9th November 2019
3 SAUDI NATIONALS CHARGED WITH SMUGGLING FIREARMS PARTS FROM US TO SAUDI ARABIA WITHOUT AN EXPORT LICENCE
A news release from US Immigration and Customs Enforcement on 8th November announced that 3 Saudi citizens allegedly purchased more than $100,000 in weapons parts in the US while on student visas and then smuggling the parts to Saudi Arabia. They are said to have had rifle barrels, rifle triggers, and other items related to firearms in their checked luggage on flights from Los Angeles to Saudi Arabia. They allegedly also would falsely identify rifle barrels, rifle triggers, and other items related to firearms as “shower curtain rods” or “car parts,” or other false names before exporting the items. All 3 defendants are believed to be in Saudi Arabia.
REPORT ON ROLE OF JAPANESE COMPANY HIGHLIGHTS NORTH KOREA’S SHREWD SMUGGLING
NHK on 8th November reported that an investigation has concluded that a Japanese logistics company unwittingly played a part in smuggling a luxury German vehicle into North Korea. The probe was launched after a C4ADS report in July how North Korea gets around international sanctions, and about a car used by North Korean leader Kim Jong Un for a summit with President Trump in February in Vietnam.
IRANIAN CENTRAL BANK IMPOSES AML CONTROLS ON LENDERS
Central Banking on 8th November reported that Iran’s central bank has imposed AML measures on all the country’s commercial banks, after government hardliners blocked new laws aimed at tightening controls, using a mechanism that does not require approval by lawmakers.
CLAIM THAT COMPANY SOLD CHINESE-MADE SURVEILLANCE EQUIPMENT TO THE US WITH ‘MADE IN THE USA’ LABELS
CNN on 8th November reported claims that a New York-based technology company sold Chinese-made surveillance equipment to the US government while falsely claiming the products were made in the US. Aventura Technologies is accused of having imported millions of dollars-worth of equipment from China that was labelled and passed off as being US-made. It is said to have sold surveillance cameras and other equipment used on US military installations.
UK POLICY PAPER ON TAX TREATMENT OF CRYPTOASSETS FOR COMPANIES
On 8th November, an article from Bird & Bird saying that HMRC finally published its policy paper on the taxation of cryptoasset exchange tokens for companies and other businesses on 1st November. It is said that the paper only covered the tax treatment of exchange tokens such as bitcoin; further guidance relating to security tokens (including asset-backed security tokens which can be traded on an exchange) is to follow. As for individuals, HMRC confirms that it does not regard any exchange tokens as money or currency.
EU CONFIRMS BELIZE REMOVED FROM EU TAX BLACKLIST AND NORTH MACEDONIA MEETS COMMITMENTS
A news release from the EU on 8th November advised that Belize has passed the necessary reforms to improve its tax regime for international business companies that was due to be implemented by end 2018. The EU Council also found North Macedonia compliant with all its commitments on tax co-operation following its ratification of the OECD multilateral convention on mutual administrative assistance and should be removed from the EU grey list.
EU COUNCIL AGREES ON A MODERNISED FRAMEWORK FOR EXCISE GOODS
A news release on 8th November advised that the EU is to modernise its rules on taxation of the sale or use of products such as tobacco, energy or alcohol, with a provisional agreement on measures to improve the business environment for trade in goods subject to excise duties, by further improving conditions for fair competition and reducing the administrative burden for companies. The intention is to align the EU excise and customs procedures, so as to improve the freedom of movement for excise goods released for consumption in the single market while ensuring that the correct tax is collected by the member states; and to reduce the administrative and legal burdens for small companies.
US LAWMAKERS INQUIRY INTO SAFETY OF IMPORTED PHARMACEUTICAL PRODUCTS
On 8th November, HKTDC carried an article on a recent US House of Representatives Energy and Commerce Committee Health Subcommittee hearing on safeguarding pharmaceutical supply chains in the global economy. The hearing focused on imported active pharmaceutical ingredients (API), especially those from mainland China and India. It was reported that nearly three-quarters of API manufacturers making products for the US are located overseas, including 18% in India and 13% in mainland China, and the number of registered facilities making API in mainland China more than doubled between 2010 and 2019. The hearing considered FDA inspections of producers, and testimony included 2 examples of problems traced to mainland Chinese manufacturers and involving tainted or substandard API.
