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The Global Legal Monitor is an online publication from the Law Library of Congress covering legal news and developments worldwide. It is updated frequently and draws on information from official national legal publications and reliable press sources. You can find previous news by searching the Global Legal Monitor.

Italy: New Legislation Creates Center to Monitor State-Regional Financial Agreements on Indebtedness

(July 17, 2018) On June 28, 2018, new legislation came into effect in Italy creating the Center for the Monitoring of Regional Agreements to provide oversight related to the indebtedness of the regions and local entities. (Decree No. 67 of the President of the Council of Ministers of April 23, 2018, Regulations on the Amendments to Decree No. 21 of the President of the Council of Ministers of February 21, 2017, on the Criteria and Modalities for the Implementation of Article 10, Paragraph 5 of Law No. 243 of December 24, 2012, on Recourse to Indebtedness by the Regions and Local Entities, Including the Implementation Modalities of the Substitutive Power of the State, in Case of Inertia or Delay, by the Regions and the Autonomous Provinces of Trent and Bolzano (Decree No. 67), GAZZETTA UFFICIALE [OFFICIAL GAZETTE] [G.U.] No. 135, June 13, 2018 (in Italian), G.U. website.)

Motivation for the New Legislation

Decree No. 67 was issued by the President of the Council of Ministers as a response to the constitutional issues debated during a constitutional legitimacy case held at the Italian Constitutional Court concerning the impact of certain budgetary commitments by the Italian state, the regions, and other local entities. (Decision No. 247/2017 of October 11, 2017, of the Italian Constitutional Court in a Constitutional Legitimacy Case Lodged by the Autonomous Provinces of Bozano and Trent, and the Autonomous Regions of Trentino-Alto Adige/Südtirol and Friuli-Venezia Giulia, and the Veneto Region, G.U. No. 49, Dec. 6, 2017 (in Italian), Conference of the Regions and Autonomous Provinces website.)

New Oversight Mechanism

The new legislation creates the “Center for the Monitoring of Regional Agreements” as a mechanism to verify compliance with the financial agreements executed between the state and the regions. (Decree No. 67, art. 1(1)(e).) The Monitoring Center is located at the Ministry of the Economy and Finances’ Department of General Accounting of the State (id.) and is composed of high-level officials from the Ministry of Economy and Finance and the Ministry of the Interior, as well as representatives from numerous government unions (id. art. 1(3)).

In order to monitor compliance with regional agreements and verify the full use of the financial allocations approved for the implementation of investments, the Monitoring Center must use available data and information in accordance with several criteria listed in the new legislation and other indicators that the Center may select on its own initiative. (Id. art. 1(19) & (20).) The Center is also empowered to prepare general principles and strategies for the full use of financial allocations and investments by local authorities. (Id. art. 1(22).)

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European Union: 5th Anti-Money Laundering Directive Enters into Force

(July 16, 2018) On July 9, 2018, the amendment of the European Union (EU) Anti-Money Laundering Directive (5th AMLD) entered into force. The AMLD obligates certain entities to fulfill customer due diligence requirements when they conduct business transactions and have in place policies and procedures to detect, prevent, and report money laundering and terrorist financing. The amendment

  • brings custodian wallet providers and virtual-currency exchange platforms within the scope of the AMLD,
  • interconnects the national central beneficial ownership registers,
  • enhances access to these registers,
  • lowers thresholds for the use of anonymous prepaid cards,
  • establishes centralized mechanisms to identify holders of payment or bank accounts, and
  • sets stricter standards for financial transactions with high-risk third countries.

Member States must implement the new rules into national law by January 10, 2020. (Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018 Amending Directive (EU) 2015/849 on the Prevention of the Use of the Financial System for the Purposes of Money Laundering or Terrorist Financing, and Amending Directives 2009/138/EC and 2013/36/EU (5th AMLD), 2018 O.J. (L 156) 43, EUR-Lex website; Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the Prevention of the Use of the Financial System for the Purposes of Money Laundering or Terrorist Financing, Amending Regulation (EU) No 648/2012 of the European Parliament and of the Council, and Repealing Directive 2005/60/EC of the European Parliament and of the Council and Commission Directive 2006/70/EC (4th AMLD), 2015 O.J. (L 141) 73, EUR-Lex website).

Definition of Virtual Currencies and Custodian Wallet Providers

The amendment defines “virtual currencies” as “a digital representation of value that is not issued or guaranteed by a central bank or a public authority, is not necessarily attached to a legally established currency and does not possess a legal status of currency or money, but is accepted by natural or legal persons as a means of exchange and which can be transferred, stored and traded electronically.” A “custodian wallet provider” is defined as “an entity that provides services to safeguard private cryptographic keys on behalf of its customers, to hold, store and transfer virtual currencies.” (5th AMLD art. 1, para. 2(d).) As previously mentioned, the new rules extend the customer due diligence requirements to custodian wallet providers and virtual-currency exchange platforms.

