11th July 2019
NEW CHEMICAL WEAPONS TEAM TO LAUNCH FIRST SYRIA INVESTIGATIONS
On 10th July, Reuters reported that a new team established by the international chemical weapons watchdog, OPCW, to attribute blame for the use of banned munitions in Syria will investigate 9 alleged attacks during the country’s civil war. Last June, the Investigation and Identification Team (IIT) was established by the member states during a special session, and it has now identified the locations of its first investigations to be conducted in the coming 3 years.
DECIPHERING THE EU’S NEW RULES ON THE IMPORT OF CULTURAL GOODS
On 10th July, Apollo, described as the international art magazine, carried an article on the Regulation on the Import of Cultural Goods that was only adopted by the European Parliament on 12th March. This is said This was to be too soon for the UK art market, which had hoped the regulation would not be adopted until after Brexit, furnishing the UK with a narrow escape. Some concessions and exemptions have been incorporated, such as exemptions for temporary import for art fairs, exhibitions, restoration, study or the safekeeping of objects with the intention to return, for cultural goods created or discovered in the EU, and the restrictions for ancient manuscripts have been watered down considerably. The article suggests that, as the Regulation does not apply to EU objects, it will most likely have an impact on the movement of ancient art from the eastern and southern Mediterranean basin, Iran, India, South and Central America, Asian and tribal art. It creates 2 tiers of object types – those most at risk (archaeological finds and/or items removed from monuments and sites), being more than 250 years old; and other cultural objects exceeding 200 years in age with a minimum value of €18,000. The article explains the licensing system for both types of object. The Regulation will apply automatically in all EU Member States, and it is anticipated that EU legislation in force on Brexit day will be transposed into UK law; but this is far from definite. However, the article notes that even if the regulation is not adopted in the UK, the UK art trade will be significantly affected, given the high volume of exports to the EU. On the other hand, there is a long transition period for implementation, and the Regulation should not take real effect until 2025.
INSIDE THE HUNT FOR IRAQ’S LOOTED TREASURES
On 10th July, the AINA news service reproduced an article from The Independent about the search for ancient relics that were originally discovered in Iraq, and are now scattered across the world. The country’s borders contain what is perhaps the most important archaeological region in the world. Mesopotamia, the land between the Tigris and Euphrates rivers, is where civilisation was born — where the first cities were built, the first words were written and the first empires rose and fell. The article says that war and instability made for easy pickings for looters. European archaeologists routinely transported their finds back to their home countries during the early part of the 20th Century. Illegal digging was common under former president Saddam Hussein, especially after the first Gulf War. But it was only after the US-led invasion in 2003, and the chaos it brought, that the floodgates opened. It says that only around half of the items looted in 2003 have been recovered – many with the help of foreign governments and police, but different countries inevitably have different laws for the acquisition of archaeological artefacts and so there are ways for collectors to legally obtain items from ancient Mesopotamia, which makes it difficult to get them back.
US: NO CLEAR ANSWER FOR WHAT’S NEXT WITH HUAWEI EXPORT CONTROLS
On 10th July, American Shipper published an article following comments by the US Commerce Secretary Commerce Secretary that the Bureau of Industry and Security will issue export licences “where there is no threat to US national security”, but that “Huawei itself remains on the Entity List, and the announcement does not change the scope of items requiring licenses from the Commerce Department, nor the presumption of denial”. A current temporary licence that lasts until August 19th allows US exporters meeting certain regulatory conditions to continue conducting business with Huawei Technologies and its 68 overseas affiliates. After the meeting between Presidents Trump and Xi in June, exporters are still left with unanswered questions regarding when and how BIS will implement the rules and procedures for lifting the US export sanctions against Huawei. The Commerce Secretary hinted that the Commerce Department will take a similar path with Huawei as it did with ZTE.
LUXEMBOURG READIES FOR FATF AML REVIEW
The Luxembourg Times on 11th July reported that Luxembourg is set to undergo an AML/CFT review by FATF in a bid to improve its last rating. In 2010 it gave Luxembourg an average score of 3 in its assessment, on a scale of 1 to 4. Out of the FATF 40 Recommendations, Luxembourg was fully compliant with only 1 and largely compliant with another 9. It found non-compliance in 7 cases, while Luxembourg was partially compliant on 23 of the Recommendations.
WHERE ARE AFRICA’S BILLIONS?
