International Financial Law Prof Blog

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

Tuesday, May 31, 2016

A Sting and a Sham College

Inside Higher Education reports that: 

Government undercover operation that led to indictments of 21 people sheds light on shadowy world of suspect colleges that abuse the student visa system and the agents who stand CIS logoto profit.

A July 2012 U.S. Government Accountability Office report issued in the wake of a high-profile visa fraud case involving an unaccredited California institution, Tri-Valley University, found that the U.S. Department of Homeland Security's Student and Exchange Visitor Program had inadequate processes in place to identify and combat school fraud. There are more than 8,000 schools certified by SEVP to enroll international students.

Since the GAO report, federal officials have brought visa fraud-related charges against the operators of a few different schools.

Read the story here on Inside Legal Ed!

May 31, 2016 in Education | Permalink | Comments (0)

Monday, May 30, 2016

Government of Canada signs international agreement on enhanced tax reporting by large multinationals

National Revenue Minister Diane Lebouthillier announced today that the Government of Canada has taken another step to stop the unfair practice of aggressive tax planning by signing an international agreement to implement stronger international reporting obligations for large multinational enterprises (MNEs). Thirty-one other jurisdictions have also signed the agreement.

The Canada Revenue Agency (CRA) told participants at the Forum on Tax Administration (FTA) meeting in Beijing, China today that the Minister has signed the Multilateral Government_of_Canada_signature.svgCompetent Authority Agreement (MCAA) on country-by-country reporting. The agreement paves the way for Canada and its international treaty partners to obtain and share information on large global businesses.

The signing of the agreement is part of the CRA's four-point action plan to address tax evasion and tax avoidance. The action plan includes measures to expand the information sources available to the CRA, strengthen its cooperation with international partners, and minimize opportunities for multi-national enterprises to shift taxable profits away from the jurisdictions where the underlying economic activity has taken place.

This new reporting requirement is a recommendation of the G20/Organisation for Economic Cooperation and Development (OECD) Base Erosion and Profit Shifting (BEPS) project, which aims to address international tax planning strategies used by MNEs to inappropriately minimize their taxes.

Budget 2016 announced that Canada would introduce legislation to implement country-by-country reporting. Under this proposal, multi-national enterprises with annual consolidated group revenue of €750 million (approximately $1.1 billion CAD) or more will be required to provide "country-by-country reports" that contain their income, taxes paid, and key economic activities. With the MCAA in place, this information will be shared by participating countries within their treaty networks and allow them to, both individually and collectively, improve their ability to audit and detect aggressive international tax avoidance.

The reports will help to ensure that the global operations of these enterprises are more transparent and that they pay appropriate taxes in the countries where their profits are generated.

Quotes

"Our government's Budget 2016 investments in the CRA will ensure that the Agency has the capacity to expand its audits of high-risk multinational corporations. The additional information that we will provide to, and receive from, our treaty partners under this important international agreement will support worldwide efforts to reinforce international tax rules and prevent tax avoidance. Canada is pleased to be an active contributor in this effort."

The Honourable Diane Lebouthillier, P.C., M.P., Minister of National Revenue

Quick facts

  • Canada has one of the world’s largest treaty networks, with 92 tax treaties and 22 tax information exchange agreements in place.
  • Under the budget proposal, country-by-country reports will be required to be filed by MNEs with group revenue of over € 750 million covering all tax jurisdictions in which they do business for taxation years beginning after 2015.
  • These reports will be shared among the MCAA signatories beginning in June 2018, providing them with the ability to better assess for taxation purposes the transactions entered into by MNEs.

Associated Links

May 30, 2016 in BEPS, OECD | Permalink | Comments (0)

Sunday, May 29, 2016

Pump & Dump Schemes Promoter Pleads Guilty To Avoiding Money Laundering & FATCA Reporting Requirement

Defendant Used Offshore Shell Companies in Belize and the West Indies to Perpetrate Numerous Schemes, Including the Manipulation of Cynk Technology Corp (CYNK)

Earlier today, Gregg R. Mulholland, a dual U.S. and Canadian citizen and secret owner of Legacy Global Markets S.A. (Legacy), an offshore broker-dealer and

FFETF-logoinvestment management company based in Panama City, Panama, and Belize City, Belize, pleaded guilty to money laundering conspiracy for fraudulently manipulating the stocks of more than 40 U.S. publicly-traded companies and then laundering more than $250 million in profits through at least five offshore law firms.  Pursuant to his plea agreement with the government, Mulholland has agreed to forfeit, among other things, a Dassault-Breguet Falcon 50 aircraft, a Range Rover Defender vehicle, two real estate properties in British Columbia, and funds and securities on deposit at more than a dozen bank and brokerage accounts.  When sentenced, Mulholland faces up to 20 years in prison. 

The guilty plea was announced by Robert L. Capers, United States Attorney for the Eastern District of New York; Diego Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI); Shantelle P. Kitchen, Special Agent-in-Charge, Internal Revenue Service, Criminal Investigation, New York (IRS-CI); and Angel M. Melendez, Special Agent-in-Charge, U.S. Immigration and Customs Enforcement’s (ICE), Homeland Security Investigations, New York (HSI).

“Mulholland’s staggering fraud perpetrated on the investing public was built on an elaborate offshore shell game, which included his secret ownership of an offshore brokerage firm.  Through manipulative trading, Mulholland generated profits of more than $250 million and used a corrupt lawyer to launder the proceeds into the United States to pay his fraudulent network of stock promoters and broker-dealers,” stated United States Attorney Capers.  “We are steadfast in our commitment to protect the investing public and will vigorously prosecute those who seek to abuse the financial markets through fraudulent means.” Mr. Capers thanked the Securities and Exchange Commission (SEC), the Department of Justice’s Office of International Affairs (OIA), the Department of State’s Diplomatic Security Service (DSS), and the Financial Industry Regulatory Authority, Inc., Criminal Prosecution Assistance Group (FINRA CPAG) for their cooperation and assistance in the investigation.

“Mulholland pleaded guilty today for his role in a stock manipulation and profit hiding scheme totaling more than $250 million. Making sure our markets are fair to all investors and bringing charges against those who profit illegally remains a top priority for the FBI,” stated FBI Assistant Director-in-Charge Rodriguez.

“This investigation highlights the government’s ability and resolve to combat global money laundering, in this case, the laundering of illicit proceeds from a stock manipulation scheme,” stated IRS-CI Special Agent-in-Charge Kitchen.  “Prospective money launderers should take note of Mr. Mulholland’s conviction and think twice about the consequences of such actions.  The same holds true for individuals who attempt to criminally circumvent IRS reporting requirements regarding foreign accounts, as their actions will attract the attention of IRS-Criminal Investigation.”  

“Laundering more than a quarter of a billion dollars, this defendant used multiple schemes including manipulating the stocks of more than 40 companies in order to line his pockets at the expense of the U.S. financial system.  HSI remains committed to using its unique authorities to arrest those that seek to conceal and launder illicit proceeds, causing harm to our economy,” said Special Agent-in-Charge Melendez.

Between 2010 and 2014, Mulholland controlled a group of individuals (the Mulholland Group) who together devised three interrelated schemes to: (1) induce U.S. investors to purchase stock in various thinly-traded U.S. public companies through fraudulent promotion of the stock, concealment of their ownership interests in the companies, and fraudulent manipulation of artificial price movements and trading volume in the stocks of those companies; (2) circumvent the IRS’s reporting requirements under the Foreign Account Tax Compliance Act (FATCA); and (3) launder the fraudulent proceeds from the stock manipulation schemes to and from the United States through five offshore law firms.  Through these schemes, the Mulholland Group laundered more than $250 million in fraudulent proceeds.

To facilitate the interrelated schemes, the Mulholland Group used shell companies in Belize and Nevis, West Indies, which had nominees at the helm.  This structure was designed to conceal the Mulholland Group’s ownership interest in the stock of U.S. public companies, in violation of U.S. securities laws, and enabled the Mulholland Group to engage in more than 40 “pump and dump” schemes.  For example, this structure enabled the Mulholland Group to manipulate the stock of Cynk Technology Corp, which traded on the U.S. OTC markets under the ticker symbol CYNK.  Using aliases such as “Stamps” and “Charlie Wolf,” Mulholland was intercepted on a court-authorized wiretap on May 15, 2014, admitting to his ownership of “all the free trading” or unrestricted shares of CYNK.  Prior to this conversation between Mulholland and his trader at Legacy, there had been no trading in CYNK stock for 24 trading days.  Over the next two months, the stock of CYNK rose from $0.06 per share to $13.90 per share, a more than $4 billion stock market valuation for a company that had no revenue and no assets.    

Mulholland used the services of a U.S.-based lawyer to launder the more than $250 million generated through his stock manipulation of CYNK and other U.S. companies – directing the fraud proceeds to five law firm accounts and transmitting them back to members of the Mulholland Group and its co-conspirators.  These concealment schemes also enabled Mulholland to evade reporting requirements to the IRS.

The government’s case is being prosecuted by the Office’s Business and Securities Fraud Section.  Assistant United States Attorneys Jacquelyn Kasulis, Winston Paes, and Michael Keilty are in charge of the prosecution.  Assistant United States Attorney Brian Morris of the Office’s Civil Division will be responsible for the forfeiture of assets.

