30th September 2019
BREXIT: EU GUIDANCE FOR TRADERS
The EU has a dedicated website, in all official languages, providing information and links on what EU businesses should do in the event of a UK withdrawal. This includes a checklist for traders who might do business with or through the UK and a leaflet described as a “Customs Guide for Business”.
EU: RESEARCH ON THE LINK BETWEEN CRIMINALITY AND JIHADIST TERRORISM
On 24th September, the EU published a paper on for a research project of the the European Policy Centre (EPC) and the Counter Extremism Project (CEP) on the link between criminality (including organised crime groups, local petty crime gangs or individuals) and jihadist terrorism. It contains articles in which experts from both organisations carry out an independent assessment of these urgent challenges as they occur in 10 European countries. The authors of the articles propose a number of bold recommendations to European governments and EU institutions to counter the ongoing threat of the crime-terror nexus. The project is said to have been sparked by the number of incidents carried out by individuals with a criminal history and the large number of European foreign terrorist fighters with criminal backgrounds.
WHY THE 1MDB SCANDAL STILL TROUBLES MALAYSIA’S AMBANK
On 30th September, KYC 360 carried an article saying that the bank’s best-known legacy customer is Malaysia’s former prime minister Najib Razak, whose accounts were held at AmBank’s branch in downtown Kuala Lumpur. Najib is on trial in Kuala Lumpur for alleged industrial-scale corruption in relation to the $1.6 billion plunder of 1MDB, the state-owned investment company that he chaired as prime minister. Najib and 2 other members of his family, notably his handbag-loving wife Rosmah, now face 70 criminal charges between them, charges they deny. The article says that the bank has only partially admitted that it had “compliance issues” in 2015, without publicly explaining why and what they were, and that AmBank seems to be in denial about its pivotal role in the 1MDB scam.
HSBC USES CRIME-SPOTTING TOOL TO CHECK NEW BUSINESS
On 30th September, KYC 360 reported that HSBC has converted a financial crime-spotting algorithm using data and AI that it was forced to build in the wake of a money laundering scandal into one that can scope out new business opportunities. HSBC was forced to invest hundreds of millions of dollars in financial crime compliance as part of a $1.9 billion settlement in 2012 with US authorities over the bank’s failure to prevent money laundering by drug cartels though its Mexican unit.
ASIAN FINANCIAL CENTRES CONTINUE TO DOMINATE TOP 10 RANKINGS
On 27th September, Low Tax reported that the Global Financial Centres Index was released on 19th September and notes that 7 of the top 10 places are now taken by centres in the Asia/Pacific region. Singapore placed 4th, behind Hong Kong in 3rd. Shanghai is considered the 5th position, followed by Tokyo in 6th, Beijing in 7th, and Shenzhen in 9th. Then Dubai rose up to the ranks to take 8th place, while Sydney was ranked 10th. British Crown Dependencies’ performance dipped, with the Isle of Man down 5 places in the rankings, Jersey falling 12, and Guernsey at 92nd, continuing its rapid decline in the index, dropping 17 places.
SCOTS DRINKS BUSINESS TOPS TAX AVOIDANCE SHAME LIST OVER £1.9MILLION UNPAID BILL
On 30th September, the Daily Record reported that Glasgow-based alcohol wholesaler Zamco Limited was hit with £1.7 million in penalties after ‘deliberately defaulting’ on money owed to HMRC.
JERSEY CONSULTING ON MANDATORY DISCLOSURE RULES FOR COMMON REPORTING STANDARD (CRS) AVOIDANCE ARRANGEMENTS AND OPAQUE OFFSHORE STRUCTURES
On 27th September, Low Tax reported that the Jersey Government has issued a consultation document on the implementation of mandatory disclosure rules for OECD CRS avoidance arrangements and opaque offshore structures. CRS replaced the former exchange of information between countries on request, with an automatic obligation to share information on foreign taxpayers to the state that they are tax resident in, to tackle aggressive tax avoidance, evasion, and fraud. The consultation closes on 1st November.
UK REGULATIONS INTENDED TO ENSURE THAT GIBRALTAR-BASED FINANCIAL SERVICES FIRMS CONTINUE TO HAVE ACCESS INTO UK MARKETS IN A BREXIT NO-DEAL SCENARIO
On 27th September, Low Tax reported that these regulations are the Financial Services (Gibraltar) (Amendment) (EU Exit) Regulations 2019 and the Gibraltar (Miscellaneous Amendments) (EU Exit) Regulations 2019.
