Panama Covid-19 update – Day 105 since the state of emergency declared – and still (back) in lockdown, at least where we are in Panama City. At least we are not facing the water shortage (of all things to suffer when water is vital to maintain hygiene, more than ever during the Covid-19 pandemic) that has produced angry protests in the Colon area over on the Caribbean side of the country.
Meanwhile, 722 new cases (now 26,752 in total), with the highest daily figure for fatalities to date – 20 (taking the total to 521). It seems that 43% of those tested remain “active”, demonstrating how long the virus can take even if you recover (and hence why it can put such strain on the health services). Of the current 10,049 active cases – 132 (another highest figure, I think) are in ICU, 615 in other wards and 771 in requisitioned hotels. One bright spot is for the 305 added to the total of people now “recovered” in the last 24 hours.
22 June 2020
THE ESCALATING TERRORISM PROBLEM IN THE UNITED STATES
On 17 June, the Center for Strategic and International Studies published a policy brief which says that the US faces a growing terrorism problem that will likely worsen over the next year. It says that the most significant threat likely comes from white supremacists, though anarchists and religious extremists inspired by the Islamic State and al-Qaeda could present a potential threat as well. Over the rest of 2020, the terrorist threat in the US will likely rise based on several factors, including the November 2020 presidential election.
PAPER: RECENT US MOVES TO RESTRICT TRANSFERS OF CUTTING-EDGE US TECHNOLOGY TO THE CHINESE TECHNOLOGY COMPANY HUAWEI
On 22 May, a paper in Arms Control and International Security Papers by the US Assistant Secretary of State for International Security and Non proliferation discusses recent US moves to restrict transfers of cutting-edge US technology to the Chinese technology company Huawei, explaining these steps and placing them in the strategic context of a great power competition with PRC brought on by China’s geopolitical revisionism, exploitation of such firms to steal and divert foreign technology to support the Chinese military, abuses of human rights in China itself, and employment of companies such as Huawei as tools of strategic influence.
END-USE MONITORING OF THE EXPORT OF COMMERCIAL EXPORTS OF US DEFENCE ARTICLES AND SERVICES
On 15 June, the US State Department published its report on its Blue Lantern end-use monitoring programme which addresses the evolving nature of arms trade and subsequent challenges associated with diversion of the goods and services exported by the US. It found that nearly 44% of its investigated cases were reported “unfavourable” due to many foreign parties refusing to respond to inquiry. All 5 cases of unauthorised (but unintentional) transfers were found to be in the East Asia-Pacific region. However, the report also noted the completion of the first tranche of visits tailored to assess the risk of diversion of US defence articles due to the acquisition of foreign companies by entities that pose a potential enhanced risk of diversion. The relevant bureau in the Department recommended non-approval of more than 130 licence applications, up from 57 during the previous year.
US COULD FACE UNINTENDED CONSEQUENCES IF IT ‘REINTERPRETS’ ARMS CONTROL PACT TO SELL MORE DRONES
On 16 June, Forbes reported on US plans to reinterpret the Missile Technology Control Regime (MTCR) to enable US suppliers to export large drones like the MQ-9 Reaper. The move could give a huge boost to the US aerospace industry and open up a whole new market, but says that it could also have serious unintended consequences. It explains that the MTCR is a multilateral agreement between 35 states which seeks to limit the proliferation of missile technology. One of its aims it to prevent exports of systems able to carry an 1,100 lb payload more than 190 miles, to stop countries acquiring rockets or cruise missiles to deliver nuclear warheads or other WMD and, currently, blocks the export of UAV like the Reaper. This, amongst other things, allows China to sell its UAV to several countries, although Israel is currently the market leader.
2019 US State Department factsheet on US policy on the export of unmanned aerial systems
A GUIDE TO JERSEY PROPERTY UNIT TRUSTS (JPUT)
On 18 June, Carey Olsen published an article which sets out to provide clients and professional intermediaries a general overview of Jersey property unit trusts, now commonly referred to as “JPUT”. A JPUT is a legal structure whereby legal ownership of assets (primarily non-Jersey real estate) is vested in one or more trustees who hold the assets on trust for the benefit of unitholders upon the terms of a written trust instrument.
