29th October 2019
US DOJ: 2 SIGNIFICANT DEVELOPMENTS RELATING TO THE ENFORCEMENT OF WHITE-COLLAR CRIME
An article from Jones Day on 24th October said that, on 8th October, the DoJ announced what is described as 2 significant developments relating to the enforcement of white-collar crime –
- new guidance on how prosecutors should evaluate requests by corporate defendants for a reduction in fines and penalties based on a stated inability to pay; and
- the restructuring of the DoJ Securities and Financial Fraud Unit as the Market Integrity and Major Frauds Unit.
It says that the DoJ hopes to increase incentives for companies to take affirmative steps to prevent fraud and other malfeasance, promote “consistency and predictability” in DOJ’s decision-making, and clarify the factors that DoJ will and will not consider in evaluating corporate inability to pay claims. Although the new guidance is said not to be mandatory, corporate targets of criminal enforcement actions should be able to rely on its provisions when negotiating a reduction in fines and penalties.
APPLICATION PERIOD FOR THE MONTENEGRIN CITIZENSHIP BY INVESTMENT PROGRAMME IS OFFICIALLY OPEN
On 25th October, an article from Eurofast reported that the Citizenship by Investment (CBI) Programme implementation has reached a milestone moment by starting to accept applications. The article sets out to review and outline the criteria for the programme, which is limited to just 2,000 applicants and offers various investment opportunities.
UK: THE MAIN ASPECTS OF THE SANCTIONS AND ANTI-MONEY LAUNDERING ACT 2018
On 25th October, Rahman Ravelli produced a short briefing on this Act and the powers and obligations created by the Act that are set to come into force when Brexit is completed. Its sanctions-related are not yet in force. However, it says, when these provisions come into force, they will give the UK government much wider powers to implement sanctions: financial sanctions, trade sanctions and immigration sanctions.
WHERE DO SCIO SIT IN THE SCOTTISH CHARITIES LEGAL STRUCTURE LANDSCAPE?
On 27th October, Brodies published an article about Scottish Charitable Incorporated Organisations (SCIO) with graphs showing our research into the number of charities that choose different types of legal form when they obtain charitable status. We also track the setting up of Community Interest Companies (CIC) to get a flavour of the wider third sector legal entity choices.
RUSSIAN MINISTRY OF LABOUR ISSUED ADDITIONAL GUIDANCE ON ANTI-CORRUPTION COMPLIANCE
On 28th October, Baker McKenzie reported that the Russian Ministry of Labour issued 3 new sets of anti-corruption guidelines for companies. The new guidelines complement and extend previous recommendations of the Ministry concerning prevention of corporate corruption. Providing links to the guidance, it says that a company may avoid liability for public or private sector bribery if it can prove that it has taken all possible measures to prevent this corrupt activity taking place, but this is unlikely to be successful if it has not followed these latest guidelines as well as the earlier recommendations of the Ministry.
MONEY LAUNDERING RISK BUILDING UP IN PRIVATE BANKS, LUXEMBOURG REGULATOR WARNS
On 28th October, KYC 360 reported that, according to Luxembourg’s financial regulator, a move into ultra-rich clients combined with growing numbers of non-European customers means that the risk of money laundering in Luxembourg’s private banks is increasing, and that the nature of cross-border private banking makes it vulnerable to being abused for illicit asset activity. Ultra- High Net Worth Individuals (UHNWI) are said to bring in more than half to money managed in the country, and this is increasing.
BRITISH COLUMBIA GOVERNMENT INTRODUCES RULES TO CRACK DOWN ON HIDDEN BUSINESS OWNERSHIP
On 28th October, KYC 360 reported that the government has introduced a new set of rules to further crack down on hidden ownership, money laundering and tax evasion in the province. From May 2020, private businesses will be required to keep transparency records of their true owners, including people or entities with direct or indirect control of the company or its shares. The amendments to the Business Corporations Act will require the transparency records to include full legal names, dates of birth, citizenship information and the last known addresses of anyone found to be an owner of a private business. It is claimed that illegal activity contributed to increasing the cost of buying a home in the province by at least 5%.
CHINESE PROFESSOR AT BRUSSELS UNIVERSITY BANNED FROM ENTERING BELGIUM
On 28th October, EU Observer reported that Professor Xinning Song, director of the Confucius Institute at the Brussels University (VUB), can no longer enter Belgium after being accused of espionage for China.
