23rd October 2018
CIGARETTE SMUGGLING IN THE UAE AN EU HEADACHE
On 22nd October, Deutsche Welle reported that companies in the UAE produce cigarettes worth billions of dollars annually and while no doubt a lucrative business, overseas smuggling has been causing rising tax losses elsewhere. In Europe, cigarette smuggling and other forms of illicit trade in tobacco products are estimated to cause a €10 billion loss to the EU and national budgets every year, says the European Anti-Fraud Office (OLAF). The article says that illicit cigarettes in the EU come from a variety of sources, and can even be manufactured inside the EU in illegal factories while internationally, cigarettes are sourced across East Asia. But 2 countries — Belarus, on the EU’s eastern border and the UAE — stand out, with illicit production activities in the free zones in the UAE of particular concern. Cigarette factories can also be found in a handful of other free zones around the world, but the UAE is believed to be the world leader, with one estimate putting production in the free zones at 60 billion cigarettes a year.
https://www.dw.com/en/cigarette-smuggling-in-the-uae-an-eu-headache/a-50930382
US HOUSE OF REPRESENTATIVES PASSES BILL TO EXPOSE OWNERS OF SHELL COMPANIES
On 23rd October, KYC 360 reported that the House had passed a Bill requiring shell companies to disclose their true owners, an effort to crack down on money laundering and other crimes. Supporters of the Corporate Transparency Act of 2019 claim that it would unmask people who use shell companies to engage in human trafficking, bribing government officials and other illegal activity. The White House has said that it supports the Bill, but urged the House and Senate to continue working on some of the specifics.
https://www.riskscreen.com/kyc360/news/house-passes-bill-to-expose-owners-of-shell-companies/
MALTA: LAWYERS, ACCOUNTANTS WILL HAVE TO REGISTER WITH THE REGULATOR TO HANDLE FINANCIAL SERVICES COMPANIES
On 23rd October, KYC 360 reported that lawyers, accountants, and notaries providing assistance to financial services firms will have to register with the Malta Financial Services Authority under proposed new rules that remove the exemption from registration for legal professionals and accountants.
IRISH FINANCE BILL 2019 – UPDATE FOR INTERNATIONAL INVESTORS
On 21st October, Maples Group published a briefing saying that the Bill contains several significant new tax measures which will affect international investment and securitisation structures located in Ireland and managed by investment firms based around the world. A number of these measures are the result of international tax initiatives such as OECD BEPS and the EU Anti-Tax Avoidance Directive (ATAD). Amendments include –
- changes to section 110 of the Irish Taxes Consolidation Act 1997, the Irish provision that underpins the tax treatment of these companies (known as “qualifying companies” or “Section 110” companies).
- a number of changes made to Ireland’s transfer pricing rules, being introduced, in part, to bring Ireland’s transfer pricing legislation in line with the 2017 OECD Transfer Pricing Guidelines and will apply from 1st
- setting out more detail on a number of significant property related tax changes which had been announced in the Budget;
- section 30 of the Finance Bill inserts a new Part 35C into the 1997Act and introduces anti-hybrid rules as required by ATAD;
- section 60 of the Bill introduces a new anti-avoidance rule with the insertion of section 31D in to the Stamp Duties Consolidation Act 1999;
- technical amendments to the revision of Ireland’s exit tax rules in the Finance Act 2018; and
- introduces a new Chapter 3A in the 1997 Act to give effect to EU Directive 2018/822 (“DAC6”) which imposes reporting obligations on intermediaries or taxpayers who enter into certain cross-border arrangements.