May 29, 2016 | Permalink | Comments (0)

Saturday, May 28, 2016

IRS Civil Asset Forfeiture Authorities and Cases

Excerpts from prepared remarks

As a 27-year prosecutor and the Deputy Assistant Attorney General overseeing a variety of areas including the Asset Forfeiture and Money Laundering Section, I am honored to Ways Means logorepresent the Department of Justice today and to address the department’s commitment to ensuring that federal asset forfeiture laws are appropriately and effectively used, consistent with civil liberties and the rule of law.

Asset forfeiture and the structuring laws are critical legal tools that serve a number of compelling law enforcement purposes, including detecting and deterring other illegal activity.  The Bank Secrecy Act assists law enforcement in the detection of criminal conduct by requiring financial institutions to file reports concerning financial transactions in excess of $10,000.  The criminal structuring laws enacted by Congress are intended to prevent individuals from evading these important reporting requirements.

The government is required to prove three elements for a structuring charge, namely that the defendant:

1. structured his transactions,

2. knew of the reporting requirements and

3. intended to evade the reporting requirements.

It is important to note that structuring is not a strict liability crime.  An individual who inadvertently divides up his deposits or withdrawals cannot be liable for structuring because he lacks the intent to evade the reporting requirements. 

Congress has authorized a variety of sanctions, both civil and criminal, for structuring violations, including forfeiture of the structured funds.  In a civil action to forfeit property linked to crime, including a structuring violation, the government has the burden of proving by a preponderance of the evidence that a crime occurred and that the seized property was connected to that crime.  Even after the government has proven its case, the law entitles any individuals with standing to assert a claim that they are innocent owners of the property at issue and defeat the government’s claim.  After a forfeiture is complete, a petitioner can seek the return of property by filing a petition for remission or mitigation.

Remission and mitigation do not contest the forfeiture.  Rather, in effect, those petitions are tools to request a pardon for the forfeited property.  The department has procedures in place for considering and fairly resolving such petitions.  Those who committed structuring violations do not qualify for remission because they are not “innocent owners” under the terms of the law.  Such petitioners might, however, qualify for mitigation, which is a decision to pardon some portion of the forfeited property based upon a holistic review of the case.

The factors the department considers when evaluating mitigation include:

1. the existence of a prior record or evidence of similar criminal conduct; 

2. whether the violation includes a drug crime;

3. the violator’s cooperation with law enforcement on the related matter;

4. was the violation isolated and not part of a larger scheme; and

5. the necessity of the forfeiture to achieving a legitimate forfeiture purpose.

In order to protect and maintain the integrity of the work of our career prosecutors and agents, I cannot comment on any pending litigation or specific cases, but I can tell you that the department continues to thoroughly review and appropriately rule on any current and newly filed petitions for remission or mitigation, including those involving structuring violations. 

I would also like to highlight the department’s ongoing comprehensive review of forfeiture practices and policies over the past 18 months.  As part of that review, on March 31, 2015, the department issued a policy limiting the use of asset forfeiture authorities in connection with structuring offenses in most cases to instances where a defendant has been criminally charged or there is evidence of additional criminal activity beyond the crime of structuring.  The new policy also imposes important protections after a seizure has taken place, including a directive to return the funds if the prosecutor at any time determines there is insufficient evidence to prevail at trial, and imposing a deadline for filing a criminal indictment or civil complaint against the funds seized.  This policy is a significant change that exceeds the requirements of the law, and it underscores the Department of Justice’s commitment to fighting crime and returning money to victims while protecting civil liberties and ensuring due process.

See also

Bipartisan Bill to Provide Due Process Within 28 Days of IRS' Civil Asset Forfeitures

Federal Government After Decades Tries To Stop Local Authorities From Profiting on Asset Seizure Abuse Justified by Federal Law (But What About State Abuse)?

Money Laundering, Asset Forfeiture and Recovery, and Compliance- A Global Guide (LexisNexis updated quarterly) is an eBook designed to provide the compliance officer, BSA counsel, and government agent with accurate analyses of the AML/CTF Financial and Legal Intelligence, law and practice in the nations of the world with the most current references and resources.  Special topic chapters will assist the compliance officer design and maintain effective risk management programs.  Over 100 country and topic experts from financial institutions, government agencies, law, audit and risk management firms have contributed analysis to develop this practical compliance guide. 

May 28, 2016 | Permalink | Comments (0)

Friday, May 27, 2016

CFTC Orders Citibank to Pay $250 Million for Attempted Manipulation and False Reporting of U.S. Dollar ISDAFIX Benchmark Swap Rates

The CFTC’s Second Enforcement Action for the Attempted Manipulation and False Reporting of ISDAFIX Benchmark Rates

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) issued an Order today filing and settling charges against Citibank, N.A. (Citibank or the Bank).  The 720px-US-CFTC-Seal.svgCFTC Order finds that, beginning in January 2007 and continuing through January 2012 (the Relevant Period), Citibank on multiple occasions attempted to manipulate, and made false reports concerning, the U.S. Dollar International Swaps and Derivatives Association Fix (USD ISDAFIX), a global benchmark for interest rate products.

The CFTC Order requires Citibank to pay a $250 million civil monetary penalty and to immediately cease and desist from further violations of the Commodity Exchange Act.  Further, Citibank is required take specified steps to implement and strengthen its internal controls and procedures, including measures to detect and deter trading potentially intended to manipulate swap rates such as USD ISDAFIX and to ensure the integrity of interest-rate swap benchmarks.

“The CFTC’s order demonstrates that we will vigorously continue to investigate any efforts to manipulate financial benchmarks, and we will take action where possible to protect the integrity of these benchmarks,” said Aitan Goelman, the CFTC’s Director of Enforcement. Mr. Goelman further commented, “The terms of this settlement are intended to reflect all aspects of Citibank’s response to the investigation, including the evolving nature of its cooperation.”

Citibank, by and through certain of its traders, attempted to manipulate and made false reports concerning USD ISDAFIX by skewing the Bank’s USD ISDAFIX submissions, in the Bank’s role as a panel bank in the USD ISDAFIX setting process, in order to benefit the Bank’s trading positions at the expense of its derivatives counterparties.  In addition, Citibank, through its traders, bid, offered, and executed trades in targeted interest rate products, including swap spreads and U.S. Treasuries, in a manner designed – including in timing and pricing – to influence the published USD ISDAFIX to benefit the Bank in its derivatives positions, according to the Order.

USD ISDAFIX

ISDAFIX is a leading global benchmark referenced in a range of interest rate products.  ISDAFIX rates and spreads are published daily and are meant to indicate the prevailing daily market rate for the fixed leg of a standard fixed-for-floating interest rate swap in various currencies.  USD ISDAFIX rates and spreads are published daily (now under a different name and methodology) for various maturities of U.S. Dollar-denominated swaps.  The USD ISDAFIX rate is used for valuing cash settlement of options on interest rate swaps, or swaptions, and as a valuation tool for a wide range of products across financial markets.  For example, during the Relevant Period, USD ISDAFIX was also used to calculate payments to be made between counterparties in curve option transactions.

During the Relevant Period, the USD ISDAFIX was set each day in a process that began at 11:00 a.m. Eastern Time with the recording of swap rates and spreads from a U.S.-based unit of a leading interest rate swaps broking firm, which disseminated the rates and spreads captured in this snapshot to a panel of banks including Citibank.  The panel banks then made submissions that were supposed to reflect where the banks would each offer and bid interest rate swaps to a dealer of good credit as of 11:00 a.m.  The USD ISDAFIX benchmark was then calculated by a process of averaging those panel bank submissions.

Citibank’s Unlawful Conduct to Benefit Derivatives Positions

As the Order sets forth, Citibank attempted to manipulate USD ISDAFIX by making false USD ISDAFIX submissions.  According to the Order, on multiple occasions during the Relevant Period, Citibank, in its role as a panel bank, submitted a rate or spread higher or lower than the reference rates and spreads disseminated to the panel banks on certain days that Citibank had a derivatives position settling or resetting against the USD ISDAFIX benchmark, in an attempt to benefit that derivatives position.

The Order also finds that Citibank, on multiple occasions, attempted to manipulate USD ISDAFIX by bidding, offering, and executing transactions in targeted interest rate products, including swap spreads and U.S. Treasuries at or near the critical 11:00 a.m. fixing with the intent to affect the reference rates and spreads captured in the snapshot sent to submitting banks, and thereby to affect the published USD ISDAFIX.  As captured in electronic communications, Citibank traders boasted about “pushing out the isdafixing” or “push[ing]” the market, described USD ISDAFIX as being “suprising[ly] easy to push,” and explained the best way to “influence the set.”

The Order describes multiple examples involving these strategies for attempted manipulation and false reporting by Citibank during the Relevant Period.

The Order recognizes Citibank’s cooperation with the CFTC Division of Enforcement’s investigation in this matter, but notes that at the outset of the investigation, Citibank’s cooperation was not sufficient.  According to the Order, Citibank’s cooperation improved after the Division said that it expected the Bank to make productions more expeditiously, after which Citibank discovered and produced evidence showing that its initial statements about certain misconduct were incorrect.

The CFTC thanks the U.K. Financial Conduct Authority and the Newark, New Jersey Field Office of the Federal Bureau of Investigation for their assistance in this matter.

CFTC Division of Enforcement staff members responsible for this case are Patryk J. Chudy, R. Stephen Painter, Jr., Lara Turcik, Trevor Kokal, Lenel Hickson, Jr. and Manal M. Sultan.

The following staff members also assisted in this case:  Candice Aloisi, Jason Fairbanks, Jordon Grimm, David MacGregor, Mark A. Picard, Steven I. Ringer, Judith M. Slowly, K. Brent Tomer and James Wheaton.

