US regulator tells Scotiabank to fix AML Deficiencies

November 14th, 2015

US regulators are compelling Bank of Nova Scotia, Canada’s third-largest bank by assets, to overhaul its anti-money- laundering (AML) controls to correct “deficiencies” in the lender’s compliance program.

Toronto-based Scotiabank has entered into a written agreement with the Federal Reserve Bank of New York and the New York State Department of Financial Services to fix problems ranging from oversight to the monitoring of suspicious activity.

The written agreement released by the New York Fed did not include any monetary penalties against the bank.

It should be noted that the enforcement action comes at a time when Canadian banks are facing increased pressure from global regulators to root out potential sources of money laundering and terrorist financing from their operations.

Scotiabank spokesman Andrew Chornenky said that the bank has a strong risk-management culture. He added: “Scotiabank is firmly committed to global Anti-Money-Laundering standards and serious about fixing the issues identified by the Federal Reserve Bank of New York.”

As part of its agreement with the New York Fed, Scotiabank has agreed to start a review of its New York agency’s wire- transfer activity over a period spanning July 1, 2014, to December 31, 2014. The purpose of the review is to “determine whether suspicious activity involving high risk customers and transactions at, by, or through the Agency was properly identified and reported in accordance with applicable suspicious activity reporting regulations,” the agreement stated.

Swiss Government Adopts New Anti-money Laundering Rules

November 11th, 2015

On November 11, 2015, the government of Switzerland adopted new rules aimed to clamp down on money laundering as the country seeks to cast off its reputation as a haven for hidden cash.

The new rules, which follow recommendations by the Financial Action Task Force (FATF) last year, establish fresh due diligence requirements for traders when they accept cash payments of more than 100,000 Swiss francs (USD 99,500).

According to the statement made by the Swiss government, they also change the way in which religious foundations are registered in Switzerland and will come into force at the start of the year 2016.

Switzerland was reminded of its reputation as a place for the wealthy to hide assets this year when media outlets published leaked documents suggesting HSBC’s Swiss private bank helped customers dodge taxes.

In June, the Swiss banking association had said that the country’s banks would beef up anti-money laundering measures through transparency rules due to come into force next year.

Money laundering to become difficult in next 1-2 years, Indian Finance Minister says

November 5th, 2015

According to Arun Jaitley, Minister for Finance, Corporate Affairs, Information, and Broadcasting in the Government of India, tax evasion and money laundering will become extremely difficult in the future. He warned lawbreakers that real-time global automatic exchange of information system will come into effect.

Indian finance minister said: “I am quite certain that the activity is going on in that direction and the next 1-2 years are also going to bring significant results because with almost real-time exchange of information, lives are going to become extremely difficult as far as lawbreakers in that regard are concerned,” the minister said in his inaugural speech at international conference on ‘Networking the Networks’.

Jaitley noted that tax evasion and stashing away illegal money anywhere in the world is becoming increasingly difficult after a G20 initiative that is being taken up by various international institutions.

The initiative, firmed at the Australia summit of G20 last November, is a new global arrangement under which countries will begin automatic exchange of tax information in stages beginning April 1, 2017. India, one of the early adopters, will begin sharing from the first date. Also, the OECD has recently announced the rules for the Base Erosion and Profit Shifting (BEPS) framework, which seeks to ensure that trans-nationals pay tax at least at some place.

UK fraud office looking at potential Money Laundering in World Cup bids

October 28th, 2015

Officials are investigating potential offenses relating to 2018, 2022 World Cup bids.

David Green said the SFO had no jurisdiction to go after FIFA under bribery laws but that there may have been potential money-laundering offenses. One of these involved a £270,000 payment (USD 414,000) payment by the Australia 2022 bid committee to Jack Warner which may have gone through London.

He also said that the SFO had no powers to act against FIFA officials who had solicited money or favors from England’s 2018 World Cup bid from the evidence obtained so far – but that attempts to procure a copy of the Garcia report into World Cup bidding had been unsuccessful.

Green said: “We are still examining issues around possible money laundering and I won’t be able to go into detail as new information has come to us quite recently.” As to the Australia payment, he said: “I cannot confirm the assertion that money went through London – it certainly started off in Sydney and appears to have ended up in Trinidad. It could be money-laundering yes. Whether the money came through London is important. “

Swiss banks to harden AML measures

June 30th, 2015

According to the Swiss banking association, Switzerland’s banks will beef up anti-money laundering measures. This was announced weeks after a report by a government-appointed group found the Alpine nation was still vulnerable to financial crime.

More transparent rules are to come into force in 2016 to make it harder for criminals to hide their money in companies or schemes with obscure ownership structures.

The measures were announced as Switzerland investigates alleged corruption at Zurich-based FIFA, world soccer’s governing body, in connection with World Cup bids. United States’ prosecutors are also investigating alleged money laundering schemes by soccer officials.

The Swiss Bankers Association said in a statement that fighting against money laundering and terrorist financing are central issues for the Swiss financial centre. It announced that from 2016, bank would face a new requirement to identify the controlling owner of legal entities and private companies. This would mean any individual with a stake of more than 25% or exercising effective control. If no one who meets these criteria, banks must instead identify the highest-ranking employee.

The announcement follows a report this month from a Swiss interdepartmental group on combating money laundering and terrorism financing, in which it recommended measures to improve rules tackling financial crime.