https://maples.com/Knowledge-Centre/Industry-Updates/2019/10/Irish-Finance-Bill
CLIMATE-RELATED SECURITY RISKS AND PEACEBUILDING IN SOMALIA
The Stockholm International Peace Research Institute has published a briefing paper saying that climate change poses serious challenges to current and future peacebuilding missions, and that climate change amplifies existing challenges and strengthens radical groups. At the same time, climate change forces missions to think out of the box with United Nations Assistance Mission in Somalia (UNSOM) proving to be an encouraging example. Somalia’s thr3ee decades of conflict have been magnified by a series of increasingly severe droughts, and the impacts of climate- and weather-related changes add pressure to the country’s overburdened governance and judicial systems. The report finds that the rising numbers of droughts, floods and famines allows al-Shabab to act as a service provider. This, it says, is a notable change from its previous strategy where the group would stop people from leaving al-Shabab territory in order to prevent them from seeking aid in government-controlled territory.
https://www.sipri.org/sites/default/files/2019-10/sipripp53_2.pdf
THIRD ANNUAL REVIEW OF THE FUNCTIONING OF THE EU-US PRIVACY SHIELD
On 23rd October, an EU news release advised that the Commission had published its report on the third annual review of the functioning of the EU-US Privacy Shield. The report confirms that the US continues to ensure an adequate level of protection for personal data transferred under the Privacy Shield from the EU to participating companies in the US. The Privacy Shield decision was adopted in 2016 and the Privacy Shield framework became operational later that year. It protects the fundamental rights of anyone in the EU whose personal data is transferred to certified companies in the US for commercial purposes and brings legal clarity for businesses relying on transatlantic data transfers.
https://ec.europa.eu/commission/presscorner/detail/en/ip_19_6134
OFFICIAL GUIDELINES PUBLISHED ON INTERPRETATION AND APPLICATION OF EU LAW ON UNFAIR TERMS IN CONSUMER CONTRACTS
On 21st October, HK TDC reported that the EU Commission had published a Guidance Notice on the interpretation and application of Council Directive 93/13/EEC on unfair terms in consumer contracts (UCTD) which aims to protect consumers against unfair terms in all types of business-to-consumer contracts. The purpose of the Guidance Notice is to present the key concepts and provisions of the Directive in a coherent manner to all interested parties. The primary aim of this Directive is to harmonise the laws of the Member States relating to unfair terms in business contracts, in particular to contractual terms which have not been individually negotiated.
SINGAPORE: 3 FINANCIAL SECTOR PROFESSIONALS CHARGED WITH CHEATING BANKS OF MORE THAN $3.6 MILLION
On 23rd October, the Straits Times reported that 3 professionals from the financial sector were charged in court with cheating, criminal breach of trust and money laundering offences committed between 2009 and last year. Shen Tsu-kuang, 51, a Taiwanese national, is a former director of asset management company Linden Asset Management (Belize). Singaporean Tan Chen Yen, 36, is a former banking operations specialist with Bank Pictet & Cie (Asia). Ng Eu Hou, 27, is a former loan officer with DBS Bank.
UK: 3 CONCRETE PRODUCTS COMPANIES FINED £36 MILLION FOR PRICE-FIXING
Construction Enquirer on 23rd October reported that FP McCann Ltd is facing a fine of more than £25 million for its part in the scheme while Stanton Bonna Concrete Ltd and CPM Group Ltd are due to pay more than £7 million and £4 million respectively.
http://www.constructionenquirer.com/2019/10/23/concrete-products-firms-fined-36m-for-price-fixing
4 FLIGHT ATTENDANTS ARRESTED IN MIAMI AFTER BRINGING IN THOUSANDS IN CASH
On 23rd October, CNN reported that 4 American Airlines flight attendants were arrested at the Miami International Airport and charged with money laundering after bringing large amounts of cash into the country.
https://us.cnn.com/2019/10/23/us/flight-attendants-money-laundering-charges-miami/index.html
INTERNATIONAL TASK FORCE TO TARGET MONEY LAUNDERING IN ILLEGAL WILDLIFE TRADE
On 23rd October, Ekklesia carried an article saying that an agreement has been reached by FATF to crack down on money laundering linked to the illegal wildlife trade. It reports that the Environmental Investigation Agency (EIA) has welcomed the decision taken at a meeting in Paris to endorse a proposal by the Chinese Government during its year-long presidency of FATF, the international standard-setter in AML actions – but also expresses reservations.
http://www.ekklesia.co.uk/node/29002
IRISH REVENUE SEEKS €200,000 UNPAID TAXES FROM LAW SOCIETY EX-PRESIDENT
On 23rd October, the Irish Times reported that the Revenue has applied to the High Court seeking €200,000 in unpaid taxes from James MacGuill, a prominent solicitor and former Law Society president, who accepts he owes the unpaid tax but says it relates to income he has earned but has not yet received.
