17th October 2019
COSTA RICA ENACTS LAW ON CORPORATE CRIMINAL LIABILITY FOR ACTS OF BRIBERY
An article from Ropes & Gray on 7th October provided a briefing saying that Costa Rica is the latest country in Latin America to establish corporate criminal liability for acts of corruption, and that, despite Costa Rica’s relatively positive rankings on international corruption surveys compared to much of Latin America, corruption remains a significant issue in the country. The new law also creates a new criminal offence of accounting fraud, new monetary and administrative penalties, while allowing companies to earn a 40% reduction by taking affirmative compliance action. As the country pursues full membership in the OECD, Costa Rican authorities may seek to enforce the New Law soon to address the OECD Working Group on Bribery’s criticism regarding the country’s lack of enforcement efforts to date.
ARIZONA OFFICIAL INDICTED FOR ALLEGED INVOLVEMENT IN ADOPTION FRAUD SCHEME
A news release from US Immigration and Customs Enforcement on 15th October announced that a a State Grand Jury in Arizona had indicted Maricopa County Assessor Paul D. Petersen for his alleged involvement in an adoption fraud scheme involving pregnant Marshallese woman flown in Arizona to place their baby up for adoption. The scheme involved Marshallese women using state-funded healthcare in order to pay for delivery costs, with the state losing more than $814,000 as a result.
NEW YORK AVIATION PARTS DEALER FRAUD CHARGES
On 16th October, AIN Online reported that William Vanmanen, operator of Long Island, New York-based aircraft parts supplier Star Aero (previously Aero-Star) had been sentenced to 30 months in prison for fraud involving aircraft parts in interstate commerce, attempting to violate the Arms Export Control Act, and submitting false export information. In 2011 he created and used fake Airworthiness Approval tags that falsely reflected the quality of anti-ice controllers on aircraft; and in 2012 attempted to illegally export restricted defence parts to Hong Kong.
INDIA’S USE OF BARTER AS A WAY AROUND US VENEZUELA SANCTIONS
On 16th October, Oilprice.com reported claims that India’s Nyara Energy has been buying Venezuelan crude oil from Rosneft of Russia and paying in fuel instead of cash to avoid a breach of US sanctions against Venezuela. Nyara is an affiliate of Rosneft, it says. It is also said that barter payments have emerged as the way to avoid sanction penalties as the sanctions only focus on cash and that Nyara Energy is not the only Indian company buying Venezuela oil from Rosneft.
AUSTRALIA: UN BLACKLISTED MAN GAMBLED AT CROWN RESORTS CASINO
The Saturday Paper in Australia on 17th October reported claims that a businessman blacklisted by the UN over smuggling arms to a war criminal gambled million at Crown Resorts. It is said that Joseph Wong lost more than $6 million in Crown VIP gambling rooms, despite being named on a UN Security Council sanctions blacklist for selling weapons to Liberian dictator Charles Taylor. This is the latest revelation about alleged shortcomings in the casino’s compliance framework.
NEW ZEALAND: FINANCE COMPANY FINED $4 MILLION FOR AML BREACHES
On 17th October, Stuff reported that Jin Yuan Finance Limited, a money remitter that formerly had 9 branches in New Zealand, had been repeatedly warned about failing to comply with the Anti-Money Laundering and Countering Financing of Terrorism Act. It had repeatedly breached requirements to conduct customer due diligence, adequately monitor accounts and transactions, keep records, establish, implement, and maintain an AML/CFT programme and ensure that its branches and subsidiaries complied with the Act.
PANAMA DISMISSES CASE AGAINST FORMER UKRAINE POROSHENKO ON SUSPICION OF MONEY LAUNDERING
On 16th October, Ukrainian News reported that the prosecutor’s office of the Republic of Panama has dismissed a criminal case against former president, Petro Poroshenko.
SUSPICIONS OF INNOCENT INVOLVEMENT IN MONEY LAUNDERING – REASSURANCE TO BANKS TERMINATING CUSTOMER ACCOUNTS
On 14th October, Addleshaw & Goddard published an article about the recent English High Court case, N v Royal Bank of Scotland PLC. It says that the ruling offers reassurance to banks taking such action in exceptional circumstances where they have genuine suspicions of financial crime, notwithstanding the potential damage it could have on a customer’s business. The claimant customer was an authorised money services business in the UK which offered foreign exchange and payment services to its domestic and international clients. Following an investigation, RBS had grounds to suspect investment fraud and money laundering on the part of the customer’s clients, and it froze the customer’s accounts and terminated the relationship.
IRAN TO FORM SPECIALISED AML WORKING GROUPS
On 16th October, the Tehran Times reported that the Iranian government is planning to form specialised AML working groups to intensify the country’s campaign against financing terrorism. It was said that the national risk assessment working group will be duty bound to form specialised working groups to review possible threats of money laundering and financing terrorism.
