International Financial Law Prof Blog

Editor: William Byrnes
Texas A&M University
School of Law

Friday, July 10, 2020

New OECD CbCR corporate tax statistics data crunch with analysis of activities of multinational enterprises

New data, released today, provides aggregated information on the global tax and economic activities of nearly 4,000 multinational enterprise (MNE) groups headquartered in 26 jurisdictions and operating across more than 100 jurisdictions worldwide.

The data, released in the OECD’s annual Corporate Tax Statistics publication, is a major output based on the Country-by-Country Reporting requirements for MNEs under the OECD/G20 Base Erosion and Profit Shifting (BEPS) Project.  

The BEPS Project has seen more than 135 jurisdictions collaborating to tackle tax avoidance strategies by MNEs that exploit gaps and mismatches in international tax rules to avoid paying tax. Under Country-by-Country Reporting, large MNEs are required to disclose important information about their profits, tangible assets, employees as well as where they pay their taxes, in every country in which they operate. Country-by-Country reports (CbCRs) provide tax authorities with the information needed to analyse MNE behaviour for risk assessment purposes, and with the release of today’s anonymised and aggregated statistics will support the improved measurement and monitoring of BEPS.

The anonymised and aggregated CbCR statistics for 2016 have been provided to the OECD by member jurisdictions of the Inclusive Framework on BEPS. This new dataset contains a vast array of aggregated data on the global tax and economic activities of MNEs, including profit before income tax, income tax paid (on a cash basis), current year income tax accrued, unrelated and related party revenues, number of employees, tangible assets and the main business activity (or activities) of MNEs.

While the data contain some limitations[1] and it is not possible to detect trends in BEPS behaviour from a single year of data, the new statistics suggest a number of preliminary insights:

  • There is a misalignment between the location where profits are reported and the location where economic activities occur, with MNEs in investment hubs reporting a relatively high share of profits compared to their share of employees and tangible assets.
  • Revenues per employee tend to be higher where statutory CIT rates are zero and in investment hubs.
  • On average, the share of related party revenues in total revenues is higher for MNEs in investment hubs.
  • The composition of business activity differs across jurisdiction groups, with the predominant business activity in investment hubs being “holding shares and other equity instruments”.

Noting the limitations of the data and that these observations could also reflect some commercial considerations, they are indicative of the existence of BEPS behaviour and reinforce the need to continue to address remaining BEPS issues as part of the Inclusive Framework’s work on Pillar 2 of the ongoing international efforts to address the tax challenges arising from digitalisation.

The new OECD analysis also shows that corporate income tax remains a significant source of tax revenues for governments across the globe, accounting for 14.6% of total tax revenues on average across the 93 jurisdictions in 2017, compared to 12.1% in 2000. Corporate taxation is even more important in developing countries, comprising on average 18.6% of all tax revenues in Africa and 15.5% in Latin America and the Caribbean, compared to 9.3% in the OECD.

This second edition of Corporate Tax Statistics also collects for the first time, information on controlled foreign company (CFC) rules, which are designed to ensure the taxation of certain categories of MNE income in the jurisdiction of the parent company in order to counter certain offshore structures that result in no or indefinite deferral of taxation (BEPS Action 3); as well as new data on interest limitation rules, which can assist in understanding progress related to the implementation of BEPS Action 4.

The publication and data are accessible at: https//oe.cd/corporate-tax-stats

A list of Frequently Asked Questions on CbCR is available at https://oe.cd/corporate-tax-stats-CbCR-FAQ

Texas A&M International Tax Risk Management programTexas A&M University School of Law has launched its online international tax risk management graduate curricula for industry professionals.

Apply now for courses that begin August 23: International Tax Risk Management, Data, and Analytics; International Tax & Tax Treaties (complete list here

Texas A&M University is a public university, ranked in the top 20 universities by the Wall Street Journal / Times Higher Education university rankings, and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018).

July 10, 2020 in BEPS | Permalink | Comments (0)

Deputy Associate Chief Counsel (Litigation) within Office of Associate Chief Counsel (International) of U.S. Treasury-IRS

The Office of Chief Counsel, IRS, the largest tax law firm in the country, is looking for enthusiastic individuals to join our team and gain valuable experience in a legal environment. The Office of Chief Counsel’s mission is to serve America's taxpayers fairly and with integrity by providing a correct and impartial interpretation of the internal revenue laws and the highest quality legal advice and representation for the Internal Revenue Service. It's a great place to work!

Salary $131,239 to $197,300 per year   Closing date 07/31/2020  Link to the application site: CCCM-ERB-20-48

Responsibilities

The Deputy Associate Chief Counsel (Litigation) of the International division of the Office of Chief Counsel will join two other Deputy Associate Chief Counsels and a Senior Level Counsel who serve as the principal advisors to the Associate Chief Counsel (International), and represent the Associate and the Office in matters generally, including the overall direction and management of International. The Deputies assist the Associate in supervising (through GS-15 managers) a staff of professional attorneys and support personnel engaged in providing legal guidance and assistance in matters dealing with international and foreign tax matters, including all matters relating to the activities of non-U.S. persons or entities within the United States and the activities of U.S. or U.S.-related persons or entities outside the United States. These legal advisory services support uniform interpretation, application, enforcement, and litigation of the international provisions of the Internal Revenue Code, all bilateral and multilateral tax treaties and agreements to which the United States is a party, and all foreign revenue laws that pertain to or affect tax matters in the United States. The Office of the Associate Chief Counsel (International) works closely on all international program matters with other Associate Chief Counsels and Division Counsels, IRS Division Commissioners, Treasury officials, officials of the State Department and the Department of Justice, and officials of foreign governments. The Deputies are delegated authority for signature on all matters on which the Associate Chief Counsel (International) has authority and, when acting for the Associate, have full authority to make decisions on any issues arising in the Office of the Associate Chief Counsel (International).

DUTIES:

The Deputy Associate Chief Counsel (Litigation) will assist the Associate Chief Counsel (International) in administering litigation matters of the Office and ensuring that timely and high-quality work product and advice is provided to relevant constituencies. In addition, together with the other Deputies, the Deputy Associate Chief Counsel (Litigation) will assist the Associate with respect to all executive activities falling within the office’s jurisdiction. More specifically, this Deputy will:

  • Provide overall assistance to the Branches and the Field (Counsel) in Appeals and Litigation and oversight of relevant matters (in collaboration with the Deputy Associate Chief Counsel (Field Services & Rulings, as appropriate).
  • Provide supervision and quality control of complex legal arguments involving international matters in court filings, Appeals submissions, and defense letters, including detailed comment on draft submissions where appropriate.
  • In respect of litigation and potential litigation matters, work with the Deputy Associate Chief Counsel (Field Services & Rulings), Large Business & International (LB&I) Counsel, Small Business/Self Employed (SB/SE) Counsel, and the Department of Justice as needed, and develop strategic relationships with relevant constituencies in respect of the foregoing.
  • Share with the other Deputies responsibility for oversight of International’s Branches and assist the Associate in ensuring that the Branch managers operate as an effective management team, including delegating sufficient authority and providing a supportive environment in order that subordinates may manage their resources effectively, and improve through creativity as well as diligence in order to meet the needs of clients as a whole.
  • Assist in planning, directing, and coordinating the International program so as best to address its mission in changing environments, balancing the needs of program segments, and determining the allocation and deployment of human and fiscal resources that best positions the organization to meet the needs of clients.
  • Perform a share of administrative and operational functions, including developing and monitoring performance measures and program goals for assigned areas, ensures the full range of personnel activities are properly and timely addressed as necessary (i.e., recruitment, training, performance evaluation, disciplinary or adverse action, and management reporting), ensuring sound management policy, and taking positive steps in support of all merit system principles and equal employment opportunity initiatives and goals.

Travel Required

Occasional travel - Travel may be required.

Qualifications

As a basic requirement, candidates must clearly describe progressively responsible leadership experiences that demonstrate the executive level managerial capabilities comprising the Executive Core Qualifications (ECQs) of the Senior Executive Service. Typically, experience of this nature will have been gained at or above the GS‑15 grade level or its equivalent in Federal service or with state or local government, the private sector, or non-governmental organizations.

The following five ECQs provide the focus for the Office of Personnel Management certification of executive qualifications for initial career appointment to the Senior Executive Service. The listing of elements for each activity area is illustrative, not exhaustive.

A) Executive Core Qualifications (ECQs):

Unless you are currently serving under a Career Senior Executive Service (SES) appointment, are eligible for reinstatement into the SES, you must address the ECQs. The following five ECQs provide the focus for certification of executive qualifications for initial career appointment to the Senior Executive Service and also provide a basis for assessing relative quality of management experience for this position. The listing of elements for each activity area is illustrative, not exhaustive, and it is not expected that an individual will be a subject-matter expert in all of these activities. Please provide a brief explanation providing two examples of your experience with each ECQ.

  1. Leading Change--This core qualification involves the ability to bring about strategic change, both within and outside the organization, to meet organizational goals. Inherent to this ECQ is the ability to establish an organizational vision and to implement it in a continuously changing environment.
  2. Leading People--This core qualification involves the ability to lead people toward meeting the organization’s vision, mission, and goals. Inherent to this ECQ is the ability to provide an inclusive workplace that fosters the development of others, facilitates cooperation and teamwork, and supports constructive resolution of conflicts.
  3. Results Driven--This core qualification involves the ability to meet organizational goals and customer expectations. Inherent to this ECQ is the ability to make decisions that produce high-quality results by applying technical knowledge, analyzing problems, and calculating risks.
  4. Business Acumen--This core qualification requires the ability to manage human, financial, and information resources strategically.
  5. Building Coalitions--This core qualification requires the ability to build coalitions internally and with other Federal agencies, State and Local governments, nonprofit and private sector organizations, foreign governments, or international organizations to achieve common goals.

B) Professional/Technical Competencies (PTCs):

In addition to the general managerial competencies set out in the Executive Core Qualifications and mandatory for all Senior Executive Service positions, candidates must show evidence of the following more specific competencies in order to meet basic qualifications for this position: 

Mandatory:

  1. Position requires comprehensive, professional knowledge of and experience in applying the tax laws related to all transactions and activities that cross the borders of the United States, including all international provisions of the United States revenue laws and all bilateral and multilateral tax treaties and agreements to which the United States is a party.
  2. Must have demonstrated experience in managing all aspects of a law program that involves significant human and fiscal resources. Experience includes planning, directing, budgeting for, staffing, and evaluating such programs, as well as effectively managing equal employment opportunity initiatives.
  3. Must have demonstrated the ability to review and evaluate programs for the purpose of assessing their effectiveness against overall organizational goals and objectives, and the ability to design and implement program improvements as necessary to enhance organizational performance.
  4. Must have demonstrated the capacity for effective and decisive decision-making, as well as the ability to solve problems of substantial impact, sensitivity, and complexity.
  5. Graduation from an ABA accredited law school and current possession of a bar membership which permits the practice of law in the United States is required.

Desirable

  1. A thorough understanding of the operations and organization of the IRS and Office of Chief Counsel, and a solid understanding of the Department of the Treasury and its Office of General Counsel, are desirable.

