15th October 2019
$4 MILLION FROZEN IN CHINESE TAIPEI DUE TO SANCTIONS ON NORTH KOREA
On 14th October, the Yonhap News Agency in South Korea reported that implementation of targeted financial sanctions (TFS) for North Korea has resulted in 81 freezing actions worth over $3.96 million, according to the Mutual Evaluation Report on Chinese Taipei released by the Asia/Pacific Group on Money Laundering (APG).
UK REFUSES TO JOIN FRANCE, GERMANY AND NETHERLANDS IN HALTING ARMS SALES TO TURKEY
The Independent on 14th October reported that a number of major European powers have unilaterally pledged to halt arms sales to, including Germany, France and Finland, but the UK, one of the world’s largest arms exporters, is notably absent from the list.
AUSTRALIA: CROWN CASINO WHISTLEBLOWER ALLEGES GAMBLING GIANT SKIRTING MONEY LAUNDERING LAWS
On 15th October, The New Daily reported that the Crown Casino in Melbourne is obliged to report all transactions over $10,000 to the country’s AML authority, AUSTRAC, but leaked reports from the Victorian Gambling watchdog in 2017 detailed concerns from inspectors about these types of transactions and the lack of record-keeping by the gambling giant. One whistleblower says foreign high-rollers often fly to Australia on private jets, avoiding customs inspections, and exchanging huge amounts of cash with no trace. A Crown spokesperson said there was no basis to these allegations. The Guardian also reported that CCTV footage showing dozens of “bricks” of $50 and $100 notes – hundreds of thousands of dollars’ worth – being casually handed over from a shopping bag in a high-rollers’ room at Melbourne’s Crown Casino have sparked renewed calls for a royal commission
NIGERIA: COURT FREEZES 3 COMPANIES’ 45 BANK ACCOUNTS OVER RICE SMUGGLING
On 15th October, The New telegraph reported that the Federal High Court sitting in Abuja has ordered a temporal freezing of 45 bank accounts belonging to 3 companies allegedly involved in smuggling of rice into Nigeria, on an ex parte application filed by the Central Bank of Nigeria (CBN). The are Sun Sam A1 International Limited, Sun Sam International Limited and Sunchrist O. Trans Nigeria Limited.
GUIDANCE ON FRENCH DEFERRED PROSECUTION AGREEMENTS
On 4th October, Osborne Clarke published an article saying that the French Financial Prosecutor (PRF) and the French Anti-Corruption Agency (AFA) have issued common guidelines on the implementation of the Convention Judiciaire d’Intérêt Public (CJIP), or Judicial Public Interest Agreement, which can be used for a corporate entity in relation to matters of corruption, “influence peddling “, money laundering and related offences and was introduced by the Sapin II law. The article provides brief details of how the CJIP operates, and highlights drawbacks, including that documents and information provided by the company or lawyers before any offer from the PRF are not covered by legal privilege.
MAREVA INJUNCTIONS/FREEZING ORDERS: CAN A STRONG PRIMA FACIE CASE OF FRAUD ALONE SUPPORT AN INFERENCE OF ASSET DISSIPATION AND/OR DISPOSAL RISK?
Aird & Berlis in Canada has published an article saying that Canadian case law has developed to create the following criteria that must be satisfied for the court to grant a Mareva injunction (now known as the more prosaic “freezing order” in English law). It says that a recent case confirmed the case law and provided helpful guidance as to when the court may infer a real risk of asset dissipation. It was held that a strong prima facie case of fraud is not alone sufficient to give rise to an inference that a defendant will dissipate or remove/dispose of its assets – context and the surrounding circumstances matter. It is said that a full contextual analysis is essential, and must be considered when compiling the evidentiary record to be filed in support of a request for a Mareva injunction.
A SWISS BANK KEEPS CROPPING UP IN VENEZUELAN CORRUPTION CASES
On 14th October, KYC 360 reported that CBH Compagnie Bancaire Helvetique SA has been described as the go-to bank for Venezuelans to hide money by a man who headed financial-crimes cases for the Venezuelan attorney general’s office until mid-2017 – saying that “they all banked at CBH”. Venezuelan clients of CBH have surfaced repeatedly in U.S. criminal cases, dating to 2010. In at least 3 cases, Venezuelans were convicted of or formally charged with using CBH accounts to pay or receive bribes or to launder illicit funds, the article says.