ITALIAN NATIONAL SENTENCED IN US FOR ATTEMPT TO EXPORT OF POWER TURBINE TO RUSSIA
On 18 June, a news release from the US DoJ advised that Gabriele Villone, an Italian national, has been sentenced to 28 months in prison. Villone, along with 2 Russian nationals, an Italian national, a US citizen and various companies, conspired to obtain a power turbine from the US without a license on behalf of a Russian energy company based in St. Petersburg. Villone and some of his co-defendants were arrested in Georgia, while attempting to complete the illegal transaction.
CHINA TO RAMP UP JOINT MILITARY-CIVILIAN EFFORTS TO DEVELOP CUTTING-EDGE TECHNOLOGIES
On 22 June, the South China Morning Post reported that a new document answers some of the big questions on the country’s long-term economic and security vision. In the just-released guide to the Chinese government’s annual report there is said to be a clearer sign of Beijing’s direction and priorities for its military-civilian fusion strategy. Launched in 2015, it is intended to get the private sector and state-owned military-industrial players to work together on dual-use technology to help modernise the country’s defence forces.
On 22 June, Express Computer in India published an article on ransomware. It asks how lethal is ransomware, and why do many of the cyber experts still consider it to be the number one cyber threat even today? It sets out to consider some of the best practices that organisations and users can adopt to strengthen their defences against ransomware and mitigate risks.
VENEZUELA ALLEGEDLY WOOED TEXAS REPUBLICAN TO EASE SANCTIONS
On 22 June, KRGV and others reported that AP was said to have learned that Venezuela tried to recruit Republican Congressman Pete Sessions to broker a meeting with the CEO of Exxon Mobil at the same time it was secretly paying a close former House of Representatives colleague $50 million to keep US sanctions at bay. An official at PDVSA sent an email to the Congressman seeking his help arranging a meeting between Venezuela’s oil minister and the CEO.
BRITISH MAN CAUGHT SMUGGLING COCAINE INTO BELGIUM INSIDE A FAKE PENIS FACES 3 YEARS IN PRISON
On 22 June, the Daily Mail reported that he was arrested in February when he arrived at Brussels airport from Jamaica and it was found that he had hidden 127g of cocaine inside the artificial penis.
HOW NATIONS PROFIT FROM ZIMBABWE’S BLOOD GOLD
On 22 June, New Zimbabwe reported that 34 tonnes of gold is smuggled out of the nation every year. It reports a Gulf News story about artisanal and small scale miners (ASM) – subsistence miners who are not officially employed by a mining company but work independently. Gold is Zimbabwe’s chief export product and it is said that 50% of the country’s gold production of 33 tonnes come from artisanal miners. Bloody turf wars over mines are common as is gold smuggling. A 2018 report from the UN claims that 50% of artisanal and small-scale mined gold in Zimbabwe is lost to smuggling. It also says that investigations show most of the gold is smuggled to China, India and Middle East through middlemen and syndicates operating out of Harare, Mashava, Bindura, Mazowe and Mutare.
ANOTHER TANKER DETAINED FOR SMUGGLING IN VIETNAM WITH THAI CREW
An article on Maritime Bulletin on 21 June reported that the oil tanker Oki Maru was detained by Vietnamese Coast Guard while bunkering a Vietnamese fishing vessel. Some 1,000 tons of illegal fuel were found and the ship’s AIS is missing since Oct 2019.
EU RELAUNCHES ITS LIST OF COUNTRIES REGARDED AS HIGH RISK FOR MONEY LAUNDERING AND TERRORIST FINANCING
A Commentary from RUSI on 22 June says that after a first attempt that was criticised from all sides in 2019, the European Commission is back with a revised list, revised its methodology for a list of third countries considered to be high risk for money laundering and terrorist financing in May 2020. It asks, was it worth it? It says that the consequences of being listed for a third country can be serious: it can result in reduced or severed access to EU-based financial services, and the additional scrutiny involved is costly. The article considers the new methodology and asks if the answer lies in a new list.
UK: FCA REMINDS CRYPTO BUSINESSES TO REGISTER AHEAD OF DEADLINE
On 22 June, the Coin Telegraph reported that the FCA is urging all crypto businesses operating in the country to submit their applications by 30 June to make it for the 10 January 2021 deadline.
TUNISIA’S REMOVAL FROM EU FINANCIAL BLACKLIST SHOULD HELP BOOST ECONOMY
On 22 June, al-Monitor reported that, 3 years after being designated as a high-risk country with strategic anti-money laundering and counterterrorist financing deficiencies, Tunisia is officially off the list and getting ready for foreign investments.
