Panama Covid-19 update – 682 new cases take us close to the 100,000 total (now at over 99,000 cases since March), with 17 new fatalities and 23,090 active cases, of whom 164 are in ICU and 1,092 in other wards.
4 September 2020
US: BIS EXPANDS HUAWEI FOREIGN DIRECT PRODUCT RULE TO CAPTURE WIDE SWATH OF COTS PRODUCTS
On 4 September, Arent Fox published an article about 2 rules published by the Department of Commerce, Bureau of Industry and Security amending matters concerned with the Entity List export controls, the so-called ‘Foreign Direct Product Rule’ (FDPR) and commercial off-the-shelf (COT) products. The Entity List now includes 153 Huawei-linked entities. The FDPR primarily targeted at the semiconductor industry but the amendments remove the requirement that the foreign product in question be either developed or produced by a designated Huawei entity or the direct product of Huawei software or technology. The new requirements are wider. In response, Arent Fox concludes that, ultimately, BIS and the government keep sending the same message: if a party is legally selling to Huawei, the government will revise its regulations to ensure that such party is no longer legally selling to Huawei. To assist, a related podcast is also available.
ARAB LEAGUE BOYCOTT OF ISRAEL – UAE EXIT AND THE US ANTI-BOYCOTT OBLIGATIONS
On 2 September, Sidley Austin LLP published an article saying that on 29 August, the UAE reportedly formally ended its participation in the Arab League’s economic boycott of Israel. It joins Egypt and Jordan in doing so. The article says US companies should be cautious, and explains the US anti-boycott law, which makes it illegal for US companies to comply with a foreign boycott to which the US is not a party, and requires US companies to report certain types of boycott requests. It notes the distinction in US law, which permits US companies to participate in the primary boycott of Israel (e.g., refusals to ship goods direct to/from Israel) but prohibits participation in secondary boycotts (e.g. refusals to do business with US persons that do business with Israel, usually in accordance with a blacklist) and tertiary boycotts (e.g. refusals to do business with persons that themselves do business with US persons on a blacklist).
DEFERRED PROSECUTION AGREEMENT (DPA) FOR UK BUSINESS INCLUDES REQUIRED ‘CORPORATE RENEWAL’ AND REVIEWERS
On 31 August, Barnes & Thornburg LLP in the US published an article saying that a recent DPA with the SFO has yielded the first appointment of an external “reviewer”, which appears to be a role similar to that of “monitors” under such US DoJ agreements, and entails examination, analysis, review, and audits of rehabilitation efforts. The article says that it remains to be seen whether the appointment of a “reviewer” becomes more common in SFO DPA.
AUSTRALIA: POLICE SEIZE MELBOURNE PROPERTY IN MALAYSIAN CORRUPTION CASE
On 3 September, the Sydney Morning Herald reported that federal police have seized properties and cash worth $1.6 million over an alleged scheme to use the Melbourne property market to funnel millions of dollars of funds from a Malaysian government entity to corrupt officials. It says such actions are rare, but also mentioned that, in July, as part of another unrelated international bribery investigation, federal police asked the US to block sale of a New York apartment as part of a long-running and politically sensitive probe into Australian mining company called Getax, owned by the wealthy Gupta family and accused of bribing Nauruan officials to benefit its phosphate exporting business.
IN DEAL: MALAYSIA DROPS GOLDMAN SACHS CRIMINAL CHARGES OVER 1MDB
On 4 September, the Wall Street Journal reported that Malaysia has dropped criminal charges against units of Goldman Sachs Group Inc. over the bank’s role in the alleged theft of billions of dollars from the government investment fund, part of a $3.9 billion settlement with the company.