SPORTS DIRECT CALLS FOR INVESTIGATION INTO GOALS SOCCER CENTRES
On 23rd October, London South-East reported that Sports Direct International PLC has called for an investigation into Goals Soccer Centres PLC and strongly hinted at the possibility of widespread fraud.
‘THE PROFESSOR’ HAS 78 COUNTS OF FRAUD THROWN OUT AFTER COURT RULES HE DID NOTHING WRONG BY USING HIS FRIENDS ACCOUNTS TO PLACE BETS
The Daily Mail reported on 23rd October that Stephen Fletcher, 47, a punter dubbed ‘The Professor’ for his ability to calculate odds has had 78 counts of fraud dismissed after a court found he did nothing wrong by using his friends’ betting accounts. He used the online betting accounts of his friends, allegedly including 2 police officers, to stay one step ahead of bookies who became suspicious.
IRELAND: BREXIT AND IRISH COMPANIES – IT’S MORE THAN NO-DEAL – THINGS TO CONSIDER
On 22nd October, Irish law firm Matheson said that, as the clock ticks on towards the October 31st deadline, companies need to remind themselves of the issues a No-Deal Brexit might present. It has produced a short list of some of these issues and recommendations to directors navigating this unchartered territory.
https://www.matheson.com/images/uploads/documents/Brexit.pdf
CORPORATE CRIMINAL LIABILITY TRIAL WAS FAIR DESPITE ABSENCE OF COMPANY’S DIRECTING MIND
On 22nd October, a briefing from Allen & Overy was concerned with the rejection of an appeal against a conviction for conspiracy to corrupt, notwithstanding that the directors who constituted the company’s directing mind were not present at the trial and did not give oral evidence. Alstom Network UK Limited, a UK subsidiary of the French multinational engineering company, was convicted in April 2018 of conspiracy to corrupt in connection with bribes, disguised as consultancy payments, to public officials in Tunisia in order to win an infrastructure contract. Alstom was convicted of conspiracy to corrupt even though the 2 directors who were the “directing minds and wills” were not present and had not given oral evidence. One could not be extradited and the other declined to give evidence. Hearsay evidence from these two directors had however been admitted in evidence. The Court of Appeal found that the directors’ absence did not render the trial unfair – Alstom UK was a separate legal entity and there was no rule of law or practice which required a directing mind to be indicted with the company or available to give evidence. Whilst remarking that the case illustrates the problems for companies is defending such charges, it also notes that the case was decided under legislation subsequently replaced by the Bribery Act 2010, which removes the need for the prosecution to rely on the identification principle in cases where a corporate entity has failed to prevent bribery.
ENGLISH COURT GRANTS ASSET PRESERVATION ORDER OVER BITCOIN
Allen & Overy on 22nd October published an article saying that the High Court has granted an asset preservation order over Bitcoin in a case where the ability to make such an order was considered. However, the Court declined to grant a freezing order on the basis that a risk of dissipation could not be shown. The article comments that where a fraudster is involved it would be easier for a court to reach a conclusion – the difficulty arises where 2 innocent parties dispute ownership.