On 11th July, a report from Transparency International accuses foreign companies and financial centres aiding corruption in Africa. A new survey finds that more than half of all African citizens surveyed think corruption is getting worse in their country and that their government is doing a poor job in tackling corruption – despite countries and the African Union declaring anti-corruption drives. The article says that national governments aren’t the only ones failing African citizens in the fight against corruption – foreign actors play a significant role in fuelling and perpetuating corruption in Africa, chipping away at the region’s sustainable development. Bribery occurs not only inside African countries – far too often, globally trading companies also resort to bribery to receive deals with public officials and governments. Another recent report found that only 11 major exporting countries – accounting for about a third of world exports – have active or moderate law enforcement against companies bribing abroad, including in Africa, and the rest fail to investigate and adequately sanction companies that pay bribes overseas. It is estimated that African countries are losing at least $50 billion annually to illicit financial flows, and corruption scandals have also shed light on the critical role of secret jurisdictions in enabling corruption and criminal activity, which drains African nations of their assets.
AUSTRALIA: 3 ARRESTED AS PART OF $80 MILLION MONEY LAUNDERING SYNDICATE
On 11th July, Mirage News reported that 3 people have been arrested following investigations into an alleged $80 million money laundering syndicate operating in south-west Sydney involving the large-scale supply of prohibited drugs and related organised crime offences.
AUSTRIA: DOES A SAILING BOAT CONSTITUTE A “PERMANENT ESTABLISHMENT”?
In its Tax Newsletter for Austria 2/2019, Wolf Theiss poses this question, saying that the Austrian Ministry of Finance dealt with the question whether services performed on a sailing boat located in Croatia may constitute a permanent establishment in the meaning of the applicable double tax treaty. Normally, a sailing boat does not establish a permanent establishment – though there are circumstances and factors that could permit it to be treated as such.
SOCIETE GENERALE SUED FOR $792 MILLION BY HEIRS OF CUBAN BANK SEIZED BY CASTRO
KYC 360 on 11th July reported that the family of the former owners of a Cuban bank (Banco Nuñez) seized by Fidel Castro’s government in 1960 have sued Societe Generale for approximately $792 million using the recently-activated provisions of the US Helms-Burton Act, saying the French bank owes damages for circumventing US sanctions against Cuba.
INDIA: PRIME MINISTER’S OFFICE CALLS FOR FREEZING OF SHELL FIRMS’ BANK ACCOUNTS
KYC 360 on 11th July reported that the PMO has called for expeditious freezing of bank accounts belonging to shell companies after some of them were found to be active, after around 350,000 inactive companies were struck off the official records since 2016-17.
RAIDS IN PERU TARGET FORMER FIRST LADY AND LAW FIRMS LINKED TO ODEBRECHT PIPELINE
KYC 360 on 11th July reported that prosecutors in Peru have raided the home of former first lady Nadine Heredia in a sweeping operation linked to alleged corruption connected to a massive gas pipeline constructed by the disgraced multinational Odebrecht. Also raided were the homes of 2 former ministers of energy and 3 prominent Peruvian law firms.
UK: CHANGES TO THE HORSERACE BETTING LEVY
On 10th July, the House of Commons published a briefing paper on changes to the Levy. It is collected from the gross profit of betting on British horseracing., and the money raised from the Levy is applied for one or more of the following purposes:
- supporting breeds of horses;
- the advancement or encouragement of veterinary science and education; and
- the improvement of horseracing.
The Levy raised £95 million in 2017/18. Until April 2017, the Levy did not extend to overseas betting operators. Now the Government wants to make changes to the Levy to “reduce financial and administrative burdens on the betting and horseracing industries”.
PODCAST: THE GORBALS VAMPIRE AND HOW THE UK BANNED US HORROR COMICS
A wonderful, enlightening podcast from BBC Radio Scotland. Dating from 2010, writer Louise Welsh investigates how a comic book vampire panic brought horror to Glasgow in 1954, with lasting effects. It resulted in a Daily Mail-like moral panic, a 10-hour debate in the House of Commons, and an import ban on horror comics that continued into the 21st Century. The Children and Young Persons (Harmful Publications) Act 1955 specifically banned the sale of magazines and comics portraying “incidents of a repulsive or horrible nature” to minors.
UK: CLAIMS COMPANY HEAD JAILED FOR ROLE IN FRAUD
The Insurance Times on 11th July reported on the case of Haroon Karim, jailed for his role in fraudulent personal injury claims, as head of a claims handling company, in which he was assisted by assisted by a solicitor.
US SAYS SEIZED MSC VESSEL MAY NOT BE RETURNED
On 11th July, Lloyds Loading List reported that vessel at the centre of one of the largest drugs seizures in US history could be taken by the authorities permanently. The vessel was detained in Philadelphia after US Customs and Border Protection officers mounted a raid that discovered 18 tonnes of cocaine with a street value of $1.3 billion on board, arresting 6 crew. MSC has not been accused of any wrongdoing.