THE MULTINATIONAL MUTUAL ASSISTANCE AND COOPERATION FRAMEWORK FOR COMPETITION AUTHORITIES
On 3 September, the Mashable website carried an article saying that the US, Australia, Canada, New Zealand and UK had signed a non-legally binding agreement to share information about competition laws and policies, with a focus on coordinating cases and investigations spanning international borders. It is said that it will strengthen existing cooperation arrangements, as well as provide a base framework for further collaboration.
US SATELLITE COMMUNICATIONS COMPANY SANCTIONS PROBE OVER RUSSIA TIES
On 4 September, Global Investigations Review reported that the US Treasury is investigating Frequency Electronics over its past relationship with a company owned by sanctioned Russian financial institution Gazprombank.
PODCAST: THE LOZOYA CASE SHAKING MEXICO: WHAT TO EXPECT
On 3 September, the Americas Quarterly produced a podcast arguing that the scandals involving the former Pemex chief may impact politics more than the rule of law.
SMALL CHINESE CITY EXPLODED INTO A MAJOR PORT FOR NORTH KOREAN TRADE – WHILE A CLOSED SEA ROUTE AFFECTS A NORTH KOREAN PORT
On 4 September, NK Pro reported how 150 companies in Dandong were behind around 25% of Chinese exports to North Korea in 2016 — worth roughly $750 million. Dandong is the largest Chinese border city, facing North Korea across the Yalu River. Meanwhile, another report on 3 September says that ship-tracking data supports NGO reports that the Dalian-Nampho sea route was closed in late July and North Korea’s formerly busiest port was quiet throughout August, averaging less than one ship voyage per day seemingly having been closed sometime in late July due to COVID-19 concerns.
THE BILLION-DOLLAR BORDER TOWN NORTH KOREA’S TRADE NETWORKS IN DANDONG (PART 1)
Available to download from RUSI, this article says that historically, a significant proportion of trade have been based in the Chinese border town of Dandong, which looks across the Yalu River into North Korea and acts as the primary cross-border trading hub between the two countries. This report – which is the first of 2 on this topic – analyses North Korea’s trade networks in Dandong and the role these have played in the country’s ongoing attempts to evade multilateral and unilateral sanctions regimes. The research involved highlights the scale of trade running through Chinese companies involved in various illicit activities and the striking importance of Dandong’s logistical, financial and corporate architecture to North Korea. It says that its discoveries have implications for regulators, financial institutions and a range of other stakeholders committed to enforcing the multilateral sanctions regime on North Korea. They also raise questions regarding China’s implementation of sanctions it has itself supported at the UN.
AUSTRALIA: CUSTOMS OFFICIALS DESTROY $19,000 ALLIGATOR-SKIN HANDBAG
On 4 September, The Nation in Sri Lanka reported that the Saint Laurent bag was destroyed by customs officials in Australia because it entered the country without the correct import licence. While alligator products are allowed into the country, their access is controlled under CITES to ensure they are not linked to the illegal wildlife trade and , although the buyer had secured an export licence from Europe, she did not have a CITES import permit for Australia.
SHARK FIN SMUGGLING OPERATION BASED IN CALIFORNIA AND FLORIDA WORTH MILLIONS OF DOLLARS BUSTED
Dive Magazine reported that 12 people and 2 businesses alleged to be fronts for an international smuggling ring have been charged with smuggling shark fins from Mexico to Hong Kong. The defendants have also been accused of running an illegal marijuana shipping operation. The scheme is thought to have been in operation since 2010.
SMUGGLERS STILL PLY TRADE ON NORTH KOREA’S CHINA BORDER DESPITE SHOOT-ON-SIGHT ORDERS
Radio Free Asia on 3 September reported that economic hardship is driving North Koreans who live near China to break strict quarantine rules to move goods across the border in spite of recent orders by authorities that anyone approaching the frontier will be shot.
DON’T EXPECT NEW EU-US DATA TRANSFER DEAL ANYTIME SOON
On 4 September, EurActiv reported that EU Justice Commissioner Didier Reynders has told MEPs that there will be “no quick fix” on a revised data transfer deal between the EU and the US following a July ruling by EU judges to strike down the Privacy Shield agreement. He is quoted as saying that what was needed were sustainable solutions that deliver legal certainty, in full compliance with the judgment of the court.
