23rd July 2019
BRAZIL REFUSES TO REFUEL IRANIAN SHIPS BECAUSE OF US SANCTIONS
The Folha de Sao Paolo on 22nd July reported that Petrobras had confirmed that it did not provide fuel to Iranian ships loaded with corn. Iranians are Brazil’s largest corn importers and are also among the top buyers of soybeans and beef, and although food is not the focus of US sanctions, the case raises concerns about agribusiness exports to Iran.
RIAH: SEIZED SHIP’S CHARTERER DENIES IRAN FUEL SMUGGLING CLAIM
On 23rd July, Hellenic Shipping News reported that a small oil tanker that Iran accused of smuggling fuel was empty of any cargo when Iranian forces seized it at gunpoint in the Strait of Hormuz earlier this month, according to the company that chartered the ship, KRB Petrochemicals. 9 of the 12 crew have since been released and will fly to India, while the remaining 3, including the captain, remain in custody. The Riah is owned by Iraq-based Riah Shipping & Trading Inc, it is said. KRB Petrochemicals is based in Sharjah’s Hamriyah Free Zone.
US: JOINT AGENCY STATEMENT EMPHASISES RISK-BASED APPROACH TO BSA/AML INSPECTIONS
On 22nd July, the ABA Risk & Compliance website reported that, as part of an ongoing effort to enhance the efficiency and effectiveness of the Bank Secrecy Act and AML regime, the federal banking agencies and FinCEN had issued a joint statement emphasising their risk focused approach to BSA/AML examinations. The agencies are said to have reiterated that they take into account banks’ unique risk profiles when conducting examinations, and that banks are encouraged to manage customer relationships and mitigate risks based on customer relationships rather than declining to provide banking services to entire categories of customers.
The joint statement can be found at –
IRELAND: AML POLICY ENHANCEMENTS REQUIRED FOR INVESTMENT FUNDS
On 19th July, Maples published a briefing saying that the Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Act 2018 transposed the majority of the 4th EU Money Laundering Directive into Irish law. The briefing considers the key changes introduced by the CJA 2018 that apply to Irish authorised investment funds.
US: POLYGAMISTS ADMIT $512 MILLION FRAUD FOR FUEL-TAX CREDITS
On 22nd July, Bloomberg reported that 4 family members belonging to a Utah polygamist group admitted fraud involving $512 million in renewable-fuel tax credits, with an Armenian immigrant businessman in Southern California. That businessman now faces trial alone. Jacob Kingston, who was the CEO of Washakie Renewable Energy LLC, pleaded guilty in Salt Lake City. He said his company falsely claimed that it produced or blended biodiesel fuel to qualify for tax credits. He also admitted laundering more than $100 million in fraud proceeds in Turkey, obstructing justice and tampering with witnesses.
LOOT BOXES: REGULATION OF TREASURE CHESTS IN VIDEO GAMES
On 22nd July, Greenberg Traurig published an article on the sale of treasure chests or “loot boxes” in video games and apps. They typically offer players a chance-based opportunity to obtain virtual items for use in a game. These in-game items may help improve a player’s chances of success in the game, or they may merely be decorative and simply give a player bragging rights based on rarity (often called “skins”). It mentions that real-world value/prizes are generally a threshold requirement for a finding of illegal gambling under most existing US precedents. The article says that only a few countries have publicly addressed loot boxes, and it provides a summary of some of those countries’ public positions, which vary, and of certain states within the US. Finally, it summarises current US considerations.
HOW ARE CONTRACT AND TRUST LAW PRINCIPLES APPLIED IN CRYPTOCURRENCY DISPUTES?
HFW has produced a briefing on 19th July saying that we are beginning to see disputes arising from the use of virtual currencies in trade, and how such issues will be tackled is subject to much speculation and debate. The article considers the recent Singapore International Commercial Court decision in B2C2 Ltd v Quoine, which provides an insight into how common law jurisdictions may apply contract and trust law principles to the trade of virtual currencies. In this case, the SICC considered how the intention of the parties was to be construed in the context of smart contracts “drafted’” (i.e. coded) by a programmer, drawing a distinction between the intention of the programmer and the automatic translation of his algorithm. The briefing says that the case also demonstrates the importance of ensuring that the governing terms and conditions for algorithmic trading provide for situations where errors (both automated and human) may arise.
