26th July 2019
AML AND SANCTIONS: TRENDS AND DEVELOPMENTS EMERGING UNDER THE TRUMP ADMINISTRATION
On 25th July, Wilmer Hale published a comprehensive review of the current position and recent trends and developments in the US BSA/AML and sanctions regulatory landscape from 2017 to the first half of 2019. It describes recent developments in AML and sanctions law and policy, and recent enforcement actions that shape companies’ obligations with respect to AML and sanctions. It considers the range of sanctions regimes, from Russia to Nicaragua, and from Global Magnitsky human rights to virtual currency aspects.
BRAZIL JUDGE ORDERS PETROBRAS TO REFUEL US SANCTIONS-STRANDED IRANIAN SHIPS
The Japan Times on 26th July reported that a Brazil Supreme Court judge has ordered Brazil’s state oil giant Petrobras to refuel 2 Iranian ships stranded off the country’s coast. Petrobras has refused to provide fuel to the vessels for fear of breaching US sanctions. The vessels had reportedly brought urea, which is used to make fertiliser, to Brazil and were to transport corn back to Iran. The ships Bavand and Termeh reportedly belong to Iranian company Sapid Shipping.
CHINA AIRLINES CHAIRMAN APOLOGISES OVER CIGARETTE SMUGGLING SCANDAL INVOLVING PRESIDENTIAL FLIGHT
On 25th July, Focus Taiwan reported that the China Airlines (CAL) Chairman has apologised over a recent case of attempted cigarette smuggling allegedly by government security agents, one of whom had travelled on a presidential flight operated by CAL. A total of 10,009 cartons of cigarettes were sold to passengers traveling with the President on her recent visit to the US and the Caribbean. To prevent incidents of smuggling in the future, passengers traveling on dedicated presidential flights will be limited to 1 carton of cigarettes, like travellers on regular flights.
PODCAST: IRAN’S CYBER WAR
A 30-minute podcast from The World Unpacked (from the Carnegie Endowment for International Peace) on 25th July considers that, while the loud, public conflict between the US and Iran rages on, a secret war has been waged in the shadows for years, how dangerous is the cyberwar between the two countries? And how has the digital battlefield changed? It consists of an interview with a former US Defense Department intelligence officer, policy advisor, & speechwriter: Jon Bateman. He discusses the tools and strategies that both countries have developed, and what an all-out cyberwar would look like.
HIGH COURT JUDGMENT BRINGS IRISH CITIZENSHIP INTO SHARP FOCUS
On 23rd July, Field Fisher published an article which says that a recent High Court on the requirement for continuous residence in Ireland for the year prior to an application to become a naturalised citizen has created new issues for those who have recently applied – or were about to apply – for Irish citizenship. In the case, an Australian national who had applied to become a naturalised Irish citizen was refused on the basis that in the year prior to his application he had been out of the country for 100 days. He challenged the Minister’s decision in the High Court. Upholding the decision, the High Court went further by saying that there is simply no room for discretion and either an individual has or has not had one year’s continuous residence in the State.
MALTA: AMENDMENTS TO THE COMPANIES ACT (REGISTER OF BENEFICIAL OWNERS) REGULATIONS
On 24th July, Ganado Advocates published an article saying that these regulations came into force on 12th July, save for one provision which comes into force on 1st January. They introduce changes to the principle regulations which, inter alia, seek to transpose certain provisions of the 5th EU AML Directive, and now place a clearer burden on beneficial owners themselves to provide information to Maltese companies in which they hold a beneficial interest; and grants the Registrar of Companies a new power which entitles him to make enquiries with the company (including through on-site inspections of the company’s books at its registered office) in order to establish the current beneficial ownership of a company.
FREEZING INJUNCTIONS: WHICH ASSETS ARE COVERED BY A STANDARD FREEZING ORDER?
An article from Kingsley Napley on 24th July looks at freezing injunctions, saying that their scope is broad, and the starting point is that this could cover all types of assets, including shares, property and bank accounts, but it’s not as straightforward as it might seem. Interesting questions can arise on a case by case basis, depending on the Respondent’s interest in the assets.
