14th August 2019
LIST 3 GOODS FROM MAINLAND CHINA EXCLUDED FROM US SECTION 301 TARIFFS
On 6th August, HKTDC reported on the announcement of the first set of goods that will be excluded from the additional 25% duty imposed under Section 301 on some $200 billion worth of imports from mainland China (the so-called “List 3 goods”). These exclusions will be retroactive to 24th September 2018 and remain in place for a period of 1 year from the date of publication of an official notice in the Federal Register.
GERMAN PROSECUTORS WON’T INVESTIGATE BRENNTAG OVER CHEMICALS SALE TO SYRIA
Yahoo News on 13th August reported that German prosecutors have said that they had found no grounds to investigate Brenntag, the world’s largest chemicals distributor, over the sale to a company in Syria of substances that can be used in chemical weapons. It had been claimed that Brenntag sold ingredients with potential dual use in painkillers and nerve gas to a Syrian drugmaker.
GERMANY-IRAN TRADE SLUMPS AMID TRUMP’S SANCTIONS
Energy Reporters on 14th August reported that German exports to Iran fell by 48% to $759 million in the first half of 2019, whilst Iranian sales to Germany also fell by 43% cent to $123 million. It also says that Iran’s faltering economy will fall by 6% this year, according to the IMF forecast. Unemployment remains high at about 12%.
BRITISH COLUMBIA TIGHTENS PROPERTY BENEFICIAL OWNERSHIP TO FIGHT MONEY LAUNDERING
International Investment reported on 13th August that the province is to lower the threshold at which shareholders of a property-owning corporation must be disclosed from 25% to 10%. For a relevant corporation, individuals who directly or indirectly own 10% of the shares or 10% of the voting rights, must be disclosed. The change is expected to take effect next year. In May, a report commissioned by the provincial government estimated that billions of dollars of illicit money were laundered through property sales in the province in 2018, most of it in Vancouver.
POLICE AND CIVIL GUARD IN SPAIN HAVE DISMANTLED A CRIMINAL ORGANISATION IN TOLEDO AND MADRID, WHICH LAUNDERED MORE THAN €70 MILLION FOR OTHER CRIMINAL GROUPS
EU-OCS reported on 13th August a statement from Spanish police about an operation in which 28 people were arrested, 22 of them in Spain and 6 in the Netherlands. Officers investigated 29 companies, froze more than 70 real estate and banking assets and recovered 7 firearms and 100 vehicles. More than 140 telephones and computer equipment has also been seized. The Netherlands-based Colombian gang reportedly charged a commission of between 10% and 15% to launder money on behalf of Asian groups involved in fraud and Colombian drug trafficking gangs, through a network of businesses in the import and export and property sectors that were headed by frontmen who were paid to lend their name to the companies. The money received for was then transferred to bank accounts in mainland China, Hong Kong and Taiwan. The gang simulated commercial operations through false invoicing.
MEXICAN FORMER MINISTER DETAINED
On 14th August, KYC 360 reported that a judge has ordered a former Mexican Cabinet minister – former social development minister Rosario Robles – to be detained pending a trial over suspected losses to taxpayers. Robles appeared in court over prosecution claims that more than $258 million destined for welfare programmes during her tenure had gone missing at the ministry, according to local media reports.
HMRC’S CRACKDOWN ON CONTRACTORS: GOVERNMENT PUBLISHES DRAFT LEGISLATION REFORMING IR35 RULES IN THE PRIVATE SECTOR
On 12th August, Charles Russell Speechlys produced a briefing note saying that the Government has confirmed that the proposed changes to the off-payroll working rules will go ahead. These represent a significant shift in the tax and compliance landscape for businesses that engage contractors through personal service companies (PSC). Broadly, the changes mean that the reforms introduced in 2017 for the public sector will now apply for large and medium-sized enterprises in the private sector – so that the burden of tax and compliance is shifted from the PSC/off-payroll worker to the fee-payer or end-user client organisation. There are further important changes to the rules which apply to the public and private sector alike.
THIRD COUNTRIES ALIGN THEMSELVES WITH EU ON UKRAINE SANCTIONS
News releases on 13th August reported that Montenegro, Albania, Ukraine and Norway have aligned with the EU over the extension of sanctions measures in view of Russia’s actions destabilising the situation in Ukraine. A separate news release advised that Montenegro, Albania, Bosnia-Herzogovina, Georgia, Norway and Ukraine had aligned with the extension to June 2020 of sanctions measures relating to the illegal annexation of Crimea and Sevastopol.