E-LEARNING MODULE ON THE MAIN CHANGES IN RESPECT OF THE TRANSPOSITION OF THE NEW EU TRADE MARK DIRECTIVE INTO NATIONAL LAW
On 28th October, the EU IPO Academy Learning Portal says that it now offers a module on ‘Trade Mark Reform: National Practice’, which aims to inform users about the main changes in respect of the transposition of the new Trade Mark Directive into national law. It seeks to answer such questions as what is the purpose of the trade mark reform?; what has changed in regards to filing an application?; has the registration process changed?; and what has changed for trade mark owners?
MAJOR CARGO CARRIERS LEVY LARGE FINES FOR MISDECLARED CARGO
On 28th October, Forwarder Law published an article saying carriers should be aware that several major carriers – including Maersk, Hapag-Lloyd, HMM and OOCL – have recently moved to impose very large fines for misdeclared cargo. For example, Maersk will impose fines of $15,000, while Evergreen announced fines of up to $35,000 per container for any omission, concealment or misdeclaration of hazardous cargo. It has been reported that misdeclared cargo as the cause of nearly 25% of all serious incidents on board containerships; and a recent private survey of import containers carried out for several carriers by the National Cargo Bureau found approximately 50% of imported containers in the 500 container sample had declaration problems. The article poses the question: what can Freight Forwarders do to minimise risks and liabilities arising out of misdeclared dangerous goods as the industry adjusts? Replying to its own question, the article stresses that carriers should not rely on a letter of indemnity unless backed by a bank with clear and specific rules for negotiating the indemnity. It also says that when doing business through an overseas agent or collaborator additional due diligence checks are needed, including on the identities of their customers and the accuracy of their declarations.
NEW UK REVIEW WILL ENHANCE RESPONSE TO SERIOUS AND ORGANISED CRIME
On 29th October, the Home Office announced a review by the Government will look to identify ways of bolstering the response to threats such as county lines, people trafficking and drugs. It will look to identify ways of bolstering the response to threats such as county lines, people trafficking, drugs, child sexual exploitation, fraud and illicit finance.
LEADER OF BRAZILIAN CRYPTOCURRENCY INVESTMENT SCAM HAS ARREST WARRANT UPHELD
A news report on 28th October reported that the chief legal officer at a fraudulent Brazilian cryptocurrency investment platform has had appeals against the warrant for his arrest rejected. The ruling judge claims Fernando Lusvarghi of Unick Forex was a prominent member at the company and, therefore, the warrant against him still stands. He was one of 65 people subject to arrest warrants issued earlier this month in action against the Unick Forex leaders, known as Operation Lamanai. The company in question was involved in an alleged Ponzi-type scheme, and claimed to guarantee investors profits of 2% per day – to achieve these far-fetched gains, it would trade cryptocurrencies and forex markets.
UK: SRA CONCERNED AT FIRMS’ ‘CUT AND PASTE’ APPROACH TO AML OF LAW FIRMS
On 29th October, the Law Society Gazette reported that widespread checks by the Solicitors Regulatory Authority on 7,000 firms that fall under the scope of money laundering regulations follow fears that many are doing little or nothing to meet their obligations. Of 400 firms checked earlier this year, 83 were found not to be compliant: firms either did not address all the risk areas required or they sent over something other than a concrete risk assessment. The regulator has highlighted its concerns in an updated warning notice and says it provides additional support including guidance, checklists and a suggested template for how to frame compliance methods.
AUSTRALIA: GOVERNMENT CONSIDERING USE OF FACIAL RECOGNITION SOFTWARE TO ENSURE ONLY ADULTS CAN ACCESS CONTROVERSIAL ONLINE CONTENT, INCLUDING GAMBLING AND PORNOGRAPHY SITES
Calvin Ayre on 28th October reported that privacy advocates have raised alarm over this plan, which would authorise access to the biometric database not only by different government agencies but also by private companies like telecoms and banks.
SINGAPORE COURT REJECTS $30 MILLION GAMBLING DEBT CASE
On 28th October, Calvin Ayre reported that an Australian casino operator has lost a legal bid to collect on a VIP gambling debt in a Singapore court. The International Commercial Court rejected a claim by the operator to force Singaporean national Wong Yew Choy to pay the A$43.2 million gambling debt Wong allegedly ran up at The Stars’ Gold Coast casino. The operator accused Wong of offering them a blank cheque to cover his gambling losses but Wong’s check bounced when the company tried to cash it at Wong’s Singapore bank. The Court ruled that Singapore law can only compel a gambler to pay his casino debts if said debt is incurred at one of Singapore’s 2 integrated resorts.
