OTHER THINGS YOU MAY HAVE MISSED – JUNE 10

Panama Covid-19 update – the Gorgas Commemorative Institute for Health Studies, and the Minister for Health have said that there are no suspected cases of Monkeypox in the country. So that’s good news then…

On the other hand, the Ministry of Health has reported that is maintaining an epidemiological alert for the increase in cases of acute diarrheal disease in the metropolitan district of Panama City. There are more than 200 cases in the region.

Meanwhile, 5 new fatalities and 2,591 new cases reported today; with 26,819 active cases – 29 in ICU and 309 in other wards.

10 JUNE 2022

DOES THE PROPOSED UK CORPORATE RE-DOMICILIATION REGIME MEASURE UP?

On 9 June, an article from Freshfields Bruckhaus Deringer LLP posed this question, saying that the UK Government is planning to introduce a UK corporate re-domiciliation regime that would allow a non-UK incorporated company to change its place of incorporation to the UK whilst maintaining its legal identity as a corporate body – although the detail of the regime remains subject to further consideration by the Government.  It looks at the proposal and directs one to an accompanying podcast which discusses some of the key UK corporate and tax aspects of the proposals 

https://transactions.freshfields.com/post/102hqbh/does-the-proposed-uk-corporate-re-domiciliation-regime-measure-up#page=1

UK PART 2 EXTRADITION BY A NON-EU COUNTRY: NO WARRANT, NO PROBLEM

On 7 June, 5SAH Chambers published an article reminding one that the Extradition (Provisional Arrest) Act 2020 introduced the power for police officers to arrest a person without an extradition warrant, and that this opens the door for arrests to be made where the only information provided is an INTERPOL Red Notice.  Prior to this Act, one needed to seek a warrant from a judge before arresting a person requested by a ‘Part 2’ territory (i.e. a non-EU country); and, to avoid this procedural delay, the Act introduced a power to make a Part 2 arrest based on an NCA certificate without having to go to court. However, there are restrictions – it only applies to a handful of countries, for offences that would attract a sentence of 3 years or more in the UK, and where “appropriate”.  The article briefly considers the procedure and possible challenges to use of the powers.

https://www.5sah.co.uk/knowledge-hub/articles/2022-06-08/part-2-extradition-no-warrant-no-problem

UK: GOVERNMENT RESPONSE TO HOUSE OF COMMONS COMMITTEE REPORT ON RUSSIAN SANCTIONS

On 10 June, EU Sanctions blog reported that the UK Government had published its response to a report by the House of Commons Treasury Committee on financial sanctions against Russia.  Amongst other things, the Government says that it is increasing resources for OFSI and is monitoring the potential scale and nature of sanctions circumvention via cryptoassets.

https://www.europeansanctions.com/2022/06/government-response-to-uk-treasury-committee-report-on-russia-sanctions/

https://www.europeansanctions.com/wp-content/uploads/2022/06/Defeating-Putin_-the-development-implementation-and-impact-of-economic-sanctions-on-Russia_-Government-Response.pdf

ASIA BRACES FOR EU PLAN TO KILL “FAST FASHION”

On 10 June, an article in Nikkei Asia reported that EU regulators have declared war on “fast fashion”, forcing a rethink of the throwaway culture that has dominated the 21st Century clothing industry and promising to rejig supply chains that reach deep into Asia.  Proposed rules would force companies to overhaul their clothing designs to meet a list of criteria governing everything from how long a garment lasts, to how much recycled yarn it contains.  The aim is to reduce the environmental impact of the industry by increasing durability.

https://asia.nikkei.com/Business/Business-Spotlight/From-China-to-India-Asia-braces-for-EU-plan-to-kill-fast-fashion

JAPAN: EXPANDED APPLICATION OF THE TERM “DEEMED EXPORT”

A post from Baker McKenzie on 9 June was concerned with “deemed exports”, and information subject to export control received by an individual within Japan and then sent or taken abroad.  In the case of individuals with no domicile in Japan, and therefore more likely to move abroad, technology information provided in Japan from an individual to a non-resident is regarded as a “Deemed Export” of technological information, and is subject to an export licence.  It explains that prior to the relevant law being amended, the provision of technology information subject to export control from a resident to another resident in Japan had never been construed as a “Deemed Export”, and it had therefore been understood that resident-to-resident information transfer was not subject to export control.  It notes that foreigners may also be classified as “resident” if they work at an office in Japan, or continue to stay in Japan for 6 months or more.  The post explains that the amendment identifies certain types of information transfer that are substantially the same as the provision of technology information to a non-resident and are therefore subject to the requirement for an export licence.  It is recommended that companies check their information management practices with respect to technology information and taking necessary measures for export compliance.