9 FENTANYL SMUGGLERS JAILED IN LANDMARK US-CHINA OPERATION
Customs Today on 8th November reported that 9 people have been jailed in China for smuggling fentanyl into the US, after a landmark joint investigation by US and Chinese officers. 1 person was given a suspended death sentence, which normally means life in prison, and 2 others were given life sentences. The 6 others received lesser sentences, ranging from 6 months to 10 years in prison.
US FEDERAL COURT REDUCES PENALTY IMPOSED ON UPS FOR TRANSPORTING CIGARETTES
On 8th November, Jurist reported that a court of appeal has reduced the civil damages imposed on UPS for transporting cigarettes to New York City. The decision reduced the district court’s order from $247 million in damages to $97.6 million. In New York, state and local laws targeted the transportation of cigarettes from non-taxed areas to New York consumers, and the New York Attorney General concluded that UPS engaged in multiple violations. That 2004 investigation ended with an Assurance of Discontinuance (AOD), in which UPS agreed not to knowingly transport cigarettes to unauthorized recipients. However, in 2011 federal agents found illicit cigarettes at a UPS facility in 2011 and a federal court concluded that UPS violated the AOD in a 2016 opinion. UPS has indicated it may lodge a further appeal.
POLISH AND SWEDISH AUTHORITIES BUST LUXURY CAR SMUGGLING GANG
On 8th November, a Europol news release advised that Polish Border Guard and the Swedish police, supported by Europol, have dismantled an organised crime group involved in the theft of luxury cars across Europe. Stolen vehicles from Sweden were transported by ferry to Poland to have their identity marks changed or to be dismantled and sold as spare parts.
NAVIGATING US EXTRATERRITORIAL SANCTIONS AND EXPORT CONTROL RISKS WITH A NIMBLE COMPLIANCE PROGRAMME
On 8th November, Baker McKenzie published an article which provides key risk assessment questions to ask, and suggests the minimum considerations for a viable compliance programme.
ISLE OF MAN: CUSTOMS UNION (UNITED KINGDOM) ORDER 2019
On the Order Paper for the November sitting of the Isle of Man’s parliament is this Order which provides that the revised customs union arrangements between the UK and the Isle of Man for the purposes of import duties is to have effect. The two jurisdictions have been in an evolving common taxes arrangement for many years, with the 1957 Common Purse Agreement (covering customs duties, some excise duties and purchase tax) replaced in in 1979 by the Customs and Excise Agreement (extending the scope of arrangements to VAT, amongst other things). The 1979 had itself been amended in subsequent years and in 2018 a new exchange of letters has led to a further, more extensive amendment, which takes into account the likely effect of Brexit. This new Order is actually made using powers in a UK Act, but one which has (in part) been applied to become part of Manx law. The revised arrangements will, subject to limited exceptions, come into effect upon an exchange of letters between the Governments and the date will be publicised in due course on the Isle of Man Government website.
CUSTOMS TRANSIT PROCEDURES (AMENDMENT) REGULATIONS 2019
These Regulations are always on the November Order Paper and are intended to ensure that the customs procedures will continue to operate effectively once the UK leaves the EU. In essence, as part of the UK customs territory, goods in transit procedures can and will be able to move to and from the Island as if moving within the UK.
UKRAINE: NABU SEIZES 15 VOLUMES OF DOCUMENTS LINKED TO CASE INVOLVING EQUIPMENT PURCHASES FOR UKRAINIAN ARMY
On 9th November, UNIAN reported that the National Anti-corruption Bureau of Ukraine (NABU) has seized 15 volumes of documents from the Ministry of Defense on the facts of the purchase of weapons and equipment for the Armed Forces of Ukraine in the past years, and in particular purchases of Bogdan 2251 ambulances and off-road trucks MAZ 5316 and MAZ 6317 in 2015-2019, linked to alleged large-scale embezzlement scheme in the defence industry.
