10th December 2019
EU MINISTERS AGREE THAT OFFICIALS SHOULD START DRAFTING NEW GLOBAL MAGNITSKY-STYLE LEGISLATION TO TARGET THOSE INVOLVED IN HUMAN-RIGHTS ABUSES AROUND THE WORLD
On 9th December, the Wall Street Journal reported that a final decision must still be taken by Member States once the framework is drawn up, a process that could take months amid concerns by some Member States.
CAMBODIA ECONOMIC ZONE WANTS COMPANIES FLEEING THAI COSTS
On 10th December, Nikkei Asian Review reported that the operator of Cambodia’s Phnom Penh Special Economic Zone has opened a new industrial park close to the Thai border, in hopes of attracting manufacturers seeking a second SE Asian hub amid rising wages in Thailand.
FORMER SECRETARY TO JAPANESE LAWMAKER RAIDED OVER CASH SMUGGLING
On 10th December, Nippon.com reported that Tokyo prosecutors have raided the houses of 2 people, including a former secretary to House of Representatives lawmaker Tsukasa Akimoto of the ruling Liberal Democratic Party, on suspicion of involvement in cash smuggling.
INTERNATIONAL SEA CUCUMBER KINGPIN IMPLICATED IN NEW SMUGGLING CASE
On 9th December, an article in Quartz reported that sea cucumbers, a protected species, can sell for up to $3,500 per kg in China, where they are eaten as a delicacy and are believed to have medicinal properties. It says that sea cucumber populations have been decimated across Latin America as a result, and in Mexico, in particular, sea cucumber stocks are near collapse. This is despite the fact that are protected under the Convention on International Trade in Endangered Species (CITES). The article tells the story of a New York-based dealer and smuggler.
ARMENIA: CUSTOMS OFFICERS ARRESTED ON SUSPICION OF INVOLVEMENT IN CONTRABAND SMUGGLING SYNDICATE
On 9th December, Armenpress reported that 8 suspects, including 6 customs officials, are under arrest on suspicion of running a contraband smuggling syndicate. It is said that the country of origin of the products was Turkey and the syndicate would re-pack and distribute the goods.
AFRICA EMERGES A LAUNDERER FOR CORRUPT RUSSIANS’ MONEY
On 9th December, All Africa reported on what it described as “indications” that vast amounts of money linked to controversial Russian officials have ended up in Africa. It says that offshore zones in Africa have since emerged as of particular interest as Russian officials scour for new markets to stash their money.
LUXEMBOURG FINANCIAL CRIME AGENCY FROZE €87 MILLION IN 2018
On 9th December, International Investment reported that Luxembourg’s Cellule de Renseignement Financier (CRF) froze 7 times more money last year than in 2017. The article says that the CRF is stepping up its fight against money laundering before it faces FATF evaluation next year. It is also said that a total of 55,948 instances of suspicious activity and questionable transactions were reported to the CRF.
IRELAND: ARRESTS AND FALSE DOCUMENTS SEIZED IN INTERNATIONAL ID FRAUD INVESTIGATION
On 10th December, The Nationalist in Ireland reported that Gardaí have arrested 2 men as part of an operation named Operation Mombasa. Suspected false documents, phones, financial documentation and cash were also seized. Gardai were supported by officers from the Spanish Policia Nacional. The Gardai is quoted as saying that the operation was established as a result of the Icelandic and Spanish authorities intercepting Georgian nationals.
ANGOLAN EX-PRESIDENT’S SON ON TRIAL IN RARE CORRUPTION CASE
On 10th December, Reuters reported that the former head of Angola’s $5 billion sovereign wealth fund Jose Filomeno de Sousa dos Santos – nicknamed “Zenu” – along with 3 others, including the former governor of the country’s central bank, are accused of transferring $500 million from the bank to a Credit Suisse account in London. Zenu is the son of Angola’s veteran ex-president, and the defendants claim that the transfer by former president Jose Eduardo dos Santos.