* * * * *

With Today’s Actions, the CFTC Has Imposed Over $5.08 Billion in Penalties in 17 Actions against Banks and Brokers to Address ISDAFIX, FX, and LIBOR Benchmark Abuses

The CFTC has imposed penalties of over $5.08 billion in its investigation of manipulation of global benchmark rates.  Of this, over $1.8 billion in penalties has been imposed on six banks for misconduct relating to foreign exchange benchmarks, while over $3.21 billion has been imposed for misconduct relating to ISDAFIX, LIBOR, Euribor, and other interest rate benchmarks.  Below is a summary of the CFTC’s actions:

Foreign Exchange Benchmark Cases

In re Barclays Bank PLC, CFTC Docket No. 15-24 (May 20, 2015) ($400 million penalty) (CFTC Press Release 7181-15)

In re Citibank, N.A., CFTC Docket No. 15-03 (November 11, 2014) ($310 million penalty) (CFTC Press Release 7056-14)

In re JPMorgan Chase Bank, N.A., CFTC Docket No. 15-04 (November 11, 2014) ($310 million penalty) (CFTC Press Release 7056-14)

In re The Royal Bank of Scotland plc, CFTC Docket No. 15-05 (November 11, 2014) ($290 million penalty) (CFTC Press Release 7056-14)

In re UBS AG, CFTC Docket No. 15-06 (November 11, 2014) ($290 million penalty) (CFTC Press Release7056-14)

In re HSBC Bank plc, CFTC Docket No. 15-07 (November 11, 2014) ($275 million penalty) (CFTC Press Release 7056-14)

LIBOR Benchmark Cases

In re Citibank, N.A., and affiliates (May 25, 2016) ($175 million penalty)

In re Deutsche Bank AG, CFTC Docket No. 15-20 (April 23, 2015) ($800 million penalty) (CFTC Press Release 7159-15)

In re UBS AG and UBS Securities Japan Co., Ltd., CFTC Docket No. 13-09 (December 19, 2012) ($700 million penalty) (CFTC Press Release 6472-12)

In re Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank), CFTC Docket No. 14-02 (October 29, 2013) ($475 million penalty) (CFTC Press Release 6752-13)

In re The Royal Bank of Scotland plc and RBS Securities Japan Limited, CFTC Docket No. 13-14 (February 6, 2013) ($325 million penalty) (CFTC Press Release 6510-13)

In re Barclays PLC, Barclays Bank PLC, and Barclays Capital Inc., CFTC Docket No. 12-25 (June 27, 2012) ($200 million penalty) (CFTC Press Release 6289-12)

In re Lloyds Banking Group plc and Lloyds Bank plc, CFTC Docket No. 14-18 (July 28, 2014) ($105 million penalty) (CFTC Press Release 6966-14)

In re ICAP Europe Limited, CFTC Docket No. 13-38 (September 25, 2013) ($65 million penalty) (CFTC Press Release 6708-13)

In re RP Martin Holdings Limited and Martin Brokers (UK) Ltd., CFTC Docket No. 14-16 (May 15, 2014) ($1.2 million penalty) (CFTC Press Release 6930-14)

ISDAFIX Benchmark Cases

In re Citibank, N.A., (May 25, 2016) ($250 million penalty)

In re Barclays PLC, Barclays Bank PLC, and Barclays Capital Inc., CFTC Docket No. 15-25 (May 20, 2015) ($115 million penalty) (CFTC Press Release 7180-15)

In these actions, the CFTC ordered each institution to undertake specific steps to ensure the integrity and reliability of the benchmarks.

May 27, 2016 in Financial Regulation | Permalink | Comments (0)

Appeals court overturns $1.27 billion penalty for Countrywide's sale of risky mortgages

The ABA Journal reports that "A federal appeals court has overturned a $1.27 billion civil penalty against Bank of America for risky loans sold to Fannie Mae and Freddie Mac by its Countrywide unit."  Read the full story here....

 

SEC Enforcement Actions Addressing Misconduct That Led to or Arose From the Financial Crisis SEC

Concealed from investors risks, terms, and improper pricing in CDOs and other complex structured products:

