International Financial Law Prof Blog

Editor: William Byrnes
Texas A&M University
School of Law

Wednesday, September 30, 2015

Was Payment Institution Account Closings Due to AML Risk or Unfair Competitive Practice by Banks?

Safe Interenvios, SA Liberbank, SA, Banco de Sabadell, SA, Banco Bilbao Vizcaya European_Court_of_JusticeArgentaria, SA, OPINION OF ADVOCATE GENERAL SHARPSTON, delivered on 3 September 2015 (1), Case C‑235/14 (Request for a preliminary ruling from the Audiencia Provincial de Barcelona (Spain))

(Prevention of the use of the financial system for the purpose of money laundering and terrorist financing — Directive 2005/60/EC — Customer due diligence measures — Directive 95/46/EC — Protection of personal data — Directive 2007/64/EC — Payment services in the internal market)

1.        This dispute involves three credit institutions (Banco Bilbao Vizcaya Argentaria, SA (‘BBVA’), Banco de Sabadell, S.A. (‘Sabadell’) and Liberbank, SA (‘Liberbank’); collectively, ‘the banks’) and a payment institution (Safe Interenvios, SA; ‘Safe’). (2) The banks closed accounts Safe held with them because they had concerns about money laundering. Safe claims this was an unfair commercial practice.

2.        Questions have arisen as to whether EU law, in particular Directive 2005/60/EC (‘the Money Laundering Directive’), (3) precludes a Member State from authorising a credit institution to apply customer due diligence measures to a payment institution. That directive provides for three types of customer due diligence measure (standard, simplified and enhanced) depending on the risk of money laundering or terrorist financing. Standard customer due diligence measures under Article 8 comprise, for example, identifying a customer and obtaining information on the purpose and intended nature of a business relationship. Article 11(1) foresees that simplified customer due diligence will apply when the customers of an institution or person covered by that directive (‘a covered entity’) are credit and financial institutions (including payment institutions) themselves covered by the Money Laundering Directive. Article 13 requires enhanced customer due diligence in situations presenting a higher risk of money laundering or terrorist financing. Moreover, Article 5 authorises Member States to impose stricter obligations than those laid down in other provisions of the Money Laundering Directive.

3.        If a credit institution may be authorised to apply (enhanced) customer due diligence measures to a payment institution which itself is covered by the Money Laundering Directive, the Court is asked for guidance on the conditions under which Member States may provide for that to happen. Does their application depend on a risk analysis and may such measures include requiring a payment institution to transfer to a credit institution data pertaining to its own consumers and the recipients of the funds transmitted abroad? Those questions also invite the Court to consider Directives 95/46/EC (‘the Personal Data Directive’), (4) 2005/29/EC (‘the Unfair Commercial Practices Directive’) (5) and 2007/64/EC (‘the Payment Services Directive’). (6)

Case available here

September 30, 2015 | Permalink | Comments (0)

Tuesday, September 29, 2015

The Tax Boondoggle Donald Trump Should Attack, But Didn't

My new article in Forbes on Donald Trump, carried interest and 1031 exchanges.

ImgresI speak to his contrary positions on carried interest and 1031s.  "One intriguing aspect to all this is that thanks to Trump, talk of repealing the carried interest loophole has overshadowed Washington discussion of eliminating another questionable tax giveaway: section 1031Section 1031 has long been an unsupervised real estate tax boondoggle, one from which Trump has most likely benefited."

I conclude by saying "Back to Trump’s attack on carried interest for hedge fund managers: he says that they didn’t “build” anything. But 1031 isn’t a tax break for construction—it’s a benefit when you are trading one investment property for another, just as hedge fund managers trade assets.

If Trump is happy getting rid of the carried interest loophole for hedge funders, then he should be just as happy getting rid of carried interest for real estate fund managers and the even bigger 1031 loophole for real estate investors."

September 29, 2015 in Finance, Tax Compliance, Wealth | Permalink | Comments (0)

BNY Mellon Bribing Foreign Sovereign Fund Officials through Student Internships? Pays $14.8 Million Fine to SEC

This matter concerns violations of the anti-bribery and internal accounting controls provisions of SECthe Foreign Corrupt Practices Act (“FCPA”) by BNY Mellon.

The violations took place during 2010 and 2011, when employees of BNY Mellon sought to corruptly influence foreign officials in order to retain and win business managing and servicing the assets of a Middle Eastern sovereign wealth fund.

These officials sought, and BNY Mellon agreed to provide, valuable internships for their family members. BNY Mellon provided the internships without following its standard hiring procedures for interns, and the interns were not qualified for BNY Mellon’s existing internship programs.

BNY Mellon failed to devise and maintain a system of internal accounting controls around its hiring practices sufficient to provide reasonable assurances that its employees were not bribing foreign officials in contravention of company policy.

The SEC investigation found that BNY Mellon did not evaluate or hire the family members through its existing, highly competitive internship programs that have stringent hiring standards and require a minimum grade point average and multiple interviews.  The family members did not meet the rigorous criteria yet were hired with the knowledge and approval of senior BNY Mellon employees in order to corruptly influence foreign officials and win or retain contracts to manage and service the assets of the sovereign wealth fund. 

According to the SEC’s order instituting a settled administrative proceeding, the sovereign wealth fund officials requested that BNY Mellon provide their family members with internships, and they made numerous follow-up requests about the status, timing, and other details of the internships for their relatives.  BNY Mellon employees viewed the internships as important to keep the sovereign wealth fund’s business. 

“The FCPA prohibits companies from improperly influencing foreign officials with ‘anything of value,’ and therefore cash payments, gifts, internships, or anything else used in corrupt attempts to win business can expose companies to an SEC enforcement action,” said Andrew J. Ceresney, Director of the SEC Enforcement Division.  “BNY Mellon deserved significant sanction for providing valuable student internships to family members of foreign officials to influence their actions.”

The SEC’s order finds that BNY Mellon lacked sufficient internal controls to prevent and detect the improper hiring practices.  The company did have an FCPA compliance policy, but maintained few specific controls around the hiring of customers and relatives of customers, including foreign government officials.  Sales staff and client relationship managers were permitted wide discretion in their initial hiring decisions, and human resources personnel were not trained to flag potentially problematic hires.  Senior managers were able to approve hires requested by foreign officials with no mechanism for review by legal or compliance staff.  BNY Mellon’s system of internal accounting controls was insufficiently tailored to the corruption risks inherent in the hiring of client referrals, and therefore was inadequate to fully effectuate BNY Mellon’s stated policy against bribery of foreign officials.

“Financial services providers face unique corruption risks when seeking to win business in international markets, and we will continue to scrutinize industries that have not been vigilant about complying with the FCPA,” said Kara Brockmeyer, Chief of the SEC Enforcement Division’s FCPA Unit.

The SEC’s order finds that in 2010 and 2011, BNY Mellon violated the anti-bribery and internal controls provisions of the Securities Exchange Act of 1934.

September 29, 2015 | Permalink | Comments (0)

Monday, September 28, 2015

U.S. Signs New FATCA Competent Authority Arrangements with Australia and the United Kingdom

The Competent Authority of the United States has signed Competent Authority Arrangements (CAA) with two jurisdictions with which it has entered into intergovernmental agreements (IGAs).  The CAAs were signed with the Competent Authorities of Australia and the United Kingdom in accordance with the “Agreement between the Government of the United States of America and the Government of Australia to Improve International Tax Compliance and to Implement FATCA” and the “Agreement Between the Government of the United States of America and the Government of the United Kingdom of Great Britain and Northern Ireland to Improve International Tax Compliance and to Implement FATCA”, respectively, IRS officials announced today.

Download United Kingdom M1A CAA 082815b

Download M1A CAA 8_24_2015 - AUS FINAL

Today’s CAAs with Australia and the United Kingdom are the first such arrangements to be signed. The U.S. Competent Authority expects that numerous other CAAs with additional competent authorities in IGA jurisdictions will be signed in the near future.

“The signing of these Competent Authority Arrangements marks another significant milestone in the international effort to gain proper reporting of offshore accounts and income,” said IRS Commissioner John Koskinen. “Together in partnership with other tax authorities, we are demonstrating how far we have come in the fight against offshore tax evasion.”

Financial institutions and host country tax authorities will use the International Data Exchange Service (IDES) as the secure electronic data transmission system to transmit and exchange FATCA data with the United States. Further information on IDES, including customer resources and support, can be found here.

