22 January 2020
FEWER SHELL COMPANIES IN THE NETHERLANDS, AS REGULATIONS BEGIN TO BITE
On 21 January, Dutch News reported that the number of letterbox, or shell, companies registered in the Netherlands has fallen by almost one third over the past 5 years, with tougher rules for trust offices and more stringent supervision by the central bank. In 2014 there were 25,000, a number down to 17,000 by the end of 2018. It is said that customers are leaving trust offices because of increased demands and the rising cost of compliance and transaction monitoring.
NIGERIA CHARGES EX-ATTORNEY GENERAL WITH FINANCIAL CRIMES IN $1.3 BILLION OIL DEAL
On 21 January, Reuters reported that an international investigation into the 2011 sale of the offshore oilfield known as OPL 245 by Malabu Oil and Gas has entangled 2 of the industry’s biggest players, Shell and Eni. Mohammed Adoke, Nigeria’s ex-attorney general, has been charged with receiving bribes in 2013 to facilitate the OPL 245 deal and help waive taxes for Shell and Eni.
2020: NEW INSOLVENCY LAW CHANGES FOR GUERNSEY
On 15 January, Ogier published an article about the Companies (Guernsey) Law 2008 (Insolvency) (Amendment) Ordinance 2020, which was published on 15 January. It says that the new legislation is set to modernise Guernsey insolvency law, bringing the jurisdiction into line with not only the UK but other offshore jurisdictions such as the BVI and the Cayman Islands, and will affect all new liquidations and administrations. The article outlines the new law and its likely effects.
AUSTRALIAN 2019 LAW TARGETING CORPORATE MISCONDUCT AND FOREIGN BRIBERY
On 21 January, law firm Hogan Lovells published an article about the Crimes Legislation Amendment (Combatting Corporate Crimes) Bill 2019. It says that the Bill replaces a former Bill, and followed detailed consultation in 2017, with the intention to strengthen Australia’s corporate crime framework and bring Australia into line with the regimes in the US and UK which have already taken significant steps to combat foreign bribery. The Bill is designed to improve authorities’ track record in combating corporate misconduct. The Bill would introduce deferred prosecution agreements (DPA) and a “failing to prevent” bribery offence, with an associated “adequate defences” defence – as in the UK Bribery Act 2010. The Bill would also introduce a new definition of dishonesty as “dishonest according to the standards of ordinary people”. It would broaden what is a bribery to include that intended to obtain a personal advantage, and not just business or a business advantage.
NORWEGIAN POLICE INVESTIGATING ACADEMICS FOR EXPOSING TECHNOLOGY TO IRANIAN VISITORS
Radio Farda on 22 January reported that Norwegian Police Security Service (PST) has charged 2 researchers of the Norwegian University of Science and Technology (NTNU) on suspicion of sharing sensitive information with Iran that may contribute to the production of WMD or their means of delivery. It is said that they invited a group of visiting scientists from Iran in the spring of 2019 and 2 Iranian researchers were allegedly allowed unauthorised access to computer systems and a high-tech lab.
WHAT FATF RECOMMENDATION 16 MEANS FOR THE CRYPTO INDUSTRY
On 22 January, Regulation Asia carried an article arguing that implementing strict KYC processes to comply with the ‘travel rule’ may be costly, but it is a necessary sacrifice to build a stronger industry in the long-run. FATF Recommendation 16, aka the “travel rule”, which is expected to be enforced by mid-2020 across 200 global jurisdictions that follow FATF AML/CFT standards. Operators will be required to exchange and hold personally identifiable information (PII) to each other when transferring crypto assets — a move that some in the industry fear will alienate its more libertarian users.
COMPLYING WITH US EXPORT CONTROL AND IMMIGRATION AND ANTI-DISCRIMINATION LAWS
This article from Torres Law on 16 January says that the intersection of immigration, anti-discrimination, and US export control laws can be confusing for employers and the DoJ will not tolerate employers discriminating against non-US persons. This article provides an overview of the intersection, and friction between, US immigration, anti-discrimination, and export control laws and regulations. It concludes that recent cases demonstrate that employers cannot seek to comply with US export control laws by instituting a US person- or US citizen-only hiring policy when a position involves working with export-controlled items/information and, more generally, may not discriminate in their application of citizenship verification processes. The article briefly offers a selection of best practices.
ENSURING US IMPORT COMPLIANCE WITH SPOT-CHECK AUDITS OF CARRIER BILLING STATEMENTS
An article from Torres Law on 16 January says that that auditing internal trade compliance processes is a necessary method of maintaining healthy trade controls and avoiding costly penalties – and that sometimes a focused spot check can be very revealing. Under the import laws in the US the responsibility for ensuring accuracy of the import information falls squarely on the shoulders of the importer of record. Failure to accurately report import information can result in significant civil fines and even criminal penalties. The article briefly explains how to carry out a spot-check audit, and what to do if you find an error.
FIFTH EU MONEY LAUNDERING DIRECTIVE: ELECTRONIC IDENTIFICATION USING A TRUST SCHEME (EIDAS)
A blog from Lexis Nexis Risk Solutions on 17 January said that the EU Directive described a significant new option for electronic identification by using a “trust scheme” that complies with EU Regulation 910/2114 on electronic transactions and trust services for electronic transactions (aka eIDAS). In the UK, the regulations implementing the Directive allow for the use of such a trust scheme. Using a trust scheme means an individual has a “digital identity”, and is able to identify themselves using an online service – instead of having to prove their identity by mail or in person each time. An routine and simple example in the non-compliance world is given as being able to sign into other websites and services using your Facebook identity – the trust scheme for compliance purposes requiring strict identity-proving requirements. The blog post says that updated guidance on electronic identification from the UK Joint Money Laundering Steering Group is expected soon. In its conclusions, the post says that systems already in place for the purposes of the 4th ML Directive are still suitable for the requirements of the 5th ML Directive, and that in the UK the only system that meets the requirements of eIDAS is the Gov.uk Verify system.