GREEK REFORMS FOR ONLINE GAMBLING
On 29th October, Intergame reported that the Greek government has accepted the reforms necessary to pass a revised gambling Bill. This will see the launch of the country’s first regulated online gambling framework, and operators will be able to continue to offer RNG games including slots. Operators blocked in the past year cannot apply for licences, while the 24 companies handed provisional licences in 2011 will need to reapply for fresh licences by March 31st.
CUSTOMS’ ROLE IN PREVENTING ILLEGAL TRAFFICKING OF CULTURAL HERITAGE STRESSED AT INTERNATIONAL CONFERENCE IN CYPRUS
A news release from the WCO on 28th October reported on the conference promoting the Council of Europe 2017 Convention on Offences relating to Cultural Property. It was observed that most cultural objects had been seized in Europe, demonstrating the region’s heightened awareness of Customs-Police co-operation and expertise in art markets. It was suggested that the Convention could fill the current gaps in the fight against the trafficking of cultural objects by criminalising these offences, thereby raising awareness by preventing them from being seen as “victimless crimes”.
UK: NATIONAL CYBER SECURITY CENTRE (NCSC) CLAIMS TO HAVE STOPPED MORE THAN 1 MILLION CASES OF SUSPECTED PAYMENTS FRAUD
On 29th October, Fintech Futures reported that the UK’s National Cyber Security Centre (NCSC) claims to have stopped more than a million cases of suspected payments fraud, according to its third annual review. It also claims to have stopped more than 600 cyberattacks on the UK and that a dedicated focus on anti-fraud has meant that a significant amount of fraudulent payments were prevented from occurring. NCSC, which is part of the Government Communications Headquarters (GCHQ), provides advice and support for the public and private sector on how to avoid and mitigate cybersecurity threats.
US: CHARGES FOR FRAUD AND ILLEGAL OFF-EXCHANGE PRECIOUS METALS TRANSACTIONS
A release on Mondo Visione on 28th October, reported charges against Aviv Michael Hen of New York, and Omega Knight 2 LLC, as well as a consent order against Erez Hen of Florida, for fraud and illegal, off-exchange precious metals transactions and failing to register with the CFTC. Omega Knight and Aviv Hen are to pay a civil monetary penalty of $11,442,771, pay $3,814,257 in disgorgement, and imposes permanent registration and trading bans against them. Erez Hen is to pay a civil monetary penalty of $75,000, pay $275,000 in disgorgement, and imposes 5-year registration and trading ban against him, and requires him to comply with certain undertakings involving 2 Erez Hen-owned entities unrelated to Omega Knight.
BREXIT: WTO IMPLICATIONS FOR BANKS IN CASE OF NO-DEAL
The European banking Federation has produced a factsheet on 28th October which explains which global trade rules will apply to European banks in the event of a no-deal Brexit. In the case of such a scenario, all trade between the EU and UK will be governed by the international rules agreed at the level of the WTO. The fact sheet specifically addresses the WTO implications for banks.
CITY OF JOHANNESBURG REFUSES TO PAY RANSOM TO HACKERS
On 28th October, Security Week reported that the South African city of Johannesburg says it will not pay the ransom demanded by hackers who recently breached its IT systems, and which led to its official website and various services being taken offline. Impacted services include billing, property valuation, land information, health and others. The hackers asked the city to pay 4 bitcoin, worth roughly $37,000, by October 28th, otherwise they would make public the financial and personal information they allegedly obtained as a result of the hack.
US REGULATOR TO BAR CHINA’S HUAWEI AND ZTE FROM GOVERNMENT SUBSIDY PROGRAMME
Reuters reported on 28th October that telecommunications regulator Federal Communications Commission (FCC) plans to vote in November to designate China’s Huawei and ZTE as national security risks, barring their US rural carrier customers from accessing an $8.5 billion government fund to purchase equipment or services, and also plans to propose requiring those carriers to remove and replace equipment from such designated companies.
ISLE OF MAN ANNOUNCES NEW NICARAGUA SANCTIONS REGIME
On 29th October, a news release from the Isle of Man advised the sanctions regime created by EU Regulation 2019/1716/EU had been implemented in the Isle of Man (Brexit notwithstanding). Of course, to date no individuals or entities have been designated by the EU Regulation.
