26th August 2019
TAIWAN’S AML EFFORTS HAILED BY REGIONAL FATF-STYLE BODY
KYC 360 on 26th August reported that the annual meeting of the Asia-Pacific Group on Money Laundering (APG) has placed Taiwan in the “regular follow-up” category as a result of Taiwan’s overall good performance in its assessment in areas ranging from technical to legal compliance and effectiveness. Before the mutual evaluation report is published the report will be provided to FATF Secretariat and other assessment bodies for a quality and consistency review process.
SWITZERLAND: REVISION OF LAW ON THE AUTOMATIC EXCHANGE OF TAX INFORMATION (AEOI)
On 22nd August, Loyens & Loeff published an article saying that the consultation on revision of the federal law and ordinance on the International Automatic Exchange of Information in Tax Matters (AEOI) ended on 12th June. It is planned to implement the recommendations issued by the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes in order to comply with the international standards for transparency and information exchange. A revised law is expected to come into force on 1st January 2021. The article looks at the proposed revision of existing law.
MALTA: DISCUSSIONS ON UN SANCTIONS PROPOSED AGAINST MALTESE FUEL SMUGGLER DISCUSSED BY FOREIGN MINISTERS
On 26th August, Malta Today reported that Russia is seeking answers from the Maltese government over its desire to designate UN sanctions against suspected fuel smuggler Darren Debono, and fellow conspirator Gordon Debono. The countries’ foreign ministers discussed the issue during a meeting in Moscow. It points out the US has already hit the fuel-smuggling ring with OFAC restrictions.
1.6 TONNES SMUGGLED FROZEN CHICKEN FEET CONFISCATED IN SW CHINA
On 25th August, Xinhua reported that Police in south-west China’s Yunnan Province have detained 2 people in connection with smuggling frozen chicken feet into the country from Vietnam. They confiscated 67 bags of frozen chicken feet weighing 1.6 tonnes after receiving a tip-off.
ASIA-PACIFIC GROUP (APG) ANNUAL MEETING CONSIDERS AML/CFT EVALUATION REPORTS
Regulation Asia on 26th August reported on the annual meeting of the FATF-style regional body recently held in Canberra. It adopted mutual evaluation reports for the Philippines, China, Hong Kong, Pakistan, Taiwan and the Solomon Islands – and these are due to be published in October, after the FATF Secretariat and other assessment bodies review them for quality and consistency. Pakistan will be placed in the “enhanced follow-up” category, having been found non-compliant on 32 of the 40 FATF Recommendation compliance parameters for terror financing and money laundering. It will be required to submit quarterly progress reports to the APG showing improvements in its technical standards for AML/CFT. The APG also agreed on a new joint project to develop a workshop on the application of FATF Guidance on Digital KYC to Asia Pacific – to be published in February.
SWISS REGULATOR PUBLISHES GUIDANCE ON REGULATORY REQUIREMENTS FOR PAYMENTS ON THE BLOCKCHAIN FOR FINANCIAL SERVICES PROVIDERS
On 26th August, Finance Feeds reported that FINMA has published guidance about the application of regulatory requirements for payments on the blockchain for financial services providers under FINMA supervision; and covering on virtual asset service providers (VASP), blockchain service providers such as exchanges, wallet providers and trading platforms. It requires that the existing rules on combating money laundering also apply to such service providers.
A link to the guidance (in English) is provided.
UK: CALL FOR CODE OF PRACTICE TO OVERSEE MACHINE LEARNING IN POLICING
On 24th August, the Law Society Gazette reported on a number of proposals to emerge from a workshop on the state of machine learning algorithms in policing conducted by the University of Winchester. It concludes that full transparency should be prerequisite for the use of machine learning (AI) in criminal justice.
UK: POLICE TACKLE RECORD NUMBER OF INVESTMENT FRAUDS
Money International on 26th August reported that more than 8,000 frauds have been received by the police’s National Fraud Intelligence Bureau so far this year. An analysist is quoted as saying that, as pensions-based scam reports have fallen, the number of people falling prey to scams focused on their investments has continued to rise and look set to hit record highs in 2019. This, he said, might reflect the fact more people are now reporting being scammed to the relevant authorities, or it could be because fraudsters have shifted their focus to investment-based schemes.
