Trade security Journal In your hands Liability for the human rights impacts of foreign subsidiaries and subcontractors russian strategic companies: new rules for foreign investors Mergers and takeovers: uK strengthens national security scrutiny Eu agrees Countering Money Laundering by Criminal Law directive an overview of Israeli data protection law 1 Trade Security Journal Issue 6 Canada’s use of its national security power Issue 8. June 2018 IN THIS ISSUE IssuE 8, JuLy 2018 froM ThE EdITor 3 nEws round-uP As we head into deep summer, C-Suite in the firing line there is (if this latest iteration of of FCPA enforcement the Trade Security Journal is to be believed) no letting up in the Hong Kong High Court world of compliance. These pages reviews need for forced reveal that regulation and labour law enforcement remain vigorously promulgated and enforced (if not China cuts number of always and everywhere with the industry sectors not same energy, conviction or open to foreign capacity) – and that new frontiers investment from 63 to 48 of technology create their own challenges. New CBP rule ‘to All readers will be aware of address ongoing aviation the growing focus on human security threats’ rights issues attached to supply chains. In this and recent issues, Drinks maker charged we can see that this is a truly with FCPA offences global development. 5th AML Directive Meanwhile, Gil Rosen’s article on Israel’s data protection regime tackles cryptocurrencies Are you liable for the human rights impacts of foreign subsidiaries? is a reminder that while there are OFAC adds facets to 23 few in the world who aren’t rough diamond GDPR-aware, other jurisdictions reporting scheme 9 bLoCKChaIn 21 ModErn sLaVEry also possess laws that must be respected and articles from Blockchain in the supply Modern Slavery Act Kazakh businessman Canada and Russia and the UK chain: where are we tabled in Australian ordered to provide prove – if proof was ever needed now? Parliament information on litigation – that CFIUS isn’t the only funding source national security regime in play… 16 naTIonaL sECurITy 25 daTa PrIVaCy BREXIT, elusive though it may New powers for Aussie Acquisition of Russian An overview of Israeli be, is everywhere at the moment. intelligence agencies strategic companies: new data protection law But as our interviewee Caroline rules for foreign Barraclough explains, it has put Glencore subsidiary investors 29 busInEss CrIME wider supply chain issues in the subpoenaed in relation limelight in a way that they The UK agencies dealing to FCPA and AML docs haven’t hitherto enjoyed. Given 17 naTIonaL sECurITy with business crime – an their increasingly mind-boggling SFO brings criminal US: Stricter regulation of overview complexity, that, perhaps is at proceedings against foreign investments and least one good thing to have Unaoil exports advances: an 32 naTIonaL sECurITy emerged from the triggering of update Article 50? Index ‘encourages Mergers and takeovers: Tom Blass continuous UK strengthens national 18 daTa PrIVaCy July 2018 improvement’ in mining security scrutiny California passes historic best practice online privacy law 34 aML # Civil forfeiture orders in &#%) 19 aML Jersey !&# EU agrees Countering Money Laundering by 35 anTI-CorruPTIon Criminal Law Directive Italy’s new Anti-Mafia Code 19 CybEr sECurITy Cyber fraud – Ireland’s 38 naTIonaL sECurITy Central Bank takes Canada’s use of its %)!#%& #%$"%$! action national security power !# $&$#$ $&! %#%!#$ &$$ $%#%!" $ (#&$!#!# '$%!#$ 20 CybEr sECurITy ##$ %!'#$ $%# % $ %! $&#%)$#&% ) #$!& %# ! ) & # )# (#%' Vietnam: 16th draft of !'#'(!$#%"#!%%! ( *$&$!%$ %! $&#%)"!(# Issue 8. June 2018 the Law on Hasan Ali /Shutterstock.com photo: Sk Cover TSJ talks Brexit and customs with Cybersecurity Caroline Barraclough 12 2 Trade Security Journal Issue 8 NEWS ROUND-UP C-suite in the firing line of FCPA enforcement More than 50% of all individuals they only had a general charged with a violation of the suspicion that bribes could be FCPA were their corporation’s occurring without any direct CEO, President, Vice-President or confirmation or involvement Director. themselves. The statistic is amongst key findings of a new study by US law Amongst the conclusions of the firm Arent Fox of individual report are that there are no signs liability under the FCPA which that the Trump administration will looks at the cases of ‘every be more lenient on FCPA offences individual charged’ between 1 than its predecessor. ‘With the new January 2005 and 31 December administration’s first year behind 2017 – i.e., 180 individuals, us,’ the study’s authors write, ‘it’s working for 81 different interesting to note 2017 recorded companies, over the past 13 years. the second-highest number of Other headline findings