2nd December 2019
5 COUNTERFEIT HOTSPOTS IN THE CZECH REPUBLIC THAT BRAND OWNERS MUST BE AWARE OF
On 26th November, a World Trademark Review article on Lexology listed 5 locations in Czechia – said to be the world’s 7th worst places when it comes to the exporting of counterfeit goods to the EU – identified as the physical marketplaces that rights-holders must be aware of. It includes the “Little Hanoi” trading centre in Prague and a duty-free zone near the Austrian border.
HOW TO SELECT A DUE DILIGENCE PROVIDER
On 6th November, an article from the Red Ensign Group website saying that, over the years, the compliance industry has been flooded by many boutique due diligence ‘providers’, some of whom have limited knowledge, expertise and understanding of the industry. It says that there are many questions you must ask yourself before selecting your due diligence provider, the article providing examples of such questions.
WHAT DOES THE FBI REGARD AS THE MAIN CYBERCRIMES? A CLOSER LOOK AT THE TYPOLOGIES
On 22nd November, Australian law firm Nyman Gibson Miralis published a briefing which discusses the FBI Internet Crime Complaint Center (IC3)’s Internet Crime Report 2018, which is concerned with the Center’s efforts in monitoring trending scams such as Business Email Compromise (BEC), Extortion, Tech Support Fraud, and Payroll Diversion.
MOZAMBIQUE: HOW A CREDIT SUISSE BANKER HELPED FUEL AN ALLEGED $2 BILLION DEBT FRAUD
On 2nd December, KYC 360 reported on Andrew Pearse, 50, of Credit Suisse and a $370 million coastal security contract between Mozambique and Privinvest Group, a shipbuilder owned by Lebanese billionaire Iskandar Safa. He was arrested in London in January and he pleaded guilty in Brooklyn federal court to wire fraud, saying he conspired to defraud investors in the Mozambique deals. His former lover, Detelina Subeva, and another former Credit Suisse colleague, Surjan Singh, both pleaded guilty to laundering illicit funds. However, a Privinvest spokesman said that no bribes were paid and Privinvest is proud of its work in Mozambique.
HMRC LACKS STAFF TO INVESTIGATE OVER 5.7 MILLION OFFSHORE TIP-OFFS
On 2nd December, International Investment reported that the information is coming from 100 countries under the Common Reporting Standards (CRS) agreed by the OECD, which are designed to stop tax evasion, or avoidance, by making governments aware of overseas money held by their citizens. The article reports that BDO has said that HMRC is instead sending out a series of “nudge” letters to the people named asking them to send details of their financial affairs in an attempt to uncover incidents of tax evasion. It also says that HMRC made 540 requests to overseas authorities for information on UK taxpayers last year, an increase of 24% on the previous year.
COPYCAT WINE LABELS IMPERSONATING FAMOUS BRANDS WILL BE PLACED ON A DIRECTORY TO PROTECT AUSTRALIAN EXPORTS
The Western Suburbs Weekly in Australia on 2nd December reported that the government had introduced legislation to federal parliament creating the wine label intellectual property directory. The new directory would be publicly accessible and require wine exporters to submit images of labels before being given export certification.
GERMAN BUSINESS AWAITS INTERNAL-INVESTIGATION PROTOCOLS
On 2nd December, CMS Germany reported that lawmakers are expected to pass the Corporate Sanctions Law within the coming year, and German businesses are expected to adopt comprehensive protocols for internal investigations in order to comply with this new and potentially high-risk regulatory climate and will cause public prosecutors to investigate corporations if evidence of malfeasance is detected in the way of corruption, regulatory violations or financial crimes, and will dramatically increase the penalties against a business. As a result, it has been recommended that businesses lose no time in preparing systems to investigate wrongdoing internally should evidence come to light.
CHINA APPROVES SYMBOLIC SANCTIONS AGAINST THE US IN RESPONSE TO PRO-DEMOCRACY HONG KONG LEGISLATION
On 2nd December, National Review and others reported that China will impose new diplomatic sanctions against the US in response to Congress’s show of support for Hong Kong protesters, but will avoid economic sanctions. It has banned US military ships and aircraft from stopping over in Hong Kong and announced sanctions on US non-profit organisations. President Trump has signed into law the Hong Kong Human Rights and Democracy Act, which allows the US to sanction Chinese officials.
