Archive for February, 2008

Liechtenstein-Germany tax scandal is spreading across Europe

Thursday, February 28th, 2008

The essence of the scandal was the following – Liechtenstein’s LGT Group acknowledged that the German secret services obtained LGT Group’s client information. The secret data was revealed by a former employee of the bank, who had stolen it. According to Liechtenstein’s LGT Group, the client information that was illegally disclosed to the German authorities is limited to the client data stolen from LGT Treuhand in 2002.

LGT alleged that a former employee who was the informant was Liechtenstein citizen Heinrich Kieber. He worked for the bank since 1999. Kieber was the subject of an international arrest warrant issued by Spanish authorities over a real estate fraud case in 1997. The bank alleged that Kieber, who was sentenced in Liechtenstein to a fine of CHF 600 000 in October 2001 and left Liechtenstein in November 2002, prior leaving the country stole client data from LGT Group and copied it onto 4 DVDs.

According to Germany, to get the data on holders of accounts with LGT in Liechtenstein, the investigators had paid an informant up to EUR 5 million.

However, a recent tax scandal involving Liechtenstein and Germany has been important across Europe as investigators from the United Kingdom to Scandinavia reportedly tried to get to know the details pointing to widespread tax evasion.

According to Financial Times, the UK authorities have now paid GBP 100 000 pounds for a list of about 100 wealthy Britons who allegedly evaded tax through Liechtenstein. The obtained information could help the Authorities recover GBP 100 million.

Accordin go Germany’s Handelsblatt daily, Finland, Sweden and Norway also got interested in the list of clients of LGT Bank.

The bank said in a statement that apparently, the stolen information has been illegally disclosed, directly or indirectly, to other authorities, and considered such methods to be extremely offensive. According to the bank,
the data regards approximately 1 400 client relationships, and the largest number is resident in Germany –  approximately 600.

As to the informant, he is considered to have been given a new identity to protect him from from those whom he had exposed as hiding money in Liechtenstein’s tax haven. Some claim he has left Europe to start his life anew in Australia.

Middle Eastern Bank speaks about AML

Sunday, February 24th, 2008

Money laundering worldwide is estimated at USD 1.5 trillion. According to Bahrain Tribune, a senior banker said that money laundering is a serious challenge to the financial institutions in the region and it is difficult for them to take all possible measures in order to keep the businesses clean.

Senior executive group corporate governance at al khaliji, Niall Coburn, said that Know Your Customer principle is continueing to be the cornerstone of anti-money laundering. According to him, corporate governance and international best practices are to assist the financial institutions with developing and advancing areas of businesses. He said that al khaliji is a next generation bank that is implementing international best practice standards to prevent itself from dirty money issues.

Mr. Coburn said that “As part of implementing this goal by adopting international best practice, al khaliji is one of the endorsement partners of Complinet 2nd GCC regulators’ Summit” that was held in Bahrain on February 19 and 20.

Coburn, as a moderator, explained and discussed the financial reliance on banks for long-term infrastructure development and the pressure to expand and consolidate. He also discussed such issues as the growth of Islamic Banking and compliance and corporate standards.

Canada expands regulation on anti-money laundering and anti-terrorist financing

Wednesday, February 20th, 2008

On February 14, 2008, the Canada’s federal government announced the final regulations in its ongoing efforts to make Canada an unwelcome place for money laundering and terrorism financing were published.

Canada’s Finance Minister Jim Flaherty said that the country is ready to go to great lengths in order to strengthen its regime in line with international standards, and that it will continue fighting for being a world leader in this regard.

It is worth noting that new regulations cover real estate developers. In accordance with the regulations, real estate developers will have to observe the requirements of client identification, record-keeping and transaction-reporting under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. Also, casinos be required to report to the Financial Transactions and Reports Analysis Centre of Canada any large disbursements as well as to keep records on of these transactions.

The regulations were published in the Canada Gazette today, on February 20.Â

US Securities and Exchange Commission publishes AML Source Tool

Saturday, February 16th, 2008

On January 1, 2008, US Securities and Exchange Commission published Anti-Money Laundering (AML) Source Tool, which represents a research guide. The guide compiles key AML laws, rules, and guidance that are applicable to broker-dealers.

As far as there is a great variety of related anti-money laundering guidance materials that assist broker-dealers, AML Source Tool summarizes and points out key anti-money laundering compliance materials and provides related source information.

