Friday, March 27, 2015

FinCEN Penalizes Colorado Check Casher $75,000 for Lack of AML Controls

FINCENThe Financial Crimes Enforcement Network (FinCEN) assessed a $75,000 civil money penalty against a Colorado money services business (MSB), Aurora Sunmart Inc., and its owner and general manager, Jamal Awad. Since 2008, Aurora willfully violated the Bank Secrecy Act’s (BSA’s) registration, program, and reporting requirements. Mr. Awad, who also served as the MSB’s compliance officer, admitted to willfully participating in these violations.

The Financial Crimes Enforcement Network (FinCEN) today announced the assessment of a $75,000 civil money penalty against a Colorado money services business (MSB), Aurora Sunmart Inc., and its owner and general manager, Jamal Awad. Since 2008, Aurora willfully violated the Bank Secrecy Act’s (BSA’s) registration, program, and reporting requirements. Mr. Awad, who also served as the MSB’s compliance officer, admitted to willfully participating in these violations.

Among other violations, Aurora failed to implement an effective written anti-money laundering (AML) program by failing to implement adequate AML controls, failing to conduct an adequate internal review of its compliance program, and failing to provide pertinent compliance training for staff, all of which are required under the BSA. Aurora’s inadequate AML procedures did not ensure the timely and accurate filing of currency transaction reports (CTRs), which it was required to file within 15 days of any currency transaction exceeding $10,000.

On average, between 2009 and 2012, 49 percent of the CTRs filed by Aurora were filed significantly late and it has not filed any CTRs since September 2012. Aurora has been the subject of three BSA/AML compliance examinations, all of which found significant and repeated violations.

“All financial institutions – large and small -- must take their obligation to protect the U.S. financial system seriously,” said FinCEN Director Jennifer Shasky Calvery. “They cannot just go through the motions, as Aurora did, and hope things turn out all right. Today’s action emphasizes that FinCEN will take action against both entities and individuals who willfully participate in violations of our anti-money laundering laws.”

In addition to the fine, Aurora and Mr. Awad also agreed to an undertaking to immediately cease operation of any business related to any money services activity that requires registration with FinCEN until several conditions related to establishing and maintaining a proper AML program are met. Mr. Awad must then certify, under oath, that the requirements have been met.

Director Shasky Calvery expressed her appreciation to the Internal Revenue Service, Small Business/Self-Employed Division, which performed the examinations of Aurora Sunmart.

Enforcement Action: http://www.fincen.gov/news_room/ea/files/Assessment_20150318_Civil_Money_Penalty_for_Aurora_Sunmart.pdf

International Financial Law Prof Blogger William Byrnes is the author of Lexis' Money Laundering, Asset Forfeiture and Recovery and Compliance -- A Global Guide, a resource detailing anti-money laundering and counter-terrorist financing law, asset forfeiture, risk and compliance, and international agreements for 87 countries & territories.

March 27, 2015 | Permalink | Comments (0)

Are Law Students Receiving Enough Data Science Training for the New Economy?

Commerce Data logoThe Department of Commerce's Economics and Statistics Administration (ESA) released a new report entitled "The Importance of Data Occupations in the U.S. Economy," that explores the importance of data jobs and their impact on the U.S. economy.  The new report shows data jobs pay 68% more than the average private sector job and have grown 4 times faster than the rest of the private sector, adding 1.8 million jobs representing 31 percent of total private sector job growth.

 "Our report found that data occupations pay more than average, and employment in these data-intensive industries has been growing faster than overall employment," said Under Secretary for Economic Affairs, Dr. Mark Doms.  "Our society increasingly depends on the intelligent use of data, whether making our businesses more competitive, our governments smarter, or our citizens better informed.  This report reveals a new dimension to the value of data as an employment engine driving innovation and economic growth."

Key highlights of the new report include:

  • Over half the American workforce, 74.3 million work with data in their jobs. US-DeptOfCommerce-Seal.svg
  • Data analysis and processing using fairly sophisticated computer technology are central to 10.3 million private and public sector jobs.
  • Over the past ten years, data jobs have grown 4 times faster than the rest of the private sector, adding 1.8 million jobs representing 31 percent of total private sector job growth.
  • Jobs in the data sector pay on average $40/hour, 68% more than the average private sector job.
  • Click here for the full report.

This new ESA-led report on data jobs is part of a series of reports authored by the Office of the
Chief Economist for the Department of Commerce. The first report released July, 2014, entitled "Fostering Innovation, Creating Jobs, Driving Better Decisions: The Value of Government Data", explored the huge benefits from a relatively small investment in our nation's statistical agencies. 

March 27, 2015 in Current Affairs | Permalink | Comments (0)

Thursday, March 26, 2015

6 Tax Questions on Deferred Annuities You Need Answered, Pt. 2

4. Is the full gain on a deferred annuity or retirement income contract taxable in the year the contract matures?

Logo-tablet-400If the contract provides for automatic settlement under an annuity option, the lump sum proceeds are not constructively received in the year of maturity; if the policy provides a choice of settlement options, the policy owner can opt out of the lump sum proceeds choice within 60 days and avoid constructive receipt.  read on at ThinkAdvisor ....

March 26, 2015 | Permalink | Comments (0)

Assuring Authority For Courts To Shut Down Botnets

Extracted from the Department of Justice's Blog, author Leslie R. Caldwell, Assistant Attorney General for the Criminal Division

USCYBERCOM_Logo... we noted the dramatic growth over the past several years in the incidence of cybercrime that victimizes Americans.  One of the most striking examples of this trend is the threat from botnets — networks of victim computers surreptitiously infected with malicious software, or “malware.”  Once a computer is infected with the malware, it can be controlled remotely from another computer with a so-called “command and control” server.  Using that control, criminals can steal usernames, passwords, and other personal and financial information from the computer user, or hold computers and computer systems for ransom. 

Criminals can also use armies of infected computers to commit other crimes, such as distributed denial of service (DDoS) attacks, or to conceal their identities and locations while perpetrating crimes ranging from drug dealing to online child sexual exploitation.  The scale and sophistication of the threat from botnets is increasing every day.  Individual hackers and organized criminal groups are using state-of-the-art techniques to infect hundreds of thousands — sometimes millions — of computers and cause massive financial losses, all while becoming increasingly difficult to detect.  If we want security to keep pace with technological innovations by criminals, we need to ensure that we have a variety of effective tools to combat evolving cyber threats like these.

One powerful tool that the department has used to disrupt botnets and free victim computers from criminal malware is the civil injunction process.  Current law gives federal courts the authority to issue injunctions to stop the ongoing commission of specified fraud crimes or illegal wiretapping, by authorizing actions that prevent a continuing and substantial injury. 