ALL EYES ON SUDAN’S PEACE DEAL WITH ARMED GROUPS
An article on Defence Web on 4 September asked if the recent peace deal between Khartoum and Sudan’s armed rebel groups can stick? The agreement covers the war-torn areas of Darfur, the ‘Two Areas’ (South Kordofan and Blue Nile) as well as central, eastern and northern Sudan. On the rebels’ side, the accord was initialled by the Sudan Revolutionary Front alliance, its two constituent movements – Gibril Ibrahim for the Justice and Equality Movement (JEM) and Malik Agar for the Sudan People’s Liberation Movement-North (SPLM-N) – and by Minni Minnawi for SPLM-MM. But it was not endorsed by 2 other groups – the SPLM-N faction under the leadership of Abdelaziz al-Hilu, or the mainstream Sudan Liberation Movement in Darfur, led by Abdel Wahid al-Nur (SLM-AW).
MURKY GHANA GOLD DEAL RAISES QUESTIONS ABOUT JERSEY
On 4 September, the Tax Justice Network published an article saying that a company based in Jersey – Agyapa Royalties – has inserted itself into the middle of what looks like a highly unwise financing arrangement for the country. In exchange for an up-front payment from ‘investors’, variously forecast between $500 million and $1 billion, Ghana will be signing away over three-quarters of its future gold royalties to Agyapa — forever. The article claims that this is an example of an apparently large injection of up-front money to Ghana’s budget, in exchange for likely vastly larger sums flowing out at a later date. It also criticises the tax carve-outs involved and looks at what (little) can be found about the Jersey company involved.
UK: FRAUDULENT FOREIGN EXCHANGE TRADER PLEADS GUILTY TO A £20.5 MILLION INVESTMENT SCAM
A news release from the CPS on 4 September said that, after emailing his clients and telling them he had not been trading with their investments since 2009, Joseph Lewis, 65, went to a police station, told them what he had done, and was arrested. Based in Turkey, Lewis attracted clients across the globe to invest in Foreign Exchange Trading.
BREXIT: TRADE WITH THE UK FROM JANUARY 2021: PREPARATIONS FOR EU BUSINESSES
On 4 September, the Department for International Trade published the latest in a series of news releases containing information for the end of the Brexit transition period. This one contains information in various languages for EU businesses.
US: EXPORT CONTROL HR PITFALLS TO AVOID WHEN HIRING
On 3 September, Sheppard Mullin published an article which said that hiring employees does not usually involve international trade compliance obligations. However, US export controls and anti-discrimination laws create a web that is overlooked or misunderstood by many types of employers of all sizes across many industries. Anti-discrimination laws prohibit unlawful citizenship status restrictions when hiring, and US export controls prohibit disclosing controlled information to foreign nationals without authorisation. Together, these laws limit acceptable job descriptions and hiring practices.
PHILIPPINES LOOKS TO PROSECUTE 19 IMMIGRATION OFFICIALS FOR POGO WORKER SMUGGLING
On 4 September, Calvin Ayre reported on alleged smuggling of foreign workers into the Philippines for the purpose of working at Philippine Offshore Gambling Operators (POGO). This has led to arrests and requests for prosecution of 19 immigration officers.
LEGALISED, REGULATED GAMBLING IN COLOMBIA
An article on the Calvin Ayre website on 4 September says that, in a few years, gambling has become a small but important part of the country’s economy, bringing in new revenue and new jobs that are vital to any country’s autonomy and longevity.