 (Note: Failure to address these factors will result in your application being disqualified.) Narrative responses to the Technical Qualifications and Desirable Qualifications should not be more than two pages for each. Please provide the Executive Core Qualifications, Technical Qualifications and Desirable Qualifications each on separate sheets of paper.

Education

Applicants must possess a J.D. and have one year of general legal experience plus three years of professional legal tax experience. An LL.M. in Taxation is desired but not required. 

The experience may have been gained in the public or private sector, or through Volunteer Service.  One year of experience refers to full-time work; part-time work is considered on a prorated basis.

To ensure full credit for your work experience, please indicate dates of employment by month/year, and indicate number of hours worked per week, on your resume.

Required Documents

A complete application includes (1) a resume, (2) vacancy question responses, (3) a supplemental narrative statement that addresses your possession of the Executive Core Qualifications (ECQs) and the Professional/Technical Competencies (PTCs), and (4) submission of any required documents noted in the vacancy announcement. Please note that if you do not provide all required information as specified in this announcement, you will not be considered for this position (or will not receive the special consideration for which you may be eligible). 

  1. Cover letter (memorandum of interest) summarizing your interest in the position.
  2. All applicants are required to submit a resume either by creating one in USAJOBS or uploading one of their own choosing. To receive full credit for relevant experience, please list the month/year and number of hours for experience listed on your resume. We suggest that you preview the online questions, as you may need to customize your resume to ensure that it supports your responses to these questions. Please view resume tips.
  3. A supplemental narrative statement that addresses your possession of the Executive Core Qualifications (ECQs) and the Professional/Technical Competencies (PTCs).
  4. If you are not an OPM-Certified SES member or candidate, you must address the Executive Core Qualifications (ECQs).

CHIEF COUNSEL EMPLOYEES:
A Supervisory Report (ERB Form 1-88, 4/11) regarding your suitability for the position as completed by your current or most recent supervisor. You are responsible for notifying your supervisor that this report must be received no later than five workdays after the closing date of this announcement.

CURRENT AND FORMER FEDERAL EMPLOYEES - Documentation Relating to Your Federal Employment:

  • Submit a copy of your SF-50, Notification of Personnel Action, which shows your current (or most recent) grade and competitive service status. (The “position occupied” block on the SF-50 should show a “1” and your “tenure” block should show a “1” or “2”.)
  • Indicate on your application the highest permanent grade you have held; if this grade is different from your current grade; submit a copy of an additional SF-50 showing this grade.
  • Submit a copy of your most recent, signed, completed annual performance appraisal which includes the final rating. If the performance appraisal is not dated within the last 12 months or if you have not received a performance appraisal, please explain why in your application.

Benefits

A career with the U.S. Government provides employees with a comprehensive benefits package. As a federal employee, you and your family will have access to a range of benefits that are designed to make your federal career very rewarding. Learn more about federal benefits.

Our comprehensive benefits are very generous. Our benefits package includes: 

  • Challenging work, opportunities for advancement, competitive salaries, bonuses and incentive awards.
  • Ten paid holidays, 13 days of sick leave, and 13 to 26 days of vacation time each year.
  • Access to insurance programs that may be continued after you retire.
  • A wide choice of health insurance plans coverage for pre-existing conditions, and no waiting periods. We pay a substantial amount (up to 75%) of the health insurance premiums.
  • A retirement program which includes employer-matching contributions.
  • Learn more about Federal benefits programs at: https://help.usajobs.gov/index.php/Pay_and_Benefits

July 10, 2020 | Permalink | Comments (0)

Thursday, July 9, 2020

When can 3rd Parties bring a claim of interest in property to be confiscated because of financial crimes? (UK Supreme Court case)

BACKGROUND TO THE APPEAL
On 22 September 2015 Bernadette Hilton was convicted of three offences contrary to section 105A of the Social Security Administration (Northern Ireland) Act 1972. Following conviction, Ms Hilton was committed to the Crown Court and that court was asked to make a confiscation order under section 156 of the Proceeds of Crime Act 2002. The application was heard by His Honour Judge Miller QC on 20 October 2016. He made a confiscation order in respect of £10,263.50, which was the equivalent of Ms Hilton’s half share of her matrimonial home. Ms Hilton appealed against the order. The Court of Appeal decided that Section 160A(2) of the Proceeds of Crime Act 2002 required that, at the time of making a confiscation order, the Crown Court must give to anyone who is thought to hold an interest in the property an opportunity to make representations on whether a confiscation order should be made and, if so, in what amount. The failure to give Ms Hilton’s estranged partner and the building society the chance to make representations was “fatal to the decision of the judge” and the confiscation order was thus invalid. The Director of Public Prosecution appeals to this Court. The Court of Appeal certified the following points of law of general public importance:

“1. Where property is held by the defendant and another person, in what circumstances is the court making a confiscation order required by section 160A of the Proceeds of Crime Act 2002, in determining the available amount, to give that other person reasonable opportunity to make representations to it at the time the order is made?

2. If section 160A does so require, does a failure to give that other such an opportunity render the confiscation order invalid?”

JUDGMENT
The Supreme Court unanimously allows the appeal. It holds that the questions certified do not arise on the present appeal because a determination under s. 160A was not made. Lord Kerr gives the judgment.

REASONS FOR THE JUDGMENT
The Proceeds of Crime Act 2002 provides for two stages to confiscation proceedings: the first is the making of the confiscation order itself and the second the order securing its  enforcement. The first stage is dealt with in sections 156 and 163B and envisages that the making of a confiscation order should be straightforward, indeed quasi-automatic [8]. Section 160A of the Act provides that

(1) Where it appears to a court making a confiscation order that
(a) there is property held by the defendant that is likely to be realised or otherwise used to satisfy the order, and
(b) a person other than the defendant holds, or may hold, an interest in the property, the court may, if it thinks it appropriate to do so, determine the extent (at the time the confiscation order is made) of the defendant’s interest in the property.
(2) The court must not exercise the power conferred by subsection (1) unless it gives to anyone who the court thinks is or may be a person holding an interest in the property a reasonable opportunity to make representations to it.

(3) A determination under this section is conclusive in relation to any question as to the extent of the defendant’s interest in the property that arises in connection with -
(a) the realisation of the property, or the transfer of an interest in the property, with a view to satisfying the confiscation order, or
(b) any action or proceedings taken for the purposes of any such realisation or transfer.

The critical question is whether, at the stage of making the order, the Crown Court judge made a determination of the extent of Ms Hilton’s interest in the jointly owned property under section 160A. If made on foot of such a determination, the confiscation order becomes immutable unless there is an appeal [11-14]. A determination under s. 160A therefore effectively extinguishes the opportunity for third parties to make later representations. On the other hand, the judge can at this stage form a view of the extent of the interest of the person in question, here Ms Hilton, without making a determination under s. 160A.

Parliament intended this to be the case, as is evident from the provisions relating to the second, enforcement stage of a confiscation order [14].

see decision here for Hilton, R. v (Northern Ireland) [2020] UKSC 29 (1 July 2020) URL: http://www.bailii.org/uk/cases/UKSC/2020/29.html
Cite as: [2020] UKSC 29

July 9, 2020 in AML | Permalink | Comments (0)

Wednesday, July 8, 2020

Financial Regulators Issue Statement on Managing the LIBOR Transition

The members of the Federal Financial Institutions Examination Council (FFIEC) today highlighted the risks that will result from the transition away from LIBOR, and encouraged supervised institutions to continue their efforts to transition to alternative reference rates in order to mitigate financial, legal, operational, and consumer protection risks.

The financial services industry uses LIBOR as a reference rate for many financial products and instruments that include loans, investments, and deposits to a range of customers, as well as borrowings and derivatives. While some smaller and less complex institutions may have limited exposure to LIBOR- denominated instruments, the transition to alternative reference rates will affect almost every institution.

The statement also highlights the legal and consumer compliance risks associated with inadequate fallback language, when the contractual language does not contemplate LIBOR’s permanent discontinuance. Institutions should take steps to identify and address existing contracts with inadequate fallback language to mitigate potential legal risk as well as safety and soundness risk.

Financial institutions should have risk management processes in place to identify and mitigate their LIBOR transition risks that are commensurate with the size and complexity of their exposure and third-party servicer arrangements. The statement identifies areas where supervisory staff will focus their reviews of LIBOR transition planning and risk mitigation efforts at regulated institutions.

Joint Statement on Managing the LIBOR Transition (PDF)

Risks to Institutions
Institutions can have a variety of on- and off-balance sheet assets and contracts that reference LIBOR including derivatives, commercial and retail loans, investment securities, and securitizations. On the liability side, Federal Home Loan Bank advances; other borrowings; derivatives; and capital instruments, including subordinated notes and trust preferred securities, can reference LIBOR. Moreover, many market participants rely on LIBOR for discounting and other purposes. An institution’s risk exposure from LIBOR’s discontinuation depends on the institution’s specific circumstances. Potential risks include:

• Operational difficulty in quantifying exposure;
• Financial, valuation, and model risk related to reference rate transition;
• Inadequate risk management processes and controls to support transition;
• Consumer protection-related risks;
• Limited ability of third-party service providers to support operational changes; and,
• Potential litigation and reputational risk arising from reference rate transition.

July 8, 2020 in Financial Regulation | Permalink | Comments (0)

U.S. International Trade in Goods and Services, May 2020

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced that the goods and services deficit was $54.6 billion in May, up $4.8 billion from $49.8 billion in April, revised.

U.S. International Trade in Goods and Services Deficit
Deficit: $54.6 Billion +9.7%°
Exports: $144.5 Billion -4.4%°
Imports: $199.1 Billion -0.9%°

Next release: August 5, 2020

(°) Statistical significance is not applicable or not measurable. Data adjusted for seasonality but not price changes

Source: U.S. Census Bureau, U.S. Bureau of Economic Analysis; U.S. International Trade in Goods and Services, July 2, 2020

Goods and Services Trade Deficit: Seasonally adjusted
Coronavirus (COVID-19) Impact on May 2020 International Trade in Goods and Services

The declines in exports and imports that continued in May were, in part, due to the impact of COVID-19, as many businesses were operating at limited capacity or ceased operations completely, and the movement of travelers across borders was restricted. The full economic effects of the COVID-19 pandemic cannot be quantified in the trade statistics for May because the impacts are generally embedded in source data and cannot be separately identified. The Census Bureau and the Bureau of Economic Analysis have monitored data quality and determined estimates in this release meet publication standards. For more information on the impact of COVID-19 on the statistics, see the frequently asked questions on goods from the Census Bureau and on services from BEA.

Exports, Imports, and Balance (exhibit 1)

May exports were $144.5 billion, $6.6 billion less than April exports. May imports were $199.1 billion, $1.8 billion less than April imports.

The May increase in the goods and services deficit reflected an increase in the goods deficit of $4.2 billion to $76.1 billion and a decrease in the services surplus of $0.6 billion to $21.5 billion.

Year-to-date, the goods and services deficit decreased $22.3 billion, or 9.1 percent, from the same period in 2019. Exports decreased $148.3 billion or 14.0 percent. Imports decreased $170.6 billion or 13.1 percent.

