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Should crypto law be the next frontier for aspiring lawyers and legal types? As blockchain technology makes its presence felt in more areas of the finance, banking and tech world at large, the need for regulation is growing. At this stage, legislation is piecemeal at best. As per CNBC’s 2018 guide to crypto laws around the world, Bitcoin and its peers are considered everything from legal tender to a ticking time bomb. With the regulatory landscape still finding its level, anyone looking to specialise in this emerging sector would have to keep abreast of the ever-changing dynamics.
Despite the air of uncertainty, investments in crypto-based start-ups are increasing. Reviewing the market, TechCrunch noted that fundraising for crypto companies is up by 40% in 2018. In line with this increased interest from venture capitalists, investment bank NKB published a report on Cardano in June 2018. Designed to be as much of regulatory exercise as a review of Cardano, the report took NKB’s “standard procedures from traditional finance” and applied them to the “newly developing crypto economy”.
Applying Financial Regulations to Emerging Technology
What’s interesting about the report is that Cardano isn’t a marquee cryptocurrency. Recently added to the eToro trading platform, Cardano coin (ADA) is currently trading at 0.1592 (at the time of writing), which is significantly lower than the 6590.85 BTC was trading at on the same day. The fact investment banks are now considering less well-established blockchains like Cardano is clearly a sign of the times. While politicians have been busy arguing over the legality of the market leader Bitcoin, those with an interest in the financial side of things have taken broader strokes.
For those in the legal sector, this clearly throws up some interesting opportunities. The problem, however, is how will all of this promise manifest itself in reality. Regulating the financial world is tough enough on its own. In the UK, the Financial Services and Markets Act 2000 (FSMA) forms the foundation of the banking sector’s regulations. However, because the UK is still part of the European Economic Area (EEA), there is a slew of European Union regulations that run parallel to the FSMA. For example, banks and investment companies must abide by (EU) 596/2014 on market abuse as well as (EU) 648/2012 which sets out guidelines for trading OTC derivatives.
A Tough Task for All Concerned
"Grimes County Courthouse, Anderson, Texa" (CC BY 2.0) by Patrick Feller
What the current landscape shows it that regulating financial companies isn’t easy, especially when they trade in multiple jurisdictions. Even with clearly defined currency lines, the matrix of clauses and subclauses is extensive. When you try to apply a similar methodology to the crypto world, you instantly run into the issue of universality. At its core, all coins are designed to be universal. Indeed, one of the founding principles was that it offered cross-border payments. Then, on top of this, you have the issue of anonymity. Although investment firms are currently more interested in the blockchain side of cryptocurrencies, the dynamic is still in place. This, again, makes establishing a set of laws difficult.
Finally, there’s the issue of national attitudes. While every country can agree that fiat currencies are useful, not all of them have the same stance on cryptocurrencies. How would a law applicable in a pro-crypto country apply to a non-crypto country? Coming up with a solution to these issues and more clearly won’t be easy. For the aspiring lawyer, this makes specialising in cryptos a tough gig. Although it’s clearly not an impossible task, it’s one that’s almost impossible at the moment. As the industry grows and evolves, things will undoubtedly find their way. However, as it stands, the regulatory path for the crypto world is anything but clear.
Nearly half (44%) of UK consumers find it hard to choose between conveyancing firms because they ‘all seem the same’, according to research from conveyancing software company, InfoTrack.
The study found that UK home movers perceive conveyancing as predominately process-driven, putting the onus on the sector to differentiate by providing added value to home movers.
Currently, home movers believe that conveyancers add the most value in: liaising with HM Land Registry (28%); managing the collection and transfer of funds (26%); drawing up contracts (26%) and conducting local searches (23%).
However, over half (55%) of consumers believe that conveyancers can gain ground by offering greater clarity of the process and communication during transactions.
Exploring how they can achieve this, the report found that over a quarter (27%) of home movers want their conveyancer to use online communication methods, and over a third (37%) would like them to use more layperson language, rather than legal jargon, to help them understand the process.
The report also established that 50% of consumers want their conveyancer to take on a more consultative role and provide advice when it is needed.
Peter Ambrose, Director, The Partnership: “Helping consumers understand the nature of what conveyancers actually do is a recognised challenge that the majority of law firms fail to address. The results of this survey are of little surprise to us, in that conveyancing is much more complex than just a “tick-box” exercise, but no-one counters this. We designed our Client Portal to give our clients clear visibility of every stage of the process, with specific help screens that don’t feature any legal jargon. Access to this ensures clients have a much better understanding of what is actually going on. We believe that only those firms that invest in such client-friendly technology can contribute to the greater appreciation of the work involved that the industry so desperately needs.”