FOREIGN INVESTMENTS IN FRANCE: NEW LEGISLATION EXPANDS AND STRENGTHENS THE NATIONAL SECURITY REVIEW MECHANISM
On 22nd July, White & Case published an updated version of this article which says that new legislation (replacing the previous 2014 version) broadens the scope of foreign investments control review in France and reinforces the sanctions in case of infringement. As a next step, French authorities are likely to adopt new regulations by the end of 2019 to clarify the review mechanism notably in light of an EU Regulation establishing a framework for the screening of foreign direct investments into the EU.
TURKEY TO INTRODUCE NATIONAL BLOCKCHAIN CURRENCY
On 23rd July, Customs Today reported that the Turkish government plans to launch a central bank “blockchain based” digital currency within the next 4 years. Other measures announced include using blockchain technology for transport and customs purposes and harnessing artificial intelligence and the Internet of Things along with blockchain to improve public services.
SRI LANKA: CUSTOMS DEPARTMENT INFORMATION ON DETAINED GARBAGE SHIPMENT
Customs Today on 23rd July reported that the Customs service had clarified facts on the containers of garbage that were imported into the country. 111 garbage containers shipped from the UK are currently held at the CICT terminal of the Colombo port, while another 130 garbage containers are currently at the Katunayaka free trade zone (of which 10 have been re-exported).
US: ADVANCE DATA REQUIREMENTS FOR E-COMMERCE SHIPMENTS TO BE TESTED
On 23rd July, Sandler Travis Rosenberg reported that U.S. Customs and Border Protection has announced that from 22nd August it will conduct year-long voluntary test under which additional data elements for certain goods will be transmitted in advance of their arrival. CBP has said that about 1.8 million shipments meeting the relevant specification are currently arriving each day, primarily by air and truck – and it is expected that the number of such consignments will rise due to increasing e-commerce.
US CUSTOMS ELECTRONIC EXPORT MANIFEST PILOT PROGRAMMES
On 22nd July, American Shipper published an article saying that US Customs and Border Protection aims to remove the remaining paper from the export manifest process and make more efficient use of this data to target threats in the outbound supply chain, and it reports on various pilot projects using electronic export manifests (EEM) involving ocean, rail and air carriers, and which require these operators to supply CBP with information about exports prior to loading for departure from the US. The identifying elements for the EEM, which are contained in house bills and waybills, include total quantity and weight, cargo description, shipper name and address, consignee name and address, and departure schedule and port. In addition, the providing house and air waybill numbers are mandatory in EEM. Under the current CBP export manifest filing process for ocean and air cargo, a paper manifest is supplied to CBP by the 4th day after sailing or flight, whereas the EEM will allow for better advanced screening.
ROMANIAN CUSTOMS SEIZE 95 REFRIGERANT CYLINDERS
Cooling Post on 22nd July reported that border police in Romania made a further seizure of refrigerant at the Petea border crossing point with Hungary. 95 cylinders of refrigerant were being carried by a Ukrainian in a vehicle registered in Portugal. The previous week a shipment of refrigerant was stopped at the Romanian border crossing point with Bulgaria, with other seizures earlier in the month.
SINGAPORE SEIZES 11.9 TONNES OF PANGOLIN SCALES AND IVORY WORTH OVER $48 MILLION
Al Jazeera on 23rd July reported that authorities in Singapore had seized 11.9 tonnes of pangolin scales and 8.8 tonnes of elephant ivory from a container being shipped to Vietnam. Authorities estimated the tusks from nearly 300 African elephants were worth $12.9 million.
SERBIA: NEW AML STRATEGY TO BE ADOPTED BY END OF YEAR
Tanjug Exactly on 23rd July reported that a new strategy on prevention of money laundering and terror financing will be adopted by the end of the year, the chairman of Serbia’s co-ordinating body for prevention of money laundering and terrorism financing has announced. By the end of August, the AML Administration will prepare a report on Serbia’s progress for the next Moneyval Plenary in December, where Serbia’s rating should be improved.
PIRATES ATTACK SOUTH KOREAN VESSEL IN SOUTH CHINA SEA
Insurance Maritime News on 23rd July reported that pirates attacked South Korean-flagged bulk carrier CK Bluebell in the South China Sea, stealing thousands of dollars in cash and personal items.