ICAO AND UPU CALL ON STATES TO SUPPORT POST AND CARGO CARRIERS
On 4 September, Lloyds Loading List reported that the organisations – the International Civil Aviation Organization (ICAO) and the Universal Postal Union (UPU) – are also stepping up analysis of each other’s e-commerce and traffic big data, so as to identify and report on the logistical constraints to growth. They have also started to exchange data on e-commerce flows to underline the importance of this sector for economic recovery and growth.
BREXIT: FREIGHT INDUSTRY – ‘SIGNIFICANT GAPS’ IN UK BORDER PLANS
On 4 September, Lloyds Loading List reported that the freight industry has called for ‘urgent roundtable’ with government and warns that if issues are not addressed UK business and the supply chain will be severely disrupted. The signatories to a letter to the UK Government include Logistics UK, the British International Freight Association (BIFA) the Road Haulage Association (RHA) and the UK Warehousing Association (UKWA) – saying that concern is growing from the logistics sector as to the Government’s and nations’ preparedness for transition.
CHINESE CUSTOMS SENDS BACK 110 TONNES OF SOLID WASTE
On 3 September, Xinhua reported that Customs in east China’s Shandong Province, said it has refused entry of 110 tonnes of solid waste into the country, misdescribed but identified as solid waste, which is prohibited from entering the country.
CHINA: CUSTOMS AUTHORITIES CRACK SMUGGLED FURNITURE CASE
On 2 September, Shine in China reported that over 15,000 pieces of smuggled antique furniture, worth $5.86 million have been seized late last month, Shanghai Customs announced.
MALI: THE COUP AND ITS CONSEQUENCES
A briefing paper from the EU Parliament Research Service on 4 September is concerned with the background to the recent coup in Mali.
US: BIS REQUESTS COMMENTS ON “FOUNDATIONAL TECHNOLOGIES,” WITH THE GOAL OF DEVELOPING NEW EXPORT AND CFIUS CONTROLS
An article from Dentons on 4 September was concerned with an advance notice of proposed rulemaking (ANPROM) seeking comments from the public concerning the criteria for defining “foundational technologies”. BIS had been charged with defining the terms “emerging technologies” and “foundational technologies”, to then impose heightened export controls on these technologies to control and safeguard these technologies deemed under ECRA to be “essential to the national security of the US. BIS is asking interested parties to submit comments by 26 October.
DESIGN CHOICES FOR CENTRAL BANK DIGITAL CURRENCY (CBDC)
On 4 September, a post on VOX, the website of the Centre for Economic Policy Research in Europe, said that many central banks are considering, and some are even piloting, central bank digital currency (CBDC). The article provides an overview of important considerations for central bank digital currency design. While central banks already provide wholesale digital currency to financial institutions, a retail central bank digital currency would expand access to more users and provide opportunities for innovative central banking. The design must balance these benefits with the potential risks created by retail central bank digital currency deployment.
RESOURCE CURSES ARE MORE LIKELY IN FRAGMENTED AUTHORITARIAN REGIMES
A post on the LSE Business review blog argues that authoritarianism and fragmented elites create uncertainty; capital tends to flee the country to avoid expropriation. It says that abundant natural resources like oil and gas rarely turn out to be a real blessing for a country. More frequently they distort economic policies, discourage entrepreneurial activity and ultimately suppress economic growth. Yet not all countries suffer from this resource curse, it says, to the same extent: some manage to escape it or even turn natural resources into a blessing. It poses the question whether some authoritarian regimes are better able to turn natural resources into a curse or a blessing than others.
US AIR FORCE TESTS POSSIBLE REPLACEMENT FOR CLUSTER MUNITIONS
On 3 September, Real Clear Defense reported that the USAF recently tested a new next-generation fragmentation bomb on the F-16 meant to be an alternative to cluster munitions that diminishes the risk of unexploded ordnance, according to a news release. Typically, cluster munitions involve a bomb that ejects explosive bomblets that are designed to kill personnel and destroy vehicles. There is an international convention that prohibits the use, transfer, and stockpiling of this type of weapon, with 108 states having ratified it (but not the US). In the UK, the Cluster Munitions (Prohibitions) Act 2010 bans the sale, transfer, export etc of cluster munitions.
