Implications for financial intermediaries in attacking money laundering prevention through enhancing tax law enforcement
| Pages | 73-75 |
| DOI | https://doi.org/10.1108/13590790310808619 |
| Published date | 01 January 2003 |
| Date | 01 January 2003 |
| Author | Peter Neville |
| Subject Matter | Accounting & finance |
Implications for Financial Intermediaries in Attacking
Money Laundering through Enhancing
Tax Law Enforcement
Peter Neville
The ®ght against money laundering Ð including the
laundering of the proceeds of tax evasion Ð will be
won only if the culture in the ®nancial services indus-
try can be changed. This paper is principally con-
cerned with intermediaries (and has particular
relevance for oshore intermediaries). The changing
scene also has implications for the regimes and the
regulators. A change in culture across the whole
piece is what is needed.
Looking at intermediaries, one of the problems is
that ®rms must get away from the `Maxwell eect'
Ð a fear of the consequences of blowing the whistle
Ð which can lead to apathy or, worse, a deliberate
hiding of the truth. Instead, as Sam Goldwyn said,
`I don't want yes men around me. I want everybody
to tell me the truth Ð even if it costs them their jobs.'
One way Ð and a very important way to change
the culture is Ð as Tony Blair would have had it Ð
to `educate, educate, educate'. The Guernsey Finan-
cial Services Commission is supporting a series of
anti-money laundering workshops covering all the
®nancial services businesses they regulate. Education
is vital.
THE GUERNSEY CONTEXT
Guernsey's ®nancial services industry includes the
whole range of intermediaries: banks, fund managers,
investment advisers, insurance brokers, insurance
managers, insurance companies (which are interme-
diaries in some respects) and ®duciaries Ð which
include company directors, company service provi-
ders and trustees. Very often this last category Ð
®duciaries Ð is the one which concerns people
most. Guernsey, along with a few other jurisdictions,
has taken the bull by the horns and now requires ®du-
ciaries to be licensed by the Financial Services Com-
mission. This means that they will have been vetted
for integrity, ®nancial soundness and competence
Ð and also brought within the regulato ry ambit of
ongoing supervision. There is access to information
on bene®cial ownership, who is actually in control,
on the managers and trustees, and on the bene®ciaries
of trusts.
Although taking action against tax evasion was not
the main driver behind the introduction of ®duciary
regulation, it is mentioned here because it shows how
extending the scope of the regulation helps to avoid
harbouring money launderers and other criminals.
The Guernsey commitment is to be cooperative
and to make sure that the information on criminal
tax evasion is available to other jurisdictions. In
the wider context this is a distinction that needs to
be recognised. The issue is not whether a jurisdiction
is onshore or oshore but whether or not it is
cooperative.
In the aftermath of the terrible New York and
Washington terrorist attacks, there was bound to be
a drive for greater security and for more information
exchange. There is more checking of identity and of
the sources and destinations of funds. International
cooperation has become more essential. These
events will help change the culture in those jurisdic-
tions which have so far not been cooperative Ð
whether they are oshore or onshore.
In the past ten years, Guernsey has assisted in
around 100 tax evasion investigations, involving 13
countries. In the year 2000 alone, 20 disclosures Ð
to 11 countries Ð were made of the transaction
reports which indicated a suspicion of tax evasion.
To some this may seem a small number but of
course, Guernsey is not a superpower.
Therefore, the implications for intermediaries
operating in Guernsey are that they must be aware
that the Guernsey approach is strongly antipathetic
to secrecy when it comes to money laundering:
Ð Guernsey does not require mutual legal assistance
treaties (MLATs) to be in place before informa-
tion can be passed Ð if a legal gateway exists, it
will be used;
Ð Guernsey has not, to date, required reciprocity to
be a precondition to the giving of assistance;
Ð There is no need for there to be a Guernsey tax
interest in a case before assistance is given;
Page 73
Journal of Financial Crime Ð Vol. 10 No. 1
Journal of Financial Crime
Vol.10, No. 1, 2002, pp. 73 ±75
#HenryStewart Publications
ISSN 1359-0790
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