Britain's Lloyds bank freezes 8,000 offshore accounts

Yahoo – AFP, June 24, 2019

Lloyds froze accounts after failing to get detailed information about their
owners (AFP Photo/DANIEL LEAL-OLIVAS)

London (AFP) - Britain's Lloyds Banking Group has frozen 8,000 customer accounts under a wider crackdown on money-laundering, the lender announced Monday.

LBG took action late last year after a change to money-laundering rules in Jersey, home to the lender's international division, the Financial Times had reported.

Lloyds froze the accounts after failing to obtain details regarding customer identities despite multiple requests, a company spokesman told AFP.

"In January 2016, we began to contact certain expatriate banking customers to ensure we were provided with up-to-date information for our records, where customer information was missing," the spokesman said.

"This was required to meet international regulatory standards... Unfortunately, where a customer has not provided us with this necessary information we have had to freeze their account until we get the information."

The news comes amid international moves towards greater tax transparency, including in UK crown dependencies Jersey, Guernsey and the Isle of Man.

The three last week announced plan to publish secret information on company ownership in the offshore territories by 2023.

Nigel Farage says tax haven fund was a mistake

Ukip leader, who has previously spoken out against tax evasion, admits he set up offshore trust fund on Isle of Man

guardian.co.uk, Press Association, Friday 21 June 2013

Nigel Farage, the Ukip leader, set up the Farage Family Educational
Trust 1654 on the Isle of Man. Photograph: Murdo MacLeod

The Ukip leader has admitted he made a mistake by setting up a trust fund in an offshore tax haven.

Nigel Farage, who has previously spoken out against tax evaders in a speech to the European parliament, admitted he paid an adviser to set up the Farage Family Educational Trust 1654 on the Isle of Man, the Daily Mirror said.

The newspaper said Farage insisted he had not personally benefited from the account, and that he claimed he had ended up out of pocket.

The MEP told the Mirror: "My financial advisers recommended I did it, to have a trust really for inheritance purposes and I took the advice and I set it up. It was a mistake. I was a completely unsuitable person for it. I am not blaming them, it was my fault. It's a vehicle that you chuck things in through your life that you don't need and you build up a trust fund for your children or grandchildren.

"It was called an educational trust and could have been used for grandchildren's schools fees, things like that. It was a mistake for three reasons. Firstly, I'm not rich enough to need one and I am never going to be. Secondly, frankly, the world has changed. Things that we thought were absolutely fair practice 10 years, 20 years ago, 30 years ago aren't any more. Thirdly, it was a mistake because it cost me money. I sent a cheque off to set it up."

The newspaper said Farage transferred his shareholding in a company, Farage Limited, to the Farage Family Educational Trust, based in Douglas, the capital of the Isle of Man. This meant the trust owned 33% of Farage Limited, later rising to 50%, the Mirror said.

Farage denied receiving dividends from the company.

Companies House documents reveal the offshore trust remained a shareholder of Farage Limited until 2011, the Mirror said.

The Ukip leader insisted he shut it down in 2007 or 2008, saying: "I sent a cheque off to set it up, out of my own taxed income, and basically just through administration fees that money disappeared."

Offshore Secrets

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France24 – AFP, 02 MAY 2013

The US Virgin Islands and British Virgin Islands are seen in a NASA image
 released 09 July, 2003. Bermuda, the Turks and Caicos and other British
 overseas territories with extensive financial centres have signed agreements to
 share tax information in what the British government hailed Thursday as a
major victory in the battle against tax evasion.

AFP - Bermuda, the Turks and Caicos and other British overseas territories with extensive financial centres have signed agreements to share tax information in what the British government hailed Thursday as a major victory in the battle against tax evasion.

Anguilla, Bermuda, the British Virgin Islands, Montserrat and the Turks and Caicos Islands have agreed to "much greater levels of transparency of accounts held in those jurisdictions", Britain's Treasury said.

The move is part of an international drive to clamp down on tax havens and is designed to help British authorities find bank account holders who evade taxes by hiding their money overseas.

The agreement means the jurisdictions have agreed to pass on names, addresses, dates of birth, account numbers, account balances and details of payments into the accounts.

The jurisdictions will share the details with Britain but also with tax authorities in France, Germany, Italy and Spain.

Britain recently reached similar tax information-sharing agreements with Jersey, Guernsey and the Isle of Man.

