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Worst fears realised? Jersey shares ‘old’ records of trusts and foundations

Life’s full of surprises, some pleasant, some not so much. Imagine you had undeclared offshore assets when the global financial crisis struck, and you’ve nervously watched the world move towards TJN ‘s proposal for multilateral, automatic information exchange. Until now you’ve probably felt ok, and that you had a choice between two moves. Either you could say ‘Ok, the game’s up – I’ll use an amnesty or some kind of disclosure facility, and go straight’; or you could decide to keep hidden, using the new loopholes that are being actively promoted in Switzerland and elsewhere.

21870055935_0a6dfe5d22_bYou probably weren’t worrying too much about the past though. Information exchange will relate to existing holdings, so you just need to get things lined up before it kicks in (from September 2017 or after). But as India’s Economic Times reports,

“The worst fear of those with secret offshore bank accounts and private trusts is coming true — some tax havens are ready to part with ‘old’ records and even details of trusts and foundations that no longer exist.”

Panama Papers: the role of Western secrecy jurisdictions in looting Africa

November 10, 2016   Africa, AllAfrica, Blog

This blog comes from Johannesburg, South Africa, where investigative journalists from 28 countries are sharing their work at the African Investigative Journalism Conference. One session looked at stories dug out from the Panama Papers leak from offshore law firm Mossack Fonseca and investigations which have revealed a colourful mix of characters involved in looting Africa.

Tax haven Jersey – the North Korea connection

May 2, 2016   Blog, Secrecy
A North Korea Jersey (this is the away strip.)

A North Korea jersey (the away strip.) A propos of nothing but a pun.

Recently, in The Guardian:

“Jersey, for example, offers a stable political and fiscal environment along with strong, internationally recognised regulation and financial expertise. Jersey has no secrecy laws but respects client confidentiality. Furthermore, Jersey is a co-operative jurisdiction which has signed 20 tax information exchange agreements and has been placed on the OECD’s list of jurisdictions – along with the US, UK, France and Germany – “that have substantially implemented internationally agreed tax standards”.

This is just one version of the ‘we are not a tax haven‘ story that all financial centres push out. The greater the appearance of probity, the more ‘investors’ (and hot money) will find it a reassuring place to come to, is the general idea. So, as we’ve noted before, ‘spin’ is terribly important. 

Tax haven USA, after #PanamaPapers

“Unless the United States, and other countries, lead by example in closing some of these loopholes and provisions, then in many cases you can trace what’s taking place but you can’t stop it… There’s always going to be illicit movement of funds around the world, but we shouldn’t make it easy.”

So said President Obama, responding to the #PanamaPapers. Leadership by example is certainly what’s needed – because the United States itself represents the biggest global threat to progress against financial secrecy.

Tax haven USA

In January 2015, we wrote a long piece about the increasing role of the US as a tax haven.  Then in November, we published the latest edition of the Financial Secrecy Index – the global ranking of tax havens. This showed one major mover at the top: the United States, leapfrogging the Cayman Islands and Luxembourg to claim third place behind Switzerland and Hong Kong.

There followed a swathe of leading media pieces making the same point: including The Economist, Bloomberg and just this week The Washington Post – not to mention being promoted by the advisers at Rothschild Trust.

The USA is not the most financially secretive jurisdiction, overall – although some individual states are highly opaque; but the national combination of substantial secrecy, with very large scale, make it one of the biggest contributors to the global problem. Key components of US secrecy are the aggressive competition among states to offer anonymous company ownership services; and the rejection of automatic information exchange between jurisdictions.

Now, public registers of beneficial ownership and automatic information exchange are critical to any serious attempt to end the era of tax havens. [Not coincidentally, these are also two of the three policy measures TJN has long promoted – the other being country-by-country reporting by multinationals.]

A conflicted international watchdog

Sadly, the OECD – which is responsible for the multilateral agreement on information exchange, appears so in thrall to its largest member that it cannot manage the same clarity. The OECD’s latest list shows 55 jurisdictions committing to automatic exchange in 2017; a further 41 to join in 2018; and just four (Bahrain, Nauru, Vanuatu and – yes – Panama) so far unwilling to commit. On this basis, the OECD top brass have been across the #PanamaPapers media calling the country out as ‘the last financial centre that has refused to implement global standards of fiscal transparency’.

But wait: buried in a footnote of the OECD doc is the fact that the United States has not so much held off on committing, but has explicitly stated that it will not cooperate. Instead, it will continue to adopt bilateral intergovernmental agreements to ensure that it receives informational automatically, and in the great majority of cases does not reciprocate.

The case, in tweets:

Where next?

On the immediate horizon, there’s been a good deal of discussion of whether #PanamaPapers will provide major US revelations, which haven’t appeared yet. Some have suggested there’s a big story coming down the line; others, that the prevalence of secrecy on offer in the US means that demand for overseas alternatives such as Panama is limited, so there won’t be anything more to see. We couldn’t possibly comment.

In the somewhat longer term, these are the key questions:

  1. Will the US finally follow its own logic, and commit to develop a public register of beneficial ownership, and to provide tax information automatically to the rest of the world?The last throw of the dice for those committed to financial secrecy is that the US is unable to commit itself to transparent, globally responsible behaviour. That will leave a gaping hole in international arrangements, as well as legitimising exactly the approaches revealed in the Panama Papers.And the US will be unable to shake off the labels of both ‘tax haven’ and indeed ‘hypocrite’, if it continues to demand full tax information from other countries in respect of on any beneficial ownership by American citizens, without providing the same in return.
  2. If not, who will act? Since the OECD seems unlikely to overcome its current inability even to mention US secrecy, will the EU take a stand? To be effective, it seems likely that that would ultimately require making the same threat of withholding taxes, by which the US obtained global automatic information from the rest of the world, to pressure the US itself to cooperate. A 30% rate like the US take with FATCA, say? We made a detailed proposal on this in January.Will the UK be in a position to offer any leadership here? At present, the UK has its own issues to address. The UK’s network of Overseas Territories (such as the British Virgin Islands) and Crown Dependencies (such as Jersey) includes many major players in the Panama documents. If taken together, this network would sit clearly at the top of the Financial Secrecy Index, above even Switzerland. So Her Majesty’s Government will be unable to sustain a claim of leadership on transparency and accountability at its anti-corruption summit in May, if it fails to have its Overseas Territories and Crown Dependencies commit to public registers of beneficial ownership – as the UK, to its credit, has itself just introduced.


HSBC: a very different relocation, tax haven to muckier tax haven

February 17, 2016   Blog, Enablers and intermediaries

We’ve just written about HSBC’s extensive lobbying effort to water down UK banking reforms by pretending it was planning to throw its toys out of the pram relocate its head office from London to Hong Kong if it didn’t get what it wanted. But inside HSBC, a very real relocation is underway.

Via TJN contacts, this email has been sent out:

“We would like to inform you of a planned change in the place of incorporation and headquarters of HSBC Bank Middle East Limited (HBME).

. . . HBME intends to move its place of incorporation and head office to the Dubai International Financial Centre (DIFC), following which it will become lead regulated by the Dubai Financial Services Authority (the Migration).”

This has been flagged previously, but it seems things are now moving.

Anyone who thinks this relocation is going to contribute to the financial or ethical health of this scandal-happy global bank needs to consider this, about the “twisted Switzerland of the Middle East”. 

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