Central Beneficial Ownership Registers

Another change to improve transparency concerns the national central beneficial ownership registers in the EU Member States. Beneficial owners are defined as “any natural person(s) who ultimately owns or controls the customer, and/or natural person(s) on whose behalf a transaction or activity is conducted.” (4th AMLD art. 3, para. 6.) The amendment requires that the central beneficial ownership registers for corporate or other legal entities are available to any member of the general public. (5th AMLD art. 1, para. 15(c).) The previous version of the AMLD made access for members of the general public dependent on demonstrating a legitimate interest. (4th AMLD art. 30, para. 5.) Information on beneficial owners of trusts will for the first time be available to the general public, but only to those who show a legitimate interest. (5th AMLD art. 1, para.16(d).) Previously, only competent authorities, Financial Intelligence Units, and entities subject to the customer due diligence rules were granted access to beneficial ownership information on trusts. (4th AMLD art. 31, para. 4.) When a trust is the beneficial owner of an entity, information will be accessible to persons that file a written request. (5th AMLD art. 1, para.16(d).)

Furthermore, in order to facilitate cooperation and information exchange between the Member States, the amendment requires Member States to connect their central registers via the “European Central Platform.” (5th AMLD art. 1, para.15 (g).) The interconnection of the central registers via the European Central Platform must be completed by March 10, 2021. (Id. art. 1, para. 42.) Beneficial ownership information must be available through the national registers and the interconnected European Central Platform for at least five years and no more than ten years after the entity has been removed from the register. (Id. art. 1, para.15 (g).)

Use of Anonymous Prepaid Cards

Furthermore, the amendment of the AMLD lowers the monetary thresholds for identifying the holders of prepaid cards to address risks linked to their use in financing terrorist activities. Payments carried out with anonymous prepaid cards online will be allowed only when the transaction amount does not exceed €50 (about US$59). (5th AMLD recital 14; art. 1, para. 17(b).) In-store use of an anonymous prepaid card must not exceed an amount of €150 (about US$176). (Id. art. 1, para. 7(a).)

Centralized Automated Mechanisms for Payment and Bank Accounts

The amendment obligates EU Member States to establish centralized registries or electronic data retrieval systems to identify natural or legal persons holding or controlling payment accounts, bank accounts, and safe-deposit boxes. (Id. art. 1, para. 19.) The national Financial Intelligence Units (FIUs) must be allowed direct, immediate, and unfiltered access to that information. Technical aspects of the interconnection of the centralized registries is to be worked out by the European Commission by June 26, 2020. (Id.)

High-Risk Third Countries

Finally, the amendment sets stricter standards for financial transactions with high-risk third countries, meaning non-EU countries that have been identified by the European Commission as having strategic deficiencies in their anti-money laundering or counterterrorism regimes. If a country is on that list, enhanced due diligence requirements must be performed by the companies conducting business with such a country. The AMLD harmonizes the enhanced due diligence obligations across the EU, but Member States may require companies to perform one or more additional mitigating measures. (Id. recital 12; art. 1, para. 11.)

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Australia: New South Wales Enacts Bill to Amend Relationship References in Legislation

(July 13, 2018) On June 15, 2018, the governor of New South Wales in Australia gave assent to the Miscellaneous Acts Amendment (Marriages) Bill 2018 (NSW). (Miscellaneous Acts Amendment (Marriages) Bill 2018, PARLIAMENT OF NEW SOUTH WALES (last visited July 12, 2018); Miscellaneous Acts Amendment (Marriages) Act 2018 No 28 (NSW), New South Wales Government website.) The Bill makes amendments to several statutes and other instruments in order to update terms and definitions related to marriage, parentage, and change of sex. The changes follow the passage of the Marriage Amendment (Definition and Religious Freedoms) Act 2017 (Cth) by the Commonwealth (federal) Parliament, which legalized same-sex marriage in Australia. (Kelly Buchanan, Australia: Same-Sex Marriage Bill Passes, GLOBAL LEGAL MONITOR (Dec. 13, 2017).)

For example, the Bill changed the definitions of “spouse” in several statutes by inserting the following wording: “the person to whom a person is legally married (including the husband or wife of a person).” (Miscellaneous Acts Amendment (Marriages) Act No 28 (NSW) sch 1.) Other amendments removed redundant references to spouses and de facto partners being of either the same or opposite sex. (Parliament of New South Wales, Miscellaneous Acts Amendment (Marriages) Bill 2018: Explanatory Note, at 3.) Amendments related to parentage were made to statutes such as the Adoption Act 2000 (NSW) and the Guardianship of Infants Act 1916 (NSW), including clarifying “that parents who are in a same sex marriage are not considered step parents of their children for the purposes of the definition of step parent in the [Adoption] Act.” (Id.)