Cracking down on tax evasion is one of Britain's priorities for its presidency of the G8 this year.

Chancellor of the Exchequer George Osborne said the move was "a significant step in tackling illicit finance and sets the global standard in the fight against tax evasion".

He called on other countries to remove the "hiding places for those who seek to evade tax and hide their assets".

Offshore Secrets

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The 'who's who' of European tax havens

Deutsche Welle, 17 April 2013

Forget about the Bahamas, Panama, Cayman Islands, or Fiji. If you want to avoid paying taxes and have no problem with dicey business practices, Europe has a lot to offer.

Europe is far from innocent in the international offshore tax evasion industry, as the Tax Justice Network (TJN) recently demonstrated. Many European countries, with their stable infrastructure and professional personnel, provide fertile ground for businesses or individuals to evade taxes.

 Markus Meinzer sees more than a
 few loopholes that need to be closed

There are more than a few gaps that need to be filled in Europe, according to Markus Meinzer of the TJN. He helped paint a picture of who's who among European tax havens.

Andorra

The independent mini-state of Andorra in the Pyrenees, which is not a part of the European Union, offers a secretive place for those in neighboring countries to stash their money. Particularly attractive is the personal service offered by banking advisers there. It's also easy for Spaniards and French to simply drive there to deposit cash. Afterwards, one can always tank up and buy cigarettes there - tax-free, of course.

Austria

As a country sharing borders with Germany, Hungary, Slovakia, Slovenia, Italy, the Czech Republic and Switzerland, Austria draws foreign capital by promising secrecy to account holders. It caters especially to Europe's German-speaking population, Meinzer said. But he also said that he knows of Argentines who, for example, combine investing in Austrian bonds with the advantages of bank secrecy. Due precisely to the lack of financial transparency and its geographic location, Austria has also attracted wealth from Arab world dictators for decades.

Channel Islands

 Guernsey is a safe haven for
dubious capital dealings

The British Channel Islands Jersey, Guernsey and Sark are home to hundreds of financial institutions and insurance companies drawn to their simple and low taxes. While Jersey probably "hides the most dirty business," according to Meinzer, Guernsey is the most innovative.

With its so-called self-protected companies, an apparent single company is organized into cells with protective legal walls between them. And on Sark, according to British newspaper The Guardian, there are 24 companies registered for each of the approximately 600 inhabitants.

Cyprus

Cyprus is the perfect example of what can go wrong with depending on such dubious business models. It was particularly oriented toward former Soviet countries, and acted as a hub for them. Transactions over letterbox companies brought money into Cyprus, then back to countries like Russia - thus avoiding Russian tax authorities. But since the Cyprus bailout , in part by the EU, the Mediterranean island will have to come up with a new business model.

England

England, with London, represents one of the largest hubs for tax evasion and capital flight. Meinzer described London as "the mother of all tax havens" since the zone, which does not answer to the crown, has developed a network that continues to bring money back to the capital of the former empire. Money flows from there to British Channel Islands, such as Guernsey, Jersey or to the Isle of Man, then overseas to British territories in the Caribbean, such as the Cayman or Virgin Islands - or in Europe, to Gibraltar. London, is the seat of many dubious "letterbox companies," which only exist on the Internet.

Germany

Frankfurt is a great place for foreign
investors to earn tax-free interest

Germany protects the data of foreign investors, who also don't have to pay taxes on interest.

Only Germans, or foreigners resident in Germany, have to actually shell out a flat rate withholding tax on interest income, Meinzer said.

Information on such yields also rarely flows out of Germany, he added: "Foreign investors with German accounts are protected with a certain degree of anonymity."

That's why Germany ranks ninth in the world for financial secrecy, according to TJN.

Gibraltar

At the southern tip of the Iberian Peninsula, Gibraltar has specialized in allowing such letterbox companies, called "trusts." The structure of such trusts means there is no real owner of the company. They are often used to add a layer of secrecy to letterbox companies, Meinzer said, which is particularly good for money laundering.

Meinzer cited insider information in calling it "the dirty end of the spectrum" for bringing money back into financial markets. The presence of many gambling casinos there also comes into play.

Ireland

It's called the "double Irish" in the financial world: A company founds two subsidiaries in Ireland with its business tax rate of 12.5 percent. Then, one claims to be based in a different tax haven. (Comparable taxes in the United States, for example, are around 35 percent.)

