Today’s Top Stories from GFI – Sun and Shadows: How an Island Paradise Became a Haven for Dirty Money

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Press Release: In-Depth Probe into Oil Smuggling Sought
Republic of the Philippines House of Congress, June 8, 2014

By Dionisio P. Tubianosa

Kabataan Party-list Rep. Terry Ridon has called for an inquiry into the rampant oil smuggling and widespread black market activity in the country.

He formally filed House Resolution 1164 “urging the Committee on Ways and Means to conduct an in-depth investigation, in aid of legislation, on the rampant petroleum smuggling in the country, particularly in our seas and major ports, and inquiry on the status of technical smuggling cases filed by different government instrumentalities against erring oil companies in the past years.”

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Hidden Assets Seen Worth $2 Trillion Targeted by India
Bloomberg View, June 9, 2014

By Anto Antony and Bhuma Shrivastava

India’s new Prime Minister Narendra Modi didn’t waste much time: Among his first acts on his first day in office was to make it a priority to recover billions of dollars stashed overseas to avoid taxes.

Within 24 hours of his May 26 inauguration, Modi created an investigative team of former judges and current regulators to find the concealed assets, known as black money, and bring them back. At stake is what’s estimated to be as much as $2 trillion, more than India’s annual gross domestic product.

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Facilitating Reverse Flow of Money Stashed Abroad
The Financial Express, June 8, 2014

By Maswood Alam Khan

With huge wealth accumulated through corruption or illegal means, hordes of black (or undisclosed)-money-holders seem to be busy moving their riches out to safer havens. With leadership crises fraying the fabrics of our society, those who are honest and eager to lead a peaceful life are also selling their properties and trying to migrate to a safer country, moving their cash and savings out from Bangladesh. In the process, siphoning money off out of the country may now have turned to be a roaring business.

Abnormal jump of import items, which enjoyed low or zero import duty, indicates a significant amount of capital flight took place in the first nine months of the current fiscal year. As reported in the media, this apprehension was expressed by Mustafizur Rahman, Executive Director of Centre for Policy Dialogue (CPD), a civil society think-tank, while he was presenting year-wise comparative analysis of such import items at a recent press briefing in Dhaka.

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Muhith: No more chance to whiten black money
The Dhaka Tribune, June 7, 2014

By Syed Samiul Basher Anik

Finance Minister AMA Muhith has brushed aside any possibility of accommodating a provision for whitening black money in the budget for 2014-15 before its passage.

Whitened money did not have that much impact on the economy as only a little amount, Tk340 crore, was whitened in FY2012-13, he told a post-budget press conference in the capital yesterday.

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Tax Havens

Sun and Shadows: How an Island Paradise Became a Haven for Dirty Money
ICIJ, June 9, 2014

By Matthew Shaer, Michael Hudson and Margot Williams

Seychelles, a thousand miles from anywhere, is an offshore magnet for money launderers and tax dodgers. A look at this corruption-haunted archipelago shows how the offshore secrecy system has grown — and where it’s going.

In the fall of 2012, two strangers from Africa showed up in Seychelles, an emerald-green archipelago in the Indian Ocean nearly a thousand miles east of Somalia. Unlike Prince William and Kate Middleton and other A-list celebrities who favor Seychelles as a getaway, these visitors didn’t come to enjoy the islands’ natural beauty and luxury accommodations. They were there, they said, to conduct business in Seychelles’ bustling offshore financial center.

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Britain becomes haven for U.S. companies keen to cut tax bills
Reuters, June 9, 2014

Nothing about the narrow cream-coloured lobby at 160 Aldersgate Street in the City of London financial district gives a hint of its role at the centre of the offshore oil industry.

That’s because the building is occupied by a law firm. Yet, on paper at least, it is also home to Rowan Companies, one of the largest operators of drilling rigs in the world.

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The Price Of Fighting Corruption In China
Forbes, June 5, 2014

By Jack Perkowski

Ever since President Xi Jinping announced his anti-corruption drive in 2013, there has been a steady flow of anecdotal evidence suggesting that fighting corruption in China is having a very real economic impact on the country. Everyone in China was somewhat amused to hear earlier this year that luxury hotels were actively trying to downgrade their ratings and lose at least one of their stars due to fears that they could no longer make money as five-star hotels. No one saw that one coming!

Beyond such unintended consequences, more predictable changes in behavior have occurred. For example, lunches and dinners hosted by local government officials have become increasingly infrequent — even when they involve groups that promise to bring investment to the local economy — and when they do occur, they are far less lavish than in the past. One senior manager of a large state-owned company recently took me to lunch in the company’s cafeteria, all the time making a point to tell me that our lunch cost the company less than 15 yuan. Such frugality is now being encouraged by the Chinese government, and expensive meals are frowned upon. As a result, nearly everyone in Beijing knows of at least one high end restaurant that has closed — there are several casualties near our office in Sanlitun.

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Ex-Hong Kong official took secret payments from tycoons, trial told
Reuters, June 5, 2014

By James Pomfret and Yimou Lee

Prosecutors in Hong Kong’s largest corruption trial opened their case on Thursday with details of what they described as “concealed and disguised” payments made to a former top civil servant by property tycoons seeking government favor.

Thomas and Raymond Kwok, the billionaire co-chairmen of Asia’s largest developer, Sun Hung Kai Properties Ltd (0016.HK), appeared in court with co-accused Rafael Hui, Hong Kong’s former chief secretary.

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Money Laundering

Report: Bank Leumi to pay NIS 1 billion fine to US over tax evasion suspicion
The Jerusalem Post, June 6, 2014

Bank Leumi, one of Israel’s largest financial institutions, will pay a billion-shekel fine to US authorities for suspected tax evasion, Channel 2 reported on Sunday.

According to a US-led investigation, the bank’s American branches made illegal transactions to clients’ accounts while evading taxes, a violation of recent laws that passed in the US to curb the money-laundering phenomenon.

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TTSEC, FIU join forces against money laundering
Trinidad and Tobago Guardian, June 9, 2014

The three regulators in the financial sector, the T&T Securities and Exchange Commission (TTSEC), Financial Intelligence Unit (FIU) and the Central Bank have formalised an agreement on co-operation and information sharing. The aim is for greater co-ordination and co-operation to facilitate the investigation and prosecution of persons suspected of money laundering and terrorist financing as well as related criminal activity.

Issues which gave rise to the agreement included the absence of a formalised process for sharing information; the appearance of arbitrary and unauthorised requests for information; and concern surrounding confidential information and resulting liability.

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Online insurance being used for money laundering in China
Want China Times, June 9, 2014

Despite the online insurance market growing at an average 202% a year in China, official regulations governing the sector have yet to be implemented and the sector has become the latest and the most convenient tool for money laundering.

The Sunshine Insurance Group and Anbang Property & Casualty Insurance Company said the China Insurance Regulatory Commission (CIRC) had requested local regulatory bodies to investigate possible incidents of laundering money, reports the Chinese-language Securities Daily.

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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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