Archive for May, 2018

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

Wednesday, 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

Thursday, 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

Friday, 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.