 Ireland's idyllic landscape belies
its savvy financial sector

While the one company does business in Europe, it pays the other patent fees. Profits vanish, as costs and income equal out on the balance sheet.

This is completely legal in Ireland, and therefore an optimal location for companies such as Google, Apple or Amazon.

Although other countries like the Netherlands offer similar models, Meinzer said the difference is that people do actually work in Ireland, which at least creates some jobs and a bit of growth in the country.

Isle of Man

Taxes are kind of an afterthought on this island between England, Scotland and Ireland. Inheritances and capital gains aren't taxed at all, while the highest level of taxation lies at 20 percent. Corporate tax is nonexistent. It's especially loved as a hidey-hole for British millionaires.

Luxemburg

Luxembourg is the second-largest financial hub in Europe, after London. Innumerable investors and around 150 different banks enjoy a lenient tax framework in Europe's stocks and bonds center. Luxembourg's status as an EU member makes it particularly attractive for European companies and the international market, Meinzer explained. "If I want to get around German laws, for example, I could go through Luxembourg," Meinzer said, adding that 40 German banks do business there.

Malta

Malta's capital Valetta offers
a beautiful climate - for investors

With its low tax rates, Malta, like Cyprus, has long drawn foreign capital. Although corporate taxes are around 35 percent, companies can get most of that refunded.

It's a favorite among German companies, which earn a higher profit if based on Malta. Meinzer said that while it's clearly a tax paradise for companies, it's not clear if that's also the case for individuals.

Monaco

The Principality of Monaco continues to be home to the rich and famous, being surrounded by France. Millionaires happily set themselves up there due to the fact that they pay no income or inheritance taxes. The city-state also does not prosecute financial crimes committed abroad. Businesses, however, must pay taxes there - at rates of around 33 percent. France, though it doesn't play an active role, lends a protective hand, Meinzer said.

Netherlands

The Netherlands is more than
just cheese

What Luxembourg is for private investors, the Netherlands is for large corporations. Business taxes are incredibly low, with many tax advantages for interest and licensing income.

With the "Dutch sandwich," a parent company has a subsidiary in the Netherlands, which it uses as a cheap tax base to develop its European business.

Switzerland

Although there are supposedly no more completely anonymous bank accounts in Switzerland (and neighboring Liechtenstein), it continues to draw large sums of money due to its strict banking secrecy. Considering the volume of money in Switzerland, it made first place on the TJN's Financial Secrecy Index.

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Deutsche Welle, 14 April 2013

Six major EU countries are set to increase the pressure on tax havens. At their meeting in Dublin, finance ministers announced an initiative against tax fraud and creative tax avoidance inspired by the US.

Pressure is growing on so-called tax havens, situated in the Caribbean and in Europe. At the meeting of European Union finance ministers in Dublin, six major EU member states, France, Britain, Italy, Poland, Spain and Germany presented a new initiative against tax evasion and tax avoidance.

In the future, the six countries plan to automatically exchange all relevant data on capital income with each other. That will enable fiscal authorities to collect taxes more easily from taxpayers who invest money in the EU.

The sudden momentum came from across the Atlantic, according to British Finance Minister George Osborne, who was responding to a reporter's question in Dublin.

"We actually have a new international standard emerging," he said. "With the countries represented here taking it up and using it as the basis of a multilateral European system, we're turning what was a bilateral US agreement into something approaching a global standard, which we want to obviously see promoted in Europe, but also more widely than that."

Osborne's statement referred to the Foreign Account Tax Compliance Act (FATCA), passed in the US in 2010, which is applied by an increasing number of countries worldwide in bilateral agreements with the US – among them Germany and Luxembourg. Under FATCA, those who don't pass on relevant data of potential American tax evaders to the US authorities are consequentially banned from doing business in the US. And since the US is the world's most important financial center, most countries and their banks have no choice but to accept FATCA.

 Austrian Finance Minister Maria
Fekter was on the defensive

Austria putting up resistance

Even Switzerland, famous for its banking secrecy, has adopted FATCA in a bilateral agreement with the US. But there has been criticism, with the Swiss daily newspaper the Neue Zürcher Zeitung speaking of a "tax diktat" by the big power, the United States.

