Day: May 3, 2021

On 30 April, Accountancy Age published a report saying that accountants and agents dealing with Chinese clients should be aware of the risk of Chinese Underground Banking to their business and mitigate this risk by conducting client due diligence procedures and identifying sources of funds and wealth.  It says that Chinese underground banking is commonplace within the Chinese community. Involving the transfer of value between countries without actually moving any funds, the informal value transfer system (IVTS) pre-dates Chinese commercial banking and postal systems, but is now being misused by criminals for commodity-based money laundering such as trafficking drugs and humans in the UK and in many other countries.  The problem, and reason for the rise in use of IVTS is that moving money out of China is very difficult and there are significant restrictions on what money leaving the country can be spent on; Chinese law has a strict control on the purposes for which citizens can obtain foreign currency, ordinarily with a $50,000 annual limit for individuals – additionally, since 2017, the maximum allowed value of overseas withdrawals by a private individual using a Chinese bank card is around $14,000.

https://www.accountancyage.com/2021/04/30/dirty-cash-the-rising-threat-of-chinese-underground-banking/

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On 30 April, Computer Weekly reported that a senior lawyer told the Crown Prosecution Service (CPS) that there was a “substantial risk” that police warrants to obtain messages from the encrypted mobile phone network, EncroChat, would be found “unlawful”; and that that the CPS could face “formidable arguments” over the lawfulness of warrants obtained by the NCA.  British police have made some 1,550 arrests after obtaining millions of hacked messages from EncroChat encrypted phones, and around 250 prosecutions are pending, involving multiple defendants who are accused of money laundering, supplying drugs, violent crime, or firearms offences. 

https://www.computerweekly.com/news/252500061/EncroChat-Top-lawyer-warned-CPS-of-risk-that-phone-hacking-warrants-could-be-unlawful

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On 29 April, an article from K & L Gates is concerned with a proposed new law that will introduce far-reaching supply chain due diligence obligations for certain businesses.  The proposed law is the EU Directive on Mandatory Human Rights, Environmental and Good Governance Due Diligence, and the Commission has been tasked with drafting a formal legislative proposal for the Directive, to be presented to the European Parliament in Summer 2021. Whilst the Directive is not expected to come into force until late 2022 or early 2023, companies falling within its scope will need to start gearing up to ensure that they are ready when the new requirements kick in.  The article summarises the aims of the Directive, who it will apply to, what they will need to do to comply, and what the risks will be if they do not do so.  The Directive would apply to large businesses and seek to prevent potential adverse impacts in 3 fields of corporate responsibility: human rights, the environment, and good governance;

https://www.klgates.com/European-Union-Moves-Towards-Mandatory-Supply-Chain-Due-Diligence-Start-Gearing-Up-For-New-Directive-4-29-2021

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