  • Citigroup - SEC charged Citigroup's principal U.S. broker-dealer subsidiary with misleading investors about a $1 billion CDO tied to the housing market in which Citigroup bet against investors as the housing market showed signs of distress. The court approved a settlement of $285 million which will be returned to harmed investors. (10/19/11)
  • Commonwealth Advisors - SEC charged Walter A. Morales and his Baton Rouge-based firm with defrauding investors by hiding millions of dollars in losses suffered during the financial crisis from investments tied to residential mortgage-backed securities. (11/9/12)
  • Deutsche Bank AG - SEC charged the firm with filing misstated financial reports during the financial crisis. Deutsche Bank agreed to pay a $55 million penalty. (5/26/15)
  • Goldman Sachs - SEC charged the firm with defrauding investors by misstating and omitting key facts about a financial product tied to subprime mortgages as the U.S. housing market was beginning to falter. (4/16/10)
    • Goldman Settled Charges - Firm agreed to pay record penalty in $550 million settlement and reform its business practices. (7/15/10)
    • Fabrice Tourre Found Liable - A jury found former Goldman Sachs Vice President Fabrice Tourre liable for fraud relating to his role in a synthetic collateralized debt obligation tied to subprime residential mortgages. (8/1/13)
  • Harding Advisory LLC - SEC charged a Morristown, N.J.-based firm and its CEO for misleading investors in a CDO about the asset selection process. (10/18/13)
  • ICP Asset Management - SEC charged ICP and its president with fraudulently managing investment products tied to the mortgage markets as they came under pressure. (6/21/10)
  • J.P. Morgan Securities - SEC charged the firm with misleading investors in a complex mortgage securities transaction just as the housing market was starting to plummet. J.P. Morgan agreed to pay $153.6 million in a settlement that enables harmed investors to receive all of their money back. (6/21/11)
  • Merrill Lynch - SEC charged the firm with making faulty disclosures about collateral selection for two CDOs that it structured and marketed to investors, and maintaining inaccurate books and records for a third CDO. Merrill Lynch agreed to pay $131.8 million to settle the charges. (12/12/13)
  • Mizuho Securities USA - SEC charged the U.S. subsidiary of Japan-based Mizuho Financial Group and three former employees with misleading investors in a CDO by using “dummy assets” to inflate the deal’s credit ratings while the housing market was showing signs of severe stress. The SEC also charged the deal’s collateral manager and portfolio manager. Mizuho agreed to pay $127.5 million to settle the charges, and the others also agreed to settlements. (7/18/12)
  • NIR Capital Management - SEC charged the two managing partners of the Charlotte, N.C.-based investment advisory firm for compromising their independent judgment and allowing a third party to influence the portfolio selection process of a CDO. Scott H. Shannon and Joseph G. Parish III agreed to collectively pay more than $472,000 to settle the charges. (12/12/13)
  • Stifel, Nicolaus & Co. - SEC charged the St. Louis-based brokerage firm and a former senior executive with defrauding five Wisconsin school districts by selling them unsuitably risky and complex investments. (8/10/11)
    • RBC Capital Markets - SEC charged the firm for misconduct in the sale of unsuitable CDO investments to five Wisconsin school districts. The firm settled the charges by paying $30.4 million to be distributed to the school districts through a Fair Fund. (9/27/11)
  • Wachovia Capital Markets - SEC charged the firm with misconduct in the sale of two CDOs tied to the performance of residential mortgage-backed securities as the housing market was beginning to show signs of distress. Firm settled charges by paying more than $11 million, much of which will be returned to harmed investors. (4/5/11)
  • Wells Fargo - SEC charged Wells Fargo's brokerage firm and a former vice president for selling investments tied to mortgage-backed securities without fully understanding their complexity or disclosing the risks to investors. Wells Fargo agreed to pay more than $6.5 million to settle the charges. (8/14/12)
  • UBS Securities - SEC charged UBS Securities with violating securities laws while structuring and marketing a CDO by failing to disclose that it retained millions of dollars in upfront cash that should have gone to the CDO for the benefit of its investors. UBS agreed to pay nearly $50 million to settle the SEC's charges. (8/6/13)
Made misleading disclosures to investors about mortgage-related risks and exposure:
  • American Home Mortgage - SEC charged executives with accounting fraud and misleading investors about the company's deteriorating financial condition as the subprime crisis emerged. Former CEO settled charges by paying $2.45 million and agreeing to five-year officer and director bar. (4/28/09)
  • BankAtlantic - SEC charged the holding company for one of Florida's largest banks and CEO Alan Levan with misleading investors about growing problems in one of its significant loan portfolios early in the financial crisis. (1/18/12)
  • Bank of America - SEC charged Bank of America and two subsidiaries with defrauding investors in an offering of residential mortgage-backed securities by failing to disclose key risks and misrepresenting facts about the underlying mortgages. (8/6/13)
  • Bank of America - SEC files new additional charges as part of a global settlement in which Bank of America admits that it failed to inform investors during the financial crisis about known uncertainties to future income from its exposure to repurchase claims on mortgage loans. The bank agreed to pay a $20 million penalty. (8/21/14)
  • Citigroup - SEC charged the company and two executives with misleading investors about exposure to subprime mortgage assets. Citigroup paid $75 million penalty to settle charges, and the executives also paid penalties. (7/29/10)
  • Commonwealth Bankshares - SEC charged three former bank executives in Virginia for understating millions of dollars in losses and masking the true health of the bank's loan portfolio at the height of the financial crisis. (1/9/13)
  • Countrywide - SEC charged CEO Angelo Mozilo and two other executives with deliberately misleading investors about significant credit risks taken in efforts to build and maintain the company's market share. Mozilo also charged with insider trading. (6/4/09)
    • Mozilo Settled Charges - Agreed to record $22.5 million penalty and permanent officer and director bar. (10/15/10)
  • Credit Suisse Securities (USA) SEC charged the firm with misleading investors in offering of residential mortgage-backed securities. Credit Suisse agreed to pay $120 million to settle the SEC's charges. (11/16/12)
  • Franklin Bank - SEC charged two top executives with securities fraud for misleading investors about increasing delinquencies in its single-family mortgage and residential construction loan portfolios at the height of the financial crisis. (4/5/12)
  • Fannie Mae and Freddie Mac - SEC charged six former top executives of Fannie Mae and Freddie Mac with securities fraud for misleading investors about the extent of each company's holdings of higher-risk mortgage loans, including subprime loans. (12/16/11)
  • IndyMac Bancorp - SEC charged three executives with misleading investors about the mortgage lender's deteriorating financial condition. (2/11/11)
    • CEO Settles Case - IndyMac's former CEO and chairman of the board Michael Perry agreed to pay an $80,000 penalty. (9/28/12)
  • J.P. Morgan Securities - SEC charged the firm with misleading investors in offerings of residential mortgage-backed securities. J.P. Morgan Securities agreed to pay $296.9 million to settle the SEC's charges. (11/16/12)
  • Morgan Stanley - SEC charged three firm entities with misleading investors about the delinquency status of mortgage loans underlying two subprime residential mortgage-backed securities securitizations that the firms underwrote, sponsored, and issued. Morgan Stanley agreed to settle the charges by paying $275 million to be returned to harmed investors. (7/24/14)
  • New Century - SEC charged three executives with misleading investors as the lender's subprime mortgage business was collapsing. (12/7/09)
  • Option One Mortgage Corp. - SEC charged the H&R Block subsidiary with misleading investors in several offerings of subprime residential mortgage-backed securities by failing to disclose that its financial condition was significantly deteriorating. The firm agreed to pay $28.2 million to settle the charges. (4/24/12)
  • RBS Securities - SEC charged the Royal Bank of Scotland subsidiary with misleading investors in a subprime RMBS offering. RBS agreed to settle the charges and pay $150 million for the benefit of harmed investors. (11/7/13)
  • Superior Bank executives - SEC charged 11 executives and board members involved in various schemes to conceal the extent of loan losses as the bank was faltering in the wake of the financial crisis. (1/13/16)
  • Thornburg executives - SEC charged three executives at formerly one of the nation's largest mortgage companies with hiding the company's deteriorating financial condition at the onset of the financial crisis. (3/13/12)
  • TierOne Bank executives - SEC charged three former bank executives in Nebraska for participating in a scheme to understate millions of dollars in losses and mislead investors and federal regulators at the height of the financial crisis. Two executives settled the charges by paying penalties and agreeing to officer-and-director bars. (9/25/12)
    • TierOne auditors - SEC charged two KPMG auditors for their roles in the failed audit of TierOne Bank. (1/9/13)
  • Wilmington Trust Corporation - SEC charged the bank holding company with fraud for failing to report the true volume of its loans at least 90 days past due as they substantially increased in number during the financial crisis. The firm agreed to pay more than $18.5 million to settle the SEC's charges. (9/11/14)
 Concealed the extent of risky mortgage-related and other investments in mutual funds and other financial products:
  • Bear Stearns - SEC charged two former Bear Stearns Asset Management portfolio managers for fraudulently misleading investors about the financial state of the firm's two largest hedge funds and their exposure to subprime mortgage-backed securities before the collapse of the funds in June 2007. (6/19/08)
  • Charles Schwab - SEC charged entities and executives with making misleading statements to investors in marketing a mutual fund heavily invested in mortgage-backed and other risky securities. The Schwab entities paid more than $118 million to settle charges. (1/11/11)
  • Citigroup - SEC charged two Citigroup affiliates with defrauding investors in two purportedly safe, low-risk hedge funds that later crumbled and collapsed during the financial crisis. The Citigroup affiliates agreed to pay nearly $180 million to settle the charges. (8/17/15)
  • Evergreen - SEC charged the firm with overstating the value of a mutual fund invested primarily in mortgage-backed securities and only selectively telling shareholders about the fund's valuation problems. Evergreen settled the charges by paying more than $40 million, most of which was returned to harmed investors. (6/8/09)
  • Morgan Keegan - SEC charged the firm and two employees with fraudulently overstating the value of securities backed by subprime mortgages (4/7/10)
    • Morgan Keegan Settled Charges - Firm agreed to pay $100 million to the SEC and the two employees also agreed to pay penalties, including one who agreed to be barred from the securities industry. (6/22/11)
  • OppenheimerFunds - SEC charged the investment management company and its sales distribution arm for misleading statements about two of its mutual funds that had substantial exposure to commercial mortgage-backed securities during the midst of the credit crisis in late 2008. (6/6/12)
  • Reserve Fund - SEC charged several entities and individuals who operated the Reserve Primary Fund for failing to provide key material facts to investors and trustees about the fund's vulnerability as Lehman Brothers sought bankruptcy protection. (5/5/09)
  • State Street - SEC charged the firm with misleading investors about exposure to subprime investments while selectively disclosing more complete information to specific investors. State Street agreed to repay investors more than $300 million to settle the charges. (2/4/10)
  • TD Ameritrade - SEC charged the firm with failing to supervise representatives who mischaracterized the Reserve Fund as safe as cash and failed to disclose risks when offering the investment to customers. Firm settled charges by agreeing to repay $10 million to certain fund investors. (2/3/11)
Others
  • Aladdin Capital Management - SEC charged the Connecticut-based investment adviser, its affiliated broker-dealer, and a former executive with falsely stating to clients that it had "skin in the game" for two CDOs.  Aladdin and its broker-dealer agreed to pay more than $1.6 million combined, and the former executive agreed to pay a $50,000 penalty. (12/17/12)
  • Bank of America - SEC charged the company with misleading investors about billions of dollars in bonuses being paid to Merrill Lynch executives at the time of its acquisition of the firm, and failing to disclose extraordinary losses that Merrill sustained. Bank of America paid $150 million to settle charges. (2/4/10)
  • Brooke Corporation - SEC charged six executives for misleading investors about the firm's deteriorating financial condition and for engaging in various fraudulent schemes designed to conceal the firm's rapidly deteriorating loan portfolio. Five executives agreed to settlements including financial penalties and officer and director bars. (5/4/11)
  • Brookstreet - SEC charged the firm and its CEO with defrauding customers in its sales of risky mortgage-backed securities. (12/8/09)
  • Capital One - SEC charged Capital One Financial Corporation and two senior executives for understating millions of dollars in auto loan losses incurred during the months leading into the financial crisis. Capital One agreed to pay $3.5 million to settle the SEC's charges. The two senior executives also agreed to pay penalties to settle the claims against them. (4/24/13)
  • Claymore Advisors/Fiduciary Asset Management - SEC charged two investment advisory firms and two portfolio managers for failing to adequately inform investors about a closed-end fund's risky derivative strategies that contributed to its collapse during the financial crisis.  Claymore agreed to distribute $45 million to fully compensate investors for losses related to the problematic trading, and Fiduciary Asset Management agreed to pay more than $2 million. (12/19/12)
  • Colonial Bank and Taylor, Bean & Whitaker (TBW) - SEC charged executives at the bank and the major mortgage lender for orchestrating $1.5 billion scheme with fabricated or impaired mortgage loans and securities, and attempting to scam the TARP program.
  • Credit Suisse bankers - SEC charged four former veteran investment bankers and traders for their roles in fraudulently overstating subprime bond prices in a complex scheme driven in part by their desire for lavish year-end bonuses. (2/1/12)
  • Fifth Third Bank - SEC charged the holding company of the Cincinnati-based bank and its former CFO for improper accounting of commercial real estate loans in the midst of the financial crisis. (12/4/13)
  • Jefferies & Co. executive - SEC charged a former executive at a New York-based broker-dealer with defrauding investors while selling mortgage-backed securities in the wake of the financial crisis so he could generate additional revenue for his firm. (1/28/13)
    • SEC charged Jefferies LLC with failing to supervise employees who lied to customers about the prices that the firm paid for certain mortgage-backed securities. Jefferies settled the charges and agreed to pay a total of $25 million to defrauded customers, the SEC, and the U.S. Attorney's Office for the District of Connecticut. (3/12/14)
  • KCAP Financial - SEC charged three top executives at a New York-based publicly traded fund being regulated as a business development company with overstating the fund's assets during the financial crisis. The executives agreed to pay financial penalties to settle the SEC's charges. (11/28/12)
  • St. Joe Company - SEC charged the Florida-based real estate developer and landowner, its former top executives, and two former accounting department directors with improperly accounting for the declining value of its residential real estate developments during the financial crisis. The company agreed to settle the charges. (10/27/15)
  • UCBH Holdings Inc. - SEC charged former bank executives with misleading investors about mounting loan losses at San Francisco-based United Commercial Bank and its public holding company during the height of the financial crisis. (10/11/11)
  • Western Asset Management - SEC charged the Legg Mason subsidiary with engaging in illegal cross trading during the financial crisis, improperly allocating millions of dollars in savings to some clients at the expense of others. Western Asset Management agreed to settle the charges by paying a $1 million penalty and returning more than $7.4 million to harmed investors. (1/27/14)
Stats (as of Jan. 13, 2016)
 