Adam Bullion, GM of Marketing, InfoTrack, commented: “Consumers feel that conveyancers take care of the most laborious admin tasks, and ensure their money is being moved around safely and efficiently. However, conveyancers should understand that consumers also want consultancy throughout each stage of the process. Consultancy can act as a real value add within the transaction which means better communication. Changing communication methods to engage with their customers on their preferred methods, will have multiple benefits, from time-saving for the conveyancer, to increased client satisfaction, leading to an increase in repeat business. Using good technology to do this should be enjoyable, as should the process of buying a home. Conveyancers and home movers can both benefit from the implementation of tools that enable this.”
(Source: InfoTrack)
More than a third (37%) of Brits think Facebook does not care about its users, according to new research from the7stars.
The findings highlight how public sentiment towards the social network has changed in the wake of the fallout from the Cambridge Analytica scandal.
Overall, 28% of survey respondents now claim to be more cautious about what they post on social media - with this figure rising to 34% for those aged 55 and over. There is also an appetite for intervention from policymakers, with 44% believing the Government should do more to monitor big tech companies.
The research findings shine a further spotlight on broader concerns around data protection among the British public, with 42% feeling that businesses are not taking enough responsibility for how they use their data. A quarter of respondents (24%) said the responsibility for looking after personal data on social media lies with the company and not with them as users.
Despite the negative sentiment among consumers, however, there is little evidence of sites such as Facebook suffering significant damage from the data misuse revelations - either financially or in terms of user base.
Just 9% of respondents said the scandal led them to delete content from social media sites – but they did not go as far as to close their accounts. And just 14% said the scandal marked the beginning of the end for social media.
Frances Revel of the7stars said: “The negativity that has been swirling around social media’s use of our personal data since the Cambridge Analytica scandal broke is clearly impacting on Brits’ decisions to use and rely upon these platforms. On top of that, trust among users is currently low and they are exercising greater caution in what they do and share.
“However, the situation hasn’t translated into a mass exodus of users. Social media is so ingrained in our lives that Brits are clearly reticent to fully extricate themselves. Facebook now faces the challenge of restoring that trust, particularly among older users, and regaining its relevance and popularity among younger audiences.”
(Source: the7stars)
There have always been fraudsters and thieves, but Pensions Freedoms, which came into force April 2015, may have made it easier for scammers to prey on the unwary looking for higher rates of return on investments. This is according to Geoff Bouchier, Managing Director at Duff & Phelps, the global advisor that protects, restores and maximises value for clients.
The latest HM Revenue & Customs statistics on flexible payments from pensions show that £6.7 billion was withdrawn by 375,000 investors in the last 12 months and £17.5 billion has been withdrawn from pensions since the freedom changes were introduced April 2015.
Bouchier commented: “The pension freedoms are fundamentally beneficial for people, giving them welcome control and flexibility over their retirement savings. However, these reforms have also increased the risk of retirees being targeted by scammers.”
“According to The Telegraph some 222,000 pensioners have made half a million withdrawals in the first three months of this year alone – 20,000 more than the last quarter of 2017. The total withdrawn in 2017-18 was £6.7 billion, the highest figure since the reforms were introduced in 2015.”
“Some pensioners have chosen to invest without taking professional advice. This DIY approach of chasing higher returns could be exposing them to a high level of risk as many are unregulated, illiquid and based on high commission rates. At worst, they could be increasingly exposed to fraudsters,” he added.
In December 2016, the government sought consultation on pensions scams and highlighted the scale of the issue noting that:
In August 2017, the government published its response to the pensions scams consultation, in which it reported strong support for a ban on cold calling, a principal mechanism used by fraudsters. Now, under the Financial Guidance and Claims Bill, a prohibition on pensions cold calling could be in place by the end of June 2018.
Bouchier added: “What we are seeing in the market is more investment products coming to light, which were established a number of years ago to target very aggressive rates of return. In some instances, these are being revealed by retail investors anxious to see the return of their pension savings invested. However, we suspect that many remain unexposed as retail investors are concerned that by doing so would bring down the collapse of the scheme and likely result in them never seeing their money again.