CANADA: FINTRAC REGAINS PENALTY POWERS, GOVERNMENT STRENGTHENS AML, WILL ENFORCEMENT RISE?
On 22 June, ACFCS posed this question in an article saying that, over the last year, Canada has been bolstering AML across the board with stronger rules targeting riskier sectors like virtual currencies, cracking open beneficial ownership bastions and boosting budgets for investigators. It reminds one that Fintrac, after handing down its largest-ever penalty for AML failures in 2016 at more than $1 million, was challenged by several entities in Federal Court, and the regulator lost. The resulting 4-year review has, the article says, resulted in 5 documents: the Compliance Framework; the Assessment Manual; the penalties policy; sample penalty calculations; and a voluntary declaration of non-compliance policy.
DEFINING THE PARAMETER OF ‘ECONOMIC SUBSTANCE’ IN UAE’S NEW LAW
Gulf News on 22 June published an article saying that foreign-owned businesses will need to offer more transparency. It says that the UAE has introduced stringent KYC and due diligence requirements to tighten the banking system, and the recently issued Economic Substance Regulations (ESR) are designed to curb harmful tax practices and meet global standards set by the OECD which requires companies to have substantial activity within its jurisdiction.
A NEW SCHEME TO DRIVE INWARD REMITTANCES AND INVESTMENT MAY RISK SRI LANKA FALLING BACK INTO THE FATF’S GREY LIST
Regulation Asia on 22 June reported that the recent introduction of the so-called ‘Special Deposit Account’ (SDA) may risk Sri Lanka falling back into the ‘grey list’. It explains that the SDA is a “no-questions-asked” deposit account designed to attract diaspora funds into the country, and to entice foreign direct investment.
UKRAINE BILLIONAIRE IGOR KOLOMOISKY “INVESTIGATED FOR MONEY LAUNDERING IN US”
On 22 June, Upnewsinfo reported claims that one of Ukraine’s wealthiest oligarchs, is under investigation by a US federal grand jury. It is claimed that the grand jury is examining the finances of Kolomoisky, an important supporter of President Volodymyr Zelensky, in property in the US.
AML: SUSPICIOUS TRANSACTION REPORT PODCAST
On 22 June, RUSI announced the release of the first of anew season of AML-related podcasts. In the first edition, “LLPs, SLPs, UBOs”, the host Tom Keatinge is joined by AML Consultant Graham Barrow of Dark Money Files fame to examine why these acronyms always pop up in financial crime scandals, often with the UK at the centre. The podcasts set out to offer “behind-the-scenes” insights and practical advice on how to implement the latest financial crime research and policy developments in the real world – from AML and illicit flows to sanctions evasion and cryptocurrency abuse.
UK: LEBANON (SANCTIONS) (ASSASSINATION OF RAFIQ HARIRI AND OTHERS) (EU EXIT) REGULATIONS 2020 PLUS OTHER “REPLACEMENT” SANCTIONS REGULATIONS
These Regulations are intended to give effect to UN SCR 1636 which established a sanctions regime imposing restrictive measures against certain persons suspected of involvement in the assassination of former Lebanese Prime Minister Rafiq Hariri and others, and replacing sanctions previously imposed by means of EU Regulations in the UK. When the Regulations come into force they will replace, with substantially the same effect, relevant existing EU legislation and related UK legislation by which the UK’s UN obligations are given effect in domestic law.
At the same time, on 22 June, the UK has also published new Regulations relating to sanctions involving Lebanon (re UN SCR 1701 on the sale or supply of arms and related materiel, and the provision of related services to entities or individuals, without the authorisation of the Government of Lebanon or UNIFIL), Central African Republic (CAR), Nicaragua, and Bosnia-Herzogovina
Brexit legislation: What has passed and what is yet to come?
On 9 June, the House of Commons Library published an Insight article which explains what legislation is required, what has already been passed and what is left to pass.
CORRUPTION THROWS SWAZILAND (ESWATINI) CORONAVIRUS SCHEME TO FEED DESTITUTE INTO CONFUSION
All Africa on 21 June reported that the eSwatini Government plan to feed the hungry during the coronavirus lockdown is falling apart. There have been so many reports across the kingdom that the registration was flawed that in some places the whole process is to start again.