The guide prepared by staff in the Office of Compliance Inspections and Examinations (OCIE), Securities and Exchange Commission includes the following topics:
– the Bank Secrecy Act;
– the USA PATRIOT Act;
– AML compliance programs;
– customer identification programs;
– Correspondent Accounts: prohibition on Foreign Shell Banks and Due Diligence Programs;
– Due Diligence programs for Private Banking Accounts;
– suspicious activity monitoring and reporting;
– other BSA reports;
– records of funds transfers;
– information sharing with law enforcement and financial institutions;
– special measures imposed by the Secretary of the Treasury;
– Office of Foreign Asset Control (OFAC) Sanctions Programs and other lists;
– selected additional AML resources;
– useful contact information.

It goes without saying that anti-money laundering regulations, rules and orders are subject to change and often they can change rapidly. Therefore, it is to be taken into account that the information summarized in the compilation is current as of January 1, 2008.

3rd EU Money Laundering Directive brings changes. Part 2

Tuesday, February 12th, 2008

It has already been discussed that the Third EU Money Laundering Directive  effective from December 15, 2007 brought some essential changes. Now, firms need to have a risk assessment in place, to conduct their client due diligence on the basis of this risk assessment, and to monitor their clients – both new and existing.

In accordance with the Third EU Money Laundering Directive, monitoring existing clients is a continuous requirement for firms. However, it should be noted that the new regulation does not require immediate request of identification information from firms’ well-established clients. Well-known clients are to submit only limited extra evidence of their identity, which is permitted in copies of some bank correspondence or copies of a tax return.

It is worth noting that anonymous accounts and anonymous passbooks will no loger be allowed to be kept. The owners or beneficiaries of existing anonymous accounts may become the subject od customer due diligence.

As regards record keeping, copies or references of evidence are to be kept for 5 years after the end of the relationship. Also, there must be systems for full and rapid response to enquiries for authorities like the Financial Intelligence Unit (FIU).

3rd EU Money Laundering Directive brings changes. Part 1

Friday, February 8th, 2008

It has already been mentioned previously that recently the Third EU Money Laundering Directive was implemented and due to implementation deadline for the Third EU Money Laundering Directive in December, European companies had to to speed on anti-money laundering issues and best practices quickly.

The Directive became operative on December 15, 2007. There were firms that already acted according to the current anti-money laundering regulations, so, the new guidelines did not entail any change for them. However, many firms had to adopt some changes.

From December 15, firms need to have a risk assessment in place, to conduct their client due diligence on the basis of this risk assessment, and to monitor their clients, both new and existing ones.

As regads due diligence, in accordance with the new regulations, simplified customer due diligence measures are permitted only for certain clients. But customer due diligence is a must when establishing a business relationship, carrying out transaction of EUR 15 000 or more, and, of course, in case of suspecting money laundering or terrorist financing.

For all higher risk clients, enhanced due diligence must be applied. Hogher risk client category includes public officials from outside the EU, clients not met physically and politically exposed persons (PEPs).

ACAMS Survey on salaries in emerging Anti-Money Laundering and Counter-Terror Financing profession

Monday, February 4th, 2008

According to the results of 1st Global Salary Survey of AML/CFT Professionals released by the Association of Certified Anti-Money Laundering Specialists (ACAMS) in December, 2007, senior European anti-money laundering executives earn much more than their counterparts in the United States and around the world.

A groundbreaking new survey conducted by ACAMS for the 1st time showed the compensation levels for private and public sector employees in the emerging industry of fighting money laundering and combating terrorist financing. This is a relatively new industry that is rapidly growing all around the world. The survey’s findings help people understand this increasingly important profession.

Executive Director of ACAMS, Gregory Calpakis, said that an unexpected result from the survey was that despite the fact that the US is the world’s leader in anti-money laundering penalties and enforcement actions, European professionals of this industry have much higher salary packages, especially those at the top ranks of the organizations.

Also, the findings reveal the premium placed on experience and training in the world. According to Calpakis, Europe has the highest comparative pay levels, however compensation rates all over the world were high for those with more experience on the job, even in traditionally lower-paying regions like Central and South America.

The survey is important as it for the first time underscores the high demand for anti-money laundering professionals all over the world.