The news that the Government is looking at a ban on pensions cold calling specifically will be welcomed and will give consumers the confidence to just ignore such calls.
We would urge retail investors to take advantage of the FCA’s ScamSmart webpages, which explains and provides advice on what to look for.”
“Retail investors should also get up to speed on their rights, specifically any contractual arrangement with the company or legal entity they have invested in. For example, where the investor has the right to be repaid capital and/or interest on a certain date and that has not happened, they should consider enforcing their rights and not merely rely on assurances of future payment from those running the schemes,” he added.
Bouchier concluded: “Pensioners have worked a lifetime to build a pension pot and they should ensure that they do all they can to protect it for enjoyment in retirement.”
(Source: Duff & Phelps)
Starting a new role is a big change that is not to be overlooked, especially in the legal industry. There are a number of variables to consider to make sure your move is actually going to improve your career, rather than be a strain. One thing that is vital, is making sure you always put your happiness first.
Richard Holmes, Director of Wellbeing at Westfield Health, gives his top 5 factors to look out for when switching to a new firm:
“It’s always a good idea to get an understanding of staff overturn before starting out at a new firm. Do employees tend to jump ship after just a few months, or do they tend to stay for a number of years and complete their training contracts? Consider checking out the Linkedin profiles of people who have worked there, how long have they been with the business and have they progressed? If you’re making a big move, you want it to be the right one with a firm that offers lots of opportunity for progression.
“In a recent review of scientific studies, it was found that the more hours people sat, the higher the number of negative health outcomes. ‘Heavy sitters’, defined as those who sat down for 7-9 hours per day, showed a 90% greater risk of developing diabetes and an 18% higher chance of dying of heart disease or cancer than those who sat less. These days many law firms are taking their staff’s health into more serious consideration, with on-site fitness facilities such as gym suites, lunchtime running clubs and funded sports teams. Being able to exercise regularly has countless health benefits, and getting involved at work can have great social benefits.
“According to research, 75% of employees in the legal industry are looking for better physical and wellbeing support in the workplace*. When starting a new role, take some time to review their wellbeing offering, outside of the traditional health cash plan structure. Do they offer mental health support, such as with MHFA (Mental Health First Aid) training? Do they have a clear line managerial support structure in place?
“Traditionally, the industry is very restricted to the 9-5 working hours. However, with more and more firms recognising the need to offer flexible hours, you should consider those that are happy to accommodate to your needs wherever necessary. For example, if you have regular childcare responsibilities, hospital appointments or other family commitments, it’s important they are happy to work around these.
“Whilst they shouldn’t be the determining factor of moving to a new firm, with the competitive nature of the industry these days, additional fun perks do end up playing a part in selecting a new firm to join.
“Perks can include discounted theatre tickets, restaurants and beauty vouchers. Socially, many firms host summer BBQ’s as well as the traditional Christmas party too.”
Following previous news that Danske Bank has been reprimanded for weak AML controls by Danish regulators, this week’s featured analysis comes from global banking expert, Robert Lyddon. Below Robert compares the penalties imposed on major Western banks with the treatment of smaller, non-systemic banks, and suggest that the current regulatory environment is governed by an uneven application of the law through recourse to extra-judicial processes.
International efforts to combat money laundering – which latterly have been closely connected with frustrating tax evasion and aggressive tax avoidance – and to staunch the supply of money to terrorist organisations have been coordinated by the Financial Action Taskforce, and have resulted in various series of FATF Recommendations and Special Recommendations.
This body of knowledge as to how to run a regime for AML/CFT has firstly been converted into law, for example via the EU Anti-Money Laundering Directives and its subsequent transposition into EU Member State law, an example of the latter being the UK’s 2017 Money Laundering Regulations.
Secondly it has been used to set up national Financial Crime organisations to receive and investigate Suspicious Activity Reports (“SARs”), to monitor the compliance of those firms with responsibilities under AML/CFT – known as “obliged entities” – when measured against applicable law and regulation, and to impose sanctions on those that have failed to run a compliant regime.
Thirdly it has been used to create implementation guidance for “obliged entities” through international organisations like the Wolfsberg Group and national ones like the UK’s Joint Money Laundering Steering Group.
In the process a grey area has been created, however, that should not exist in a proper legal system: the enforcer of a law must be bound by it as much as the subject, and the same penalty must be imposed upon two different organisations committing the same offence.