Three-Month Moving Averages (exhibit 2)

The average goods and services deficit increased $6.6 billion to $48.9 billion for the three months ending in May.

  • Average exports decreased $22.4 billion to $161.9 billion in May.
  • Average imports decreased $15.8 billion to $210.8 billion in May.

Year-over-year, the average goods and services deficit decreased $0.9 billion from the three months ending in May 2019.

  • Average exports decreased $49.8 billion from May 2019.
  • Average imports decreased $50.7 billion from May 2019.

Exports (exhibits 3, 6, and 7)

Exports of goods decreased $5.5 billion to $90.0 billion in May.

  Exports of goods on a Census basis decreased $5.6 billion.

  • Industrial supplies and materials decreased $3.9 billion.
    • Other petroleum products decreased $1.6 billion.
    • Crude oil decreased $0.7 billion.
    • Fuel oil decreased $0.6 billion.
  • Capital goods decreased $0.9 billion.
    • Semiconductors decreased $0.4 billion.
    • Computer accessories decreased $0.3 billion.

  Net balance of payments adjustments increased $0.1 billion.

Exports of services decreased $1.1 billion to $54.5 billion in May.

  • Other business services decreased $0.6 billion.
  • Financial services decreased $0.2 billion.
  • Charges for the use of intellectual property decreased $0.2 billion.

Imports (exhibits 4, 6, and 8)

Imports of goods decreased $1.3 billion to $166.0 billion in May.

  Imports of goods on a Census basis decreased $1.0 billion.

  • Automotive vehicles, parts, and engines decreased $4.4 billion.
    • Passenger cars decreased $3.0 billion.
    • Automotive parts and accessories decreased $0.6 billion.
    • Trucks, buses, and special purpose vehicles decreased $0.4 billion.
  • Capital goods decreased $0.6 billion.
    • Computers decreased $0.4 billion.
  • Industrial supplies and materials increased $2.3 billion.
    • Nonmonetary gold increased $1.2 billion.
    • Finished metal shapes increased $1.2 billion.
  • Consumer goods increased $1.9 billion.
    • Other textile apparel and household goods increased $1.8 billion.
    • Cell phones and other household goods increased $1.2 billion.

  Net balance of payments adjustments decreased $0.3 billion.

Imports of services decreased $0.5 billion to $33.1 billion in May.

  • Charges for the use of intellectual property decreased $0.2 billion.
  • Other business services decreased $0.1 billion.
  • Travel decreased $0.1 billion.
  • Financial services decreased $0.1 billion.

Real Goods in 2012 Dollars – Census Basis (exhibit 11)

The real goods deficit increased $6.0 billion to $86.5 billion in May.

  • Real exports of goods decreased $6.7 billion to $106.8 billion.
  • Real imports of goods decreased $0.7 billion to $193.3 billion.

Goods by Selected Countries and Areas: Monthly – Census Basis (exhibit 19)

The May figures show surpluses, in billions of dollars, with South and Central America ($1.9), Brazil ($0.4), OPEC ($0.4), United Kingdom ($0.2), and Hong Kong ($0.1). Deficits were recorded, in billions of dollars, with China ($27.9), European Union ($12.7), Mexico ($4.2), Germany ($3.9), Japan ($3.2), Taiwan ($2.6), South Korea ($1.9), Singapore ($1.6), Italy ($1.4), Canada ($1.2), France ($1.1), India ($0.7), and Saudi Arabia ($0.1).

  • The deficit with China increased $1.9 billion to $27.9 billion in May. Exports increased $0.7 billion to $10.0 billion and imports increased $2.7 billion to $37.9 billion.
  • The surplus with members of OPEC decreased $1.0 billion to $0.4 billion in May. Exports decreased $0.5 billion to $2.4 billion and imports increased $0.5 billion to $2.1 billion.
  • The deficit with the European Union decreased $1.6 billion to $12.7 billion in May. Exports decreased $1.0 billion to $14.9 billion and imports decreased $2.6 billion to $27.6 billion.

July 8, 2020 in Economics | Permalink | Comments (0)

Tuesday, July 7, 2020

SEC Charges Alexion Pharmaceuticals With FCPA Violation

The Securities and Exchange Commission today announced that Boston-based pharmaceutical company Alexion Pharmaceuticals Inc. has agreed to pay more than $21 million to resolve charges that it violated the books and records and internal accounting controls provisions of the Foreign Corrupt Practices Act (FCPA).

According to the SEC’s order, two Alexion subsidiaries made payments to foreign government officials to secure favorable treatment for Alexion’s primary drug, Soliris. The order finds that, from 2010 to 2015, Alexion Turkey paid Turkish government officials to improperly influence them to approve patient prescriptions and provide other favorable regulatory treatment for Soliris. The order similarly finds that from 2011 to 2015, Alexion Russia made improper payments to Russian government health care officials to favorably influence the regulatory treatment of and the budget allocated to Soliris as well as to increase the number of approved Soliris prescriptions. Alexion Russia and Alexion Turkey maintained false books and records of these improper payments, which Alexion’s internal accounting controls were not sufficient to detect or prevent. Further, the order finds that Alexion’s subsidiaries in Brazil and Colombia failed to maintain accurate books and records, including by creating or directing third parties to create inaccurate financial records concerning payments to patient advocacy organizations. 

“Alexion’s internal accounting controls failed to detect and prevent payments to foreign government officials by its subsidiaries,” said Melissa Hodgman, an Associate Director in the SEC’s Division of Enforcement. “Companies in frequent contact with foreign officials need to ensure that their internal controls appropriately address such risks.”

Without admitting or denying the SEC’s findings, Alexion agreed to cease and desist from committing violations of the books and records and internal accounting controls provisions of the FCPA and pay $14,210,194 in disgorgement, $3,766,337 in prejudgment interest, and a $3.5 million penalty.

Company Announcement here

July 7, 2020 in AML | Permalink | Comments (0)

International community continues making progress against offshore tax evasion

The international community continues making tremendous progress in the fight against offshore tax evasion, as implementation of innovative transparency standards by the Global Forum on Transparency and Exchange of Information for Tax Purposes moves countries ever closer to the goal of eradicating banking secrecy for tax purposes.

Nearly 100 countries carried out automatic exchange of information in 2019, enabling their tax authorities to obtain data on 84 million financial accounts held offshore by their residents, covering total assets of EUR 10 trillion. This represents a significant increase over 2018 – the first year of such information exchange – where information on 47 million financial accounts was exchanged, representing EUR 5 trillion. The growth stems from an increase in the number of jurisdictions receiving information as well as a wider scope of information exchanged.


The Common Reporting Standard requires countries and jurisdictions to exchange financial account information from non-residents obtained from their financial institutions automatically on an annual basis, reducing the possibility for offshore tax evasion. Many developing countries have joined the process and more are expected to join in the coming years.

“Automatic exchange of information is a game changer,” OECD Secretary-General Angel Gurría said on the eve of a plenary meeting of the OECD/G20 Inclusive Framework on BEPS. “This system of multilateral exchange created by the OECD and managed by the Global Forum is providing countries around the world, including many developing countries, with a wealth of new information, empowering their tax administrations to ensure that offshore accounts are being properly declared. Countries are going to raise much needed revenue, especially critical now in light of the current COVID-19 crisis, while moving closer to a world where there is nowhere left to hide.”

Since the G20 declared an end to bank secrecy in 2009, the international community has made strong and ongoing progress in the fight against offshore tax evasion. Under the leadership of the Global Forum, which brings together 161 countries and jurisdictions committed to OECD tax standards, countries have ramped up global co-operation, first through exchange of information on request and through automatic exchange since 2017, implemented through more than 6,000 bilateral relationships worldwide in 2019 (4,500 in 2018).

The benefits were seen even before the exchanges began. A November 2019 OECD study shows that wider exchange of information driven by the Global Forum was associated with a global reduction in foreign-owned bank deposits in international financial centres (IFC) by 24% (USD 410 billion) between 2008 and 2019. Voluntary disclosure programmes, offshore tax investigations and related measures before the start of automatic exchange in 2017 and since then, have already led to the identification of more than 100 billion euros of additional tax revenues worldwide.

“The discovery of previously hidden accounts thanks to automatic exchange of information has and will lead to billions in additional tax revenues,” Mr Gurría said. “The tremendous achievements of our tax transparency work prove that when we work together, we all win. International co-operation is a condition for success.”

For more information on the Global Forum on Transparency and Exchange of Information for Tax Purposes, visit: https://www.oecd.org/tax/transparency.

Texas A&M International Tax Risk Management programTexas A&M University School of Law has launched its online international tax risk management graduate curricula for industry professionals.

Apply now for courses that begin August 23: International Tax Risk Management, Data, and Analytics; International Tax & Tax Treaties (complete list here

Texas A&M University is a public university, ranked in the top 20 universities by the Wall Street Journal / Times Higher Education university rankings, and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018).

July 7, 2020 in GATCA | Permalink | Comments (0)

Monday, July 6, 2020

U.S. Seeks to Recover Approximately $96 Million Traceable to Funds Allegedly Misappropriated from Malaysian Sovereign Wealth Fund

The Justice Department announced the filing of civil forfeiture complaints seeking the forfeiture and recovery of approximately $96 million in assets allegedly associated with an international conspiracy to launder funds misappropriated from 1Malaysia Development Berhad (1MDB), a Malaysian sovereign wealth fund.  Combined with earlier civil forfeiture complaints filed beginning in July 2016, the United States has sought the forfeiture of more than $1.8 billion in assets traceable to funds embezzled from 1MDB.  To date, as a result of these actions, the United States has recovered or assisted Malaysia in recovering nearly $1.1 billion in assets associated with the 1MDB international money laundering and bribery scheme.  This case represents the largest action brought under the department’s Kleptocracy Asset Recovery Initiative as well as the largest civil forfeiture action in the Justice Department’s history.

The complaints filed today in the Central District of California identify additional assets traceable to the 2012 and 2013 bond offerings.  These assets include luxury real estate in Paris, artwork by Claude Monet and Andy Warhol, and accounts maintained at financial institutions in Luxembourg and Switzerland.    

According to the complaints, from 2009 through 2015, more than $4.5 billion in funds belonging to 1MDB were allegedly misappropriated by high-level officials of 1MDB and their associates.  1MDB was created by the government of Malaysia to promote economic development in Malaysia through global partnerships and foreign direct investment, and its funds were intended to be used for improving the well-being of the Malaysian people. 

“The complaint filed today seeks to forfeit a range of luxury items — including real estate in Paris, artwork by Monet, Warhol, and Basquiat, and international bank accounts — all of which were allegedly acquired with funds stolen from Malaysia’s sovereign wealth fund,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division.  “Today’s action is just the latest demonstration of the Criminal Division’s longstanding commitment to tracing, seizing, and forfeiting assets acquired through grand corruption and, wherever possible, returning those assets to the people from whom they were stolen.”  