CANADA PROPOSES TO STRENGTHEN TRADE REMEDY REGIME FOR ANTI-DUMPING DUTIES ETC
HK TDC on 25th July reported that the Canadian government is seeking input from interested parties by 5th August on a proposal to provide additional tools to the Canada Border Services Agency to address price distortions more effectively when calculating dumping margins in anti-dumping duty proceedings, and would provide the CBSA with flexibility in calculating the costs of production when inputs are supplied by an associated supplier. The amendments would provide a hierarchy of alternatives to be used to determine the costs of inputs, depending on the information available and whether the alternative would allow for such a proper comparison.
BOSNIAN COURT DETAINS INDIAN BUSINESSMAN PRAMOD MITTAL OVER SUSPECTED FRAUD
On 25th July, Reuters reported that a court in Bosnia has ordered a 1-month detention for Indian businessman Pramod Mittal and 2 other officials who have been suspected of involvement with organised crime and abuse of office at a Bosnian coke plant.
RESTAURANTEUR SERVED 12-YEAR BAN OVER £1 MILLION TAX FRAUD
Accountancy Daily on 26th July reported that Lam Seong, from Barnet in north London, who was the sole director of Novari Ltd and Novari (at the O2) Ltd – the companies traded as the Water Margin Chinese Restaurant in Portsmouth, as well as the Water Margin Chinese Restaurant and Water Margin Jazz Club in Greenwich – and who has been jailed, has been banned from running companies for 12 years after he was found to owe HMRC over £1 million in VAT.
GREATER SUPPLY CHAIN TRANSPARENCY TO DRIVE UPTAKE OF ‘SMART’ CONTAINERS
Lloyds Loading List on 25th July reported that the Container Census & Leasing Annual Review & Forecast 2019/20’ argues that telematics devices have the potential to radically transform the utility and value of shipping container equipment assets. Apparently, a container becomes “smart” when fitted with a telematics device that provides real-time tracking and monitoring, enabling operators to increase turn time of their container equipment and so utilisation; and it also allows beneficial cargo owners (BCO) to better understand the location and status of their cargo so that they can more efficiently control their supply chains. The report said that smart containers had increased in prominence in a very short space of time and predicted the pace of adoption would likely accelerate over the next 5 years.
LAWRENCE LIVERMORE DATA ANALYST BRINGS DIRTY BOMB PREPAREDNESS TO LIFE
On 25th July, Homeland Preparedness News carries an article about a new model that gives emergency responders a means of simulating and testing a situation no one ever wants to witness first hand: the explosion of a radiological dispersal device (RDD), aka a “dirty bomb”. It explains that such devices are explosives paired with radioactive material, and that their purpose is to spread radioactive contamination around explosion sites and the surrounding area, weather-depending. It ends by saying that there are no reliable antidotes for inhaled or ingested radioactive material, though symptoms can be treated. Consumption of materials such as Prussian blue and potassium iodide tablets are useful for specific cases. Mostly, though, for responders and victims alike, it’s about covering mouth and nose, avoiding plumes and dust clouds, removing contaminated clothes soon after exposure and washing the skin post-contamination.
NEW ZEALAND LAUNCHES “INVESTMENT PASSPORT”
An article on Mondo Visione on 25th July reported that investors and managed funds will now be able to do business more easily with Australia, Japan and Thailand, after New Zealand’s implementation of the Asia Region Funds Passport (ARFP). The agreement between by New Zealand, Australia, Japan, Thailand and Korea in 2016 facilitates the offering of liquid and well diversified managed funds among the signatory economies. The Financial Markets Authority (FMA) has now officially announced to the ARFP Joint Committee that New Zealand had completed preparations for the agreement and, as a result, foreign passport funds can apply for permission to offer their funds in New Zealand.
JOINT FATF/APG MUTUAL EVALUATION OF SOUTH KOREA
On 16th July, the FATF-style regional body, APG, announced that the joint FATF/APG onsite mutual evaluation visit for Korea was conducted from 30th June to 18th July. The mutual evaluation was conducted using the 2013 FATF assessment methodology which focusses on both technical compliance with the FATF international standards and the effectiveness of the jurisdiction’s AML/CFT measures. The mutual evaluation report will be considered at the FATF meeting in February 2020 and the APG annual meeting in July 2020 after which it will be published on the APG website.