Number of Entities and Individuals Charged 198
Number of CEOs, CFOs, and Other Senior Corporate Officers Charged 89
Number of Individuals Who Have Received Officer and Director Bars, Industry Bars, or Commission Suspensions 53
Penalties Ordered or Agreed To > $1.93 billion
Disgorgement and Prejudgment Interest Ordered or Agreed To > $1.47 billion
Additional Monetary Relief Obtained for Harmed Investors $418 million*
Total Penalties, Disgorgement, and Other Monetary Relief > $3.76 billion

* In settlements with Evergreen, J.P. Morgan, State Street, TD Ameritrade, and Claymore Advisors

May 27, 2016 | Permalink | Comments (0)

Thursday, May 26, 2016

FINRA Fines Raymond James $17 Million for Systemic Anti-Money Laundering Compliance Failures

Former AML Compliance Officer Fined and Suspended

The Financial Industry Regulatory Authority (FINRA) announced today that it has fined Raymond James & Associates, Inc. (RJA) and Raymond James Financial FINRAServices, Inc. (RJFS), a total of $17 million for widespread failures related to the firms’ anti-money laundering (AML) programs. RJA was fined $8 million and RJFS was fined $9 million for failing to establish and implement adequate AML procedures, which resulted in the firms’ failure to properly prevent or detect, investigate, and report suspicious activity for several years. RJA’s former AML Compliance Officer, Linda L. Busby, was also fined $25,000 and suspended for three months.

RJA and RJFS’ significant growth between 2006 and 2014 was not matched by commensurate growth in their AML compliance systems and processes. This left RJA and Busby, as RJA’s AML Compliance Officer from 2002 to February 2013, and RJFS unable to establish AML programs tailored to each firm’s business, and forced them instead to rely upon a patchwork of written procedures and systems across different departments to detect suspicious activity. The end result was that certain “red flags” of potentially suspicious activity went undetected or inadequately investigated. These failures are particularly concerning given that RJFS was sanctioned in 2012 for inadequate AML procedures and, as part of that settlement, had agreed to review its program and procedures, and certify that they were reasonably designed to achieve compliance.

Brad Bennett, FINRA’s Executive Vice President and Chief of Enforcement, said, “Raymond James had significant systemic AML failures over an extended period of time, made even more egregious by the fact the firm was previously sanctioned in this area. The monitoring for suspicious transactions is an essential part of protecting our financial system and firms must allocate adequate resources to their AML compliance efforts. This case demonstrates that when there are broad-based failures within specific areas of responsibility, we will seek individual liability where appropriate.”

During its investigation, FINRA found that the firms failed to conduct required due diligence and periodic risk reviews for foreign financial institutions, and that Busby failed to ensure that RJA's reviews were conducted. RJFS also failed to establish and maintain an adequate Customer Identification Program.

In concluding these settlements, Raymond James & Associates, Inc., Raymond James Financial Services, Inc., and Busby neither admitted nor denied the charges, but consented to the entry of FINRA’s findings.

Money Laundering, Asset Forfeiture and Recovery, and Compliance- A Global Guide (LexisNexis updated quarterly) is an eBook designed to provide the compliance officer, BSA counsel, and government agent with accurate analyses of the AML/CTF Financial and Legal Intelligence, law and practice in the nations of the world with the most current references and resources.  Special topic chapters will assist the compliance officer design and maintain effective risk management programs.  Over 100 country and topic experts from financial institutions, government agencies, law, audit and risk management firms have contributed analysis to develop this practical compliance guide.

May 26, 2016 | Permalink | Comments (0)

Wednesday, May 25, 2016

Romanian Hacker “Guccifer” Pleads Guilty to Hacking Hillary Clinton's Emails

Marcel Lehel Lazar, 44, of Arad, Romania, a hacker who used the online moniker “Guccifer,” pleaded guilty today to unauthorized access to a protected computer and aggravated identity theft.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Dana J. Boente of the Eastern District of Virginia, Assistant Director in FBISeal (1)Charge Paul M. Abbate of the FBI’s Washington Field Office, Director Bill A. Miller of the U.S. Department of State’s Diplomatic Security Service (DSS) and Special Agent in Charge Brian J. Ebert of the U.S. Secret Service’s Washington Field Office made the announcement.

“Cybercriminals like Marcel Lazar believe they can act with impunity from safe havens abroad, but the Justice Department’s partnerships with law enforcement agencies around the world ensure that they can be brought to justice,” said Assistant Attorney General Caldwell.  “Lazar sought fame by hacking the private online accounts of Americans and releasing their personal information to the public; instead, he has been convicted in United States federal court.”

“Mr. Lazar will be punished for violating the personal privacy of dozens of Americans,” said U.S. Attorney Boente.  “These convictions show that cyber criminals cannot hide from justice.  The United States will vigorously pursue these offenders, wherever they may hide.”

“Marcel Lazar, who hacked under the moniker ‘Guccifer,’ has now been brought to justice before a United States court,” said Assistant Director in Charge Abbate.  “As a direct result of our global technological and investigative reach and strong international partnerships, we were able to successfully identify Guccifer and his criminal activities, and bring him to justice here in America.  The FBI will continue to relentlessly hunt down criminals in cyberspace and around the world.  I would like to commend the dedicated efforts of the agents, analysts, prosecutors and international partners who worked tirelessly to resolve this highly complex cyber investigation.”

“The success of this international investigation is the direct result of our long established partnerships with our federal and foreign law enforcement partners,” said Special Agent in Charge Ebert.  “By working with our law enforcement partners around the world, we have disrupted and brought to justice some of the most prolific transnational cyber-criminals operating around the world.  These continued partnerships will enable us to pursue cyber criminals wherever they operate.”

Lazar pleaded guilty before U.S. District Judge James C. Cacheris of the Eastern District of Virginia, who set sentencing for Sept. 1, 2016. 

In a statement of facts filed with his plea agreement, Lazar admitted that from at least October 2012 to January 2014, he intentionally gained unauthorized access to personal email and social media accounts belonging to approximately 100 Americans, and he did so to unlawfully obtain his victims’ personal information and email correspondence.  His victims included an immediate family member of two former U.S. presidents, a former member of the U.S. Cabinet, a former member of the U.S. Joint Chiefs of Staff and a former presidential advisor, he admitted.  Lazar admitted that in many instances, he publically released his victims’ private email correspondence, medical and financial information and personal photographs.

The FBI, DSS and the Secret Service investigated the case.  Senior Counsel Ryan K. Dickey and Peter V. Roman of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorneys Maya D. Song and Jay V. Prabhu of the Eastern District of Virginia are prosecuting the case.  The Criminal Division’s Office of International Affairs has provided significant assistance.  The Justice Department thanks the government of Romania for their assistance in this matter.

May 25, 2016 | Permalink | Comments (0)

Google, France Tax Raid, and Texas Hold'em

Reuters reported yesterday that in highly dramatic fashion the French tax authorities and IT specialists raided Google's headquarters.  I don't own Google stock. I don't live in Texas HoldemCalifornia anymore where Google has its US campus with a vast amount of jobs.  And I'm not in favor of Google's near monopoly on search (though it has accomplished this by offering a really great product and (free) work tools that make my life much easier).  

But my U.S. nationalistic eyebrows rise high on my forehead when I read the headline.  And I thought of Texas Hold'em.  Let me explain....

"Google, now part of Alphabet Inc, pays little tax in most European countries because it reports almost all sales in Ireland.  ...  If staff in countries like France finalize contracts with local clients, then the company would be obliged to report the revenues nationally and pay taxes in each country."

Prof. David Herzig (Visiting at Loyola Law, Los Angeles this summer) and I discussed for an hour yesterday whether Google may, or may not, have a PE.  Whether the activities of the Irish company in France, or the French company on behalf of the Irish company, rise to the level of a permanent establishment under the Ireland-French tax treaty will inevitably require a Court to decide.  At least, we couldn't decide and we consider ourselves reasonable minds.  

Perhaps the France authority will beat Google down to just accept a UK deal, albeit a bit higher.  But I take a contrarian perspective that will be as unpopular with my academics colleagues as my current Starbucks stance.  (see  Starbucks’ Transfer Pricing & The EU Commission Decision)

The UK Revenue, at least according to its testimony in Parliament, with a fine tooth comb, swept all of Google's operational practices and procedures, examined emails and memos, interviewed dozens of staff and executives, and after this three-year intensive investigation concluded that Google did not have breach the threshold of a PE  (at least according to the Ireland - UK tax treaty).  

I think it unlikely, albeit recognize it is plausible, that Google France may have different operational procedures, or that Google may have hoodwinked the UK revenue authorities. France, on the same set of facts, may find under its law that the treaty PE threshold has been breached whereas the UK may not (which would be a damaging finding to the EU system of Rule of Laws and to the general tax treaty system PIL, but that's another issue).

But does it require a "raid" upon another US multinational to collect the facts?  Would a disclosed subpoena have been sufficient legal protocol for both sides to then establish a time for the meeting, document collection, and interviews, in an orderly fashion.   Would a MAP request under the Ireland - France treaty with EoI not been effective?  France could have requested an EoI from the UK Revenue for the evidence gathered from the UK exhaustive investigation.  

But instead, the French government chose to organize a "raid" on a US company - equivalent of a perp arrest walk.  Obviously, the French are seeking headlines, the French President seeking votes (kicking the Americans is always a popular French vote getter)  and nationalistic social - political pressure on Google (perhaps the French will boycott the Internet).