This authority played a crucial role in the department’s successful disruption of the Coreflood botnet in 2011 and the Gameover Zeus botnet in 2014.  These botnets used keystroke logging or “man-in-the-middle” attacks to collect online financial account information, and they transferred stolen funds to accounts controlled by the criminals.  The Gameover Zeus botnet, which infected computers worldwide, was estimated to have inflicted over $100 million in losses on American victims alone, often on small and mid-sized businesses.  Because the criminals behind these particular botnets used them to commit fraud against banks and bank customers, existing law allowed the department to obtain court authority to disrupt the botnets by taking actions such as disabling communication between infected computers and the command and control servers.  Taking action to shut down botnets has been praised in the press and in Congress.

The problem is that current law only permits courts to consider injunctions for limited crimes, including certain frauds and illegal wiretapping.  Botnets, however, can be used for many different types of illegal activity.  They can be used to steal sensitive corporate information, to harvest email account addresses, to hack other computers, or to execute DDoS attacks against web sites or other computers.  Yet — depending on the facts of any given case — these crimes may not constitute fraud or illegal wiretapping.  In those cases, courts may lack the statutory authority to consider an application by prosecutors for an injunction to disrupt the botnets in the same way that injunctions were successfully used to incapacitate the Coreflood and Gameover Zeus botnets.

The Administration’s proposed amendment would add activities like the operation of a botnet to the list of offenses eligible for injunctive relief.  Specifically, the amendment would permit the department to seek an injunction to prevent ongoing hacking violations in cases where 100 or more victim computers have been hacked.  This numerical threshold focuses the injunctive authority on enjoining the creation, maintenance, operation, or use of a botnet, as well as other widespread attacks on computers using malicious software (such as “ransomware” ).

The same legal safeguards that currently apply to obtaining civil injunctions, and that applied to the injunctions obtained by the department in the Coreflood and Gameover Zeus cases, would also apply here.  Before an injunction is issued, the government must civilly sue the defendant and demonstrate to a court that it is likely to succeed on the merits of its lawsuit and that the public interest favors an injunction; the defendants and enjoined parties have the right to notice and to have a hearing before a permanent injunction is issued; and the defendants and enjoined parties may move to quash or modify any injunctions that the court issues.

In sum, this proposal would provide the government with an effective tool to shut down illegal botnets or certain widespread malicious software to better match the ways that criminals are using these technologies.  It assures that the legal mechanism that has proven effective to date will be available. 

see Cyber Crime 2014 Round Up - StealthGenie, Blackshades, Dark Market, Gameover Zeus

March 26, 2015 in Current Affairs | Permalink | Comments (0)

Legislative Proposals To Protect Online Privacy And Security

Extracted from the Department of Justice's Blog, author Leslie R. Caldwell, Assistant Attorney General for the Criminal Division

USCYBERCOM_LogoOur growing reliance on computer networks and electronic devices in almost every aspect of our lives has been accompanied by an increasing threat from individuals, organized criminal networks, and nation states who victimize American citizens and businesses.  Hackers can steal or hold for ransom our most valuable and personal information.  They can invade our homes by secretly activating webcams.  They can steal financial information to line their pockets while jeopardizing the credit and financial stability of everyday Americans. 

A new generation of organized criminals is able to steal the personal information of millions of victims from a computer halfway around the world.  These developments also pose a widespread threat to American businesses and the economy.  Cyber criminals can orchestrate massive disruptions of businesses and can electronically spirit away millions of dollars worth of trade secrets in seconds.  Every individual has a stake in protecting computers and computer networks from intrusions and abuse.  One 2014 report found a 62% increase in the number of breaches over the previous year, resulting in over half a billion identities exposed – a 368% increase. The global cost of cybercrime is estimated to exceed $100 billion.

An essential part of the mission of the Department of Justice is to protect Americans from emerging criminal threats such as the ones described above and to deter, disrupt, and prosecute the criminals who are culpable.  The department’s prosecutors, along with agents from the Federal Bureau of Investigation, the U.S. Secret Service and other law enforcement agencies, are working diligently using the legal tools at our disposal to protect personal information and vindicate the privacy rights of citizens and businesses.  But just as our adversaries adapt to new technologies and global realities, so must we.

On Jan. 12, 2015, the President announced new legislative proposals designed to protect the online privacy and security of American citizens and businesses.  These proposals include a set of targeted updates to the criminal code to provide additional tools to prosecute offenders and deter and disrupt criminal conduct.  Some of the proposals will enable the department to address the growth of specific types of crime, such as the sale of illegal spyware or the use of botnets — networks of victim computers surreptitiously infected with malicious software, or “malware.”  Other proposals address shortcomings in existing statutory tools, such as the government’s ability to prosecute cases involving insiders, including government or corporate employees, who use their access to information systems to misappropriate sensitive and valuable data.  The proposals also respond to changes in the threats posed by cyber criminals, such as by adding provisions to enable the prosecution of hacking by organized crime groups and to give federal courts the authority to sentence the most significant cyber crimes in line with similar financial crimes.

As part of our effort to explain to the public why these proposals are important, and also how they have been drafted in a careful and targeted way, the Justice Department’s Criminal Division will outline several of the proposed changes and set forth how they will enable us to protect Americans’ privacy and security.  Our first post will focus on a proposed amendment to the statute that gives federal courts the authority to issue civil injunctions to stop ongoing cyber crimes.

see Cyber Crime 2014 Round Up - StealthGenie, Blackshades, Dark Market, Gameover Zeus

March 26, 2015 in Current Affairs | Permalink | Comments (0)

Wednesday, March 25, 2015

Former U.K. Rabobank Trader Appears in U.S. Court to Face LIBOR Interest Rate Manipulation Charges

Justice logoThe former global head of liquidity and finance for Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank) has waived extradition and appeared in U.S. federal court today for an arraignment on charges related to his alleged role in a scheme to manipulate the U.S. Dollar (USD) and Yen London InterBank Offered Rate (LIBOR), a benchmark interest rate.

Anthony Allen plead not guilty to a superseding indictment charging him with conspiracy to commit wire and bank fraud and substantive counts of wire fraud.  The court released Allen on a $500,000 bond and set a trial date for Oct. 5, 2015.  

Paul Robson, a former Rabobank LIBOR submitter, and Takayuki Yagami, a former Rabobank derivatives trader, already pled guilty in 2014 earlier this year to one count of conspiracy in connection with their roles in the scheme.  Lee Stewart pled guilty to one count of conspiracy to commit wire and bank fraud.   Rabobank entered into a deferred prosecution agreement with the Department of Justice on Oct. 29, 2013, and agreed to pay a $325 million penalty to resolve violations arising from Rabobank’s LIBOR submissions.

According to admissions made in connection with his guilty plea, Stewart worked as a senior derivatives trader at Rabobank’s London desk from 1993 to 2009, and entered into derivative contracts involving interest rate swaps linked to the U.S. Dollar LIBOR rate.  Stewart admitted that from May 2006 through early 2011, he conspired with others at Rabobank to manipulate the LIBOR benchmark interest rate, which was tied to the profitability of interest rate derivative trades entered into by Rabobank traders.

