News MONEY LAUNDERING
RUSSIA
© Gettyimages/iStockphoto
The Financial Action Task Force (FATF) has published a ‘Report on the State of Effectiveness and Compliance with the FATF Standards’. This is the first public report of its kind and outlines results from the 4th Round of Mutual Evaluations, which assessed the strengths and weaknesses of countries’ frameworks to combat money laundering and the financing of terrorism and proliferation. Overall, the report finds that countries have made huge progress in improving technical compliance by establishing and enacting a broad range of laws and regulations to better tackle money laundering, terrorist and proliferation financing. This has created
a firm legislative basis for national authorities to ‘follow the money’ that fuels crime and terrorism. In terms of laws and regulations, 76% of countries have now satisfactorily implemented the FATF’s 40 Recommendations. This is a significant improvement in technical compliance, which stood at just 36% in 2012, demonstrating the positive impact of the FATF Mutual Evaluation and Follow-up processes. However, many countries still face substantial challenges in taking effective action commensurate to the risks they face. This includes difficulties in investigating and prosecuting high-profile cross-border cases and preventing anonymous shell companies and trusts being used for illicit purposes. FATF is an independent intergovernmental body that develops and promotes policies to protect the global financial system against money laundering, terrorist financing and the financing of proliferation of weapons of mass destruction. The FATF Recommendations are recognised as the global anti-money laundering and counter-terrorist financing standard.
Ban on services exports to Russia © Gettyimages/iStockphoto
Significant rise in international money laundering compliance
Foreign Secretary Liz Truss has announced a ban on services exports to Russia, cutting them off from doing business with UK sectors that are critical to the Russian economy. The new measures will mean Russia’s businesses can no longer benefit from the UK’s world class accountancy, management consultancy and PR services, which account for 10% of Russian imports in these sectors. Russia is heavily reliant on Western services companies for the production and export of manufactured goods, and these measures will further ratchet up economic pressure on Putin’s siege economy. Foreign Secretary Liz Truss said: ‘Doing business with Putin’s regime is morally bankrupt and helps fund a war machine that is causing untold suffering across Ukraine. Cutting Russia’s access to British services will put more pressure on the Kremlin and ultimately help ensure Putin fails in Ukraine.’
OFFSHORE ASSETS
Huge spike in UK taxpayers admitting unpaid tax on offshore income The number of wealthy UK taxpayers admitting to unpaid tax on offshore assets has jumped 35% from 3,301 to 4,443 in the last year, says multinational law firm Pinsent Masons. These figures represent the number of declarations made to the Worldwide Disclosure Facility, a system by which taxpayers owing tax to HMRC on offshore income can come forward and confess. This allows taxpayers to potentially receive reduced penalties. Provided that an accurate and complete disclosure is made, the risk of criminal AIAWORLDWIDE.COM | ISSUE 123
prosecution is also significantly reduced. HMRC reserves criminal investigations for where it needs to send a strong deterrent message or where the taxpayer’s conduct is such that only a criminal sanction is appropriate. Pinsent Masons says the increase in individuals admitting to unpaid tax on offshore assets is likely to be due to a HMRC campaign warning taxpayers that it has received information from tax authorities abroad. HMRC has sent out letters in the last 12 months asking taxpayers to sign a declaration asserting
they do not owe any tax from offshore sources. HMRC now receives information on taxpayers’ offshore assets from tax authorities abroad through the Common Reporting Standard. Information shared with HMRC includes taxpayers’ names, addresses and the amount received in offshore income. Over 100 countries and territories participate in the Common Reporting Standard, including historically popular tax havens such as Switzerland, Bermuda, the British Virgin Islands and the Cayman Islands.
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