GUERNSEY LAUNCHES CONSULTATION ON INTRODUCING LLC
Low Tax on 27th September reported that Guernsey is proposing to adopt limited liability companies (LLC), in a move intended to enhance the island’s competitive position in the US. It notes that Guernsey adopted LLP in 2013, and it is expected that would be treated as partnerships for the purpose of taxation in Guernsey, but could decide at the point of establishment to be taxed as a company.
US CUSTOMS SEIZES NEARLY $800,000 INSIDE BOAT SAILING FROM PUERTO RICO TO VIRGIN ISLANDS
On 24th September, a news release advised that US Customs and Border Protection Air and Marine Operations (AMO) agents have seized nearly $800,000 in undeclared currency found inside a 25-foot vessel heading to St. Thomas – being the second incident within one week in which transnational criminal organisations seek to move currency between the two places.
E-MAIL FOOTER COUNTED AS SIGNATURE FOR PROPERTY CONTRACT
On 30th September, Legal Futures reported on a case in which the High Court ruled that a solicitor’s automated email sign-off sufficed as a ‘signature’ for the purposes of a contract involving the disposition of an interest in land, as it indicated “a clear intention” to authenticate or to sign the agreement.
HONG KONG: TIGHTENING THE RULES OF BACKDOOR LISTING
On 30th September, Eversheds Sutherland published a briefing saying that, in recent years, there have been growing concerns over backdoor listings and shell activities in Hong Kong as a result of which new businesses have been able to be listed without going through the listing requirements contained in the relevant rules. The Stock Exchange of Hong Kong Limited considers that these activities invite speculative trading and may undermine investor confidence and the overall quality of the Hong Kong securities market. To help address the evolving market practices in backdoor listing, the Stock Exchange has recently tightened the regulation on reverse takeovers, details of which are described in the briefing. A reverse takeover (RTO) refers to an acquisition (or a series of acquisitions) of assets which results in a change in control of the listed issuer with an attempt to circumvent the new listing requirements under the Listing Rules. The article concludes by saying that, ever since the market consultation on amendments to the backdoor listing rules took place in mid-2018, there has been a noticeable decline in the number of transactions which attempt to list new businesses without going through the new listing criteria. In light of the new rules that are formally in place, the article says, the authors expect this trend to continue in the near future.
US PARK RANGERS CHARGE 2 PEOPLE WITH GINSENG POACHING OFFENCES
On 29th September, Illicit Trade reported that law enforcement officers at Mammoth Cave National Park in Kentucky have charged 2 people with illegally poaching over 100 roots of American ginseng. As well as breaking US federal law by removing a plant from the park, the poachers also contravened CITES, which protects ginseng from harvesting.
NASDAQ CRACKS DOWN ON IPO OF SMALL CHINESE COMPANIES
On 29th September, Reuters reported that Nasdaq is cracking down on initial public offerings of small Chinese companies by tightening restrictions and slowing down their approval, according to regulatory filings, corporate executives and investment bankers. The article says that the shares of most small Chinese companies trade thinly following their US listing, because most of them stay in the hands of a few insiders, and their low liquidity makes them unattractive to many large institutional investors, to whom Nasdaq caters.
A NEW STUDY OF CONSUMER BEHAVIOUR FOUND SCAMMERS ARE FAR MORE LIKELY TO SUCCEED USING WEBSITES AND SOCIAL MEDIA THAN PHONE CALLS AND EMAILS
On 29th September, the Wall Street Journal reported that a new study of consumer behaviour toward fraudulent schemes found that scammers are far more likely to succeed in engaging and stealing money from potential targets by using websites and social media than through the phone calls and emails. It says that this has made online marketplaces among the most lucrative venues for scammers to hunt for targets, along with social-media platforms. Fraudsters often run official-looking websites with fake consumer reviews, and try to lure targets with items including used cars, vacation rentals and tickets to popular concerts and sporting events.
US TREASURY SAYS NO PLANS TO BLOCK CHINESE LISTINGS ‘AT THIS TIME’
On 28th September, Bloomberg reported that it seems that there are no current plans to stop Chinese companies from listing on US exchanges, though the Trump administration is discussing ways to limit US investors’ portfolio flows into China.
CITY OF LONDON POLICE – NATIONAL LEAD FORCE FOR FRAUD
On 30th September, the Home Office published information about the National Lead Force (NLF) agreement between the Home Office and the City of London Police. The City of London Police has an agreement with the Home Office to act as the National Lead Force for fraud. The agreement includes –
- aims and objectives
- accountability and governance
ERICSSON FCPA $1.5 BILLION FINE – ANOTHER FCPA VIOLATION INVOLVING OPERATORS IN AFRICA -PUTS THE SPOTLIGHT ON DJIBOUTI TELECOM
On 27th September, All Africa reported that the investigation covers a period ending Q1 2017 and revealed breaches of the Company’s Code of Business Ethics and the FCPA in 6 countries: China, Djibouti, Indonesia, Kuwait, Saudi Arabia and Vietnam. Djibouti’s monopoly operator Djibouti Telecom signed a deal with Ericsson to build its 3G network and improve its 3G network. The article relates the roll-call of previous companies across Africa caught violating the US FCPA.