September 28, 2015 | Permalink | Comments (0)

Sunday, September 27, 2015

Proposed Revisions of Financial Institutions Consolidated Reports of Condition and Income (Call Report)

The Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board (Board), and the 640px-FdicLogoOffice of the Comptroller of the Currency (collectively, the agencies) are requesting comment on proposed revisions to the Call Report that would take effect December 31, 2015, or March 31, 2016, depending on the nature of the change.  The agencies encourage you to review the proposal, which has been approved by the Federal Financial Institutions Examination Council (FFIEC), and comment on those aspects of interest to you.  You may send comments to any or all of the agencies by the methods described in the attached Federal Register notice. 

All comments must be submitted by November 17, 2015.  The FFIEC and the agencies will review and consider the comments as they finalize the revisions to the Call Report.

This Call Report proposal is one element of a formal initiative launched by the FFIEC in December 2014 to identify potential opportunities to reduce burden associated with Call Report requirements for community banks.  In embarking on this initiative, the FFIEC is responding to industry concerns about the cost and burden arising from the Call Report preparation process.  The FFIEC's burden-reduction initiative comprises actions in five areas, which are summarized as follows:

  • Implementing an initial group of burden-reducing revisions to the Call Report;
  • Accelerating the start of the next statutorily required review of existing Call Report data items;
  • Assessing the feasibility of a potential community bank Call Report;
  • Conducting industry dialogue to better understand significant sources of Call Report burden; and
  • Providing Call Report training for bankers.

As a foundation for these actions, the FFIEC has developed a set of guiding principles for use in evaluating potential additions and deletions of Call Report data items and other revisions to the Call Report. The attached Federal Register notice provides further information about the community bank Call Report burden-reduction initiative and the guiding principles.

In proceeding with the first action above, the agencies have identified and are proposing a number of burden-reducing changes to the Call Report.  Additional burden-reducing changes to the Call Report are expected to result from other actions taken under the FFIEC's formal initiative. The agencies' proposal also includes certain new and revised Call Report data items, but because of the nature of these changes, they should have a limited impact on community institutions. The proposal also contains instructional clarifications and revisions. The proposed reporting changes, which would take effect in December 2015 unless otherwise indicated, include:

  • Deletions of certain existing data items pertaining to other-than-temporary impairments from Schedule RI, Income Statement; troubled debt restructurings from Schedule RC-C, Loans and Lease Financing Receivables, and Schedule RC-N, Past Due and Nonaccrual Loans, Leases, and Other Assets; loans covered by FDIC loss-sharing agreements from Schedule RC-M, Memoranda, and Schedule RC-N; and certain unused commitments to asset-backed commercial paper conduits in Schedule RC-R, Regulatory Capital;
  • Increases in existing reporting thresholds for certain data items in Schedule RI-E, Explanations; Schedule RC-D, Trading Assets and Liabilities; Schedule RC-F, Other Assets; Schedule RC-G, Other Liabilities; and Schedule RC-Q, Assets and Liabilities Measured at Fair Value on a Recurring Basis; and theestablishment of a reporting threshold for certain data items in Schedule RC-S, Servicing, Securitization, and Asset Sale Activities;
  • Instructional revisions addressing the reporting of:
    • Home equity lines of credit that convert from revolving to non-revolving status in Schedule RC-C;
    • Securities for which a fair value option is elected in Schedule RC, Balance Sheet; and
    • Net gains (losses) and other-than-temporary impairments on equity securities that do not have readily determinable fair values in Schedule RI;
  • New and revised data items and information of general applicability, including:
    • Increasing the time deposit size threshold used to report certain deposit information from $100,000 to $250,000 in Schedule RC-E, Deposit Liabilities, and (effective in March 2016) in Schedule RI, and Schedule RC-K, Quarterly Averages;
    • Revising the statements used to describe the level of external auditing work performed for the reporting institution during the preceding year in Schedule RC (effective in March 2016);
    • Adding contact information for the reporting institution's Chief Executive Officer;
    • Reporting the institution's Legal Entity Identifier if it already has one (on the Call Report cover page);
    • Creating additional preprinted captions for itemizing and describing components of certain items that exceed reporting thresholds in Schedules RC-F and RI-E; and
    • Revising Schedule RI to eliminate the concept of extraordinary items (effective in March 2016); and
  • New and revised data items of limited applicability, including:
    • Revising the reporting of certain securities measured under a fair value option in Schedule RC-Q and moving the existing Memorandum items for the fair value and unpaid principal balance of loans (not held for trading) measured under a fair value option from Schedule RC-C to Schedule RC-Q;
    • Revising the information reported in Schedule RI Memorandum items by institutions with total assets of $100 billion or more on the impact on trading revenues of changes in credit and debit valuation adjustments (effective in March 2016);
    • Adding a new item on "dually payable" deposits in foreign branches of U.S. banks to Schedule RC-E, PartII, Deposits in Foreign Offices, on the FFIEC 031 report; and
    • Revising the information reported about the supplementary leverage ratio by advanced approaches institutions in Schedule RC-R (effective in March 2016).

For the Call Report revisions proposed to take effect in December 2015, the agencies invite comment on difficulties institutions would encounter in implementing any of these revisions in their year-end 2015 Call Reports.

To help you understand the proposed changes to the Call Report, drafts of the Call Report schedules that are proposed to be revised are available on the FFIEC's website ( Draft instructions for the proposed reporting changes will be posted on the FFIEC's website during the comment period for the proposal.

Please forward this letter to the person responsible for preparing Call Reports at your institution. For further information about the proposed reporting revisions, state member banks should contact their Federal Reserve District Bank. National banks, savings associations, and FDIC-supervised banks should contact the FDIC's Data Collection and Analysis Section in Washington, D.C., by telephone at (800)688-FDIC (3342) or by email at

Judith E. Dupré
Executive Secretary

Attachments: Initial Paperwork Reduction Act Federal Register Notice - PDF (PDF Help)

Distribution: FDIC-Supervised Banks and Savings Institutions, National Institutions, State Member Institutions, and Savings Associations

Complete Financial Institution Letter: 

September 27, 2015 in Financial Regulation | Permalink | Comments (0)

Saturday, September 26, 2015

Malaysia's measures to combat money laundering and terrorist financing

The Asia/Pacific Group on Money Laundering (APG) and the FATF completed a joint assessment  of Malaysia 's anti-money laundering and counter-terrorist financing (AML/CFT) system. The assessment is a comprehensive review of the effectiveness of Malaysia's AML/CFT system and its level of compliance with the FATF Recommendations.

Overall, Malaysia has a robust legal AML/CFT framework with generally well-developed and implemented policies.

Malaysia is an observer to FATF and is working with the FATF to meet the criteria for membership. FATF logo

In line with these criteria, Malaysia must bring its level of compliance up to a satisfactory level. To strengthen its AML/CFT framework, it needs to take a number of actions, such as further risk assessments of terrorist financing and foreign sources threats, a greater focus on obtaining  convictions and confiscation and better use of financial intelligence by law enforcement agencies.

Key Findings

Malaysia’s robust policy framework for AML/CFT reϐlects strong political commitment and well-functioning coordination structures for AML/CFT and combating proliferation financing. Significant resources have been allocated to achieve the policy objectives. Coordination arrangements effectively support the implementation of activities to meet these policy objectives.

Malaysia has largely up-to-date AML/CFT statutory instruments, generally welldeveloped policies, institutional arrangements and implementation mechanisms. These elements provide the building blocks for overall good levels of compliance with the FATF Recommendations and a number of real strengths with effectiveness in AML/CFT measures.

Malaysia’s understanding of risk is sound, although improvements are needed in the assessment of TF risk to include more details for the private sector, and to deepen the assessment of ML risks from foreign sourced threats. Malaysia’s well-structured inter-agency cooperation framework has supported the assessment of ML/TF risk through two iterations of a national risk assessment (NRA) and other assessments, which have involved the private sector to some extent. Malaysia has integrated the outcomes of risk assessments into its policies and priorities and has reached out to reporting institutions with findings on risk, although the processes for disseminating risk findings should continue to be strengthened.

Malaysia develops and disseminates good quality financial intelligence to a range of LEAs. The well-resourced FIU produces high quality intelligence; however, the take-up of their products by LEAs is mixed, but improving. Improvements are needed to ensure ϐinancial intelligence is used to target investigations for at least all of the high-risk crime types. Financial intelligence has added to TF and CT investigations, CT preventive measures and the assessment of ML/TF risk.