SOUTH AFRICA: CORPSES BOUGHT OR RENTED TO COMMIT INSURANCE FRAUD
On 10th December, Fin24 reported that the Association for Savings and Investment South Africa has claimed that the “buying and renting of dead bodies” for the purpose of obtaining fraudulent death certificates is a popular modus operandi in South Africa. 1,127 funeral insurance claims were found to involve fraudulent documentation, another 156 fraudulent claims showed syndicate involvement and in 7 cases beneficiaries were found to have caused the death of the policyholder. It is said that overall South African life insurers detected 3,708 fraudulent and dishonest claims.
TRIAL OF MALTA’S PILATUS BANK CHAIRMAN TO CONTINUE IN THE US
On 10th December, the Lovin Malta website reported that the US trial of Pilatus Bank Chairman Ali Sadr Hasheminajad on charges of money laundering and sanctions violation is set to continue, after a court rejected 7 pretrial motions to have the case dismissed.
ALGERIAN COURT CONVICTS 2 FORMER PRIME MINISTERS OF CORRUPTION
On 10th December, Al Jazeera reported that 2 former Algerian prime ministers – Ahmed Ouyahia and Abdelmalek Sellal – were convicted of corruption-related charges and sentenced to lengthy prison terms. The trial was the first resulting from sweeping investigations into fraud allegations launched after President Abdelaziz Bouteflika, the convicted men being allies of the president, stepped down in April in the face of mass protests that erupted in February against his bid for a 5th term.
INDIA’S MINISTRY OF FINANCE HAS PROPOSED PLANS TO LAUNCH A GOODS & SERVICES TAX LOTTERY
On 9th December, VAT Live reported that consumers who ensure they are given a tax receipt for their purchases will be able to upload them online into the GST tax portal, with draws held on a daily and monthly basis. Cash prizes will be based on a multiple of up to 5 times the GST value on their invoice.
SWITZERLAND’S DARK BUSINESS WITH UKRAINIAN COAL AND UKRAINE SEPARATISTS
On 10th December, Customs Today reported that pro-Russian separatists are financing their war in Ukraine with coal deliveries to the West. Now the role of Swiss companies is being investigated. It says that the Ukrainian judiciary has named the Zug-based company in a criminal case concerning the illegal import of hard coal from the Donbass region in eastern Ukraine, which is occupied by pro-Russian separatists. The judiciary has also named 3 other companies domiciled in Switzerland or whose owners are Swiss. These are not directly accused, but the Swiss are said to have helped Ukrainian companies export the “black gold” to Ukraine and EU countries.
ECONOMIC SUBSTANCE LAWS IN CHANNEL ISLANDS, BVI AND CAYMAN ISLANDS
On 10th December, Ogier published a briefing about the laws requiring companies which are tax resident in such centres and also conducting certain types of activities to demonstrate that they have an adequate level of physical substance and operations in those centres. The following article sets out a brief overview of the new substance regime with a particular focus on its application to private wealth structures. Although the article refers specifically to Jersey, the comments are directly applicable to Guernsey and the general principles can also be applied in relation to BVI and Cayman structures (albeit with some different nuances).
EXTRADITION: AN INTRODUCTION
Ben Keith and Louisa Collins of 5 St Andrew’s Hill produced a briefing for Chambers & Partners which starts by saying that, unlike in the quite recent past, there are few places where criminals can hide without being extradited. The article considers the Extradition Act 2003 and the European Arrest Warrant system (as it continues, for the time being at least, to apply in the UK). It says that non-EU cases are fewer and often more complex. Countries such as Russia and the USA make frequent requests to the UK, and that some countries must still prove a prima facie case before extradition is allowed (e.g. India and the UAE). It also mentions that there are those countries from which the UK receives ad hoc requests, for instance Rwanda and Kuwait.