FRAUD INSIGHTS: PROTECTING SHAREHOLDER RIGHTS THROUGH AN UNFAIR PREJUDICE PETITION
On 30th September, law firm Mishcon de Reya published a briefing saying that, where the affairs of a company are being or have been conducted in a manner that it is unfairly prejudicial to the interests of a shareholder, or an actual or proposed act or omission would be so prejudicial, a shareholder can apply to the Court under through what is commonly known as an “unfair prejudice petition”. It says that the conduct complained of must be both prejudicial and unfair, and prejudice can be shown where the financial position of the shareholder is damaged.
4 TONNES OF COCAINE AND €2 MILLION IN CASH SEIZED BY SPANISH AUTHORITIES
On 30th September, a news release from Europol advised that a joint investigation, Operation Beautiful, co-ordinated by Spain and involving law enforcement authorities from Colombia, France, Portugal, Romania, Sweden and UK and supported by Europol, led to the dismantling of the largest organised crime group in the Spanish Levante area, involved in drug trafficking and money laundering. The investigation led to the arrests of 81 individuals and various seizures including 4,000 kg of cocaine, €2 million in cash, 3 firearms, jewellery, precious gems, luxury watches, 42 vehicles and a 25-metre-long yacht. Properties worth €20 million and 800 bank accounts were frozen. At present, those arrested are charged with laundering over €7 million.
10 PEOPLE CHARGED WITH CORRUPTION IN GOVERNMENT AGENCY CZECHTOURISM
On 30th September, Radio Prague reported that Czech police have begun the criminal prosecution of 10 individuals connected to dubious public contracts issued by the government agency CzechTourism. A manager has been charged with manipulating public tenders, while the other 9 are suspected of bribery.
AFRICA: THE ORGANISED CRIME INDEX 2019
ENACT Africa has published the Organised Crime Index, an integral part of the EU-funded ENACT programme (Enhancing Africa’s Response to Transnational Organised Crime), which is implemented by a consortium comprising the Institute for Security Studies (ISS), INTERPOL and the Global Initiative Against Transnational Organized Crime (GI-TOC) ENACT undertakes in-depth research at continental, regional and national levels, publishes studies, policy briefs and short observers to monitor organised-crime trends, and works to engage policymakers, and build the capacity of practitioners and enforcement officials. The key finding is that, regardless of current levels of criminality, geographic diversity, economics or governance quality, African countries display very low levels of resilience to the threat. In every region, the criminality score outstrips the resilience score, in some cases by a considerable and troubling differential. However, a significant number of African countries (20 countries, or 37%) find themselves with both low criminality and low resilience to criminality. 3 countries – Kenya, South Africa and Nigeria – are the gateways and entrepots of criminality in Africa, despite their being probably seen as the most democratic and law-abiding.
THE UK MILITARY IN THE EASTERN MEDITERRANEAN
On 12th September, the Oxford Research Group published a Primer which explains what presence, relations and obligations the UK military has in the Eastern Mediterranean region, including Cyprus, Egypt, Greece, Israel, Jordan, Lebanon, Libya, the Palestinian Territories, Syria and Turkey. It points out that retention of the Sovereign Base Areas on Cyprus gives the UK a permanent military and intelligence presence in the Eastern Mediterranean – and by 2020 this will be the largest concentration of UK forces outside of mainland Britain. It also comments that UK arms exports to the region are relatively minor but there is an ambition to sell more to major arms importers Egypt, Turkey and Israel, which are not under any arms embargoes.
THE STATUS OF THE WORLD’S NUCLEAR INDUSTRY
On 25th September, the Bulletin of the Atomic Scientists published an article concerned with the latest World Nuclear Industry Status Report from the Central European University in Budapest – an independent assessment of the nuclear industry. This says that the number of nuclear reactors operating worldwide has increased significantly over the past year – but that the industry is growing too slowly to be sustaining. It says that 9 new reactors started up in 2018, and 4 more came online during the first half of 2019, a modest upturn mostly driven by China. However, the total number of reactors worldwide, 417, falls short of the historic peak of 438 reactors in 2002.
