Portugal issues Legal Regime on the Beneficial Ownership Central Register

September 19th, 2018

The Ministerial Order 233/2018, which regulates the Legal Regime on the Beneficial Ownership Central Register, was issued in Portugal.

On August 21, was issued the Ministerial Order 233/2018, which regulates the Legal Regime on the Beneficial Ownership Central Register (BOCR Legal Regime). However, the regulations are still not complete, since the forms for compliance of the disclosure requirements under the BOCR Legal Regime must still be published on the website of the Justice sector. In addition, it requires that such forms will include the circumstances indicating of the status of beneficial owner that must be taken into account when filling out the form.

The first beneficial owner declaration for the companies already in existence on 1 October 2018 must be made between 1 January 2019 and 30 April 30 2019.

The obligations under this legal regime must be fulfilled by filing the said form.

5th EU Anti-Money Laundering Directive published

July 20th, 2018

On June 19th, 2018, the 5th EU Anti-Money Laundering Directive (AMLD 5) was published in the official journal of the European Union.

The AMLD5 modifies the 4th Anti-Money Laundering Directive (AMLD4) released only in 2015. The EU Commission proposed the revised AMLD in July 2016 as part of its Action Plan against terrorism announced in February 2016, after the attacks in Paris and Brussels, and as a reaction to the Panama Papers published in April 2016. The plan to implement the changes by January 2017 resulted overambitious; a final compromise text was reached only in December 2017. The new directive entered into force on July 9th, 2018. Member states are obliged to transpose the modified regulations into national law by latest January 20th, 2020.

The above mentioned Anti-Money Laundering Directive includes the following:

  • it extends the scope to virtual currency platforms and wallet providers, tax related services and traders of art;
  • grants access to the general public to beneficial ownership information of EU based companies;
  • makes it an obligation to consult the beneficial ownership register when performing AML due diligence;
  • obliges member states to create a list of national public offices and functions that qualify as politically exposed (PEP);
  • introduces strict enhanced due diligence measures for financial flows from high-risk 3rd countries;
  • ends the anonymity of bank and savings accounts, as well as safe deposit boxes and creates central access mechanisms to bank account and safe deposit boxes holder information throughout the EU;
  • makes information on real estate holders centrally available to public authorities;
  • lowers thresholds for identifying purchasers of prepaid cards and for the use of e-money;
  • enhances the powers of the FIUs and facilitates cooperation and information exchange among authorities.

 

OECD says Switzerland must do more to tackle bribery and protect whistleblowers

May 30th, 2018

Switzerland must urgently do more to protect whistleblowers and stop money laundering and bribery.

After a year-long investigation, the Organisation for Economic Co-operation Development (OECD) said that companies, lawyers and trustees operating in Switzerland must face tougher penalties for perpetrating or facilitating bribery taking place abroad.

The OECD said Switzerland “presents a specific risk of corruption” because of a large number of public international organisations and an outsized financial sector providing services for overseas clients. Despite hosting international industries which have significant potential for corruption, such as commodities trading, Switzerland has no legal framework to protect whistleblowers.

The organisation also found out that not a single case of foreign bribery has been brought to local Swiss law enforcement agencies in any of its cantons by a whistleblower. Internationally, company insiders who alert authorities to wrongdoing are seen as vital in the battle against corruption. They have been instrumental in a number of recent high-profile data leaks that have shone a light into the sometimes shady world of offshore finance.

Long famed for its secretive banks and as a hub for clandestine financial activity, Switzerland has been attempting to clear up its image in recent years after a string of scandals, but the latest report found an “almost universal mistrust” of whistleblowers in the country, stemming from “extremely entrenched opinions on this matter that point to strong, deep-rooted cultural resistance to people who support suspicions of wrongdoing”.

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UK to crackdown on century-old loophole being used for money laundering

May 10th, 2018

According to the government of the United Kingdom, Scottish Limited Partnerships (SLPs) are being exploited by overseas criminal gangs. Initially, SLPs were introduced in 1907 to help Scottish farmers.

The government research revealed that one laundering scheme used 100 different SLPs to shift USD 80bn in Russian money in just 4 years.

The proposals are the latest in ministers’ attempts to crack down on dirty money as part of a wide-ranging response to Russia in the wake of the Salisbury nerve agent attack.

