Panama Covid-19 update – 178 new cases reported, taking us to 6,278 total to date (around 0.14% of the population), with 2 additional fatalities (giving a total of 178). 1,187 people are isolated in requisitioned hotel rooms, 367 in hospital and 92 in ICU (4 more since yesterday). In the daily news conference the government warned that the lockdown could be tightened if figures didn’t improve (relatively good as they may be) – though it is hard to see how tighter they can be made…
29 April 2020
HONGKONGERS CONNED INTO ‘SPYING’ ON ‘MONEY LAUNDERERS’ ARRESTED IN PHONE FRAUD SCAM
On 29 April, KYC 360 reported that 2 people, a man, 23, and a woman, 25, who did not know each other, recruited by fraudsters posing as mainland officials to “spy” on people suspected of money laundering have been arrested for duping victims out of US$709,000. They are said to have fallen victim to a gang who pretended to be mainland Chinese police.
UK: BANK VICARIOUSLY LIABLE FOR DISHONEST ASSISTANCE AND FRAUDULENT TRADING
On 27 April, an article from Allen & Overy says that the case demonstrates the breadth of the concept of dishonest assistance – the traders were found to have “assisted” fraud at the other end of a chain of transactions, despite lacking actual knowledge of the fraud. The claimants were a group of UK companies, all in liquidation as a result of their directors’ participation in a VAT “carousel fraud”. The article says that the case provides a good illustration of how the concepts of dishonesty and assistance can impact liability of the participants in a chain of commercial transactions, and judgment illustrates how those involved in trading can become liable in relation to a fraud of an unrelated, and even unknown, party at the far end of a chain of transactions. Companies must encourage employees to flag suspicious activity and make enquiries where they suspect that the transactions they are involved in may be linked, even indirectly, to fraud. There may also, of course, be an obligation to report suspected money laundering.
HOW BANKS ARE USING BEHAVIOURAL SCIENCE TO PREVENT SCANDALS
On 28 April, the Havard Business Review published an article saying that some of Europe’s largest banks have created behavioural risk teams composed of professionals trained in organizational psychology, anthropology, forensics, and other disciplines. Each team has a direct reporting line to the chief audit, compliance, or risk executive. It says that, in the case of one of the banks, behavioural risk team is part of the bank’s audit function, its findings are considered “audit” points that need to be addressed. The article says that the key to preventing ethical scandals is identifying risky behaviour before it’s too late.
SWISS OIL TRADERS AND BANKS BURNED BY VENEZUELA TIES
On 29 April, Swissinfo reported that several Swiss companies and banks have found themselves in the line of fire as the US ramps up pressure on the Venezuelan government.
‘ONE OF WORLD’S BIGGEST WILDLIFE CRIMES’: GLASS EEL SMUGGLING AND HOW HONG KONG SUPERMARKETS COMMONLY SELL ENDANGERED EUROPEAN EELS
The South China Morning Post on 29 April carried an article saying that almost half of retail eel products in Hong Kong supermarkets and convenience stores contain endangered European eels and more than 300 million glass eels are trafficked from Europe to Asia each year, estimates say, with 1 kg fetching at least US$6,450 on the black market.
EU SPLIT OVER HALTING BAILOUTS FOR TAX HAVEN FIRMS
On 29 April, Deutsche Welle reported that France, Denmark and Poland are refusing to let companies registered in offshore tax havens access financial aid from coronavirus bailout packages (and Italy may soon join them). But Ireland, the UK, Luxembourg and the Netherlands have other ideas. The European Commission has confirmed that its existing rules allow individual EU countries to block aid going to businesses based in tax havens.
MONGOLIA: CRIMINALISATION OF DEFAMATION THREATENING ANTI-CORRUPTION EFFORTS
On 29 April, Transparency International reported calls on the Mongolian government to take urgent legislative action to address an increasingly dangerous environment for independent media in the country. A new law that took effect in January says that disseminating false information can be punished by fines or restriction of the right to travel for 1 to 3 months. Mongolian press freedom and anti-corruption activists are concerned that the law does not define the term ‘false information’. Under the previous law it is said that over 100 journalists were brought to court, many by politicians.
GERMANY STILL TARGETING ONLINE GAMBLING PAYMENT PROCESSORS
On 29 April, Calvin Ayre reported that the Ministry of Interior and Sport in the state of Lower Saxony announced that it had “once again prohibited an unnamed internationally active payment service provider (said to be widely thought to be PayPal) from participating in payment transactions in connection with illegal gaming in Germany”.
MISDECLARED CONTAINER WEIGHTS STILL A CONCERN, SAYS UK MARINE ACCIDENT REPORT
On 29 April, Lloyds Loading List reported that the introduction of verified gross mass rules in 2016 was supposed to put an end to misdeclared container weights. But a new MAIB investigation has found that correct weights are still not making their way into stowage plans. The report was into an incident when a UK-flagged vessel suffered a 20º roll in heavy weather, leading to the loss of 137 containers overboard and damage to another 85. Under the rules on the verification of gross mass (VGM) of containers, shippers must either weigh a packed container using certified equipment or weigh all the content of a container, along with the containers tare weight, to calculate a single mass. This VGM is then submitted for the preparation of the ship’s stowage plan.