are Individuals charged with a violation of the FCPA most likely to be from C-suite. individual FCPA prosecutions that: since 1977. And with the highest percentage of criminal individuals involved in bribe formalization of the “FCPA l The most civil and/or criminal cases (94%), followed closely schemes under $500,000; 73% Corporate Enforcement Policy,” charges for violating the FCPA by Venezuela (93%) and China of individuals in bribe schemes it’s fair to presume companies will arose from bribes occurring in (67%). of between $500,000 and $1 be forced to disclose individual Latin America (30%), Asia l Just under half of all million; and 67% for bribe “wrongdoers” now more than (28%), and Africa (24%). The individuals charged (45%) schemes of between $1 million ever ... Doing nothing – even when countries in those regions were involved in bribes and $10 million. you only have a general suspicion associated with the most schemes of between $1 million l More than one in 10 of bribery – is risky. Remember charges are Mexico, Venezuela, to $10 million. One-third were individuals (13%) were more than 1 in 10 such individuals Argentina, China, and Nigeria. involved in bribes schemes of charged criminally, even when were charged criminally.’ n l Almost all bribe schemes under $1 million. involving China, Mexico, and l For every range of bribes under The full report is at: Venezuela resulted in criminal $10 million, an overwhelming https://www.arentfox.com/sites/default/files/2018- charges for the individuals majority of individuals were 06/2018_CSuite_FCPA_Risk_Assessment_20180427.pdf involved. Mexico had the charged criminally: 70% of Hong Kong High Court reviews need for forced labour law Immigration, human rights slavery, servitude and forced or lawyers and others (including compulsory labour (but does not apparent victims of human explicitly prohibit human trafficking and forced labour) are trafficking). looking forward to the outcome of ‘Relying on the jurisprudence a two-day judicial review, heard of the European Court of Human by the Hong Kong High Court in Rights concerning similar issues May, which considers whether arising under the European Hong Kong should introduce a Convention on Human Rights, law on forced labour. Judge Zervos ruled in the The issue was first brought to claimant’s favour, declaring that in the fore in 2016 after a Pakistani failing to have his case recognized man, known as Zn, won a legal as one potentially involving battle against Hong Kong’s human trafficking for forced Immigration Department, Hong labour, which prevented further Kong Police Force and the Labour Does Hong Kong need a law on forced labour? We should know soon. appropriate action, his rights had Department. Zn had been lured been denied.’ from his country to Hong Kong Peter Chang, knowledge Hong Kong Special According to Chang, Judge under false pretences, had his lawyer at Freshfields notes: Administrative Region Zervos ‘confirmed that the passport withheld, received ‘Zn eventually sued the Government (HKSARG) and government has positive threats against himself and his departments before the High relevant government authorities’ obligations under Article 4 to enact family, and was subjected to Court of Hong Kong. In a process response to the claimant’s measures to ensure the prohibition violence. known as judicial review, whereby complaints had resulted in a of forced or compulsory labour, Each of the government individuals are granted access to denial of protection under the law including criminalizing and agencies he approached, it was courts to challenge decisions made – specifically, Article 4 under penalizing offenders, and shown, had ignored his claims that by public authorities, High Court Section 8 of the Hong Kong Bill of introducing appropriate measures he was a victim of human Justice Mr. Kevin Zervos was Rights Ordinance (Cap 383) (the to recognize and investigate such trafficking. invited to determine whether the HKBORO), which prohibits cases upon detecting red flags.’ n 3 Trade Security Journal Issue 8 NEWS ROUND-UP China cuts number of industry sectors closed to foreign investment from 63 to 48 Effective from 28 July, China will network of trunk railway lines be reducing the number of l Railway passenger transport industry sectors in which foreign companies entities are restricted from l International marine transport - investing – demonstrating, say ation companies lawyers, the country’s willingness l International shipping agencies to take real steps to encourage l Purchase and wholesale of rice, further growth. wheat and corn The Special Administrative l Construction and operation of Measures on Access to Foreign gas stations Investment (Negative List) (2018 l Banks (previous restrictions on Version), or