US: ANTIQUITIES DEALER CHARGED WITH SEVERAL COUNTS OF SMUGGLING LOOTED CAMBODIAN ARTEFACTS
The Eleven Media Group on 2nd December reported that antiquities dealer Douglas Latchford has been charged in the Southern District of New York. He has been charged with wire fraud, substantive wire fraud, smuggling, conspiracy to commit an offence against the US, entry of goods by false statements and one count of aggravated identity theft. It is said that Latchford has dual British and Thai citizenship.
UK: REGULATORY BURDEN ON CONVEYANCING SOLICITORS IS GROWING
An article in the Law Society Gazette on 2nd December reported that a new regime for property agents is set to place a responsibility on solicitors to spot illegal activity by agents, and this is in addition to their own duties to prevent money laundering. It says that solicitors also have a role in effecting a ‘cultural change’ in the conveyancing process, whereby agreements between the parties should reduce the risk of a sale falling through – adding to pressure on those involved.
UK: KEY QUESTIONS REMAIN AS NEW AML REGIME LOOMS
An article in the Law Society Gazette on 2nd December reported on a recent conference in which it was said that, with new EU Directives coming into force and little guidance for firms on compliance, even AML experts are struggling to stay on top. It says that there are 2 pressing deadlines of 2020 –
- 10th January, when changes introduced by the EU 5th AML Directive must be implemented in domestic law; and
- 31st August, when the first batches of reports required under the EU Directive on cross-border tax arrangements (DAC 6) must be made.
BENEFICIAL OWNERS, OFFICERS AND MANAGERS OF LAW FIRMS TO FACE DBS CHECKS
Another article said that new requirements are likely to include inspection of ‘evidence of suitability’ when approving appointments to key roles in law firms. This would include a basic Disclosure and Barring Service check to show that individuals have not been convicted of an offence that would bar them. The roles affected are so-called BOOM – beneficial owners, officers and managers. The director of AML at the Solicitors Regulatory Authority stressed that the change was required for the regulator to comply with the EU 5th AML Directive.
MORE BOARD MEMBERS RESIGN FROM VATICAN CITY FIU
On 2nd December, the Daily Stock Dish reported that board members of the Vatican’s Financial Information Authority (AIF) have resigned, with one describing it as an “empty shell”. This comes after it was announced that Rene Bruelhart, president of the AIF, would be leaving and that his successor has already been appointed, just weeks after unprecedented internal police raids on both his organisation and the Vatican’s Secretariat of State. The AIF continues to be a member of the Egmont Group, but will no longer enjoy access to the secure communications network used to share confidential information against money laundering and other financial crimes.
US DoJ HAS ACCELERATED ITS PROBE INTO DEUTSCHE BANK’S PARTICIPATION IN THE $220 BILLION DANSKE BANK MONEY LAUNDERING SCHEME
PYMNTS.com on 2nd December reported a Reuters article saying that the DoJ is investigating if Germany’s largest bank assisted with moving dirty money to the US from Denmark’s largest lender. A Danske Bank spokesman confirmed that it is working with the authorities in the US, Estonia, Denmark and France.
UK: FCA SAID TO BE INVESTIGATION 2 E-MONEY FIRMS
On 2nd December, Payments Compliance reported that the FCA regulator were undertaking money laundering investigations at 2 e-money institutions.
INDIA TO POST CUSTOMS INTELLIGENCE OFFICERS IN LONDON AND HONG KONG TO CHECK FOR MONEY LAUNDERING
On 2nd December, India Today reported that the Directorate of Revenue Intelligence (DRI), the lead agency to check customs frauds and smuggling, has started the process of selecting customs overseas intelligence network (COIN) officers. It is said that COIN officers play an important role in checking trade-based money laundering and other financial frauds originating from abroad.
DJIBOUTI: AN EMERGING EAST AFRICAN TRADING HUB
An article on HK TDC on 2nd December featured Djibouti, one of the smallest countries in East Africa, strategically located at the mouth of the Red Sea but with few natural resources and little industrial activities. The article says that Djibouti’s economy depends heavily on logistics services and trade through its international port and, in a bid to transform itself into a commercial trading hub for the broader region, the country has invested in projects across the road, rail, port and airport sectors. In particular, there has been an expanding economic footprint from China in the country, with many projects driven by the Belt and Road Initiative (BRI).
WHAT’S GOING ON IN MALTA? A GUIDE TO THE PM’S EXIT AND DAPHNE CARUANA GALIZIA’S KILLING
An article in the Globe & Mail in Canada on 2nd December sets out to explain the background to the ongoing developments in Malta.