“The FBI will relentlessly pursue international corruption investigations,” said FBI Assistant Director Calvin Shivers of the Criminal Investigative Division.  “As efforts in this case have shown, our dedicated investigators will pursue corruption, uncover proceeds of illicit activity, and return ill-gotten gains to the rightful owners.  In this case, to the people of Malaysia.”

“These seemingly endless civil forfeiture complaints associated with the 1MDB scandal are representative of the seemingly endless schemes used to hide and launder money as part of the sophisticated efforts to steal from the Malaysian people,” said Don Fort, Chief, IRS Criminal Investigation.  “This latest civil forfeiture complaint would return an extraordinary sum of money to the people of Malaysia where it belongs and where it can finally be used for its original intended purpose - to improve the lives of everyday Malaysians.”

As alleged in the complaints, the members of the conspiracy – which included officials at 1MDB, their relatives and other associates – diverted more than $4.5 billion in 1MDB funds.  Using fraudulent documents and representations, the co-conspirators allegedly laundered the funds through a series of complex transactions and shell companies with bank accounts located in the United States and abroad.  These transactions allegedly served to conceal the origin, source and ownership of the funds, and ultimately passed through U.S. financial institutions to then be used to acquire and invest in assets located in the United States and overseas.

As alleged in the earlier complaints, in 2009, 1MDB officials and their associates embezzled approximately $1 billion that was supposed to be invested to exploit energy concessions purportedly owned by a foreign partner.  Instead, the funds were allegedly transferred through shell companies and were used to acquire a number of assets, as set forth in the complaints.  The complaints also allege that the co-conspirators misappropriated close to $1.4 billion in funds raised through bond offerings in 2012, and more than $1.2 billion following another bond offering in 2013.  The complaints also allege that in 2014, the co-conspirators misappropriated approximately $850 million in 1MDB funds under the guise of repurchasing certain options that had been given in connection with a guarantee of the 2012 bonds.

The FBI’s International Corruption Squads in New York City and Los Angeles and the IRS-CI are investigating the case.  Deputy Chief Woo S. Lee and Trial Attorneys Barbara Levy and Joshua L. Sohn of the Criminal Division’s Money Laundering and Asset Recovery Section are prosecuting the case.  Assistant U.S. Attorneys John Kucera and Michael Sew-Hoy of the U.S. Attorney’s Office for the Central District of California provided substantial assistance.  The trial team also expresses its gratitude and appreciation to the Criminal Division’s Office of International Affairs for their continued assistance in this matter.

The department also expresses its deep appreciation for the significant assistance provided by the Office of the Attorney General and the Federal Office of Justice of Switzerland, the judicial investigating authority of the Grand Duchy of Luxembourg and the Criminal Investigation Department of the Grand-Ducal Police of Luxembourg, the Attorney General’s Chambers of Singapore, the Singapore Police Force-Commercial Affairs Division, and the Attorney General’s Chambers of Malaysia, the Royal Malaysian Police, and the Malaysian Anti-Corruption Commission.

July 6, 2020 in AML | Permalink | Comments (0)

IMF's State of the Global Economy as of July 2, 2020

Last week we released our World Economic Outlook Update for June, which downgraded the April forecast—pegging global growth at -4.9 percent this year, down from -3 percent in April. Next year’s growth is forecast to be 5.4 percent. 

Discussing these figures and more, Managing Director Kristalina Georgieva spoke to Financial Times Africa Editor David Pilling in a new 23-min video interview about the economic uncertainty caused by the coronavirus crisis, how Africa is in danger after a period of growth, and how the IMF is supporting countries through this crisis. For a look at the global outlook for the business community, take some time and watch MD Georgieva's recent 45-min conversation with the Harvard Business Review.

And for a more detailed discussion on how COVID-19 has upended the global economy across the board, watch a new 50-min interview with Chief Economist Gita Gopinath—hosted earlier this week—by the Center for Strategic & International Studies.

OUTLOOK FOR LATIN AMERICA AND THE CARIBBEAN

Latin America and the Caribbean have become the new COVID-19 global epicenter. The human cost has been tragic, with over 100,000 lives lost. The economic toll has also been steep. Our World Economic Outlook Update now estimates the region to shrink by 9.4 percent in 2020, four percentage points worse than the April projection and the worst recession on record. A mild recovery to +3.7 percent is projected in 2021. 

The rates of COVID-19 infections and deaths per capita are approaching those in Europe and the United States, with the total number of cases accounting for about 25 percent of the worldwide total. Against this backdrop, countries should be very cautious when considering reopening their economies and allow science and data to guide the process. Indeed, many countries in the region have high levels of informality and low preparedness to handle new outbreaks, like a high occupancy of intensive care unit beds and low testing and tracing capacity.

Click here to read the full blog by Director of the Western Hemisphere Department Alejandro Werner, which includes several charts visualizing the impact of COVID-19 on the region and three policy priorities for how best to proceed. There are also specific insights with respect to Argentina, Brazil, Chile, Colombia, Mexico, Peru, Central America, Panama & the Dominican Republic, as well as the Caribbean.

ASIA'S REOPENING AND RECOVERY

For the first time in living memory, Asia’s growth is expected to contract by 1.6 percent—a downgrade to the April projection of zero growth. While Asia’s economic growth in the first quarter of 2020 was better than projected in the April World Economic Outlook—partly owing to early stabilization of the virus in some—projections for 2020 have been revised down for most of the countries in the region due to weaker global conditions and more protracted containment measures in several emerging economies.

In the absence of a second wave of infections and with unprecedented policy stimulus to support the recovery, growth in Asia is projected to rebound strongly to 6.6 percent in 2021. But even with this fast pickup in economic activity, output losses due to COVID-19 are likely to persist. We project Asia’s economic output in 2022 to be about 5 percent lower compared with the level predicted before the crisis; and this gap will be much larger if we exclude China, where economic activity has already started to rebound.

Our projections for 2021 and beyond assume a strong rebound in private demand; however, this may be optimistic for several reasons: slower growth in trade, longer than expected lockdowns, rising inequality, and both weak balance sheets and geopolitical tensions.

Click here to read the full blog by Director of the Asia and Pacific Department Chang Yong Rhee, which also details key policies that would support the region's recovery.

LESSONS FROM VIETNAM ON CONTAINING COVID-19

At the outset, it was expected to be an uphill battle. Vietnam was regarded as highly vulnerable, given its long border and extensive trade with China, densely populated urban areas, and limited healthcare infrastructure. But Vietnam’s cost-effective containment strategy resulted in only 352 confirmed cases and no deaths in a population of almost 100 million people. The country was among the first to lift virtually all domestic containment measures.

Vietnam’s successful strategy was informed by its experience with previous outbreaks, like the Severe Acute Respiratory Syndrome, or SARS, in 2003. Early on, the Prime Minister prioritized health above economic concerns. The strategy was swiftly deployed with the help of the military, public security services, and grass-root organizations, which speaks to some features unique to Vietnam. Effective and transparent communications won the population’s buy-in, and contains broader lessons for developing countries.

Click here to read more in IMF Country Focus. Have your headphones? Listen to a new 14-minute podcast with IMF economists Era Dabla-Norris and Anne-Marie Gulde of the Asia Pacific Department on why Vietnam's approach should allow for a quicker rebound.

SUB-SAHARAN AFRICA’S SHARPEST ECONOMIC DECLINE SINCE THE 1970'S

In our latest Regional Economic Outlook for sub-Saharan Africa, Real GDP is now forecast to contract by 3.2 percent, double the contraction predicted in April. On average, per capita incomes across the region will fall by 5.5 percent in 2020, back to levels last seen nearly a decade ago. This will likely lead to more poverty and widen income inequality as lockdowns disproportionally affect informal sector workers and small- and medium-sized companies in the services sectors. Regional policies should remain focused on safeguarding public health, supporting people and businesses hardest hit by the crisis, and facilitating the recovery.

For example, shortly after the region’s 100th case on March 15, many country authorities proactively implemented strict containment measures to control the COVID-19 outbreak. These measures led to more people staying home and reducing daily movements to areas with services and recreational facilities, including the informal economy. The growth of new cases has slowed somewhat since, and a number of countries have cautiously eased some of their containment measures. But region-wide, the pandemic is still in its exponential phase with more than a quarter of a million confirmed cases, and infection cases doubling every 2-3 weeks.

Click here to view six charts that tell a visual story of how COVID-19 has impacted sub-Saharan Africa. For more, you can download the reportread the press release and watch the 30-min Q&A press conference.

If you're wondering what impact COVID-19 has had specifically on Africa's energy sector, I would encourage you to read this speech from earlier this week by Director of the African Department Abebe Aemro Selassie to the IEA Africa Ministerial Roundtable.

OUTLOOK FOR THE MIDDLE EAST AND CENTRAL ASIA

The Gulf states' economies could contract by 7.6 percent this year in their deepest decline in decades, as COVID-19 and low oil prices take their toll. The new IMF projection for the six-nation Gulf Cooperation Council (GCC) is dramatically worse than the 2.7 percent contraction we forecast just two months ago. Oil revenues in the GCC, which supply nearly a fifth of the world's crude, are also expected to decline by $200 billion in 2020, said Director of the Middle East and Central Asia Department Jihad Azour in a virtual economic forum on the prospects for recovery in the region.

However, Azour predicted a faster rebound in 2021 as Gulf economies grow by 2.5 percent—a full 10 percent turnaround—but that the sharp drop in oil prices and the impact of the pandemic would lead to more debt in GCC economies. Last week, the IMF projected the Saudi economy, the largest in the region, would shrink by 6.8 percent—the lowest growth in more than three decades. A more detailed regional economic outlook will be released in the coming weeks.

If you're wondering about the outlook for Central Asia given the crisis, watch this just-released 15-min interview between Jihad Azour with Lyazzat Shatayeva of Kazakh TV.

A NEW INDEX OF DIGITAL FINANCIAL INCLUSION

The pandemic could be a game changer for digital financial services. Low-income households and small firms can benefit greatly from advances in mobile money, fintech services, and online banking. Financial inclusion as a result of digital financial services can also boost economic growth. While the pandemic is set to increase use of these services, it has also posed challenges for the growth of the industry’s smaller players and highlighted unequal access to digital infrastructure.

Many countries (for example, Liberia, Ghana, Kenya, Kuwait, Myanmar, Paraguay and Portugal) are supporting this shift with measures such as lowering fees and increasing limits on mobile money transactions.

Moreover, in a new study, we introduce a new index of digital financial inclusion that measures the progress in 52 emerging market and developing economies. We found that digitalization increased financial inclusion between 2014 and 2017, even where financial inclusion through traditional banking services was declining. This is likely to have progressed more since then. For more details, click here to read the full blog by the IMF's Ulric Eriksson von Allmen, Purva Khera, Sumiko Ogawa, and Ratna Sahay. 

Still, Internet usage remains a luxury: half of the world’s population does not have access to the Internet, either through a mobile device or through fixed line broadband. Countries in sub-Saharan Africa, followed by many in emerging and developing economies in Asia, are among those with the lowest access to the Internet despite being world leaders in mobile money transactions. There is also a large variation in Internet connectivity by firms in sub-Saharan Africa—only about 60 percent of businesses use email for business compared to about 85 percent in Europe and Central Asia. For more, view our latest Chart of the Week on Internet inequality.