US HAS ADDED GABON TO THE LIST OF COUNTRIES ELIGIBLE FOR TRADE IN ROUGH DIAMONDS
On 11th July, Sandler Travis & Rosenberg reported that the State Department has added Gabon to the list of countries eligible for trade in rough diamonds under the Clean Diamond Trade Act of 2003. There are currently 57 countries and political entities on this list.
OECD VERY CONCERNED THAT ACTIVE BRIBERY IS NO LONGER A FELONY IN GREECE
A news release from the OECD on 10th July says that the OECD Working Group on Bribery has serious concerns that recent steps taken by Greece may leave the country in breach of the OECD’s Anti-Bribery Convention, after the main active bribery offence was converted from felony to a misdemeanour, which is a less serious offence. For a second time the Working Group has decided to undertake a supplementary examination of Greece. In 2012, Greece failed to promptly investigate a significant foreign bribery case and to provide timely information on its anti-bribery efforts.
VAT ASSESSMENTS: MEANING OF ‘DELIBERATE’
On 20th June, Out-Law published a briefing about the first Tribunal case where the possible application of the Court of Appeal’s analysis of ‘deliberate’ in Tooth could apply to VAT assessments and penalties. The case involved an assessment to recover overpaid VAT and issued a penalty on the basis that the taxpayer’s behaviour had been ‘deliberate and concealed’, and who had made claims to recover input tax but had destroyed all relevant documents relating to his claims. A “deliberate” action could result in an extended assessment time limit of 20 years. It was noted that the judgment in Tooth was not binding on the Tribunal, both because it related to different statutory provisions and because the comments made in respect of the meaning of ‘deliberate’ were made in passing and did not form a necessary part (ratio decidendi) of the Court’s decision. The Tribunal nevertheless found that the same analysis could be applied when considering whether a VAT assessment had been validly issued within the relevant time limits, but that the Tooth analysis of ‘deliberate’ was too wide for penalty purposes and that ‘deliberate’ cannot extend to purely mechanical errors in circumstances where the level of the penalty is based on the taxpayer’s behaviour – and HMRC would have to prove intent to deceive on the part of the taxpayer.
See also –
TRUMP’S MINI-TRADE WAR WITH INDIA
An article from the Peterson Institute for International Economics on 8th July reflects on the past problematical relationship between the US and India, and saying that President Trump, as he has on most trade issues, is seeking to punish India with tariffs. Since the beginning of 2018, his administration has increased duties on 14% of India’s exports to the US. India has recently retaliated by slapping new tariffs on about 6% of US exports to India, including $600 million of almonds from California; drawing parallels with the US-China trade relationship. The article says that India followed the lead of many countries by choosing retaliation as a response to the Trump administration, but the move is legally questionable under WTO rules. Trump’s tariffs justified as a “national security” exemption are already being disputed at the WTO in ongoing litigation, including by India.
ISLE OF MAN: IMMIGRATION RECOGNITION OF UK VISAS POLICY
A Supplementary Order Paper for the last sitting in the current session of the Parliament of the Isle of Man includes this policy document. It sets out all of the UK-issued visas that will be recognised by the Isle of Man Immigration Service. A migrant holding one of the UK-issued visas specified in this Policy will be able to use it during their residence in the Isle of Man, and will not be required to obtain a visa issued by the Isle of Man Immigration Service.
FORMER FRENCH PRESIDENT HOLLANDE QUESTIONED BY POLICE OVER BRAZIL’S FIGHTER JET PURCHASE PROBE
Reuters on 9th July reported that former French President Francois Hollande has spoken to police as a witness in Brazil’s corruption probe into the purchase of Gripen fighters. Brazilian prosecutors are investigating whether former Brazilian President Luiz Inacio Lula da Silva influenced the decision to select the Swedish Gripen over France’s Rafale.
US: ICE USED FACIAL RECOGNITION TECHNOLOGY ON STATE DRIVER LICENCE PHOTOS CREATING A DE FACTO CRIMINAL DATABASE
Government Executive on 10th July reported that Immigration and Customs Enforcement (ICE) agents have used facial recognition technology on state driver licence photos, turning a public database into a de facto criminal database, according to a report from Georgetown Law’s Center on Privacy and Technology, with the intention of using the technology to scan drivers’ photos and match them against criminal and residency databases without their knowledge. 3 years ago, the Center revealed that nearly half of all US adults are already in the FBI’s facial recognition database, which is largely sourced from DMV photos.