MULTI-MILLION EURO GOLD HEISTS LEAD PAN-EUROPEAN INVESTIGATION AND 7 ARRESTS
A news release from Eurojust on 29th October advised that 7 suspects have been arrested for the sale of large quantities of stolen gold as the result of an action, co-ordinated by Eurojust. The French Gendarmerie commenced an investigation in 2017 and a suspect was identified, traveling once or twice a month to Frankfurt to sell melted gold (originally stolen jewellery) to German accomplices, who were laundering the proceeds of the crimes. The arrests included 2 people in Germany and 1 in Austria. In addition to the arrests, significant seizures were made, with an estimated value of close to €3 million, including jewellery, real estate, cash, luxury cars and handguns.
FORMER LEADER OF MOLDOVAN DEMOCRATIC PARTY VLAD PLAHOTNIUC PUT ON INTERNATIONAL WANTED LIST
The official Moldovan News Agency on 29th October announced that the former PDM leader has the capacity of an accused person on criminal files managed by the prosecuting authority, opened for committing money laundering in particularly large amounts. He is said to have left Moldova on 14th June, when the government led by Pavel Filip informed that it was resigning.
CFTC AND OTHER US FINANCIAL REGULATORY AGENCIES, JOINS THE GLOBAL FINANCIAL INNOVATION NETWORK (GFIN)
In its latest Corporate & Financial Weekly Digest, law firm Katten reported that, on 24th October, the Commodity Futures Trading Commission (CFTC) joined the Federal Deposit Insurance Corporation (FDIC), Office of the Comptroller of the Currency (OCC), and the SEC in announcing that it will be joining the Global Financial Innovation Network (GFIN). It explains that GFIN was formed to establish a framework for co-operation among financial services regulators on innovation-related topics and a vehicle for sharing different experiences and approaches. With 46 other member organisations worldwide, GFIN also seeks to provide a more efficient way for innovative firms to interact with regulators and navigate among jurisdictions as they look to scale new ideas.
THE IMPACT OF FOREIGN INSOLVENCY PROCEEDINGS ON ENGLISH LAW BANK GUARANTEES
On 28th October, 4 New Square Chambers published a briefing about a recent case which raised a number of important points of European cross-border insolvency law under the European Insolvency Regulation, and the English Court’s exercise of a foreign law judicial power. The case involved guarantees under English law and a company that subsequently entered into examinership, an Irish insolvency procedure. It says that the resultant decision is undoubtedly a cautionary tale for those creditors with English law guarantees, who should not assume that they will go unaffected by foreign insolvency proceedings. It is also said to be a welcome clarification as to the general approach of the English court to the interpretation and application of foreign law in domestic proceedings, where insolvency processes governed by the EU Regulation or the Recast Regulation are opened in the jurisdiction of another EU Member State.
CHINESE SELLERS TO OVERSEAS CONSUMERS WILL FACE NEW OBSTACLES IN 2020
Loadstar on 29th October reported on the go-ahead at the Universal Postal Union (UPU) for postal services in destination countries to raise their charges to China Post (and other countries of origin) whereas previously China was dealt with as if a developing country with low postal charges. Countries with a high level of receipts from China, such as the US, will be able to set their rates as high as 70% of their domestic rates from 1st July and, subsequently, raise them to a maximum of 80%. Countries with lower inbound volumes will be able to raise their charges starting in 2025. In addition, the EU is to introduce a new VAT regime on 1st January 2021 that will make it more difficult to avoid the tax. It is said that China Post officials expect fees its agency has to pay other countries for parcel delivery will nearly triple by 2025. The EU change sees the elimination of a VAT exemption for goods in small consignments with a value of up to €22, with the seller having to charge and collect VAT at point of sale and then pay the it to the relevant EU Member State. Shippers will not be able to hide behind e-commerce platforms to avoid VAT.
DETAINED JIHADISTS APPARENTLY PLANNING MARITIME ATTACK IN MOROCCO
On 29th October, Defence Web reported that an Islamic State cell that has been broken up planned to attack Casablanca and its port while a Syrian militant who assisted the group is at large. The group is said to have targeted economically sensitive sites in Casablanca and offshore, and were caught in possession of firearms, bomb-making material, an inflatable boat, diving equipment and navigation tools.