The Bill also removed restrictions from the Births, Deaths and Marriages Registration Act 1995 (NSW) “so that persons who change their sex and are married may have that change of sex recorded on the Births, Deaths and Marriages Register.” (Id. at 4.) Previously, a person could not record a change of sex unless they were not married, since a same-sex marriage was not legal. (See Change of Sex, NSW Registry of Births, Deaths and Marriages (last updated June 22, 2018).)

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China: Government Indicates All Virtual Currency Platforms Have Withdrawn from Market

(July 12, 2018) On July 6, 2018, the People’s Bank of China indicated that the platforms trading virtual currencies, such as Bitcoin, and dealing with initial coin offerings (ICOs) in China have “basically all safely withdrawn from the market.” Chinese authorities had identified 88 virtual currency trading platforms and 85 ICO platforms since September 2017 when they started to crack down on ICOs and trading of virtual currencies on exchanges. (Woguo Xuni Huobi Jiaoyi Pingtai Jiben Shixian Wu Fengxian Tuichu [Chinese Virtual Currency Platforms Basically Achieve Risk-Free Withdrawal], XINHUA (July 6, 2018).)

In September 2017, Chinese authorities issued an order to completely ban the practice of raising funds through ICOs—the equivalent of initial public offerings for new virtual currencies—and imposed restrictions on the primary business of virtual currency trading platforms. Since then, such platforms have essentially been shutting down their trading business in China. (LAW LIBRARY OF CONGRESS, GLOBAL LEGAL RESEARCH CENTER, REGULATION OF CRYPTOCURRENCY IN SELECTED JURISDICTIONS 30–31 (June 2018).)

Recently, the government has taken more measures to combat “new varieties of illegal financial activities” that arose after the domestic transactions were shut down. Platforms “going overseas,” for example, would allow Chinese investors to participate in overseas transactions. Up until May 2018, the authorities blocked 110 websites dealing with virtual currencies or ICOs, according to the Xinhua report. (Woguo Xuni Huobi Jiaoyi Pingtai Jiben Shixian Wu Fengxian Tuichu, supra.)

Furthermore, the authorities have pressed payment institutions to strictly implement the requirement of not providing services related to virtual currencies. As a result, Alipay, a big third-party mobile- and online-payment platform, closed approximately 3,000 accounts found to be dealing with virtual currencies. In addition, the public security authority has reportedly investigated over 300 offenses related to virtual currencies. (Id.)

China was once the most active market for Bitcoin trading on exchanges, and Bitcoin traded with Chinese yuan used to account for over 90% of the global trading in Bitcoin. In the wake of the regulatory measures the government has instituted since September 2017, Bitcoin traded with Chinese yuan has dropped to under 1% of global Bitcoin trading, according to the Xinhua report. (Id.)

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Brazil: State of Rio de Janeiro Enacts New Law for the Support of Victims of Rape

(July 11, 2018) The State of Rio de Janeiro, Brazil, has enacted a Law to create a program for the support of victims of rape in the state. According to article 2(§ 1) of Law No. 8,007 of June 26, 2018, the testimony of the female victim and the information collected in the health unit that provides initial care are sufficient to initiate a police investigation. (Lei No. 8.007, de 26 de Junho de 2018, Legislative Assembly of Rio de Janeiro website.) From now on, the investigation of a case will start from the moment of the victim’s complaint. (Felipe Rebouças, Vítimas de Estupro Terão Programa de Atenção, O DIA (July 3, 2018).)

The program must be implemented in all police stations, including the Specialized Police Stations for the Care of Women (Delegacias Especializadas de Atendimento à Mulher, DEAM), the Police Station for the Protection of the Adolescent (Delegacia de Proteção do Adolescente, DPCA), the Police Station for Child and Adolescent Victims (Delegacia da Criança e do Adolescente Vítima, DCAV), and the Legal Medical Institute (Instituto Médico Legal, IML), in a joint action with the Integrated Centers for Assistance to Women (Centros Integrados de Atendimento à Mulher, CIAM) and with the Reference Centers for Assistance to Women in the State of Rio de Janeiro (Centros de Referência de Atendimento à Mulher do Estado do Rio de Janeiro). (Lei No. 8,007, art. 1(§ 1).)

Whenever possible, the female victim is to be examined by a female doctor (legista), except in the case of a minor who is female, who must be examined by a female doctor. (Id. art. 1(§ 3).) Every step must be preceded by an interview during which the female victim must be heard and oriented regarding police procedures, what will be done at each stage of care, and the importance of multiprofessional medical care. The victim’s decision regarding the performance of any procedure must be respected. (Id. art. 2(§ 2).) In all stages of care, the principles of respect for the dignity of the person, nondiscrimination, confidentiality, and privacy must be observed. (Id. art. 2(§ 3).)

In the case of violence against children or adolescents, the guidelines set forth in the Statute of Children and Adolescents (Estatuto da Criança e do Adolescente, Lei No. 8.069, de 13 de Julho de 1990, Presidency of the Republic website) must also be observed. (Id. art. 3.)

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