NORTH KOREAN COAL TRANS-SHIPPER VESSEL RETURNS TO SOUTH KOREA
NK Pro reported on 10th July that the Liberia-flagged Great Roc, a North Korean coal trans-shipper returned to South Korea’s shores in early July, its second visit to the South in 2 months, the NK Pro ship tracker shows. The ship moved North Korean coal several times in 2017, according to a 2018 report from the UN Panel of Experts (PoE).
CHINA WORRIED ABOUT MONEY OUTFLOWS VIA GAMBLING
On 10th July, the Wall Street Journal reported that capital is said to be flowing out of China via casinos in neighbouring countries. It says that an article in Chinese state media said Suncity, Macau’s largest junket operator, facilitated capital outflows by running an online gambling platform in the Philippines and Cambodia that targets gamblers in China. Suncity denied the accusations and said it doesn’t have any online gambling operations. Junket operators, attracting high-roller gamblers, are an integral part of Macau casinos. The newspaper suggests might be about to clamp down on the use of gambling to avoid capital movement controls. Macau is the only place in China where casinos are legal, and the Chinese government has in the past restricted capital flows into the semi-autonomous city, which uses the Macau pataca rather than the Chinese renminbi. However, the newspaper asserts, cash leaks via casinos in neighbouring countries could be harder to control or trace.
MUMBAI THE FIRST PORT IN INDIA TARGETED IN PROGRAMME TO TACKLE CORRUPTION IN PORTS
On 11th July, Loadstar reported that the Maritime Anti-Corruption Network (MACN) and the Indian government have linked up to tackle corruption in the country’s port sector to help India’s ports reduce corruption, with a pilot scheme in the Mumbai gateway running until October. The intention is for the port integrity campaign to be expanded to other Indian gateways once the pilot is completed.
GLOBAL CORRUPTION BAROMETER: AFRICA 2019
Transparency International has released the 10th edition of the Global Corruption Barometer (GCB) – Africa, which reveals that while most people in Africa feel corruption increased in their country, but a majority also feel optimistic that they, as citizens, can make a difference in the fight against corruption. An introductory video is included. More than half of all citizens surveyed in 35 African countries think corruption is getting worse in their country. 59% of people think their government is doing badly at tackling corruption.
ISLE OF MAN CONFIRMS AMENDMENTS TO 4 INDIVIDUALS UNDER VENEZUELA SANCTIONS
On 11th July, a news release from the Isle of Man advised of amendment of the details for the entries for 4 individuals on the Venezuelan sanctions list.
PHILIPPINES: DUTERTE TO FIRE 64 CUSTOMS OFFICIALS FOR “CORRUPTION”
In its 12th July edition, the Manila Times reported that President Rodrigo Duterte has escalated his threat against officials and employees of the Bureau of Customs (BoC), this time telling them to either resign or face charges over allegations of corruption. In a speech, Duterte said he would fire 64 Customs officials and employees.
RUSSIA: EX-MINISTER ABYZOV’S PERSONAL PROPERTY WORTH $327.6 MILLION ARRESTED, SAYS LAWYER
TASS on 11th July reported that Moscow courts have arrested the property of ex-Minister of Open Government, Mikhail Abyzov, who is accused of fraud of $327.6 million, his lawyer said.
FBI ARRESTS TOP PUERTO RICO OFFICIALS FOR CORRUPTION
OCCRP on 11th July reported that the FBI had arrested Julia Keleher, Puerto Rico’s former Secretary of Education and Health Insurance Administration head, as part of an investigation into the allocation of government contracts. She and Ángela Ávila-Marrero, who was part of the health insurance agency until her departure in June, allegedly handed out out over $15 million in contracts to close associates.
HMRC MONEY LAUNDERING GUIDANCE FOR ACCOUNTANCY SERVICE PROVIDERS UPDATED
Accountancy Daily on 11th July reported that the guidance has been updated with guidance about money laundering regulations for payroll service providers to a third party.
EU CONSIDERS ADDING SAUDI ARABIA TO MONEY LAUNDERING GREY LIST
On 11th July, Reuters reported that the EU is preparing an overhaul of its listing of countries that pose money-laundering risks, an EU confidential document shows, a review that could allow Saudi Arabia to be moved to a new grey list after having been briefly blacklisted. Instead of directly blacklisting those with shortfalls, a new process would be based on a “staged approach” under which risk countries would need to commit to changing their rules and practices by set deadlines.
UK FINANCE BILL: MISUSING THE INSOLVENCY OF COMPANIES
On 11th July, HM Treasury published draft clauses for the next Finance Bill, which includes a measure which tackles the small minority of taxpayers who unfairly seek to reduce their tax bill by misusing the insolvency of companies. It sets out the conditions that must be met so an authorised HMRC officer may issue a ‘joint liability notice’ to an individual.