JOINT WORKING GROUP OF 3 UN AGENCIES MET IN SPAIN TO ADDRESS IUU FISHING
On 28th October, the International Maritime Organisation reported that on 23rd-25th October, 3 agencies – the International Maritime Organization (IMO), the Food and Agriculture Organization (FAO) and the International Labour Organization (ILO) – held a meeting on illegal, unreported and unregulated (IUU) fishing. It recommended the organisations promote and support the development of ways to increase co-ordination and information sharing for inspection procedures at national level. This included a technical co-operation programme on IUU fishing and on promotion of relevant international instruments. It is said that the entry into force of the Cape Town Agreement is expected to contribute to the fight against IUU fishing by providing a global mandatory regime for fishing vessel safety.
46 COUNTRIES SIGN THE TORREMOLINOS DECLARATION AIMED AT IMPROVING FISHING VESSEL SAFETY AND REDUCING ILLEGAL, UNREPORTED AND UNREGULATED (IUU) FISHING
On 29th October, Defence Web reported that the countries had signed the Torremolinos Declaration, a non-legally binding political instrument during the Torremolinos Ministerial Conference on Fishing, Vessel Safety and Illegal, Unreported and Unregulated Fishing in Spain.
ESTONIA LAUNCHES CRIMINAL PROBE INTO SWEDBANK MONEY LAUNDERING SCANDAL
Reuters reported on 29th October reported that Estonia’s police and prosecutor have launched a criminal investigation of Swedbank over alleged money laundering in 2011-2017, the state prosecutor’s office said. It is already under investigation by Swedish and Estonian financial regulators.
DUTCH COURT REMOVES OBSTACLE TO DUTCH PROSECUTION OF SHELL OVER NIGERIAN OIL DEALS
On 29th October, Energy Mix reported that a Dutch court has rejected Shell’s claim that documents seized during a raid on the company’s offices cannot be used as evidence by prosecutors, in a case over alleged corruption in its dealings in Nigeria in relation to the OPL 245 oil deal, due to legal professional privilege. The court is reported to have ruled that, in fraud and corruption cases, legal professional privilege applies only to advice from external lawyers. The ruling is said to be seen as a major victory for the Dutch prosecutors who are investigating corruption allegations surrounding Shell’s acquisition (with the Italian oil giant Eni) of the controversial OPL 245 oil field.
MACAU: POLICE ARREST 76 LOAN SHARKS
On 29th October, Calvin Ayre reported that the loan shark scheme was worth US$2.6 million and specifically targeted gamblers and police were able to seize $701,490 by freezing 13 accounts purporting to belong to junkets. 41 of the arrests were in Macau, the others in China. It is said that, like other loan shark operations around Macau, this one is accused of illegally detaining victims who were unable to pay back their debts.
TARIFF WARS AND AMERICAN SUPERYACHTS – EU REQUIRES US-BUILT SUPERYACHTS TO PAY AN ADDITIONAL 25% CUSTOMS DUTY
On 29th October, Superyacht News carried an article saying that, due to the ongoing trade dispute between the US and EU, US-built yachts wishing to charter in EU waters and needing to be imported into the EU will be affected and potentially find themselves subject to punitive EU duty tariffs. It explains that the range of US goods on which increased tariffs were to apply included sailing yachts and motor yachts and that, consequently, US-built superyachts that were to be imported into the EU, either for chartering purposes or for private ownership by an EU resident, are required to pay an additional 25% customs duty in addition to the VAT payable in the Member State of importation. US yachts that had been imported into the EU before 22nd June 2018, however, were unaffected. Importantly, the article notes that yachts that have previously been exported from the EU are also required to pay these additional duties. As a consequence, even yachts that are being imported into the EU under the existing French Commercial Exemption, where the VAT is exempted on the importation, will still be subject to the specified additional 25% duty tariff. Temporary Admission (temporary importation) is still available, but the vessel cannot trade, meaning that it can only be in EU waters as a private pleasure vessel.
LEGAL EXPENSES AND VARIATIONS FOR LIVING EXPENSES IN ACCOUNT FREEZING ORDERS
Another briefing from Drystone Chambers in October was concerned with living expenses from an Account Freezing Order under the UK’s Proceeds of Crime Act 2002. As with other forms of restraint under POCA, living expenses can be paid from an account where they are reasonable and continue the current lifestyle of the owner of the account.
UK: POLICE DETAIN JAILED FORMER MEXICAN GOVERNOR’S WIFE AND SHE FACES EXTRADITION HEARING
On 29th October, Reuters reported that police in London had detained Karime Macias, the wife of a disgraced former Mexican state governor who is serving a 9-year jail sentence for money laundering and links to organized crime. A judge in Mexico issued a warrant for her arrest in 2018 for the alleged misuse of over $5.9 million in funds from a social welfare programme.
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