FORMER FIRST DEPUTY CHIEF OF THE RUSSIAN STATE GEOLOGICAL COMPANY (ROSGEO) PLEADS GUILTY TO FRAUD
RAPSI in Russia reported on 2nd December that Ruslan Gorring had pleaded guilty to accepting bribes from a businessman for the unhindered carrying out commercial activity in the Moscow Region’s Leninsky District. Arrested in 2011, he fled, changed his name, noy to be rearrested at a Moscow airport in March 2019.
UK: US EMBASSY EXTRADITION REQUEST FOR EX-AUTONOMY BOSS OVER HPE FRAUD CHARGES
On 2nd December, The Register reported that the US Embassy in London has filed a request to extradite ex-Autonomy boss Mike Lynch to face charges of wire fraud.
UK STATEMENT ON COMPLAINT FILED AGAINST BRITISH AMERICAN TOBACCO (BAT) OVER OECD EMPLOYMENT, HUMAN RIGHTS AND THE ENVIRONMENT GUIDELINES
On 2nd December, the Department for International Trade published a final statement from the UK National Contact Point (UK NCP) which examined the allegations put forward by the International Union of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied Workers’ Associations (IUF) and the Farm Labor Organizing Committee (FLOC) that BAT is linked to alleged breaches of the OECD Guidelines for Multinational Enterprises. The UK NCP finds that BAT did meet the obligations, but that there are still issues which need to be addressed by the company to ensure that these are acted on appropriately and it makes recommendations to BAT. The UK NCP will issue a follow-up report to this final statement in April 2020. The complaint also refers to a second company, Reynolds American Inc (RAI), which, at the time the complaint was made in 2016, was part owned by BAT. In 2017, BAT went on to acquire the remaining shares in RAI. The allegations involved migrant workers involved in the harvesting of tobacco crops in North Carolina.
Previous UK NCP case statements are available at –
OBSERVER OR SHADOW DIRECTOR? – INVESTORS MUST MAKE SURE THEY KNOW THE DIFFERENCE
An article from Walker Morris on 29th November says that while a “board observer” will not, on the face of it, be a director of the company, care should be exercised by any person that is appointed as an observer as, depending on the level of involvement that they have in the proceedings at directors’ meetings, they may be regarded as a shadow director at which point they incur duties and obligations. A board observer is where an investor, instead of appointing a director – because of potential conflicts of interest and liability issues – will instead require the right to appoint a board observer, who can attend all board meetings, but who will not participate in any board decisions.
BERMUDA MONETARY AUTHORITY NOTICE ON CANNABIS-RELATED RISKS FOLLOWING CANADIAN LEGALISATION
On 27th November, Appleby published an article saying that the BMA has confirmed that it will not object to BMA-supervised entities conducting cannabis business with a licensed cannabis cultivator, processor or seller, so long as the conduct of the cannabis business is legal at all levels within the country in which it is operated. The Notice stresses that it is the BMA-supervised licensed entity’s responsibility to understand the application of foreign laws and be in compliance therewith.
30,506 INTERNET DOMAIN NAMES SHUT DOWN FOR IP INFRINGEMENT
A news release from Europol on 2nd December announced that law enforcement authorities from 18 EU Member States and third parties in a joint investigation with Europol and the US National Intellectual Property Rights Coordination Center, have seized over 30,506 domain names that distributed counterfeit and pirated items over the internet during Operation IOS X. These included counterfeit pharmaceuticals, pirated movies, illegal TV streaming, music, software, electronics, and other bogus products. Officials arrested 3 suspects, seized 26,000 luxury products (clothes, perfumes), 363 litres of alcoholic beverages, and many hardware devices. They identified and froze more than €150 000 in several bank accounts and online payment platforms.
OVER €30,000 CASH CONFISCATED BY CUSTOMS ON FLIGHT FROM MALTA TO ISTANBUL
Lovin Malta on 2nd December reported that a passenger waiting to board a flight from Malta to Istanbul was discovered to have been carrying a total of €30,761 in undeclared cash.
6 KYRGYZSTANIS ARRESTED AT ISTANBUL AIRPORT FOR ELECTRONIC CIGARETTE SMUGGLING
AKI Press on 2nd December reported that 9 suitcases and 6 backpacks were searched by the customs authorities in Turkey during the operation and 7,390 packs of electronic cigarettes found. Those involved have arrived from Kyrgyzstan.