Motomura, Thompson, Yagami and other traders entered into derivative contracts containing USD or Yen LIBOR as a price component and they asked Conti, Robson, Allen and others to submit LIBOR contributions consistent with the traders’ or the bank’s financial interests, to benefit the traders’ or the banks’ trading positions.  Conti, who was based in London and Utrecht, Netherlands, served as Rabobank’s primary USD LIBOR submitter and at times acted as Rabobank’s back-up Yen LIBOR submitter.  Robson, who was based in London, served as Rabobank’s primary submitter of Yen LIBOR.  Allen, in addition to supervising the desk in London and money market trading worldwide, occasionally acted as Rabobank’s backup USD and Yen LIBOR submitter.  Allen also served on a BBA Steering Committee that provided the BBA with advice on the calculation of LIBOR as well as recommendations concerning which financial institutions should sit on the LIBOR contributor panel. 

According to the superseding indictment, at the time relevant to the charges, LIBOR was an average interest rate, calculated based on submissions from leading banks around the world, reflecting the rates those banks believed they would be charged if borrowing from other banks.  It serves as the primary benchmark for short-term interest rates globally and is used as a reference rate for many interest rate contracts, mortgages, credit cards, student loans and other consumer lending products.  See original indictment DOJ announcement.

LIBOR was published by the British Bankers’ Association (BBA), a trade association based in London.  LIBOR was calculated for 10 currencies at 15 borrowing periods, known as maturities, ranging from overnight to one year.  The published LIBOR “fix” for U.S. Dollar and Yen currency for a specific maturity was the result of a calculation based upon submissions from a panel of 16 banks, including Rabobank. 

According to allegations in the superseding indictment, Allen, who was Rabobank’s Global Head of Liquidity & Finance and the manager of the company’s money market desk in London, put in place a system in which Rabobank employees who traded in derivative products linked to USD and Yen LIBOR regularly communicated their trading positions to Rabobank’s LIBOR submitters, who submitted Rabobank’s LIBOR contributions to the BBA.  Rabobank traders entered into derivative contracts containing USD or Yen LIBOR as a price component and they allegedly asked others at Rabobank to submit LIBOR contributions consistent with the traders’ or the bank’s financial interests, to benefit the traders’ or the banks’ trading positions.   

March 25, 2015 in Current Affairs | Permalink | Comments (0)

6 Tax Questions on Deferred Annuities You Need Answered, Pt. 1

Logo-tablet-400As part of ThinkAdvisor’s Special Report, 22 Days of Tax Planning Advice: 2015, throughout the month of March, we are partnering with our ALM Media sister service, Tax Facts Online, to take a deeper dive into certain tax planning issues in a convenient Q&A format.

This is part 1 of a two-part look at six important tax questions, covering questions 1-3, about Deferred Annuities. 

1. What is the difference between a longevity annuity and a deferred annuity?

read the story on ThinkAdvisor

 

March 25, 2015 in Current Affairs | Permalink | Comments (0)

Developing countries participate in global meetings to counter BEPS

Logooecd_enDelegates from over 90 jurisdictions have gathered at the OECD Conference Centre in Paris in two meetings devoted to discussing solutions to base erosion and profit shifting (BEPS). The Global Forum on Transfer Pricing and the Task Force meetings built on the structured dialogue with developing countries and complement the direct involvement in the CFA’s BEPS work and the regional meetings on BEPS held in Seoul, Lima, Libreville, Ankara and Pretoria.

OECD's engagement with developing countries in the BEPS Project has been strongly supported by several international and regional organisations. This close cooperation was highlighted by the signing of a Memorandum of Understanding (MOU) between the Centre de rencontres et d'études des dirigeants des administrations fiscales (CREDAF) on 16 March. CREDAF joined the African Tax Administration Forum (ATAF) and the Center for Inter-American Tax Administrators (CIAT) who already have MOUs with the OECD aimed at strengthening the partnership to improve tax policy and statistics and tax administration, and helping build greater capacity within the respective regions.

On 16 and 17 March more than 240 tax officials discussed solutions to end base erosion and profit shifting at the Global Forum on Transfer Pricing. During this meeting the experience of delegates and the practical impact of the current BEPS work on Transfer Pricing took centre stage. In his opening address, Pascal Saint-Amans, Director of OECD's Centre for Tax Policy and Administration welcomed developing countries as participants in the BEPS Project. "Your participation is vital for the BEPS Project. Learning from your experiences helps to develop new international standards for the global tax community."

The challenges faced and experience gained by developing countries also played an important role in the meeting of the Task Force on Tax and Development on 18 March. In their outcomes statement, the Co-Chairs applauded the G20 mandate to the OECD and other international and regional organisations to work together to develop toolkits to support the practical implementation of the BEPS measures and the other priority issues for developing countries. "We appreciate the work done in cooperation with other international and regional organisations, building on the experience of developing and developed countries". The first outputs on Tax Incentives and on Transfer Pricing Comparables are scheduled to be presented in the second half of 2015.

i. Direct participation in the Committee on Fiscal Affairs (CFA) and its subsidiary bodies

The Task Force meeting welcomed the direct participation of 14 developing countries and the regional tax organisations (ATAF and CIAT) in the work of the CFA and the Working Party meetings on the BEPS Project.

ii. Regional Networks of tax policy and administration officials

iii. Capacity building support

Participants expressed concerns over the current lack of coherence in granting tax incentives, the lack of capacity to conduct effective cost/benefit analysis, and the lack of transparency on the governance of tax incentives. Participants also welcomed the outline of a report by the international organisations to assist Low Income Countries on ensuring tax incentives designed to attract investment are efficient and effective.

Participants noted the challenges developing countries face in building effective transfer
pricing regimes due to the lack of comparability data. Discussions highlighted that countries use a broad range of approaches in an attempt to address the difficulties of finding comparability data. The Task Force considered the toolkit aimed at providing assistance to developing countries on this issue as a critical step forward.

 

 

March 25, 2015 in Current Affairs | Permalink | Comments (0)

Tuesday, March 24, 2015

Most Big Law Firms Have Been Breached, As Hackers Seek Corporate Client Secrets

USCYBERCOM_LogoBloomberg Law's Ellen Rosen with assistance from Michael Riley, Patrick G. Lee, Sabrina Willmer and Devin Banerjee, report that data breaches don't just affect retailers and banks; most big law firms have also been hacked, according to a report from Cisco Systems Inc.  ...

This is particularly true at firms with practices involving government contracts or mergers and acquisitions, and especially when non-U.S. companies or countries are involved.