PAYOFF SCANDAL THREATENS JAPAN’S NUCLEAR POWER REVIVAL
On 9th October, Bloomberg reported that the scandal is threatening to delay the restart of idled reactors in what is becoming the industry’s biggest crisis since the Fukushima meltdowns of 2011. An influential municipal official in a town that hosts a nuclear plant spent years doling out large gifts to executives of its operator, one of the country’s biggest power producers – Kansai Electrical Power. The gifts included hundreds of millions of yen, US currency, vouchers for tailored suits and even gold coins hidden in a box of candy.
TAKING MERCHANDISE FROM THE UK IN YOUR BAGGAGE
On 15th October, HMRC published guidance on “merchandise in baggage” – commercial goods (for trade or business use) where a commercial transport operator does not carry them for you, or you are travelling from the UK carrying goods in your baggage. The requirements include applying for an EORI number at least 48 hours before travelling if your business does not have one already, and checking that the goods are not “restricted”.
UK: PRISON TERMS FOR TAX EVASION INCREASE 10%
On 14th October, ICAEW reported that, in the past year, the average sentence for tax evasion has risen from 2 years and 5 months to 2 years and 7 months, according to research from law firm Pinsent Masons.
Q&A: TRUSTS AND FIFTH MONEY LAUNDERING DIRECTIVE IN THE UK
On 15th October, an article in Accountancy Daily examined potential pitfalls accountants could experience when registering trusts to comply with the 5th Money Laundering Directive (5MLD). The new Directive will bring into its scope all UK express trusts, and not just those with UK tax implications. It will also apply to non-EU resident trusts which own UK land or property, or which have a “business relationship” with an entity in the UK such as solicitors, accountants or banks.
CHARTERED INSTITUTE OF TAXATION RESPONSE TO DIRECTIVE DAC 6 AND INTERNATIONAL TAX ENFORCEMENT
On 14th October, the Institute published its response to consultation by HMRC on implementation in the UK of EU Directive 2018/822, amending Directive 2011/16/EU and aka DAC 6. It says its main concern is that there could be a very large number of transactions requiring disclosure, with many being trivial and/or benign, creating additional burdens on businesses and taxpayers, and on HMRC which will have to process the information. There may also be unnecessary disclosures where intermediaries and taxpayers take a very precautionary approach in order to avoid the risk of penalties.
EL CHAPO’S FAMILY WANTS “TO BUILD UNIVERSITY IN MEXICO”
On 14th October, OCCRP reported claims that the family of imprisoned drug kingpin Joaquin ‘El Chapo” Guzman is planning on building Mexico’s first indigenous university and hopes President Andres Manuel Lopez Obrado will lay the cornerstone. It is also said that El Chapo’s family wants to build a series of co-operative stores selling goods – such as food, coffee, beer and tequila – for dramatically reduced prices. There are also said to be plans to create a pharmaceutical company. Both these companies would be staffed by the local indigenous population. However, the plan hinges on keeping Guzman’s assets in Mexico.
NEW ZEALAND PROPOSES “CATCH-ALL” EXPORT EMBARGO PROVISION
World ECR reports that New Zealand’s Ministry of Foreign Affairs and Trade has launched a public consultation on the introduction of catch-all controls on military exports. This is suggested due to concerns that merely imposing an embargo based on UN sanctions is insufficient, and a change in law would allow a ban affecting all countries of concern to New Zealand.
GE SETTLES WITH OFAC OVER CUBA SANCTIONS VIOLATIONS
World ECR reported that General Electric has paid just over $2.7 million to settle alleged violations of the Cuban Assets Control Regulations on behalf of 3 subsidiaries: Getsco Technical Services Inc., Bentley Nevada, and GE Betz. It was said that they had accepted payment from The Cobalt Refinery Company for goods and services provided to a Canadian customer of GE.
UK: REPORTS OF FOOD CRIME SOARING
On 14th October, Police Professional said that reports of food crime have reached their highest level in the UK for more than 6 years according to the National Food Crime Unit (NFCU). There were almost 7,000 reports of food crime between January 1st 2013 and March 31st 2019. Food crime varies from the deliberate mislabelling of a product, such as horsemeat for beef, to the fraudulent substitution of an ingredient for a cheaper and potentially unsafe alternative. It says that there are concerns that food crime may increase in the event of a no-deal Brexit with prices of many items likely to increase or become in short supply. Fish, grains, honey, coffee, tea, spices, wine, certain fruit juices, milk and meat are the most commonly subject to fraud.
