Anti Money Laundering Blog

In the past 15 years, money laundering has significantly grown in Mexico. As a result, it reached as much as USD 10 billion in 2010. This was announced by Sen. Carlos Navarrete who was quoting Attorney General’s Office figures.

During the inauguration of the “Seminario Internacional sobre Corrupcion y Lavado de Dinero” (International Seminar on Corruption and Money Laundering) held on February 9, the senator said that money laundering is a problem worsening from day to day as billions of USD have been laundered and injected into Mexico’s formal economy over several years.

He noted: “This problem has disrupted banking institutions, investment firms and businessmen, and I believe it is time for a good law that will allow us to strike a blow at the finances of organized crime groups”.

Lawmakers, other public officials and Mexican and foreign academics took part in this seminar to analyze the legislation submitted to Congress by the Calderon administration in 2010 with a view to fight money laundering.

The Federal Police’s coordinator of operations targeting ill-gotten gains, Jesus Alberto Fernandez Wilburn, said that any new rule should improve access to information between the authorities and other countries.

It should be noted that Mexico is currently conducting 15 open investigations with the US. However, Fernandez said that until the country has adequate mechanisms, there will be no exchange of information between the authorities.

Several Spanish experts were invited to the conference to evaluate efforts to struggle money laundering. University of Salamanca professor Eduardo Fabian Caparros said: “The economies of important countries have allowed themselves to be dazzled by the short-term advantages of asset laundering and have installed sinister windows to collect the foreign exchange without asking where it comes from”.

New penalties for offshore non-compliance have been announced by UK’s HM Revenue & Customs (HMRC). The new penalties come into effect on April 6, 2011 and apply to Income Tax and Capital Gains Tax.

The first Self-Assessment returns affected will be for the 2011-2012 tax year, with paper returns due to be filed by October 31, 2012, and electronic returns by January 31, 2013.

The new legislation can be found in Schedule 10 of Finance Act 2010. Under the new rule, the penalties will be linked to the tax transparency of the jurisdiction in which the income or gain arises. Penalties for failing to declare income or gains arising in another country will be higher where it is harder for HMRC to get information from that jurisdiction.

Three new levels of penalty will be introduced:
-    where the income or gain arises in a territory in ‘Category 1′, the penalty rate will be the same as under existing legislation;
-    where the income or gain arises in a territory in ‘Category 2′, the penalty rate will be 1.5 times that in existing legislation – up to 150% of tax;
-    where the income or gain arises in a territory in ‘Category 3′, the penalty rate will be double that in existing legislation – up to 200% of tax.

In an interview with Cayman’s local television news channel, the chair of Cayman Finance Anthony Travers has called Nicholas Shaxson, the author of a new book on tax havens, an imbecile.

Travers criticized the book called Treasure Islands: Tax Havens and the Men Who Stole the World as well as its author. Shaxson says that his work demonstrates no more than an 11-year-old’s understanding of offshore finance, while Travers suggested that Shaxson’s position came from the politics of envy. He added: “Now the politics of envy are exacerbated by imbeciles who don’t actually understand what’s going on in the Cayman Islands”.

Travers said the opinion that Cayman is a tax haven or a magnet for illicit transactions is no more than fiction. There are places where money laundering or tax evasion are easier, but the Cayman Islands is not such a jurisdiction. He noted: “There are simply jurisdictions where it would be more sensible to perpetuate your fraud or money laundering than the Cayman Islands”.

To respond, Shaxson said that Travers had refused to talk to him when he came to the Cayman Islands and challenged Travers to explain in detail what he does not like about the book.

It was widely discussed in 2006 that a famous Australian actor Paul Hogan had been under investigation for money laundering.

The Australian Crime Commission became suspicious that the star of one of the most successful Australian movies ever was using offshore tax havens in order to conceal his wealth. As a result, the actor was subjected to a 5-year tax investigation which was dropped in November 2010.

Recently, it has been announced that the world-famous Crocodile Dundee is planning to sue the Australian government for more than GBP 50 million (up to USD 80 million) for damaging his reputation in this tax probe.

According to Hogan’s lawyer Andrew Robinson, his client is to sue the Australian government for loss of earnings as ‘his earning potential and reputation has been decimated in the international community and it has had that level of effect on his position”.

The International Monetary Fund (IMF) has published 6 reports that were the result of the evaluations held by the Fund in March and May 2010. These were evaluations on Guernsey’s financial supervision and criminal justice frameworks that concerned anti-money laundering and counter-terrorist financing in the jurisdiction.

In accordance with the reports, Guernsey has financial sector regulation and supervision of a high standard across all sectors. These reports take into consideration Guernsey’s well-positioned basis for an effective Anti-Money Laundering/Combating the Financing of Terrorism regime, with preventative measures in line with the Financial Action Task Force (FATF) Recommendations.

