Day: March 10, 2020

Torres Law in the US has produced a handbook which describes a voluntary self-disclosure (also known as voluntary disclosures or prior disclosures depending on the governing agency) as a narrative account with supporting documentation that describes violations or suspected violations of import or export regulations.  It says that most US government agencies permit companies to file an Initial Notification of the VSD before submitting the full VSD – and, in general, the Initial Notification serves as a notice to the regulatory and enforcement agencies of the general nature and extent of the potential violations.  The handbook considers why file a voluntary disclosure, and the risks of doing so, before explaining the steps in making one.  It then looks at the individual government agencies that may be involved, and the processes and considerations for each.

http://www.torrestradelaw.com/staticpage_images/downloadable_files/457VSD%20Handbook_03.02%20Final%20Version.pdf

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A post on the blog of the New York University School of Law reported on 2 recent FCPA cases which, depending on decisions of higher courts, could impact the DOJ’s FCPA charging strategies going forward.

In United States v. Coburn, the government prevailed in its interpretation of the proper “unit of prosecution” – a district court ruled that individual emails sent in furtherance of the same foreign bribery scheme are separate FCPA violations, with each email forming the basis for a separate “unit of prosecution.  The post says that this ruling may give the DoJ and SEC increased leverage in settlement negotiations involving individuals as well as companies.  In addition, it says, the ruling could mean that 2 bribery schemes involving similar conduct could potentially result in significantly different charges depending on the number of emails or phone calls made to or from the US.

The post also mentioned the case involving British citizen, Lawrence Hoskins, where a district court acquitted Hoskins on all FCPA charges, ruling that the government failed to present sufficient evidence to establish an agency relationship.  He was nevertheless convicted on money laundering charges.  The post says that this ruling further limits the ability on the DoJ to pursue foreign nationals who are not employees of issuers or domestic concerns, unless the government’s appeal succeed at a higher court.

https://wp.nyu.edu/compliance_enforcement/2020/03/09/fcpa-litigation-update-doj-theories-on-unit-of-prosecution-and-agency-tested-to-mixed-results/

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In December, the EU Commission Joint Research Centre of the European Commission published the Export Control Handbook for Chemicals.  The handbook is concerned with not only the EU Dual-use Regulation but also a number of other instruments that impact the export of chemicals. It therefore refers to –

• the EU Dual-use Regulation;
• restrictive measures imposed on certain jurisdictions under sanctions controls (e.g. Syria);
• the EU Common Military List;
• the regulations regarding explosives precursors (chemical substances that can be used for legitimate purposes, but that can also be misused to manufacture homemade explosives); and
• the regulations regarding psychotropic and narcotics precursors (chemicals which may be used for the illicit manufacture of narcotic drugs or psychotropic substances).

It is said that the aim of the handbook is to correlate chemicals under the scope of Export Control Regulations with other relevant data such as: the Combined Nomenclature (CN) code used to identify commodities in export declarations for Customs procedures, the CAS number which identifies chemicals, and the Export Control Number (ECN) to name dual-use items in general or chemicals in particular.  Excluded from the handbook all type of complexes materials such as alloys, ceramics, polymers or composites.

https://publications.jrc.ec.europa.eu/repository/bitstream/JRC117839/kjna29879enn.pdf