PIRACY-RELATED INCIDENTS RISE IN SINGAPORE STRAITS
On 26th July, Hellenic Shipping News reported that anti-piracy watchdog ReCAAP (the Regional Cooperation Agreement on Combating Piracy and Armed Robbery against Ships in Asia) reports that there has been an increase in sea robbery and piracy related incidents around the Straits of Malacca and Singapore, as well as lingering concerns over abduction of crew in the Sulu Sea-Celebes Sea region. There has been a 60% on the year increase in such incidents on barges towed by tug boats in the Singapore Straits to 8 such incidents in the first-half of 2019. However, despite the increase in piracy related incidents around the Straits of Malacca and Singapore, the overall East Asian region saw a decline of 32% during H1 2019 compared with the same period last year; but it said that ships passing through the region must exercise extra vigilance and maintain communication at all times with the maritime authorities of the Philippines and Malaysia.
ASSETS IN FLIGHT: TRACKING AFRICA’S CORRUPT ELITE IN THE SKIES
On 9th July, research organisation C4ADS published a report on the use and movement by a number of African leaders, and which focuses on use of the executive fleet of Equatorial Guinea . It says that, despite the use of off-shore shell companies to obscure aircraft ownership, aircraft identification is made possible by the existence of several universal regulations adopted by most UN Member States. Hwoever, in Equatorial Guinea, for example and like many other African countries, the domestic civil aviation authority does not publicly disclose its domestically-registered private aircraft, thus limiting public visibility on the number of private or corporate-owned aircraft.
GEORGIA: GOVERNMENT DENIES ACCUSATIONS OF POLITICAL MOTIVE BEHIND MONEY LAUNDERING CASE AGAINST TBC BANK FOUNDERS
On 26th July, the Agenda news agency site in Georgia reported that top figures of the Georgian Dream ruling party say that there are no political grounds in the accusations against TBC founders Mamuka Khazaradze and Badri Japaridze.
HOW A RUSSIA-BASED LOGISTICS NETWORK TIES TOGETHER RUSSIAN MINING COMPANIES AND MILITARY CONTRACTORS IN AFRICA
Research from C4ADS in June examined the relationship between Russian ostensibly “private” mercenary and military contractor groups, like the Wagner Group, and Russian companies involved in the extractive industries in Africa. One of the points it makes is that the evident integration of these ostensibly private actors with activities of the Russian government makes it all the more surprising that this network would have a connection to the US. The US nexus in this case demonstrates the permeability of jurisdictions that allow for obscured ultimate beneficial ownership, and the importance of verifying the identities and affiliations of parties to trade transactions.
US DOJ SEES UPTICK IN ILLICIT USE OF CRYPTOCURRENCIES
The Wall Street Journal on 26th July reported that digital currencies are increasingly being used to support illicit activities, raising national security concerns for US authorities, officials said during the 2019 International Conference of Cyber Security in New York.
ANTI-CORRUPTION: THIRD EU REPORT ON COMBATING CORRUPTION IN THE PRIVATE SECTOR MARKS PROGRESS
On 26th July, the EU published a third report on combatting corruption in the private sector. The report finds that many Member States have stepped up their efforts to amend national legislation and bring sanctions linked to corruption in line with the minimum standards set out by the relevant EU Council Framework Decision 2003/568/JHA. Under the Framework Decision, Member States must criminalise 2 types of conduct –
- promising, offering or giving a bribe to a person in the private sector in order that he or she do something or refrain from doing something, in breach of that person’s duties; and
- requesting or receiving a bribe, or the promise of such, while working in the private sector, in order to do something, or refrain from doing something, in breach of one’s duties.
The assessment focused on Member States’ efforts to: criminalise various aspects of active and passive corruption in the private sector, including bribery; penalising the instigation of corruption as well as aiding or abetting corruption; and to implement legal penalties for individuals. It says that work must continue to enforce the measures and to eliminate possible limitations to the scope of the Council Decision.