UK: DISCLOSURE FAILINGS SEE TWICE AS MANY CASES COLLAPSE
Police Professional on 15th October reported that the number of criminal cases collapsing as a result of failures to disclose evidence to defence lawyers has more than doubled in the past 4 years. Figures obtained from the CPS show that on average last year around 2 criminal cases a day were dropped because of delays in bringing them to court or an abuse of process. A total of 1,078 cases were discontinued in first 9 months of last year because of disclosure oversights by prosecutors – up from 567 in the whole of 2014. The total is expected to have been far higher for the whole year.
UK HOUSE OF COMMONS COMMITTEE DEBATES SANCTIONS POLICY
On 3rd October, the House of Commons Foreign Affairs Committee debated UK sanctions policy in Westminster Hall. The Chairman repeated calls for there to be a senior responsible officer responsible for co-ordinating sanctions across Whitehall and for ways to block listings on the London Stock Exchange on national security grounds. The Committee did welcome confirmation that Magnitsky-style sanctions on human right abuse grounds would be forthcoming.
TOP VATICAN OFFICIAL RESIGNS AMID LONDON REAL ESTATE SCANDAL
The Wall Street Journal reported on 14th October that Domenico Giani, the Vatican’s head of security, has resigned over leaks connected to a widening financial scandal over the Holy See’s investments in London real estate – in the upscale Chelsea district. The scandal has already led to the suspension of 5 Vatican employees, including a senior Vatican financial supervisor, but the Vatican has so far kept the nature of any suspected wrongdoing secret.
CONTAMINATED MEAT SCANDAL EXPOSES GERMANY’S FOOD SAFETY FLAWS
On 15th October, EurActiv carried an article saying that 3 people died in Germany because bacteria-contaminated food from a meat producer was sold on the European market. Although the authorities knew about the bacterial discovery, production was only halted after 2 weeks, and 37 people are said to have fallen ill because of the bacteria. The meat has been widely distributed as food from the Wilke company is said to have been sold under 13 different brands in 21 EU countries, as well as in several other countries across the globe. How can such large-scale scandals repeatedly occur despite allegedly proper food controls in Germany and the EU? A consumer body is quoted and the article says that the traceability of the production chain often failed because companies had not kept sufficient records of all suppliers, the relevant national authorities do not always sufficiently implement the required standards, according to consumer protection organisations, and there is also a lack of consumer rights, as well as an insufficient amount of strict rules on when authorities must publish consumer-relevant information.
VW PUTS ON HOLD PLAN FOR CAR FACTORY IN TURKEY OVER SYRIA INCURSION
On 15th October, EurActiv reported that Volkswagen has postponed the decision on opening a new car factory in Turkey, against the background of the recent Turkish military offensive in Syria. The German company had registered a carmaker company in Turkey with a capital of more than $100 million, as a sign that the final decision had been made to build a factory in Izmir.
BREXIT: LIST OF CUSTOMS AGENTS AND FAST PARCEL OPERATORS IN UK
On 15th October, HMRC published an updated list of customs agents and fast parcel operators who can help submit customs declarations in a no-deal Brexit.
EU REMOVES 1 NAME FROM ISIS/AL-QAIDA SANCTIONS LIST
EU Regulation 2019/1717/EU on 14th October had the effect of removing Fabien CLAIN (aka Omar) from the EU sanctions lists.
AFRICA INTERNATIONAL CRIMES COURT IS STILL A PIPE DREAM
Defence Web on 15th October reported that, in June 2014, African leaders agreed to set up an African international crimes court under the Malabo Protocol. It is said that such court could, for example, try perpetrators of drug trafficking in Kenya, war crimes in the CAR or DRC, leaders of violent extremist groups such as Boko Haram or al-Shabaab, and other large-scale human rights abuses on the continent. Such jurisdiction could go a long way in addressing impunity for serious crimes in Africa. The new court was intended as a merger of the African Court of Justice and Human Rights (said to be largely non-existent beyond its creation by the AU) and the African Court on Human and Peoples’ Rights created by the African Charter on Human and Peoples’ Rights. However, it is noted that the Malabo Protocol provided for immunity for sitting African heads of state and senior government officials – limiting the usefulness. The Protocol covers 14 categories of ‘grave’ crimes: genocide, crimes against humanity, war crimes, unconstitutional change of government, piracy, terrorism, mercenarism, corruption, money laundering, trafficking in persons, drugs and hazardous waste, illicit exploitation of natural resources and aggression. The article concludes that the odds are poor that the court will become functional.