https://www.globalcompliancenews.com/2022/06/09/japan-expanding-application-of-deemed-export-27052022/

PAKISTAN: AMNESTY FOR REPATRIATING MONEY MAY ENCOURAGE MORE LAUNDERING

On 10 June, The Business Standard reported that the Centre for Policy Dialogue had warned that a plan to allow people to repatriate laundered money in order to increase foreign exchange risked increasing money laundering; and would benefit those who have earned money illegally by taking bank loans and through corruption.

https://www.tbsnews.net/economy/budget/tax-management-required-achieve-target-cpd-437142

https://cpd.org.bd/#

ONLY 25 PEOPLE CONVICTED FOR MONEY LAUNDERING IN INDIA SINCE 2005

On 9 June, the Millennium Post in India claimed that data showed that only 25 people have been convicted for money laundering despite more than 400 arrests, since the Enforcement Directorate was empowered to investigate serious financial crimes 17 years previously.

http://www.millenniumpost.in/big-stories/only-25-people-convicted-for-money-laundering-in-india-since-2005-data-481523

https://www.statista.com/chart/27575/public-companies-with-most-bitcoins-on-balance-sheet

SINGAPORE PORTS BAN CONTAINERS FULL OF HYDROGEN PEROXIDE FOLLOWING THE FATAL FIRE AND EXPLOSION AT A CHITTAGONG DEPOT

On 10 June, Loadstar reported that PSA Singapore will no longer accept containers full of hydrogen peroxide at its terminals, following the fatal fire and explosion at a Chittagong depot, which claimed more than 40 lives.  Hydrogen peroxide is an explosive precursor and there is a problem with a rising stockpile of hydrogen peroxide in PSA yards.

https://theloadstar.com/port-of-singapore-stops-accepting-hydrogen-peroxide-following-chittagong-blast/

THE RACE TO ARM UKRAINE HIGHLIGHTS WEST’S WORRY OF LOSING TECHNOLOGY SECRETS

On 8 June, Defense News reported that a new generation of western-made arms travels to Ukraine’s front-line forces, but donor nations are assessing the risk of revealing sensitive technology to Russia’s military if the equipment is captured.

https://www.defensenews.com/global/europe/2022/06/08/the-race-to-arm-ukraine-highlights-wests-worry-of-losing-tech-secrets/

US IS HEAVILY RELIANT ON CHINA AND RUSSIA FOR ITS AMMUNITION SUPPLY CHAIN

On 8 June, Defense News reported that the mineral antimony is needed to produce everything from armour-piercing bullets and explosives to nuclear weapons as well as sundry other military equipment, such as night vision goggles; and that the US has relied almost entirely on China — and to a lesser extent Russia — in recent years.  The article reports on Congress efforts to boost the country’s strategic stockpile of such materials.

https://www.defensenews.com/congress/budget/2022/06/08/the-us-is-heavily-reliant-on-china-and-russia-for-its-ammo-supply-chain-congress-wants-to-fix-that/

HOW BANKS CAN NAVIGATE SWIFT AND EXPORT BANS

On 26 May, an article in the ABA Journal in the US explained that, based in Belgium, SWIFT connects more than 11,000 financial institutions operating in more than 200 countries — including orders and confirmations for payments, trades, and currency exchanges; and sanctions effectively ban Russian financial institutions from taking part in global financial transactions.

https://bankingjournal.aba.com/2022/05/sanctions-101-how-banks-can-navigate-swift-and-export-bans/

REPORT: MACROECONOMIC AND EXCHANGE POLICIES OF MAJOR TRADING PARTNERS OF THE US

This US Treasury report to Congress reviews developments in international economic and exchange rate policies over the 4 quarters through December 2021.  Legislation requires the US Treasury is required to assess the macroeconomic and exchange rate policies of major trading partners of the US.  The Treasury has also established a Monitoring List of major trading partners that merit close attention to their currency practices and macroeconomic policies – and the Monitoring List comprises China, Japan, Korea, Germany, Italy, India, Malaysia, Singapore, Thailand, Taiwan, Vietnam, and Mexico.  The report concludes that no major trading partner had, during the period covered by the report, manipulates the rate of exchange between its currency and the US dollar for purposes of preventing effective balance of payments adjustments or gaining unfair competitive advantage in international trade.