THE MOLDOVA RUSSIAN LAUNDROMAT
On 26th July, the German Marshall Fund of the United States (a US non-profit organisation founded in 1972 through a gift from Germany as a permanent memorial to Marshall Plan assistance) published an article about the Russian money-laundering operation perpetrated through Moldindconbank in Moldova, known as the Russian Laundromat or the Global Laundromat – allegedly involving $20 billion from Russian banks to Moldindconbank over 5 years, where facilitators “cleaned” the money. However, it says, the real amount of Russian money that was laundered in Moldova through Moldindconbank or through other institutions during this period is very likely much higher. The article says that the case points to the inadequate response by Moldova’s government in the face of the staggering scale of the problem, to the possibility that similar illicit activity also occurred at other Moldovan banks, and to the importance of tracking cross-border payments. Most of all, it says, the Moldovan experience shows that small jurisdictions matter, and that solutions must be comprehensive if they are to be enduring. After analysing how the scheme worked and lessons learned, the article concludes that the most important lesson of the Russian Laundromat — a scheme that relied on Moldindconbank, a bank outside the EU, and Trasta Komercbanka, a bank inside the EU, making payments in dollars through the US — is that European and US authorities must not play whack-a-mole in fighting such large-scale money laundering. Success will only come from sustained, coordinated, and comprehensive approaches to a sophisticated, multi-jurisdictional threat.
US AUTHORITIES ARREST THE OPERATOR OF A BITCOIN ESCROW COMPANY FOR DEFRAUDING 2 FIRMS OF $7 MILLION
CCN.com on 26th July reported that Jon Barry Thompson, director of the Bitcoin escrow firm Volantis, has been arrested and charged with 2 counts of wire fraud and 2 counts of commodities fraud in the US. He is said to have encouraged investors to buy bitcoin through his escrow company as his service would “eliminate any risk of loss during the purchase”.
EURASIAN NATURAL RESOURCES CORPORATION (ENRC) OPENS SECOND FRONT AGAINST SFO
The Law Society gazette on 26th July reported the latest development in the battle between the SFO and the mining company – when the company filed a High Court claim against a former prime minister of Kazakhstan, alleging he leaked confidential and/or legally privileged information to the SFO. The article reminds one that ENRC is the subject of an ongoing, 6-year SFO investigation into alleged fraud, bribery and corruption and that ENRC denies all allegations against it.
IRS SAYS IT IS SENDING WARNING LETTERS TO US CRYPTOCURRENCY OWNERS
On 26th July, Coindesk reported that the IRS has announced that it has begun sending letters to taxpayers who own cryptocurrency, advising them to pay any back taxes they may owe or to file amended tax returns regarding their holdings.
SWISS UBS RULING COULD OPEN NEW DOORS ON CLIENT DATA
Reuters on 26th July reported that Switzerland’s Supreme Court has ruled that historical data about 40,000 UBS clients must be handed to French tax authorities in a landmark case that could set a precedent for foreign governments seeking information from Swiss banks.
ILLEGAL FIREARMS SEIZED ACROSS UK IN SECOND NATIONAL OPERATION TARGETING ONLINE CUSTOMERS
On 26th July, a news release from the NCA advised that 100 firearms have been seized and 27 people arrested in the second national operation targeting customers who bought illegal blank-firing weapons online. Those arrested bought forward venting blank-firing guns from sellers across Europe. While these weapons can be purchased with limited restrictions in many countries, they are illegal in the UK. As they can be readily converted to fire live ammunition, they represent a significant criminal risk.
UK: THE BRIBERY ACT 2010 AND THE CONSTRUCTION INDUSTRY
On 26th July, Dentons published a paper which summarises the Bribery Act 2010 and explains the main offences, related penalties and defences. It also provides a vivid illustration of how an individual/company in the construction industry can be caught under the Act in the daily running of their business. It emphasises that businesses should be aware that failing to prevent bribery is a strict liability offence – the only defence available is if the company can show that it had “adequate procedures” in place to prevent bribery.
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