UK: LOCAL COUNCIL SECURES £400,000+ CONFISCATION ORDER AGAINST LANDLORD OVER HOUSE IN MULTIPLE OCCUPATION WITH 15 TENANTS
Local Government Lawyer on 2nd December reported that a joint action by Hillingdon Council’s planning enforcement and trading standards teams has seen a Hayes landlord ordered to pay more than £430,000 after she turned her property into an illegal House in Multiple Occupation (HMO). He was ordered to pay more than £406,000 following confiscation proceedings under the Proceeds of Crime Act 2002.
EU AUTHORISED ECONOMIC OPERATOR (AEO) APPLICATIONS ARE NOW DIGITAL
On 1st October, the EU-wide AEO system went digital. Submission of AEO requests will be made electronic and economic operators will have to submit all new applications electronically.
ISLE OF MAN LEGAL GUIDE TO GAMBLING 2020
Appleby has provided the Isle of Man chapter to the ICLG Gambling 2020. The chapter covers common issues in gambling laws and regulations – including relevant authorities and legislation, application for a licence, licence restrictions, digital media, enforcement, liability and anticipated reforms.
UK: INFORMATION COMMISSIONER CONSULTS ON DRAFT GUIDANCE FOR EXPLAINING USE OF AI IN DECISION-MAKING ABOUT INDIVIDUALS
On 2nd December, Local Government Lawyer reported that the ICO has launched a consultation on new draft guidance for organisations using, or thinking about using, artificial intelligence (AI) to support or make decisions about individuals. It is said to lay out 4 key principles rooted within the GDPR.
The consultation, which runs to 24th January, is at –
HMRC PUBLISHES GUIDANCE ON THE TAXATION OF CRYPTOASSETS FOR BUSINESSES
On 2nd December, Eversheds Sutherland published an article saying that on 1st November, HMRC published its much anticipated guidance on the taxation of cryptoassets for businesses. The guidance sets out HMRC’s view on the taxation of transactions involving cryptoasset exchange tokens (such as Bitcoin) that are undertaken by companies and other businesses (including sole traders and partnerships). Future guidance will deal with the tax treatment of security tokens and utility tokens. The guidance only deals with cryptoassests which are exchange tokens. HMRC make clear that they will be separately addressing the tax treatment of security tokens and utility tokens in the future.
MISDECLARED CONTAINER CARGOES ARE WORRYING INSURERS
On 2nd December, Insurance Marine News reported that there are probably more than 6 million undeclared or misdeclared hazardous contents of containers every year, according to the Standard Club’s deputy director for Loss Prevention. He recommended that carriers should gain more knowledge of their customers, develop strong KYC relationships, take extra care on due diligence and the closer vetting of new shippers, and pay particular attention to freight forwarders and the booking processes of slot charterers. The cost to the insurance industry was estimated at more than $500 million a year from increased insurance premiums.
EUROPE UNDER SIEGE AS DRUGS CRIME SYNDICATES PIGGYBACK SUPPLY CHAINS
On 2nd December, American Shipper published a report (with video) saying that maritime, air and overland trade routes into Europe are being piggybacked by criminal gangs deploying the latest digital supply chain technologies to help meet mushrooming demand for illegal drugs across the EU, according to a major new report examining the continent’s illicit drugs business – the 2019 EU Drug Markets Report by EMCDDA and Europol. The report also says that the use of post and parcel services to transport drugs is also expanding rapidly, following the rising trend of online shopping in Europe and the movement of larger volumes of goods.
BELGIAN LAWYER ACCUSED IN SWISS COURT OF LAUNDERING FAMILY SHARES IN INBEV
On 2nd December, Reuters reported that a Belgian lawyer has appeared in a Geneva court accused of money laundering and falsifying documents in a case involving Belgium’s richest family, who say she swindled missing shares in brewer InBev. She was convicted in 2016 by a Luxembourg court for attempted fraud in a linked case involving the 2005 testament of the late heiress Amicie de Spoelberch, with the missing shares never found. Now the heiress’ sons have launched a new case accusing her of being behind the disappearance of 815,000 bearer shares in InBrew (now InBev).
5 NGO REFUSE TO PARTICIPATE IN PROCEDURE FOR SELECTING NEW COUNTER-CORRUPTION COMMISSION HEAD
The Bulgarian News Agency on 2nd December advised that 5 influential NGO refuse to participate in the selection procedure for a a new head of the Counter-corruption and Unlawfully Acquired Assets Forfeiture Commission (CUAAFC) and claim the
choice is predetermined.
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