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Tax evasion cases around the world

Several cases of tax evasion around the world dominated the news. The European Commission acted against VAT frauds in 8 countries, leading to 2 arrests and seizure of over 100,000 euros. Goods purchased with no VAT records by ghost-operated French companies were sold in France with false VAT information to deceive tax authorities, resulting in a tax loss of 12 million euros. Similarly, officers of the Romanian Economic Crime Investigation Service involved in tax evasion and money-laundering during 2012-2015 have been sent to trial. They created false financial records and acquisition declarations, causing a damage of over 5.2 million lei. Likewise, Shalom Domrani, the leader of an Israeli crime organization, has been arrested for laundering over $150 million using false tax receipts. The Israeli economic department is also investigating model Bar Refaeli and her parents for money-laundering and tax evasion worth 7.5 million euros between 2009-2013. On a different note, the head of the Cyprus Securities and Exchange Commission said that the Cyprus taxation department is facing technological challenges in identifying tax evasion. Therefore, despite amended laws and closed tax evasion loopholes, Cyprus’ reputation is still maligned when it comes to money-laundering. In other tax-related news, India is set to remove or reduce the punishment and penalty for Income Tax Law violations to boost its economy to $5 trillion by reducing the fear of conducting business activities.

Money-laundering in the crypto world and the dark web

In India, members of the crypto community have filed numerous petitions against the decision of the Reserve Bank of India (RBI) to impose a controversial ban on them. The Supreme Court had asked the RBI to clarify its reasons for the ban, while also upholding concerns about the misuse of digital assets for money-laundering and tax evasion purposes. These concerns ring true as Chainalysis, a company involved in investigating cybercrimes and analysing the blockchain system, has said that cryptocurrencies worth $2.8 billion were laundered in 2019. 50% of the money ended up in Binance and Huobi, the two biggest exchange platforms for cryptocurrencies. The company pointed out several weaknesses in Binance’s policies and the functioning of OTC brokers on Huobi. Meanwhile, in the US, five alleged members of a prolific online drug trafficking organization have been indicted for using Dark Web marketplace accounts and encrypted messaging apps to sell illegal drugs online, laundering over $2.8 million.

Cross-country money-laundering

Whistleblower Nicholas Wilson alleged that the world economy will collapse if London stops laundering money. Amidst this bold statement on the extent of cross-country money-laundering, several examples came up in the news. For instance, Angola froze the assets of Isabel dos Santos, daughter of a former Angola president, for embezzling hundreds of millions of dollars of public money through two Portuguese banks. In another case, 7 people were indicted in the US for unlicensed business transactions to Colombia under a scheme to help clients transfer money across countries without moving US currency. Meanwhile, Indian businessman Abdul Karim Jaka’s properties worth rupees 9.5 crores were attached to an ongoing money-laundering case against Afroz Fatta. Fatta and others had created shell companies to illegally deposit commissions in foreign remittance to Jaka’s account. Likewise, Hungarian police arrested one of the members of a gang involved in a fraud of $685 million, of which one-sixth has been found in various foreign accounts. In Turkey, the Transaction Exchange Office that defrauded the Osmanbey market of 25 million liras had become a drug money-laundering center, with the money being deposited in foreign accounts or invested in real estate. In another case in Turkey, 462 of the 3220 people arrested for suspected money-laundering worth 450 million pounds were found guilty after counterfeit US dollars and documents were seized from them.

Money-laundering issues in banks and other financial crimes

Money-laundering allegations against the Estonia branch of Danske Bank have expanded from 2 to more than 10 cases involving laundering of over $2 billion. Meanwhile, following the allegations of AML deficiencies in ING Italy which affected the acquisition of new customers, the Central Bank of Italy has ordered that the bank CEO be removed. Meanwhile, Romanian authorities are ready to penalize more than 100,000 companies including banks and other financial businesses that were not developed in line with their new AML legislation. The sanction represents 10% of the total income in the completed fiscal period. On the other side, a court in Spain has ordered the prosecution of 70 members of a criminal organization involved in the scams of over 500,000 euros from a dozen banks in Valladolid. The group obtained money from banks but did not return it by preparing counterfeit documents. On a different note, Lamine Diack, former president of France’s Athletics Federation, has been charged with money-laundering and fraud for extorting $3.45 million as a bribe to cover up doping cases. In a separate case, Polish authorities have arrested 7 people involved in an organized criminal group that exploited vulnerable people facing poor health, family and living situations and made them lose about PLN 10 million.

Good AML efforts worldwide

Good news came from Bermuda which was found to have the highest compliance with international AML standards since it complied with 39 of the 40 recommendations of the Financial Action Task Force (FATF). Similarly, Qatar was lauded by the International Chamber of Commerce Qatar on its successful fight against money-laundering, a feat that has been attributed to the new AML/CFT laws based on FATF guidelines. Meanwhile, the revised AML Directive has come to force in Germany. The new law will make the real estate industry more responsible by demanding frequent reports of suspicious financial transactions. Inspiring news comes from Estonia where, in the wake of massive money-laundering scandals involving the Estonian branches of two Scandinavian banks, Taavi Tamkivi and colleagues have founded Salv, an AML platform. Salv is partnering with a local software company Cybernetica to use its multi-party computation technology that cryptographically secures communication and allows banks to keep their private data safe. Through Salv, AML specialists can review alerts in real-time, monitor customer behavior and decide on reporting suspicious customer activities. In another good effort, legal experts in Tanzania’s Dar es Salaam have warned that the current legislation does not specify a minimum amount for a transaction to constitute money-laundering. They contended that people who clean their illegally obtained money by investing it in a legal business are also subject to money-laundering charges.