UK: MONEY LAUNDERERS JAILED FOR ROLE IN £1 MILLION ‘RARE EARTH’ METAL SCAM
On 30th September, Accountancy Daily reported that The Commodities Link gave customers the opportunity to invest in baskets of valuable elements – known as ‘rare earths’ – when in reality the metal they were selling was almost worthless. 3 men behind it have now been sentenced for converting criminal property, and 5 other members of the gang were sentenced last Autumn for conspiracy to commit fraud by false representation. Commodities Link ceased trading in September 2013 and was issued with a winding up order in September 2014, and the company went into liquidation in March 2015.
REACH: EXPORT OF CHEMICALS AFTER BREXIT
DEFRA on 18th September published a leaflet and saying that the way you import to and export from the EU will change after Brexit and providing flowcharts which explain the new processes for chemicals.
GUIDE TO BLOCKCHAIN FOR STATE LEGISLATORS IN THE US
On 30th September, Jurist published an article which provides an overview of current US blockchain legislation and a guide for state legislators on the subject.
JAPANESE ELECTRIC COMPANY ADMITS EMPLOYEES RECEIVED $2.97 MILLION IN CASH AND GOODS FROM A FORMER DEPUTY MAYOR OF A CITY HOSTING THE COMPANY’S NUCLEAR PLANT
On 30th September, OCCRP reported that a Japan’s tax authorities’ inspection reportedly revealed that Kansai Electric Power Co (KEPCO) executives had accepted “massive amounts of cash and valuables”.
AZERI MP RESIGNS OVER CORRUPTION ALLEGATIONS AFTER COMPROMISING VIDEO
OCCRP on 30th September reported that Rafael Jabrayilov, an Azerbaijani lawmaker, has resigned following release of a video that showed him trying to repay a $300,000 personal loan he took from a woman by offering her a government-owned house instead.
CANNABIS SEIZURES HIT NEW HIGH IN HONG KONG
The Bangkok Post on 30th September reported that the amount of marijuana seized by Hong Kong customs has surged threefold this year amid the growing use of parcel delivery by drug dealers. Most of the drugs were smuggled from the US and Canada.
DRUG TRAFFICKERS TAKE ADVANTAGE OF URUGUAY’S LAX CONTROLS
660 City News on 29th September reported that following recent large drug seizures originating from Uruguay in May and July, its customs director resigned. Authorities on both sides of the Atlantic have said they had noticed a change in cocaine trafficking patterns from Uruguay, and it is said that senior government officials met with customs agents and exporters to find out what was happening. An example of reportedly lax controls is given as in the port of Montevideo, where the customs terminal has a single scanner that is operated by officials who work only during office hours, never at night. The machine is used solely to check imports. Inspecting all the containers leaving the country is impossible because of the costs and delays that would entail. A computer programme analyses what the merchandise is, its destination and who is moving it to determine which containers are inspected but less than 3% of containers are examined.
MEXICO’S CARTELS FIGHTING IT OUT FOR CONTROL OF AVOCADO BUSINESS
On 30th September, Insight Crime reported that 4 competing drug cartels are extorting avocado producers in Michoacán (which produces over 80% of Mexico’s avocados – worth around $2.4 billion), showing how the fruit is becoming an increasingly important source of illicit profits in the context of shifting criminal dynamics in the state. The cartels charge a monthly protection payment from avocado producers and, in addition, avocado theft is rampant, with at least 4 truckloads of the fruit are stolen every day in the state.
WHERE AND WHY DO MODERN PIRATE ATTACKS HAPPEN?
On 30th September, an article from Hellenic Shipping Review says that while maritime piracy has seen a decline since its height in 2010, the International Maritime Bureau (IMB) still records hundreds of pirate attacks each year with just over 200 in 2018 alone. Pirate attacks largely occur in a few “hotspots” around the globe and are driven by a number of factors ranging from corruption and institutional weakness to fishing conditions and a lack of economic opportunities.
UK POLICE AUCTION TALKTALK HACKER’S CRYPTOCURRENCY
On 30th September, Engadget reported that, in reportedly the first such case, a UK police force auctioned more than £240,000 of cryptocurrency that they confiscated from the teenage hacker behind the 2015 TalkTalk breach. The hacker was sentenced to 20 months jail time and ordered to pay back £407,359; apparently, he was also sitting on a pretty large stash of cryptocurrency.
OFAC: AMENDED VENEZUELA-RELATED GENERAL LICENSES
On 30th September, OFAC advised that it has released amended General License 3G (Authorizing Transactions Related to, Provision of Financing for, and Other Dealings in Certain Bonds) and General License 9F (Authorizing Transactions Related to Dealings in Certain Securities).
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