GFI in the News
GFI Calls on Obama, G8 to Require Public Registries of Corporate Owners, Curtail Illicit Flows
Global Financial Integrity Press Release, June 14, 2013
U.S. President Urged to Join David Cameron’s Call for Public Registries of Beneficial Ownership Information at G8 Summit Next Week
Washington, DC – As G8 leaders prepare to meet Monday and Tuesday in Northern Ireland, Global Financial Integrity (GFI) called on U.S. President Barack Obama to take aggressive action to curtail illicit financial flows and support public disclosure of corporate ownership information as essential to reducing crime, corruption, tax evasion, and terrorist financing. Under the leadership of British Prime Minister David Cameron, the G8 Summit is expected to focus on curbing abusive tax dodging and corruption.
“President Obama has the opportunity to serve as the lynchpin of a global deal cracking down on the most damaging problem in the international financial system,” said Raymond Baker, President of GFI and a longtime authority on financial crime. “Illicit financial flows drain roughly $1 trillion per year from developing countries. Tax haven secrecy and anonymous shell companies facilitated the illegal outflow of roughly $261 billion from the Greek economy in the lead-up to the European debt crisis, and tax haven abuse is estimated to cost U.S. taxpayers roughly $150 billion per year. Illicit financial flows facilitated by tax haven secrecy and anonymous shell companies are a global epidemic undermining rich and poor nations alike.”
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The transparency summit
The Economist, June 15, 2013
At first blush, David Cameron seems an unlikely foe of tax dodgers and their accomplices. Conservatives are traditionally friendly to the wealthy and to big business, who gain most from fancy financial footwork. The City of London enjoys symbiosis with a cluster of offshore dependencies—including Jersey and the British Virgin Islands (BVI)—which have a reputation for, at best, inviting tax avoidance and, at worst, aiding financial crime.
But as chair of the summit of the G8 (the biggest industrialised countries) being held in Northern Ireland next week, the prime minister will push for global reform of the world economy’s most shadowy corners. He wants to improve tax compliance through the cross-border exchange of information, to improve those data by making companies, trusts and the like show their true owners, and to change outdated rules which multinationals exploit to cut their tax bills.
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Money Laundering
Virtual Currencies Have ‘Nothing to Fear’ From U.S. Government -Regulator
The Wall Street Journal, June 13, 2013
By Jeffrey Sparshott
The United States’ top anti-money-laundering regulator Thursday said her agency isn’t working to clamp down on virtual currencies, though authorities expect exchanges and administrators for digital cash to comply with the same rules that apply to other financial institutions.
The comments may allay some concerns following high-profile moves against exchanges for virtual money. U.S. law enforcement officials last month brought charges against a group of men behind Liberty Reserve, a virtual currency site that allegedly laundered about $6 billion in ill-gotten gains. Separately, the Department of Homeland Security seized an account tied to bitcoin exchange Mt. Gox, alleging the company and a subsidiary were conducting transactions “as part of an unlicensed money service business.”
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Afghanistan Tops Index for Money-Laundering Risk
Corporate Counsel, June 14, 2013
By Catherine Dunn
In a new ranking of money-laundering risk by country, Afghanistan takes the top spot for highest level of risk, while the least-risky country is Norway, according to the Basel AML Index 2013.
The index, produced by Switzerland’s Basel Institute on Governance, measures risk on a scale of 0 to 10 for 149 countries. In addition to Afghanistan, with a score of 8.55, the top five countries posing the highest risk for money laundering and terrorism financing include Iran (8.48), which last year ranked number one for risk, Cambodia (8.35), Tajikistan (8.27), and Iraq (8.17).
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Tax Havens
David Cameron could make Bermuda open up on taxes – if he wanted to
The Guardian (Op-ed), June 14, 2013
By Jack Blum
That Bermuda may jeopardise a major international agreement that’s trying to crack down on tax havens is a bad joke. Consider this from a recent white paper on the future of Britain’s overseas territories: the UK’s parliament has “unlimited power to legislate for all its overseas territories and crown dependencies”.
The unvarnished truth is clear. If David Cameron wanted to, he could force Bermuda to fall into line and simultaneously put Britain’s house in order.
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U.S. Presses Liechtenstein on Tax Havens
The Wall Street Journal, June 14, 2013
By John Letzing
U.S. authorities are pressing ahead with efforts to pry information out of Liechtenstein that could come back to haunt Americans hiding money in tax havens.The Justice Department sought help in April from the Principality of Liechtenstein Tax Authority in gathering a trove of information from firms there that advise clients, according to a letter reviewed by The Wall Street Journal.
A person familiar with the matter said U.S. officials have sent additional letters to Liechtenstein. U.S. officials indicated that they want information about Americans who might have dodged taxes by using Liechtenstein foundations to hold offshore accounts.
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Tax Avoidance and Evasion
G8 to shy away from naming and shaming corporate tax avoiders
Reuters, June 14, 2013
By Tom Bergin
The G8 group of leading economies will shy away from adopting a measure aimed at curbing tax avoidance by highlighting when companies channel profits into tax havens, and will include a watered down alternative, according to a draft statement.
British Prime Minister David Cameron, who is hosting the annual G8 Summit in Northern Ireland next week, has said he will put tax evasion and aggressive avoidance at the heart of the meeting.Tackling corporate tax avoidance has become a political goal internationally following public anger about revelations over the past year that companies like Apple and Google had used structures U.S. and European politicians said were contrived to minimise the amount of taxes paid.
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Automatic Exchange of Information
Mexico Requests To Join Multinational Tax Info Exchange
Tax-News, June 14, 2013
By Mike Godfrey
The Ministry of Finance has disclosed that Mexico has applied, as the first non-European Union country, to join the United Kingdom, France, Germany, Italy and Spain, as they develop the pilot for a new multilateral tax information exchange program based on the United States Foreign Account Tax Compliance Act (FATCA) model.
In a statement, the Ministry said that, through its possible participation, Mexico hopes to continue the “decisive action it has taken in recent years to combat tax evasion and avoidance,” so as to “ensure the proper fulfillment of taxpayer’ obligations and improve our country’s tax revenues.”
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Banking Secrecy
Swiss Government Backs Move Toward Sharing Bank-Account Data
Businessweek, June 14, 2013
By Giles Broom and Catherine Bosley
Switzerland will join the international push against tax dodgers and help develop global standards allowing banks to share customers’ details to combat tax evasion, its finance minister said.
A group of academics and government officials appointed by the finance ministry recommended in a report today that Switzerland start to work immediately on developing global standards for exchanging data within the framework of the Organization for Economic Cooperation and Development.Switzerland is trying to shake off its reputation as a tax haven after amassing $2.2 trillion of assets from wealthy clients living outside the country. It has faced pressure from the European Union to join a system of automatic exchange of bank-account data.
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Drug Money
Afghan Banks Face New Dollar Troubles
The Wall Street Journal, June 13, 2013
By Yarolsav Trofimov
Afghanistan’s fragile banking system is facing more turbulence after the German bank that was the main gateway to foreign transactions decided to sharply restrict its U.S.-dollar business in the country.
At a confidential meeting with Afghan banking executives in the Ritz-Carlton hotel in Dubai in April, Commerzbank said it would shut down U.S.-dollar correspondent relationships with those Afghan banks that don’t open separate correspondent accounts with U.S. banks by June 30, participants said.
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