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A White paper from Jones Day says that it has long been the case that goods made with forced labour are not entitled to entry or importation into the US.  US Customs and Border Protection may use Withhold Release Orders (WRO), or formal findings, to enforce this prohibition.  It also says that imported goods are being more heavily scrutinised for evidence that forced labour was present in their supply chain, and the issuance of WRO and formal findings will likely be used more frequently than has been seen historically.  If an importer is issued a WRO, or a formal finding, the goods will be denied entry or seized until the importer is able to affirmatively show that the goods were not, in fact, produced with forced labour.  The White Paper explains that forced labour is defined as “convict labour, forced labour, or indentured labour under penal sanctions,” and includes forced child labour.  It notes that there have been only 45 WRO issued since the first one was issued in 1953 (Chinese importers have received 32).  One of the reasons for there being relatively few in the past was that, until revoked in 2016, an exception allowed the importation of goods produced with forced labour so long as the goods were not produced “in such quantities in the United States as to meet the consumptive demands of the United States”.  However, while between 2000 and 2015, no WRO or formal findings were issued, 25 have been issued since 2016, with 13 WRO — 4 in 2016, 2 in 2018, and 7 in 2019.  Then in January, President Trump issued an “Executive Order on Combating Human Trafficking and Online Child Exploitation in the United States”, which states that the Executive Branch will “prioritize its resources to vigorously prosecute offenders, to assist victims, and to provide prevention education to combat human trafficking and online sexual exploitation of children”.

https://www.jonesday.com/-/media/files/publications/2020/03/combating-forced-labor/combating_forced_labor.pdf

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9 March 2020

AFTER INDICTMENT IN US, NORTH KOREA RUSHED TO MOVE STOLEN FUNDS TO SAFETY

On 6 March, NK News reported that federal prosecutors say that the DPRK moved stolen cryptocurrency as soon as cybercrime charges were made public.  This is said to be just days after federal prosecutors accused 2 Chinese nationals accused of laundering $100 million in stolen cryptocurrency funds for North Korea.

https://www.nknews.org/2020/03/after-indictment-north-korea-rushed-to-move-stolen-funds-to-safety-doj/

 

FORMER ALSTOM EXECUTIVE LAWRENCE HOSKINS SENTENCED TO 15 MONTHS IN PRISON 7 YEARS AFTER INDICTMENT

On 9 March, the Wall Street Journal reported that the British executive was convicted on money laundering charges related to a scheme to bribe Indonesian officials in a scheme to win a $118 million power contract.

https://www.wsj.com/articles/former-alstom-executive-sentenced-to-15-months-in-prison-11583542058

 

MOLDOVA CENTRAL BANK OFFICIALS DETAINED OVER $1 BILLION FRAUD

On 9 March, KYC 360 reported that Moldova has detained 2 current and 2 former senior central bank officials on suspicion of involvement in a $1 billion theft in 2014-2015.  3 banks were involved – Banca de Economii, Banca Sociala and Unibank – and are said to have plunged the impoverished former Soviet republic into economic and political crisis.

https://www.riskscreen.com/kyc360/news/moldova-central-bank-officials-detained-over-1-bln-fraud/

 

TAX HAVENS: RUSSIAN STYLE

On 4 March, Raedas published an article, originally published by the Russo-British Chamber of Commerce, about 2 new “offshore” zones in Russia which now offer certain companies the same favourable taxes and conditions of confidentiality as other offshore zones, if not the tropical temperatures.  The “Special Administrative Regions” (SAR) were established in Russia in August 2018.  They are located in Oktyabrsky Island in Kaliningrad, the westernmost region of Russia, and Russky Island, near Vladivostok in Russia’s far east.  It is said that around 2 dozen companies have already re-registered in the SAR and several more intend to re-register later this year.  A company registered in a SAR is called a “Mezhdunarodnaya Kompaniya” (International Company, or ‘MK’), a new company type in Russia exclusive to the SAR.

https://www.raedas.com/tax-havens-russian-style/#https://www.raedas.com/contact/

 

£58.9 MILLION IN SANCTIONS ISSUED BY UK GAMBLING COMMISSION 2014-2019

SBC News on 9 March reported that a freedom of information request has revealed that the Gambling Commission has handed out £58.9 million in financial sanctions over a 5½ year period.  £24 million of the funds were returned to those who fell victim to illegal gambling activity and the remaining £35 million was divided up to agreed ‘socially responsible purposes’.

https://www.sbcnews.co.uk/retail/2020/03/09/59-9m-in-sanctions-issued-by-ukgc-from-2014-2019/

 

COULD THE US SANCTION THE INTERNATIONAL CRIMINAL COURT?