EU FOREIGN DIRECT INVESTMENT SCREENING: WHAT INVESTORS NEED TO KNOW
On 16th October, Bird & Bird published a briefing saying that from 11th October 2020, the long-anticipated EU Foreign Direct Investment Screening Regulation (FDIR) will apply. While the FDIR does not establish a European equivalent of CFIUS, it is nonetheless likely to have a significant impact on FDI within the EU – both in Member States that already have their own screening mechanisms and those which do not. It says that non-EU investors should take note: the FDIR creates significant risks, and perhaps also a few opportunities. The briefing explains the role and working of the process.
GERMANY AND FRANCE AGREE JOINT RULES FOR ARMS EXPORTS
On 17th October, EU Business reported that the 2 countries had agreed binding rules for the export of the product of joint programmes. Germany agreed to no longer block arms exports to third countries for equipment made with less than 20% German components. Recently, Germany blocked arms exports to Saudi Arabia in 2018 following the murder of journalist Jamal Khashoggi, France did not.
OECD SAYS FIGHT AGAINST CORRUPTION IN BRAZIL IS ‘SERIOUSLY ENDANGERED’
The Rio Times on 17th October said that the Anti-Corruption Committee of the OECD has stated that Brazil’s aptitude to investigate cases of corruption involving foreign officials and to prosecute those involved is “seriously endangered”.
CONCERN THAT REFORM OF FINANCIAL REPORTING COUNCIL NOT INCLUDED IN QUEEN’S SPEECH
On 16th October, the ICAEW reported that Sir John Kingman, who led the “root and branch” review of the Financial Reporting Council (FRC), complained that his reforms were not included in the Queen’s Speech; with missing legislation needed to put the new regulator onto a proper statutory base – and to give it the powers it needs to do its job.
US TRADE ENFORCEMENT ACTIONS INCREASE IN 2018
On 17th October, Sandler Travis Rosenberg reported on the issue of the annual report from the US International Trade Commission, which says that the US increased its trade enforcement activities and saw higher trade values in 2018. The report includes information on anti-dumping, countervailing, safeguard, IP rights infringement, national security, etc; the operation of trade preference programmes; activities involving trade bodies such as the WTO, and bilateral trade and free trade agreement negotiations.
HOW SOUTH AFRICA’S BLACK ECONOMIC EMPOWERMENT INITIATIVE EMPOWERED THE POWERFUL
On 16th October, OCCRP published a feature about South Africa’s post-apartheid Black Economic Empowerment (BEE) programme. The programme was intended to reduce inequality for South Africa’s disenfranchised black citizens by getting big white-owned companies to sell stakes in businesses at a massive discount to eligible black partners. Companies could gain political clout through this process, while the new investors, who often had close ties to the ruling ANC, acquired valuable assets at little or no cost. The feature is concerned with a boutique South African securities investment firm which earned more than $58.7 million in shares by taking advantage of the government initiative. It also looks at the role of the state-owned Public Investment Corp (PIC) – Africa’s largest fund – overseeing $131 billion in assets, and meant to manage government investments, including the pensions of public employees. The fund owns significant stakes in many of South Africa’s most valuable companies and controls over 10% of the market capitalisation of the Johannesburg Stock Exchange. A consortium is said to have hijacked these funds for their private gain.
UKRAINE: NO CONVINCING EVIDENCE OF ACTION TO RECOVER FROZEN ASSETS ABROAD THAT ALLEGEDLY BELONG TO FORMER PRESIDENT VIKTOR YANUKOVYCH AND HIS INNER CIRCLE
On 17th October, Rferl reported that Ukraine’s first deputy prosecutor-general has said that in the 3½ years since he left his post, the authorities haven’t provided convincing evidence to recover frozen assets abroad that allegedly belong to former President Viktor Yanukovych and his inner circle.
CHINA AND THE PHILIPPINES – DUERTE’S CLOSE RELATIONSHIP FACES OPPOSITION FROM PUBLIC AND MILITARY
The Nikkei Asian Review carried an exclusive article saying that President Duerte is relying on China to back his $180 billion “Build Build Build” infrastructure programme. It says that 3 years ago, the Philippines’ president announced his “separation” from the US, in exchange for Beijing’s promise to invest in infrastructure and job creation. Distrust of China runs deep in the Philippines, particularly in military circles, where China’s motives are often seen in the context of the countries’ ongoing dispute over territory in the South China Sea. China-backed projects have faced stringent reviews, public backlash and cancellations, posing a challenge for Duterte as he tries to use Chinese money to build infrastructure, create jobs.