Malaysia’s frameworks for ML investigations and prosecutions are generally sound but have produced minimal outcomes. Malaysia is not effectively targeting its high-risk offences (other than fraud) or foreign sourced threats in its prosecution of ML. While there are anumber of high value cases, most cases relate to low-medium level offending. The sanctions imposed for ML have been low, and have not been demonstrated to be effective. Malaysia has had a preference for pursuing other criminal justice measures rather than ML prosecutions, particularly conϐiscation.

Confiscation to combat tax and goods smuggling has been very successful through administrative recoveries by the Special Taskforce relating to strategically significant elements of the economy. The Taskforce has achieved excellent results, including an evident reduction in these types of offences. However, conϐiscation levels have been low in other high-risk areas (fraud, drugs and corruption) and in international matters, and the crossborder cash declaration regime is producing minimal results, which reduces effectiveness.

Despite the risk and context of TF in Malaysia, to date Malaysia has not prosecuted any TF cases. Malaysia has commenced 40 TF investigations with 22 still ongoing and LEAs make increasingly good use of ϐinancial intelligence to focus on terror groups and acts. Malaysia takes a security intelligence approach to terrorism prevention, rather than criminal justice action against the ϐinanciers. In a number of cases, Malaysia has demonstrated successes using other criminal justice and administrative measures to disrupt TF and terrorist activities arising from financial investigations and other strategies.

Malaysia’s legal and institutional framework to implement targeted financial sanctions (TFS) against terrorism is compliant and is being implemented with notable successes, including designating domestic and foreign entities under 1373, co-sponsoring UN designations and freezing assets of 1267 and 1373 entities. Reporting institutions (RI) are aware of their freezing obligations and freezing actions with respect to a wide range of assets and persons indirectly controlled by designees have recently occurred. Supervision of the implementation of TFS is taking place across most sectors, with the exception of certain DNFBPs.

Prevention of abuse of non-proϐit organisations (NPOs) for TF has been achieved through the implementation of a targeted approach to educate and oversee NPOs that are at risk. Assessment of risk, outreach, targeted controls on high risk activities (charitable collection), centralised controls on Zakat and targeted compliance monitoring and enforcement of regulatory controls add to the effectiveness of CFT for the NPO sector.

The legal framework for TFS against proliferation of WMD contains a significant legal gap in the delay of transposing UN designations into domestic law, which undermines effectiveness. Despite this, freezing results have occurred, supervision is taking place and vigilance measures are in place.

Malaysia’s legal framework for supervision is sound and all regulators apply a risk-based approach to supervision. Market entry controls are generally working well. BNM supervises the majority of RIs which carry the bulk of the ML/TF risk, and is an effective, well-resourced supervisor. SC’s approach is comparably sound and LFSA’s supervisory capabilities are improving. Supervisors have adequate resources, tools and well trained staff to assess and use risks to target supervision and remedial measures. There is a gap in BNM FIED’s available resources necessary for supervising Malaysia’s large DNFBP population. Supervisory interventions have further to go to ensure RIs deepen their risk-based approach to AML/ CFT implementation.

The regulatory framework for preventative measures is highly compliant, which sets a good starting point for RIs, however many sectors are taking longer to transition from a rules based to risk-based approach, despite their long-standing obligations. Supervisory findings show that key sectors have a mixed understanding of risk, and RIs do not always adequately implement CDD requirements on a risk-sensitive basis.

Malaysia’s controls on legal persons and arrangements to ensure that the ‘corporate veil’ cannot undermine AML/CFT preventative measures and investigations are still developing, but there are some notable strengths, such as the public availability of Malaysia’s legal persons ownership registers and the requirement for trustees to declare their trustee status to banks. Malaysia is not a major centre for the establishment of legal persons or legal arrangements.

Malaysia’s international cooperation has been aligned to its risk profile to some extent, but more needs to be done to increase the focus on the risks Malaysia faces from transnational crime. Supervisors, regulators and the FIU cooperate well with their counterparts, making and responding to a reasonable range of requests largely in keeping with the risks, which supports effectiveness. Criminal justice agencies generally respond well to LEA cooperation, MLA and extradition requests, but Malaysia receives far more MLA and LEA cooperation requests than it makes, which may be a product of Malaysia’s lack of focus on foreign threats. Malaysia has made very few MLA and extradition requests in the past ϐive years.

September 26, 2015 | Permalink | Comments (0)

Friday, September 25, 2015

FATCA Webinar - Audio Recorded on YouTube


September 25, 2015 | Permalink | Comments (0)

Switzerland Asks Non-Prosecution Agreement Resolution for All Its Banks this Year

Bern, 14.09.2015 - Federal Councillor Eveline Widmer-Schlumpf met the US Attorney General Loretta Lynch for bilateral talks on the implementation of the US programme for settling the tax Swiss logodispute with Swiss banks.

Under this US programme from 2013, Swiss banks that have to assume they violated US law can enter into a so-called Non-Prosecution Agreement with the US Department of Justice.

The talks between the two ministers addressed the issue of equal treatment of all banks with regard to determining fines and the required evidence of client asset taxation. The intention of concluding all Non-Prosecution Agreements with category 2 banks by the end of this year was also discussed. In this regard, it is important for Switzerland that each bank is granted fair and transparent negotiations. The treatment of employee data under the programme was likewise discussed.



State Secretariat for International Financial Matters  

September 25, 2015 | Permalink | Comments (0)

Thursday, September 24, 2015

Texas A&M University School of Law Hires 12 New Faculty & Expands Programs

Texas A&M University School of Law is quickly distinguishing itself as an institution to watch. TAMU-Law-lockup-stack-SQUARE

At a time when most schools are cutting back, Texas A&M University has made an unparalleled investment in the future of legal education for Texas, the nation and beyond by attracting an unprecedented 12 new faculty members for its School of Law located inFort Worth.

Five of the new faculty focus on intellectual property issues, adding strength to the school's Center for Law and Intellectual Property and building on A&M's strong reputation in engineering and life sciences. These hires cover all aspects of intellectual property, including patents, copyrights, trademarks, and trade secrets. Together with two existing scholars in the field, A&M Law is now in contention to have one of the country's top intellectual property law programs.

"This extensive concentration of intellectual property faculty offers students comprehensive coverage, allowing them to develop specialized training based on their individual interests and career paths," said intellectual property expert and incoming professorPeter Yu. "Our newly expanded program offers an unparalleled focus and makes A&M Law immediately stand out in the intellectual property field."

Among A&M Law's seven additional hires are thought leaders with strong backgrounds in legal ethics, commercial law, legal writing, law and economics, tax and international law. They include the newly appointed President of Texas A&M University, Michael K. Young, whose two decades as a legal scholar and dean at Columbia Law included the development of internationally recognized programs in Japanese and Korean legal studies and authorship of numerous briefs, articles and books on U.S. trade law and policy.  Given his leadership, including presidency at two leading universities and service, it is fitting that he will hold tenure in both Texas A&M's School of Law and the George H. W. Bush School of Government & Public Service. 

"I'm pleased to be joining Texas A&M University at this exciting time of my career and their history," offered Young. "It is a wonderful bonus, to also join my colleagues in the transformation of this law school, legal education nationally and our contributions as scholars to the continued dynamic vitality of Texas."

"As not only a top tier, public research university, but also a land grant institution, we have a special obligation to bring the academy to the public, and these folks are going to help us expand our efforts to do that," Dean Andy Morriss said. "We're particularly excited to have long time bar leaders like legal ethicist Susan Fortney, former Uniform Law Commission Executive Director Bill Henning, and former American Society of International Law Executive Director Charlotte Ku joining us."

These incoming faculty join the existing academic team, now 55 members strong and punctuated by an ethos of market-disruptive thinking and scholarship. In 2015 alone, A&M Law faculty members have gained national attention for policy papers and commentary on topics including the intersection of water and energy law, developments in intellectual property, law reform in the Middle East, and the changing face of the death penalty.

And in an era when many law schools are cutting staff and faculty as enrollments fall nationally, A&M Law has only enhanced its commitment to lead by expanding curricular options, improving student services, attracting the very best talent and aligning to Texas A&M University's mission tenet of service to the state, nation and beyond.