REMITTANCES TO FALL BY $100 BILLION IN 2020

COVID-19 is crippling the economies of rich and poor countries alike. Yet for many low-income and fragile states, the economic shock will be magnified by the loss of remittances, which represent a lifeline that supports households as well as provides much-needed tax revenue. In a new article for F&D, Deputy Managing Director Antoinette Sayeh and Assistant Director in the Institute for Capacity Development Ralph Chami dig deeper into how the pandemic threatens to dry up this vital source of income, and what measures can be taken to tackle this challenge.

As of 2018, remittance flows to low-income and fragile states reached $350 billion, surpassing foreign direct investment, portfolio investment, and foreign aid as the single most important source of income from abroad. A drop in remittance flows is likely to heighten economic, fiscal, and social pressures on governments of these countries already struggling to cope even in normal times. And according to the World Bank, remittance flows are expected to drop by about $100 billion in 2020, which represents roughly a 20 percent drop from their 2019 level. 

Read the full article here with plenty of charts. Prefer the PDF? Click here to download. And if you're in a listening mood, click here for a new 18-min podcast with author Ralph Chami.

IMF AND COVID-19

We just updated our global policy tracker to help our member countries be more aware of the experiences of others in combating COVID-19, and we are regularly updating our lending tracker, which visualizes the latest emergency financial assistance and debt relief to member countries approved by the IMF’s Executive Board.

To date, 72 countries will have been approved for emergency financing, totaling about US$25.3 billion. Looking for our latest Q&A about the IMF's response to COVID-19? Click here. We are also continually producing a special series of notes—around 50 to date—by IMF experts to help members address the economic effects of COVID-19 on a range of topics including fiscal, legal, statistical, tax and more. The most recent additions include a focus on food markets during COVID-19budgeting in crisis, and digital financial services and the pandemic

FINAL THOUGHT

Thank you again very much for your interest in the Weekend Read. We really appreciate your time. If you have any questions, comments or feedback of any kind, please do write me a note.

And if you're on LinkedIn, subscribe to this newsletter in a more 📈 visual format.

Have a safe weekend,

Rahim Kanani  

Rahim Kanani
Editor, IMF Weekend Read
rkanani@IMF.org / LinkedIn


P.S. If you're a young person interested in learning more about the IMF, check out our new page dedicated to youth dialogue and engagement. You'll find articles, videos and other resources on climate change, fintech, gender equality and more, as well as economic explainers on issues like social spending and corruption.

July 6, 2020 in Economics | Permalink | Comments (0)

Saturday, July 4, 2020

Happy 4th July - USMCA Entered Into Force

The U.S. Council for International Business (USCIB), which represents many of America’s leading global companies, welcomes the 1 July 2020 entry into force of the United States-Mexico-Canada Agreement (USMCA) trade agreement, preserving and deepening the economic ties in North America and bolstering the global competitiveness of our companies and workers. The implementation of this agreement comes at a critical time of restoring certainty to U.S. industry in the North American market, as the global market is working toward recovery from the impacts of the current crisis.

The three partner countries must continue to work together to ensure effective implementation of this agreement, so that the benefits of the agreement in its updated and modernized provisions including on digital trade and customs can be realized. Over 12 million American jobs depend on trade with Canada and Mexico, and continuing to build on this economic relationship is important for U.S. industry for future economic growth. USCIB looks forward to a seamless transition to the new agreement.

UNITED STATES–MEXICO–CANADA TRADE FACT SHEET

July 4, 2020 | Permalink | Comments (0)

Friday, July 3, 2020

OECD releases global tax reporting framework for digital platforms in the sharing and gig economy

Today, the OECD has released a new global tax reporting framework, the Model Rules for Reporting by Platform Operators with respect to Sellers in the Sharing and Gig Economy ("MRDP"). Under the MRDP, digital platforms are required to collect information on the income realised by those offering accommodation, transport and personal services through platforms and to report the information to tax authorities.

With the digitalisation of the economy transactions that take place on platforms may not always be reported to tax administrations, either by third parties or by the taxpayers themselves. The platform economy also means increased access to information for tax administrations, as it brings activities previously carried out in the informal cash economy onto digital platforms.

The MRDP are designed to help taxpayers in being compliant with their tax obligations, while ensuring a level-playing field with traditional businesses, in key sectors of the sharing and gig economy. They further seek to avoid a proliferation of different and unilateral reporting regimes, allow for the use of novel technology solutions and help create a sustainable environment supporting the growth of the digital economy.

"The approval of the MRDP by the G20/OECD Inclusive Framework on BEPS proves that multilateral solutions to address tax challenges in the digital economy are possible and that they are to the benefit of tax administrations, taxpayers and businesses alike", said Pascal Saint-Amans, Director of the OECD Centre for Tax Policy and Administration.

The MRDP are part of a wider strategy of the OECD to address the tax challenges arising from the digitalisation of the economy and are designed to serve as a basis for further policy developments in increasing tax transparency to create a stable environment for the growth of the digital economy. They were developed in response to calls for a global reporting framework for digital platforms, as reflected in the 2018 OECD report to the G20 on Tax Challenges Arising from Digitalisation, as well as in the 2019 report on The Sharing and Gig Economy: Effective Taxation of Platform Sellers by the OECD Forum on Tax Administration, which brings together over 50 of the world’s most advanced tax administrations.

To support the swift and coherent implementation of the MRDP, the OECD will now take forward work on the international legal and technical framework to facilitate the automatic exchange of the information collected under the MRDP.

Texas A&M International Tax Risk Management programTexas A&M University School of Law has launched its online international tax risk management graduate curricula for industry professionals.

Apply now for courses that begin August 23: International Tax Risk Management, Data, and Analytics; International Tax & Tax Treaties (complete list here

Texas A&M University is a public university, ranked in the top 20 universities by the Wall Street Journal / Times Higher Education university rankings, and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018).

July 3, 2020 in OECD | Permalink | Comments (0)

FTC Releases Agenda for PrivacyCon 2020

The Federal Trade Commission has released the final agenda for its fifth annual PrivacyCon event, which will be held online on July 21, 2020.

PrivacyCon 2020 will bring together a diverse group of stakeholders to discuss the latest research and trends related to consumer privacy and data security.

Andrew Smith, Director of the FTC’s Bureau of Consumer Protection, will give opening remarks to kick off the event and will be followed by six panel discussions. The three morning sessions will focus on research related to health apps, artificial intelligence, and Internet of Things devices. The three afternoon sessions will feature discussions on research related to the privacy and security of specific technologies such as digital cameras and virtual assistants, international privacy, and miscellaneous privacy and security issues.

Links to the research that will be presented at PrivacyCon 2020 are available on the event page. PrivacyCon will take place online from 9 a.m. ET to 5 p.m ET. A link to view PrivacyCon 2020 will be posted on the event page prior to the start of the event. Registration is not required.

July 3, 2020 in Financial Regulation | Permalink | Comments (0)

Revocation of Hong Kong Special Status for U.S. and Suspension of U.S. License Exceptions for Hong Kong

With the Chinese Communist Party’s imposition of new security measures on Hong Kong, the risk that sensitive U.S. technology will be diverted to the People’s Liberation Army or Ministry of State Security has increased, all while undermining the territory’s autonomy. Those are risks the U.S. refuses to accept and have resulted in the revocation of Hong Kong’s special status.

Commerce Department regulations affording preferential treatment to Hong Kong over China, including the availability of export license exceptions, are suspended. Further actions to eliminate differential treatment are also being evaluated. We urge Beijing to immediately reverse course and fulfill the promises it has made to the people of Hong Kong and the world.

Suspension of License Exceptions for Hong Kong

Effective June 30, 2020, BIS is hereby suspending any License Exceptions for exports to Hong Kong, reexports to Hong Kong, and transfers (in-country) within Hong Kong of items subject to the Export Administration Regulations (EAR), 15 CFR Parts 730-774, that provide differential treatment than those available to the People’s Republic of China. BIS is taking this action pursuant to Section 740.2(b) of the EAR, 15 CFR § 740.2(b), which provides that all License Exceptions are subject to revision, suspension, or revocation, in whole or in part, without notice.

A License Exception is an authorization contained in Part 740 of the EAR that allows exports, reexports, or transfers (in-country) under stated conditions, of items subject to the EAR that would otherwise require a license. As a result of this suspension, no items subject to the EAR may be exported to Hong Kong, reexported to Hong Kong, or transferred within Hong Kong based upon an authorization provided by a License Exception except for transactions that would otherwise be eligible for a license exception if exported to the People’s Republic of China. A license must instead be sought and obtained whenever a license requirement applies for an export to, a reexport to, or a transfer within, Hong Kong.

However, shipments of items that are removed from eligibility for a License Exception as a result of this action and were on dock for loading, on lighter, laden aboard an exporting or transferring carrier, or en route aboard a carrier to a port of export or reexport on June 30, 2020, pursuant to actual orders for export to Hong Kong, reexport to Hong Kong, or transfer within Hong Kong, may proceed to their destination under the previous License Exception eligibility.

Similarly, deemed export/reexport transactions involving Hong Kong persons authorized under a License Exception eligibility prior to June 30, 2020 may continue to be authorized under such provision until August 28, 2020, after which such transactions will require a license. Exporters, reexporters, or transferors (in-country) availing themselves of this 60-day savings clause must maintain documentation demonstrating that the Hong Kong recipient was hired and provided access to technology eligible for Hong Kong under part 740 prior to June 30, 2020.

BIS is taking this action because the Chinese Communist Party has imposed new security measures on Hong Kong which undermine its autonomy and thereby increase the risk that sensitive U.S. items will be illegally diverted to the Chinese People’s Liberation Army or Ministry of State Security, Iran, or North Korea.

July 3, 2020 in Financial Regulation | Permalink | Comments (0)

Thursday, July 2, 2020

TAX DIVISION (TAX) LAW STUDENT VOLUNTEER, ACADEMIC YEAR WASHINGTON, DC UNITED STATES

About the Office: 

The Tax Division seeks to engage volunteer law student interns during the spring semester for its Appellate Section, Civil Trial Sections, Financial Litigation Unit (FLU), Criminal Enforcement Sections, and Criminal Appeals and Tax Enforcement Policy Section (CATEPS). 

The Appellate Section, Civil Trial Sections, and the FLU handle civil cases presenting a variety of legal issues involving federal tax law, bankruptcy law, constitutional law, property law, and commercial law, as well as the panoply of evidentiary, procedural, and jurisdictional issues that are the staple of any civil litigation docket. The Tax Division’s Appellate Section handles appeals of civil cases and U.S. Tax Court cases in the U.S. Courts of Appeals and participates with the Office of the Solicitor General in proceedings before the Supreme Court. The six regional Civil Trial Sections handle litigation in the United States District Courts and Bankruptcy Courts nationwide, and the seventh civil section – the Court of Federal Claims Section – defends all tax suits filed in the United States Court of Federal Claims. The FLU handles post-judgment litigation in U.S. District Courts (and occasionally in Bankruptcy Courts) to collect money judgments obtained by the Civil Trial Sections.