2019 UK ANNUAL REPORT ON MODERN SLAVERY
On 17th October, the Home Office released a report which provides an overview of modern slavery in the UK and explains how the UK has responded to this threat over the last 12 months.
EU TAX BLACKLIST – CONFIRMATION OF AMENDMENT
On 17th October, the EU published a Notice confirming amendment of Annexes I and II of the Council conclusions of 12th March 2019 on the revised EU list of non-cooperative jurisdictions for tax purposes. The document lists those still on the blacklist as Vanuatu, Fiji, Belize, Guam, Oman, Samoa, Trinidad and Tobago, US Virgin Islands and American Samoa. Annex II lists the state of play in respect of co-operation by other “grey list” states with respect to commitments taken to implement tax good governance principles.
ITALY’S TOP COURT ORDERS RETRIAL OF FORMER CHAIRMAN CARIGE REGIONAL BANK
On 17th October, Reuters reported that Giovanni Berneschi, former chairman of the bailed-out regional bank had been sentenced to 8 years and 7 months in jail for criminal association and money laundering. He was arrested in 2014 and convicted in 2017 in Genoa.
SWISS AUTHORITIES FINE COMMODITIES GIANT GUNVOR OVER BRIBES IN AFRICA
On 17th October, AP and others reported that the Swiss authorities had ordered commodities trading giant Gunvor to pay nearly CHF94 million in compensation and fines for failing to stop its representatives from bribing public officials to gain access to oil markets in Congo and Ivory Coast. There were “serious deficiencies” in the firm’s internal organisation that led to its inability to block the bribery and corruption between 2008 and 2011. Gunvor was founded in 2000, sources and trades crude oil and refined oil products and has its main trading office is in Geneva. Its headquarters are in Nicosia, Cyprus. Last year, Gunvor had revenue of $87 billion.
PAKISTAN CUSTOMS SET TO INTRODUCE AUTHORISED ECONOMIC OPERATORS (AEO) PROGRAMME
The Express Tribune on 17th October reported that Pakistan Customs is set to introduce an AEO programme, which it says will shorten the average time taken to clear import and export consignments. It was also said that a comprehensive AEO programme had been conceived that would cover all sectors directly dealing in international trade, mainly the exporters and importers. The AEO programme is operational in 83 countries while it is under consideration in 18 countries which include Pakistan.
COCAINE HIDDEN IN FRUIT FEEDS EUROPEAN PIPELINE
On 17th October, Insight Crime carried a report following the latest detection which shows that traffickers continue to move drugs to Europe through a common Latin American export: fruit. An estimated 60% of cocaine trafficked to Europe in 2018 came through the ports of Rotterdam and Belgian port city of Antwerp, according to a Dutch newspaper. The article says that the large amount of cocaine seized at the port of Rotterdam in the banana shipments underscores that fruit remains a favoured cargo for concealing drugs – and this is for 3 reasons, which the article details.
INTERNATIONAL ASSESSMENT OF UK MARITIME COUNTER-TERRORISM EFFORTS
On 17th October, Hellenic Shipping News reported that the IMO, together with experts from Interpol, WCO and the UN Office on Drugs and Crime, took part in a follow-up visit to the UK in October, particularly to assess the country’s implementation of the special maritime security measures in IMO SOLAS, the ISPS Code, as well as the SUA Convention and Protocols. The UN Counter-Terrorism Committee Executive Directorate (UNCTED) organises such assessment visits to countries to assess their compliance with various international security instruments and UN Security Council Resolutions. Topics covered included movement of goods and persons, law enforcement, legal and criminal justice matters, countering the financing of terrorism, and countering violent extremism.
NIGERIA DEPORTS 7 NORTH KOREAN NATIONALS, ONE MAY BE DIRECTOR OF US-SANCTIONED COMPANY
On 17th October, NK News reported that Nigeria had deported 7 North Koreans, and that one of them may be director of US-sanctioned Korea South-South Cooperation Corporation. The reason for the deportations was unclear, but the individuals are banned from re-entering Nigeria for life.
MALAYSIA ‘OPEN’ TO SETTLING WITH GOLDMAN AND DROPPING 1MDB CHARGES
On 17th October, KYC 360 reported that Goldman Sachs has been negotiating with the Malaysian authorities to drop criminal charges against 3 of its subsidiaries in connection with 3 bond issues by 1Malaysia Development Berhad (1MDB). The government is seeking $3.3 billion in compensation accusing Goldman Sachs of helping a Malaysian businessman loot the state-backed fund.
MOLDOVA: BANK FRAUD WAS CO-ORDINATED WITH POLITICIANS AND STATE OFFICIALS
On 17th October, KYC 360 said that a new report has said that the process of the banking system looting in Moldova was a well-prepared operation in time, co-ordinated with politicians and state dignitaries, and there are suspicions that the amount of damage could be much larger than the estimated $900 million to $1 billion previously quoted.