On 9 March, Lawfare in the US posed this question after the ICC revealed it was investigating allegations of abuses by US forces in Afghanistan.  In 2018, then National Security Adviser John Bolton said that the US could sanction ICC officials and staff if they pursued an investigation into the US — although it is unclear what legal authorities could be used for such sanctions.  The US has never joined the ICC and has long opposed ICC investigations of Americans.  The article notes that the State Department had already prevented Bensouda’s travel to the US in April 2019, several months after she announced her intention to launch a preliminary investigation into US actions in Afghanistan.  Ironically, the article suggests that the US could seek to use the Global Magnitsky sanctions programme – established to sanction individuals and entities involved in human rights abuses and corruption.  Alternatively, Trump could establish a new sanctions regime against the court.

https://www.lawfareblog.com/could-us-sanction-international-criminal-court

 

THE CURIOUS CASE OF THE US SRI LANKA SANCTIONS

The Interpreter on 9 March published an article saying that, in February, the US imposed individual sanctions against Sri Lankan military chief Shavendra Silva, who is presently both the Acting Chief of Defence Staff and Commander of the Sri Lanka Army, for gross violations of human rights.  Although an alleged war criminal, Silva has been promoted several times and continues to serve – having been “arguably the most important front line ground commander” in the last months of the 26-year Sri Lankan civil war.  The article asks: why has the US acted now, and does the Trump administration actually care about human rights in Sri Lanka?  Described as largely symbolic, it’s unclear what impact the move will have on US–Sri Lanka relations.  The article suggests that the US is trying to put pressure on Colombo for geopolitical reasons – largely due to concerns about China’s influence in the country.  The article points out that senior politicians have been singled out as human rights abusers, by a UN panel of experts, and one of these is the current president of the country.

https://www.lowyinstitute.org/the-interpreter/curious-case-us-sri-lanka-sanctions

 

50 ACCUSATIONS OF MONEY LAUNDERING VIA LATVIA’S ABLV BANK

On 9 March, LSM in Latvia reported that the State Police Economic Crimes Unit (ENAP) has begun 50 criminal procedures regarding possible money laundering through ABLV Bank.  The article says that many of the allegations involve illegal activity by clients, and in many instances the bank aided in uncovering the activity. Around 10 procedures involve bank employees and authorities possibly aiding or abetting money laundering.

https://eng.lsm.lv/article/society/crime/50-accusations-of-money-laundering-via-latvias-ablv-bank.a351094/

 

SPAIN ROCKED BY FORMER KING JUAN CARLOS I MONEY LAUNDERING SCANDAL

The National on 9 March reported that Le Monde in France contained revelations that the former king, Juan Carlos I, held a $1 million bank account in Switzerland, which is now at the centre of money laundering claims.  It is said that the monarch lost total immunity in 2014 when he abdicated the throne to his son, Felipe VI.  The story was first broken by the Swiss daily the Tribune de Geneve, and subsequently reported by The National and other international titles.

https://www.thenational.scot/news/18290360.scandal-exposes-spains-monarchy/

 

US: DEFENCE CONTRACTOR CHARGED WITH PASSING CLASSIFIED INFO TO HEZBOLLAH-CONNECTED LOVE INTEREST

On 5 March, Homeland Security Today reported that Mariam Taha Thompson, 61, a contract linguist working for the Defense Department out of Kurdistan, has been charged with passing highly sensitive classified information to a person connected to Hezbollah.  Thompson said she passed the classified information at the behest of a love interest, identified as a Lebanese national located outside of the US.

https://www.hstoday.us/subject-matter-areas/counterterrorism/defense-contractor-charged-with-passing-classified-info-to-hezbollah-connected-love-interest/

 