“Law firms are very attractive targets. They have information from clients on deal negotiations which adversaries have a keen interest in,” Harvey Rishikof, co-chairman of the American Bar Association Cybersecurity Legal Task Force, told Bloomberg News. “They're a treasure trove that is extremely attractive to criminals, foreign governments, adversaries and intelligence entities.”

Breach at Top 100 Firms

Although Cisco ranked law firms as the seventh most-vulnerable industry to “malware encounters” in its 2015 Annual Security Report, other statistics relevant to law firms are more striking.

At least 80 percent of the biggest 100 law firms have had some sort of breach, Peter Tyrrell, chief operating officer of Digital Guardian, a data security software company, told Bloomberg News.

read the full story on Bloomberg Law

March 24, 2015 in Current Affairs | Permalink | Comments (0)

FFIEC Focuses on Cybersecurity, Will Debut Self-Assessment Tool

FFIEC

The Federal Financial Institutions Examination Council (FFIEC) provided an overview of its cybersecurity priorities for the remainder of 2015.

The priorities include seven workstreams that stem from last year’s pilot assessment of cybersecurity readiness at more than 500 financial institutions. The planned work includes the development and issuance of a self-assessment tool that financial institutions can use to evaluate their readiness to identify, mitigate and respond to cyber threats.

The FFIEC also will enhance their incident analysis, crisis management, training, and policy development and expand their focus on technology service providers’ cybersecurity preparedness. Additionally, the FFIEC will continue to improve its collaboration with other agencies and communicate on the importance of cybersecurity awareness and best practices among financial industry participants and regulators.

Work is underway in the following workstreams:

  1. Cybersecurity Self-Assessment Tool—The FFIEC plans to issue a self-assessment tool this year to assist institutions in evaluating their inherent cybersecurity risk and their risk management capabilities.
  2. Incident Analysis—FFIEC members will enhance their processes for gathering, analyzing, and sharing information with each other during cyber incidents.
  3. Crisis Management—The FFIEC will align, update, and test emergency protocols to respond to system-wide cyber incidents in coordination with public-private partnerships.
  4. Training—The FFIEC will develop training programs for the staff of its members on evolving cyber threats and vulnerabilities.
  5. Policy Development—The FFIEC will update and supplement its Information Technology Examination Handbook to reflect rapidly evolving cyber threats and vulnerabilities with a focus on risk management and oversight, threat intelligence and collaboration, cybersecurity controls, external dependency management, and incident management and resilience.
  6. Technology Service Provider Strategy—The FFIEC’s members will expand their focus on technology service providers’ ability to respond to growing cyber threats and vulnerabilities.
  7. Collaboration with Law Enforcement and Intelligence Agencies—The FFIEC will build upon existing relationships with law enforcement and intelligence agencies to share information on the growing cybersecurity threats and response techniques.

The FFIEC has published several resources to help financial institutions improve their cybersecurity, including additional information regarding the cybersecurity assessment conducted in 2014. They are available on the FFIEC website at http://www.ffiec.gov/cybersecurity.htm.

March 24, 2015 in Current Affairs | Permalink | Comments (0)

Monday, March 23, 2015

May DOJ Start Cancelling NPAs with Global Banks?

Excerpts from the March 16, 2015 speech of Assistant Attorney General Leslie Caldwell 

DOJ-U-S-ATTORNEYS-OFFICEDPAs and NPAs are useful enforcement tools in criminal cases.  Through those agreements, we can often accomplish as much as, and sometimes even more than, we could from a criminal conviction.  We can require improved compliance programs, remedial steps or the imposition of a monitor.  We can require that the banks cooperate with our ongoing investigations, particularly in our investigations of individuals.  We can require that such compliance programs and cooperation be implemented worldwide, rather than just in the United States.  We can require periodic reporting to a court that oversees the agreement for its term.  These agreements can enable banks to get back on the right track, under the watchful eye of the Criminal Division and sometimes a court.

And these agreements have teeth – not just because they are overseen by the Department of Justice and sometimes a court, but because of the potential penalties triggered by a breach. 

Let me be clear: in the Criminal Division, we will hold banks and other entities that enter into DPAs and NPAs to the obligations imposed on them by those agreements.  And where banks fail to live up to their commitments, we will hold them accountable. 

Just like an individual on probation faces a range of potential consequences for a violation, so too does a bank that is subject to a DPA or NPA.

Under DPAs and NPAs, we have a range of tools at our disposal.  We can extend the term of the agreement and the term of any monitor, while we investigate allegations of a breach, including allegations of new criminal conduct.  Where a breach has occurred, we can impose an additional monetary penalty, or additional compliance or remedial measures.  Most significantly, we can pursue charges based on the conduct covered by the agreement itself – the very conduct that the bank had tried to resolve through the DPA or NPA. 

Make no mistake: the Criminal Division will not hesitate to tear up a DPA or NPA and file criminal charges, where such action is appropriate and proportional to the breach. 

DPAs and NPAs are powerful tools.  They can’t be ignored once they’re signed, and they can’t be followed partially but not completely.  We will take action to ensure that banks are held accountable for DPA or NPA violations.  And where a bank that violates a DPA or NPA is a repeat offender with a history of misconduct, or where a violating bank fails to cooperate with an investigation or drags its feet, that bank will face criminal consequences for its breach of the agreement. 

International Financial Law Prof Blogger William Byrnes is the author of Lexis' Money Laundering, Asset Forfeiture and Recovery and Compliance -- A Global Guide, a resource detailing anti-money laundering and counter-terrorist financing law, asset forfeiture, risk and compliance, and international agreements for 87 countries & territories.

March 23, 2015 in Current Affairs | Permalink | Comments (0)

UK Regulators outline new rules for senior bankers

FCA UKThe British Bankers Association (BBA) reports that the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) provided further details of the new accountability regime for senior bankers...

The PRA announced that those responsible for running the UK operations of non-European banks will be subject to the new rules and could be subject to “fines, public censure and bans” if found guilty of serious malpractice (FT, £, p3). The FCA also announced that investment banks will have to assess the fitness of their traders on an annual basis, although CityAM (p2) notes concerns by lawyers that the definition of a “trader” has not been clarified.

March 23, 2015 in Current Affairs | Permalink | Comments (0)

Sunday, March 22, 2015

Central Banking in Latin America: From the Gold Standard to the Golden Years

IMF Working Paper No. 15/60 of Author/Editor Luis Ignacio Jácome

IMF_Text_LogoThis paper provides a brief historical journey of central banking in Latin America to shed light on the debate about monetary policy in the post-global financial crisis period. The paper distinguishes three periods in Latin America’s central bank history: the early years, when central banks endorsed the gold standard and coped with the collapse of this monetary system; a second period, in which central banks turned into development banks under the aegis of governments at the expense of increasing inflation; and the “golden years,” when central banks succeeded in preserving price stability in an environment of political independence.