LIBYAN GOVERNMENT CLAIMS TO HAVE EXPOSED HAFTAR’S FINANCIAL CORRUPTION
On 22 June, the Anadolu Agency in Turkey carried an article saying the UN-based GNA Libyan government has published 2 documents implicating the GNA’s Khalifa Haftar in corruption, with the illegal seizure of state land and property by the Military Investment Authority, an economic arm of Haftar’s militia.
EU: COURT ORDERED TO RECONSIDER IMMUNITY IN ‘DALLIGATE’ POLITICAL SCANDAL AND BRIBERY AFFAIR
On 22 June, Tobacco Reporter reported on developments in the affair that involves Swedish smokeless tobacco and millions of dollars in bribes. The European Court of Justice found that a lower court had erred in its decision to side with the former head of OLAF, Giovanni Kessler, whose immunity from prosecution had been rescinded by the European Commission following allegations of illegal wiretapping. The article reminds one that the case dates from 2012, when Maltese politician John Dalli either resigned from or was forced out of his post as a EU Commissioner following allegations of bribery. An associate of Dalli was found to have demanded €60 million from Swedish Match to lift a ban on snus, which is legal in Sweden but outlawed in other EU Member States.
EVERTON MANAGER CARLO ANCELOTTI ACCUSED OF TAX FRAUD BY PROSECUTORS IN SPAIN
On 22 June, Liverpool Echo and others reported that he was in charge of Real Madrid between 2013 and 2015 and has been accused of failing to pay €1 million in taxes by prosecutors in Spain.
COVID-19 FALLOUT: CJRS FRAUD AND PENALTIES EXPLAINED
On 22 June, an article from Accounting Web investigates HMRC powers to investigate the fraud in the Coronavirus Job Retention Scheme (CRJS) launched in April and what accountants can do to help clients avoid the trap.
FRAUD INSIGHTS: CRYPTOASSETS FRAUD AND CIVIL PENALTIES
On 22 June, Mishcon de Reya published an article saying that recently, the Courts in England and Wales have provided much needed clarity on the fundamental legal status of cryptoassets and recent case law shows the Courts’ willingness to utilise common law tools to give victims access to civil remedies – such as proprietary injunctions and disclosure orders – to help them recover their misappropriated assets. It refers back to the ruling in November by the UK Jurisdiction Taskforce of the Law Society’s LawTech Delivery Panel (UKJT) that cryptoassets are “sufficiently permanent or stable to be treated as property” under English law.
PHILIPPINES: 11 POGO ONLINE GAMBLING OPERATIONS REOPEN, 5 CLOSE PERMANENTLY
On 22 June, Calvin Ayre reported that, following the Covid-19 shutdown, 5 Philippine Offshore Gambling Operators (POGO) have now closed, but 11 have now been permitted to resume operations. Over 2,000 Filipinos have lost work as a result. The article also says that It did not help matters that the Bureau of Internal Revenue (BIR) demanded a full payment of outstanding taxes for operations to resume.
CHINA CLAIMS SUCCESS IN COMBATING CROSS-BORDER GAMBLING OPERATIONS
On 22 June, Calvin Ayre reported that China’s anti-gambling crackdown has resulted in over 11,500 arrests and the seizure of $32.4 billion in illegal gambling proceeds in the past 4 months. The Ministry of Public Security announced that it had prosecuted 257 criminal cases since February.
BREXIT: EU INDICATES IT WILL IMPOSE FULL CUSTOMS CONTROLS ON UK GOODS FROM JANUARY
On 22 June, Lloyds Loading List reported that the EU will impose full customs controls and checks on goods from the UK from 1 January, a key EU diplomat has indicated – meaning that it has decided not to replicate the UK’s planned 6-month “light touch” period from January.
PRICE CHANGES FOR US-BOUND MAIL
The fallout from changes to how mail is treated in the US, following agreement in the Universal Postal Union (UPU), has reached even the Isle of Man, where its Post office announced on 22 June that the cost of sending a parcel to the US is to increase from late July. The US will fall become a separate category when sending airmail, instead of within the ‘rest of the world’ bracket.
AUSTRALIA: 360 KG METH SEIZURE WORTH $180 MILLION
A news release from the Australian Federal Police on 18 June advised that the AFP has charged 3 men, including an Australian and 2 Malaysian nationals, following the seizure of approximately 360 kg of crystal methamphetamine; enough to supply Melbourne with 3.6 million drug hits. This followed Australian Border Force (ABF) officers examining a shipping container of furniture, after it arrived into Melbourne via sea from Malaysia.