Perhaps the PE system must be changed or its definition in treaties?  But that's not where the law stands today.  If France wants to capture more tax revenue from Google, let France change its laws to do so.  

What I see is a U.S. company, bushwacked then drug through the mud, because the French government has decided that the company under a doctrine of equity and fiscal necessity does not pay enough tax to support the French joie de vivre.  My question: What is the U.S. Treasury going to do about it?  File another "I protest" speech?  (See Will the US Impose IRC Section 891 - Double US Tax Rates - on EU Companies for State Aid Retribution?). 

A French colleague has reminded me that the "American Chicken has come home to roost".  Not Colonel Sanders.   BNP's $10 billion OFAC fines.  $10 billion fine for breaking "American OFAC rules".  Apples and Oranges my French friends.  OFAC was, at the time, clear law, that BNP clearly violated, and its chief executive team lied about violating.  It wasn't a civil tax dispute based on heavy facts.  It was a fundamental human rights matter of a bank funding  governments known for genocide and terrorism, accepted as such by the French government.  Anyway, I said then that the large US fine of BNP was merely passing on the blame to the government and pension fund shareholders - where the blame clearly did not attach.  But the French wanted to protect the executives from criminal responsibility so it cost $10 billion to do so.  The clear lesson - do not fund genocidal, terrorist regimes.  

I think BNP has something to do with this Google raid though.  The French have a long memory, and experts at diplomacy.  The French government did not fold on BNP, rather it traded on a bad hand.  It knew that the hand was a loser, and thus accomplished a trade-off to keep the executives from being hunted down like Swiss bankers.  Perhaps the Google raid is a feint - not about Google and whether it has a PE in France, but instead is a warning to the U.S. federal authorities in general about geo-politics.  

If it is the sore feelings left from BNP, then France is playing like a game of poker with a wry smile.  Will the U.S. fold, call, or up the ante.  

But in Texas we play Texas Hold 'em poker with the cards face up, not face down.  Because more information is available, we bet aggressive on a good hand but fold quickly on a bad hand.  I hope the U.S. Treasury follows Texas Hold 'em style and realizes it has a good hand.  Up the ante by languaging a bill for Section 891 Congressional input!  Up it again by conducting a couple IRS "raids" of French companies to gather evidence for a Section 482 intangibles audit.  

And once the French fold, agree to let the normal tax protocols and procedures work without political interference, domestically for tax audits, and international for policy changes.  Internationally, France and the US should work within the agreed framework of the OECD to prospectively evolve the international tax system.  "Raids" [on Google] do not help build credibility for a cooperative framework.  

May 25, 2016 in BEPS | Permalink | Comments (0)

Cyprus Orders Review for Mossack Fonseca / Panama Papers clients or relationships By All Cypriot Financial Services Regulated Companies

Within the scope of its mandate for market supervision and ensuring the compliance of Regulated Entities with the legislation in force, and acting preventively, the Cyprus Securities CySEC_Logoand Exchange Commission (‘CySEC’), wishes to inform the Regulated Entities of the following:

Following the leak of documents of Mossack Fonseca, a series of documents referred to as “Panama Papers” appeared online, that refer to a number of persons (legal and natural), which may be involved in tax evasion, corruption and/or money laundering activities.

  • Whether they maintain or maintained any relationship with the company Mossack Fonseca, either directly or with any third person acting for or representing Mossack Fonseca;
  • Whether they maintain or maintained any business relationship with customers introduced or managed by Mossack Fonseca or by any third person acting for or representing Mossack Fonseca.
  • Whether they maintain any business relationship with any other person, who appears to be included in the said documents.

Further to Circular C125, the Cyprus Securities and Exchange Commission (‘CySEC’), wishes to inform the Regulated Entities of the following:

  1. A Directive has been issued by MOKAS (attached in Greek only), which clarifies the Regulated Entities’ reporting obligations in relation to the publicly available list of persons (legal and natural) which are included into the documents of Mossack Fonseca, referred to as “Panama Papers”.
  2. Based on the above, the Regulated Entities that have identified any business relationship with persons included into the Panama Papers, are required to:
    1. Review and update their customers’ identification documents and data/information included in their economic profile,
    2. Review and thoroughly examine their customers’ activity and transactions, to determine whether suspicions over money laundering activities arise,
    3. Reassess, and where necessary, reclassify their customers’ risk categorisation in accordance to the risk based approach which they internally apply.
  3. The regulated Entities are directed to the CySEC’s Circular CI144-2014-06, with subject ‘Serious Tax Offences’, which is relevant to this issue.

May 25, 2016 in GATCA, Tax Compliance | Permalink | Comments (0)

Tuesday, May 24, 2016

Penn State Law Opportunity for Dynamic Assistant Dean for Career Services!

Penn State Law seeks a seasoned professional with broad leadership and management experience to serve as Assistant Dean for Career Services. The Assistant Dean reports directly to Penn_state_law_mark the Dean and, as a key member of the law school’s management team participates in many aspects of the law school operation.

The Assistant Dean is responsible for developing and carrying out a comprehensive program of career advising, development and counseling for students and occasionally for law school alumni. To this end, the Career Services team works closely with students, faculty and staff at Penn State Law and with national and regional employers from the private and public sectors to help Penn State students pursue career aspirations. Responsibilities also include establishing office policies, supervising career services staff, coordinating efforts with other administrative departments, working with alumni groups, setting goals and planning strategies for success, and tracking and preparing statistical information on job placement. For more information about Penn State Law go to www.pennstatelaw.psu.edu.

Penn State Law has modern, state-of-the-art facilities, a faculty of outstanding scholars and dedicated teachers, and exceptional students with strong credentials and the potential to become leaders in the United States and around the world. It is located on Penn State’s University Park campus in State College, Pennsylvania. University Park is the largest of Penn State’s campuses and houses the University’s central administration, its renowned graduate and undergraduate programs, and its NCAA Division I Athletics Department. The 13-square-mile campus is home to more than 46,000 graduate, professional, and undergraduate students and more than 12,000 full-time employees (faculty and staff). University Park is pedestrian and bike friendly and features an eclectic mix of historic classroom buildings, cutting-edge, modern architecture, and beautiful urban landscape.

Often referred to as Happy Valley, State College is a quintessential college town that offers residents many of the amenities of a larger urban environment in a clean, safe, and welcoming setting. Centrally located between several major metropolitan areas, State College is within a few hours’ drive of New York, Washington, Philadelphia, Baltimore, Cleveland, and Pittsburgh. With a diverse population made up largely of Penn State faculty and staff, State College is consistently ranked among the nation’s smartest, safest, and most livable cities.

The ideal candidate will have a J.D. or LL. M. degree from an accredited law school and five to ten years of relevant experience. Previous law school Career Services or legal recruitment experience is preferred. Excellent administrative, organizational, counseling, interpersonal and oral and written communication skills are essential. Experience with computer database management systems and Microsoft Office programs is desired.

Compensation will be competitive and will depend on qualifications and experience. Interested applicants must upload a resume and a cover letter including any salary requirements.

Please forward your intereest to: Beth Kransberger, Managing Partner & Principal

ME Kransberger Consulting Group, 3930 Centre Street, Suite 105, San Diego, CA 92103

beth.kransberger@gmail.com c: 858.943.9401 f: 619.677.2462

May 24, 2016 in Education | Permalink | Comments (0)

IRS Offers LB&I “Overseas Filing for US Taxpayers” Webinar Wednesday May 25 1-3pm EDT

LB&I International Individual Compliance will present the “Overseas Filing for US Taxpayers” webinar May 25 from 1-3 p.m. EDT,(18:00-2100 hours UTC-0). Irs_logo

To register and attend this webinar, use the Overseas Filing for US Taxpayers webinar link. It is recommended attendees log in 10 minutes prior to the start time.

 

May 24, 2016 | Permalink | Comments (0)

Commission Publishes Notice On State Aid, Including Tax Rulings

In the context of the State aid modernisation, the Commission wishes to provide further clarification on the key concepts relating to the notion of State aid as referred to in Article EU Commission107(1) of the Treaty on the Functioning of the European Union, with a view to contributing to an easier, more transparent and more consistent application of this notion across the Union.  excerpts below about State Aid and Tax Rulings

5.4. Specific issues concerning tax measures
156. Member States are free to decide on the economic policy which they consider most appropriate and, in particular, to spread the tax burden as they see fit across the various factors of production. Nonetheless, Member States must exercise this competence in accordance with Union law.

5.4.4. Tax rulings and settlements
5.4.4.1. Administrative tax rulings

169. The function of a tax ruling is to establish in advance the application of the ordinary tax system to a particular case in view of its specific facts and circumstances. For reasons of legal certainty, many national tax authorities provide prior administrative rulings on how specific transactions will be treated fiscally. This may be done to establish in advance how the provisions of a bilateral tax treaty or national fiscal provisions will be applied to a particular case or how ‘arm’s-length profits’ will be set for related party transactions where uncertainty justifies an advance ruling to ascertain whether certain intra-group transactions are priced at arm’s length. Member States can provide their taxpayers with legal certainty and predictability on the application of general tax rules, which is best ensured if its administrative ruling practice is transparent and the rulings are published.

170. The grant of a tax ruling must, however, respect the State aid rules. Where a tax ruling endorses a result that does not reflect in a reliable manner what would result from a normal application of the ordinary tax system, that ruling may confer a selective advantage upon the addressee, in so far as that selective treatment results in a lowering of that addressee's tax liability in the Member State as compared to companies in a similar factual and legal situation.