One such example is a $370,000 grant awarded to the School of Law from the Access Group. With the grant, A&M Law's Milan Markovic will serve as principal investigator of the Texas Lawyers Study, examining professional satisfaction and income levels of nearly 88,000 members of the State Bar of Texas. This study will generate an extraordinary amount of data on the economics of the legal profession and the working lives of lawyers that can inform the decision-making of prospective law students and lawyers.

"We're proud of our work to date, and are inviting all to see how far we've come and to take a look at where we are heading," Morriss said. "By attracting new talent to compliment our strong foundation of scholars, A&M Law is leading by example."

September 24, 2015 in Education | Permalink | Comments (0)

Switzerland Money Laundering Changes Include Tax Crimes

The Financial Action Task Force on Money Laundering (FATF) has implemented the risk-based Swiss logoapproach in its review of the 40+9 FATF recommendations in 2012. It is calling for more transparency on beneficial ownership.

This means that identifying beneficial owners will become more complex in future. The requirements as regards “politically exposed persons” (PEPs) are being widened to include PEPs resident in Switzerland. In addition, tax crimes are for the first time included as "predicate offences" to money laundering.

After carrying out its consultations, in December 2013 the Swiss Federal Council adopted for submission to parliament the draft of the new Swiss Federal Act on the Implementation of the 2012 Revised Recommendations of the Financial Action Task Force (FATF). A partial revision of the Swiss Anti-Money Laundering Act concerning the Money Laundering Reporting Office (MROS) had already entered into effect on 1 November 2013.

In addition to enhanced information exchange, the revision also expanded the powers of the MROS to obtain information in the future from financial intermediaries. After lengthy discussions the Swiss Federal Parliament reached an agreement and approved the amended draft of the Federal Act with the final vote on 12 December 2014. The deadline for referendum expired on 2 April 2015.

The draft contains the following key changes: 

Alternative to cash ban

 | If in the future traders accept more than 100,000 francs in cash, they are also subject to anti-money laundering due diligence requirements (otherwise the transaction must be made through financial intermediaries). In official insolvency auctions a cash limit of 100,000 francs has likewise been introduced. 

Tax fraud as a predicate offence for money laundering

 | A key change is that tax evasion is now considered to be a predicate offence to money laundering. 

Transparency in bearer shares

 | In the future, anyone who acquires the bearer shares of a company whose shares are not listed on the stock exchange must report the purchase of the company and identify themselves. The company must also maintain a record of the owners.

One new mandatory requirement is that the beneficial owners must be determined (owners with more than a 25% stake) for operating legal entities.

Domestic PEPs

 | Now not only rulers abroad are considered to be PEPs, but also persons in Switzerland and from international organisations.

Discontinuance of automatic freezing of assets

 | Assets will no longer be frozen when the FI reports to the MROS; instead, assets are to be frozen only when the MROS informs the FI that the notification was forwarded to the law enforcement agency. But if there is a suspicion of terrorism, the assets must be frozen immediately.

Religious foundations

 | The revision requires that religious foundations must now be registered in the Commercial Register.

Entry into force in two steps

 On 1 July 2015:

  • Code of Obligations

  • Collective Investment Schemes Act

  • Federal Intermediated Securities Act

On 1 January 2016:

  • Amendments to the Swiss Civil Code regarding ecclesiastical and family foundations

  • Provisions on tax predicate offences

  • Amendments to the Debt Collection and Bankruptcy Act concerning the mode of payment

  • Anti-Money Laundering Act and Anti-Money Laundering Regulation SAAM

Consultation process documents
Consultation process response

September 24, 2015 | Permalink | Comments (0)

Wednesday, September 23, 2015

Improving Co-operation between Tax and Anti-Money Laundering Authorities: Access by tax administrations to information held by financial intelligence units for criminal and civil purposes

Financial crimes, including tax crimes, threaten the strategic, political and economic interests of OECDboth developed and developing countries and undermine confidence in the global financial system. In a world of limited resources and increasing complexity government authorities must work closely together in a “whole of government” approach to best address these challenges.

Financial crimes, including tax crimes, threaten the strategic, political and economic interests of both developed and developing countries and undermine confidence in the global financial system. In a world of limited resources and increasing complexity government authorities must work closely together in a “whole of government” approach to best address these challenges.

This report uses survey data to analyse the levels of co-operation between the authorities combating serious financial crimes such as tax crimes, bribery corruption, money laundering and terrorism financing. More specifically, it assesses various models for the sharing of Suspicious Transaction Reports (STRs) by the Financial Intelligence Unit (FIU) with the tax administration, both for criminal and civil purposes. It finds that there are significant potential benefits from greater co-operation, with each authority pooling their knowledge and skills. The report subsequently recommends that subject to the necessary safeguards, tax administrations should have the fullest possible access to the STRs received by the FIU in their jurisdiction.

Vast amounts are lost to illicit financial flows, including tax evasion, money laundering, bribery and corruption. These crimes threaten the strategic, political and economic interests of both developed and developing countries. In a world of limited resources and increasing complexity, it is essential for government authorities to work closely together in a “whole of government” approach to best address these challenges.

Improving Co-operation between Tax and Anti-Money Laundering Authorities: Access by tax administrations to information held by financial intelligence units for criminal and civil purposes highlights the need for governments to maximise their effectiveness in tackling financial crimes and ensuring tax compliance and shows the benefits of greater co-operation between Financial Intelligence Units (FIUs) and tax administrations. It recommends that, subject to the necessary safeguards, tax administrations should have the fullest possible access to the Suspicious Transaction Reports received by the FIU in their jurisdiction.

This report was released at the Fourth OECD Forum on Tax and Crime in Amsterdam, an event which brought together over 200 senior officials and specialists from over 70 countries and international organisations, who collectively share responsibility for combating financial crime and terrorist financing in all its forms. Strengthening the links between criminal tax investigations and the fight against illicit financial flows such as tax evasion, bribery and corruption, money laundering, terrorist financing was a key topic of the agenda. Participants also stressed the need for capacity building to help developing countries to better fight financial crimes as part domestic resource mobilisation.  Discussions on the dark web and the use of analytics to detect and deter financial crimes illustrated the importance of technology as both a risk and part of the solution to tax crimes and other crimes with further work forthcoming.

Further details on the Fourth Forum on Tax and Crime, including the statement of outcomes, are available at:

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September 23, 2015 | Permalink | Comments (0)

More Billion Dollar Transfer Pricing Cases Reported in SEC Filings

As of Dec. 31, 2014, the IRS' International Business Compliance and Transfer Pricing Practice units Irs_logoof LB&I had 1,060 cases under examination, involving 1,890 “income-shifting issues,” with total estimated potential adjustments of between $90 billion and $194 billion.  [see "As of 2014, 1,000 Transfer Pricing Cases Under Audit", BNA Trans. Pricing Rept. (Sept 17, 2015)]

Two sample excerpts of Coca-Cola and Microsoft 2015 8-K and 10-K filings respectively.   Coca-Cola reported a $3.3 billion transfer pricing deficiency.  Microsoft reported nearly $100 billion accumulated in foreign subsidiary's accounts.  Earlier in February of this year, in its 10-K Caterpillar reported that a grand jury is looking into its transfer pricing policy.

$3.3 Billion (plus interest) reported in Coca-Cola SEC filing 8-K of September 17, 2015

On September 17, 2015, The Coca-Cola Company (the “Company”) received a Statutory Notice of Deficiency (“Notice”) from the Internal Revenue Service (“IRS”) for the tax years 2007  2009, after a five-year audit.  In the Notice, the IRS claims that the Company’s United States taxable income should be increased by an amount that creates a potential additional federal income tax liability of approximately $3.3 billion for the period, plus interest. No penalties were asserted.
The disputed amounts largely relate to a transfer pricing matter involving the appropriate amount of taxable income the Company should report in the United States in connection with its licensing of intangible property to certain related foreign licensees regarding the manufacturing, distribution, sale, marketing and promotion of products in overseas markets.
The Company has followed the same transfer pricing methodology for these licenses since the methodology was agreed with the IRS in a 1996 closing agreement that applied back to 1987. The closing agreement provides prospective penalty protection as long as the Company follows the prescribed methodology, and the Company has continued to abide by its terms for all subsequent years. The Company’s compliance with the closing agreement was audited and confirmed by the IRS in five successive audit cycles covering the subsequent 11 years through 2006, with the last audit concluding as recently as 2009.
The IRS provided the Company no economist’s report or other detailed explanation for the asserted adjustments until approximately two weeks before the issuance of the Notice. The Company has also been notified by the IRS that a recommendation has been made to the Chief Counsel of the IRS that this matter be designated for litigation. The Company has requested a meeting with the Chief Counsel. If the matter is designated, the Company will be prevented from pursuing any administrative settlement at IRS Appeals or under the IRS Advanced Pricing and Mutual Agreement Program.
The Company firmly believes that the assessments are without merit and plans to pursue all administrative and judicial remedies necessary to resolve this matter. Initially, the Company expects to file a petition in the United States Tax Court challenging the Notice. The Company intends to vigorously defend its position and is confident in its ability to prevail on the merits. ... However, the ultimate outcome of disputes of this nature is uncertain, and if the IRS were to prevail on its assertions, the assessed tax and deficiency interest could have a material adverse impact on the Company’s financial position, results of operations or cash flows.