Equally the subject of such a penalty must have rights of representation, of transparency, of appeal and of redress, enabling them to continue as if the authorities had not intervened if it should turn out that the actions of the authorities were unwarranted.
This is not the situation as it has emerged for “obliged entities” where breaches of the AML/CFT regime have been suspected.
In February 2018 Rabobank, a California unit of the Dutch cooperative bank, was reported to have agreed to pay over US$368 million for processing funds likely tied to drug trafficking and other illicit activity and it pleaded guilty in court to conspiring to obstruct regulatory oversight. It continued in business, however.
In May 2015 BNPP was sentenced to five years’ probation by a U.S. judge at the time the bank agreed to pay US$8.9 billion to settle claims that it violated sanctions against Sudan, Cuba and Iran. It continued in business and in June 2017 it was reported as having been fined EUR10 million by the French AML/CFT regulator ACPR for inadequate anti-money laundering controls.
In 2012 HSBC paid US$1.9bn to the US authorities to settle allegations that it allowed terrorists to move money around the financial system, and it signed a Deferred Prosecution Agreement, which involved agreeing to the Department of Justice delegating an official to monitor HSBC’s progress at a reported cost of US$20 million annum. Bizarrely HSBC later hired Jennifer Shasky Calvery as Head of Compliance to run their side of the monitoring process, the very official at the Department of Justice who had brought the suit against HSBC, and against the named position in the bank that she then came to occupy. In late 2017 the UK’s Financial Conduct Authority commissioned a so-called "166 report" into the HSBC after the Department of Justice official raised concerns about the degree of progress.
These are examples of the penalties imposed upon major banks in the Western world, two of them being Global Systemically Important Banks according to the Financial Stability Board, where the banks have continued in business.
By contrast the authorities have been very quick to act in cases where banks are small and non-systemic, and to stop them doing business.
On 21st March 2018 Malta’s regulators imposed a freeze on the business of Pilatus Bank after its chairman was arrested on charges of breaking U.S. sanctions.
ABLV in Latvia was closed down by the Latvian authorities immediately after it was served a notice 311 by FinCen – the financial crime arm of the US Treasury Department – on 13th February 2018 naming it as an institution of prime money laundering concern, and applying the fifth special measure to it: this forbids US banks from running a correspondent account for ABLV and from handling its payments on a pass-through basis.
Versobank in Estonia was closed down on 26th March by the Estonian authorities due to AML/CFT failings allegedly linked to the Russian elite and intelligence services.
The Estonian branch of Danske Bank – the major Danish and Nordic institution – was investigated by the Estonian Financial Supervision Authority around the same events as resulted in the closure of Versobank, but Danske’s Estonian branch remains open.
This has been the pattern when dealing with smaller banks, and the test case for this approach remains that of FBME, the small and foreign-owned bank branch in Cyprus which was “resolved” in 2014 by the Central Bank of Cyprus (“CBC”). FBME had had a 311 Notice issued against it by FinCen imposing the same fifth special measure. CBC used the 311 Notice as its trigger to stop FBME doing business and take it over. In the four years since this occurred, however, CBC has failed to corroborate the validity of any of the cases of alleged money laundering that gave rise to Fin Cen’s 311 Notice.
There were no court cases involved in these examples. Authorities took swift actions and closed banks, creating a fait accompli against which there could be no adequate redress for the owners of these banks, even had they had an adequate right to receive redress. The banks were taken over, their ability to do business nullified and their reputation destroyed.
The rights of the subject to proper representation during the legal process, to transparency of process, and to a right of appeal have been duly bypassed.
Then we have the report on 13th April 2018 that the US authorities considered taking action against China Construction Bank and Agricultural Bank of China for alleged violations of international sanctions against North Korea. In other words there was evidence to hand that these banks were routing payments to and from North Korea, although not necessarily in US$.
Given that the US authorities acted so quickly against FBME, ABLV and others, a 311 FinCen Notice imposing the fifth special measure would then have been expected. The US authorities must have had a body of evidence against these Chinese banks, but they apparently have significant latitude in deciding how to apply that evidence and, indeed, whether to use it at all.
It seems that the idea of taking any action was quickly shelved, primarily because of fears that punishing banks of that size might send shock waves through the global financial system. Indeed, both China Construction Bank and Agricultural Bank of China are amongst the 30 Global Systemically Important Banks.