The paper concludes by cautioning against overburdening central banks in Latin America with multiple mandates as this could end up undermining their hard-won monetary policy credibility. 
http://www.imf.org/external/pubs/cat/longres.aspx?sk=42790.0 

March 22, 2015 | Permalink | Comments (0)

Saturday, March 21, 2015

UK Follows US Approach - Bankers Who Assist Tax Evaders Will Go to Jail

S630_HMRC_sign__media_library__960_The 2015 UK Budget has been tabled.  Interesting, the UK has one of the lowest corporate tax rates of the OECD and its other competitors.  The UK is also experiencing growth and unprecedented levels of employment.  

But the Budget has a surprise for bankers.  Besides increasing the bank tax to raise an additional L900 million (which gives the UK a forecast budget surplus) ...

Banking
1.247 This government has been clear that banks should make an additional contribution
that reflects the risks they pose to the UK economy. This contribution has always needed to be balanced against financial stability considerations and banks’ ability to lend to the real economy.

However, with banks now strengthening their balance sheets and returning to profitability, the government believes that the sector should be expected to absorb a greater burden of remaining deficit reduction. The government will therefore increase the Bank Levy from 0.156% to 0.210% from 1 April 2015.

...bankers who assist with tax evasion will suffer criminal prosecution, like in the USA.  See the Budget, page 60. 

1.238 The government is committed to a fair tax system in which everyone contributes to reducing the deficit, and those with the most make the largest contribution. Budget 2015 announces further measures to tackle offshore evasion, close down tax avoidance, and ensure a fair contribution from businesses and individuals.

Evasion
1.240 Tax evasion is a crime that deprives the country of much needed revenue for public
services. Over the last two years, this government has led work in Europe, in the G20 and
through the UK’s G8 Presidency to transform international tax transparency. Agreement has now been reached among 92 countries to exchange information on bank accounts automatically every year. Regulations giving effect to these agreements will be laid shortly after Budget 2015.

1.241 Under these agreements, starting in 2016 for the Crown Dependencies and Overseas Territories, HMRC will receive a wide range of information on offshore accounts held by UK tax residents, including names, addresses, account numbers, interest and balances. This represents an unprecedented change in HMRC’s ability to tackle offshore tax evasion.

1.242 Building on this, the government will toughen sanctions for those who continue to evade tax by closing the existing disclosure facilities for tax evaders early. A tougher ‘last chance’ disclosure facility will be offered between 2016 and mid-2017, with penalties of at least 30% on top of tax owed and interest and with no immunity from criminal prosecutions in appropriate cases.

Avoidance
1.243 This government has introduced changes throughout this Parliament to tackle avoidance
and to focus in on the diminishing minority who refuse to play by the rules. As proposed in
the consultation document ‘Strengthening Sanctions for Tax Avoidance,’ the government will introduce tougher measures for those who persistently enter into tax avoidance schemes that fail, and will develop further measures to publish the names of such avoiders and to tackle avoiders who repeatedly abuse reliefs.106 The government will also widen the current scope of the Promoters of Tax Avoidance Schemes regime by bringing in promoters whose schemes are regularly defeated by HMRC.

1.244 The government introduced a significant new regime for avoidance with the creation of the general anti-abuse rule (GAAR). The government will increase the deterrent effect by introducing a penalty based on the amount of tax that is tackled by the GAAR.

1.245 The government changed the economics of tax avoidance with the introduction of the Accelerated Payments regime, removing the cash-flow advantage that users of avoidance schemes have benefitted from. HMRC has continued to review cases and more accelerated payment notices will now be issued than previously announced.

1.246 Some companies enter into contrived arrangements, with little economic substance, to convert old losses into new ones and circumvent the loss relief rules. The government will introduce a targeted anti-avoidance rule to level the playing field between the majority of companies, who follow the rules, and those others who side step them.

The Telegraph reports that: ... “We’re making it a crime if companies fail to put in place measures to stop economic crime happening in their organisations.   

“Tax evasion is a crime like any other. If people help a burglar, they are accomplices and criminals, too.  Now it will be the same for those that help tax evaders.” (emphasis added)

March 21, 2015 | Permalink | Comments (0)

Friday, March 20, 2015

FATCA Research Project - Help Us Find IGA Model 1 Reporting Deadlines !!!

FATCA_rollHaydon Perryman has posted a list of Model 1 IGA Countries that have at least one FFI registered with the IRS.  We already know the deadlines for Non IGA and Model 2 IGA countries.  Please help us in this important research!

In most Model 1 Countries that deadline will be by the end of June 2015 (but not always).  Thus, please post by comment any reporting dates you know by jurisdiction - on his blog (if you post here I will copy it over for you).

http://haydonperryman.com/fatca-reporting-deadline-by-jurisdicion/

March 20, 2015 in Current Affairs | Permalink | Comments (0)

FinCEN Issues Advisory on the FATF-Identified Jurisdictions with AML/CFT Deficiencies

FINCENThe Financial Crimes Enforcement Network (FinCEN) issued an advisory to financial institutions regarding the Financial Action Task Force’s (FATF) updated list of jurisdictions with strategic anti-money laundering/counter-terrorist (AML/CFT) financing deficiencies. These changes may affect U.S. financial institutions’ obligations and risk-based approaches with respect to relevant jurisdictions.

The FATF has recognized that Indonesia has made progress in substantially or largely addressing its FATF action plan. Consequently, the FATF has now removed Indonesia from the “FATF Public Statement” and included it in its “Improving Global AML/CFT Compliance: On-going Process” document. 

In addition, due to their significant progress in establishing the legal and regulatory framework to addressing all or nearly all of their strategic technical AML/CFT deficiencies on a technical level, Albania, Cambodia, Kuwait, Namibia, Nicaragua, Pakistan, and Zimbabwe have been removed from the FATF listing and monitoring process. These jurisdictions will work with their respective FATF-Style Regional Bodies as they continue to address the full range of AML/CFT issues identified as part of the mutual evaluation process.

Jurisdictions that are subject to the FATF’s call for countermeasures or are subject to EDD due to their AML/CFT deficiencies: 

A. Countermeasures: Iran and Democratic People’s Republic of Korea (DPRK)

B. Enhanced Due Diligence: Algeria, Ecuador, and Myanmar

Jurisdictions identified by the FATF as having AML/CFT deficiencies

Afghanistan, Angola, Guyana, Indonesia, Iraq, Lao PDR, Panama, Papua New Guinea, Sudan,
Syria, Uganda, and Yemen.

IRAN

With respect to Iran, U.S. financial institutions are subject to a broad range of restrictions and
prohibitions due to a number of illicit financing risks, including money laundering, terrorist
financing, and weapons of mass destruction (WMD) proliferation financing. Financial institutions
are reminded of the existing U.S. sanctions that are administered by the Department of the
Treasury’s Office of Foreign Assets Control (OFAC), including but not limited to sanctions against
Iranian government-owned banks and other entities, as well as Iranian entities that have links to
terrorist activity and the proliferation of WMDs. Information about these sanctions is available
on OFAC’s website.