MicroSoft's 10-K (ending June 30, 2015) see page 41 and 42  

Tax contingencies and other income tax liabilities were $12.1 billion and $10.4 billion as of June 30, 2015 and 2014. This increase relates primarily to adjustments to prior years’ liabilities for intercompany transfer pricing and adjustments related to our IRS audits. While we settled a portion of the I.R.S. audit for tax years 2004 to 2006 during the third quarter of fiscal year 2011, we remain under audit for those years. We also continue to be subject to examination by the I.R.S. for tax years 2007 to 2015.

Our effective tax rate for fiscal years 2014 and 2013 was approximately 21% and 19%, respectively. Our effective tax rate was lower than the U.S. federal statutory rate primarily due to earnings taxed at lower rates in foreign jurisdictions resulting from producing and distributing our products and services through our foreign regional operations centers in Ireland, Singapore, and Puerto Rico.

$94.4 billion was held by our foreign subsidiaries and would be subject to material repatriation tax effects.

September 23, 2015 in Tax Compliance | Permalink | Comments (0)

Tuesday, September 22, 2015

Costa Rica’s ‘Wet Noodle’ Regulations Perpetuate Call Center Scams

"Stamping out call center boiler room scams has been described like a continuous game of Whack-A-Mole. Costa Rica's weak regulation and lack of resources is making it a hot spot for such scams."

Read Journalist  expose and interview of Professor William Byrnes about Costa Rica's Call Center industry at her Nearshore Article

September 22, 2015 | Permalink | Comments (0)

Monday, September 21, 2015

FATCA Deadlines Postponed Again - Notice 2015-66 Released

Extension of FATCA Transitional Rules for Gross Proceeds, Foreign Passthru Payments, Limited FATCA_rollBranches and Limited FFIs, and Sponsored Entities; Reporting of 2014 Information under a Model 1 IGA; and Modification to Grandfathered Obligation Rule with Respect to Collateral

Notice 2015-66

This notice announces that the Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) intend to amend the regulations under chapter 4 (sections 1471-1474) to extend the period of time that certain transitional rules will apply. Specifically, the amendments will extend:

(1) the date for when withholding on gross proceeds and foreign passthru payments will begin;

(2) the use of limited branches and limited foreign financial institutions (limited FFIs); and

(3) the deadline for a sponsoring entity to register its sponsored entities and redocument such entities with withholding agents.

In addition, in order to reduce compliance burdens on withholding agents that hold collateral as a secured party, this notice announces that Treasury and the IRS intend to amend the regulations under chapter 4 to modify the rules for grandfathered obligations with respect to collateral.

Finally, this notice also provides information on the exchange of information by Model 1 IGA jurisdictions with respect to 2014


Many U.S. and foreign financial institutions, foreign governments, Treasury, the IRS, and other stakeholders have devoted resources to implementing FATCA withholding on withholdable payments, which (subject to certain exceptions) began on July 1, 2014, as well as for the first U.S. account reporting under FATCA, which was due for certain FFIs starting in March 2015.  At the same time, 112 jurisdictions are now treated as if they have an IGA in effect, which allows for the information reporting goals of FATCA to be satisfied for FFIs covered by such IGAs.  

In order to continue to facilitate an orderly phase-in of FATCA withholding, Treasury and the IRS intend to amend the chapter 4 regulations under section 1473 to extend the start date of gross proceeds withholding by providing that the definition of the term withholdable payment means any payment of U.S. source FDAP income, and for sales or other dispositions occurring after December 31, 2018, any gross proceeds from the sale or other disposition of any property of a type that can produce interest or dividends that are U.S. source FDAP income.

Additionally, Treasury and the IRS intend to amend the regulations under section 1471 to extend the start date of withholding on foreign passthru payments to provide that a participating FFI is not required to withhold tax on a foreign passthru payment made to a recalcitrant account holder or a nonparticipating FFI before the later of January 1, 2019, or the date of publication in the Federal Register of final regulations defining the term foreign passthru payment.


Currently, 112 jurisdictions are treated as if they have an IGA in effect, which highlights the overwhelming support of FATCA partner jurisdictions in implementing the information reporting goals of FATCA. FFIs and other stakeholders continue to express strong support for IGAs as a way to facilitate effective and efficient FATCA implementation while avoiding conflicts with local law.

While Treasury remains open to entering into IGA discussions based on the published models, there may be jurisdictions that have not been able or willing to agree to an IGA and that continue to impose legal restrictions that prevent FFIs resident or organized there, or branches located there, from complying with the terms of an FFI agreement.  If an FFI that is not covered by an IGA has a branch located in, or an FFI affiliate subject to the laws of, a jurisdiction that prohibits compliance with the terms of an FFI agreement, that FFI will no longer be able to obtain or maintain status as a participating or deemed-compliant FFI once limited branch and limited FFI status expire.

To provide FFIs and other stakeholders additional time to determine whether to continue operating in jurisdictions where limited branches or limited FFIs exist, Treasury and the IRS intend to amend the regulations under section 1471 to provide that the availability of limited branch and limited FFI statuses will terminate on January 1, 2017.  A limited FFI or limited branch that becomes able to comply with the terms of the FFI agreement or becomes a participating FFI or deemed-compliant FFI pursuant to an applicable IGA should amend its registration to reflect its modified status.

FFIs that continue to operate after December 31, 2016, in jurisdictions where they cannot comply with the terms of an FFI agreement due to local law will jeopardize the chapter 4 status of participating FFIs and registered deemed-compliant FFIs (other than FFIs covered by an IGA) in the group.

Branches that continue to operate after December 31, 2016, in jurisdictions where they cannot comply with the terms of an FFI agreement due to local law will jeopardize the participating FFI status of the FFI of which the branch is part (as well as jeopardize any branches of the FFI that have participating FFI status under the FFI agreement), subject to the terms of an applicable IGA.

After December 31, 2015, all limited FFI and limited branch registrations will be placed in “registration incomplete” status on their online FATCA account. Limited FFIs and limited branches that seek to continue such status during the 2016 calendar year will be required to edit and resubmit their registrations after December 31, 2015, on the FATCA registration website.


As previewed in Notice 2013-69 (2013-46 I.R.B. 503), the IRS is developing a streamlined process for sponsoring entities to register their sponsored entities on the FATCA registration website. The IRS anticipates that this registration process will be available in the coming months and intends to update the FATCA registration user guide to include this process.  In order to provide sufficient time for sponsored entity registration, Treasury and the IRS intend to amend the regulations under sections 1471 and 1472 to provide that sponsoring entities must register their sponsored registered deemed-compliant FFIs and sponsored direct reporting NFFEs by January 1, 2017.

Beginning on such date, sponsoring entities must use the GIIN of the sponsored entity when reporting with respect to the sponsored entity on Form 8966 (FATCA Report) and must provide the GIIN to withholding agents making payments to the sponsored entity.

Sponsored investment entities and sponsored controlled foreign corporations covered by Annex II of a Model 1 IGA will maintain their deemed-compliant status as long as they are registered by the sponsoring entity on or before the later of December 31, 2016, and the date that is 90 days after a U.S. reportable account is first identified.

Sponsored investment entities and sponsored controlled foreign corporations covered by Annex II of a Model 2 IGA will maintain their deemed-compliant status as long as they are registered by the sponsoring entity on or before December 31, 2016.

In addition, Treasury and the IRS intend to amend the regulations under section 1471 to provide that withholding agents can continue to rely on withholding certificates from sponsored registered deemed-compliant FFIs and sponsored direct reporting NFFEs that have only the sponsoring entity’s GIIN for payments made prior to January 1, 2017.

