Day: October 16, 2019

On 16^th October, Eversheds Sutherland published a briefing on a recent High Court case which it says is a useful case study and a welcome outcome.  World Proteins had paid some €2,000,000 to a fraudster, under the mistaken pretence that it was paying a genuine supplier that was chasing payment of genuine invoices and, after cancelling certain payments, World Proteins was out of pocket for €500,000.  World Proteins successfully applied for a freezing injunction over the bank account to which the payments were made – thus immediately preventing the fraudster from further dissipating remaining funds, and then set about recovering the funds in High Court proceedings.  The briefing said that the key to quickly recovering the funds is obtaining a declaration from the Court that the victim of the fraud has a proprietary interest in the funds held in the frozen bank account – that way the funds can be returned by the bank – but something that in the past courts were reluctant to do without a trial.

https://www.eversheds-sutherland.com/global/en/what/articles/index.page?ArticleID=en/Commercial_dispute_resolution/Invoice_hijacking_fraud_-_Court_adopts_practical_approach_to_assist_recovery

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On 16^th October, RUSI published a Commentary saying that while foreign trade zones bring many benefits, they require greater transparency in order to operate securely and ethically.  It says that foreign trade zones anywhere are defined by 3 key characteristics –

1. they are geographically delineated areas considered to be outside of the normal customs area;
2. they have a management authority that can be public, private or mixed; and
3. their authorities offer special benefits in exchange for locating within the zone.

It says that FTZ form the backbone of global supply chains and are the lubricant to the cogwheels of globalisation – yet their importance is frequently overlooked or misunderstood in everything from international development goals to efforts at combating terrorism, transnational organised crime and trade fraud.  It warns that the absence of a standardised set of regulations for zones means that in many places they are the ‘Wild West’ of globalisation, cowboy capitalism at its worst.

https://rusi.org/commentary/transparency-backbone-global-supply-chains-foreign-trade-zones

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On 16^th October, HM Treasury (finally) released its review of the so-called “Paradise Papers” claims about VAT evasion/avoidance involving yachts and private jets using the Isle of Man aircraft register.  It says that there is no evidence of aircraft VAT avoidance in the Isle of Man but further compliance checks should be implemented.  It says that the Isle of Man Government has correctly implemented and administered UK and EU VAT law for aircraft and yachts but should implement additional post-registration compliance procedures to ensure that the right VAT continues to be collected.  Following a series of allegations of VAT avoidance in late 2017, the Isle of Man Government invited HM Treasury to carry out a review of its VAT rules and procedures regarding aircraft and yacht importations.  Under the Isle of Man Act 1979, the island must apply VAT rules in a very similar way to the UK, but it is the responsibility of the Isle of Man to assure those rules.  The report finds that the Isle of Man Government carries out extensive and effective compliance checks during VAT registration but (perhaps surprisingly, if existing checks were “extensive and effective”) should implement further compliance checks in the years after registration to ensure that the right amount of VAT continues to be collected.  The accompanying news release also says that HMRC investigations into other aspects of the Paradise Papers continue.

https://www.gov.uk/government/publications/isle-of-man-aircraft-and-yachts-vat-review

https://www.theguardian.com/news/2017/nov/06/lewis-hamilton-avoided-taxes-jet-isle-of-man-scheme-paradise-papers

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On 16^th October, OCCRP reported that Mossack and Fonseca are taking Netflix to court.  In a lawsuit in the US, the firm alleges defamation, invasion of privacy, trademark infringement, and false advertising, and requests that the film’s release be put on hold.  The suit states that the plaintiffs did not authorize the use of the Mossack Fonseca logo, which is used “in disparaging ways” a total of 8 times between the trailer and the film.

https://www.occrp.org/en/daily/10895-panama-papers-lawfirm-sues-netflix-over-the-laundromat-film

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These Regulations make provision relating to the enforcement of EU Regulation 2019/1716/EU of 14^th October concerning restrictive measures in view of the situation in Nicaragua.  It includes licensing and penalty provisions.  However, to date no person or entity has been designated under the EU Regulation. The sanctions measures include travel restrictions and freezing of funds and economic resources of persons responsible for serious human rights violations or abuses or for the repression of civil society and democratic opposition in Nicaragua, as well as persons whose actions, policies or activities otherwise undermine democracy and the rule of law in Nicaragua, and persons associated with them.

