My blog entitled The Crown Protectorates - Open for Money Laundering was reposted on the Is This Jersey? web site. They often are. And, as is equally often the case, it got a comment there. Someone delighting in the name 'Jason the Maverick' said:
Richard, do you actually work in the Offshore Industry? Because I can put your mind at ease that our compliance tightens up nearly every month. This Website seems to be outdated on it's allegations. I would understand if we went back 10 years. But a lot of this hype has no material back-up.
So I responded:
Jason
Your comment is absurd. This was an audit published in November 2007 by the UK's National Audit Office based on current data. And the message is absolutely clear - you in the financial services industry might fill in the right pieces of paper but you don't do your job.
What's the evidence? Simply this. In 2006 no one in Jersey - not one person - reported suspicion of money laundering. But tax evasion is money laundering. The JFSC says so. And experts other than me estimate there are $500 billion of funds in Jersey on which the income is tax evaded. So most all of you handle it regularly.
I don't believe you when you say you don't know it.
I don't believe you when you say it's not true - or £400 million in back taxes would not have been paid to the UK under the recent tax amnesty.
I do say you're conspiring in this process.
Because there is no other possible explanation for how this happens.
The only people who have no material back up for what they say are the financial services industry. I have clear, unambiguous evidence that it is generically party to fraud.
Now, what are you going to do about it?
Richard Murphy
To which I got the reply:
What am I going to do about it? I couldn't really give a monkeys because if this is true, you know as well as anybody that all the clients will do is transfer money elsewhere. I would use the term Tax Avoidance as opposed to Evasion by the way.
We do report STRs in my Firm, including money laundering so this data is definitely not true.
The other thing is that our UK cliant base in tiny.
Now this is a fascinating exchange. First, Jason can't accept the evidence as presented to him. So he seeks to shoot the messenger instead. That's hard in my case. I am, for example, a money laundering officer in a regulated firm.
Next he reveals his indifference to the evidence. His reason is simple: he thinks abuse inevitable. His logic is that of the person who assumes he might as well steal your property because if he does not someone else will which as a justification for action is about as low as they get.
But the excuses this by denying there is a crime at all. As Marty Sullivan has shown, the process in which Jersey is engaged is criminal: there are $500 billion of funds there on which tax is evaded on the income. And although it is hard to find it the Jersey Financial Services Commission does define tax evasion as a money laundering offence. In section 2.7.5 of its new money laundering handbook (which has the basic force of law) it says:
2.7.5 Fraud related offences
Fraud, including fiscal offences (such as tax evasion) and exchange control violations, are commonly and mistakenly regarded as distinct from other types of crime for money laundering purposes. They are not. Any fraud related offence is capable of predicating an offence of money laundering in Jersey where it satisfies the requirements of the definition of criminal conduct within the Proceeds of Crime Law.
But of course if the person in the industry seeks to describe tax evasion as tax avoidance they can of course avoid their obligation to report the offence - and I have no doubt that this practice is widespread and commonplace.
And then he claims something that is obviously untrue: that his firm files STRs. This is clearly untrue for two reasons. First of all if it were true he'd know they are called Suspicious Activity Reports in Jersey. Second, the police would have recorded receiving them - and I think they are telling the truth.
Finally, he absolves himself because his firm does not deal with the UK. I presume he thinks money laundering for people from elsewhere is OK as a result.
So why analyse this? Three reasons. First of all whilst I have no idea as to the real identity of this person I am sure they are real and do work in the industry, and this shows the poverty of analytical skill amongst those who might do so. Second it shows their ability to deny the truth. Third it shows their ability to propagate misinformation.
In combination these elements suggest very clearly why regulation is not working offshore: the industry does not want it to and is doing its best to defeat it by subtle but pervasive non-compliance. And if that's true the approach to this sector and the danger it represents to the world has to change.
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[…] with tax evaded money to which it is clear the financial services industry turns a blind eye. As my previous posting showed, those who work in the sector want to deny the truth of this although the evidence is beyond […]
Maybe you have the wrong end of the stick. Maybe the Jersey police are noting the amount of SAR’s that they have forwarded overseas..
I know for certain that Jersey firms have filed SARs and likewise in Guernsey STRs during 2006 totalled over 500
There are tax avoidance schemes which are not tax evasion, until such time as they are deemed tax evasion then they are not illegal.
Hundreds of SARs/STRs have been filed in both Guernsey and Jersey in the past couple of years conerning tax evasion.
OK
So why don’t the police in Jersey record them?
See http://www.taxresearch.org.uk/Blog/2007/03/02/jersey-officially-a-money-laundering-free-zone/
Why should I believe they are filed if the police don’t say so?
And where is the evidence for Guernsey. Please give me the link
Richard
Your thread has made it to other Forums, though I think your allegations still have no material back up. Give us actual proof of tax evasion that is happening now, report it to the Authorities and then people may take you seriously. We already follow anti-tax evasion procedures so at the moment I can only view your finger pointing as hearsay.
I know for a fact that it does not happen in my firm.
MMol is right about the Police dealings with STRs we were told at a presentation by the Police on anti-money laundering.
Richard seems to be clutching at straws in order to try and stir gossip in telling people that Jersey is run by cowboys and supports tax evasion.
This is total rubbish and Richard’s comments should not be taken too seriously. He should either prove there is USD400M being evaded in tax or otherwise shut up.
Hello Richard,
Apt name. If you require some sort of official assurance that Guernsey law enforcement have received (and record the receipt of) suspicious transaction reports I suggest you contact the local FIU. The following link has contact information…
http://www.guernseyfis.org/index.asp
P.S. I would have thought someone as knowledgeable as yourself would have been able to find the contact details themselves.
http://www.guernseyfis.org/lib.asp
Page 8 of the Guernsey FIS 2006 annual report. Whilst it does not state tax evasion within the statistics they are within the Fraud / forgery heading which accounts for over 35% of the 500+ reports received by the FIS in 2006
You are clearly mad or just not listening.
