Financial Crime In Focus

YOUR ROUND-UP OF CRITICAL FINANCIAL CRIME NEWS

FINANCIAL CRIME IN FOCUS – Edition 11

Published Date: 9th August 2019

For most people August is all about some time off for holidays; indeed as I write, the Harris suitcases are being packed for a short break. I’m sure some of you will be lucky enough to be visiting some exotic locations; perhaps even Mauritius which has been receiving attention recently for the wrong reasons.

Another tropical tax haven...

First it was the Panama Papers, then the Paradise Papers, that grabbed global headlines. Now we have the Mauritius Leak – so what’s the controversy this time?

Mauritius is commonly known as an exotic holiday location off the east African cost, but there’s much more to this Indian Ocean paradise. Having gained independence in 1968, Mauritius became a fairly successful and prosperous island, providing excellent social benefits for its 1.3 million residents.

In 1989 it sought to diversify by positioning itself as a business gateway to Africa and becoming a financial hub, encouraging foreign businesses to incorporate companies with limited disclosure obligations that enjoyed significant tax advantages. And thus Mauritius became a tax haven.

However, the country has often been accused of denying African governments tax revenues from businesses who register in Mauritius, creating a reduced ability to invest in infrastructure and widening the wealth gap in populations. This has attracted international criticism both of the regime and numerous companies that have taken advantage of the tax benefits from African operations. And, as is being revealed by the International Consortium of Investigative Journalists (ICIJ), taking advantage they certainly have! Delivering ongoing coverage, the ICIJ are trickling new stories into the public domain everyday.

Sounds familiar doesn’t it? So far the story has revolved around tax avoidance, only time will tell if the revelations include tax evasion and money laundering. The forward thinking compliance professional may well already be assessing their exposure to Mauritian entities and customers associated with them.

Is your business SM&CR ready?

In what feels to be one of the busiest periods in financial crime compliance, a week or so off is well earned and, indeed, needed for those tasked with combatting illicit money; particularly as the autumn will seemingly offer little respite as regulatory deadlines loom.

For many of our customers across the financial services sector, if they haven’t already, ensuring their organisation is ready by December 9th for the Senior Managers and Certification Regime (SM&CR) will be front of mind. The Financial Conduct Authority (FCA) is the place to go for definitive information on SM&CR and its implementation.

From recent conversations with customers it is evident that many have underestimated what is entailed, especially smaller firms with more limited resources. Our friends at Bovill have written a very good article naming the ‘seven sins’ of training and certification they have seen some investment management firms committing in their preparations.

Switching to the new regime should be fairly straightforward, however there are some challenges to consider such as ensuring the pool of nominated Senior Managers is not too narrow and that relevant overseas managers are included. Similarly the process of accreditation could be onerous and firms may want to start planning for this work now.

If it’s not already, making sure SM&CR plans are on top of the ‘to do’ pile when you get back from your holidays could be a good idea.

Financial Crime in Football

Professional sport has long suffered from being an arena in which financial criminals love to play – from allegations against owners of top flight clubs, to illegal sports betting rings, to suspect companies involved in managing top players.

Professional football is now considered such a significant risk that the European Union has added it to its watchlist of money-laundering risks, having conceded that the EU has a “structural problem” in its ability to fight financial crime. The beautiful game now joins 46 other products and sectors on the EU list of targets susceptible to financial crime.

It’s a sad reality that a sport which unites so many people and communities is exploited for criminal benefit. It’s inclusion on the watchlist will perhaps come as a little surprise to the financial crime compliance community, and any dealings with football clubs or their associated parties could warrant a closer inspection with the compliance microscope...

If you’re about to go on holiday – enjoy. No doubt by the time I return from my break, there will be an abundance of stories to discuss – I look forward to sharing them with you.

Author: Michael Harris 
Director, Financial Crime Compliance and Reputational Risk
LexisNexis® Risk Solutions

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The 'Money Laundering Exposed' Initiative

The 'Money Laundering Exposed' Initiative

If the UK is to effectively combat the flow of illicit funds, frank and open conversations with those on the frontline are required. LexisNexis® Risk Solutions is creating a platform for these discussions to take place and be shared, through its latest insight initiative – Money Laundering Exposed.
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