So what we have here in the AML/CFT area is not an example of the law acting as it should – Blind Justice – but of laws that are applied or not applied, and of available penalties that are varied as regards severity and timing, in accordance with the offender and not the offence.
Instead the authorities make up their own mind – frequently behind closed doors - as to which banks to apply the law to and when, and which penalties to apply to a given situation.
There is significant recourse to extra-judicial processes like those that sit behind the Notices of FinCen, where the evidence is not made public and where the subject can only see it third-hand, by having a judge review the evidence in camera: neither the subject nor their legal representative can be present.
Since FATF itself acts as the ultimate court of arbitration by issuing – without contradiction - its Recommendations and Special Recommendations that lawmakers convert into laws and supervisory regimes, the entire edifice has gone outside democratic control. The edifice may claim to have been successful in reducing money laundering and blocking terrorist financing, but there is no factual evidence either in the form of a placebo test – what would have happened if FATF had never been established – or of a sanity test – what has actually been achieved and what could have been achieved by different means.
Instead we have the prima facie evidence that the crassest breaches by the largest banks can go unpunished, that other large banks are fined, supervised, fined again and the breaches continue, but that the roof is brought down on the smaller banks. That does not sound like an ecosystem in which money laundering and the financing of terrorism have been successfully eliminated, or one in which justice is blind to expedience and commercial prejudices.
Sources: https://uk.reuters.com/article/uk-rabobank-fraud-usa/rabobank-agrees-to-pay-368-million-over-processing-illicit-funds-idUKKBN1FR2YO https://uk.reuters.com/article/uk-bnp-paribas-moneylaundering/bnp-paribas-fined-over-weaknesses-in-anti-money-laundering-controls-idUKKBN18T2JE https://www.reuters.com/article/us-bnp-paribas-settlement-sentencing/bnp-paribas-sentenced-in-8-9-billion-accord-over-sanctions-violations-idUSKBN0NM41K20150501 https://www.theguardian.com/business/2012/dec/11/hsbc-bank-us-money-laundering https://www.justice.gov/sites/default/files/opa/legacy/2012/12/11/dpa-attachment-a.pdf https://www.telegraph.co.uk/business/2017/02/21/hsbc-profits-slump-volatile-year/ https://www.fincen.gov/news/news-releases/fincen-names-ablv-bank-latvia-institution-primary-money-laundering-concern-and https://www.ffiec.gov/bsa_aml_infobase/pages_manual/OLM_031.htm https://www.occrp.org/en/investigations/7698-report-russia-laundered-billions-via-danske-bank-estonia https://news.postimees.ee/4452455/bank-suspected-of-money-laundering-was-closed-down-overnight https://www.occrp.org/en/daily/7654-latvia-detains-central-bank-chief-over-graft-allegations https://www.express.co.uk/news/world/938856/eurozone-money-laundering-scandals-ecb-versobank-ablv-us-financial-authorities https://uk.reuters.com/article/us-malta-banks/malta-freezes-pilatus-banks-operations-after-chairmans-arrest-idUKKBN1GY0Z9 https://www.bloomberg.com/news/articles/2018-04-13/china-banks-aiding-north-korea-are-said-too-big-to-punish
Major changes to the MOT test rules in Britain could have huge legal ramifications warns Cristina Parla from leading law firm Roythornes Solicitors. She cautions motorists to fully understand the system as the law may not be on your side if you are involved in an accident.
The rules around MOT tests in Britain changed last week (20 May) and could potentially make it harder for vehicles, including cars, vans and motorbikes, to pass the MOT test thanks to a new sliding scale of testing. However, the new regulations could have negative implications for UK drivers.
The move was introduced by the Driver and Vehicle Standards Agency (DVSA) to improve air quality and make roads safer. The new testing scale for a MOT slides from ‘dangerous’ to ‘major’ to ‘minor’. ‘Dangerous’ and ‘major’ defects are automatic fails whereas a ‘minor’ defect is a pass but should be repaired as soon as possible and it is here where the potential danger lies.
An example of how the new MOT system could impact your legal bearing if involved in an accident could be regarding faulty brakes. If an accident had been caused by faulty brakes but the owner of the car denies they were faulty, the legal team could ask to see the most recent MOT which should now record defects in the appropriate category.
If there is evidence to show that the brakes were an issue at the time of the last MOT then there is potentially evidence to hold that person accountable.