UK: NON-PARTY ACCESS TO COURT DOCUMENTS
An article from Allen & Overy on 22nd October is concerned with a ruling from the Supreme Court that the court has far-reaching jurisdiction to allow non-parties access to court documents, but it will only allow such access where doing so furthers the principle of open justice. The case involved an insurer which sued an asbestos manufacturer for contributions to pay-outs it had made for mesothelioma contracted from the manufacturer’s products. The trial commenced, but before judgment the proceedings were settled. Subsequently, an asbestos victims’ forum sought non-party access to the documents referred to at trial, as it believed that these documents would show the asbestos industry’s knowledge about the dangers of asbestos which would help with other (unspecified) claims. The Court said the guiding principle for granting access must be that it furthers the principle of open justice, and that it was for claimant to demonstrate that this was the case – and showing a compelling case. The firm warns that litigants should be aware of this risk of the release of documents whenever they are involved in litigation.
http://www.allenovery.com/publications/en-gb/Pages/non-party-access-to-court–documents.aspx
INDONESIAN MARINE POLICE CRACK DOWN ON LOCAL PIRATES
On 23rd October, American Shipper carried an article saying that aggressive action by Indonesia’s marine police is putting pressure on South-East Asian pirates and the number of local attacks is falling, according to the International Maritime Bureau has reported. It is said that incidents of piracy and armed robbery against ships around the archipelago nation of Indonesia has plummeted over the last 5 years, with a 76.7% fall between 2015 and the year to September 2019.
https://www.freightwaves.com/news/indonesian-marine-police-crack-down-on-local-pirates
https://www.statista.com/chart/3890/the-countries-with-the-most-millionaires/
US ICO OFFERINGS WAY DOWN, BUT SOME STILL USING SEC BACK DOOR TO RAISE FUNDS
On 22nd October, Marketwatch reported that a few “brave” initial coin offering promoters are still using the SEC Form D exempt offering process to gain access to accredited investors with no pre-review by the SEC, but there’s been a steep drop-off since the SEC started suing, and settling, with some early promoters. A Form D is a notice filed by a company for an offering that is exempt from full SEC registration requirements.
UK INVESTMENT BANKERS CHARGED IN US IN GLOBAL INSIDER TRADING SCHEME
The Wall Street Journal on 22nd October reported the case of London-based junior investment bankers at Moelis & Co. and Centerview Partners LLC, Darina Windsor and Benjamin Taylor. The couple were also lovers, and it is alleged that they earned more than $1 million from the scheme, including cash, luxury watches, hotel rooms and dinners. They were among 6 people charged in 4 separate indictments, which laid out several interconnected conspiracies. Both Windsor and Taylor are still at large. She is said to be living in Thailand, and he in France.
https://www.wsj.com/articles/investment-bankers-charged-in-global-insider-trading-scheme-11571763384
INSIDE THE PHONE COMPANY SECRETLY RUN BY DRUG TRAFFICKERS
In another fascinating (not to say astounding) article from Vice, on 22nd October it carried a feature on the murder of Martin Kok, a 49-year-old Dutch convict turned successful crime blogger. One of his clients was MPC, a company that made special, encrypted phones, and it sponsored his Butterfly Crime website. The phones typically run software for sending encrypted emails or messages, and use their own server infrastructure for routing communications, having features that defeat the ordinary methods for law enforcement to intercept messages. MPC was one of several similar businesses offering such phones, the type of phones implicated in various criminal operations. On its website, MPC also advertised security-focused laptops, tablets, and GPS tracking devices. MPC itself was said to be controlled by criminals nicknamed “The Brotherhood”. Initially, it is said, The Brothers were clients of the encrypted phone industry, and used to buy their specialised BlackBerry devices but, not wanting to trust others with their security, decided to create their own devices and they hired developers to make a custom operating system. It is said that the organisation would regularly create new companies before dismantling them once again. The article says that, ostensibly, MPC is now closed – the website is offline and its Twitter account is dormant; and sources are quoted as saying that The Brothers shuttered the phone company after investigations into the group developed.
