THINGS YOU MAY HAVE MISSED – 8 FEBRUARY

Panama Covid-19 update – while cases drop, fatalities continue, with 22 new fatalities and 3,180 new cases. Active cases now stand at 33,763, with 73 in ICU and 519 in other wards.

8 FEBRUARY 2022

PANAMA: NEARLY $700,000 OF LAUNDERED MONEY RECOVERED FROM FORMER PRESIDENT MARTINELLI SONS

On 7 February, Newsroom Panama reported on the the case of the 2 brothers who pleaded guilty to using the US financial system to launder bribes paid by Odebrecht to benefit “a high-ranking Panamanian government official” between 2009 and 2014.  As well as the nearly $700,000 so far recovered, authorities have also ordered the confiscation of a million dollars that were traced by the US government, but this money has not yet been recovered.  It was established that they had secret bank accounts in the name of shell companies in foreign countries and in the US to launder nearly $28 million in bribes. they received from Odebrecht, during the government of their father.

https://www.newsroompanama.com/news/nearly-700000-of-laundered-money-recovered-from-martinelli-sons-1

THE IMPORTANCE OF TIME LIMITS IN FORFEITURE APPEALS

On 7 February, an article from 5 St Andrews Hill chambers about a case in which the  the High Court considered a judicial review arising out of Account Forfeiture applications pursuant to the Proceeds of Crime Act 2002.  It is said that was is most interesting about the Court’s decision is that nowhere within the judgment is reference made to the Lamai rulings which provides that the 30-day time limit cannot be extended.  Aving been returned to the Crown Court, this will have to decide whether the original appeal notice emailed to the Magistrates Court within the 30-day time limit was sufficient to “make” an appeal.

https://www.5sah.co.uk/knowledge-hub/articles/2022-02-07/the-importance-of-time-limits-in-forfeiture-appeals-james-fletcher

SWISS CONFLICT MINERALS AND CHILD LABOUR DUE DILIGENCE LEGISLATION TAKES EFFECT – WILL REQUIRE DUE DILIGENCE AND REPORTING BY MANY US-BASED MULTINATIONALS DOING BUSINESS IN SWITZERLAND

On 2 February, an article from Ropes & Gray reported that the relevant Ordinance and the relevant provisions of the Swiss Code of Obligations entered into force on 1 January, but are subject to a 1-year transition period.  Examining the build-up to the new legislation, the article says that the provisions apply to child labour and specified conflict minerals and metals. In this regard, the provisions are narrower than other recently adopted corporate human rights due diligence legislation in Germany and Norway, which apply to human rights risks and impacts broadly.

https://www.ropesgray.com/-/media/Files/alerts/2022/02/20220202_ESG_Alert.pdf

UK: £4.3 BILLION FRAUD WRITE-OFF LIKELY TO BE ECLIPSED BY £20 BILLION COVID LOAN DEFAULTS 

On 8 February, City AM reported that Covid loans that may have to be written-off by The Treasury due to fraud and highlighted by the recent resignation of Lord Agnew, could be eclipsed by businesses failing to repay their CBIL and BBL Covid support loans – £73.8 billion has been loaned under the above schemes to around a quarter of UK businesses by banks, building societies and other accredited lenders.

https://www.cityam.com/treasurys-4-3bn-fraud-write-off-likely-to-be-eclipsed-by-20bn-covid-loan-defaults-as-cbils-and-bbls-are-not-repaid

UK MAKES 8 AMENDMENTS TO ITS SANCTIONS LISTS

On 8 February, HM Treasury advised that8 amendments to entries in the new version of the Consolidated List.  Amendments have been made to entries in the new version of the consolidated list under the Belarus, Myanmar, Counter-Terrorism and Global Anti-Corruption financial sanctions regimes.  The relevant notices can be found on the respective regime pages.