The Tax Division’s three Criminal Enforcement Sections are responsible for authorizing all federal criminal tax prosecutions throughout the United States. The Sections investigate and prosecute individuals and corporations that attempt to evade taxes, willfully fail to file tax returns, submit false tax forms, and otherwise attempt to defraud the government. CATEPS handles or supervises the appeals of those cases and tax cases prosecuted by U.S. Attorneys' Offices and works with the IRS and the U.S. Attorneys’ Offices to develop policies that govern the investigation and prosecution of tax crimes. 

For more information about the Tax Division’s offices and the cases they handle, please see our website at http://www.justice.gov/tax/about-division.

Our office places a high value on diversity of experiences and perspectives and encourages applications from all qualified individuals from all ethnic and racial backgrounds, veterans, LGBT individuals, and persons with disabilities.
Job Description: 

The Tax Division works to provide a valuable internship experience by attempting to ensure that legal interns assist in as many aspects of the Division’s work as possible, and that interns are provided written or oral feedback on their assignments.   

Interns are assigned to a section for the semester and work closely with that section’s attorneys on a wide range of issues, to the extent allowed by law. Interns are frequently asked to research legal issues that arise in pending cases,  but may also be asked to prepare legal memoranda or draft pleadings, briefs, motions, and other legal documents. Interns may assist with discovery, including drafting interrogatories, document requests, and subpoenas. Interns may have the opportunity to help attorneys prepare for arguments, trials, and hearings, and may have the opportunity to attend and observe those that are local.

Interns will be expected to work approximately 10-12 weeks during the semester, for a minimum of 15 hours per week. It is anticipated that most interns will be attending classes during the semester and will therefore be working a part-time schedule; however, the sections will attempt to accommodate requests for full-time internships.


 

Qualifications: 

The Division seeks law students with a strong academic record and excellent legal research and writing skills. Interns must be able to grasp issues quickly, conduct thorough and accurate research, and write clearly, concisely, and persuasively. 

Candidates must hold full or dual United States citizenship,  and have resided in the United States for three of the past five years. Because of the sensitive nature of the work, candidates receiving offers must undergo a background investigation.

Salary: 
The positions are uncompensated; however, work-study credit may be available.
Application Process: 

Please submit a resume, writing sample, and law school transcripts (official or unofficial) with a cover letter via email to Intern Coordinator at LawInterns.TaxDivision@usdoj.gov

Applications should be submitted by October 1 for the spring semester. Please note that the Tax Division does not generally review application materials, conduct interviews, or make offers until the application period has closed.

The majority of positions will be located in the Tax Division’s offices in Washington, DC.  In addition, the Tax Division places volunteer legal interns in our Civil Trial Section, Southwestern Region, which is located in Dallas, TX. If you are interested in being considered for the Dallas office, please so indicate in your email.

If you have any questions about this or any of the Tax Division’s other hiring programs, please call (202) 616-2470 or email TaxDivision.Recruiting@usdoj.gov.

Application Deadline: 
Thursday, October 1, 2020
Relocation Expenses: 
Relocation expenses will not be authorized.
Updated July 2, 2020

*         *         *

Department Policies

Equal Employment Opportunity:  The U.S. Department of Justice is an Equal Opportunity/Reasonable Accommodation Employer.  Except where otherwise provided by law, there will be no discrimination because of color, race, religion, national origin, political affiliation, marital status, disability (physical or mental), age, sex, gender identity, sexual orientation, protected genetic information, pregnancy, status as a parent, or any other nonmerit-based factor.  The Department of Justice welcomes and encourages applications from persons with physical and mental disabilities. The Department is firmly committed to satisfying its affirmative obligations under the Rehabilitation Act of 1973, to ensure that persons with disabilities have every opportunity to be hired and advanced on the basis of merit within the Department of Justice. For more information, please review our full EEO Statement.

Reasonable Accommodations:  This agency provides reasonable accommodation to applicants with disabilities where appropriate. If you need a reasonable accommodation for any part of the application and hiring process, please notify the agency.  Determinations on requests for reasonable accommodation will be made on a case-by-case basis.

Outreach and Recruitment for Qualified Applicants with Disabilities:  The Department encourages qualified applicants with disabilities, including individuals with targeted/severe disabilities to apply in response to posted vacancy announcements.  Qualified applicants with targeted/severe disabilities may be eligible for direct hire, non-competitive appointment under Schedule A (5 C.F.R. § 213.3102(u)) hiring authority.  Individuals with disabilities are encouraged to contact one of the Department’s Disability Points of Contact (DPOC) to express an interest in being considered for a position. See list of DPOCs.   

Suitability and Citizenship:  It is the policy of the Department to achieve a drug-free workplace and persons selected for employment will be required to pass a drug test which screens for illegal drug use prior to final appointment.  Employment is also contingent upon the completion and satisfactory adjudication of a background investigation. Congress generally prohibits agencies from employing non-citizens within the United States, except for a few narrow exceptions as set forth in the annual Appropriations Act (see, https://www.usajobs.gov/Help/working-in-government/non-citizens/). Pursuant to DOJ component policies, only U.S. citizens are eligible for employment with the Executive Office for Immigration Review, U.S. Trustee’s Offices, and the Federal Bureau of Investigation. Unless otherwise indicated in a particular job advertisement, qualifying non-U.S. citizens meeting immigration and appropriations law criteria may apply for employment with other DOJ organizations. However, please be advised that the appointment of non-U.S. citizens is extremely rare; such appointments would be possible only if necessary to accomplish the Department's mission and would be subject to strict security requirements. Applicants who hold dual citizenship in the U.S. and another country will be considered on a case-by-case basis. All DOJ employees are subject to a residency requirement. Candidates must have lived in the United States for at least three of the past five years. The three-year period is cumulative, not necessarily consecutive. Federal or military employees, or dependents of federal or military employees serving overseas, are excepted from this requirement. This is a Department security requirement which is waived only for extreme circumstances and handled on a case-by-case basis.

Veterans:  There is no formal rating system for applying veterans' preference to attorney appointments in the excepted service; however, the Department of Justice considers veterans' preference eligibility as a positive factor in attorney hiring. Applicants eligible for veterans' preference must include that information in their cover letter or resume and attach supporting documentation (e.g., the DD 214, Certificate of Release or Discharge from Active Duty and other supporting documentation) to their submissions. Although the "point" system is not used, per se, applicants eligible to claim 10-point preference must submit Standard Form (SF) 15, Application for 10-Point Veteran Preference, and submit the supporting documentation required for the specific type of preference claimed (visit the OPM website, www.opm.gov/forms/pdf_fill/SF15.pdf for a copy of SF 15, which lists the types of 10-point preferences and the required supporting document(s). Applicants should note that SF 15 requires supporting documentation associated with service- connected disabilities or receipt of nonservice-connected disability pensions to be dated 1991 or later except in the case of service members submitting official statements or retirement orders from a branch of the Armed Forces showing that his  or her retirement was due to a permanent service-connected disability or that he/she was transferred to the permanent disability retired list (the statement or retirement orders must indicate that the disability is 10% or more).

*         *         *

This and other vacancy announcements can be found under Attorney Vacancies and Volunteer Legal Internships. The Department of Justice cannot control further dissemination and/or posting of information contained in this vacancy announcement. Such posting and/or dissemination is not an endorsement by the Department of the organization or group disseminating and/or posting the information.

July 2, 2020 in Education | Permalink | Comments (0)

U.S. International Investment Position, First Quarter 2020, Year 2019, and Annual Update

First Quarter 2020

The U.S. net international investment position, the difference between U.S. residents’ foreign financial assets and liabilities, was –$12.06 trillion at the end of the first quarter of 2020, according to statistics released by the U.S. Bureau of Economic Analysis (BEA). Assets totaled $26.77 trillion and liabilities were $38.82 trillion.

At the end of the fourth quarter of 2019, the net investment position was –$11.05 trillion (Table 1).

U.S. Net International Investment Position
U.S. Assets and Liabilities: Quarterly, not seasonally adjusted

The –$1.01 trillion change in the net investment position from the fourth quarter of 2019 to the first quarter of 2020 came from net financial transactions of –$184.2 billion and net other changes in position, such as price and exchange rate changes, of –$822.8 billion (Table A).

Coronavirus (COVID-19) Impact on First Quarter 2020 International Investment Position
In the first quarter of 2020, the declines in U.S. assets and liabilities reflect the impact of the COVID-19 pandemic. The disruption to global production and financial markets led to sharp declines in global stock prices, the appreciation of the U.S. dollar against most foreign currencies, and a shortage of U.S. dollar liquidity in foreign money markets. The stock price declines and the appreciation of the U.S. dollar are reflected in price changes and exchange rate changes. Currency swap transactions between the U.S. Federal Reserve System and several foreign central banks to alleviate the shortage of U.S. dollar liquidity contributed to record levels of U.S. acquisition of assets and U.S. incurrence of liabilities. The full economic effects of the COVID-19 pandemic cannot be quantified in the statistics for the first quarter because the impacts are generally embedded in source data and cannot be separately identified. For more information on the currency swaps, see the technical note that accompanied the June 19 international transactions accounts news release.

Table A. Quarterly Change in the U.S. Net International Investment Position
Billions of dollars, not seasonally adjusted

  Position,
2019 Q4
Change in position in 2020 Q1 Position,
2020 Q1
Total Attributable to:
Financial
transactions
Other changes
in position 1
U.S. net international investment position -11,050.5 -1,007.0 -184.2 -822.8 -12,057.5
   Net position excluding financial derivatives -11,070.7 -1,022.1 -162.4 -859.8 -12,092.8
   Financial derivatives other than reserves, net 20.2 15.2 -21.8 37.0 35.3
   U.S. assets 29,152.8 -2,385.7 (2) (2) 26,767.1
      Assets excluding financial derivatives 27,362.4 -3,595.8 739.9 -4,335.7 23,766.6
      Financial derivatives other than reserves 1,790.4 1,210.1 (2) (2) 3,000.5
   U.S. liabilities 40,203.3 -1,378.7 (2) (2) 38,824.6
      Liabilities excluding financial derivatives 38,433.0 -2,573.6 902.3 -3,475.9 35,859.4
      Financial derivatives other than reserves 1,770.3 1,194.9 (2) (2) 2,965.2
1. Disaggregation of other changes in position into price changes, exchange rate changes, and other changes in volume and valuation is only presented for annual statistics (see table B and table 2 in this release).
2. Financial transactions and other changes in financial derivatives positions are available only on a net basis; they are not separately available for U.S. assets and U.S. liabilities.

U.S. assets decreased by $2.39 trillion, to a total of $26.77 trillion, at the end of the first quarter, mostly reflecting decreases in portfolio investment and direct investment assets that were partly offset by increases in financial derivatives and in other investment assets. Portfolio investment assets decreased by $2.39 trillion, to $10.99 trillion, and direct investment assets decreased by $1.82 trillion, to $6.98 trillion, reflecting sharp decreases in foreign stock prices and the depreciation of major foreign currencies against the U.S. dollar that lowered the value of these assets in dollar terms. These large changes in asset prices reflected a sudden decrease in production and earnings as global economic activity was disrupted by the COVID-19 pandemic.