For a payment made on or after January 1, 2017, a withholding agent will be required to obtain the GIIN of a payee that is a sponsored registered deemed-compliant FFI or a sponsored direct reporting NFFE by obtaining either:

(1) a withholding certificate from the payee that includes its GIIN, or

(2) if the withholding agent already has on file a withholding certificate for the payee that includes the GIIN of the sponsoring entity, oral or written confirmation of the payee’s GIIN (such as by e-mail).  

If a withholding agent obtains oral or written confirmation of the payee’s GIIN, it will be required to retain a record of such information, which will become part of the withholding certificate. Whether the withholding agent receives the GIIN through a new withholding certificate, or by oral or written confirmation, the withholding agent will have 90 days from the date it obtains the GIIN to verify its accuracy against the published IRS FFI list. Because withholding agents will be required to obtain the GIIN of each sponsored entity for payments made after December 31, 2016, sponsoring entities should consider registering to obtain GIINs well in advance of January 1, 2017, in order to give withholding agents sufficient time to complete this requirement (and thereby avoid being withheld upon).


A. Model 1 IGAs for which the Obligation to Exchange Has Not Taken Effect

Many partner jurisdictions that have signed IGAs or reached an agreement in substance on the text of an IGA continue to work through their internal procedures to bring the IGA into force.  Pursuant to its authority under section 1471(b)(2)(B), and consistent with Announcement 2014-38, for Model 1 IGAs that have not yet entered into force on September 30, 2015, Treasury intends to continue to treat FFIs covered by the IGA as complying with, and not subject to withholding under, FATCA so long as the partner jurisdiction continues to demonstrate firm resolve to bring the IGA into force and any information that would have been reportable under the IGA on September 30, 2015, is exchanged by September 30, 2016, together with any information that is reportable under the IGA on September 30, 2016.

B. Model 1 IGAs for which the Obligation to Exchange Is in Effect For Model 1B

IGA jurisdictions that have an IGA in force pursuant to Article 10(1) or Article 12(1) (as applicable) of the IGA, and for Model 1A IGA jurisdictions for which the obligation to exchange information has taken effect pursuant to Articles 3(9) and 10(1) of the IGA, Article 3(5) of the IGA requires the partner jurisdiction to exchange information on U.S. reportable accounts with respect to 2014 by September 30, 2015.

Treasury and the IRS understand that partner jurisdictions are continuing to develop and implement the systems needed for automatic information exchange and may not have those systems in place by September 30, 2015. In addition, several partner jurisdictions are in the process of enacting legislation to implement their IGAs, without which they are not able to exchange information with the United States.

Consistent with treating 2014 and 2015 as a transition period, Treasury and the IRS will treat FFIs covered by an IGA as complying with, and not subject to withholding under, FATCA even if the relevant partner jurisdiction has not exchanged 2014 information by September 30, 2015, as long as the partner jurisdiction notifies the U.S. competent authority before September 30, 2015, of the delay and provides assurance that the jurisdiction is making good faith efforts to exchange the information as soon as possible. This notice does not affect the timing of when FFIs should report information to a partner jurisdiction, which remains governed by local law.


A. Modifications to Pro Rata Rule for Pooled Collateral

Treasury and the IRS agree that, in order to ease administrative burdens when collateral secures both grandfathered obligations and obligations that are not grandfathered, the secured party should be permitted either to withhold on all collateral or to apply the pro rata approach with respect to such collateral. Therefore, Treasury and the IRS intend to amend §1.1471-2(b)(2)(i)(A)(3) to provide that the pro rata rule is not mandatory.

B. Substitute Payments Made with Respect to a Grandfathered Obligation

In balancing the benefits and burdens of the information reporting and withholding rules under FATCA, Treasury and the IRS agree that a substitute payment made with respect to a grandfathered obligation that has been posted as collateral should also be treated as a payment made under a grandfathered obligation, and therefore not subject to withholding under section 1471 or section 1472.

Therefore, Treasury and the IRS intend to amend the definition of grandfathered obligation in §1.1471-2(b)(2)(i)(A) to include any obligation that gives rise to substitute payments and that is created as a result of the payee posting collateral that is otherwise treated as a grandfathered obligation under §1.1471-2(b)(2)(i)(A)(1).

September 21, 2015 | Permalink | Comments (0)

Sunday, September 20, 2015

CFTC Orders Bitcoin Options Trading Platform Operator and its CEO to Cease Illegally Offering Bitcoin Options and to Cease Operating a Facility for Trading or Processing of Swaps without Registering

In First Action against an Unregistered Bitcoin Options Trading Platform, CFTC Holds that Bitcoin and Other Virtual Currencies Are a Commodity Covered by the Commodity Exchange Act

The U.S. Commodity Futures Trading Commission (CFTC) today issued an Order filing and 720px-US-CFTC-Seal.svgsimultaneously settling charges against Coinflip, Inc. d/b/a Derivabit (Coinflip) and its chief executive officer Francisco Riordan for conducting activity related to commodity options transactions without complying with the Commodity Exchange Act (CEA) and CFTC Regulations, specifically, by operating a facility for the trading or processing of commodity options without complying with the CEA or CFTC Regulations otherwise applicable to swaps or conducting the activity pursuant to the CFTC’s exemption for trade options. Coinflip is based in San Francisco, California, and Riordan resides in San Francisco.

The Order finds that, from in or about March 2014 to at least August 2014, Coinflip and Riordan operated an online facility named Derivabit, offering to connect buyers and sellers of Bitcoin option contracts.

The Order requires Coinflip and Riordan to cease and desist from further violations of the CEA and Regulations, as charged, and to comply with specified undertakings.

Aitan Goelman, the CFTC’s Director of Enforcement, commented: “While there is a lot of excitement surrounding Bitcoin and other virtual currencies, innovation does not excuse those acting in this space from following the same rules applicable to all participants in the commodity derivatives markets.”

The CFTC Order finds that Coinflip designated put and call options for the delivery of Bitcoins as eligible for trading on the Derivabit platform. Under Section 4c of the CEA and Part 32 of the CFTC’s Regulations, commodity option transactions must either be conducted in compliance with provisions of the CEA or Regulations otherwise applicable to swaps, or conducted pursuant to Regulation 32.3, the “trade option” exemption. In the Order, the CFTC for the first time finds that Bitcoin and other virtual currencies are properly defined as commodities. The Order further finds that the activities related to commodity option transactions were not conducted in compliance with a provision of the CEA or a provision of the Regulations otherwise applicable to swaps, and were not conducted pursuant to the Regulation 32.3 “trade option” exemption.

Additionally, the Order finds that Coinflip operated a facility for the trading of swaps but did not register the facility as a Swap Execution Facility or Designated Contract Market, as required. The CEA’s definition of “swap” includes option contracts. Accordingly, Coinflip violated Section 5h(a)(1) of the CEA and Regulation 37.3(a)(1). Because Riordan controlled Coinflip, directly or indirectly, and did not act in good faith or knowingly induced, directly or indirectly, Coinflip’s acts in violation of the CEA and Regulations, Riordan is liable for all of Coinflip’s violations of the CEA and Regulations, the Order finds.

September 20, 2015 in Financial Regulation | Permalink | Comments (0)

Saturday, September 19, 2015

European Cybercrime Center at Europol Address by US Attorney General

Remarks Attorney General Loretta E. Lynch excerpted

In only three short years, the European Cybercrime Centre has already proved itself to be an Justice logoindispensable leader in the global effort to fight cybercrime, to protect infrastructure and innovation and to safeguard innocent people from fraud, exploitation and intrusions on their privacy.  ...

...Cybercriminals are getting more sophisticated, more adaptable and more ambitious in their wrongdoing.  They are targeting critical information and vital infrastructure.  And the fact that their attacks occur in a world without walls or borders requires us to continually reimagine and reinvent our traditional law enforcement responses.

This Centre exemplifies that innovative approach and serves as a model for the kind of open communication, efficient information-sharing and nimble responsiveness that we know is highly effective for ensuring our cybersecurity going forward – and the history of unparalleled cooperation among the United States, partner nations and EC3 shows the virtues of confronting this problem hand in hand.  Just this past July, our coordinated effort resulted in a takedown of the Darkode hacking forum – an online underground marketplace where hackers convened to arrange the purchase, sale and trade of malicious software, botnets and other tools designed to facilitate computer intrusions, as well as stolen personal information obtained through illegal hacking.  Through the outstanding efforts of the Federal Bureau of Investigation in the United States and the hard work of a coalition of 20 nations’ law enforcement forces – led by EC3 and the U.S. Department of Justice – we were able to charge, arrest, or search 70 Darkode members and associates around the world.