Italy amends Black Lists of countries as regards tax information exchange

April 7th, 2015

On April 1, Italy’s Minister of the Economy and Finance, Pier Carlo Padoan, signed 2 decrees that modify Italy’s “black lists,” and announced on the same day that Italy and the Vatican had signed their previously agreed tax information exchange agreement (TIEA).

The 2 decrees follow the guidelines laid down in Italy’s 2015 Stability (Budget) Law, which established amended criteria for the production of 2 black lists that is expected to boost economic connections with foreign countries.

Under the framework of Italy’s controlled foreign company (CFC) regime, the black list includes territories that do not have an adequate TIEA with Italy and if they have an effective corporate tax rate that is at least 50% lower than the effective tax rate that would be applicable if the company was an Italian resident.

The Stability Law specified another black list under which expenses incurred in transactions with residents in a jurisdiction would not be deductible. For this list, the criterion that such a jurisdiction should not have a privileged tax regime has been eliminated, leaving only the presence of an adequate TIEA with Italy as the determining factor.

The “non-deductibility of costs” list now therefore includes only 46 tax jurisdictions. 21 have been cancelled as already having TIEAs in effect. They are as follows: Alderney, Guernsey, Jersey, the Isle of Man, Gibraltar, the British Virgin Islands, Anguilla, the Netherlands Antilles, Aruba, Belize, Bermuda, Costa Rica, the United Arab Emirates, the Philippines, the Cayman Islands, the Turks and Caicos Islands, Malaysia, Mauritius, Montserrat, and Singapore.

This second list still includes Switzerland, Liechtenstein, and Monaco, despite the fact that all have recently signed TIEAs with Italy. At the time it was indicated that completion of those TIEAs would be a prerequisite for Italians with undeclared assets in those countries to be able to enter into Italy’s current voluntary disclosure program.

AML/CFT Workshop to be held in Seychelles

August 1st, 2014

The Centre for Legal Business Studies (CLBS) with the support of the Seychelles’ Financial Services Authority (FSA), will be hosting an Advanced Workshop on Anti-Money Laundering and Counter Terrorist Financing. The event will be held on August 11-12, 2014 at the Le Meridien Fishermen’s Cove Hotel, Bel Ombre, Seychelles.

As Anti-money Laundering & Counter Financing (AML/CFT) compliance has become increasingly complex, level of examiner expectations has become corresponding. AS a result, there is a need for seasoned compliance personnel to learn and to know how to put in practice.

The workshop will provide an up to date, current regulatory information, particularly in the areas of risk assessments, suspicious activity surveillance, customer due diligence, impact from emerging products/services, vendor management, and increasing Anti-money Laundering and Counter Financing program expectations.

FATF removes Kenya from blacklist

July 8th, 2014

The Global Financial Action Task Force has removed Kenya from its monitoring process under the ongoing Anti-Money laundering and combating the Financing of Terrorism AML/CFT regime that has been under review since June 2009.

In a statement Treasury Cabinet Secretary Henry Rotich says that the Financial Action Task Force (FATF) team is satisfied with the way Kenya has substantially addressed its action plan on addressing money laundering, combating the financing of Terrorism and proliferation. Also, the team is satisfied with political commitment and institutional capacity to continue implementing the Task Force’s reforms in Kenya.

On the basis of an on-site visit the team, the global body established in 1989 to set international standards on money laundering and combating the financing of terrorism concluded that Kenya has established the legal and regulatory framework in order to address deficiencies identified in February 2010.

Germany seizes tax evasion info

June 22nd, 2014

German customs authorities in the Port of Hamburg have confiscated documents that may contain information about the accounts of suspected tax evaders. This was reported by German media on June 21.

Two containers with around 14,000 documents inside were confiscated at the end of May, with some coming from a branch of private bank Coutts, a subsidiary of the Royal Bank of Scotland, in the Cayman Islands, newspaper Welt am Sonntag said in an advance copy of an article due to be published on Sunday.

It was also reported that customs authorities confiscated a container of Coutts documents from the Cayman Islands on May 20. Since then, finance experts had been evaluating the information and searching for evidence of tax evasion.

A spokesperson for Coutts told Reuters: “We are not aware of any investigation into our Trust Company or its papers and we are working with the authorities to allow these papers to continue on their way.”

EU adopts European Tax Compliance Activities

June 1st, 2014

The European Commission has adopted the 1st annual program for its new anti-fraud regime Hercule III. Over the year 2014, EUR13.7 million will be made available to support EU member states in their enforcement activities that include fighting fraud and fiscal crime.

This program will allow member states to finance specific projects and purchase of technical equipment by national authorities, as well as to tackle smuggling and other activities affecting the EU’s financial interests. Under Hercule III, EU countries will be able to apply for more funding. They could receive funding of up to 80% of the overall costs for actions to strengthen the technical and operational capacity of customs and law enforcement agencies. In exceptional and duly justified cases, the funding could be increased to 90%.

Also, the European Commission will pay for access to specialized databases for use by member states’ customs and tax authorities. Funds will be allocated for training activities and seminars and conferences for customs and police staff.

According to Tax Commissioner Algirdas Šemeta, “Fighting fraud and corruption in the EU must really be a partnership. Hercule III means that member states will have significant financial support in catching fraudsters and protecting taxpayers’ money. Thanks to the work program adopted today, many useful anti-fraud projects can now be put into practice.”