY

On 3rd July, Calvin Ayre reported that Malta-licensed gambling operators increased their share of the local economy in 2018, according to the latest annual report by the Malta Gaming Authority.  The gaming sector accounted for 13.2% of Malta’s overall economic activity last year, the fourth-highest producing sector of its economy.

https://calvinayre.com/2019/07/02/business/malta-gaming-13-percent-economic-activity/

UK GAMBLING COMMISSION’S ENFORCEMENT REPORT

On 2nd July, CMS Law Olswang published a briefing on the report which provides an overview of the enforcement work it has undertaken throughout the preceding financial year and details future lessons for operators.  It says that the Commission hopes that the Report will be used as a support tool for operators in order to guide compliance with the Gambling Act 2005 and the Licence Conditions and Codes of Practice.

http://www.cms-lawnow.com/ealerts/2019/07/gambling-commissions-enforcement-report

PIGS

https://www.aphis.usda.gov/aphis/ourfocus/animalhealth/animal-disease-information/swine-disease-information/african-swine-fever/african-swine-fever

LONDON: RAIDS PLANNED ON MONEY SERVICE BUSINESSES THAT ‘HELP LAUNDER DRUG PROFITS’

Sky News on 2nd July reported that the Metropolitan Police plans to raid 12 London money service businesses which are suspected of laundering cash for organised crime gangs, during a week-long crackdown in the capital targeting the illegal practice.  Another 39 businesses are set to be visited by officials to check they are complying with the law.  The police claim a “significant” number of the businesses accept cash from drug dealers who take holdalls stuffed with notes there before the money is then flown abroad without leaving a paper trail.

https://news.sky.com/story/raids-on-money-service-businesses-that-help-launder-drug-profits-11755044

UK: POLICE OFFICER WHO LAUNDERED MONEY FOR MOTHER DISMISSED WITHOUT NOTICE

Police Professional on 2nd July reported that an officer with the Metropolitan Police Service who allowed his ‘shopaholic’ mother to use his bank account to launder money stolen from her employer has been dismissed without notice.

https://www.policeprofessional.com/news/pc-who-laundered-money-for-mother-dismissed-without-notice/

PIRACY AND ARMED ROBBERY AGAINST SHIPS IN ASIA

On 3rd July, Hellenic Shipping News published an article about 2 incidents in Malaysia and Indonesia in June/July.

https://www.hellenicshippingnews.com/piracy-and-armed-robbery-against-ships-in-asia-2/

SINGAPORE: 4 SUSPECTS ARRESTED FOR SYNDICATED PAYMENT CARD FRAUD

The Strait Times on 3rd July reported that 4 men had been arrested for suspected syndicated payment card fraud involving a payment card system called EZ-Reload, that automatically tops up a user’s registered ez-link card when it has insufficient value.

https://www.straitstimes.com/singapore/4-suspects-arrested-for-syndicated-payment-card-fraud

MAN ARRESTED AND FAKE PASSPORTS SEIZED IN DUBLIN AS PART OF EUROPEAN CYBER FRAUD INVESTIGATION

The Journal reported on 3rd July that a man had been arrested by by gardaí as part of a Europol investigation into cyber fraud and bogus online sales.  Investigators believe equipment seized during the investigation was used by an organised crime group involved in cyber fraud, including bogus online sales and accommodation fraud, where people throughout the EU were duped into buying goods online but did not receive them.  Gardaí also believe the that more than €1.5 million used in the fraud was subsequently laundered through bank accounts set up in Ireland under fake names.

https://www.thejournal.ie/man-arrested-eu-cyber-fraud-probe-4708427-Jul2019

JAPAN MUST URGENTLY ADDRESS LONG-STANDING CONCERNS OVER FOREIGN BRIBERY ENFORCEMENT

A news release from the OECD on 3rd July said that Japan must step up enforcement of its foreign bribery laws and strengthen the capacities of its law enforcement agencies to proactively detect, investigate and prosecute the foreign bribery offence, according to a new report by the OECD Working Group on Bribery.  Japan continues to demonstrate a particularly low level of anti-bribery enforcement.  Since 1999, it has only prosecuted 5 foreign bribery cases and sanctioned 12 individuals and 2 companies.  Japan’s enforcement rate is not commensurate with the size and export-oriented nature of its economy or the high-risk regions and sectors in which its companies operate.

http://www.oecd.org/newsroom/japan-must-urgently-address-long-standing-concerns-over-foreign-bribery-enforcement.htm

BULGARIA’S ANTI-CORRUPTION COMMISSION TERMINATES PROCEEDINGS AGAINST EU COMMISSIONER MARIYA GABRIEL

Novinite on 3rd July reported that the Commission for Countering Corruption and Forfeiture of Illegally Acquired Property decided on 26th June to terminate the proceedings against EU Commissioner Mariya Gabriel over a property transaction.

https://www.novinite.com/articles/198273/Bulgaria%27s+Anti-corruption+Commission+Terminates+Proceedings+Against+EU+Commissioner+Mariya+Gabriel