The plans are aimed to ensure that SLPs are being used only by legitimate businesses, users will have to prove they have a genuine connection to the UK and are running a company or maintaining an address in Scotland. Under the current rules, anyone in the world is able to register an SLP. The proposed changes will mean that anyone setting up a limited partnership will have to pass anti-money laundering checks.

While many SLPs are owned by legitimate businesses, government research suggests others have been part of complex attempts to launder the proceeds of criminal activities.

UK to force offshore centres to make public the owners of companies

May 4th, 2018

The UK parliament made a decision to force its overseas territories to make public the owners of companies registered in their jurisdiction, if necessary through an order in council.

Most of British news organizations celebrated this as a victory for transparency campaigners and a major push against offshore secrecy, while the constitutional concerns expressed by the majority of overseas territories’ leaders about British MPs legislating the affairs of largely autonomous territories received very little attention.

The Guardian acknowledged that there may be legitimate reasons to use offshore jurisdictions. “But kleptocracy – egregious and globalized grand corruption – is enabled by anonymous companies, which strip the fingerprints off stolen money and, having done so, hide it under the cover of supposedly respectable corporations. Once all traces of the money’s origin have been removed, the thieves can spend it on New York property, European passports or western politicians, and they do it in vast quantities,” the Guardian said. Accordingto the article, “many of these companies came from the British Virgin Islands, Gibraltar, Anguilla and the other pink dots left on the map of the world, which is why Tuesday’s vote in parliament was so celebrated”.

Also, the Guardian connected Tuesday’s decision directly to the Panama and Paradise Papers.

British tabloid The Daily Mirror attacked one of the few politicians who spoke up on behalf of the overseas territories. It said that Conservative MP Geoffrey Cox “defended tax havens in Parliament after a GBP40,000 Cayman Islands payday” stating the “millionaire MP” had failed to mention in Tuesday’s House of Commons debate that he once represented former Cayman Islands Premier “McKeeva Bush in a corruption trial over his use of government credit cards in casinos.” IT is worth reminding that Mr. Bush was found not guilty in the trial.

News agency Bloomberg welcomed the United Kingdom’s move in a commentary stating it would “let the sunshine in on tax havens” but cautioned that the new transparency would have to be backed by enforcement. It said that corporate anonymity is what had made the British Overseas Territories a huge attraction for overseas money. Open registers “should sow seeds of panic in the offshore financial ecosystem, which has played a central role in recent money laundering and tax evasion scandals.”

The Financial Times analyzed why British Overseas Territories “fear” that the transparency push could “undermine their positions as leading offshore financial centers.”

The potential for legal action by Cayman and Bermuda against an order in council was discussed. However, Tory MP Mr. Mitchell said this was unlikely to be successful. He said that the jurisdictions have to do this by 2020.

US politicians question Trump ties to Panama real estate project

March 4th, 2018

The United States politicians question Trump ties to scandal-struck Panama real estate project. The Panama City project is said to have earned the President between USD 30-50 million.

Two members of Congress have asked the Trump Organisation to reveal if it knew about allegations that real estate agents and investors linked to a project bearing the President’s name in Panama, had ties to money laundering and drugs. Democratic congresswoman Norma Torres and congressman Eliot Engel asked if the company, founded by Donald Trump and run by his sons Eric and Donald Trump Jr since their father entered the White House, was aware of the claims relating to the Trump Ocean Club International Hotel and Tower in Panama City. They asked what due diligence was done on investors and agents involved in the project, which has earned Mr Trump between USD 30 and 50 million for lending his name to it.

The Trump Organisation have not responded to enquiries immediately.

Seychelles to chair AML meeting in August 2018

January 19th, 2018

Seychelles is gearing up to hold this year’s Eastern and Southern Africa Anti-Money Laundering Group meeting in August while also preparing to take up the presidency of the group, the jurisdiction’s finance minister said.

To prepare for the high-level meeting, Seychelles’ Ministry of Finance is holding frequent meetings with all involved parties to ensure the event goes smoothly from start to finish.

The Seychelles’ Minister for Finance, Trade and Economic Planning, Peter Larose, said: “It is important that we plan ahead. I had to call on a number of parties to be able to assist as this is about Seychelles. We need to showcase Seychelles’ style of management, governance system and show the world that we are a capable, responsible and accountable government”. He said that the guests will have the opportunity to witness the competitive edge of Seychelles as part of the global village. Minister also noted that discussions in this year’s meeting will focus on our compliance with international best practices including preventing money-laundering, tax evasion and combatting the financing of terrorism. “It is part and parcel of our commitment to share information within the group and Africa, and with the rest of the world,” said Larose.

