Today’s Top Stories from GFI: In Mexico, you can pay taxes with art

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In Mexico, you can pay taxes with art
The Washington Post, April 14, 2014

By Gail Sullivan

Antonio “Gritón” Ortiz hasn’t paid taxes to the Mexican government in 28 years. Why? Because he’s an artist.

It all started in 1957, wrote Eva Hershaw of the Atlantic.

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Business firms hope India will confront its corruption crises
ANI, April 15, 2014

The ongoing general elections in India will attract the attention of Western observers to happenings on the subcontinent for several reasons.

The world’s largest democracy represents a tantalizing market for struggling manufacturers based in the United States, the United Kingdom and the European Union.

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Tax Havens

This is the location of tens of billions of dollars that won’t be declared to the IRS today
Quartz, April 15, 2014

By Tim Fernholz

Today is tax day in the United Sates, and most Americans pay their fair share without a peep. Some of the folks that aren’t playing ball keep their money in offshore accounts to dodge taxes and then invest it back in the US, and for the first time we have an estimate for how much: Some $34 billion to $109 billion, at least in 2008.

We’re talking about “round-tripping,” a fairly common technique in the world of tax evasion: Send your money to a shell company overseas in a low-tax country, then reinvest in your home country while avoiding taxes and perhaps garnering special treatment designed to attract foreign investment. It’s frequently cited as a problem for emerging markets: Chinese investors dodge taxes by routing their money through Hong Kong before it returns to the mainland; Russian oligarchs do the same thing in Cyprus. In the US, Caribbean islands are the haven of choice.

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For Those With Offshore Bank Accounts, Today Is Just One More Tax Holiday
Money News, April 15, 2014

By John Morgan

It may be tax day for most Americans, but it’s still a tax holiday for those who use offshore accounts to avoid paying levies on as much as $109 billion annually back to Uncle Sam, according to Quartz.

Many of the monied types keep their dollars in offshore accounts specifically to dodge taxes, and then invest it back into the United States — a practice called “round tripping.” They use shell companies to hide the money, and when they reinvest back into the United States, they often receive special treatment designed to attract foreign investment.

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Syz Urges Swiss to Keep Diverse Wealth Hub in Switzerland
Bloomberg, April 15, 2014

By Giles Broom

Swiss banks seeking to compensate for the loss of financial secrecy by setting up operations abroad risk eroding the multinational appeal they enjoy at home, Banque Syz & Co. SA said.

“Even if it is legitimate that Swiss private banks should establish local operations in some countries — whether their aim is to get as close as possible to their clients or to adapt to the constraints of cross-border activity — it remains essential in our view to keep and develop international wealth management business in Switzerland,” directors said in the Geneva-based bank’s annual report.

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Tax Evasion and Tax Avoidance

U.S. fears Afghan services may be cut as corruption sharply reduces customs taxes
The Washington Times, April 14, 2014

By Guy Taylor

U.S. officials are deeply concerned that corruption is reducing Afghanistan’s collection of customs taxes by as much as half, shorting the country’s primary source of revenue and raising concerns that the government may need to cut critical services in order to close budget shortfalls.

The U.S. Embassy in Kabul has raised warning flags to officials in Washington that the revenue problems are surfacing at an inopportune time, threatening renewed instability just as U.S. troops pull out of the country by year’s end from a decadelong occupation and a new Afghan president takes office.

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N.Y. Regulator Sends Subpoena to Credit Suisse in Tax-Evasion Probe
The Wall Street Journal, April 15, 2014

By Andrew R. Johnson

New York’s top financial regulator has sought numerous documents from Credit Suisse Group AG as it ramps up a continuing tax-evasion probe of the Swiss bank, according to a person familiar with the matter.

The New York Department of Financial Services sent a subpoena last week to Credit Suisse demanding the bank turn over emails, personnel files, travel records, expenses, hard drives and other materials from its New York office, which the agency regulates, this person said.

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Money Laundering

Ex-Bitcoin Foundation’s Shrem Indicted After Plea Talks
Bloomberg News, April 14, 2014

By Patricia Hurtado

Charlie Shrem, a prominent Bitcoin evangelist, was indicted for allegedly trying to launder more than $1 million in the virtual currency in a case tied to the illicit online bazaar Silk Road.

The indictment came after plea bargaining talks with federal prosecutors in Manhattan ended. Shrem, the former vice chairman of the Bitcoin Foundation, and Robert Faiella, who the U.S. said operated an underground Bitcoin exchange called “BTCKing,” are accused of engaging in a scheme to sell Bitcoins to users of Silk Road for illegal purchases.

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SEC’s Conflict Minerals Rule, Bitcoin, Venezuela: Compliance
Bloomberg News, April 15, 2014

By Ellen Rosen

A U.S. Securities and Exchange Commission rule requiring companies to disclose whether any “conflict minerals” are used in their products violates the free-speech rights of manufacturers, an appeals court held.

The rule was part of the 2010 Dodd-Frank Act overhauling regulations of securities markets and applied to certain minerals, including gold, tin, tungsten and tantalum, mined in Democratic Republic of the Congo and neighboring countries. It was intended to help ensure that use of the minerals didn’t benefit armed groups responsible for violence in the region.

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Mexico Pledges Own Anti-Money Laundering List
Associated Press, April 14, 2014

By E. Eduardo Castillo

Mexico has announced plans to fight money laundering by using “kingpin” lists like those issued by the United States, although unlike the public U.S. list, Mexico will make its registry confidential, a Mexican official saidMonday.

Alberto Elias Beltran, the official in charge of implementing a new money laundering law at the Finance Department, said the list will be made available only to authorities, anyone accused of money laundering and financial institutions.

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Global Financial Integrity (GFI) promotes national and multilateral policies, safeguards, and agreements aimed at curtailing the cross-border flow of illegal money. In putting forward solutions, facilitating strategic partnerships, and conducting groundbreaking research, GFI is leading the way in efforts to curtail illicit financial flows and enhance global development and security.

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