The Financial Crimes: Liechtenstein: Trust me.
A Liechtenstein Trust is set up by a deed between the settlor and trustees. The trust deed does not have to name the beneficiaries. If the trust deed is deposited with the Liechtenstein Registrar of Trusts, it will not be publicly available, and later instruments, which might, for example, name beneficiaries, who might just happen to be Anglo Saxon, do not have to be disclosed. So if the trust is established with Liechtenstein trustees, there is no reason why the details of UK resident beneficiaries should show up in an audit.
For once I'm going to argue against the case presented here: know your client rules should disclose the UK link.
If they don't we have a much bigger problem with Liechtenstein.
Of course that is possible: the new deal is predicated on there being real reform in Liechtenstein. If it really is a sham then the gains will be limited, money will leave without anti-money laundering suspiscious transaction reports beingn filed and cash recovery will be low.
But having toured the BBC yesterday talking about this issue I'll confirm just exactly what I think: underlying this agreement is a weak Tax Information Exchange Agreement. Laid on top of it is the evidence that no one has confidence in Tax Information Exchange Agreements: the Proactiave Information Exchange Agreement as I have called it.
The PIE may not work. But sometimes you just have to try, and it's better than just having a TIEA. Which is why I was trumpeting this as good news.
But I'll be quite candid: I can be proved wrong.
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“know your client rules should disclose the UK link”
Come off it. The bank records are going to say that the account holder this is a Liechtenstein Trust, a legal entity established in liechtenstein, whose trustees are well known and well respected Liechtenstein persons from downtown Vaduz whose businesses comply with Liechtenstein money laundering practices, so the auditor is going to say no UK resident account holders here, end of story.
Alex
Maybe
But if so we have a much bigger problem: Liechtenstein wilfully not complying with FATF money laundering requirements because that is not good enough for FATF purposes
If that transpires we have to send in the cavalry
Richard
FATF guidelines only require banks to take “reasonable” measures to establish the identity of the beneficiary of a trust. If the settlor can demonstrate that the trust has not been settled with the proceeds of crime but the beneficiaries are not publicly declared, then I don’t think any audit enquiries will get very far.
Alex
I’m a money laundering officer
I don’t agree: I think they need to know the warm bodied real human being who is behind these things in the sense that they are the person who gives the instructions (and there is almost always such a person) and declare it to comply
Richard
Maybe, but the person giving the instructions is not necessarily the person to whose benefit any interest accrues.
Your argument presupposes that the “audit” will be anything more than a review of a list of names and addresses of account holders.
The MoU defines those who are beenficiaries as:
1) In the case of foundations, trusts or other fiduciary entities : —
a) he is the person or one of the persons who established or funded it; or
b) he is the person or one of the persons who the financial intermediary regards
as its principal beneficiary or principal beneficiaries; or
c) he is a person entitled to 25% or more of its income or capital; or
d) he is a person who has received a distribution or distributions, in a given UK
tax year, in total amounting to £5,000 or more from such an entity since
1 August 2009; or
e) he is a person who the financial intermediary knows has been provided with
the benefit, in a given UK tax year, of an asset or any number of assets of a
value equivalent to £25,000 or more from such an entity since 1 August 2009.
Looks good to me
There aren’t any obvious holes in that.
On the contrary, there are some very obvious holes, but I think it would be unwise to comment further in a public forum. Bear in mind that any arrangement is likely to be more complicated that an a simple bank deposit or a simple trust arrangement.
Alex
Of course
But all arrangememnts have beneficiaries – and not just in the trust sense
AML rules allow for this
And distributions cover companies too
Richard
But all arrangememnts have beneficiaries
Eventually maybe, but I think you are missing a trick or two, and for the moment I am saying no more.
Alex
I’m not expecting you to disclose your thoughts, but I’m very much in the tax planning industry (NOT tax evasion) and I’m struggling to think of anything legitimate that wouldn’t be caught. I can only think that you are referring to using a “nominee settlor/founder” under (a), a “sham” beneficiary as a front for (b), and then either (i) not actually making any distributions so that everything rolls up within, or (ii)distributing to the “sham beneficiary” as a conduit for the real beneficiary.
If that sort of “planning” is actually going on, then I’m sorry – I wouldn’t touch it with a bargepole. I happen to rather like living this side of the prison walls.
Are there really people out there still doing that type of “planning” ? I certainly don’t know anyone who would remotely consider it.
@Rupert
I am not going to discuss or comment any particular ideas, but you need to be thinking more along these lines:
http://www.wealth-bulletin.com/home/rss/content/1054950206/
than this:
http://www.usdoj.gov/usao/cac/pressroom/pr2009/101.html