The Consolidated List can be found at –

https://www.gov.uk/government/publications/financial-sanctions-consolidated-list-of-targets

FinCEN STATEMENT REGARDING BENEFICIAL OWNERSHIP INFORMATION REPORTING AND NEXT STEPS

A news release from FinCEN on 8 February notes that the comment period to the notice of proposed rulemaking (NPRM) requiring the reporting of beneficial ownership information (BOI) has closed; and that FinCEN received over 230 comments.   The next step in the Corporate Transparency Act rulemaking series will be FinCEN’s publication of proposed rules on BOI access and disclosure requirements, which FinCEN anticipates publishing later this year.   FinCEN strongly encourages all interested parties, including those that may be affected by the proposed beneficial ownership information reporting rule, to review the Access NPRM once issued and to submit written comments.

https://www.fincen.gov/news/news-releases/fincen-statement-regarding-beneficial-ownership-information-reporting-and-next

OFAC: ISSUANCE OF ETHIOPIA SANCTIONS REGULATIONS

On 8 February, OFAC advised that the regulations implement the Executive Order “Imposing Sanctions on Certain Persons with Respect to the Humanitarian and Human Rights Crisis in Ethiopia”. These regulations are currently available for public inspection with the Federal Register and will take effect upon publication in the Federal Register on 9 February. OFAC intends to supplement these regulations with a more comprehensive set of regulations, which may include additional interpretive guidance and definitions, general licenses, and other regulatory provisions.

https://home.treasury.gov/system/files/126/20220208_ethiopia_regulations.pdf

PREDATORY FINANCE AND THE US JUSTICE SYSTEM

On 3 February, the Crime Report reported on a new report from the Consumer Financial Protection Bureau which deals with the dominance of for-profit companies that force incarcerated people to overpay for essential goods, to escalating court fines and fees, financial exploitation exacerbates the already precarious situation of the vast majority of Americans who become justice-involved.  It argues that predatory monetary practices manifest themselves at every phase of the criminal justice process.  Even the prepaid debit cards people receive upon release, which contain money they had at arrest and their commissary account balance, can impose high fees for both use and inactivity.

https://thecrimereport.org/2022/02/03/predatory-finance-and-the-justice-system/

The CFPB report is at –

https://files.consumerfinance.gov/f/documents/cfpb_jic_report_2022-01.pdf

https://advisor.visualcapitalist.com/the-inflation-rate-in-the-u-s-past-present-and-future/

https://www.statista.com/chart/18819/worldwide-market-share-of-leading-cloud-infrastructure-service-providers

AID TO TALIBAN-CONTROLLED AFGHANISTAN

On 8 February, the House of Commons Library published a briefing paper which sets out to describe the humanitarian situation in Afghanistan, and the country’s economic and liquidity crisis. It also looks at how the UN and aid agencies are attempting to access people in Afghanistan, without Taliban interference; new aid pledges (including from the UK); and debates over how to best engage with the Taliban over aid now.

https://researchbriefings.files.parliament.uk/documents/CBP-9343/CBP-9343.pdf

CORPORATE CRIMINAL LIABILITY IN ENGLAND AND WALES

On 8 February, the House of Commons Library published a briefing paper which says that successfully prosecuting large corporates has been challenging, including problems with the identification doctrine, when someone who can be said to be the “directing mind and will” of a corporate commits the offence.

https://researchbriefings.files.parliament.uk/documents/CBP-9027/CBP-9027.pdf

CEO OF PRIVATE EQUITY FUND PLEADS GUILTY TO SCHEME TO DEFRAUD BANKS OF $140 MILLION

A news release from US DoJ on 8 February advised that Elliot Smerling has pleaded guilty to a bank fraud scheme that caused the issuance of approximately $140 million in collateralised loans on the basis of forged documents, including subscription agreements from purported limited partners, audit letters attesting to his private equity firm’s finances, and falsified bank account statements. 

https://www.justice.gov/usao-sdny/pr/ceo-private-equity-fund-pleads-guilty-scheme-defraud-banks-140-million