PERSONAL SERVICE COMPANIES & IR35

On 9 March, the House of Commons Library published a briefing which says that the so-called ‘IR35’ rules to prevent the exploitation of personal service companies for tax avoidance were introduced in April 2000, following a long and contentious consultation exercise.  This legislation remains unpopular among freelancers who use this corporate form to provide services.  This briefing looks at debates as to the effectiveness of these rules and wider concerns about the use of employment intermediaries to avoid tax, before discussing recent developments as to their application in the public and private sector.

https://researchbriefings.parliament.uk/ResearchBriefing/Summary/SN05976

 

PHILIPPINES: LOOPHOLES IN AML LAW

In its 10 March edition, Inquirer reported that Bureau of Customs (BOC) chief Rey Leonardo Guerrero has admitted to lawmakers that there was an apparent loophole in the country’s AML and banking laws that tied the hands of authorities in curbing the inflow of foreign dirty money.  It is claimed that at least $370 million in foreign dirty money brought in by 2 suspected criminal syndicates from last year up to January.
https://newsinfo.inquirer.net/1239084/loopholes-in-antimoney-laundering-law-bared

 

US CHARGES EX-HEAD OF UNITED AUTO WORKERS LABOUR UNION WITH EMBEZZLEMENT

On 9 March, OCCRP published an article about the long running case, saying that now US prosecutors have charged the former president of the United Auto Workers (UAW) union with embezzling more than $1 million in union funds, furthering racketeering activity, and evading taxes.  He is accused of using the union funds to buy himself lavish dinners, expensive hotels, villas, and golf trips, as well as luxury cigars, liquor and other merchandise.

https://www.occrp.org/en/daily/11769-us-charges-ex-head-of-labor-union-with-embezzlement

 

AUSTRALIA: MULTI-MILLION DOLLAR ILLEGAL TOBACCO CROP SEIZED

On 9 March, TJI reported that Victoria Police, in conjunction with the Australian Taxation Office (ATO), uncovered about 5 acres of illegal tobacco crop.

http://www.tobaccojournal.com/Multi-million_dollar_illegal_tobacco_crop_seized.55728.0.html

 

CAMBODIA: 280 SMUGGLED LION BONES SEIZED AT AIRPORT

On 8 March, Japan News reported that, on 2 March, authorities opened packages of more than 280 lion bones seized in December at the Phnom Penh International Airport as the case progresses against the suspected owners who remain behind bars.  281 kg of suspected lion bones were smuggled from South Africa.  2 Vietnamese remain in jail.  It is said that Cambodia is a well-known transit country in the illegal wildlife trade for products heading to Vietnam and China, and that it is suspected that the lion bones were intended to be transported to Vietnam where they are popular in traditional medicines.

https://the-japan-news.com/news/article/0006398911

 

EVERYTHING/ANYTHING CAN BE FAKE: US CUSTOMS SEIZE COUNTERFEIT ELECTRIC TOOTHBRUSH HEADS

On 9 March, American Shipper reported that US Customs & Border Protection had seized 1,440 counterfeit Oral-B electric toothbrush heads that had arrived in an express parcel from Turkey.  It is said that the heads were likely manufactured in unsanitary facilities with substandard materials that may sicken users or cause bleeding to a user’s gums or mouth, and structural defects may cause the brush head to detach and potentially choke users.

https://www.freightwaves.com/news/cbp-pulls-counterfeit-electric-toothbrush-heads-from-supply-chain

 

PANAMA AND COLOMBIA AGREEMENT TO EXCHANGE FINANCIAL INFORMATION

On 9 March, La Prensa in Panama reported that the Panamanian Minister of Economy revealed that an agreement was reached with Colombia, which was keen to obtain information about its citizens with assets in Panama.  Panama already more than 70 agreements with countries with which it exchanges financial information automatically.

https://www.prensa.com/economia/panama-pacta-acuerdo-con-colombia-para-intercambiar-informacion-financiera/

 

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