UK TAXATION OF PERSONAL SERVICE COMPANIES AND THE CONSTRUCTION SECTOR: WHAT IS CHANGING AND WHO WILL BE AFFECTED?
An article in Thomson Reuters Practical Construction Blog on 10th December says that 2020 is looking to be a year in which the tax burden of companies operating in the UK construction sector is likely to increase. The blog post discusses one reason for this, the implications of the HMRC changes to the off-payroll working rules (commonly known as “IR35”) and the steps companies affected by these changes can take. The rules are, it explains, (very broadly) designed to catch disguised employment relationships through the use of personal service companies (PSC), with the effect is that payments made to the PSC are subject to employment taxes, that is PAYE and NIC.
UK: FCA HAS HANDED OUT RECORD LEVEL OF FINES IN 2019
On 10th December, Fintech Futures reported that the FCA has issued fines which are more than 6 times those levied in 2018. It has so far charged firms £391 million in 2019, compared with £60 million for the previous year – the highest level since 2015, when the watchdog fined firms £905 million.
HEWLETT PACKARD SEIZES COUNTERFEIT PRODUCTS WORTH $11 MILLION IN INDIA
On 9th December, Illicit Trade reported that Hewlett Packard has seized counterfeit products worth $11.26 million in India over the course of the past year as part of its global Anti-Counterfeiting and Fraud (ACF) programme. It says that HP worked with police across the country to carry out raids on more than 170 premises, resulting in the arrest of over 140 suspects and the seizure of completed and unfinished bogus cartridges, counterfeit packaging materials, and various sets of labels that were used during the manufacture of HP print supplies. The article also says that a study showed that $3 billion is lost every year to counterfeit print products.
ITALY: POLICE SEARCH REGIONAL OFFICES AND BUSINESSES IN LEAGUE FRAUD PROBE
On 10th December, Reuters reported that Italy’s finance police searched offices of the Lombardy regional government and several companies with ties to the League party as part of a money laundering investigation by prosecutors in the northern port city of Genoa. The League was ordered to repay some €49 million it owed the state – but whilst the courts have already recovered €4 million, many League bank accounts were discovered to be empty and magistrates are investigating whether some funds may have been shifted abroad illegally to avoid detection.
US SANCTIONS AIM TO TOPPLE CAMBODIAN TIMBER MAGNATE
On 9th December, American Shipper reported that OFAC has added Try Pheap and 11 of his companies to the Specially Designated Nationals and Blocked Persons List for his role in illegally harvesting and exporting timber.
HONG KONG COMPANY NOTIFIES THAT US SUBSIDIARY MAY HAVE BREACHED US IRAN SANCTIONS
On 10th December, the EU Sanctions blog reported that an SEC filing by a Hong Kong appliance maker, JS Global, revealed that SharkNinja Operating LLC, a US subsidiary, may have violated the US sanctions in respect of Iran in 2017 by means of a wire transfer involving an IRISL ship.
COOK ISLANDS PM AND DEPUTY PM ACCUSED OF FRAUD
Radio New Zealand on 10th December reported that 2 private criminal proceedings have been filed in the Cook Islands against Prime Minister Henry Puna and Deputy Prime Minister Mark Brown. The private proceedings allege the MPs conspired to defraud the crown of about $20,000 by chartering an aircraft for an emergency medical evacuation when no such emergency existed. The lawyer involved is quoted as saying that he filed the proceedings because police failed to act.
US CHARGES EX-MEXICAN OFFICIAL WITH TAKING BRIBES FROM THE SINALOA CARTEL
On 10th December, Reuters reported that Genaro Garcia Luna, 51, a former Mexican official has been arrested and charged in the US with accepting millions of dollars of bribes from the Sinaloa drugs cartel to enable it to operate with impunity in Mexico. He was head of Mexico’s Federal Investigation Agency from 2001 to 2005 and the country’s secretary of public security from 2006 to 2012.
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