For more information on Gov.uk Verify (which I myself have used, and found quite easy and painless to use) see –
IMPORTING INTO THE US MADE A (MORE) RISKY BUSINESS?
Law firm Crowell & Moring on 22 January published an article saying that for companies that import goods into the US, increased tariffs have made business much more complicated and expensive. They are also bringing risk on the legal front. It refers to a May 2019 case where charges of violating the False Claims Act by understating the value of imported goods to avoid duties, thus costing the government more than $1 million in revenue, arose from a whistleblower claim. The firm says that, with the Trump administration’s protectionist policies and increased scrutiny on making sure duties are paid, it anticipates seeing the government taking up more of these FCA cases.
UK AMENDS TERRORISM SANCTIONS ENTRY FOR (THE LATE) QASEM SOLEIMANI
On 22 January, a Notice from HM Treasury advised that the entry relating to Qasem SOLEIMANI had been amended in line with changes made to EU sanctions lists.
PODCAST: 2019 FCPA YEAR IN REVIEW
In the latest TRACE podcast, Jeff Clark, a partner with Willkie Farr & Gallagher and well-known to TRACE members, provides an excellent summary of US foreign anti-bribery activity in 2019.
GENERAL ELECTRIC GRANTED A US LICENCE FOR ASSISTANCE IN THE INVESTIGATION OF THE UKRAINIAN JET SHOT DOWN IN TEHRAN ON 8 JANUARY
On 22 January, the EU Sanctions blog reported that GE has been granted a licence from the US Treasury to authorise its assistance in the investigation of the Ukrainian jet PS752, as GE co-owns (with French company Safran) CFM International, which made the engines.
HOW UK MUSEUMS AND GALLERIES CAN ARRANGE TO PROTECT EXHIBITS ON LOAN FROM ABROAD FROM COURT-ORDERED SEIZURE
On 22 January, the Department of Digital, Culture, Media and Sport issued updated information saying that objects on loan from abroad in temporary exhibitions in UK museums are protected from seizure by the UK courts when they are on display in a museum or gallery which has been approved by the Culture Secretary and where the museum or gallery has published information about the objects on loan. Such protection is provided because the ownership of art can be disputed and many other countries will not lend to the UK without this protection. The guide explains the application process and conditions which must be met by participating institutions, and also includes a list of museums and galleries which have already received approval.
IRANIAN CYBER ESPIONAGE GROUP TARGETS SUPPLIERS OF INDUSTRIAL CONTROL SYSTEMS
On 22 January, Control Risks reported that in November security researchers said that an Iran-linked unit had shifted its targeting focus from espionage and data-wiping campaigns to IT networks. Now the group increasingly targets the suppliers and manufacturers of industrial control systems (ICS) used in electric utilities, manufacturing, and oil refineries. This is said to have implications for organisations globally that are using such systems, particularly in the energy, oil and gas, maritime and manufacturing sectors. Organisations with a strong presence in, or links to, such industries in the Middle East, particularly in Saudi Arabia, the UAE and Bahrain likely face a heightened threat.
LATIN AMERICA’S TOP 10 CRIMINAL GROUPS
Insight Crime on 22 January carried an article which says that Colombia’s last rebel army (Ejército de Liberación Nacional – ELN) is now the most powerful criminal syndicate in Latin America, as it expands across Colombia and far into Venezuela, deepening its involvement in the drug trade. It then provides a list of criminal organisations in the country, being non-state illegal actors (i.e. not those governments where organised crime has penetrated the highest echelons and put state assets at the service of criminal activity, such as Venezuela and arguably, Honduras). It also lists the indicators used to measure and compare such criminal groups.
FORMER HEAD OF DRUG COMPANY SENTENCED IN BRIBERY CASE RE SCHEME THAT PROSECUTORS SAY HELPED FUEL THE OPIOID CRISIS
On 22 January, KSL.com reported that Michael Babich, who was CEO of Insys Therapeutics, was sentenced to 2½ years in Boston and that employees for Arizona-based Insys paid millions of dollars in bribes to doctors nationwide to overprescribe Subsys, a powerful, addictive fentanyl-based painkiller for cancer patients. The article says that the case was considered the first to hold an opioid maker and its executives criminally liable for a nationwide drug crisis that has claimed nearly 400,000 lives over 2 decades.
SNC-LAVALIN DROPS COURT CHALLENGE OVER BID FOR SPECIAL AGREEMENT TO AVOID CRIMINAL PROCEEDINGS ON CORRUPTION AND FRAUD CHARGES
The Star on 22 January reported that this means legal questions about the nature and extent of the prosecution service’s authority won’t be examined further by the courts. In 2015, SNC-Lavalin Group and 2 of its affiliates were charged with corruption of a foreign public official and fraud stemming from business dealings in Libya, and it had unsuccessfully pressed for a special settlement — known as a remediation agreement — out of concern the company could be barred from federal contracts for a decade if convicted of criminal charges.
SWISS RETURN SEIZED FUNDS TO TURKMENISTAN
On 15 January, Swissinfo reported that Switzerland says it is repatriating $1.3 million in seized assets to Turkmenistan. The funds will be paid towards a health project run by the UN Development Programme (UNDP), and will be used to purchase anti-TB drugs.