THIRD COUNTRIES ALIGN THEMSELVES WITH EU ON LIFTING MALDIVES SANCTIONS
A news release on 13th August advised that Turkey, North Macedonia, Montenegro, Serbia, Albania, Bosnia and Herzegovina, Iceland, Liechtenstein, Norway, Ukraine, Moldova, Armenia and Georgia have aligned with the decision of the EU to lift sanctions measures imposed.
PRO-CHINA FORMER GANGSTER ‘WHITE WOLF’ CAUGHT IN TAIPEI OVER ILL-GOTTEN GAINS
The Taiwan News on 14th August reported that former gang leader and current head of the Chinese Unity Promotion Party (CUP) Chang An-le, aka the “White Wolf”, and 5 other members of his party were indicted on multiple charges and are under investigation for even more crimes. He was indicted for taking illicit political contributions, forging documents, embezzlement, and tax evasion – and is also under investigation for receiving funding from China and being again involved in organised crime. His son and wife were also charged.
GLENCORE LOSES BID TO STOP AUSTRALIAN TAX OFFICE USING ‘PARADISE PAPERS’
Reuters on 14th August reported that the commodity miner and trader Glencore has lost its case to stop Australian tax authorities using business information that was leaked as part of the so-called Paradise Papers. Australia’s high court found that the Australian Tax Office (ATO) was entitled to access the documents as they were in the public domain, adding that lawyer-client privilege did not apply in this case.
GET YOUR BUSINESS READY TO EXPORT FROM THE UK TO THE EU AFTER BREXIT
On 13th August, the Department for International Trade produced guidance on what you need to do now to make sure you’re able to send goods from the UK to the EU, if there’s a no-deal Brexit.
US AGENCIES’ INTERIM RULE BANNING HUAWEI AND OTHER CHINESE COMPANIES RELEASED
On 13th August, Holland & Knight published an article saying that on 7th August the DoD, GSA, and NASA released an interim rule that will have the effect of largely banning products and services from Huawei Technologies Company, ZTE Corporation, Hytera Communications Corporation, Hangzhou Hikvision Digital Technology Company and Dahua Technology Company from being purchased by federal government end-users. It takes effect from 13th August.
JERSEY: ACCOUNTANT COULD BE ORDERED TO REPAY £740,000 IN FRAUD CASE
On 14th August, Jersey Evening Press reported that an accountant who defrauded elderly Islanders out of millions of pounds could be ordered to repay hundreds of thousands of pounds. Richard Arthur, the former managing director of accountancy firm BDO, appeared before the Superior Number of the Royal Court for a confiscation hearing. It is said that Arthur had ultimately benefitted from his crimes to the tune of £2,967,370.79.
4 BRITONS ARRESTED AFTER £50 MILLION DRUG SEIZURE IN AUSTRALIA
The Belfast Telegraph and others on 14th August reported on the seizure of 766 kg of MDMA powder. Police in Australia arrested 2 UK citizens in the state, a 51-year-old man and a 40-year-old man, and 2 other British men, aged 60 and 49, were arrested by police in New Zealand after 200 kg of methamphetamine was seized the previous week as part of the same operation.
SEC $8 MILLION ASSET FREEZE IN ALLEGED FRAUDULENT TOKEN OFFERING AND MANIPULATION SCHEME
A release on Mondo Visione on 13th August reported that the SEC had announced fraud charges against a Brooklyn individual and 2 entities under his control who allegedly engaged in a fraudulent scheme to sell digital securities to investors and to manipulate the market for those securities. This involved Reginald “Reggie” Middleton, a self-described “financial guru,” and 2 entities he controls, Veritaseum, Inc. and Veritaseum, LLC (collectively Veritaseum). They allegedly marketed and sold securities called “VERI” tokens on the internet, inducing retail investors to invest based on multiple material misrepresentations and omissions.
FinCEN SAYS CASINOS FILING FEWER SUSPICIOUS ACTIVITY REPORTS
On 14th August, the Wall Street Journal reported in its Risk & Compliance email newsletter that casinos and card clubs in 2018 filed 9% fewer SAR than in the previous year. The Director of FinCEN said that the most common types of suspicious activity reported by casinos so far in 2019 include large transactions from customers who have done minimal gaming, as well as “chip walking,” in which customers leave a casino with chips they have not redeemed.