U.S. liabilities decreased by $1.38 trillion, to a total of $38.82 trillion, at the end of the first quarter, mostly reflecting decreases in direct investment and portfolio investment liabilities that were partly offset by increases in financial derivatives and in other investment liabilities. Direct investment liabilities decreased by $1.78 trillion, to $8.77 trillion, and portfolio investment liabilities decreased by $1.61 trillion, to $19.78 trillion, mostly reflecting decreases in U.S. stock prices amid the COVID-19 pandemic.

U.S. Assets: Quarterly, not seasonally adjusted
U.S. Liabilities: Quarterly, not seasonally adjusted

Annual Update for Year 2019

The U.S. net international investment position was –$11.05 trillion at the end of 2019 compared to –$9.67 trillion at the end of 2018 (Table 2).

The –$1.38 trillion change in the net investment position from the end of 2018 to the end of 2019 came from net financial transactions of –$395.5 billion and net other changes in position, such as price and exchange rate changes, of –$980.5 billion (Table B).

U.S. assets increased by $3.92 trillion, to a total of $29.15 trillion, at the end of 2019, reflecting increases in all major categories of assets, particularly in portfolio investment and direct investment assets. Portfolio investment assets increased by $1.94 trillion, to $13.38 trillion, and direct investment assets increased by $1.35 trillion, to $8.80 trillion, driven mainly by foreign stock price increases.

U.S. liabilities increased by $5.30 trillion, to a total of $40.20 trillion, at the end of 2019, reflecting increases in all major categories of liabilities, particularly in portfolio investment and direct investment liabilities. Portfolio investment liabilities increased by $2.55 trillion, to $21.39 trillion, and direct investment liabilities increased by $2.15 trillion, to $10.55 trillion, driven mainly by U.S. stock price increases.

Table B. Annual Change in the U.S. Net International Investment Position
Billions of dollars

  Position,
2018
Change in position in 2019 Position,
2019
Total Attributable to:
Financial
transactions
Other changes in position
Total Price changes Exchange rate changes Changes
in volume and valuation n.i.e
U.S. net international investment position -9,674.4 -1,376.1 -395.5 -980.5 (1) (1) (1) -11,050.5
   Net position excl. derivatives -9,716.5 -1,354.2 -357.2 -997.0 -1,104.9 119.5 -11.5 -11,070.7
   Financial derivatives, net 42.0 -21.9 -38.3 16.4 (1) (1) (1) 20.2
   U.S. assets 25,233.8 3,919.0 (2) (2) (2) (2) (2) 29,152.8
      Assets excl. derivatives 23,784.2 3,578.2 440.8 3,137.4 3,080.1 128.3 -71.0 27,362.4
      Financial derivatives 1,449.6 340.8 (2) (2) (2) (2) (2) 1,790.4
   U.S. liabilities 34,908.2 5,295.1 (2) (2) (2) (2) (2) 40,203.3
      Liabilities excl. derivatives 33,500.7 4,932.4 798.0 4,134.4 4,185.0 8.8 -59.4 38,433.0
      Financial derivatives 1,407.5 362.7 (2) (2) (2) (2) (2) 1,770.3
1. Data are not separately available for price changes, exchange rate changes, and changes in volume and valuation n.i.e. (not included elsewhere).
2. Financial transactions and other changes in financial derivatives positions are available only on a net basis; they are not separately available for U.S. assets and U.S. liabilities.

July 2, 2020 in Economics | Permalink | Comments (0)

Wednesday, July 1, 2020

British Man Sentenced To 70 Months In Prison For Fraud Scheme That Victimized Hundreds of Thousands of U.S. Consumers

Gareth David Long, 41, of Las Vegas, Nevada, was sentenced to serve 70 months in prison for running a scheme to steal millions of dollars from hundreds of thousands of consumers, the Department of Justice announced. 

Long was sentenced by Judge Andrew Gordon of the U.S. District Court for the District of Nevada as a result of his Nov. 5, 2019, guilty plea to wire fraud and aggravated identity theft charges in connection with the scheme that he operated.  As part of his guilty plea, Long admitted that he created and deposited checks drawn on the checking accounts of more than 375,000 victims without authorization during a six-month period in 2013.  Although Long had no authorization to charge the victims’ accounts, he represented to victims’ banks that the victims had authorized the debits.  When victims called to complain about the charges, Long instructed employees working for him to tell the victims that they had authorized the charges in connection with an online payday loan application.  Many of the victims were elderly.  Long used the proceeds of this scheme to purchase a ranch and 23 acres of land in Texas, three airplanes, cars, a fire truck, and construction and farm equipment, as well as to pay other personal expenses.

“The defendant exploited his access to sensitive personal and financial information to steal millions of dollars from victims throughout the United States” said Jody Hunt, Assistant Attorney General for the Justice Department’s Civil Division. “The Department of Justice is committed to protecting the public from such identity theft and fraud.” 

“The U.S. Postal Inspection Service (USPIS) has been at the forefront of investigating fraud schemes for many years,” said Delany E. De Leon-Colon, Inspector in Charge for the Criminal Investigations Group at the USPIS National Headquarters.  “We remain steadfast in our pursuit to safeguard the public from those who take advantage of their trusted access for personal gains. Anyone who engages in this type of fraud scheme should know Postal Inspectors will find them and they will be held accountable for their actions.”

From 2008 through 2013, Long operated a third-party payment processing company, V Internet Corp, which also did business as Altcharge and Check Process.  As a payment processor, Long specialized in the creation and deposit of remotely-created checks (RCCs).  An RCC is a check created not by the account holder but by the third-party payee.  In place of a signature, Long’s RCCs contained a typed statement claiming that the check was authorized by the account holder.  Because of this payment processing activity, Long possessed the personal and financial information of hundreds of thousands of consumers whose accounts he debited in 2012 and before.  

In January 2013, Long stopped acting as a third-party payment processor for other merchants, and simply started using RCCs to charge the bank accounts of consumers whose personal identifying information he had acquired over the previous five years, as well as other consumers whose information Long purchased in the form of “lead lists.”  Long did not have authorization to charge any of these victims’ accounts.   

During the wire fraud and identity theft scheme from January through July of 2013, Long created and deposited more than 750,000 RCCs totaling more than $22 million.  While approximately half of the RCCs were immediately reversed by victims’ banks, Long nevertheless succeeded in stealing approximately $11 million over a six-month period.

The U.S. Postal Inspection Service seized more than $2.9 million from Long’s company bank accounts.  Postal Inspectors also seized property that Long purchased with the proceeds of his fraudulent activity, including three airplanes and the other vehicles and property described above.  As part of the sentencing hearing, the court issued a forfeiture money judgment of more than $11.2 million and Long forfeited the ranch and land he purchased in Texas.

Trial Attorneys John W. Burke and Ehren Reynolds of the Civil Division’s Consumer Protection Branch are prosecuting the case in coordination with the U.S. Attorney’s Office for the District of Nevada.  USPIS investigated the case.

Since President Trump signed the bipartisan Elder Abuse Prevention and Prosecution Act (EAPPA) into law, the Department of Justice has participated in hundreds of enforcement actions in criminal and civil cases that targeted or disproportionately affected seniors.  In particular, in March 2020, the department announced the largest elder fraud enforcement action in American history, charging more than 400 defendants in a nationwide elder fraud sweep.  The department has likewise conducted hundreds of training's and outreach sessions across the country since the passage of the Act. 

More information about the department’s efforts to help American seniors is available at its Elder Justice Initiative webpage.  For more information about the Consumer Protection Branch and its enforcement efforts, visit its website at https://www.justice.gov/civil/consumer-protection-branch.  Elder fraud complaints may be filed with the FTC at www.ftccomplaintassistant.gov.  If you or someone you know has been a victim of elder fraud, help is standing by at the National Elder Fraud Hotline:  833–FRAUD–11 or 833–372–8311, every day, 6:00 a.m.–11:00 p.m. eastern time.  The Department of Justice provides a variety of resources relating to elder fraud victimization through its Office for Victims of Crime, which can be reached at www.ovc.gov. 

July 1, 2020 in AML | Permalink | Comments (0)

Tuesday, June 30, 2020

Novartis Hellas S.A.C.I. and Alcon Pte Ltd Agree to Pay over $233 Million Combined to Resolve Criminal FCPA Cases

Novartis AG, Novartis Hellas S.A.C.I., and Alcon Pte Ltd Agree to Pay over $345 million Combined to Resolve FCPA Matters with the Government

Novartis Hellas S.A.C.I. (Novartis Greece), a subsidiary of Novartis AG, a Switzerland-based global pharmaceutical company, and Alcon Pte Ltd, a former subsidiary of Novartis AG and current subsidiary of Alcon Inc., a multinational eye care company, have agreed to pay a combined total of more than $233 million in criminal monetary penalties to resolve the department’s investigation into violations of the Foreign Corrupt Practices Act (FCPA). 

The resolutions arise out of a Novartis Greece scheme to bribe employees of state-owned and state-controlled hospitals and clinics in Greece and to falsely record improper payments relating to the corrupt scheme and similar conduct, and an Alcon Pte Ltd scheme to make and falsely record improper payments in Vietnam.  Novartis AG has also agreed to pay over $112 million to the U.S. Securities and Exchange Commission (SEC) in a related matter.

Novartis Greece entered into a deferred prosecution agreement with the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the District of New Jersey in connection with a criminal information filed today in the District of New Jersey charging Novartis Greece with one count of conspiracy to violate the anti-bribery provisions of the FCPA and one count of conspiracy to violate the books and records provision of the FCPA.  Pursuant to the deferred prosecution agreement, Novartis Greece has committed to pay a total criminal monetary penalty of $225 million. 

Alcon Pte Ltd, a subsidiary of Novartis AG at the time of the misconduct, separately entered into a deferred prosecution agreement in connection with a criminal information filed today in the District of New Jersey charging Alcon Pte Ltd with conspiracy to violate the books and records provision of the FCPA.  Pursuant to the deferred prosecution agreement, Alcon Pte Ltd has committed to pay a total criminal monetary penalty of approximately $8.9 million. 

“Novartis AG’s subsidiaries profited from bribes that induced medical professionals, hospitals, and clinics to prescribe Novartis-branded pharmaceuticals and use Alcon surgical products, and they falsified their books and records to conceal those bribes,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division.  “The resolutions announced today reflect the paramount importance of effective compliance programs and the department’s commitment to holding companies accountable when they fall short.”

“The agreement we’re announcing today shows that there will be a heavy price paid by companies that violate our laws, whether at home or overseas,” said U.S. Attorney Craig Carpenito for the District of New Jersey.  “Just as importantly, it includes a framework for compliance reforms that should ensure that these companies conduct their business legally moving forward.”