CALIFORNIA MAN SENTENCED TO 25 YEARS FOR LEADING $1.3 BILLION REAL ESTATE PONZI SCHEME
On 15th October, Law.com reported that executive Robert Shapiro was accused of fleecing 9,000 investors with a promise of profits on real estate loans, and seniors contributed about $400 million in retirement savings.
ISLE OF MAN: STATEMENT TO TYNWALD BY CHIEF MINISTER ON VAT TREATMENT OF AIRCRAFT AND YACHTS
On 16th October, the Chief Minister of the Isle of Man made an urgent statement to the island’s parliament on the report published earlier that day by HM Treasury. The report was the outcome a review following the Paradise Papers claims that suggested that yacht and aircraft-owning entities were being registered for VAT purposes in the Isle of Man because of the incorrect application of EU VAT law by the Isle of Man authorities. The Chief Minister said that the review finds there is no abuse of VAT principles in the Isle of Man, and that the Island’s Customs and Excise followed the EU VAT Committee guidance by gathering and considering extensive information regarding the use of the aircraft.
UK-GIBRALTAR DOUBLE TAXATION AGREEMENT AND TAX INFORMATION EXCHANGE AGREEMENT (TIEA)
On 17th October, HMRC published updated versions of the DTA of 2019, which is not yet in force, and the 2009 TIEA.
HM TREASURY NICARAGUA SANCTIONS GUIDANCE NOTICE
On 17th October, HM Treasury published a Notice about the recently implemented EU sanctions about Nicaragua. To date, no individual or entity have been designated under the sanctions.
FORMER UKRAINIAN PRESIDENT ALLY ARRESTED ON ABUSE OF OFFICE CHARGES
On 17th October, Rferl reported that Ukraine’s National Anti-Corruption Bureau (NABU) has arrested Oleh Hladkovskiy, the former first deputy secretary of the National Security and Defense Council (NSDC), and a long-time business associate and political ally of former President Petro Poroshenko on suspicion of abuse of office.
UBS PAYS MORE THAN €10 MILLION TO SETTLE ITALY MONEY LAUNDERING PROBE
On 17th October, Reuters reported that an Italian judge has accepted a request by UBS to pay more than €10 million to settle a money laundering investigation. The settlement, which by Italian law is not an admission of guilt, was requested by UBS in July, after a deal with Italian prosecutors.
US CFTC LAWSUIT ALLEGES $200 MILLION BOGUS SILVER INVESTMENT FRAUD
On 17th October, Courthouse News reported that the Commodity Futures Trading Commission had brought a complaint against Rust Rare Coin in Utah, saying it defrauded people of $200 million in bogus silver investments through a rare coin retailer in Utah and alleging a massive scheme to defraud over 430 individuals — from Utah and at least 16 other states.
BRAZIL: BOLSONARO ALLY UNDER INVESTIGATION FOR CORRUPTION
On 17th October, OCCRP reported that Brazilian investigators started looking into the role of the leader of the Social Liberal Party, or PSL, Luciano Bivar, in alleged campaign finance fraud. The probe has led to charges against the tourism minister and has widened divisions in the right-wing political group.
PHYSICAL POSSESSION STARTING POINT FOR EXCISE DUTY CHARGE RULES UK TRIBUNAL
A briefing from Out-Law on 17th October was concerned with an Upper Tribunal excise duty appeal case where it was ruled that HMRC is entitled to assess the physical holder of goods for unpaid excise duty where there is no evidence that previous suppliers physically possessed the goods. The person in physical possession of goods can be held liable for unpaid excise duty as ‘holder’ if no evidence of earlier duty point, and HMRC is entitled to assess the person in physical possession of goods, and to displace assessment the person assessed must establish that an earlier supplier was the ‘holder’. The briefing stressed that the case illustrates the pitfalls for handlers of excise duty goods where there has been fraud in the supply chain. Effective due diligence of the supply chain is crucial to ensure that legitimate businesses do not suffer when others have committed fraud. In the case involved, HMRC had traced the supply chain back from the final holder’s suppliers to missing, deregistered or hi-jacked companies.
NETFLIX HITS BACK AT MOSSACK & FONSECA DEFAMATION LAWSUIT OVER LAUNDROMAT MOVIE
On 17th October, OCCRP reported on the reaction of Netflix to the defamation lawsuit launched by Mossack & Fonseca in the US. It calls the lawsuit “an eleventh hour gag order against constitutionally protected speech” and insisting the film — which is inspired by the Panama Papers leak — is not the reason their professional reputations have been injured.
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