Ethics and governance in the European Financial centers

A few days ago, citing $100 billion in revenue drained from the U.S. Treasury at the expense of honest, hardworking American families who pay their fair share, Sen. Carl Levin, D-Mich., Sen. Norm Coleman, R-Minn., and Sen. Barack Obama, D-Ill., introduced comprehensive legislation to stop offshore tax haven and tax shelter abuses.
For more than four years, Levin and Coleman, the Chairman and senior Republican of the Permanent Subcommittee on Investigations, have led an in-depth Subcommittee investigation into offshore tax havens, abusive tax shelters, and the professionals who design, market, and implement these tax dodges.
A report was published in August 2006 (see article).

The bill would

bill would:

ESTABLISH PRESUMPTIONS TO COMBAT OFFSHORE SECRECY by allowing U.S. tax and securities law enforcement to presume that non-publicly traded, offshore corporations and trusts are controlled by the U.S. taxpayers who formed them or sent them assets, unless the taxpayer proves otherwise;

IMPOSE TOUGHER REQUIREMENTS ON U.S. TAXPAYERS USING OFFSHORE SECRECY JURISDICTIONS by listing 34 jurisdictions which have already been named in IRS court filings as probable locations for U.S. tax evasion;

AUTHORIZE SPECIAL MEASURES TO STOP OFFSHORE TAX ABUSES by giving Treasury authority to take special measures against foreign jurisdictions and financial institutions that impede U.S. tax enforcement;

STRENGTHEN DETECTION OF OFFSHORE ACTIVITIES by requiring U.S. financial institutions that open accounts for foreign entities controlled by U.S. clients, open accounts in offshore secrecy jurisdictions for U.S. clients, or establish entities in offshore secrecy jurisdictions for U.S. clients, to report such actions to the IRS;

CLOSE OFFSHORE TRUST LOOPHOLES by taxing offshore trust income used to buy real estate, artwork and jewelry for U.S. persons, and treating as trust beneficiaries those persons who actually receive offshore trust assets;

STRENGTHEN PENALTIES on tax shelter promoters by increasing the maximum fine to 150% of their ill-gotten gains, and on corporate insiders who hide offshore stock holdings by increasing the maximum fine on them to $1 million per violation of U.S. securities laws;

STOP TAX SHELTER PATENTS by prohibiting the U.S. Patent and Trademark Office from issuing patents for “inventions designed to minimize, avoid, defer, or otherwise affect liability for Federal, State, local, or foreign tax”; and

REQUIRE HEDGE FUNDS AND COMPANY FORMATION AGENTS TO KNOW THEIR OFFSHORE CLIENTS by requiring them to establish anti-money laundering programs like other U.S. financial institutions, under regulations to be issued by the Treasury Department.

An initial list of 34 Offshore Secrecy Jurisdictions was established, taken from IRS court filings identifying them as probable locations for U.S. tax evasion:
Anguilla
Antigua and Barbuda
Aruba
Bahamas
Barbados
Belize
Bermuda
British Virgin
Islands
Cayman Islands
Cook Islands
Costa Rica
Cyprus
Dominica
Gibraltar
Grenada
Guernsey/Sark/
Alderney
Hong Kong
Isle of Man
Jersey
Latvia Lichtenstein
Luxembourg
Malta
Nauru
Netherlands
Antilles
Panama
Samoa
St. Kitts and
Nevis
St. Lucia
St. Vincent and
the Grenadines
Singapore
Switzerland
Turks and Caicos
Vanuatu

Treasury Secretary will be responsible for adding or subtracting from the list to determine the final list of jurisdictions with secrecy laws or practices that unreasonably restrict U.S. tax authorities from obtaining needed information, unless the jurisdiction has information exchange practices that effectively overcome those secrecy barriers.

See press release dated February 17, 2007

Summary of the Levin-Coleman-Obama Stop Tax Haven Abuse Act

Full text of the Bill

A very interesting conference about links between money laundering and crime took place on Friday 2nd February at the Law Courts of Monaco, before an audience of jurists and financial professionals. It was led by Gilles Duteil, PhD in Management Science, a member of the European research group on financial crime and organised crime and a legal expert at the Court of Appeal in Aix-en-Provence.
As Philippe Narmino, the Director of Judicial Services pointed out to introduce the conference, the Principality of Monaco was welcoming Gilles Duteil within the context of the strategy to combat economic and organised crime.
Gilles Duteil concluded his talk by stating that, despite of the will of the international community to seek to stop the progression of organised trans-national crime, the methods implemented up until now remain insufficient considering the amplitude of the phenomenon.

See conference (in French)

Strasbourg, 21-23 February 2007

The Financial Action Task Force (FATF) and the Council of Europe Committee of Experts on the Evaluation of Anti-Money Laundering Measures (MONEYVAL) will, for the first time, hold a joint plenary meeting aimed at strengthening international co-operation to combat money laundering and terrorist financing.

The Plenary will study the FATF’s mutual evaluation of Turkey’s anti-money laundering laws and their enforcement, MONEYVAL’s 3rd round mutual evaluation report on Georgia and the MONEYVAL progress report on Cyprus.

Participants will also discuss the abuse of Value Added Tax systems for money laundering and money-laundering in South America