US: SERBIAN-HUNGARIAN DUAL CITIZEN PLEADS GUILTY TO MULTI-MILLION DOLLAR BUSINESS EMAIL COMPROMISE SCHEME

A news release from US DoJ on 8 February advised that Dejan Medic had pleaded guilty to participating in a business email compromise scheme that stole over $3.7 million from 15 victim companies in the US and Europe.

https://www.justice.gov/usao-sdny/pr/serbian-hungarian-dual-citizen-pleads-guilty-manhattan-federal-court-multi-million

TAX RISKS FOR UK COMPANIES ENGAGING OVERSEAS CONTRACTORS

On 8 February, an article from Out-Law said that engaging overseas contractors ‘off-payroll’ to provide services remotely is becoming an increasingly attractive option for UK companies.  However, the company may become exposed to non-UK tax risks, particularly in relation to creating a permanent establishment 

https://www.pinsentmasons.com/out-law/guides/tax-risks-for-uk-companies-engaging-overseas-contractors

FOREIGN-OWNED COMPANIES RESPONSIBLE FOR THIRD OF SUSPECTED UNDERPAID UK TAX

On 8 February, an article from Out-Law reported that foreign-owned companies were responsible for 32% of all the tax suspected to be underpaid by large businesses in the UK as at 31 March, with £11.5 billion from a total of £35.8 billion suspected to be underpaid.

https://www.pinsentmasons.com/out-law/news/foreign-owned-companies-responsible-third-suspected-underpaid-uk-tax

UK GOVERNMENT ACCEPTS LAW COMMISSION’S RECOMMENDATIONS TO REFORM THE COMMUNICATIONS OFFENCES

On 7 February, the Law Commission reported that the reformed offences will refocus the criminal law on communications where the sender specifically intended to cause harm, and that pose a real and substantial risk of causing at least serious distress.  The offences will replace the offences in the Malicious Communications Act 1988 and section 127 of the Communications Act 2003.

https://www.lawcom.gov.uk/government-accepts-law-commissions-recommendations-to-reform-the-communications-offences/

2 INDIVIDUALS ARRESTED IN MANHATTAN FOR AN ALLEGED CONSPIRACY TO LAUNDER CRYPTOCURRENCY THAT WAS STOLEN DURING THE 2016 HACK OF BITFINEX

On 8 February, a release on Mondo Visione reported that the men were detained for an alleged conspiracy to launder cryptocurrency that was stolen during the 2016 hack of Bitfinex, a virtual currency exchange, presently valued at approximately $4.5 billion. Thus far, law enforcement has seized over $3.6 billion in cryptocurrency linked to that hack.

https://mondovisione.com/media-and-resources/news/us-department-of-justice-two-arrested-for-alleged-conspiracy-to-launder-45-bi/

STATE-OWNED ENTERPRISES POSE CHALLENGES TO STANDARD COMPLIANCE MEASURES

On 8 February, a post on the FCPA Blog said that risk-based due diligence is the foundation of how companies prevent corruption.  However, it says that Natural Resource Governance Institute (NRGI) research into state-owned enterprise (SOE) corruption in the extractives sector reveals some of the practical limitations of this approach.  State enterprises pose a challenge to standard compliance measures.  It concludes that risk-based due diligence will continue to play a core role in helping companies avoid corruption, but certain scenarios – such as partnerships with extractive SOE — make clear the need for supplemental approaches. 

https://fcpablog.com/2022/02/08/state-owned-enterprises-pose-challenges-to-standard-compliance-measures/

Any modest contributions for my time and ongoing expenses are welcomed!  I have a page where you can do so, and where one-off contributions start as low as $3, at

https://www.buymea3coffee.com/KoIvM842y

Author: raytodd2017

Chartered Legal Executive and former senior manager with Isle of Man Customs and Excise, where I was (amongst other things) Sanctions Officer (for UN/EU sanctions), Export Licensing Officer and Manager of the Legal-Library & Collectorate Support Section

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