HOW THE ART INDUSTRY CAN ADAPT TO THE CHALLENGES OF 5MLD
On 2 September, the International Compliance Association in the UK published an article saying that the most recent changes to the art market are significant. January 2020 saw the transposition of the EU 5th Money Laundering Directive (5MLD) into UK law. After extensive consultation, and with HMRC as the regulator, art market participants face considerably more onerous AML requirements. The article outlines the 5MLD obligations, its nuances and details and how to adjust to the necessary CDD.
GUIDANCE RELATING TO THIRD PARTIES ACCIDENTALLY IN RECEIPT OF PERSONAL DATA RELATING TO OTHER INDIVIDUALS
The Irish data protection authority has produced this guidance, in 3 forms, for individuals, organisations and data controllers.
THE DIRECT CORRELATION BETWEEN COMPLEX FINANCIAL CRIME AND THE EVOLVING CRIMINAL MIND
On 3 September, this research paper, published by Compliance and Financial Intelligence Principles, sets out to critically examine the direct correlation between complex financial crime and the evolving criminal mind. Within a highly competitive and dollar-driven global economy, it is paramount to understand the criminological, societal, institutional and psychological factors that contribute to the increasing intricacy of financial crime. In recent years, studies have shown the rising complexity of money laundering, terrorist financing, fraud and other financial crime related predicate offences. In light of these findings, the evolving criminal mind prompted by a series of factors was deemed to be a main cause. This paper concisely focuses on 4 core components –
- the modern-day societal triggers that propel individuals and businesses to engage in financial crime;
- the psychological factors which influence the increasing complexity of financial crime;
- the institutional factors which encourage criminality; and
- the criminological factors that explain the growing criminal network.
Notably, the paper concludes that among the factors driving financial crime is the impact of poor institutional or lax cultural norms within political, financial, legal, judicial and prosecutorial systems were observed as stimulants of criminality.
UK: PROPOSED LEGISLATION COULD SEE GOVERNMENT ‘BROADEN’ USE OF DATA COLLECTED THROUGH THE FALSIFIED MEDICINES DIRECTIVE
On 3 September, the Pharmaceutical Journal reported that proposals set out in the Medicines and Medical Devices Bill for a UK version of the EU Falsified Medicines Directive (FMD) – and address any regulatory gaps that could occur after Brexit – is said to considerably broaden how medicines data collected through the system would be used. It explains that the FMD is an EU Directive that came into effect on 9 February, requiring UK pharmacies to register with SecurMed and have hardware in place to scan 2D barcodes that must feature on all new packs of prescription medicine sold in Europe as a safety measure.
US AUTHORITIES REMOVES FRENCH MAN CONVICTED OF ORGANISED FRAUD AND WANTED IN FRANCE
A news release from US Immigration and Customs Enforcement on 4 September advised that officers had removed an unlawfully present French man wanted by French law enforcement authorities for organised fraud. Stany N’Goma Mavambu, 24, was removed to France and handed over to French authorities.
HMRC’S CROWN PREFERENCE SCARES AWAY RESCUE FINANCE LENDERS
On 4 September, Accountancy Age published a report claiming that companies will have more trouble raising funds with floating charges as HMRC’s creditor preferential status puts off lenders. It is due to take effect on 1 December, and will make HMRC a secondary preferential creditor in respect to certain taxes, and this will make it more difficult to raise capital for business restructuring according to insolvency practitioners. HMRC had previously held such a preferential status until 2003, when it was abolished.