https://home.treasury.gov/system/files/136/FINAL_Spring_2022_FXR.pdf

THE SPACE INDUSTRY AFTER THE RUSSO-UKRAINIAN WAR

On 10 June, an article in War on the Rocks says that the ongoing war in Ukraine, the economic sanctions placed on the Russian Federation by the US and its allies, and Russia’s response to these sanctions are affecting the outer-space environment in wide-ranging ways.  It concludes that Russia’s role in commercial space launch is likely to be diminished, to the benefit of alternative launch-service providers in the US, Europe, and, potentially, nations like India and Japan.  It also says that the war is also affecting space and technology import and export streams, with both commercial and national security effects.  It reviews the recent history of the Russian commercial space industry.  It also warns that the short-term impact of the Russo-Ukrainian war and its resulting sanctions provide some hints at its likely effects on the commercial space industry over time. 

https://warontherocks.com/2022/06/sanctions-and-satellites-the-space-industry-after-the-russo-ukrainian-war/?__s=abb44a7d5b81zs8iy0c0

JAPAN: EXPANDED RUSSIA SANCTIONS AND ASSET FREEZE ON RUSSIAN AND BALARUS BANKS

On 10 June, the EU Sanctions blog reported that Japan announced a ban from 17 June on the export to Russia of certain goods that support industrial infrastructure, including wood and wood products, machinery and electrical equipment components, trains, bulldozers and trucks.  It also imposed an asset freeze on the Credit Bank of Moscow, Russian Agricultural Bank and Belinvestbank.

https://www.europeansanctions.com/2022/06/japan-adopts-russia-export-ban-lists-russian-belarusian-banks/

MOST WANTED HMRC TAX FUGITIVE JAILED

A news release from HMRC on 10 June advised that one of the UK’s most wanted tax fugitives has been jailed for 8 years after spending 9 years on the run.  Sarah Panitzke, 48, played a leading role in a vast multi-million-pound VAT fraud.  She was arrested in Spain in February and extradited to the UK.

https://www.mynewsdesk.com/uk/hm-revenue-customs-hmrc/pressreleases/most-wanted-hmrc-tax-fugitive-jailed-3188198

SAN DIEGO BUSINESSMAN PLEADS GUILTY TO CONSPIRING TO VIOLATE US EXPORT CONTROL LAWS

A news release from US Immigration & Customs Enforcement on 10 June advised that Joe Sery, 77, the former owner and CEO of Tungsten Heavy Powder & Parts (THPP), has pleaded guilty to conspiring to commit offences, including the unlawful exportation of defence articles on the US Munitions List from the US to China, India and elsewhere, without first obtaining a valid licence or approval for such export.

https://www.ice.gov/news/releases/san-diego-businessman-pleads-guilty-conspiring-violate-us-export-control-laws

A DUAL APPROACH TO TACKLING IP THEFT AND IP LOSS

A Commentary from RUSI on 8 June says that the threat posed to UK businesses and economic and national security by IP theft and IP loss is huge, and the UK’s approach needs immediate attention.  Recent months have seen fresh allegations of intellectual property (IP) theft reported against Chinese technology companies.  It says that the UK Government needs a dual approach to IP theft and IP loss, recognising that while the tactics differ, they ultimately lead to the same goal: an attrition of IP.  Nurturing and maintaining UK companies for the benefits of short- and long-term innovation is a key step in reducing IP loss.  On IP theft, strengthening naming and shaming powers while making the UK a harder target would help in deterrence.