US: FEDERAL COURT DISMISSES CHALLENGE TO TEXAS BAN ON BOYCOTTING ISRAEL
On 29 April, Jurist reported that a US Court of Appeals has decided that a case challenging the Texas prohibition of government entities from contracting with companies who boycott Israel cannot be heard as the plaintiffs are sole proprietors and such are exempt from the “No Boycott of Israel” rule.
UK: BANK RECOVERY OF FOREIGN JUDGMENT BEFORE APPEAL PERIOD ENDED WAS UNLAWFUL
On 29 April, an article from Out-Law concerned a Court of Appeal case in which it has been held that an Icelandic Bank should not have taken action to recover a debt before a 1 month period of appeal under the Lugano Convention had expired. It reports that enforcement measures during a debtor’s period of appeal is unlawful, and unlawful enforcement measures is not execution for a bankruptcy petition. The Lugano Convention enables the registration of a foreign judgment in England and Wales, and the Convention is intended to facilitate recognition, and to introduce an expeditious procedure for securing the enforcement of judgments, authentic instruments and court settlements. The Lugano Convention is incorporated into UK law by the Civil Jurisdiction and Judgments Regulations 2009
UAE: THE ONGOING COMMITMENT TO COMBATING FINANCIAL CRIME AND PROTECTING ITS ECONOMY
An article from Eversheds Sutherland in Financial Crime of April 2020 says that the focus on combating financial crime in the UAE has significantly increased over the last few years and that last year’s mutual evaluation visit from FATF had its own positive role to play in this development. It details the developments implemented. At the end it says that FATF feedback will be instrumental for future enhancements to the AML/CFT framework, which was (pre-Covid-19) expected in April.
HMRC ISSUES DRAFT GUIDANCE ON DAC6
On 29 April, Eversheds Sutherland reported that Directive 2011/16/EU (commonly known as DAC6) will soon require taxpayers and intermediaries across the EU to start reporting information in relation to certain cross-border arrangements to their respective tax authorities. The rules were only formally implemented into UK law in January and HMRC have finally now shared draft guidance on how the rules are expected to be interpreted in the UK context. There have been increasing calls for DAC6 to be delayed across Europe in light of the COVID-19 situation, but the article details the new guidance. It does say that ambiguity continues to persist in relation to exactly how DAC6 will apply in the UK (in the light of Brexit) and the approach to be taken in respect of some of the reporting triggers and hallmarks.
IS THE SFO ABLE TO MEET THE CHALLENGE OF COVID-19?
A post from the always interesting blog from law firm Corker Bining poses this question, in the light of an Economist article which warned that the economic crisis resulting from the covid-19 pandemic will expose a decade’s worth of corporate fraud. It says that much of the crime directly arising from covid-19 is unlikely to fall within the statutory remit of the SFO of investigating serious or complex fraud. Smaller retail scams concerning, for example, small volumes of fake pharmaceuticals, PPE or testing kits will properly fall outside its remit and fall to others to investigate. The article warns that the portents for the SFO being able to cope are not favourable.
DEALING WITH DEMAND FOR CHINA’S GLOBAL SURVEILLANCE EXPORTS
A report from the Brookings Institute says that countries and cities worldwide now employ public security and surveillance technology platforms from the China, with Chinese technology an attractive choice despite security and privacy concerns. It says that major questions remain about the implications and advantages that China could derive from these developments, including how dominance in this sector and access to data could shape the contours of strategic competition between China and the US, but that understanding the impacts of these technologies will be important for crafting effective policy. It advises that the US must address Chinese technology companies’ ongoing efforts to shape the global regulatory environment.
PIRATES ARE EXPANDING IN WEST AFRICA, THREATENING OFFSHORE OIL STORAGE
On 29 April, Hellenic Shipping News reported that, as international oil companies grapple with a historic plunge in crude prices, a rise in piracy is also poised to threaten supply chains. The first quarter of 2020 saw a spike in piracy around the world. The Gulf of Guinea, a key production hub surrounded by eight oil exporting countries in West Africa, has emerged as a global hot spot, accounting for 21 attacks so far this year and 90% of all kidnappings at sea in 2019. Piracy is expected to rise in 2020 and 2021 and expand further from Nigerian waters into neighbouring states.
PODCAST: RISK, TELECOM AND 5G
In the latest TRACE podcast, Barnard College professor Alex Cooley and Wiley partner Kevin Muhlendorf discuss telecommunications scandals and the risk of corruption in 5G telecom implementation. They are the authors of chapters on these 2 subjects in TRACE’s new book, “Corrosive: Corruption and its Consequences”.
LOS ANGELES-AREA LAWYER AGREES TO PLEAD GUILTY TO CRIMES INCLUDING PAYING BRIBES TO ICE AND FBI SPECIAL AGENTS
A news release from US Immigration and Customs Enforcement on 28 April advised that Edgar Sargsyan had agreed to plead guilty to 5 federal offences – one related to a credit card bust-out scheme, and the others related to more than $250,000 in bribes he paid to 2 federal agents for assistance that included sensitive law enforcement information. Sargsyan paid the HSI agent at least $32,000 in cheques and at least $45,000 to $50,000 in cash in return for assistance, and he also admitted he paid the FBI agent monthly cash bribes of up to $10,000 beginning in 2015 in exchange for the agent providing protection, which included running queries on law enforcement databases.