UK COMPETITION AND MARKETS AUTHORITY (CMA): 2 DIRECTORS DISQUALIFIED FOR 6½ YEARS FOR THE ROLE THEY PLAYED IN A PRICE-FIXING CARTEL AMONGST LOCAL ESTATE AGENTS
On 22 June, an article from Dentons explains that the disqualifications mean that the individuals cannot act as directors, or be involved in the management, of any company based in England, Scotland or Wales. The article says that the cases highlight the CMA’s increasingly aggressive approach to bringing actions against directors for breaches of competition law, in addition to the usual fines imposed on companies. It goes on to explain the risks for directors and how to manage those risks.
IRELAND: HERBAL CANNABIS WORTH €5.54 MILLION SEIZED AT ROSSLARE EUROPORT
A Revenue Commissioners news release on 22 June advised that, as a result of routine profiling, Revenue officers seized 277 kg of herbal cannabis at Rosslare Europort and on an unaccompanied trailer that had arrived into Rosslare from Bilbao, Spain.
BELARUS AUTHORITIES ACCUSE OPPOSITION LEADER BABARIKO OF $430 MILLION WORTH OF MONEY LAUNDERING
BNE Intellinews on 22 June reported claims by the head of Belarus’ State Control Committee about Viktor Babariko, who was CEO of Belgazprombank for 20 years. This was the country’s largest private bank and owned by the Russian gas monopoly, Gazprom. He quit to run for the presidency earlier this year and is considered to be the front-runner in the race against incumbent Belarus President Alexander Lukashenko.
P+I COVER AND CYBER RISK
On 22 June, Hellenic Shipping News carried an article explains that, at present there are no specific cyber exclusions in standard P&I cover for shipping. However, P+I member companies are obliged to ensure that cover is not prejudiced by acting in an “imprudent, unsafe, unduly hazardous or improper” way and this obligation extends to their conduct in relation to cyber risks. It goes on to consider the situation, including whether cyber attacks can be considered “terrorism”.
NEW BIS MILITARY EXPORTS RULE WILL LEAD TO ‘UNCERTAINTY’ FOR US UNIVERSITIES
An article in Science Magazine in the US on 18 June said that US universities may be forced to turn down research activities – including COVID-19 research – due to the Bureau of Industry and Security’s increased restrictions on shipments to military end-users. This is according to the Association of University export Control Officers (AUECO). It is reported that the change is being promoted as a way to stop China and other countries from stealing the fruits of federally funded research and using the information to damage US economic and national security. But research advocates worry that if enacted, the Bill could damage the US academic research enterprise by restricting the flow of talent and ideas. Among the things said is that higher education organisations are unhappy with a provision that lowers the requirement for reporting gifts, including grants, from another government or any foreign entity. The current standard is $250,000, but it would be lowered to $50,000.
EY’S WIRECARD AUDIT EXPOSED POTENTIAL FRAUD BUT STILL BEING SUED
On 22 June, Accountancy Age reported that, after a series of audits by EY and a special audit by KPMG, nearly €1.9 billion remains unaccounted for. The discovery was announced on 18 June, and the company has since withdrawn its 2019 and preliminary Q1 2020 financial results. However, although EY caught the error, a Dutch shareholder group is pursuing compensation from the firm, saying: “EY has played a significant role in the whole Wirecard scandal, not only from its inability to detect the flaws in Wirecard’s escrow account in former years”.
UK: PERSONAL SERVICE COMPANIES & IR35
On 22 June, the House of Commons Library published an updated briefing paper on the ‘IR35’ rules to prevent the exploitation of personal service companies for tax avoidance and which were introduced in April 2000, following a long and contentious consultation exercise.
EUROPEAN COMMISSION’S WHITE PAPER ON FOREIGN SUBSIDIES
On 18 June, Latham & Watkins LLP published an article about a public consultation to 23 September on a new tool to protect the EU from international competition. The proposal is to add a new tool to the EU protective framework against international competition. An EU White Paper addresses the potential distortive effects of foreign subsidies on the EU single market. The various models proposed could have a significant impact on companies that have received non-EU subsidies and some types of inbound M&A. The aim of the consultation, it says, is to assess whether new instruments, as a complement to existing tools, are required to address distortions of competition caused by foreign subsidies. The White Paper offers 3 options, with the aim of implementing any changes in 2021.
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