FIXED ODDS BETTING TERMINALS
On 15th October, the House of Commons Library published an updated briefing examining the controversy over FOBT in the UK.
RUSSIA TRYING TO TRADE AN ISRAELI SENTENCED TO 7½ YEARS IN PRISON FOR POSSESSING CANNABIS FOR A RUSSIAN ARRESTED BY ISRAEL FOR PERPETRATING CYBER FRAUD IN THE US
On 15th October, the Jerusalem Post reported that Russia is trying to trade Na’ama Issachar, just sentenced for possessing cannabis, for Alexei Burkov, arrested by Israel for perpetrating cyber fraud in the US. Burkov has been in custody since 2015, when the US filed a serious and well-grounded evidentiary request for extraditing him to the US for perpetrating the cyber fraud scheme and recently, the Israeli Supreme Court rejected his final appeal. Russia sentenced Issachar for possessing 9 grams of cannabis in her checked luggage in April. The newspaper asks, does this mean Burkov has value to Moscow and might have been involved in cyber intelligence activities? Why else would they care if one Russian gets sent to jail for fraud.
UKRAINE COURT SEIZES PROPERTY OF EX-MP MYKYTAS
On 15th October, 112 UA reported that Maksym Mykytas is suspected of misappropriation of the property of the National Guard worth more than $3.3 million.
SLOVAKIA: POLICE TO QUESTION EX-GENERAL PROSECUTOR TRNKA
On 15th October, the Slovakia Spectator reported that current GP Jaromír Čižnár will not suspend his predecessor, who faces grave corruption suspicions, for now, it says. It claims that Dobroslav Trnka allegedly attempted to blackmail Jaroslav Haščák, a Penta financial group co-owner, in relation to the 2011 political corruption-related Gorilla scandal.
EX-SOUTH AFRICAN PRESIDENT ZUMA GRAFT TRIAL POSTPONED
On 15th October, OCCRP reported that the trial of ex-President Zuma has been postponed until February. The case relates to a $2.5 billion deal with French arms manufacturer Thales.
CALIFORNIA THE FIRST STATE IN THE US TO BAN FUR PRODUCTS
On 15th October, Jurist reported that the new law, just signed by the governor, would make it unlawful to sell, offer for sale, display for sale, manufacture for sell, trade, or otherwise distribute for monetary or non-monetary consideration a fur product in the state. It does contain exemptions, including for fur products used for religious purposes, and fur products used by Native Americans for traditional tribal, cultural, or spiritual purposes.
302 POTENTIAL VICTIMS OF LABOUR EXPLOITATION IN THE AGRICULTURAL SECTOR IDENTIFIED IN PAN-EUROPEAN ACTION
On 15th October, a news release from Europol announced that it had supported the first Europe-wide Joint Action Days against human trafficking between 16th and 20th September for labour exploitation focusing specifically on the agricultural sector. The operation, led by France, also involved law enforcement authorities from Belgium, Bulgaria, Cyprus, Portugal, Spain and the Netherlands. Over 400 officers from seven Member States took part in the 5-day operation. The release says that the agricultural sector is particularly vulnerable to labour exploitation. Most of the vulnerabilities related to the seasonal aspect of the contracts offered, the low wages and therefore the use of relatively low-skilled workforce coming usually from modest backgrounds in poorer regions.
DUTCH DELIGHT AT BREXIT BOUNTY
On 15th October, American Shipper reported that shippers are rapidly relocating distribution and storage capacity to continental Europe ahead of the UK’s expected exit from the EU. Anecdotal evidence that this trend is in full flight was readily available on a fact-finding logistics tour of the Netherlands.
LESSONS FROM THE L3HARRIS TECHNOLOGIES CONSENT AGREEMENT OVER VIOLATION OF US ARMS EXPORT CONTROLS
An article from Torres Law on 11th October is concerned with the settlement agreement between the US Directorate of Defense Trade Controls and L3Harris Technologies Inc for alleged violations of the Arms Export Control Act and the International Traffic in Arms Regulations. The article says that the consent agreement with DDTC provides 5 valuable takeaways for all defence exporters – voluntary disclosures must be voluntary; consent agreements apply to future owners of the company; the cost of consent agreements can extend beyond financial penalties; robust compliance programs help prevent violations and mitigate future penalties; and government regulators actively share information. The article also says that the consent agreement serves as a reminder to companies involved in defence manufacturing or exporting that their export compliance programmes should be holistic and address all potential regulations affecting trade from all the relevant agencies – not just OFAC.