The aim of the group is to combat anti-money laundering by implementing recommendations of the Financial Action Task Force on Money Laundering (FATF). The organisation sets standards and promotes effective application of AML legal and regulatory measures.

Is BitCoin a way to launder money or a technology challenge?

December 20th, 2017

As Bitcoin breaks new barriers and faces new restrictions, its role and potential is being discussed all over the world.

Is Bitcoin criminal as a way to launder money and avoid paying taxes? Is it profitable as an apportunity to invest money? Is it just a bubble and will it terminate soon?

Fears over tax evasion and money laundering are pushing the European governments to regulate the Bitcoin. The EU is planning to bring cryptocurrencies into the scope of anti-money laundering and counter-terrorism legislation, meaning that traders will have to reveal their identities.

So far, during the currency’s relatively short life, it has been anonymous, making it attractive for people trading drugs and other illegal items on the so-called ‘dark web’.

The new rules could come into force within the next few months and ensure that the platforms that allow users to trade the currency have to carry out due diligence and even report any transactions that appear suspicious.

It’s a major change and one that could either be seen as a clampdown on something that’s being exploited by criminals or as a stamp of recognition that cryptocurrencies are becoming mainstream, despite the lack of a state that back up its value.

5 steps of AML compliance in 2017

March 3rd, 2017

Sven Stumbauer, Managing Director of AlixPartners, published an article on Five Steps for Anti-money Laundering Compliance in 2017.

According to the article, banks and other financial institutions entered 2017 facing an increasingly daunting framework of anti-money-laundering (AML) laws and regulations.

Having a comprehensive compliance programme in place is currently becoming more and more crucial. So, the following five steps financial institutions can take in 2017 have been outlined:

1. KEEP ABREAST OF CHANGES AND NAVIGATE THEM DILIGENTLY

2. KNOW YOUR CUSTOMER

3. ESTABLISH A CULTURE OF RESPONSIBILITY — FROM THE TOP DOWN

4. CONDUCT A THOROUGH RISK ASSESSMENT AND AN ACCURATE RISK QUANTIFICATION

5. IMPLEMENT A SOPHISTICATED INFORMATION TECHNOLOGY SYSTEM

It has been also mentioned that recent AML enforcement actions pinpoint the danger of failing to recognize potential risk and respond appropriately. While the evolving regulatory landscape poses significant challenges to financial institutions, opportunities might also be present. By performing comprehensive risk assessments and establishing a culture of compliance throughout the organization, a financial institution can position itself to better recognize, identify, and avoid potential risk exposure. So, by full usage of technology solutions, it can develop a better understanding of its underlying customer base and ensure it complies with AML regulations at a lower cost.

Switzerland consults on implementing AEOI Agreements

December 29th, 2016

The Swiss Federal Department of Finance (FDF) has launched a consultation aimed to introduce the automatic exchange of information (AEOI) related to tax issues with a list other countries.

The consultation will run until March 15, 2017.

The list includes the following jurisdictions:
Andorra,
Argentina,
Barbados,
Bermuda,
Brazil,
the British Virgin Islands,
the Cayman Islands,
Chile,
the Faroe Islands,
Greenland,
India,
Israel,
Mauritius,
Mexico,
Monaco,
New Zealand,
San Marino,
the Seychelles,
South Africa, Turks and Caicos,
Uruguay.

The AEOI with the above-mentioned countries is to enter into force on January 1, 2018, with the first exchanges to take place in 2019.

The FDF said that the introduction of the AEOI with these countries confirms Switzerland’s international commitment to implementing the AEOI standard as well as strengthens the competitiveness, credibility, and integrity of Switzerland’s financial center. The implementation of the AEOI will be based on the Multilateral Competent Authority Agreement on the Automatic Exchange of Financial Account Information.

In 2017, Switzerland will introduce the AEOI with EU member states, Australia, Iceland, Norway, Japan, Canada, South Korea, and the British crown dependencies of Jersey, Guernsey, and the Isle of Man. To enter into force, the agreements require parliamentary approval of these countries.