US: ANOTHER CHIEF COMPLIANCE OFFICER ARRESTED FOR DRUG COMPANY’S CONTROL FAILURES
On 22nd July, Corporate Counsel from Law.com reported that James Barclay is the second chief compliance officer to be arrested by federal prosecutors in 3 months over their companies’ illegal opioid sales. After eluding police for 5 days, he turned himself in to federal authorities to face a felony charge that he helped his Ohio drug company illegally sell millions of dollars’ worth of opioids.
PUTIN GRANTS RUSSIAN CITIZENSHIP TO US NATIONAL TO SKIRT US GAS PRODUCER EXECUTIVE
The Moscow Times on 22nd July reported that Russia had granted Russian citizenship to gas producer Novatek’s veteran finance chief, Mark Gyetvay, in a move that could potentially help the US national bypass some sanctions restrictions. Gyetvay has been Novatek’s chief finance officer since 2003.
VIETNAM CRACKS DOWN ON TARIFF-DODGING EXPORT DETOURS
Nikkei Asian Review on 23rd July reported that the Vietnamese government has begun taking steps to clamp down on shipments of products from China and elsewhere that pass through Vietnam and are relabelled as Vietnamese to avoid US tariffs.
HUAWEI: REPORT ON SUPPLY CHAIN RISKS
In June, Finite State, a US cyber security company, produced a report, and the results of the analysis are said to show that Huawei devices quantitatively pose a high risk to their users. In virtually all categories examined, Huawei devices were found to be less secure than those from other vendors making similar devices. The analysis looked for risks including hard-coded backdoor credentials, unsafe use of cryptographic keys, indicators of insecure software development practices, and the presence of known and zero-day vulnerabilities; looking at 9 different dimensions of risk.
UK: USING A FAST PARCEL OPERATOR TO IMPORT AND EXPORT
On 23rd July, HMRC issued updated information on how to use a fast parcel operator and the rules they must follow when making customs declarations. It is designed to help exporters to understand the issues surrounding the use of fast parcel operators for imports and exports. HMRC has approved several fast parcel operators for simplified export procedures using a MoU. The guide explains what the MoU mean for fast parcel operators, and their duties and liabilities to you when making customs declarations on behalf of the exporter.
SCANDALS IN KYRGYZSTAN HIGHLIGHT DUBIOUS CHINESE BUSINESS PRACTICES
On 23rd July, an article in EurActiv says that Kyrgyzstan was shaken by a major corruption scandal involving a Chinese company while the country’s capital Bishkek was hosting a ministerial meeting of the 5 Central Asian countries (Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan) earlier this month. The scandal, involving a $386 million contract handed to a Chinese company in 2013 to refurbish the Soviet-built Bishkek Thermal Power Station, has led to the arrest of 2 former prime ministers, Sapar Isakov and Jantoro Satybaldiev. Revelations have provided shocking details, such as fire extinguishers billed in the thousands of dollars, or pliers billed in the hundreds, according to the contract, and it is claimed that the Chinese company failed to refurbish the plant. China is also involved in geological explorations in Kyrgyzstan and operates mines which produce a gold-copper concentrate, for export to China.
UK: NEW PACE CODES C AND H FOR THE DETENTION, TREATMENT AND QUESTIONING OF PERSONS IN POLICE CUSTODY
A new Order brings into use new Codes C and H made for the purposes of the Police and Criminal Evidence Act 1984 which include amendments relating to what can be described as personal dignity and health and hygiene needs of the detainee. The amendments require all detainees to be given an opportunity to speak to a member of custody staff in private regarding their health, hygiene and personal needs, with necessary arrangements made to accommodate such needs as soon as practicable, and they specifically require the provision of menstrual hygiene products free of charge to detainees where requested and make clear that there should be privacy for detainees in the toilet area of their cells. Officers are to have regard to the dignity of a detainee when conducting an intimate search or a strip search and extend the obligation to have regard to the dignity of a detainee when determining their gender for the purpose of a search. The requirement to speak to a staff member of the same sex may be modified in respect of a transgender detainee to ensure their needs are accommodated.
UK: PARLIAMENTARY BRIEFING ON BANKING FRAUD
On 23rd July, the House of Commons Library published a briefing paper which answers FAQ about banking scams, and describes: the scale of the problem; the types of scam; what help is available for victims; and, government and industry action.
UN WORLD DAY AGAINST TRAFFICKING IN PERSONS
The World Day Against Trafficking in Persons was established by the UN in 2013, and the first World Day Against Trafficking in Persons was held in 2014. The focus on 30th July this year is on “highlighting the importance of government action in the interest of victims of trafficking”. The House of Lords Library has published a briefing paper ahead of the day.