As part of the IMF’s global Financial Stability Assessment Program, the evaluations were produced that assessed the jurisdiction as having a high level of compliance with the international standards. The standards were as follows:
-    the 25 Basel Core Principles for Effective Banking Supervision;
-    -the 28 Insurance Core Principles of the International Association of Insurance Supervisors;
-    the FATF 40 Recommendations on money laundering and 9 Special Recommendations on terrorist financing.

The 6 reports have been welcomed by the Guernsey government and the Financial Services Commission.

Guernsey’s Chief Minister Lyndon Trott said: “The regulatory framework and the Bailiwick’s anti-money laundering and combating the financing of terrorism regime that is now in place have been important factors in both sustaining Guernsey’s economy and developing and maintaining Guernsey’s international reputation as an excellent place to do business. This in turn has been an important driver in the continuing development of Guernsey’s international identity.”

It is worth mentioning that the reports also re-assessed the work of the Financial Investigation Unit (GBA/Police), the Law Officers Chambers and all the member organisations of the AML/CFT Advisory Committee, and reported the achievement of high international standards.

In October 2010, the Financial Action Task Force (FATF) published a report entitled Money Laundering Using New Payment Methods.

This report builds on the 2006 Typologies report on New Payment Methods (NPMs). It should be noted that there has been a significant increase in the number of transactions and the volume of funds moving through new payment methods (NPMs) since 2006. As a result, the number of discovered cases where such payment systems were misused for money laundering (ML) and/or terrorist financing (TF) purposes has gone up.

The report that can be downloaded from the FATF website compares the “potential risks” described in the 2006 report to the “actual risks” based on new case studies and typologies. A number of indicators of suspicious activity are described in the paper to help new payment methods service providers and other financial institutions to detect money laundering/terrorist financing activities. The FATF document describes the challenges faced by national legislators and regulators in these terms.

The Money Laundering Using New Payment Methods report was the result of analysis of questionnaire responses and publications about NPMs. Also, relevant private sector representatives such as NPM service providers (including the Internet payment sector, the mobile payment sector and prepaid card technology providers) made a significant input.

Gibraltar’s Police officers suspect money laundering scheme to be carried out by a British national through Belize-registered company holding a bank account in Gibraltar.

52-year-old Nasser Heikal, a British national born in Lebanon, has been arrested by Royal Gibraltar Police Financial Crime Unit officers because of money laundering suspicion.

Gibraltar’s Police made a statement to announce that this money laundering case is related to the laundering of the proceeds of a ‘boiler room’ operation that had targeted UK victims between November and December 2010.

The financial investigation identified up to GDP 80 000 that have allegedly been laundered by Heikal with the help of a Belize-incorporated company through a bank account in Gibraltar.

Arab governments are getting together with a view to fight terrorist financing by joining forces to struggle money laundering.

Arab interior and justice ministers signed 5 agreements. One of these documents is the agreement aimed to control money laundering. This pact calls on nations to set up their own programs for generating information and monitoring money transfers.

To sign the agreements, the ministers met at the Arab League headquarters on December 21. The accords were signed by all 22 members. While the statement did not name particular terrorist groups, several Arab countries are targets of al-Qaida.

Other agreements signed by ministers deal with organized crime, technical data fraud, counterfeiting, and pornography and sexual exploitation.

An Australian businessman has been sentenced to 8 years and 6 months in jail in the New South Wales Supreme Court. This decision was made after the businessman was convicted of money laundering and tax fraud.

After a 5-week trial which followed investigations into the use of offshore tax structures under Project Wickenby, Michael Milne was found guilty on November 19. He was found guilty of offences related to money laundering and tax evasion. The crime involved the use of an offshore tax haven structure.

The offshore tax haven structure hid assets and income in a complicated series of transactions that involved Swiss and Dutch entities. So, it allowed evading tax payable on a capital gain of more than AUD 7.5 million.

According to Tax Commissioner Michael D’Ascenzo, tax evasion through the use of illegal offshore tax haven schemes is unfair to businessmen and the community who do the right thing. So, the sentencing showed the seriousness of tax evasion. He said that “this result serves as a clear warning to people who use offshore structures to defraud the tax system that they face significant consequences for their actions”.

Mr D’Ascenzo said: “Every defrauded tax dollar means less funding for community services including health, education and other government funded programs. This result serves as a clear warning to participants and promoters of illegal offshore schemes that they face significant and very serious consequences for their actions.”

Project Wickenby is a cooperative partnership between the ATO, Australian Federal Police, Australian Crime Commission, Australian Securities and Investments Commission and the Commonwealth Director of Public Prosecutions, with support from the Australian Transaction Reports and Analysis Centre, the Australian Government Solicitor and the Attorney-General’s Department.

As many governments all over the globe are fighting against money laundering, Uruguay is also planning to make some steps to try to defeat this problem.

The President of Uruguay, Jose Mujica recently announced the intention to loosen the country’s bank secrecy laws, which is a necessary step to run after Uruguayan money launderers both in Uruguay and abroad.

However, President Mujica should expect many people to oppose this move as the additional 12% tax for deposits and investments made abroad is to be introduced.