Dawn of more regulated world, after London summit

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As the sun rose over London on Friday, where the last remnants of the previous day’s anti-tax haven “tax haven beach” , pictured, were being cleared away from Trafalgar Square, the world’s financial services industry awoke to face a significantly more regulated world.

As reported, new measures unveiled in London on Thursday during what was billed as the world’s first-ever global Anti-Corruption Summit will see, among other things, new laws that will hold banks and other multi-national entities doing business in Britain “criminally responsible” for failing to spot and prevent any kind of economic crime, including tax evasion and money laundering.

The beneficial owners of all foreign companies that own UK properties also will now have to be revealed, including those that already own it; and any companies interested in applying for a UK Government contract also will be expected to provide this information.

In addition, some 40 countries, including a number of British Overseas Territories and Crown Dependencies, agreed, at least in principle, to automatically share beneficial ownership information, although not all agree on the extent to which they are happy to have this information made available to the public or any other non-governmental/non-law enforcement entities.

The UK, though, has vowed to launch its own fully public register of true company ownership next month – “the first G20 country to do so”, according to the Government.

Also unveiled on Thursday was what is being called an “International Anti-Corruption Co-ordination Centre”, to be based in London and designed to help police and prosecutors work together to do just that.

A new “Global Forum for Asset Recovery” was also outlined, with the aim of enabling governments and law enforcement agencies from different countries to seize stolen assets and return them to the countries from which they were taken.

Some 22 countries were said to have agreed on new asset recovery legislation, while 14 committed to strengthening their protections for whistle-blowers, according to summary of the summit’s key agreements posted on the UK government’s website.

Eleven countries said they will “review the penalties for companies that fail to prevent tax evasion”, the summary said, while in the UK, a consultation is planned to consider extending the criminal offence of tax evasion to include “other economic crimes such as fraud and money laundering”.

Another UK consultation is to look at so-called Unexplained Wealth Orders, with the intention of “reversing the burden of proof, so if someone is suspected of corruption, the onus is on them to prove that they acquired their wealth legitimately”.

Thursday’s Anti-Corruption Summit had been called by UK prime minister David Cameron in the immediate aftermath of the leak of some 11.5 million confidential documents by a Panamanian law firm, in order to bring together leaders from a range of countries, including – as Cameron was overheard on Wednesday to have pointed out to the Queen, in remarks for which he was subsequently criticised – representatives from “fantastically corrupt” Nigeria.

Politicians from more than 40 countries, along with World Bank and IMF representatives, attended the conference.

As reported, the US Department of the Treasury last week unveiled a package of new measures, including requiring companies to register their beneficial ownership information, that it said were aimed at countering money-laundering, corruption and tax evasion, after months of criticism over America’s growing status as a defacto “tax haven”.

Trafalgar Square ‘beach’

Many Londoners who initially had managed not to be aware of the tax haven summit taking place in their city on Friday soon found out about it by the sight of some 50 volunteers, who dressed up in business suits and bowler hats to sip cocktails and enjoy ice creams in an artificial beach created for the day in Trafalgar Square.

The event, which coincided with a cloudless sky and unusually tropical temperatures for London, had been organised by Oxfam, Action Aid and Christian Aid, in order to call attention to their calls for a global clampdown on tax evasion.

On Friday, Oxfam issued a statement in which it concurred with some financial services industry experts in expressing scepticism that the proposed anti-corruption measures announced the day before would in fact put an end to “tax cheats”.


Oxfam said it “welcomed” such measures as “commitments to set up national registries of the owners of shell companies… and to exchange this information”.

However, it noted, “unless all countries, including tax havens, introduce the same standards on transparency, tax dodgers will always find somewhere to hide their money”.

An executive with LexisNexis Risk Solutions, which monitors banks’ anti-money-laundering efforts and other aspects of regulatory compliance, noted that any effort to “sustainably fight financial crime” more than is currently being done would require “greater collaboration between banks, law enforcement and government bodies”.

“As such, recent plans to establish new laws to force suspected money launderers to declare their wealth by imposing Unexplained Wealth Orders is a step in the right direction,” added Dean Curtis,UK managing director of LexisNexis RS.

He added: “In addition, there is an urgent need to implement ultimate beneficial ownership [registration] across the world, whereby individuals who ultimately own a corporate entity, property or control customer transactions are identified and closely monitored.

“The creation of central registries by country will help to considerably enhance international transparency.”

Curtis noted that multi-million-dollar fines for failing to detect money laundering operations “are just the tip of the iceberg for banks” when it comes to how much they are already spending on their anti-money laundering efforts.

“In recent years, AML regulations have placed immense operational pressure on banks when fighting financial crime,” he added, citing LexisNexis research that’s found some of the UK’s largest banks “are spending as much as US$1bn each year on AML compliance”.