http://www.legislation.gov.uk/uksi/2019/1353/contents/made

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On 16^th October, HM Treasury issued a Notice advising that Fabien CLAIN had been removed from the Consolidated List following EU Regulation 2019/1717/EU.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/839954/161019_ISIL_2019_1717.pdf

https://www.gov.im/news/2019/oct/16/financial-sanctions-isil-daesh-and-al-qaida/

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On15th October, FATF-style regional body ESAAMLG, which covers Africa, has produced a typology report on the ESAAMLG region which identifies 3 main things: the ways in which the procurement system is manipulated, the main players that abuse the system and finally the manner in which the ill-gotten monies are laundered.  The study indeed confirms that procurement corruption exists in the ESAAMLG region and most responding member states cited cases. The evidence presented by member states indicated that corruption exists at all stages of the procurement process. However, it is at the awarding of the tender that most corruption occurs.  The report concludes by accepting that ESAAMLG has a serious problem when it comes to public procurement corruption. Furthermore, the study was able, through making reference to finalized cases, to confirm that there is a link between money laundering and public procurement corruption.

https://esaamlg.org/reports/Report_procurement.pdf

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At the October sitting of the Island’s parliament, Tynwald, a question was asked about the compliance enhancing procedures (CEP) report required on issues identified by MONEYVAL, following the mutual evaluation report and the enhanced follow-up process.  When, it was asked, would this CEP report be published?  It is said that the Isle of Man entered the CEP process in December 2018 in order that 3 specific matters identified as outstanding from the 2016 Mutual Evaluation Report should be monitored and addressed in a timely manner.  The first of 2 CEP reports was considered at the MONEYVAL’s July Plenary and, it is said, will be published on the Government website in due course.  A second CEP report will be submitted to MONEYVAL at the end of October.  The 3 issues involved were concerned with CDD procedures and the greater use of administrative sanctions by the financial sector regulator, the FSA.

http://www.tynwald.org.im/business/hansard/20002020/t191015%20Early%20Written%20Answers.pdf

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On 16^th October, KYC carried an article saying that, despite 470,000 jobs and over $11 billion it contributes to the economy, nobody is sure who fully owns Philippines’ online gambling industry.  It says that online gambling operators, or POGO, are invisible, have owners which are mostly anonymous, according to information gathered by the Nikkei Asian Review.  Of the 60 POGO set up in the Philippines since 2016, most are registered either in the BVI, or other tax havens including the Seychelles, Belize, Samoa and the Isle of Man.  Only 15 POGO are said to be registered with the Bureau of Internal Revenue, and only 6 pay taxes.  It is said that the Anti-Money Laundering Council has revealed that it was already looking into the POGO industry to “understand peculiarities and trends in the flow of funds of online gaming operators and licensees” that will assist in the conduct of a money laundering and terrorism financing assessment of the sector.

https://www.riskscreen.com/kyc360/news/shadowy-operators-power-dutertes-offshore-gaming-boom/

https://calvinayre.com/2019/10/15/business/pogo-tax-revenue-increasing-as-fear-of-raids-spreads/

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On 16^th October, KYC 360 said that understanding why Hezbollah has deep roots in the drug trade requires a historical view of Lebanon.  It also requires knowing that Latin America has a large Lebanese community, involved in the free trade zones of Colon in Panama, the Tri-Border-Area (the region where the borders of Paraguay, Argentina and Brazil meet), Maicao in Colombia, and other strategic zones have been dominated by businessmen of Lebanese descent.  More than 10 million people of Lebanese descent that now call Latin America their current home (Shakira, for example, has Lebanese connections).  The article alleges connection between some Lebanese businessmen, Hizbollah and the drug trade from Venezuela, including via West Africa.

https://www.riskscreen.com/kyc360/news/how-hezbollahs-terrorist-financing-roots-grew-into-the-drug-world/

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