HOW IS COVID-19 AFFECTING THE ILLEGAL DRUGS TRADE?
The Global Initiative Against Transnational Organized Crime has been producing regular newsletters exploring existing and emerging interactions between the virus pandemic and the illicit economy. The latest edition looks at one of the mainstays of the global criminal economy: drugs.
HUMAN SMUGGLING IN THE TIME OF COVID-19: THE IMPACT OF THE PANDEMIC ON HUMAN-SMUGGLING DYNAMICS AND MIGRANT-PROTECTION RISKS
The Global Initiative Against Transnational Organized Crime has produced a briefing paper saying that efforts to counter the pandemic have seen unprecedented restrictions on movement being imposed in many countries, both at borders and within countries. Some communities and policymakers have adopted increasingly hostile attitudes towards migrants, whom they perceive as contagion risks – barriers to movement are therefore not only state-imposed but can also be community led. It warns that, as the policy environment becomes more hostile to migration, the operating risks and prices of smuggling look set to rise – and that this may drive out operators with a lower risk appetite and attract organised crime groups, which are more likely to exploit migrants for ever greater profit. The paper makes the important distinction between ‘the smuggling of migrants’ (involving willing – at least to some extent – “victims”) and ‘human trafficking’ (which may involve abduction, threats or use of force, or other forms of coercion). The paper ends by looking at likely short-, medium- and long-term impacts.
COMPARATIVE GUIDE TO BLOCKCHAIN AROUND THE WORLD
Available via Mondaq is a comparative guide provided by Dentons which provides an overview of some of the key points of law and practice concerning blockchain and allows one to compare regulatory environments and laws across multiple jurisdictions. This guide provides answers to a set of questions on the legal and regulatory framework, cryptocurrencies, smart contracts, data and privacy, cybersecurity, IP, trends, tips and predictions – covering a number of countries, including the UK, Gibraltar, Malta, Singapore and Switzerland.
US: ICE REMOVES LIBERIAN SECURITY FORCES COMMANDER
A news release from US Immigration & Customs Enforcement on 29 April advised that Alexander Mentol Zinnah, 56, a member of the Liberian security forces under the regime of President Charles Taylor had been removed and had arrived in Liberia on board an ICE charter removal flight and was turned over to Liberian law enforcement authorities. Zinnah was a member of the National Patriotic Front of Liberia (NPFL), a rebel group led by Charles Taylor that engaged in a wide range of human rights abuses including massacres, torture, and kidnapping. He had been arrested in the US in 2017 for immigration violations and violating the terms of his parole into the US.
UK: NEW OPEN GENERAL IMPORT LICENCE
On 21 April, the UK Department for International Trade published a new, revised Open general Import Licence (OGIL). As with the previous one it replaces, the OGIL essentially permits the importation of all goods into the UK, subject to the various exceptions set out in the OGIL. The DIT also issued a new Notice to Importers 2020. This Notice pointedly says that membership of the EU, particularly since the introduction of the EU Single Market in 1992, placed limitations upon the ability of the UK to introduce purely national import control measures. Wording in the OGIL itself confirmed that its terms are subject to EU restrictions. These restrictions continue during the Brexit transition period to 31 December (at least).
Among the controls imposed concern the importation of certain nuclear materials. In the UK, the Office for Nuclear Regulation (ONR) is responsible for the licensing of imports of nuclear materials and currently (i.e. until, at least, the end of the Brexit transition period) licences to import certain nuclear materials are required from outside of the EU, and a licence to import nuclear materials from a country that is not a state party to the Convention on the Physical Protection of Nuclear Materials is unlikely to be issued.
Another function of the OGIL is to deal with controls on the import of goods from Iran, North Korea, Libya, Syria and all territory which is comprised within the Russian Federation.
One of the new provisions deals with the import of firearms, including any relevant component part (whether part of a firearm or not), manufactured on or after 14 September 2018 or which were imported into the EU on or after that date, unless in either case those goods are marked so as to comply with EU Marking Requirements.
TOP AIDE TO DR CONGO PRESIDENT TO BE ARRAIGNED IN COURT OVER GRAFT
In its 30 April edition, CGTN in China reported that a key ally of DRC President Felix Tshisekedi will appear in court on 11 May over alleged fraud totalling $51 million. Vital Kamerhe, a veteran politician who became the president’s chief of staff after helping him to secure election victory in 2018, has been in detention since 8 April.
TAIWAN: MINISTRY OF CULTURE OFFICIAL QUESTIONED OVER BRIBERY CLAIMS
In its 30 April edition, the Taipei Times reported that prosecutors at the Ministry of Justice’s Agency Against Corruption have summoned Ministry of Culture official Chen Ching-hua and 8 others for questioning over an alleged case of bribery.
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