There will also be stricter rules on diesel emissions introduced to help crack down on air pollution and also additional safety checks will be carried out during the MOT – such as underinflated tyres, fluid leaks or reversing lights. The changes will make it harder for vehicles, especially diesel, to pass the test but it is anticipated that these tougher regulations will improve air pollution and make roads safer for motorists.
However, I would encourage all drivers to fully understand the system and if your vehicle passes with a minor you should seriously consider repairing the fault in case it causes an accident later down the line. The cost of repairing an old brake pad will be minimal in comparison to the cost incurred from an accident deemed your fault.
The American Institute for International Steel (AIIS), SIM-TEX, LP and KURT ORBAN PARTNERS, LLC, the latter two both companies owned by the AIIS, recently filed suit in the United States Court of International Trade in New York City against the 25% tariff imposed on imported steel by US President Donald Trump.
The filed lawsuit aims to obtain a declaration that the tariffs put in place by Trump are unconstitutional and further enforcement of the tariffs should be stopped.
Below Lawyer Monthly has heard expert commentary from two very relevant sources, each with their own thoughts on the matter.
Geoffrey Morgan, Founding Partner, Morgan Legal Group:
When President Trump imposed a 25% tariff on steel imported from the European Union, Canada and Mexico, it angered two groups of people: those who are forced to pay the tariffs – primarily US companies that use large amounts of steel and are unable to pass on the increased costs to others; and those whose livelihood depend on handling large amounts of steel –transport workers, logistics companies, and longshoremen.
The American Institute for International Steel (AIIS), the only steel-related trade group that supports free trade to advance economic growth, has filed a lawsuit challenging the constitutionality of the law granting the President broad power to impose tariffs if it is believed that the quantity or other circumstances of such imports pose a threat to national security. The AIIS does not base its suit on whether national security is affected; rather, it alleges that Section 232 of the Trade Expansion Act of 1962 – enacted more than 50 years ago – failed to provide Congress any meaningful oversight of the President’s actions.
According to the AIIS’s suit, because the law “allows the President a virtually unlimited range of options,” it creates an unlawful delegation of legislative authority to the President in violation of Article 1 Section 1 of the Constitution. This argument will not be easily defended by the AIIS and its member companies. Section 232 of the Act is rarely used and, in fact, has not been invoked since the formation of the World Trade Organization in 1995. Congress could, of course, amend the Act, but it has shown little interest in doing so. Further, the American Iron and Steel Institute has come out in defense of the tariff for its benefit to US steelmakers as previously described.
The case is being brought before a three-judge panel of the Court of International Trade. Although the majority of judges were appointed by democratic presidents, it remains to unclear whether political ideology, rather than geography, will be a predictor of outcome. Regardless, it is likely the Court’s ruling will be appealed in the US Supreme Court, whose recent rulings have been right-of-center.
Demonstrating the unconstitutionality of Section 232 will prove a long and expensive battle for AIIS and its members. In the meantime, the President’s tariffs will stand and the case will continue to be tried in the court of public opinion.
Robert Soza, Jr., Partner, Jackson Walker, Globalaw:
In March, President Trump exercised his authority under Section 232 of the Trade Expansion Act of 1962 to declare a threat to national security from imports of steel and aluminum and imposed a 25% tariff on steel and a 10% tariff on aluminum. On June 27, 2018, a steel-industry trade association and two steel importers (the Steel Importers) filed suit in the US Court of International Trade seeking an injunction to prevent these tariffs from going into effect. They argued that Section 232 is an unconstitutional delegation to the President of Congressional taxing authority.
However, looking at Supreme Court precedent in cases where delegation challenges have been asserted, and one case involving Section 232, indicates that the Steel Importers will face significant obstacles to winning their case.
Not since 1935, when the US Supreme Court struck down Roosevelt New Deal legislation, has the Court invalidated a law delegating rule-making authority to the President. The Supreme Court has, however, referred to the delegation doctrine to narrowly construe a statute, including in the case brought by the National Cable Television Association in 1974 where the Court believed Congress impermissibly delegated to the President the power to tax.
The President’s authority under Section 232 was reviewed by the US Supreme Court in 1976 when President Nixon used Section 232 to increase license fees for the importation of crude oil into the United States. In the case of Federal Energy Administration v. Algonquin SG, Inc. in 1976, the Court held that because Section 232 contains clear preconditions to Presidential action and provides the President with specific tools to address any national security threat, it was not an improper delegation. In other cases where the Court has reviewed executive action, it has noted that “[w]hen the President acts pursuant to an express or implied authorization from Congress, he . . . would be supported by the strongest of presumptions and the widest latitude of judicial interpretation, and the burden of persuasion would rest heavily upon any who might attack it.” (See Dames & Moore v. Regan).
