Appendix A: Cases The following cases were identified in the context of a World Bank workshop, as well as from open-source review. Case 1. The Businessperson and His Hidden Untaxed Assets Overview. The promoter of a business group had a combined yearly turnover of approximately $16 million.1 His group consisted of one proprietary concern and three closely held companies operating in the food and fashion sectors. He and his family were suspected of having undisclosed assets abroad not commensurate with their declared income, assets, and profile. Investigation. Undisclosed assets in foreign countries suspected of belonging to the promoter and his family triggered suspicious transaction reports (STRs). The financial intelligence units (FIUs) in those countries spontaneously shared these reports with the FIU in the promoter’s home country, which then shared them with the country’s tax authorities. The tax authorities checked the reports against the promoter’s and family’s declared income and tax payments and found them to be inconsistent. Proceedings against the promoter and family were then launched. The FIU and tax authorities also spontaneously shared these reports with other interested jurisdictions, which began inquiries. The authorities traced 11 safety deposit lockers to the promoter and his family. They contained undisclosed cash and jewelry valued at over $1.8 million.2 In addition, the authorities seized mobile phones and deciphered messages indicating that the promoter’s family were the beneficial owners of undisclosed offshore entities and foreign assets. Outcome. The investigation found that the promoter’s family owned several undisclosed assets, including (1) three offshore entities incorporated in Belize, the British Virgin Islands, and the Seychelles; (2) bank accounts held in Hong Kong SAR, China; Singapore; Switzerland; and the United States with a balance of $10 million and credits arranged through shell companies, including credit cards from the Swiss bank; (3) real estate in London held through an offshore entity and valued at $5 million, in addition to other substantive real estate holdings; (4) insurance policies in Canada; (5) luxury items and other conspicuous expenses in foreign countries with unaccounted sources of income; and (6) various expenses incurred in foreign countries settled by underinvoicing export proceeds and cash remittances through illegal channels.
73