171. The Court of Justice has held that a reduction in the taxable base of an undertaking that results from a tax measure that enables a taxpayer to employ transfer prices in intra-group transactions that do not resemble prices which would be charged in conditions of free competition between independent undertakings negotiating under comparable circumstances at arm’s length confers a selective advantage on that taxpayer, by virtue of the fact that its tax liability under the ordinary tax system is reduced as compared to independent companies which rely on their actually recorded profit to determine their taxable base. Accordingly, a tax ruling which endorses a transfer pricing methodology for determining a corporate group entity’s taxable profit that does not result in a reliable approximation of a market-based outcome in line with the arm’s length principle confers a selective advantage upon its recipient. The search for a ‘reliable approximation of a market-based outcome’ means that any deviation from the best estimate of a market-based outcome must be limited and proportionate to the uncertainty inherent in the transfer pricing method chosen or the statistical tools employed for that approximation exercise.

172. This arm’s length principle necessarily forms part of the Commission’s assessment of tax measures granted to group companies under Article 107(1) of the Treaty, independently of whether a Member State has incorporated this principle into its national legal system and in what form. It is used to establish whether the taxable profit of a group company for corporate income tax purposes has been determined on the basis of a methodology that produces a reliable approximation of a market-based outcome. A tax ruling endorsing such a methodology ensures that that company is not treated favourably under the ordinary rules of corporate taxation of profits in the Member State concerned as compared to standalone companies who are taxed on their accounting profit, which reflects prices determined on the market negotiated at arm’s length. The arm’s length principle the Commission applies in assessing transfer pricing rulings under the State aid rules is therefore an application of Article 107(1) of the Treaty, which prohibits unequal treatment in taxation of undertakings in a similar factual and legal situation. This principle binds the Member States and the national tax rules are not excluded from its scope.

173. When examining whether a transfer pricing ruling complies with the arm's length principle inherent in Article 107(1) of the Treaty, the Commission may have regard to the guidance provided by the Organisation for Economic Co-operation and Development (‘OECD’), in particular the ‘OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations’. Those guidelines do not deal with matters of State aid per se, but they capture the international consensus on transfer pricing and provide useful guidance to tax administrations and multinational enterprises on how to ensure that a transfer pricing methodology produces an outcome in line with market conditions. Consequently, if a transfer pricing arrangement complies with the guidance provided by the OECD Transfer Pricing Guidelines, including the guidance on the choice of the most appropriate method and leading to a reliable approximation of a market based outcome, a tax ruling endorsing that arrangement is unlikely to give rise to State aid.

174. In sum, tax rulings confer a selective advantage on their addressees in particular where:

a) the ruling misapplies national tax law and this results in a lower amount of tax;
b) the ruling is not available to undertakings in a similar legal and factual situation; or
c) the administration applies a more ‘favourable’ tax treatment compared with other taxpayers in a similar factual and legal situation. This could, for instance, be the case where the tax authority accepts a transfer pricing arrangement which is not at arm's length because the methodology endorsed by that ruling produces an outcome that departs from a reliable approximation of a market-based outcome.

The same applies if the ruling allows its addressee to use alternative, more indirect methods for calculating taxable profits, for example the use of fixed margins for a cost-plus or resale-minus method for determining an appropriate transfer pricing, while more direct ones are available.

Download State Aid EU Commission

 

May 24, 2016 in BEPS | Permalink | Comments (0)

Monday, May 23, 2016

16 of the world’s largest banks must face anti-trust claim for LIBOR manipulation

16 of the world’s largest banks (“the Banks”), were on the panel of banks that determined LIBOR each business day based, in part, on the Banks’ individual submissions.  It is alleged 2nd Cir Ct Appealsthat the Banks colluded to depress LIBOR by violating the rate‐setting rules, and that the payout associated with the various financial instruments was thus below what it would have been if the rate had been unmolested.  Numerous antitrust lawsuits against the Banks were consolidated into a multi‐district litigation (“MDL”). 

We vacate the judgment on the ground that: 

(1) horizontal price‐fixing constitutes a per se antitrust violation;

(2) a plaintiff alleging a per se antitrust violation need not separately plead harm to competition; and

(3) a consumer who pays a higher price on account of horizontal price‐fixing suffers antitrust injury.

Download 2nd Cir LIBOR decision 13 banks (Twitter tip to Thomson Reuters journalist Alison Frankel, follow her on Twitter https://twitter.com/alisonfrankel)

May 23, 2016 in Financial Regulation | Permalink | Comments (0)

Profit-Shifting Structures and Unexpected Partnership Status

Prof. Jeffrey Kadet explains "Many U.S.- and foreign-based MNCs that have implemented carefully researched tax strategies to reduce their income taxes are coming under increased scrutiny. Most MNC tax Jeffrey-M-Kadet-244x300strategies involve businesses they conduct worldwide, but which are managed from the U.S."   Prof. Kadet provides the following synopsis of his attached article. 

These strategies have several factors in common:

(i) Companies established in tax havens or otherwise structured to attract little if any tax;

(ii) Intercompany agreements placing commercial risk and intangibles in such companies, thereby shifting profits to such companies;

(iii) Conduct of centralized activities and functions in the U.S. (in addition to group senior management), which are integral to and which critically benefit all MNC group members conducting that line of business (examples of such activities include product development, product sourcing, management of contract manufacturing process, management and control of internet platforms, etc.); and

(iv) No significant changes made to their business operations when tax strategies were implemented, meaning potentially that these structures lack economic substance.

This article suggests that in their haste to create these profit-shifting structures, the MNCs and their advisors may have overlooked two important weapons in the IRS’s arsenal to attack profit-shifting strategies.

First, because of the centralized activities and functions within the U.S. that are integral to the business conducted by various group members (including both U.S. and foreign group members), an MNC may inadvertently create through its actions and intercompany contracts a partnership that is recognized solely for U.S. tax purposes. Once such a partnership exists for tax purposes, the various group members become its partners and the partnership conducts the applicable worldwide line of business.

Secondly, because the partnership conducts a portion of its activities through U.S. offices and other facilities, the foreign group member partners are treated by statute as being engaged in a trade or business in the U.S. This makes them subject to U.S. taxation on their share of effectively connected income (ECI) earned by the partnership. U.S. taxation will be imposed at effective rates of 54.5% or higher. (The effective rate could be 38.25% or higher if a tax treaty applies.)

In the absence of a partnership, whether a foreign group member is engaged in a U.S. trade or business is a factual determination that may be difficult for the IRS to establish. However, to their collective detriment, MNCs whose factual situations support the existence of a partnership that conducts such a U.S. trade or business have made it a slam-dunk for the IRS to conclude that the foreign group member partner is so engaged. The U.S. tax rules are clear – if a foreign corporation is a partner in a partnership engaged in a U.S. trade or business, then that partner will be so engaged. All MNCs with this general fact pattern and their auditors should re-examine existing profit shifting structures to determine if they could withstand an IRS charge asserting both the existence of a partnership and taxable ECI. 

Download Partnerships-Profit Shifting_Koontz-Kadet

May 23, 2016 in BEPS | Permalink | Comments (0)

Sunday, May 22, 2016

Planned stakeholder input in OECD BEPS New Reports

The OECD's Committee on Fiscal Affairs consults with interested parties through a variety of means to inform its work in the tax OECD area. One important way of obtaining such input is through the release of requests for input or discussion drafts for public comment* and through public consultations.

Type

Topic

Title

Date

Deadline

Discussion draft Interest deductions Elements of the design and operation of the group ratio rule 6 July 2016 3 August 2016
Discussion draft Hybrid mismatch arrangements Branch Mismatch Arrangements 15 July 2016 26 August 2016
Discussion draft Interest deductions Approaches to address BEPS involving interest in the banking and insurance sectors 18 July 2016 29 August 2016

May 22, 2016 in BEPS, OECD | Permalink | Comments (0)

Saturday, May 21, 2016

Ransomware: Understanding the Threat and Exploring Solutions - Senate Hearings Transcripts

Congressional hearing and video available here

The threat from ransomware is staggering.  One ransomware scheme extorted an estimated $27 million in just its first two months.  While ransom fees are typically between $200 and Us judiciary senate committee$10,000, victims suffer additional harms due to things like lost productivity and the cost of mitigation.   

The growth in ransomware is fueled by many factors.  Our computers are still more vulnerable that we would like.  And advances in technology – such as anonymizing proxy networks and bitcoin – offer even average criminals highly sophisticated tools to avoid detection. 

Despite these challenges, law enforcement is actively working to disrupt and deter ransomware schemes.  The FBI currently has dozens of active investigations into different ransomware variants.  And this hard work has paid off.  In 2014, for example, the Department of Justice led a multi-nation effort that disrupted a highly sophisticated ransomware scheme called Cryptolocker, which had encrypted computer files on more than 260,000 computers. 

Defeating ransomware schemes, however, requires a strategy that encourages the public and private sectors to work together.  Computer owners everywhere need to improve their “digital hygiene” by taking steps like installing the latest patches and ensuring that backups are up to date.  The department has tried to assist in raising awareness by issuing public service announcements about the dangers of ransomware, and which provide tips on how to protect systems and respond to malware infections. 

In addition, we must work to disrupt the means used to distribute and profit from ransomware.  Like other malicious software, ransomware is often facilitated by botnets.  As you may know, botnets are networks of computers infected with malware, or “bots,” that criminals can control remotely to do their bidding.  They allow small groups of criminals to use hundreds – or hundreds of thousands – of infected computers to attack other victims.  As botnets grow more sophisticated, and as the threat from botnets continues to evolve, we must continually strive to ensure that our laws remain up to date and provide law enforcement with the tools and authorities it needs to address this threat. 