The US Government’s answer in the current case is due on August 27, and it will likely seek an early dismissal of this case, bolstered by the strong precedent outlined here.
We would also love to hear more of Your Thoughts on this, so feel free to comment below and tell us what you think!
Below Neil Williams, of business crime solicitors Rahman Ravelli, considers the EU’s latest efforts to tackle fraud in its budget.
With quite a fanfare, the European Union has announced that is has found money to help member states tackle EU budget fraud. The new EU Anti-Fraud Programme will provide €181m to support the fight against fraud, corruption and financial irregularities in member states.
The programme intends to tackle fraud, corruption and other irregularities by providing what is called targeted training to law enforcement authorities in all member states. It will also, we are told, help facilitate the exchange of intelligence and best practice. And that is not all. It will also support investigation and prevention activities by helping to finance the purchasing of technical equipment used in detecting fraud and by developing secure information systems through which exchanges can be made.
It will be run by OLAF, the EU’s anti-fraud office, and will replace Hercule III; the programme that has been trying to tackle EU budget fraud in recent years. Hercule III was an acknowledgement that EU budget fraud is a problem. Do we take from its abandonment that it has been a failure? Possibly. And is this new programme likely to be a major improvement? It is hard to believe so.
The European Commissioner for Budget, Günther Oettinger, has said that this latest programme will make a “tangible contribution’’ to improving efforts to tackle fraud and corruption within the EU budget. That may well be the case. But the size of that tangible contribution has to be seen as the issue at stake here. Yes, it may well identify some fraud and lead to some convictions. But looking at the bigger picture, just how much of an impact can it have when it comes to tackling corruption that is geographically widespread, quite often sophisticated in its planning and execution and involves huge sums of money?
Let’s take a simple look at the figures. The European Commission intends to make the €181M available for the next long-term EU budget, 2021-2027. While €181m may, at first glance, appear impressive, a close inspection will indicate that it is a far from overwhelming financial attack on fraud. When divided between each of the current member states, it equates to just under 6.5m euros per member. We have a current case ongoing, involving allegations of EU budgetary fraud through applications to the Welsh Government. This has been investigated for the past four years. The costings have yet to be determined as the case has not been finalised. But it would be astonishing if that case alone did not cost somewhere in the region of what each member state will receive under this programme. It is important, therefore, not to be dazzled by the figures.
What should also be considered here is that the EU budget is particularly vulnerable to fraud. There doesn’t appear to be sufficient checks and safeguards to ensure that applications made for EU monies are legitimate or that the funds are then utilised for the proper purpose for which they were intended. This, of course, certainly does not relate to every application made for funding. But it almost goes without saying that unscrupulous individuals and corporations may well use failings in the safeguarding systems to their advantage. This then means that the EU is left with a problem – it has to play an almost impossible game of catch-up. If an abuse of the system is identified after it has happened, the time lag between the abuse and its coming to light can make it hugely difficult in many cases to identify the exact nature of the fraud. In such circumstances, it can be a massive challenge to apprehend the perpetrators and almost impossible to recoup any of the funds that were obtained fraudulently.
While any money to combat EU fraud is always welcome, it does seem that strengthening the safeguarding and vetting procedure for the application processes may be a better use of funds. Chasing suspected cases of abuse after they have happened is the legal equivalent of bolting the stable door long after the horse has run away.
Another complicating factor here is that EU budgetary control passes in part to the member states, and they then use their own procedures to test the veracity of the applications made to them. This has the benefit of localised control over the application process. But cynics may suggest that this has the unintended consequence of such control being relaxed - especially when future budgets are under consideration and annual budgetary allocations aren’t being utilised. The temptation can be there to allocate funds to an application regardless of its quality. It is the old argument: if it doesn’t get spent this year, you won’t be given it to spend next year.
So while the headline figure for this latest initiative is eye catching, it is at best a limited response. EU budget fraud is a large problem. It needs to be approached in a more systematic manner than simply throwing a relatively modest amount of money at it.
There is an old saying which may, unfortunately, be relevant to this latest proposal – cheap is more expensive.