DATA PROTECTION SUBJECT ACCESS REQUESTS — 3 ILLUMINATING UK CASES
On 5th August, Bryan Cave Leighton Paisner re-published an article which first appeared in the Privacy and Data Protection Journal, in which 3 recent UK cases involving current trends involving DSAR (Data Subject Access Requests). The article highlights 3 English court judgments and an Upper Tribunal decision, all of which apply the pre-GDPR legal framework though they illustrate trends and issues which are equally relevant under the current law. They are said to demonstrate the significant lengths to which controllers are now expected to go when responding to a valid DSAR.
LITHUANIAN CUSTOMS OFFICERS DETAIN SHIPMENT OF EXPLOSIVE AMMUNITION FROM RUSSIA
The Baltic Times on 26th August reported that Lithuanian customs officers detained a shipment of almost 9 kg of explosive ammunition at the Lavoriskes border checkpoint with Belarusian – a box of explosive ammunition used by military helicopters and other aircraft. Documents stated that the ammunition box was being transported from Russia and the shipment’s receiver was a company in Peru and it had been collected from Moscow’s Domodedovo Airport.
MAN JAILED FOR 82 DAYS AND LOSES JOBS FOR BRINGING BACK 3 JARS OF HONEY BACK TO US
On 26th August, the Independent reported that the man had bought 3 bottles from a favourite roadside stand before heading home to Maryland after visiting relatives in Jamaica. Suspected of carrying honey containing methamphetamine, he spent nearly 3 months in jail before all charges were dropped and law enforcement lab tests showed no controlled substances in the bottles.
LIBYA: NEW SANA BRIEFING PAPER: WHO IS FIGHTING WHOM IN TRIPOLI?
A new Briefing Paper from the Small Arms Survey’s Security Assessment in North Africa (SANA) project examines the identities and interests of the forces fighting each other over control of Tripoli. It shows that the divides of 2011 are central in structuring the 2 opposing alliances and in shaping the motivations of many involved in the war.
HMRC SUBMITS WRITTEN EVIDENCE ON ITS APPROACH TO EXPORT CONTROLS ENFORCEMENT
On 23rd August, Baker McKenzie reported that HMRC, which has primary responsibility for enforcement of export controls, recently submitted written evidence to an inquiry being conducted by the Parliamentary Committees on Arms Export Controls. The written evidence provides a helpful summary of HMRC’s approach to export controls enforcement. The factors taken into account include – existence of adducible evidence of a criminal offence; any indications of a deliberate attempt to evade export controls; and rime importance of preventing attempts to circumvent export and trade controls i.e. stopping any unauthorised export or trading activity before the transaction happens.
The UK Export Control Joint Unit has also submitted written evidence for the same inquiry, and links to both submissions are provided in the article.
CORPORATE REPORTS OF MANY RUSSIAN LEGAL ENTITIES AND OPEN DATABASES NO LONGER CONTAIN INFORMATION ABOUT SANCTIONED SHAREHOLDERS AND/OR MANAGERS OF SUCH LEGAL ENTITIES
On 23rd August, Baker McKenzie reported on law changes in Russia establishing special record-keeping rules for ownership rights over the securities of particular issuers. Accordingly, for a request on shareholders the registrar provides such information excluding the information on sanctioned Russian shareholders, if any. The same basic position applies in respect of securities.
COMPETITION HAS BEEN BUILDING FOR THE PAST FEW YEARS OVER CONTROL OF THE STRATEGIC PORTS ADJACENT TO THE MAJOR TRADE ROUTE OF THE GULF, AND RED AND ARABIAN SEAS
An Insight from the Institute for National Security Studies in Israel on 5th August looks at how it says that power struggles have developed in the context of China’s efforts to consolidate its hold on key ports in the Indian Ocean, Arabian Sea, and Red Sea, as part of the Belt and Road Initiative (BRI). It says that Chinese penetration of this arena has both increased the Indians’ sense of a direct threat and sharpened the US understanding that it must increase its strategic focus on this region. In addition, it says, there have been heightened efforts by Arab Gulf states to increase their strategic-military stability and secure their energy export and food import channels, while reducing their dependence on the Strait of Hormuz. Gulf states are developing their ports with an emphasis on industrial zones, refineries and petrochemical facilities, storage facilities, export facilities, and free trade zones.