UK FINANCE BILL: HMRC TO BECOME A SECONDARY PREFERENTIAL CREDITOR FOR CERTAIN TAX DEBTS
On 11th July, HM Treasury published draft clauses for the next Finance Bill, which includes a measure introduces changes to the insolvency legislation from 6th April 2020. It would have application in the recovery of VAT and certain other debts owed to HMRC in insolvency proceedings. In the UK, preferential debts are paid after fixed charges and the expenses of the insolvency but before the holders of floating charges and all other unsecured creditors
INTERPOL AND UN PUBLISH JOINT HANDBOOK FOR ONLINE COUNTER-TERRORISM INVESTIGATIONS
On 11th July, an Interpol news release advised that INTERPOL and the United Nations Counter-Terrorism Centre (UNCCT) have jointly produced a handbook to help investigators collect, analyse and share information found online, particularly on social media platforms. The news release says that, given the immediacy and global reach of online terrorist activities, it is critical for law enforcement officers to understand how best to use the Internet to generate online investigative leads and collect and preserve electronic records – often across international borders – in order to contribute to successful prosecutions. Using the Internet and Social Media for Counter-Terrorism Investigations shares good practices in the following areas as well as offering a comprehensive list of practical online tools. Law enforcement officers should contact the INTERPOL National Central Bureau in their country. The handbook forms part of a wider project on preventing and combating the FTF phenomenon in the Middle East and North Africa, SE Asia and South Asia regions and it complements a series of training workshops.
BRAZIL: PRISON GANG LAUNDERED ESTIMATED $15 MILLION OF DRUG MONEY THROUGH ACCOUNTS OPENED BY RELATIVES OF JAILED MEMBERS
Insight Crime on 11th July carried an article saying that Brazilian prison gang, the PCC (First Capital Command or Primeiro Comando da Capital) has laundered an estimated $15 million of drug money through accounts opened by relatives of jailed members. the scheme worked by bribing visitors of detainees to allow the deposit and transfer PCC money through their bank accounts – mostly wives and girlfriends of newer gang members, they were offered assistance with transport, rent and medical expenses in exchange for their collaboration. The prison gang, formed in the early 1990s, first entered the drug trade by co-ordinating trafficking inside Brazil’s jails.
FCA: MAN CONVICTED FOR CONTEMPT OF COURT OVER BREACH OF RESTRAINT ORDER
A release on Mondo Visione on 11th July said that it could now be reported (as court reporting restrictions were lifted) that Richard Baldwin was convicted of dealing in £1.5 million criminal property between October 2007 and November 2008. The property represented the proceeds of a conspiracy to insider deal and Baldwin used offshore companies, bank accounts and false invoices to affect his money laundering. FCA also brought contempt of court proceedings against him in relation to the breach of a restraint order made in June 2011. The restraint order prevented him from in any way disposing of, dealing with or diminishing the value of any of his assets within or outside of England & Wales. He admitted his contempt on 13th November 2015. Baldwin was tried in his absence because during the proceedings he absconded from justice, and an arrest warrant along with a European Arrest Warrant were issued for his arrest for him to be brought before the Court for sentencing. He remains at large.
FATF RECOMMENDATIONS FOR THE CRYPTOCURRENCY INDUSTRY: SUMMARY AND IMPLICATIONS
On 11th July, Dentons published a briefing on FATF Guidance issued on 21st June which impose AML/CFT rules on activities related to Virtual Assets (VA), and Virtual Asset Service Providers (VASP). The briefing summarises the content of the Guidance, and comments on its implications, from the perspective of Canadian businesses.
EU COURT ANNULS ASSET FREEZES ON YANUKOVYCH, SON AND 5 OTHERS – BUT RESTRICTIONS REMAIN IN PLACE
On 11th July, Rferl reported that the EU General Court annulled asset freezes imposed on former Ukrainian President Viktor Yanukovych, his son Oleksandr, and 5 other associates, ruling on the original 2014 decision and subsequent renewals until 2018. However, despite the ruling, Yanukovych, his son, and associates remain on the sanctions list since the restrictive measures against them were extended by a year in March 2019. Andriy Klyuyev, the former head of Yanukovych’s presidential administration, also had the asset freeze formally lifeted by the Court – but he had already been removed from the sanctions list earlier this year.
This blog is primarily for my own use, to keep informed and up to date. However, if you would like to say thank you (and perhaps help me get a new, better laptop when I am away…) you can “buy me a coffee” at https://www.buymeacoffee.com/KoIvM842y