UK: REGULATION OF INSOLVENCY PRACTITIONERS
On 23rd July, the House of Commons Library published a briefing paper which provides an outline of the current regulation of insolvency practitioners (IP) in England and Wales and how to make a complaint. It also considers the Insolvency Service’s recent call for evidence on the current regulatory framework. Only a licensed IP can act as a liquidator, an administrative receiver or administrator (in respect of company insolvencies), or a trustee in bankruptcy (in respect of personal insolvencies). In addition, only a licensed IP can advise on formal procedures in respect of all Company Voluntary Arrangements (CVA) and Individual Voluntary Arrangements (IVA s). In carrying out their duties, IP must comply with statutory requirements and follow best practice and ethical guidance.
Scotland shares the same corporate insolvency law as in England and Wales, but a different legal procedure applies to bankruptcy (known as ‘sequestration’). Bankruptcy and insolvency are handled by the Accountant in Bankruptcy in Scotland. Insolvency is a devolved function in Northern Ireland, although in practice the regime is closely aligned with that of England and Wales and insolvency is handled by the Northern Ireland Insolvency Service.
UK SANCTIONS REGIMES IF THERE’S NO BREXIT DEAL
On 23rd July, the FCO published updated links to legislation and guidance on implementing UK and UN sanctions if the UK leaves the EU without a deal. This includes new guidance on Burundi and Guinea sanctions.
US MEGACHURCH FRAUD CASE
On 23rd July, the Mail Online reported that Gregory Alan Smith, 55, a Louisiana investment adviser has pleaded guilty to conspiracy to commit wire fraud in a $3.5 million case that also involves a minister who was once spiritual adviser to former President George W. Bush. The trial is to follow of Kirbyjon Caldwell, who officiated at the 2008 wedding of Bush’s daughter Jenna and remains pastor of a Houston megachurch. Prosecutors said the pair used their positions to lure investors to pay for bonds issued by the Chinese government before the Communist takeover in 1949, which do not have any investment value.
DETAILS OF UK MOJ REVIEW OF CRIMINAL LEGAL AID ANNOUNCED IN DECEMBER 2018
On 23rd July, the MoJ published a news release advising details of the review, which will also consider wider changes to the justice, social, economic, business and technological landscape that are impacting on the criminal legal aid system. A final report, including any recommendations, is due towards the end of the Summer 2020.
FORMER HMRC EMPLOYEE AMONG BROTHERS SENTENCED FOR VAT FRAUD AND MONEY LAUNDERING
Baker McKenzie reported on 23rd July that Shapal Yaqoob, 35, ran a car sales company and submitted false information to HMRC to keep £174,500 in VAT. His brother Efzal Yaqoob, who worked for HMRC as a telephone adviser, helped him launder the unreported earnings.
GUATEMALA ELITES EXPLOITED HEALTH SECTOR TO POCKET MILLIONS
On 23rd July, Insight Crime reported that prosecutors in Guatemala are investigating a multimillion-dollar graft scheme within the country’s Public Health Ministry, in just the latest example of officials and business elites raiding the coffers of Latin America’s health systems for personal gain. The UN-backed International Commission Against Impunity in Guatemala (Comisión Internacional Contra la Impunidad en Guatemala – CICIG) is investigating more than 50 people — including government officials — for allegedly partaking in the scheme, which raked in millions of dollars in kickbacks between 2012 and 2014. The report says that authorities began investigating the Social Security Institute (Instituto Hondureño de Seguridad Social – IHSS) in 2013. Eventually, they uncovered an intricate scheme composed of 10 so-called ghost companies that allegedly embezzled some $330 million.
UK LICENSED £650 MILLION WORTH OF ARMS TO SAUDI ARABIA FOLLOWING KHASHOGGI MURDER
An article on Ekklesia on 23rd July said that newly-released arms export statistics show that the UK Government licensed £648 million worth of arms to Saudi Arabia in the 6 months that followed the murder of Jamal Khashoggi in the Saudi Consulate in Turkey on 2nd October 2018. These arms are said to include £551 million worth of ML4 licences (Grenades, bombs, missiles, countermeasures), and it says that many of these are likely to be used in the ongoing Saudi-led bombardment of Yemen.
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