US CUSTOMS ANNOUNCES NEW RULE TO COMBAT ANTI-DUMPING AND COUNTERVAILING DUTY INFRACTIONS
On 11th October, Torres Law published an article about a rule requiring customs brokers to verify the identity of their importer clients, in particular non-resident importers to strengthen the agency’s ability to prevent fraudulent transactions, improve revenue protection, and help prevent the use of shell or shelf companies attempting to evade customs laws, in particular as relates to intellectual property rights, anti-dumping/countervailing duties, and health and safety requirements. The rule also creates procedural and record-keeping requirements for customs brokers to verify information collected from clients, including conducting checks to determine if the client has been sanctioned by the US government or suspended or debarred from doing business with the US government.
PODCAST: THE RISE OF BLOCKCHAIN SMART CONTRACTS
Smart contracts – the next generation of international trade. In this podcast from the International Chamber of Commerce, the co-founder of a Singapore-based start-up working with the ICC to launch blockchain pilots on digital trade innovation sets out to address the question – can we integrate blockchain, Incoterms and ecological sustainability into the emerging technology?
SAN DIEGO INTERNATIONAL AIRPORT IS TESTING AUTONOMOUS SECURITY ROBOTS
Homeland Security Today on 12th October reported that NXT Robotics will beta test and refine the robots in an operating airport setting. The airport’s Innovation Lab occupies part of the former commuter terminal building. NXT has developed its autonomous robots to support airport security monitoring by employing artificial intelligence and continual surveillance.
LISBON AIRPORT TEST OF ‘BIOMETRICS ON THE MOVE’ TO REDUCE WAITING TIME AT BORDERS
Homeland Security Today on 8th October reported that Portugal’s Lisbon Airport is testing future border control technologies this October. Instead of standing in line to show their passport to border guard, travellers are able to cross the border almost seamlessly thanks to face recognition and touchless scanning of fingerprints. The technology will be tested by Frontex – the EU Border and Coast Guard Agency, along with the Border Service of Portugal and the Lisbon Airport Authority. It is said that the technology will allow border guards more time to conduct systematic and efficient security checks without affecting regular travellers, increasing security at the borders while speeding up the process for the public.
MEXICAN PIRATES POSING GREATER RISK IN GULF OF MEXICO TO OIL WORKERS AND TOURISTS
On 8th October, Homeland Security Today relayed a Fox News report that, according to the Maritime Herald, pirate robbery, aggression, and looting – including boats and marine thieves – rose some 310% in 2018, and experts say it has continued to rise. Much of the piracy has been focused on offshore platforms operated by Pemex – Mexico’s state-owned oil company – resulting in massive losses reaching $1 billion in revenue annually. Over the past 2 years, the Mexican Navy has received more than 300 reports about the stealing of hydrocarbons in oil tankers and other critical equipment and machinery, ranging from pipework and communication equipment to cash, motors, and aluminium. Pirates often have been disguised as fishermen, or as Mexican law enforcement or officials when boarding the platforms.
THE US ENTITY LIST EXPLAINED AND ENTITIES LISTED IN THE CONTEXT OF US-CHINA COMPETITION
On 15th October, the Center for International and Strategic Studies published the latest in its Critical Questions series. This followed the listing on 9th October of 28 Chinese government and commercial organisations said to have been implicated in human rights violations against Uighur Muslims in the Xinjiang region of China. Included on the list were 8 leading Chinese technology companies, including artificial intelligence (AI) champions Hikvision, iFLYTEK, SenseTime, and Megvii. The article explains what the Entity List is (essentially a tool used to restrict, not prohibit as a licence can be applied for, the export of certain sensitive technologies and components to organisations who are involved in activities that threaten the national security or foreign policy interests of the US) and the likely effect of the listing on the companies concerned. It also poses the questions – how important are the companies to China and is this really about weakening China’s AI “champions”. Finally, it asks if the move could backfire, and result in China developing its own sources and thus not rely on US suppliers.
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