Furthermore, on November 21, 2011, Treasury issued a notice of proposed rulemaking to impose
a special measure against Iran based on its finding that Iran is a jurisdiction of “primary money
laundering concern” under Section 311 of the USA PATRIOT Act.

In addition, financial institutions should be familiar with the financial provisions and
prohibitions contained in United Nations Security Council Resolutions (UNSCRs) against
Iran and DPRK.  In particular, UNSCRs 1929 and 1803 call on all states to exercise vigilance over activities of financial institutions in their territories with all banks domiciled in Iran and their branches and subsidiaries abroad.

EDD Requirements

As required by the regulations implementing the Bank Secrecy Act (BSA), covered financial institutions should ensure that their enhanced due diligence programs include, at a minimum,
steps to:

• Conduct enhanced scrutiny of correspondent accounts to guard against money laundering and to identify and report any suspicious transactions, in accordance with applicable law and regulation;

• Determine whether the foreign bank for which the correspondent account is established or maintained in turn maintains correspondent accounts for other foreign banks that use the foreign correspondent account established or maintained by the covered financial institution and, if so, take reasonable steps to obtain information relevant to assess and mitigate money laundering risks associated with the foreign bank’s correspondent accounts for other foreign banks, including, as appropriate, the identity of those foreign banks; and

• Determine, for any correspondent account established or maintained for a foreign bank whose shares are not publicly traded, the identity of each owner of the foreign bank and the nature and extent of each owner’s ownership interest.

International Financial Law Prof blogger William Byrnes' 2015 edition of Money Laundering, Asset Forfeiture and Recovery and Compliance -- A Global Guide is now available!

March 20, 2015 in Current Affairs | Permalink | Comments (0)

Former Bank President Pleads Guilty to Bank Fraud and Money Laundering

Sigtarp_logoMichael “Sean” Davis, 43, has plead guilty to conspiracy to commit bank and mail fraud; conspiracy to commit money laundering; making false statements to a federally insured institution; and fraudulently benefitting from a loan by a federally insured institution.

Between January 2006 and January 2011, while the president of Premier Community Bank of the Emerald Coast, Davis devised a scheme to defraud Premier Community Bank, Bank of America, and Beach Community Bank.  As a part of the scheme, Davis solicited a straw buyer to submit false
documents to purchase real properties via short sales from Bank of America.

At Davis’ direction, the straw buyer then sold the properties the same day to third-party buyers. Davis authorized and approved loans from Premier Community Bank to these third-party buyers for the purchase of two of these properties from Davis’ straw buyer.

As a result of these loans, Davis received approximately $297,408 through his company, MSD Investments. Through this scheme, Davis discharged approximately $743,425 in debt he owed to Bank of America for mortgage loans issued to Davis personally.

International Financial Law Prof Blogger William Byrnes is the author of Lexis' Money Laundering, Asset Forfeiture and Recovery and Compliance -- A Global Guide, a resource detailing anti-money laundering and counter-terrorist financing law, asset forfeiture, risk and compliance, and international agreements for 87 countries & territories.

March 20, 2015 in Current Affairs | Permalink | Comments (0)

Thursday, March 19, 2015

Analysis of EU Tax Rulings Disclosure Directive

Excerpted from yesterday's EU Commission Memo ...

What information exchange rules are currently in place for tax rulings?

Comision_Europea_logo.svgCurrently, EU legislation provides for spontaneous exchange of information on tax rulings, but only in certain circumstances. These spontaneous exchange provisions require a Member State to communicate information on their tax ruling(s) to any other Member State for whom the information may be relevant.

However, this system leaves a lot of room for interpretation by the Member State issuing the tax ruling. That State decides what is "relevant" and which other Member States should receive the information. In some cases, this leeway may be deliberately exploited to avoid sharing information. In other cases, the Member State issuing the tax ruling may simply not realise that this information could be useful to another Member State, so it doesn't spontaneously exchange it. Moreover, under current rules, Member States can refuse to spontaneously exchange the information on the grounds of commercial secrecy laws or public policy.

In 2014, Member States were required, for the first time, to provide statistics to the Commission on their information exchange on tax rulings. This was required by the current Directive, which entered into force in 2013.These statistics confirmed that, in practice, very little information was being shared between tax authorities and that the spontaneous exchange of information on tax rulings has been quite ineffective.

That is why the Commission has now made it a priority to put forward clearer, more comprehensive and more stringent information exchange requirements for tax rulings.

What new transparency provisions is the Commission proposing for tax rulings?

Today's proposal would oblige Member States to automatically exchange information on their tax rulings. This means that tax authorities would have to share a pre-defined set of information on all of their advance cross-border tax rulings with all other Member States. They would do this on a quarterly basis and following a standard format. Recipient Member States would then be allowed to request more detailed information on a particular tax ruling if they believe that it is relevant to their own taxation rules.

The big improvement that would come with this automatic exchange of information on tax rulings is that there would be clear and unequivocal rules on what information Member States must share with each other and when. The fact that Member States would have to send information on their rulings at regular, set intervals will help to ensure that information exchange is applied properly and comprehensively, and that the Commission would be able to monitor the correct application of the information exchange. Moreover, Member States would not be allowed to refuse or reduce information on the grounds of commercial secrecy or public policy.

With the automatic exchange of information, every Member State would know what cross-border tax rulings apply across the EU, and would be able to assess for itself whether a tax ruling of another Member State has an impact on itself. This would make all MS much better equipped to take the necessary measures to protect their tax base and to react to aggressive tax planning.

How would the automatic exchange of information on tax rulings work in practice?

Every three months, every Member State would be obliged to report to all the other Member States on the tax rulings they have issued in that period.

This report, sent via a secure email system, would contain a pre-defined, standard set of information. The Member States receiving the information would have to confirm receipt within 7 days, to ensure that the information has reached the intended recipients.

The recipient Member States would also have the right to request more detailed information on any of these rulings, where the information is relevant to the administration of the tax laws.

Every year, Member States would have to provide statistics to the Commission on the volume of information exchange on tax rulings.

The objective of this proposal is to ensure that information on advance cross-border rulings and advance pricing arrangements is automatically exchanged between Member States when the conditions laid down in the new Article 8a are fulfilled.

9. 'automatic exchange' means,

(a) for the purposes of Article 8(1) and Article 8a, the systematic communication of predefined information to another Member State, without prior request, at pre-established regular intervals. For the purposes of Article 8(1), reference to available information relates to information in the tax files of the Member State communicating the information, which is retrievable in accordance with the procedures for gathering and processing information in that Member State.

(b) for the purposes of Article 8(3a), the systematic communication of predefined information on residents in other Member States to the relevant Member State of residence, without prior request, at pre-established regular intervals.