US CUSTOMS WILL INTRODUCE VESSEL MANIFEST DATA TOOL ON ALLOW IMPORTER CONFIDENTIALITY
On 26th August, American Shipper reported that US Customs and Border Protection said it will introduce “in the coming months” a new automated tool for importers and exporters to submit their electronic vessel manifest confidentiality requests to the agency. The new tool will allow importers and exporters to have their vessel manifest data confidentiality requests processed within 24 hours. US importers and exporters already have the capability to request (by mail, email or fax) that their names and addresses on inbound and outbound vessel manifests be withheld from public view. Manifest data includes vessel country codes, names and numbers; port of unlading; estimated arrival dates; bill of lading numbers; foreign ports of lading; manifest quantities and units; weight and weight unit; shipper names and addresses (unless confidential); consignee names and addresses (unless confidential); notify party names and addresses (unless confidential); piece counts; descriptions of goods; container numbers; and seal numbers.
US CUSTOMS TO PROCESS BILLIONS IN TRADE REVENUE USING IBM CLOUD
On 23rd August, Nextgov reported that US Customs and Border Protection recently migrated the tech it uses to process billions of dollars in annual trade revenue to a cloud platform hosted by IBM. Moving the collections processing functions of its Automated Commercial System (ACS) to IBM’s SmartCloud for Government. The migration is expected to cut costs and further shrink the CBP physical IT infrastructure.
COURT ORDERS FREEZING OF ASSETS OF CRYPTO “GURU” REGINALD MIDDLETON AND HIS FIRM VERITASEUM
Finance Feeds on 26th August reported on developments in the case between SEC against Veritaseum LLC, Veritaseum, Inc and crypto “guru” Reginald Middleton. A judge in New York has imposed a preliminary injunction freezing assets and granting other relief against the defendants. They are alleged to have raised $14.8 million by making material misrepresentations and omissions about the unregistered securities they offered: “VERI Tokens,” “VERI,” or “Veritas”, in a so-called initial coin offering (ICO) in 2017, and in post-ICO offers and sales.
2 HONG KONG CRICKETERS BANNED FOR LIFE OVER MATCH-FIXING
On 26th August, RTHK reported that the International Cricket Council (ICC) had banned 2 Hong Kong players, including one who has already served a 30-month ban, from all cricket for life for breaching the ICC Anti-Corruption Code in matches played between 2014 and 2016.
FIFA OFFICIALS ACCUSED OF GRAFT FACE TRIAL IN GERMANY
Swissinfo on 26th August reported that 4 former football officials, including a Swiss, in connection with an investigation into suspicions of corruption during the 2006 World Cup in Germany. The German organising committee is suspected of having used a slush fund at the time to buy votes in order to ensure the award of the tournament. The Swiss official to go on trial in Germany is former FIFA Secretary General Urs Linsi. The 3 Germans are 2 former presidents of the German Football Association, Wolfgang Niersbach and Theo Zwanziger, as well as former general secretary, Horst Schmidt.
EVERY MONTH UKRAINE LOSES $120 MILLION DUE TO TAX EVASION IN TOBACCO MARKET
On 26th August, 112 UA reported that the Deputy Chairman of the National Police has said that every month Ukraine loses $120 million through schemes which help to avoid the 5% excise duty. He said there were 2 problems – the smuggling of cigarettes to Ukraine and moving them to Europe, and the existence of “grey” tax evasion schemes.
MONEY LAUNDERING USING LIFE ASSURANCE SETTLEMENTS
On 26th August, in his blog, Kenneth Rijock discusses the use of “Life Settlements” by money launderers in the light of a decision from the courts in New Jersey that holding that such Life Settlements are void under its state law, for lack of an Insurable Interest. He explained that these are investments in high-value life insurance policies of elderly persons who generally have chronic health problems, and are selling policies that they no longer need or can afford. The new investors usually purchase a policy from a broker, at a substantial discount, maintain the policy and receive the payment, as beneficiaries, when the insured passes away, and the policy matures.
IRISH CORRUPTION LAW NOT IN COMPLIANCE WITH OECD GUIDELINES
On 26th August, Baker McKenzie reported that a law introduced by Ireland last year, as part of an international drive aimed at combating corruption, has been found not to be in compliance with the OECD convention behind the proposal. The Criminal Justice (Corruption Practices) Act 2018 included a requirement that the offence be a crime both in Ireland and in the country where the bribery allegedly occurred, a requirement called “dual criminality”. However, the OECD has recently said that such a requirement is inconsistent with Article 1 of the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, which requires an autonomous foreign bribery offence.
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