Saturday, July 16, 2016

Fears grow over Scottish firms used for money-laundering in former Soviet Union

William H. McNeill has passed away, author of The Rise of the West (NYT)

Chilcot: A Grand and Disastrous Deceit London Review of Books 
News release: “Today, the House Permanent Select Committee on Intelligence (HPSCI), under the direction of Chairman Devin Nunes (R-CA) and Ranking Member Adam Schiff (D-CA), approved publication of a newly declassified section of the 2002 Joint Congressional Inquiry into Intelligence Community Activities Before and After the Terrorist Attacks of September 11, 2001.   Following a declassification review, the Obama Administration decided to declassify the Joint Inquiry’s only wholly classified section, commonly referred to as the “28 pages.” The Administration then sent this document, with redactions to protect sources and methods, to congressional leadership. HPSCI has posted the document on its website

Arthur J. Cockfield (Queen's University), Big Data and Tax Haven Secrecy, 18 Fla. Tax Rev. 483 (2016):
While there is now a significant literature in law, politics, economics, and other disciplines that examines tax havens, there is little information on what tax haven intermediaries — so-called offshore service providers — actually do to facilitate offshore evasion, international money laundering and the financing of global terrorism. To provide insight into this secret world of tax havens, this Article relies on the author’s study of big data derived from the financial data leak obtained by the International Consortium for Investigative Journalists (ICIJ).

BrexitWall Street Journal editorial, Europe’s Tax Punishers:
What most frightens European leaders about Brexit? Perhaps it is that Britain might make a success of its departure from the European Union. Witness the furious backlash against proposals to improve Britain’s attractiveness to foreign investors.

New warnings have been sounded that off-the-shelf Scottish firms are being used for money-laundering and tax evasion in the former Soviet Union.

Concerns have been growing for more than a year over controversial limited partnerships - a unique Scottish corporate structure used in the elaborate looting of $1bn from Moldovan banks in 2014.

At least a dozen agencies in Latvia, Ukraine and Russia are selling Scottish limited partnerships (SLPs) along with Certificates of Good Standing, essentially references from Britain's Companies House confirming that the SLPs are bona fide. Such papers are then used to secure bank accounts in, say, Riga, Latvia, or Nicosia, Cyprus.

Russian-language adverts seen by The Herald show such certificates being offered for a price of 350 euros - on top of one-off payments of 1700 euros for an off-the-shelf SLP, typically registered in a virtual office or private flat somewhere in Scotland.

Green MSP Andy Wightman has campaigned for reform of SLPs. He said: "These revelations are further proof that Scottish Limited Partnerships are now the vehicle of choice for a growing number of criminal enterprises.

"The ease with which they can be registered and exploited for nefarious purposes such as money-laundering emphasises how urgently the Scottish and UK governments should be dealing with this issue."
Crucially, the use of an SLP and a bank account in an EU country allows former Soviet "investors" the ability to bypass so-called blacklisted tax havens. Several former USSR states have banned direct contact with offshore zones. However, an SLP enables them to deal indirectly with jurisdictions such as Belize and Panama. That is because SLPs while registered in Scotland are often owned by "members", or partners, in the Caribbean. So the SLP is used to provide a financial bridge between the former Soviet Union and tax havens by, nominally, provided a corporate based in the respectable European Union jurisdiction. That SLP then opens doors to a bank account in another EU jurisdiction. However, the SLP does not need to publish financial accounts if it does not business in Scotland, meaning it effectively enjoys the secrecy and tax advantages of its offshore parent companies.
Now it has emerged that such shell firms - advertised as "Scottish zero-tax offshore companies" - are being marketed across the European Union complete with official UK Government documentation that enables their owners to open bank accounts.