In particular, Article 1(3) of the proposed Directive inserts a new Article 8a into the existing Directive, which sets out the scope and conditions for the mandatory automatic exchange of information on types of tax rulings and transfer pricing arrangements as defined in the proposed Directive, inserted by Article 1(1) of the proposal.

Article 8a(1) provides that the competent authorities of a Member State shall, by automatic exchange, communicate information about defined tax rulings that they issue or amend to the competent authorities of all other Member States. This obligation is extended to rulings issued in the ten years before the date on which the proposed Directive takes effect that are still valid on the date of entry into force of the Directive (Article 8a(2)).

Article 8a

Scope and conditions of mandatory automatic exchange of information on advance cross-border rulings and advance pricing arrangements

1. The competent authority of a Member State issuing or amending an advance cross-border ruling or an advance pricing arrangement after the date of entry into force of this Directive shall, by automatic exchange, communicate information thereon to the competent authorities of all other Member States as well as to the European Commission. 

2. The competent authority of a Member State shall also communicate information to the competent authorities of all other Member States as well as to the European Commission on advance cross-border rulings and advance pricing arrangements issued within a period beginning ten years before the entry into force but still valid on the date of entry into force of this Directive;

3. Paragraph 1 shall not apply in a case where an advance cross-border ruling exclusively concerns and involves the tax affairs of one or more natural persons.

Article 1(6) of the proposed Directive enables the possible creation by the Commission of a secure central directory concerning information communicated in the framework of this proposal. This central directory would both facilitate the exchange of information and support Member States in their job of studying and reacting to rulings exchanged between Member States.

4. The exchange of information shall take place as follows:

(a) in respect of the information exchanged pursuant to paragraph 1: within one month following the end of the quarter during which the advance cross-border rulings or advance pricing arrangements have been issued or amended.

5. The information to be communicated by a Member State pursuant to this Article shall as a minimum include the following information:

(a) the identification of the taxpayer and where appropriate the group of companies to which it belongs;

(b) the content of the advance cross-border ruling or advance pricing arrangement, including a description of the relevant business activities or transactions or series of transactions;

(c) the description of the set of criteria used for the determination of the transfer pricing or transfer price itself in the case of an advance pricing arrangement;

(d) the identification of the other Member States likely to be directly or indirectly concerned by the advance cross-border ruling or advance pricing arrangement;

(e) the identification of any person, other than a natural person, in the other Member States likely to be directly or indirectly affected by the advance cross-border ruling or advance pricing arrangement (indicating to which Member State the affected persons are linked).

8. Member States may, in accordance with Article 5, request additional information, including the full text of an advance cross-border ruling or an advance pricing arrangement, from the Member State which issued it.

For this purpose, the proposal modifies Directive 2011/16/EU as amended by Directive 2014/107/EU9 by introducing a specific requirement for the automatic exchange of information on advance cross-border rulings and advance pricing arrangements.

14. 'advance cross-border ruling' means any agreement, communication, or any other instrument or action with similar effects, including one issued in the context of a tax audit, which:

(a) is given by, or on behalf of, the government or the tax authority of a Member State, or any territorial or administrative subdivisions thereof, to any person;

(b) concerns the interpretation or application of a legal or administrative provision concerning the administration or enforcement of national laws relating to taxes of the Member State, or its territorial or administrative subdivisions;

(c) relates to a cross-border transaction or to the question of whether or not activities carried on by a legal person in the other Member State create a permanent establishment, and;

(d) is made in advance of the transactions or of the activities in the other Member State potentially creating a permanent establishment or of the filing of a tax return covering the period in which the transaction or series of transactions or activities took place.

The cross-border transaction may involve, but is not restricted to, the making of investments, the provision of goods, services, finance or the use of tangible or intangible assets and does not have to directly involve the person receiving the advance cross-border ruling; …

15. 'advance pricing arrangement' means any agreement, communication or any other instrument or action with similar effects, including one issued in the context of a tax audit, given by, or on behalf of, the government or the tax authority of one or more Member States, including any territorial or administrative subdivision thereof, to any person that determines in advance of cross-border transactions between associated enterprises, an appropriate set of criteria for the determination of the transfer pricing for those transactions or determines the attribution of profits to a permanent establishment.

Enterprises are associated enterprises where one enterprise participates directly or indirectly in the management, control or capital of another enterprise or the same persons participate directly or indirectly in the management, control or capital of the enterprises.

Transfer prices are the prices at which an enterprise transfers physical goods and intangible property or provides services to associated enterprises, and “transfer pricing” is to be construed accordingly;

16. For the purpose of point 14 'cross-border transaction' means a transaction or series of transactions where:

(a) not all the parties to the transaction or series of transactions are resident for tax purposes in the Member State giving the advance cross-border ruling, or;

(b) any of the parties to the transaction or series of transactions is simultaneously resident for tax purposes in more than one jurisdiction, or;

(c) one of the parties to the transaction or series of transactions carries on business in another Member State through a permanent establishment and the transaction or series of transactions forms part or the whole of the business of the permanent establishment. A cross-border transaction or series of transactions shall also include arrangements made by a single legal person in respect of business activities in another Member State which that person carries on through a permanent establishment.

In Article 14 the following paragraph 3 is added:

3. Where a Member State makes use of any information communicated by another Member State in accordance with Article 8a, it shall send feedback thereon to the competent authority which provided the information as soon as possible, and no later than three months after the outcome of the use of the requested information is known, except if feedback has already been provided pursuant to paragraph 1 of this Article. The Commission shall determine the practical arrangements in accordance with the procedure referred to in Article 26(2)."

March 19, 2015 in Current Affairs | Permalink | Comments (0)

CommerceWest Bank Admits Facilitating Consumer Fraud Schemes, Will Pay $4.9 Million Criminal and Civil Penalty

Justice logoThe Justice Department announced that it has agreed to a $4.9 million civil and criminal resolution with CommerceWest Bank, of Irvine, California, arising out of the department’s investigation into consumer fraud schemes facilitated by the bank.  The United States filed a criminal charge and a civil complaint in the U.S. District Court for the Central District of California. 

The criminal information charges the bank with a felony violation of the Bank Secrecy Act in connection with the bank’s relationship with a third-party payment processor.  The civil complaint alleges that CommerceWest Bank knowingly facilitated consumer fraud by permitting the payment processor to make millions of dollars of unauthorized withdrawals from consumer bank accounts on behalf of fraudulent merchants.  To resolve the department’s criminal and civil allegations, CommerceWest Bank has agreed to a total monetary resolution of more than $4.9 million, a deferred prosecution agreement and a permanent injunction that reforms the bank’s practices to prevent such fraud in the future.

