On 10 February, Deutsche Welle reported that Teodorin Obiang was ordered to pay a €30 million fine and faces a suspended jail term of 3 years after a lower court found him guilty on a range of charges relating to graft and money laundering. Additionally, the Paris appeals court confirmed the seizure of his property, including a 6-level mansion in Paris which had been valued at €107 million in 2012.
Day: February 10, 2020
UK: LIVE INVESTIGATIONS FOR FAILURE TO PREVENT CRIMINAL TAX EVASION
On 10 February, HMRC issued a news release saying that, following a number of requests made under the Freedom of Information Act on this subject, it was publishing statistics on relevant compliance activities. The Corporate Crime Offence (CCO) for the failure to prevent the facilitation of tax evasion were introduced by Part 3 of the Criminal Finances Act 2017. As at 31 December, HMRC had 9 live CCO investigations with a further 21 opportunities under review across 10 different business sectors, including financial services, oils, construction, labour provision and software development. These investigations and opportunities sit across all HMRC customer groups from small business through to some of the UK’s largest organisations.
BARBADOS HAS INTRODUCED NEW ECONOMIC SUBSTANCE REQUIREMENTS – THE END OF THE IBC
On 10 February, International Investment says that this effectively brings down the so-called ‘ring fence’ that kept separate tax rates for local and international business companies. As of January, the concept of an “International Business Company” in Barbados no longer exists: for tax purposes all companies are now Regular Barbados Companies, regardless of where their customers are and if they are foreign owned. A new law requires business companies that are resident in Barbados for tax purposes and which conduct certain types of activity to have adequate substance in the jurisdiction. The new requirements are in response to EU and OECD initiatives to prevent harmful tax practices and profit shifting, and mirror developments in many other offshore jurisdictions.
CANADIAN MAN CHARGED IN ALLEGED VENEZUELAN/IRANIAN GOVERNMENT MONEY LAUNDERING SCHEME
On 10 February, Global News in Canada reported in an interesting article that an Iranian-Canadian man, Bahram Karimi, 53,has been accused in New York of bank fraud in an alleged money laundering and sanctions evasion scheme involving Iran’s government, a state-owned oil company in Venezuela, and a complex web of offshore accounts and shell companies, and allegedly funnelling US$115 million through US banks and into accounts for the Iranian government. It is claimed that the case highlights that wealthy Iranian regime-friendly immigrants have used Canada to finance covert operations for Iran. The case is said to be development of investigations involving one of Iran’s most politically connected billionaires, Mohammed Sadr Nejad, and his son, Ali Sadr Nejad – who was arrested on a visit to the US in 2018 – and the Stratus Group, the Tehran-based international construction conglomerate directed by the father.
THE NEW UK AML REGULATIONS: HOW WILL THE ART WORLD BE IMPACTED?
A briefing from Cohen & Gresser (UK) LLP on 7 February addressed this question, as the 5th EU AML Directive is implemented in the UK, and saying that individuals and firms within the art market need to put in place appropriate procedures to guard against the facilitation of money laundering. Previously, had AML/CTF obligations only if they were classed as a “high value dealer” – essentially someone who trades in goods and makes or receives a payment of more than €10,000 in cash. New 2019 Regulations now impose obligations on them when acting in any transaction whose value exceeds €10,000, and not only in cash. It says that guidance on implementing the 2019 Regulations is expected imminently from both HMRC and the British Art Market Federation but, in the meantime the firm provides a checklist which sets out some of the areas that one should consider when enhancing/designing systems and controls.
US CRACKDOWN ON COUNTERFEIT GOODS TO INCREASE E-COMMERCE COSTS
On 10 February, Loadstar reported that parcel shipments into the US are set to cost more as, in addition to rising charges for e-commerce sent by mail, the government is moving to raise charges to cover the cost of inspecting incoming parcels for counterfeit goods and illicit substances. A new Executive Order requires new regulations and that e-commerce operators step up controls – and rules to determine if foreign postal services are doing their part of the job (and presumably sanctions them in some way if they are thought to be falling short).
https://theloadstar.com/us-crackdown-on-imported-fake-goods-and-drugs-means-higher-e-commerce-costs/
FINANCIAL IRREGULARITIES IN AFRICAN SOCCER EXPOSED BY AUDIT
On 8 February, AP reported that financial irregularities across African football have been unearthed in a confidential audit by PwC of the continent’s governing body, the Confederation of African Football. It reports “possible abuse of power” and reported “potential fraudulent adjustments” in accounting records that are “unreliable and not trustworthy”.
TRADE-BASED MONEY LAUNDERING: THE OVERLOOKED METHOD
On 10 February, KYC 360 carried an article saying that while FATF lists 3 main methods by which criminal organisations and terrorist financiers move money for the purpose of disguising its origins and integrating it into the formal economy, the third of these receives less attention than the others – and the scope for abuse of the international trade system has received relatively little attention. It then says that recently there has been heightened focus from both governments and regulatory bodies on trade-based money laundering, resulting in enhanced pressure on financial institutions to do more to combat financial crime through the physical trade of goods. The article goes on to consider 3 common challenges faced by financial institutions when processing trade finance transactions, in the form of 3 case studies.
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