https://rusi.org/explore-our-research/publications/commentary/dual-approach-tackling-ip-theft-and-ip-loss

https://www.statista.com/chart/27605/map-of-russian-empire-and-russia-today

ECONOMIC CRIME (TRANSPARENCY AND ENFORCEMENT) ACT 2022 (COMMENCEMENT No.2 AND SAVING PROVISION) REGULATIONS 2022

These Regulations in the UK bring into force Chapter 1 (monetary penalties) of Part 3 (sanctions) of the Economic Crime (Transparency and Enforcement) Act 2022 on 15 June.  The measures brought into force include – section 54, which provides that civil monetary penalties can be applied to persons for breaches of financial sanctions with no requirement for HM Treasury to prove that the person had knowledge or reasonable cause to suspect their activity breached sanctions; section 55, which  removes the requirement for a review of a decision by HM Treasury to impose a monetary penalty to be carried out by the Minister personally; and section 56, which allows HM Treasury to publish notices detailing violations by persons of financial sanctions in cases where the Treasury have decided not to impose a penalty. The new law will not apply to breaches of financial sanctions that took place before the coming into force of section 54 of the Act.

https://www.legislation.gov.uk/uksi/2022/638/contents/made

MALAYSIA TO ABOLISH MANDATORY DEATH PENALTY 

On 10 June, CNN reported that will abolish the mandatory death penalty, in a move cautiously welcomed by rights groups as a rare progressive step on the issue for the region.  Mandatory death sentences for serious crimes would be replaced by “alternative punishments” at the discretion of the courts.  A number of crimes that carry the death penalty, including drug offences.

https://edition.cnn.com/2022/06/10/asia/malaysia-death-penalty-abolish-human-rights-intl-hnk/index.html

FORMER OPENSEA EMPLOYEE CHARGED WITH WIRE FRAUD AND MONEY LAUNDERING IN FIRST-EVER “DIGITAL ASSET INSIDER TRADING” SCHEME

On 10 June, an article in the National Law Review says that a former employee of OpenSea, the largest marketplace for the purchase and sale of non-fungible tokens (NFT), has been indicted and charged with wire fraud and money laundering allegedly in connection with actions he took while employed by OpenSea.  Nathaniel Chastain was arrested on 1 June and released on $100,000 bond after entering a plea of “not guilty” in federal court.  While Chastain was not formally charged with securities fraud, the use by the DoJ of “insider trading” verbiage throughout the indictment and in the press release seems to indicate a clear signal of future enforcement actions to come.

https://www.natlawreview.com/article/former-opensea-employee-charged-wire-fraud-and-money-laundering-first-ever-digital

PANAMA HAS REPORTED TO THE FATF 6 INVESTIGATIONS FOR TAX FRAUD AND 89 FOR MONEY LAUNDERING

On 10 June, La Estrella Panama reported that the investigations are included as part of the actions in its FATF action plan.   The investigations of previous crimes of tax fraud came from different jurisdictions such as the US, Lithuania, Guatemala, Paraguay, El Salvador and Spain.  Of the 89 investigations for money laundering, 51 involve activity abroad and they remain under investigation.

https://www.laestrella.com.pa/economia/220610/panama-reportado-gafi-seis-investigaciones-defraudacion-fiscal-89-lavado-dinero

The EU Sixth Anti-Money Laundering Directive harmonises the definition of money laundering across the bloc with the primary aim to remove any loopholes in national legislations.  The new list of 22 predicate offences supports this new definition and Member States must criminalise them. 

https://www.linkedin.com/posts/sherif-afifi-aml-compliance-expert_money-cybercrime-tax-activity-6940970769304670208-AV0W

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OFAC ISSUES 2 NEW SANCTIONS GENERAL LICENSES RE COVID

On 10 June, OFAC issued General License N-1 re Iran and authorising certain activities to respond to the coronavirus disease 2019 (COVID-19) pandemic; and General License 21A re Syria authorising certain activities to respond to the coronavirus disease 2019 (COVID-19) pandemic.

https://home.treasury.gov/system/files/126/iran_gln1.pdf

https://home.treasury.gov/system/files/126/syria_gl21a.pdf

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CANADA BANS TECHNICAL AND SUPPORT SERVICES FOR RUSSIAN OIL, GAS, MINING AND CHEMICAL INDUSTRIES

On 10 June, the EU Sanctions blog reported that the change includes technical, management, accounting, advertising, construction and engineering services.

https://www.europeansanctions.com/2022/06/canada-ban-service-exports-for-russian-oil-gas-mining-and-chemical-industries/

https://www.canada.ca/en/global-affairs/news/2022/06/canada-imposes-sanctions-on-russian-oil-gas-and-chemical-industries.html

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UK: LAW COMMISSION PROPOSALS TO MAKE DIRECTORS MORE ACCOUNTABLE FOR ECONOMIC CRIMES CONDEMNED AS A “THUNDERING DISAPPOINTMENT”