AS IT PLANS FOR £4.5 BILLION LISTING, IT IS REVEALED THAT THE HUT GROUP CANCELLED A 2011 FLOTATION AFTER A MULTIMILLION-POUND FRAUD WAS UNCOVERED
On 4 September, the Guardian carried an article saying that the Manchester-based e-commerce company preparing a £4.5 billion stock exchange listing, cancelled a previous flotation following the discovery of a multimillion-pound fraud at the company. Details have come to light in a 2014 court judgment which explored how THG’s aggressive business culture during that time contributed to the fraud and stated how attitudes within its finance department had “allowed the fraud to flourish”.
CYPRUS TO STRIP 7 PEOPLE OF ‘GOLDEN PASSPORTS’
On 4 September, Al Jazeera reported that Cyprus has said it will strip 7 people of their “golden passports” that were bought in the country’s citizenship-by-investment scheme. However, it is said that there are questions over whether this is genuinely fresh action by the Cypriot authorities or a repeat of what has already been announced.
AFTER SEIZING SUPERYACHT, US MOVES TO CONFISCATE NIGERIAN OIL MOGUL’S MANSION AND OTHER LUXURY PROPERTIES
On 4 September, Sahara Reporters reported that the US has initiated proceedings in Texas to seize a $25 million mansion in Los Angeles owned by Kola Aluko, an ally of Diezani Alison-Madueke, former Minister of Petroleum Resources in Nigeria. He has been named in proceedings relating to alleged bribery in order to win oil production contracts worth $1.5 billion, according to a civil forfeiture complaint.
RUSSIA INTRODUCES SANCTIONS AGAINST FORMER UKRAINIAN PRESIDENT POROSHENKO
On 4 September, TASS, the Russian news agency reported that Pyotr Poroshenko is listed, along with former Ukrainian MP Svyatoslav Vakarchuk and several other officials on a list of 41 persons.
BREXIT: BORDER INFRASTRUCTURE PLANNING EASEMENTS WELCOME BUT TIMESCALES REMAIN TIGHT
On 4 September, Hellenic Shipping News reported that the British Ports Association has welcomed the new UK legislation introduced to fast track the planning processes for Brexit-related border infrastructure, at and around ports, but is warning that there is still a lot to be done in a short period of time.
ZIMBABWE’S TAX AUTHORITIES HAVE ACCUSED SWITZERLAND’S ABB OF AVOIDING $13.4 MILLION IN TAXES,
On 3 September, ICIJ reported that Zimbabwe’s tax authorities have accused ABB, one of Switzerland’s most profitable companies, of avoiding $13.4 million in taxes, according to court filings and other documents obtained by ICIJ. It seems that, in 2010, ABB Zimbabwe Private Ltd, the Swiss multinational’s local arm, won government tenders to provide power generators to one of the country’s largest power stations.
MALAYSIAN AUTHORITIES ARREST CRYPTO MINERS FOR $600,000 POWER THEFT
On 1 September, Coin Telegraph reported that officials in the Malaysian state of Johor shut down 2 crypto operations which had stolen more than $600,000 worth of electricity over 3 years.
CAN ITALY DEFEAT ITS MOST POWERFUL CRIME SYNDICATE? THE ’NDRANGHETA—THE RICHEST, MOST POWERFUL, AND MOST SECRETIVE CRIMINAL GROUP IN ITALY
An article in the October issue of The Atlantic poses this question, saying that its ’Ndrangheta’s tentacles extend to Italy’s wealthy north, where the organisation thrives on skimming off state contracts, especially in construction, and to 31 other countries worldwide — to much of Europe, to the US and Canada, to Colombia, to Australia. Outside Italy, the city with the most ’Ndrangheta outposts is Toronto. The ’Ndrangheta is on excellent terms with criminal affiliates in Latin America, from which it imports vast amounts of cocaine. The group is said to control more than half the cocaine market in Europe. It has also cashed in on the coronavirus pandemic. The article looks at Nicola Gratteri, the chief prosecutor for Catanzaro, a small city high in the hills of central Calabria and who dedicated the past 3 decades of his life to fighting the Calabria-based organisation.