Congress has a significant role to play.  The Computer Fraud and Abuse Act (or CFAA) clearly makes it a crime to hack into computers to create a botnet, and of course we could bring charges against criminals who use botnets to commit other crimes.  It is not clear, however, that the CFAA also criminalizes selling or renting access to botnets, which is increasingly common among cybercriminals.  We support closing this loophole. 

In addition, federal law currently provides courts with authority to issue civil injunctions to disrupt botnets – but only if the botnet is being used to commit certain specific categories of crime.  Yet botnets are used for many types of criminal activity, such as denial of service attacks and sending phishing emails.  The administration has proposed updating the law to allow courts to issue civil injunctions to stop botnets no matter what the criminals are using them for.

While use of civil injunctions is a valuable tool, there may be circumstances in which it is preferable to seek a warrant from a court in order to disrupt a botnet.  Because of this, the department supports the Supreme Court’s recent action to amend Rule 41 of the Federal Rule of Criminal Procedure to clarify which court is the right court to consider warrant applications.  While this amendment would not change the substantive authority to authorize such a warrant, it would eliminate needless inefficiency in the process for applying for this sort of warrant.   

Excerpt of Deputy Assistant Attorney General Richard Downing Testimony before Senate Judiciary Committee

See also American Bankers Association testimony  Download 05-18-16 Blauner Testimony

There are three points I want to highlight today:

I. Botnets continue to be a significant threat to our nation’s economy and citizens;

II. The financial sector, the Administration, and federal law enforcement are taking strong action against botnets and ransomware; and

III. Congress can assist by giving prosecutors better tools to stop criminal use of botnets.

May 21, 2016 | Permalink | Comments (0)

Friday, May 20, 2016

Anti-Corruption Summit: country statements

The Ministry of Justice will consult on plans to extend the scope of the criminal offence of a corporate ‘failing to prevent’ beyond bribery and tax evasion to other economic crimes.

Police and other law enforcement agencies can struggle to prosecute corporations for money laundering, false accounting, and fraud under existing common laws. FATF logo

The consultation will seek views and evidence to assess whether changes in the law could allow the courts to more effectively prosecute corporate economic crime.

Justice Minister Dominic Raab said:

The government is finding new ways to tackle economic crime and we are taking a rigorous and robust approach to corporations that fail to prevent bribery or allow the tax evasion on their behalf.

We now want to carefully consider whether the evidence justifies any further extension of this model to other areas of economic crime, so that large corporations are properly held to account.

The consultation, published this summer, will explore whether the ‘failure to prevent’ model should be extended to complement existing legal and regulatory frameworks.

The consultation follows the recent announcement by the Prime Minister to bring forward a criminal offence for corporations who fail to stop their staff facilitating tax evasion and two recent prosecutions for the offence of failure of a commercial organisation to prevent bribery on its behalf.

Statements from individual countries setting out the concrete actions they will take in order to tackle corruption.

May 20, 2016 | Permalink | Comments (0)

Thursday, May 19, 2016

Orchestrator Of More Than 40 Pump And Dump Schemes And Secret Owner Of Offshore Brokerage Firm Pleads Guilty To$250 Million Money Laundering Scheme

Defendant Used Offshore Shell Companies in Belize and the West Indies to Perpetrate Numerous Schemes, Including the Manipulation of Cynk Technology Corp (CYNK)

Gregg R. Mulholland, a dual U.S. and Canadian citizen and secret owner of Legacy Global Markets S.A. (Legacy), an offshore broker-dealer and investment management company based in Panama City, Panama, and Belize City, Belize, pleaded guilty to money laundering conspiracy for fraudulently manipulating the stocks of more than 40 U.S. publicly-traded companies and then laundering more than $250 million in profits through at least five offshore law firms.  Pursuant to his plea agreement with the government, Mulholland has agreed to forfeit, among other things, a Dassault-Breguet Falcon 50 aircraft, a Range Rover Defender vehicle, two real estate properties in British Columbia, and funds and securities on deposit at more than a dozen bank and brokerage accounts.  When sentenced, Mulholland faces up to 20 years in prison. 

“Mulholland’s staggering fraud perpetrated on the investing public was built on an elaborate offshore shell game, which included his secret ownership of an offshore brokerage firm.  Justice logoThrough manipulative trading, Mulholland generated profits of more than $250 million and used a corrupt lawyer to launder the proceeds into the United States to pay his fraudulent network of stock promoters and broker-dealers,” stated United States Attorney Capers.  “We are steadfast in our commitment to protect the investing public and will vigorously prosecute those who seek to abuse the financial markets through fraudulent means.” Mr. Capers thanked the Securities and Exchange Commission (SEC), the Department of Justice’s Office of International Affairs (OIA), the Department of State’s Diplomatic Security Service (DSS), and the Financial Industry Regulatory Authority, Inc., Criminal Prosecution Assistance Group (FINRA CPAG) for their cooperation and assistance in the investigation.

“Mulholland pleaded guilty today for his role in a stock manipulation and profit hiding scheme totaling more than $250 million. Making sure our markets are fair to all investors and bringing charges against those who profit illegally remains a top priority for the FBI,” stated FBI Assistant Director-in-Charge Rodriguez.

“This investigation highlights the government’s ability and resolve to combat global money laundering, in this case, the laundering of illicit proceeds from a stock manipulation scheme,” stated IRS-CI Special Agent-in-Charge Kitchen.  “Prospective money launderers should take note of Mr. Mulholland’s conviction and think twice about the consequences of such actions.  The same holds true for individuals who attempt to criminally circumvent IRS reporting requirements regarding foreign accounts, as their actions will attract the attention of IRS-Criminal Investigation.”  

“Laundering more than a quarter of a billion dollars, this defendant used multiple schemes including manipulating the stocks of more than 40 companies in order to line his pockets at the expense of the U.S. financial system.  HSI remains committed to using its unique authorities to arrest those that seek to conceal and launder illicit proceeds, causing harm to our economy,” said Special Agent-in-Charge Melendez.

Between 2010 and 2014, Mulholland controlled a group of individuals (the Mulholland Group) who together devised three interrelated schemes to: (1) induce U.S. investors to purchase stock in various thinly-traded U.S. public companies through fraudulent promotion of the stock, concealment of their ownership interests in the companies, and fraudulent manipulation of artificial price movements and trading volume in the stocks of those companies; (2) circumvent the IRS’s reporting requirements under the Foreign Account Tax Compliance Act (FATCA); and (3) launder the fraudulent proceeds from the stock manipulation schemes to and from the United States through five offshore law firms.  Through these schemes, the Mulholland Group laundered more than $250 million in fraudulent proceeds.

To facilitate the interrelated schemes, the Mulholland Group used shell companies in Belize and Nevis, West Indies, which had nominees at the helm.  This structure was designed to conceal the Mulholland Group’s ownership interest in the stock of U.S. public companies, in violation of U.S. securities laws, and enabled the Mulholland Group to engage in more than 40 “pump and dump” schemes.  For example, this structure enabled the Mulholland Group to manipulate the stock of Cynk Technology Corp, which traded on the U.S. OTC markets under the ticker symbol CYNK.  Using aliases such as “Stamps” and “Charlie Wolf,” Mulholland was intercepted on a court-authorized wiretap on May 15, 2014, admitting to his ownership of “all the free trading” or unrestricted shares of CYNK.  Prior to this conversation between Mulholland and his trader at Legacy, there had been no trading in CYNK stock for 24 trading days.  Over the next two months, the stock of CYNK rose from $0.06 per share to $13.90 per share, a more than $4 billion stock market valuation for a company that had no revenue and no assets.    

Mulholland used the services of a U.S.-based lawyer to launder the more than $250 million generated through his stock manipulation of CYNK and other U.S. companies – directing the fraud proceeds to five law firm accounts and transmitting them back to members of the Mulholland Group and its co-conspirators.  These concealment schemes also enabled Mulholland to evade reporting requirements to the IRS.

Today’s guilty plea took place before United States District Judge I. Leo Glasser. 

The government’s case is being prosecuted by the Office’s Business and Securities Fraud Section.  Assistant United States Attorneys Jacquelyn Kasulis, Winston Paes, and Michael Keilty are in charge of the prosecution.  Assistant United States Attorney Brian Morris of the Office’s Civil Division will be responsible for the forfeiture of assets.

The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force.  The task force was established to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes.  With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud.  Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions, and other organizations.  Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants.  For more information on the task force, please visit www.StopFraud.gov.

The Defendant:

GREGG R. MULHOLLAND
Age:  46
San Juan Capistrano, California

May 19, 2016 | Permalink | Comments (0)

The Looming FATCA / CRS Cyber Security Disaster: unauthorised transfer of $951m (of which $81m could not be recovered) belonging to the National Bank of Bangladesh

Withers Law Firm reported that: SWIFT system that led to the unauthorised transfer of $951m (of which $81m could not be recovered) belonging to the National Bank of Bangladesh... FATCA_roll

"As the Panama Papers have shown, financial information can be easily stored and retrieved electronically on a global scale. Unsurprisingly, therefore, Governments have been considering the introduction of a global system for the automatic exchange of information. Although the implementation of this system has proceeded at speed, and with minimal scrutiny, it raises major questions about several issues: ..." read the full analysis at Withers Law Firm.

May 19, 2016 in GATCA | Permalink | Comments (0)