PODCAST: BERNIE MADOFF AND THE DEATH OF TRUST
On 14th August, the latest podcast from TRACE International involves a discussion in which Diana Henriques describes Madoff’s Ponzi scheme, discusses how difficult it is to uncover fraud by those who prey on the trust of others and addresses the simple, consistent controls that saved some investors from losses.
SOUTH AFRICA: STEINHOFF CORPORATE FRAUD BEYOND WHAT ANYONE ENVISAGED AND PROBABLY LARGEST IN COUNTRY’S HISTORY
On 14th August, Fin24 reported that an inquiry has heard evidence from 77 witnesses over the past 8 months and the commissioners responsible will be working to finalise its report for submission to the President by October 31st. In December 2017, Steinhoff’s share value plummeted by as much as 98% over accounting irregularities. The company, also listed in Germany, is a retailer and operates in Europe, Africa, Asia, the US, Australia and New Zealand, and its assets include Poundland in the UK.
EU NEEDS AN OFFICE FOR FINANCIAL ASSET CONTROL TO DEFEND ITS HOME INDUSTRY AGAINST SANCTIONS
An article dated 15th August from the European Council on Foreign Relations says that the EU is unprepared for this kind of economic statecraft being waged by the US, using the power of the dollar and control of the international finance system (such as the threaten German companies dealing with Iran or in the Nord Stream 2 pipeline), and may well also be employed by China. To defend itself, the article says that the EU should make clear that sanctioning European companies comes at great economic cost, and that Europe needs its own OFAC, a body that brings together economic and security policy experts to devise the right responses in this geo-economic age.
PONZI SCHEME SOLICITOR ESCAPES STRIKE-OFF DESPITE ‘MANIFESTLY INCOMPETENT’ FINDING
The Law Society Gazette on 14th August reported that a former law firm director who acted for the operators of a dubious investment scheme was reckless and incompetent but not dishonest or lacking in integrity, and has been suspended for 6 months by the Solicitors Disciplinary Tribunal and ordered to pay almost £59,000 in costs.
SALARY PAYMENTS IN CRYPTOASSETS RAISES TAX ISSUES
In the light of the decision in New Zealand by the Inland Revenue that regular, fixed salary payments paid in cryptoassets from 1st September will be subject to income tax – effectively legalising cryptoasset salary payments in the country, an article from Out-Law on 14th August considers tax implications. This would include questions about capital gains on the assets.
US CUSTOMS AND BORDER PROTECTION LOOKS TO FACIAL RECOGNITION AND CLOUD COMPUTING
On 13th August, CloudWedge reported that CBP intends to expand its capabilities for facial recognition as well as move its traveller processing functions into the Cloud. Current vetting data uses biographic data, and CBP says it is seeking to change the system into a biometric one. In the ideal setup, the system would automatically recognise travellers, and they wouldn’t need to present travel documents, potentially speeding up transit times.
ERDOGAN’S POLITICAL FORTUNES – UP IN THE AIR?
On 14th August, Control Risks examined the situation of President Erdogan of Turkey, saying that recent polls and municipal elections show a trend of declining support. It identifies 4 risk points to be alert to, though it concludes that a drawn-out power struggle until the 2023 elections remains most likely. However, it says, another course is gaining momentum, and seeing earlier elections and the potential of violence, given that Erdogan has continued. facing challenges by suppressing dissent and tightening control over key institutions, and seeking to secure his grip on power.
CHINESE SHELL CORPORATIONS EVADE TAXES IN ECUADOR
On 14th August, Baker McKenzie reported that at least 7 Chinese companies the Ecuadorean government hired for public works projects in the construction, mining, telecommunications, and oil exploitation sectors made payments to companies the Ecuadorean Internal Revenue Service (SRI) considers shell corporations, with an expert quoted as saying that such companies are usually hired to launder money, simulate expenses, artificially lower their earnings, and pay kickbacks to authorities for acts of corruption.
COULD THE US STOP THE NORD STREAM 2 PIPELINE?
An article from Rferl on 13th August says that US efforts to derail Russian pipelines to Europe have failed since the 1960s, and asks will Nord Stream 2 be any different?
8 TANKERS AND A BULK CARRIER HAVE LEFT THE UK SHIP REGISTER IN THE PAST 3 WEEKS
Insurance Marine News on 14th August reported this story from Lloyds List. Shipowners including BW Maritime and J Lauritzen were said by Lloyd’s List to have removed tonnage from the UK register. It says that one of the historical attractions of a UK flag – protection from the Royal Navy – has reduced over time along with the size of the Royal Navy.
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