Transcript Anti-Money Laundering: Latin America

FATF
Revised Recommendations
January 2013
Ben Tonner
Attorney
www.samsonandmcgrath.com
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Overview
Part 1
• Background
•FATF
•Trusts and Corporate Services
Part 2
•The Revised FATF Recommendations
•Conclusions and predictions
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The Financial Action Task Force
http://www.fatf-gafi.org/
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FATF
‘The most influential body you’ve never heard of’
Palmer, Global Witness and the Task Force on Financial Integrity and Economic Development
• G7, Paris 1989, independent policy maker
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FATF
• Criminalization
• Confiscation
• Regulation FIs and DNFIs
• Intelligence
• Co-operation
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Role of FATF
• Global standards
– 40 Recommendations
– National legislation/regulations
• Mutual Evaluation
– Non-cooperative jurisdictions
– Countermeasures (R. 19)
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Cayman Islands
•Criminal Justice (International Co-operation) Law (2010)
•Confidential Relationships (Preservation) Law 2009
•Proceeds of Crime Law 2008
•Money Laundering Regulations 2010
•Guidance Notes 2010
•Terrorism Law 2008
•The Monetary Authority Law 2010
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Trusts
‘The greatest and most
distinctive achievement
performed by
Englishmen in the field
of jurisprudence.’
The Collected papers of Frederic William Maitland, ed.
Fisher, Cambridge, 1911, 3 vols, at 271.
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Trusts
‘Is the trust concept, that forms a bewildering variety of
trusts, not too much of an untamed, unruly, wild horse...
[such] that it can be ridden by any rider desiring to
escape the clutches of creditors, spouses, heirs, tax
inspectors and anti-money laundering police? Is the trust
concept not a dubious device too capable of exploitation
by dishonest people so that its scope should be restricted
and not enlarged?’
Professor David Hayton, English Trusts and Their Commercial Counterparts in Continental
Europe, 2002
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Typology Reports
 ‘The Misuse of Corporate Vehicles, including Trust
and Company Service Providers’ 2006
 ‘Money Laundering Using Trusts and Company
Service Providers’ 2010
www.fatf-gafi.org/
 Recommendations 22 and 23
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Revisions to FATF Recommendations
• February 2012
• 40 + 9 now 40
• Ahead of 4th round
MEV
www.fatf-gafi.org/recommendations
• National revisions
necessary
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FATF Revisions
1. Enforcement
2. Risk Based Approach (RBA)
3. International Co-operation
4. Tax crime now predicate offence
5. Politically Exposed Persons (PEPs)
6. Ultimate Beneficial Ownership (UBO)
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Enforcement
• Presidency of Bjorn Aamo and 4th Round of
MEVs
• ‘To be able to identify suspicious, economically
unsound structures, law enforcement needs to
understand the rationale behind legitimate
structures. At the moment, law enforcement’s
understanding of corporate law is limited.’
The Puppet Masters, Willebois, Halter, Harrison, Park and Sharman, Stolen Asset Recovery
Initiative, 2011
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Risk Based Approach (R.1)
‘Countries should require financial institutions and designated
non-financial businesses and professions (DNFBPs) to
indentify, assess and take effective action to mitigate their
money laundering and terrorist financing risks’
•
‘RBA guidance for Trust and Companies Service Providers
(TCSPs)’
• High risk and EDD (R. 10)
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International Co-operation (R.2 and Pt G)
• Internally/Domestically
• Internationally:
– Regulators
– FIUs
– Enforcement agencies
– Legal departments
– Tax authorities
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Tax as predicate offence
POCL 2008 s.136
‘(1) A person [in the regulated sector] commits an offence if
(a) he knows of, suspects or has reasonable grounds for knowing or
suspecting that another person is engaged in criminal conduct; and
(c) he does not make the required disclosure to a nominated officer,
or the Financial Reporting Authority’
What is criminal conduct?
POCL 2008, s.144
‘Conduct which constitutes an offence in any part of the [Cayman] islands or would
constitute an offence in any part of the islands if it occurred here’
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Politically Exposed Persons (R.12)
• Enhanced Due Diligence
• ‘Specific Risk Factors in the Laundering of Proceeds
of Corruption’ Oct 2012
• Foreign and domestic
• Family and close associates
• GN 3.49 – 3.53
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18
Beneficial Ownership
• R. 24
Transparency and beneficial ownership of legal
persons
• R. 25
Transparency and beneficial ownership of legal
arrangements
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Beneficial Ownership
‘There should be an equivalent level of
transparency about the beneficial ownership of
trusts and their legal arrangements as there is
about companies’
The Review of the Standards – Preparation for the 4th Round of Mutual Evaluation – Second public consultation
June 2011, paragraph 12
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Beneficial Ownership
‘There is a major distinction between transparency of
beneficial ownership to competent authorities and
broader transparency to the general public. Most
jurisdictions demand a high degree of public
transparency of companies because they trade with the
public and obtain credit. Trusts, in contrast, are typically
private, family arrangements.’
‘Trusts under scrutiny’, George Hodgson (STEP Deputy Executive), September 2011
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Beneficial Ownership
•
Regulated entities to collect evidence of UBO (R. 24 and 25 and IN)
•
‘Global Shell Games: testing Money Launderers and Terrorist Financiers Access to
Shell Companies’
Findley, Neilson and Sharman, 2012’
– Kenya, US vs IFCs
•
Guidance Notes 3.31
– It will normally be necessary to obtain ‘satisfactory evidence of the identity of each of the
principle beneficial owners being any person holding 10% interest or more ‘
•
Foreign Account Tax Compliance Act (FATCA)
– With respect to a trust any person who holds directly or indirectly more than 10% of the
beneficial interest of the trust
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Conclusions
•
Legislative revision
•
Anticipate changes
–
–
–
–
RBO + more rigorous enforcement
PEPS
Tax as predicate
UBO
•
Plenary
•
Engagement
•
FATF mandate
•
Opportunity
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Ben Tonner
Attorney
Cayman Islands
[email protected]
www.samsonandmcgrath.com
January 2013
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