UK: COURTS AND TRIBUNALS (ONLINE PROCEDURE) BILL

On 3rd July, the MoJ published updated information about this Bill which will create a committee to provide rules of court for online proceedings in civil and family Courts and tribunals.  It will establish a new Online Procedure Rule Committee (OPRC) to apply to civil, family and tribunal proceedings. The role of the Committee will be to provide new, simple rules to support users of online courts services.

https://www.gov.uk/government/publications/courts-and-tribunals-online-procedure-bill

US: IMMIGRATION ENFORCEMENT VISITS AND RAIDS: STANDARD OPERATING PROCEDURES

An article from Davis Wright Tremaine LLP on 2nd July which says that, in the US, immigration site visits are on the rise and can occur without notice.  The most common visits involve paperwork audits.  In some cases, certain employees are targeted.  The article outlines the basic rules for the 3 agencies that may be involved.

https://www.dwt.com/blogs/employment-labor-and-benefits/2019/07/immigration-enforcement-visits-or-raids-standard

REPORT SHINES LIGHT ON UNADDRESSED CORRUPTION RISKS IN UK

On 3rd July, OCCRP reported on a Fraud Advisory Panel paper which, it says, leads with a simple question: does the United Kingdom have a corruption problem?  The paper notes that that while the UK has dedicated infrastructures for policing foreign bribery and “fraud” generally, it lacks a clear, well-funded mechanism to investigate domestic corruption.   It also notes that the NCA anti-corruption unit is funded by the Department for International Development (DFID), rather than the Home Office.  The paper also draws attention to the lack of research and data on domestic graft.

https://www.occrp.org/en/27-ccwatch/cc-watch-briefs/10114-report-shines-light-on-unaddressed-corruption-risks-in-uk

MONTANA MAN ADMITS TO $43 MILLION IN CROSS-BORDER FRAUD

Another article from OCCRP on 3rd July is about Todd Casper, 43, who defrauded a Canadian financial institution of US$43 million by convincing it to lend him the money after lying about his business.  He took the money from a company media identified as Third Eye Capital Corporation and attempted to con another 9 institutions in a scheme that included telling the companies about his daughters’ fake cancer diagnosis.  For over 3 years he posed as a legitimate businessman seeking investments in oil and chemical tankers.

https://www.occrp.org/en/27-ccwatch/cc-watch-briefs/10116-montana-man-admits-to-43-million-in-cross-border-fraud

ECUADORIAN ARMY AND POLICE DISPATCHED TO COMBAT ILLEGAL MINING

On 3rd July, OCCRP reported that the Ecuadorian government has deployed soldiers and police to protect locals and precious resources from organised crime groups that have established themselves in the northern part of the country where illegal mining is flourishing.

https://www.occrp.org/en/27-ccwatch/cc-watch-briefs/10115-ecuadorian-army-and-police-dispatched-to-combat-illegal-mining

2 ECUADOR CITIZENS IN FLORIDA INDICTED FOR FCPA CONSPIRACY AND MONEY LAUNDERING IN AN EXPANDING PROSECUTION INVOLVING BRIBERY AT PETROECUADOR

On 2nd July, a blog post on the FCPA Blog reported that 2 Ecuador citizens living in Florida had been indicted in an expanding prosecution involving bribery at Ecuador’s state oil company.  Armengol Alfonso Cevallos Diaz and Jose Melquiades Cisneros Alarcon were charged with conspiracy to violate the FCPA, conspiracy to commit money laundering, and 9 counts of money laundering, in a case involving more than $4 million in bribes.  So far, it says, at least 4 other defendants have pleaded guilty in the case.

http://www.fcpablog.com/blog/2019/7/2/two-more-charged-with-fcpa-conspiracy-in-petroecuador-bribe.html

EX-GENERAL COUNSEL AT FAILED NEW ORLEANS BANK’S PLEADS GUILTY TO BANK FRAUD CONSPIRACY

On 2nd July, Corporate Counsel from law.com reported that Gregory St. Angelo, who was formerly at First NBC Bank from its inception in 2006 to its collapse in 2017, faces a maximum of 30 years in prison and $1 million fine when he is scheduled to be sentenced on a charge of conspiracy to commit bank fraud in Louisiana in October.

https://www.law.com/corpcounsel/2019/07/02/failed-new-orleans-banks-ex-general-counsel-pleads-guilty-to-bank-fraud-conspiracy

ANOTHER SWISS BANK SETTLES GERMAN TAX EVASION PROBE

Swissinfo on 3rd July reported that Schaffhausen Cantonal Bank has settled a tax evasion dispute with the German state of North Rhine-Westphalia with a €3.9 million payment.  The dispute centred around accounts held for German citizens who failed to declare taxes between 2004 and 2009.  In 2015 the bank also agreed to pay the US $1.6 million to clear up a similar investigation, and since 2009 the bank says it has adopted a “white money” strategy of demanding that foreign clients clear up their tax affairs or move their money elsewhere.

https://www.swissinfo.ch/eng/business/financial-penalty_another-swiss-bank-settles-german-tax-evasion-probe/45074672

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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