ISLE OF MAN: PROCEEDS OF CRIME ACT (COMPLIANCE WITH INTERNATIONAL STANDARDS) (NO.3) ORDER 2019 AND ANTI-TERRORISM AND CRIME ACT (COMPLIANCE WITH INTERNATIONAL STANDARDS) ORDER 2019
On the Order Paper for the November sitting of the Isle of Man’s parliament, the first Order is intended to amend the Island’s law to align its tipping-off legislation so that it is commensurate with the FATF Recommendation 21 (Tipping-Off and Confidentiality) and to make explicit the offence of tipping off found within section 145 of POCA 2008. In this context, “tipping off” refers to the act of divulging that a matter has been disclosed (either to the FIU or a nominated person) suggesting that a money laundering offence under Part 3 of POCA 2008 has been committed. This was an issue identified in MONEYVAL’s Mutual Evaluation Report of the Island (and in a preceding 2009 IMF report). Other amendments made by the Order are intended to assist with the legitimate disclosure of information within group companies and financial institutions, to allow proper liaison within the sectors when suspicions are held to provide for voluntary information sharing, to meet CDD obligations.
The second Order makes corresponding changes in respect of the Anti-Terrorism and Crime Act 2003.
2 FORMER OWNERS OF BINARY OPTIONS SCHEME, AND 13 OTHERS, CHARGED IN US – ALL ISRAELI
On 8th November, a release on Mondo Visione reported that 15 individuals, including 2 former company owners, were charged for their alleged participation in a scheme to defraud investors in the US and worldwide by fraudulently marketing approximately $140 million in financial instruments known as “binary options” from 2014. They are all current or former residents of Israel. The charges relate to 2 websites, known as BinaryBook and BigOption, and the indictment alleges that the defendants and their co-conspirators all worked for an Israel-based company called Yukom Communications, a purported sales and marketing company.
ULTRA-FAST BOMB DETECTION UNVEILED
Police Professional on 8th November reported that researchers from the University of Surrey have developed a new ‘ultra-fast’ method to detect materials that could be used by terrorists to build explosives. It says that the new detection system is able to analyse a wider range of materials than current thermal-based detection systems used in airports, and other high-risk locations while reducing false positive reports. Using swabbing material to collect samples of explosives, the new method is able to detect substances such as nitrotoluenes, trinitrotriazine, hexamethylene triperoxide diamine and nitroglycerine. Detection of peroxide-based explosives is key as high-profile terrorist attacks, such as the London bombings in 2007, used devices made from these materials.
BRITISH FORMER ALSTOM EXECUTIVE WHO CARRIED A UK PASSPORT, WORKED IN FRANCE, AND SAID HE NEVER SET FOOT IN THE US, CONVICTED BY A FEDERAL JURY FOR HIS PART IN A SCHEME TO BRIBE GOVERNMENT OFFICIALS IN INDONESIA
A post on the FCPA Blog on 8th November reported that Lawrence Hoskins, 69, a former senior vice president at Paris-based Alstom, was found guilty of violating the FCPA and of money laundering and related conspiracy charges. He was indicted in 2013, but the hearing was delayed until now due to legal challenges over whether or not the FCPA could apply in his case and his circumstances – but then the jury took only 1 day to return its verdict.
THE ‘MISTAKES’ BEHIND MOST OFAC VIOLATIONS
A post on the FCPA Blog on 8th November listed the most common “mistakes”, accidental or otherwise, behind most OFAC violations –
- No sanctions compliance programme;
- Improper due diligence;
- Bad information and the wrong tools;
- Being wrong about who and what are covered by OFAC regulations;
- Being wilfully blind about where U.S.-origin goods, technology, or services will end up;
- De-centralised and inconsistent compliance functions and programmes; and
- Bosses going rogue.
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