By Grace Zhao, July 14, 2014
Don’t get too excited about Kenya’s removal from the Financial Action Task Force’s (FATF) gray list.
The FATF list of “high risk and non-cooperative jurisdictions” is a list of countries that the organization believes to be doing very little in the global fight against money laundering and terrorist financing. The list is based off a series of 40 recommendations that it expects countries to abide by to reduce money laundering and terrorist financing. These recommendations include, among other things, the regulation of banks and other financial institutions. Countries that do not adequately address these expectations are placed on the black or gray list based on varying degrees of compliance.
In 2010, FATF placed Kenya on a list of high risk countries for delays in enacting laws to tackle criminal financial activity as well as a failure to track money laundering.
By Cobus de Swardt, July 9, 2014
Curbing Cross-Border Corruption via Anonymous Companies Should Be a Priority for Global Leaders in 2014, Says Transparency International’s Cobus de Swardt
Corruption around the world is facilitated by the ability to launder and hide proceeds derived from the abuse of power, bribery and secret deals. Dirty money enters the financial system and is given the semblance of originating from a legitimate source often by using corporate vehicles offering disguise, concealment and anonymity. For example, corrupt politicians used secret companies to obscure their identity in 70 percent of more than 200 cases of grand corruption survey by the World Bank.
For far too long, corrupt figures have been able to easily stash the proceeds of corruption in foreign banks or to invest them in luxurious mansions, expensive cars or lavish lifestyles. They do this with impunity and in blatant disregard for the citizens or customers they are supposed to serve.
Importantly, the corrupt are aided by complacent and sometimes complicit governments of countries with banking centers that facilitate money laundering and allow the corrupt to cross their borders to enjoy stolen wealth. Weak government actions are failing to prevent the corrupt from evading justice and have enabled cross-border transfers of corrupt assets. Complacent governments responsible for protecting the public from such criminal acts are de facto supporting impunity for corruption.
By Grace Zhao, July 8, 2014
Kleptocrats and criminals are always looking for new ways to properly launder their illicit wealth, and it now appears that many of them are turning to Manhattan real estate.
Unsavory investors are increasingly purchasing New York City flats in an attempt to squirrel away ill-gotten funds or dodge billions of dollars in taxes, according to an in depth investigation by New York Magazine and the International Consortium of Investigative Journalists (ICIJ). Some might even say that New York City itself is becoming a sort of tax haven.
Since the financial crisis of 2008, 30 percent of all condo sales in the city were purchased through foreign entities—many of them anonymous shell companies—yet much of the purchased property remains vacant. The census bureau estimates that 30 percent of the apartments from 49th to 70th streets and between Fifth and Park Avenues in New York City are empty for up to 10 months of the year.
By Daniel Winton, July 3, 2014
Tomorrow marks the Fourth of July, the day on which we commemorate the adoption of the Declaration of Independence 238 years ago. For most Americans, the Fourth of July is a day filled with barbecues, fireworks, and, most importantly, patriotism.
Recently, some politicians and corporate leaders have begun to push for another kind of holiday—a repatriation tax holiday. This holiday would provide a tax break for American multinational corporations (MNC) to return money to the United States from abroad.
In contrast to the Fourth of July holiday, which showcases Americans’ support for and appreciation of their country, this tax holiday would result in MNCs swindling America out of legitimate tax revenue. While a new tax holiday might produce some short-term benefits, it would almost certainly end up as a net negative for the country.
By Grace Zhao, July 2, 2014
A couple weeks ago, we wrote a blog post hoping that discipline would go further up the BNP food chain. Unfortunately, the U.S.-BNP Paribas settlement still ineffectively punishes the French bank.
France’s BNP Paribas has agreed to pay a historically large fine of $9 billion for violating sanctions on Sudan, Iran, and Cuba. At face value, this seems to be a big deal. After all, no bank has ever been fined so much for similar crimes.
Yet yesterday, shares in BNP Paribas rose 4 percent, even after the bank pled guilty to a criminal charge. Moreover, no single person within the bank has been charged specifically with any crimes, allowing those who abused executive power to slip away relatively unnoticed. BNP did fire a few employees. Some left on their own. Others faced demotions and pay cuts, small atonements for the billions of dollars that the bank illegally transferred.