“CommerceWest Bank ignored a parade of red flags indicating that a third-party payment processor was defrauding hundreds of thousands of innocent victims,” said Acting Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.  “As the civil and criminal actions filed against CommerceWest Bank today demonstrate, we will hold financial institutions accountable when they choose unlawfully to look the other way while fraudsters use the bank’s accounts to steal millions of dollars from American consumers.”

According to the civil complaint, from December 2011 through July 2013, CommerceWest Bank worked with V Internet Corp LLC, a third-party payment processor based in Las Vegas.  V Internet processed transactions for fraudulent merchants that withdrew money from consumers’ bank accounts without authorization.  These merchants included a fraudulent telemarketing company and a company that charged hundreds of thousands of victims for a payday loan referral fee they had never authorized.  In early 2013, V Internet took over the payday loan referral scheme, operating as the payment processor and sole merchant from January 2013 through July 2013. 

The complaint alleges that CommerceWest ignored clear warning signs indicating that V Internet and its merchants were defrauding consumers.  V Internet’s debit transactions resulted in an abnormally high rate of rejected transactions.  Approximately 50 percent of the transactions were returned by consumers and their banks.  Many of those returned transactions included sworn affidavits, in which victims stated, under penalty of perjury, that the withdrawals on their accounts were unauthorized. 

CommerceWest also received complaints and inquiries from other banks, which expressed their belief that V Internet’s transactions were fraudulent.  Even in the face of these explicit warnings from other banks, CommerceWest did not terminate V Internet or file a Suspicious Activity Report, an alert banks are required to file with the government indicating the presence of suspicious illegal activity.  Instead, CommerceWest and V Internet developed a practice of blocking transactions against accounts at those banks that complained, but allowing the transactions to continue against accounts at all other banks.  

The complaint alleges that, by May 29, 2013, a CommerceWest official had determined that all of V Internet’s transactions appeared to be fraudulent and unauthorized.  However, CommerceWest Bank did not make the decision to terminate V Internet until early July 2013.  Even at that point, CommerceWest planned to allow V Internet an additional 30 days to wind down its processing activity.  Only when the department notified CommerceWest that it intended to seek an emergency injunction did CommerceWest immediately terminate V Internet’s ability to access victims’ checking accounts.  

The U.S. Postal Inspection Service (USPIS) seized more than $2.9 million from V Internet’s accounts at CommerceWest Bank.  Postal inspectors additionally seized property purchased by V Internet’s owner with the proceeds of his fraudulent activity, including five airplanes, a Land Rover, a Dodge Charger, multiple tractors, five all-terrain vehicles and a fire truck.   

“CommerceWest ignored warning signs and numerous complaints stemming from unauthorized withdrawals, and now it must pay the price for allowing innocent consumers to be ripped-off by fraudsters,” said Acting U.S. Attorney Stephanie Yonekura of the Central District of California. 

“CommerceWest Bank not only failed to comply with its statutory obligation to notify the government of suspicious illegal activity involving consumer fraud,” said Inspector in Charge Gary Barksdale of the USPIS.  “The bank also allowed fraudulent activity to continue through its accounts to the detriment of the American consumer.”

The criminal information filed today charges CommerceWest with willfully failing to file Suspicious Activity Reports, as required by the Bank Secrecy Act.  The criminal charge will be deferred for two years under an agreement that requires CommerceWest Bank to admit to its wrongdoing, give up any claim to more than $2.9 million previously seized from V Internet’s bank accounts at CommerceWest, and cooperate fully in other civil and criminal investigations.

The department’s civil complaint alleges conduct that violates the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA), a law enacted by Congress in 1989 as part of a comprehensive legislative plan to reform and strengthen the banking system and the federal deposit insurance system that protects the public from bank failures and that provides for the United States to recover civil monetary penalties.  The department also alleges that CommerceWest Bank violated the civil anti-fraud injunction statute, which allows the government to seek a court order barring continued illegal conduct.  According to the terms of the proposed civil consent decree, CommerceWest Bank will be required to pay $1 million to the U.S. Treasury as a civil monetary penalty and to forfeit $1 million to the USPIS Consumer Fraud Fund.  CommerceWest Bank will also be required to implement a strict regime of underwriting and monitoring designed to prevent future consumer fraud by third-party payment processors.

March 19, 2015 in Current Affairs | Permalink | Comments (0)

Other EU Tax Transparency Measures

EU CommissionExpanding the automatic exchange of information on financial accounts: In December 2014, Member States adopted landmark transparency measures through a revision to the Administrative Cooperation Directive. This requires Member States to automatically exchange information on the full spectrum of financial information from 2017, and spells the end of bank secrecy in the Single Market. The revised Directive implements the new OECD/G20 global standard of automatic exchange in the EU. The revision of the Savings Tax Directive was also agreed in March 2014 (see above). MEMO/14/591

Negotiating stronger tax agreements with neighbouring countries: The Commission is currently finalising negotiations with Switzerland, Andorra, Monaco, San Marino and Lichtenstein on ambitious new tax agreements. The agreements will secure the widest scope of automatic information exchange between the EU and each of these five countries, in line with the OECD/G20 global standard. They should be ready to be signed in the summer. MEMO/14/172

Why is the Commission proposing to repeal the Savings Taxation Directive?

The revised Savings Tax Directive, adopted in March 2014, widened the scope of information that Member States would automatically exchange on savings income. (IP/12/1325). While this was an important transparency measure, its scope was limited to savings-related income.

In December 2014, Member States adopted a revision of the Administrative Cooperation Directive, which was much wider in scope than the Savings Directive. The revised Administrative Cooperation Directive would ensure that Member States automatically exchange the full spectrum of financial information from 2017. It reflects, in EU law, the new OECD/G20 global standard for the automatic exchange of information.

Provisions previously contained in the EU Savings Tax Directive are now entirely covered by the more ambitious Administrative Cooperation Directive. Therefore, in order to avoid duplication and overlapping EU legislation in this field, the Commission is proposing to repeal the Savings Tax Directive as part of today's Tax Transparency Package. This will ensure a simpler and streamlined legislative framework for businesses and tax administrations, in line with the Commission's REFIT objectives.

Would the repeal of the Savings Tax Directive have any consequences for the new tax agreements that the Commission is currently finalising with Switzerland, Andorra, Lichtenstein, Monaco and San Marino?

No. The mandate to negotiate stronger tax agreements with these five countries was never specifically linked to the Savings Tax Directive. The goal of these negotiations was always to ensure that the five countries exchanged an equivalent level of tax information with Member States to that exchanged within the EU. Given major advances in this field over the past few years, at both EU and global level, these agreements will be significantly more ambitious than originally foreseen. They will be aligned to the new global standard and will secure the widest scope of automatic information exchange on financial information between Member States and each of these five countries. The Commission is currently finalising these negotiations with the five neighbouring countries, and intends to present a proposal for their signature by summer 2015.

March 19, 2015 in Current Affairs | Permalink | Comments (0)