We shared another victory through Operation Onymous in November 2014, during which we worked with more than 15 other countries under EC3’s auspices to bring down so-called “dark market” websites.  Those sites relied on the anonymity of buyers and sellers to traffic narcotics, firearms, stolen credit card data, fake passports, computer-hacking tools and other illegal goods and services.  Using court-authorized legal processes and Mutual Legal Assistance Treaty requests, our international coalition seized 400 online user addresses and multiple computer servers, disrupting the marketplace and sending an unmistakable message that law enforcement worldwide will not be deterred from action against harmful online activity, no matter how sprawling the crime nor how well-concealed.

We have also been able to make significant progress together on one of our most critical common objectives: combatting the sexual exploitation of children online.  Through a sweeping multi-national effort under an investigation that began in 2012 – in which we pooled resources, ran parallel investigations and shared information in real time – the Justice Department and EC3 were able to take more than 200 child sexual exploitation websites offline, derail the activities of tens of thousands of online producers and traffickers of child pornography and prosecute offenders across the world.  It was a criminal investigative effort of unprecedented complexity and technical sophistication and it is now a model of operational coordination for all cross-border investigations.

These cases and many others – from the Blackshades Remote Access Tool takedown to the shutdown of the infamous Gameover Zeus botnet – have demonstrated the growing sophistication of online criminal enterprises.  They have helped us develop and refine our own abilities to investigate, infiltrate and disassemble malicious cyber networks.  And they have reminded us that a global problem demands a global response; that a robust information-sharing infrastructure is critical to our success; and that strong personal relationships among international law enforcers – like those in evidence here today – are the fuel for the progress our nations need and our people deserve.

The Department of Justice I lead – and the entire Obama Administration – is deeply committed to doing our part.  Our FBI and Secret Service are investigating cyber intrusions while staying vigilant against individuals, organized groups and state actors who might attempt to steal sensitive data or inflict harm.  We’re laying the groundwork to respond swiftly to future cyber-attacks and intrusions and using our expertise to prevent them from happening in the first place.  And we recently created a new Cyber security Unit within the Justice Department’s Criminal Division, staffed with experienced prosecutors steeped in the law, policy and practice of cybercrime prevention.  One of the unit’s primary missions is to engage private industry leaders – because cyber security is also a shared responsibility between government and the private sector.  That’s why I’ve been meeting with corporate executives across the United States to emphasize the need for law enforcement officials and members of the business community to keep one another informed of cybercrime, to collaborate on comprehensive strategies and to work together to ensure that everyone is safe from exploitation and abuse online.

Of course, these attacks don’t just exploit the vulnerable, strike at our financial well-being and flout the rule of law; they also may represent threats to the fundamental security interests of our nations – threats that are appearing in a variety of forms, including those that target critical infrastructure.  We see cases of economic espionage and trade secret theft from private companies and violations of the export control laws committed through cyber-enabled means.  And we are all too aware of terrorist groups that rely on the Internet and social media to push propaganda, lure new recruits and plot attacks both on- and off-line.  To address the frequency, sophistication and seriousness of those threats, the United States government is pursuing an inclusive “whole-of-government” approach, modeled on our comprehensive response to terrorism threats in the wake of the September 11th attacks, which focused on facilitating interagency coordination and sharing information widely and rapidly.

We also continue to reach out to our partners beyond the United States.  Just this fiscal year, the FBI’s Cyber Division established three new permanent Cyber Assistant Legal Attaché positions – in London, Ottawa and Canberra – as well as five new temporary positions.  Those attachés are embedded in law enforcement and intelligence agencies in their host nations to help facilitate information-sharing, improve cooperation on investigations and build even stronger relationships with our allies.  We will be adding four more cyber attachés in the next fiscal year and I expect the number will continue to grow into the future – along with the collaboration and partnership those positions will foster.

As part of our outreach to international partners, we’re also building our capacity to provide mutual legal assistance to other countries in cybercrime cases and cases involving electronic evidence.  We’ve created a cyber-unit in our Office of International Affairs to focus exclusively on responding to and executing requests for electronic evidence from foreign authorities.  To help process the increased volume of requests for electronic evidence – which has increased by 1000 percent over the past ten years – we are actively hiring 38 more attorneys and 26 additional professional staff for OIA’s Mutual Legal Assistance Treaty Modernization Project and we are hopeful that – with increased funding from our legislature – we will be able to develop even greater capacity in the coming months.

I am also very happy to announce today that – with the support of Europol and Eurojust – we will be temporarily assigning a prosecutor from our Department’s Criminal Division to sit in Eurojust and work with EC3.  This assignment is a sign of the importance we attach to Eurojust, Europol and EC3 – and we look forward to assessing together whether this should be a permanent arrangement in the future.

Of course, while efficiency, information-sharing and effective law enforcement represent paramount objectives, we must also make certain that we are protecting the privacy and civil liberties of our people.  I am pleased to note that, just a few days ago, the United States and the European Union initialed the “Umbrella” Data Privacy and Protection Agreement, which will enhance the ability of law enforcement and prosecutorial agencies on both sides of the Atlantic to combat crime and terrorism while protecting personal privacy.

These are all important accomplishments – and we still have more work to do.  There can be no doubt that we face difficult challenges, complex issues and evolving threats.   We will need to confront increasingly sophisticated criminals and find ways to respond to technological changes that complicate the ability of law enforcement officers to gather evidence when acting under lawful authority.  But I also know, through the collaborations that have already taken place during this Centre’s short existence, that this extraordinary gathering – with our friends and partners around the world – is more than equal to these tasks.  Our very presence here today is a testament to our commitment.

We are here because of what we can do, together, to safeguard our citizens, to protect our nations and to strengthen our global society against threats to its most fundamental values.  We are here because we aspire to the same high ideals that have brought our nations together in years past.  We are here, at this moment of challenge and change, to break new ground, forge new paths and build a brighter future for individuals around the world.  And we are here, in the words of this beautiful city’s motto, to fight for “Vrede en Recht” – peace and justice.  As we go forward, let us continue to hold fast to that determination.  Let us redouble and reaffirm that commitment.

September 19, 2015 | Permalink | Comments (0)

Friday, September 18, 2015

Texas A&M Law Seeks Legal Writing Center "Writing Specialist"

Writing Specialist:   TAMU-Law-lockup-stack-SQUARE

The Writing Specialist is responsible for providing instruction, tutoring, and guidance to law students in the technical aspects of writing (grammar, punctuation, structure, style, etc.). The Writing Specialist will assist the Writing Center Director in planning, developing, and implementing programs to improve the students’ technical writing skills. The Writing Specialist also provides technical writing assistance to faculty members.


September 18, 2015 in Academia | Permalink | Comments (0)

OECD launches report on greater co-operation and information sharing between government agencies to counter financial crimes

Vast amounts are lost to illicit financial flows, including tax evasion, money laundering, bribery and OECDcorruption. These crimes threaten the strategic, political and economic interests of both developed and developing countries. In a world of limited resources and increasing complexity, it is essential for government authorities to work closely together in a “whole of government” approach to best address these challenges.

Improving Co-operation between Tax and Anti-Money Laundering Authorities: Access by tax administrations to information held by financial intelligence units for criminal and civil purposes highlights the need for governments to maximise their effectiveness in tackling financial crimes and ensuring tax compliance and shows the benefits of greater co-operation between Financial Intelligence Units (FIUs) and tax administrations. It recommends that, subject to the necessary safeguards, tax administrations should have the fullest possible access to the Suspicious Transaction Reports received by the FIU in their jurisdiction.

This report was released at the Fourth OECD Forum on Tax and Crime in Amsterdam, an event which brought together over 200 senior officials and specialists from over 70 countries and international organisations, who collectively share responsibility for combating financial crime and terrorist financing in all its forms. Strengthening the links between criminal tax investigations and the fight against illicit financial flows such as tax evasion, bribery and corruption, money laundering, terrorist financing was a key topic of the agenda. Participants also stressed the need for capacity building to help developing countries to better fight financial crimes as part domestic resource mobilisation. Discussions on the dark web and the use of analytics to detect and deter financial crimes illustrated the importance of technology as both a risk and part of the solution to tax crimes and other crimes with further work forthcoming.

