Chip Poncy of the US Treasury is talking on ‘know your client’ obligations as required in FATF rules — those things places like Jersey like to say they comply with.
The trouble is, he says, is that FATF risk based assessment procedures mean commercial banks can decide not to investigate beneficial ownership. They let them decide when to do so.
He says that’s not good enough. His solution is simple: FATF should require that beneficial ownership be proved in every case. And unless ownership rests in a proven public company then what he wants to know are ‘who are the warm bodies’ behind this structure (I summarise — warm bodies is a favourite phrase of my own).
I agree. The nightmare of trusting the private sector to police themselves through the use of risk assessment tolls they themselves design has to end. We won’t beat tax evaders when those who set up in trade to facilitate tax evasion (they’re called banks in common parlance) decide whether to identify the criminals, or not.
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I agree fully and can confirm without reservation that I have worked in banks and law firms in Jersey and both take this approach. In fact, the Anchor, Cavendish and Michel cases in Jersey all clearly illustrate that the Jersey authorities will close down businesses that don’t identify beneficial ownership. In one case (I think it was Caversham) a person’s career and reputation were ruined and a major fine imposed because of one single (though significant) failure to follow correct KYC procedure.
The better offshore jurisdictions can take the heat as long as it is applied equally to competitors, and that means everyone from Panama to the London, Switzerland to Delaware.
Where Jersey may be at fault is with legacy clients – I have no doubt that between 1970 and 1995 a lot of UK retail banks were piling people from the UK into offshore accounts and the numbers may mean that some of that dross has not yet been excised. If the HMRC trawl does the job, so much the better. But really, its the banks themselves that are to blame for that rather than the jurisdiction.
mad foetus
So the finance industry in Jersey knows the ultimate beneficiary of all the transactions that take place there?
Are you therefore suggesting that the supposed capital outflow from Africa (hard to pin down isn’t it, even when ‘fully compliant’ accounts are published) is a known instrument to Jersey institutions, and that they are knowingly complicit in wholesale social destruction?
And you are proud of it?
How are those Angolan investments doing? Oh, they’re Swiss are they?