https://www.vice.com/en_us/article/wjwbmm/inside-the-phone-company-secretly-run-by-drug-traffickers
PODCAST: A CONVERSATION WITH SABIC IN RIYADH
In the latest TRACE podcast, Danielle Cannata, Senior Counsel, International Trade at SABIC, talks about some of the challenges, surprises and successes arising out of doing business in Saudi Arabia. SABIC is 70% owned by Aramco and is the largest public company in the Middle East and Saudi Arabia – a diversified manufacturing company, active in petrochemicals, chemicals, industrial polymers, fertilisers, and metals.
https://traceinternational.org/bribe_swindle_or_steal
‘FIVE EYE’ COUNTRIES (AUSTRALIA, CANADA, NEW ZEALAND, US AND UK) ON SHARED EMERGING THREATS
On 23rd October, the Home Office released the final communiqués summarising 2019 meeting of the Five Eyes Interior Ministers in London. They include one on emerging threats, including emerging technologies, and cyber and online threats.
https://www.gov.uk/government/publications/five-country-ministerial-communique
CHANGES FOR UK EMPLOYEES AND SELF-EMPLOYED WORKING IN THE EU, THE EEA OR SWITZERLAND IN THE EVENT OF A NO-DEAL BREXIT
In its latest Agent Update, HMRC provided information, saying that, in the event the UK leaves the EU without an agreement, there may be changes for UK employers who have people working in the EU, the EEA or Switzerland, and for UK self-employed workers in the EU, EEA or Switzerland.
IN MEXICO, AVOCADO ‘GREEN GOLD’ BRINGS BOTH RICHES AND VIOLENCE
On 23rd October, various media reported that a region’s avocado boom, fuelled by soaring U.S. consumption, has raised parts of western Mexico out of poverty in just 10 years. But the scent of money has drawn gangs and hyper-violent cartels. A recent US warning that it could withdraw orchard inspectors, after one team was threatened, sent a shiver through the $2.4 billion-a-year export industry. Such a move could block shipments and devastate the industry that supplies US consumers hungry for guacamole and avocado toast.
LEBANON’S FORMER PRIME MINISTER DENIES CORRUPTION CHARGES
Deutsche Welle on 23rd October reported that Najib Mikati has denied charges that he had made illicit gains from subsidised housing loans. The accusations come amidst large-scale anti-corruption protests in the country. Allegations have been brought against Mikati, his brother, and his son, as well as Lebanon’s Bank Audi, for making gains from the subsidised loans.
https://www.dw.com/en/lebanons-former-pm-denies-corruption-charges/a-50950966
SOUTH CHINA POLICE ARREST 14 OVER CIGARETTE SMUGGLING AND SEIZE CIGARETTES WORTH $28 MILLION
On 23rd October, Xinhua reported that Customs in south China’s Guangdong Province arrested 14 suspects and seized 7,300 cartons of smuggled cigarettes, worth about $28.2 million US dollars. It was reported that a preliminary investigation showed that the gangs had been smuggling cigarettes via the China-Vietnam border before transferring them to other places using modified vehicles.
http://www.xinhuanet.com/english/2019-10/23/c_138496129.htm
IDENTIFICATION AND PRESERVATION OF ASSETS IN THE CAYMAN ISLANDS
On 23rd October, Appleby published an article which sets out the steps that a party with an arbitration award may take to identify and preserve assets in the Cayman Islands – covering key recent developments and providing practical guidance.
UK – VAT DEDUCTIBILITY FOR FUND-RAISING: CLARITY AT LAST?
On 23rd October, Eversheds Sutherland published an article the Tax Journal that said that the Supreme Court in Frank A Smart Ltd & Son distilled the existing CJEU case law to provide clarity on VAT deductibility for those undertaking fund-raising activities; but says that the judgment will be analysed by the courts in the future as to exactly how it should be applied to a wide variety of cases on input tax recovery.
https://www.eversheds-sutherland.com/documents/services/taxation/TJ_VAT_Salmond-Cummings_Oct19.pdf
https://www.freightwaves.com/news/incoterms-2020
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