Further details on the Fourth Forum on Tax and Crime, including the statement of outcomes, are available at:

September 18, 2015 | Permalink | Comments (0)

Court Authorizes IRS to Issue Summonses to Discover U.S. Taxpayers with Offshore Bank Accounts at Belize Bank International Limited and Belize Bank Limited

A federal court in Miami entered an order authorizing the Internal Revenue Service (IRS) to Justice logoserve a “John Doe” summons seeking information about U.S. taxpayers who may hold offshore accounts at Belize Bank International Limited (BBIL) or Belize Bank Limited (BBL), the Justice Department announced. 

The order, which was entered by U.S. District Judge Ursula Ungaro, granted the United States’ petition for permission to seek records of BBIL’s and BBL’s correspondent accounts at Bank of America, N.A. and Citibank, N.A.  Those records will allow the IRS to identify U.S. taxpayers who hold or held interests in financial accounts at BBIL and BBL, as well as other financial institutions that used the same correspondent accounts.

“The Department and the IRS are using every tool available to identify and investigate those individuals determined to evade their U.S. tax and reporting obligations through the use of offshore financial accounts and foreign entities,” said Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.  “These John Doe summonses will provide detailed information about individuals using financial institutions in Belize and, to the extent funds were transferred, other jurisdictions.  But rest assured, we are receiving information from many sources regarding hidden foreign accounts and offshore schemes.  The time to come clean is now – before we knock on your door.”

“This court action further demonstrates our relentless efforts to pursue and catch those evading taxes with hidden offshore accounts no matter where they are or what structures are used to hide behind,” said Commissioner John Koskinen of the IRS.  “This court action also reinforces the ongoing importance of the John Doe summons in international tax enforcement.”

According to the IRS declaration, BBL is incorporated and based in Belize, and directly owns BBIL.  The IRS declaration further states that Belize Corporate Services (BCS) is incorporated and based in Belize and offers corporate services including the purchase of “shelf” Belizean international business companies.  BBL, BBIL and BCS are all corporate subsidiaries of BCB Holdings Limited, according to the declaration. 

The declaration describes and IRS Revenue Agent’s review of information submitted by BBL and BBIL customers who disclosed their foreign accounts through the IRS offshore voluntary disclosure programs.  The customers in the “John Doe” class may have failed to report income, evaded income taxes, or otherwise violated the internal revenue laws of the United States, according the declaration.

The IRS uses what are known as “John Doe” summonses to obtain information about possible violations of internal revenue laws by individuals whose identities are unknown.  The John Doe summonses approved today direct Citibank and Bank of America to produce records identifying U.S. taxpayers with accounts at Belize Bank International Limited, Belize Bank Limited, or their affiliates, including other foreign banks that used BBIL and BBL’s correspondent accounts to service U.S. clients.

The court also granted the IRS permission to seek records related to Citibank’s and Bank of America’s correspondent accounts for BCS and information related to BCS’s deposit accounts at Bank of America. 

A correspondent account is a bank account that one bank maintains for another bank.  Financial transactions involving U.S. dollars flow through U.S. banks; therefore, foreign banks that do business in U.S. dollars, but do not have an office in the United States, obtain a correspondent account in order to reach U.S. customers.  Transactions in the correspondent account leave a trail in the United States that the IRS can follow, including by using a John Doe summons.  The John Doe summons can let the IRS obtain records of money deposited, paid out through checks, and moved through the correspondent account through wire transfers.

The Justice Department has previously obtained similar orders from the U.S. District Court of the Southern District of New York, permitting a John Doe summons on UBS AG for records of Swiss bank Wegelin & Co.’s correspondent account at UBS and from the U.S. District Court of the Northern District of California, permitting a John Doe summons on Wells Fargo, N.A., for records of the Barbados-based Canadian Imperial Bank of Commerce FirstCaribbean International Bank (FCIB).

For further information about the Department of Justice’s offshore compliance initiatives, please visit:

September 18, 2015 | Permalink | Comments (0)

Thursday, September 17, 2015

Swiss Banking Shakes Off FATCA and CRS. Rising AUM, Income, & 26% Global Market Share

The Swiss Bankers Association reported that despite ongoing structural change, shrinking interest Swiss logomargins and a challenging market environment: the Swiss banks reported a rise in both assets under management and net income in 2014. Companies and private individuals benefitted from intact bank lending. Domestic mortgage loans rose moderately by 3.6 percent. A slight decrease in staff levels in 2014 reflects the more difficult framework conditions. The banks expect the employment trend to remain constant or improve slightly in the second half of 2015.

The banking sector once again made a significant contribution to Switzerland’s prosperity in 2014. It generated around 6 percent of total economic performance and recorded net annual profit of CHF 7.4 bn. The sector employed over 104,000 people (full-time equivalents) and paid a total of CHF 2.6 bn in income taxes and taxes on earnings. An overview of the key figures for the 2014 business year:

  • The banks in Switzerland managed CHF 6,656 bn at the end of 2014. Compared to 2013, this represents an increase of CHF 518 bn. This rise is the result of an increase in securities holdings, savings and investment liabilities to customers, and time deposits. The banks also benefitted from strong inflows from emerging countries and transition countries in Europe. These inflows more than compensated for the decrease in assets from Western Europe arising from tax settlements.
  • The share of foreign assets under management continues to account for slightly over 50 percent. With a market share of 26 percent, the Swiss banking sector remains the global leader for cross-border wealth management.
  • Aggregate annual profit of the profitable institutions rose by 19.3 percent to CHF 14.2 bn. The losses generated by the unprofitable institutions also rose, by 25.9 percent to CHF 6.8 bn. The big banks and foreign-controlled group of banks were the primary drivers behind the annual profits and losses. The banks paid taxes amounting to CHF 2.6 bn (a 36.8% increase year-on-year).
  • Lending by banks in Switzerland to companies and private individuals remained intact. The domestic credit volume amounted to CHF 1,072.5 bn. This corresponds with a moderate increase compared to the previous year. Domestic loans rose by 3.6 percent, which represents a less significant increase than in the previous three years. This is likely also due to the measures introduced in the mortgage lending segment, including the amendments to the self-regulation of the banks.
  • The banks’ balance sheet total rose by 6.8 percent to CHF 3,041.7 bn, predominantly due to the expansion of foreign positions held by the big banks and the rise in mortgage lending.
  • At the end of 2014, the banks in Switzerland employed 104,053 people. Staff levels decreased by 1,682 jobs or 1.6 percent in 2014. This reflects the more difficult economic and regulatory framework conditions faced by the banks. The average unemployment rate in the Swiss banking sector was 2.5 percent, and therefore significantly below that of the overall economy (3.2%). According to an SBA survey, the banks expect the employment trend to remain unchanged or improve slightly in the second half of 2015. 

Challenges stimulate structural change

2014 presented numerous challenges for the banks in Switzerland, which had a negative impact on costs and margins. This situation, combined with the rapid developments in the digitization segment, is likely to lead to further structural change and consolidation in the banking sector. While there were still 283 banking institutions operating in Switzerland in 2013, the number decreased to 275 at the end of 2014. The number of institutions therefore decreased by eight.

The Swiss National Bank’s (SNB) decision in January 2015 to lift the minimum euro exchange rate and introduce negative interest rates on sight deposit accounts places a particularly heavy burden on the banks in Switzerland. On the one hand, as an export industry, they are affected by the high franc exchange rate. On the other hand, the negative interest rates have an adverse effect on the business activities of the banks, in particular for those with a domestic focus.

Strengthening the Swiss capital market and improving framework conditions

A balanced relationship between capital market and credit financing is beneficial when it comes to ensuring sufficient financial resources for companies in all phases of the economic cycle. Traditionally, credit financing – particularly for the financing of small and medium sized companies – has been the predominant form of financing in Switzerland; debt financing on the capital market (e.g. through issuances) is the exception. In international comparison, momentum in the Swiss capital market has seen weak development due to unattractive framework conditions, in particular for foreign issuers. In order to stimulate this business, focus must be placed on the following areas: abolition of the withholding tax and the stamp tax on issuance, introduction of the paying agent principle and sustainable solutions for Coco bonds (contingent convertible bonds). A further measure for increasing the appeal of the Swiss capital market is the creation of a hub for foreign exchange trading of the Chinese currency, the renminbi, which is well underway thanks to the endeavours of the SBA.

September 17, 2015 | Permalink | Comments (0)