“The FBI is committed to fighting any corrupt acts that adversely impact our economy, our citizenry, or our way of life,” said Acting Special Agent in Charge Douglas Korneski of the FBI’s Newark Field Office. “I say this to every company doing business on the stock exchange –  if you think you can ignore the rules or make up your own, if your business model includes bribery or a quid pro quo, you can count the days until we show up on your company's doorstep. We will protect our citizens, our economy, our way of life, and bring to justice anyone who breaks the law.”

According to its admissions, between 2012 and 2015, Novartis Greece conspired with others to violate the FCPA by engaging in a scheme to bribe employees of state-owned and state-controlled hospitals and clinics in Greece in order to increase the sale of Novartis-branded pharmaceutical products.  Specifically, Novartis Greece paid for employees of state-owned and state-controlled hospitals and clinics to travel to international medical congresses, including events held in the United States, as a means to bribe these officials in exchange for increasing the number of prescriptions they wrote for Lucentis, a prescription drug that Novartis Greece sold.  In furtherance of the scheme, Novartis Greece employees traveled to the United States, and, while located in the United States, facilitated the provision of the improper benefits to publicly-employed Greek health care providers.  

In connection with the resolution, Novartis Greece also admitted that between 2009 and 2010, Novartis Greece made improper payments to health care providers in connection with an epidemiological study that was intended to increase sales of certain Novartis-branded prescription drugs.  The epidemiological study was used as a vehicle to make improper payments to the health care providers in order to increase sales of certain Novartis-branded prescription drugs, and Novartis Greece employees recognized that many participating health care providers believed that they were being paid in exchange for writing prescriptions of Novartis products and not for providing data as part of a clinical study. 

In furtherance of both schemes, Novartis Greece, through its employees and agents, knowingly and willfully conspired with others to cause Novartis AG to mischaracterize and falsely record improper payments related to the international medical congresses and the epidemiological study in Novartis AG’s books, records, and accounts. 

According to its admissions, from 2011 through 2014, Alcon Pte Ltd knowingly and willfully conspired with others to cause Novartis AG to maintain false books, records and accounts, as a result of a scheme to bribe employees of state-owned and state-controlled hospitals and clinics in Vietnam.  Specifically, the false books and records resulted from a scheme in which Alcon employees in Vietnam made corrupt payments through a third-party distributor to employees of state-owned and state-controlled hospitals and clinics in Vietnam in order to increase sales of intraocular lenses.  Intraocular lenses are artificial replacement lenses that are implanted in the eye as part of a treatment for a variety of ailments such as cataracts.  Alcon employees in Vietnam, reimbursed the distributor for up to 50 percent of the cost of the corrupt payments, and these reimbursements were falsely recorded as, among other things, consulting expenses, marketing expenses, and human resource expenses.

As part of the agreement with Novartis Greece, Novartis Greece agreed to continue to cooperate with the U.S. government in any ongoing or future criminal investigations concerning Novartis Greece, its executives, employees, or agents.  In addition, under the agreement, Novartis Greece and its parent company, Novartis AG, agreed to enhance their compliance programs and to report to the government on the implementation of their enhanced compliance programs.  

As part of the agreement with Alcon Pte Ltd, Alcon Pte Ltd agreed to continue to cooperate with the government in any ongoing or future criminal investigations concerning Alcon Pte Ltd, its executives, employees, or agents.  In addition, under the agreement, Alcon Pte Ltd and its parent company, Alcon Inc., agreed to enhance their compliance programs and to report to the government on the implementation of their enhanced compliance programs.  

The government reached these resolutions with Novartis Greece and Alcon Pte Ltd based on a number of factors, including the failure to timely disclose the conduct that triggered the investigations; the nature and seriousness of the offenses, which spanned multiple years and involved high level employees; the lack of an effective compliance and ethics program at the time of the misconduct; and credit for each company’s respective cooperation.  The companies also engaged in remedial measures, including terminating and disciplining individuals who orchestrated the misconduct, adopting heightened controls and anti-corruption protocols, and significantly increasing the resources devoted to compliance.

The criminal monetary penalty for Novartis Greece reflects a 25 percent reduction off a point near the midpoint of the U.S. Sentencing Guidelines range because, although Novartis Greece fully cooperated and remediated, its parent company Novartis AG was involved in similar conduct for which it previously reached a resolution with the SEC in March 2016.

The criminal monetary penalty for Alcon Pte Ltd reflects a 25 percent reduction off the bottom of the U.S. Sentencing Guidelines fine range because of Alcon Pte Ltd’s full cooperation with the government’s investigation.

In a related matter with the SEC, Novartis AG agreed to pay the SEC disgorgement and prejudgment interest totaling approximately $112 million for the conduct in Greece and Vietnam, as well as additional conduct.  

June 30, 2020 in AML | Permalink | Comments (0)

Monday, June 29, 2020

USCIB Joins With Global Community to Oppose Revision to ISO 26000

USCIB joined with several other U.S. business associations in opposing a recent proposal to revise ISO 26000 on Social Responsibility, develop implementation guidelines or standards and create a new Technical Committee (TC) on Social Responsibility.  After a five-year global negotiation, ISO 26000 was released in November of 2010 as a guidance document rather than a management systems for certification purposes and it remains a valuable resource for companies.

USCIB Vice President for Corporate Responsibility and Labor Affairs Gabriella Rigg Herzog observed that the proposal currently before ISO would, “not only reverse the consensus achieved over the five year negotiation, but would also divert resources and away from ongoing implementation and innovation in the field of social responsibility.”

Global stakeholders who also opposed this proposal included leading human rights NGOs, the International Trade Union Confederation, the International Organization of Employers (IOE), and the International Labor Organization (ILO). Moreover, and as was expressed by ILO Secretary-General Guy Ryder, adoption of this proposal would divert focus from and undermine universally accepted standards on human rights and labor issues, including the UN Guiding Principles on Business and Human Rights, ILO Conventions, the ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy, and the OECD Guidelines for Multinational Enterprises.

USCIB continues to follow this matter and will be in communication with members and our global affiliates as this matter develops.

USCIB's positions include cost-effective, science and risk-based cooperative environmental and energy policies

• Address the challenges of climate change while protecting energy security, promoting innovation and efficiency and advancing resilience to climate impacts
• Provide multilateral solutions to trans-boundary environment, energy and climate challenges, and reject unilateral, arbitrary measures that disqualify technology or energy options
• Ensure science and risk-based life-cycle approaches to chemicals management in the APEC, the OECD, UNEP and the Strategic Approach to International Chemicals Management
• Support voluntary labeling and access to environmental information that protects confidential business information and provides credible information for consumer choices

Pro-growth, market oriented policies that promote sustainable development

• Develop multilateral and national partnership frameworks to incentivize private sector involvement in sustainable development planning, implementation and risk allocation minimization
• Maintain technology neutral policies and other enabling frameworks to encourage trade and investment in cleaner technologies and energy sources

June 29, 2020 in Financial Regulation | Permalink | Comments (0)

Friday, June 26, 2020

Corporate Profits fall $263 billion in 1st Quarter 2020 - real GDP decreased 5.0 percent

Corporate Profits

Profits from current production (corporate profits with inventory valuation and capital consumption adjustments) decreased $262.8 billion in the first quarter, in contrast to an increase of $53.0 billion in the fourth quarter (table 10).

Profits of domestic financial corporations decreased $37.5 billion in the first quarter, in contrast to an increase of $0.7 billion in the fourth quarter. Profits of domestic nonfinancial corporations decreased $181.8 billion, in contrast to an increase of $53.7 billion. Rest-of-the-world profits decreased $43.5 billion, compared with a decrease of $1.4 billion.

Updates to GDP

In the third estimate, first-quarter real GDP decreased 5.0 percent from the fourth quarter, unrevised from the second estimate. An upward revision to nonresidential fixed investment was offset by downward revisions to private inventory investment, PCE, and exports.  For more information, see the Technical Note. For information on updates to GDP, see the "Additional Information" section below.

  Advance Estimate Second Estimate Third Estimate
(Percent change from preceding quarter)
Real GDP -4.8 -5.0 -5.0
Current-dollar GDP -3.5 -3.5 -3.4
Real GDI -4.2 -4.4
Average of Real GDP and Real GDI -4.6 -4.7
Gross domestic purchases price index 1.6 1.7 1.7
PCE price index 1.3 1.3 1.3
PCE price index excluding food and energy 1.8 1.6 1.7

June 26, 2020 in Economics | Permalink | Comments (0)

Thursday, June 25, 2020

Financial Regulators Issue Rule Amending Margin and Capital Requirements for Covered Swap Entities

The FDIC, along with the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Farm Credit Administration, and the Federal Housing Finance Agency (collectively, the Agencies), have amended the swap margin requirements for a registered swap dealer that is an insured depository institution or is otherwise supervised by one of the Agencies.  

A copy of the Final Rule and the Interim Final Rule regarding the swap margin requirements can be found on the FDIC’s website.

 In 2015, the Federal Deposit Insurance Corporation, the Federal Reserve Board of Governors, the Office of the Comptroller of the Currency, the Federal Housing Finance Agency, and the Farm Credit Administration (the “agencies”) issued a final rule requiring banks and other entities that engage in swaps activities (referred to as “covered swap entities”) to exchange initial and variation margin with their counterparties for swaps that are not centrally cleared.

 Since 2015, the agencies’ supervisory experience has shown that banking organizations use inter-affiliate swaps for internal risk management purposes by transferring derivatives exposures to a centralized risk management function. In addition, after the rule was finalized, the largest firms have made significant progress implementing resolution strategies designed to recapitalize subsidiaries as protection against the types of affiliate failures envisioned under the rule.

 In light of this experience and to provide covered swap entities flexibility regarding the internal allocation of collateral, the agencies are issuing a final rule designed to facilitate prudent risk management while also protecting safety and soundness:

o Facilitate Prudent Risk Management – The rule facilitates the ability of banking organizations to use inter-affiliate swaps to centralize risk management of their derivatives exposures by modifying the requirement that a covered swap entity collect initial margin from affiliates. Under the rule, a covered swap entity is not required to collect initial margin from affiliates when the aggregate amount of such initial margin is less than 15% of the covered swap entity’s tier 1 capital.
o Protect Insured Depository Institutions – The rule protects the Deposit Insurance Fund by preventing banking organizations from transferring significant levels of risk to insured depository institution subsidiaries. Specifically, the rule requires that, if the aggregate amount of initial margin for inter-affiliate swaps exceeds 15% of a covered swap entity’s tier 1 capital, the covered swap entity would be required to collect initial margin on all new contracts with affiliates.
o Maintain Safety and Soundness – The rule maintains key safeguards to protect safety and soundness by requiring covered swap entities to exchange variation margin with affiliates to reflect the change in value of each party’s obligations over the life of each contract. In addition, the rule does not amend the requirement that a covered swap entity exchange initial and variation margin with unaffiliated counterparties.

The rule also amends the requirements for covered swap entities by -

(1) facilitating the transition away from interbank offered rates (IBORs) and other interest rates that are expected to be discontinued or that are determined to have lost their relevance as a reliable benchmark due to significant impairment, and

(2) adding an additional initial margin compliance period for certain smaller counterparties.

June 25, 2020 in Financial Regulation | Permalink | Comments (0)