Frank
Tell me why you think that or you are not presenting an argument, you are just being abusive. That is not endearing, o useful. It just makes you look silly.
Richard
Richard,
I was not being abusive. You stated it as fact that no STR’s are submitted to the Guernsey FIU. I provided you with a link so that you could ask the FIU about the matter. You ignored that post. Then Mol actually gave you the figure (with an attached link so you could verify the information provided to you). You make no comment on thoses posts.
When presented with the evidence that proves your claims wrong you simply ignore it. Hence why i said your not listening.
Is that clear enough for you?
Thanks
Frank
Frank
That is wrong.
I commented upin that evidencxe and made quite clear why I dismissed it, saying it could not imply moe than 10 money laundering STR’s a year and made quite clear why there should be thousands.
You continue to avoid the issue and offer abuse instead of argument.
Please explain why thosuands of STRs are not filed. You have not.
Richard
Thousands of STRs are not filed because they are no doubt under investigation, it can take a Compliance officer weeks to investigation and gather sufficient evidence together to then determine whether or not to submit a disclosure to the relevant intelligence service / unit..
How many people do you think work in the finance industry in Jersey and Guernsey? How many of those work in a position where they would be privy to knowing sufficient information to be able to gain a suspicion of money laundering / tax evasion? How many people do you think work in Compliance in Guernsey and Jersey collectively?
We do not stick our heads in the sand, but interestingly enough when you come to tax evasion its people in the mainland UK which are the culprits…. They are the corrupt individuals.. Not so long ago it wasn’t illegal to place your funds offshore, Jersey and Guernsey had no issues and were most definitely not breaking the law.
On the UK from as you will undoubtedly have read news articles SOCA have suffered with such a massive influx of SARs and are unable to deal with the majority which end up in the abyss.. A large percentage of SARs submitted are deficient in even basic information and would never contribute to any form of investigation.
To say that Guernsey and Jersey aren’t doing there part is ridiculous. We like to think of quality not quantity. Alot of SARs/STRs submitted are quality and do get passed onto international agencies.
Mol
Your comment is ludicrous. First I do not believe that thousands of STRs are being investigated. Second it is the duty of the financial services industry to have sufficient people to investigate the illegitimate business it attracts. Third the fact that tax evasion is actually happening in another country is no excuse – and you should know that. So let’s stop the excuses and deal with the reality. And when we deal with that can I make clear the reality of tax evasion using Jersey and Guernsey has not changed in very many years – so again you are hopelessly misinformed.
The reality is that paying tax at 15% under the EU STD is sufficient evidence that the client is likely to be tax evading for an STR to be raised. Why opt for tax deducation and complicate your home tax affairs but for reason that you have no intention of paying the additional tax due in your home state?
In that case the answer is simple and obvious. Prima facie opting for tax withholding is evidence of intent to deny information to a home state – and therefore of intent to tax evade.
EVERY person opting for tax withholding needs an SAR (STR in Guernsey).
Why aren’t you doing them? Why is there mass negligence in this respect in your jurisidiction, becuase that is what I believe it is.
Richard
Richard, you do not work in either Channel Island so I just cannot see how you think you are so qualified to comment on our day to day practices.
STRs are submitted and that is a fact from our part so if you don‘t believe it, what does it matter to us anyway?
I can see why the Jersey Government does not take your allegations seriously now because you refuse to even listen to the people that work within the industry, who, with the knowing expertise know a lot of what you have to say has no real substance, back-up or proof.
JTM
There is no proof of what you are saying
Your own authorities do not confirm it
As such I and the rest of the world are entitled to presume you are not telling the truth
And of course your governments will ignore me – but they are dedicated to the provision of the facilities needed to pursue corrupt practices. Unsuprisingly they are not too keen on someone who wishes to close that corruption down.
In view of your inability to provide any evidence to support your case, or a coherent argument, further comment on this issue from you will be ignored.
Richard
Well you are being ridiculous now. I and others from Guernsey are not coming onto your blogger and making this up.
I also do not see why either Government has to give you evidence that we are submitting STRs anyway. We know we are doing the work by the book and that is all what matters.
JTM
My point is simple. Someone is not telling the truth.
And there is no obligation of your government to tell me anything – it’s a duty to report laid down in law.
And – finally – going by the book is what all those who turn a blind eye say.
Richard
Report to who? If they believe an STR may have a world wide connection then they cannot report on anything until it has gone through the courts. And when they do go through the courts they are reported. Are you saying we don’t have any? Only had AG V Michel earlier in the year.
JTM
You know who report to.
The JFSC says nothing about where the tax evasion takes place in its rule book
It only says suspiscion of tax evasion need exist
Your argument is wrong
If I am wrong please refer me to the paragraph and I will advise the IMF
Richard
But that is all what you have “suspicion”. neither proven nor verified. Sorry Richard but this debate is going nowhere. And as far as I am concerned, you have already challenged the Powers that be in Jersey, and they have already dismissed your allegations as miles off the mark.
But you consistently refuse to ignore people that are working in the industry as well who have told you both from Jersey and Guernsey that are accusations are wrong. Like the other thread this is now going nowhere.
JTM
Now you show just how absurd your argument is
An STR or SAR is in either case a report of a suspiscious activity
They must be raised when suspiscion exists. Proof is emphatically not needed.
So, I have proved my case.
You have proved yourself ignorant of the requirements of your law
I think we’ll leave it at that
Richard
[…] He (I presume the correspondent mail – these people do not, of course, reveal who they are) said of my suggestion that SARs must be raised when suspicion of evasion […]
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