On 10 June, the Guardian reported that MPs from the all-party parliamentary group on anti-corruption and responsible tax criticised the proposals as “unambitious, uninspired and insipid”, and saying the Law Commission had excluded essential changes that would have made it easier to punish companies and directors for failing to prevent money laundering.  The Commission’s role is to recommend updates to the law, ensuring that it remains fair, modern and simple. The review will now be passed to Government, which will decide which, if any, of the recommendations will be adopted.

https://www.theguardian.com/business/2022/jun/10/anti-money-laundering-proposals-uninspired-insipid-mps-law-commission-review-corporate-criminal-liability

The Law Commission says that options for reform to corporate criminal liability include widening the scope for attributing liability to corporations for the conduct of senior management – which would reform the established, and problematical, “identification doctrine”.  The report also contains the option of extending “failure to prevent” offences so that they capture other economic crimes by corporations, including an offence of “failure to prevent fraud”.  This would cover a situation in which the company has failed to put measures in place to prevent their own employees or agents committing fraud for the benefit of the company.  New financial penalties and reporting requirements for corporations are also presented as possible reform measures.

https://www.lawcom.gov.uk/law-commission-sets-out-options-to-government-for-reforming-how-companies-are-convicted-of-criminal-offences/

 

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SLOVENIA: AML/CFT EVALUATION FOLLOW-UP REPORT

On 10 June, MONEYVAL published a fourth follow-up report on Slovenia following its 2017 mutual evaluation report.  It says that Slovenia has moderately improved its measures to combat money laundering and terrorist financing, demonstrating some progress in the level of compliance with the FATF standards.  There has been an upgrade of Slovenia from “partially compliant” to “largely compliant” in the area related to assessment of money laundering and terrorist financing risks. However, there are still significant legislative deficiencies as regards the criminalisation of terrorism financing.  In the light of the new report, MONEYVAL has decided to apply its Compliance Enhancing Procedures (CEP), and the first step would be to inviting the Secretary General of the Council of Europe to send a letter to the country’s authorities requesting the necessary corrective measures to be taken.  Slovenia will also remain in enhanced follow-up and will continue to report back to MONEYVAL on progress to strengthen its implementation of AML/CFT measures. Slovenia is expected to report back in 1 year’s time.

https://rm.coe.int/fur-slovenia-4th/1680a6d983

https://www.coe.int/en/web/human-rights-rule-of-law/-/moneyval-report-on-slovenia-moderate-improvements-in-risk-assessment-but-significant-deficiencies-remain-in-combating-terrorism-financing

 

 

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MOLDOVA: AML/CFT EVALUATION FOLLOW-UP REPORT

On 10 June, MONEYVAL released the enhanced follow-up report on Moldova following its 2019 mutual evaluation report.  The new report details the upgrading of the country’s ratings from “partially compliant” to “largely compliant” in 4 areas related to the activities of designated non-financial businesses and professions (DNFBP), customer due diligence (CDD), politically exposed persons (PEP), and higher risk countries. However, in the field of new technologies, where new international requirements for virtual assets have been introduced, Moldova’s rating has been downgraded.  It notes that some minor deficiencies also remain, including those concerning the definition of the close associates of politically exposed persons, and the lack of customer due diligence requirements in some sectors.  Moldova is expected to report back to MONEYVAL on further progress to strengthen its implementation of AML/CFT measures in 1 year’s time.

https://rm.coe.int/fur-moldova-1st/1680a6d980

https://www.coe.int/en/web/human-rights-rule-of-law/-/moneyval-upgrades-moldova-s-ratings-following-improvements-in-measures-to-prevent-money-laundering-new-report

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INTRODUCTION OF INTERNET-RELATED RUSSIA TRADE SANCTIONS IN THE UK

On 9 June, the National Law Review published an article about new measures to prevent the provision of internet services to or for the benefit of designated persons, introduced by the UK on 29 April.  On 4 May, the UK regulator, Ofcom, issued an Open Letter to industry on the subject, and referred one to its 2017 guidance on regulatory investigations.

https://www.natlawreview.com/article/introduction-internet-related-russia-trade-sanctions-uk

https://www.ofcom.org.uk/__data/assets/pdf_file/0023/237218/open-letter-russia-sanctions.pdf

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