The largest EU countries now want to adopt automatic data exchange as a standard for Europe. The last country to put up open resistance was Austria. In Dublin, Finance Minister Maria Fekter of the conservative party ÖVP called it an "attack on banking secrecy."

Banking secrecy has deep traditional roots in Austria and is anchored in the constitution. The proposed data exchange, she criticized, would lead to a "graveyard of data." "It's better to tax at the source," said Fekter. Austria does just that, deducting a tax at the source on returns on interest – in an anonymous way.

Luxembourg's Finance Minister Luc Frieden also criticized the initiative brought forward by the big six. "They want the small EU countries to just follow suit," Frieden said. Nevertheless, on Saturday (13.04.2013), three medium-sized EU member states, the Netherlands, Belgium, and Romania, also decided to join the initiative.

But Austria looks set to give in to pressure from the US, and seems likely to begin negotiations on adopting FATCA. Austria will try and push for an agreement similar to the one Switzerland has adopted, one which doesn't impose an automatic data exchange, so that the anonymity of bank depositors remains somewhat protected.

Brits put pressure on Cayman Islands

In Dublin, Britain's finance minister announced that the new transparency will also apply to tax havens in Britain's sphere of influence.

"First of all the Crown dependencies, the Channel Islands, the Isle of Man and so on: we have in the past couple of weeks concluded automatic exchanges of information, which are based on the US model, based on the model that we are adopting amongst ourselves here," said Osborne.

"With the overseas territories, like the Cayman Islands and the British Virgin Islands, we are in advanced stages of discussions. But I think they are in no doubt about what we expect of them."

The Cayman Islands - beautiful beaches
and an attractive tax system

People who want to evade taxes, Osborne added, should know that the hiding places are becoming few and far between.

Limit creative tax avoidance

German Finance Minister Wolfgang Schäuble stressed that the initiative of the six major EU countries isn't limited on returns on interest. It will also be applied to all forms of capital income by companies. In the future, systems that encourage creative tax avoidance, currently legal and present in many EU member states such as Luxembourg and Ireland, will also come under scrutiny.

"When the International Monetary Fund has its spring meeting in Washington next week, we will continue our efforts on a global level," he said. "We want to fight tax evasion through data exchange and we want to fight tax avoidance that happens when someone uses different tax systems or even tax havens. I believe a global movement is emerging, that will find the support of all Europeans."

But not all EU member states agree. Luxembourg benefits from direct investment by US companies, for example, which settle in the Grand Duchy because they benefit from the limited tax burden there, a prime example being online retailer Amazon.

'Surge in appetite' for stricter rules

At the moment, the EU member states are in competition with each other because of such legal tax avoidance systems. Countries like Cyprus were a popular destination for companies to register low-taxed subsidiaries, so-called letterbox companies. In the future, that system should lose its appeal, said Polish Finance Minister Jacek Rostowski in Dublin.

Schäuble said the IMF will continue
the efforts on a global level

Rostowski explained that Poland has tried to attract big international companies for many years. He wants the multinationals to tax the profits where they make them: in Poland. "As a host country we're always concerned about a reduction of the base for tax. We can only fight tax avoidance in cooperation with other states," he said.

EU Tax Commissioner Algirdas Semeta has urged member states to finally adopt the EU's Savings Directive that was negotiated in 2008. In Dublin, he said he could now see that happening over the coming weeks. But he warned that all questions concerning tax policy require a unanimous vote by all member states.

"The surge in the appetite of member states for progress and action in the fight against evasion is extremely welcome," said Semeta, seemingly surprised by the initiative launched by the six big countries. And yet, it's still up to the member states themselves to determine their tax systems and their tax rates.

Offshore Secrets

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A worldwide research effort in collaboration with the Guardian/ICIJ reveals the real people behind these anonymous companies

The Guardian, David Leigh, Harold Frayman and James Ball, 25 November 2012

James Ball travels to the tiny Caribbean island of Nevis searching for Sarah Petre-Mears,

 who on paper controls more than 1,200 companies scattered around the Caribbean, the

Republic of Ireland, New Zealand and the UK itself Link to this video

The existence of an extraordinary global network of sham company directors, most of them British, can be revealed.

The UK government claims such abuses were stamped out long ago, but a worldwide joint investigation by the Guardian, the BBC's Panorama and the Washington-based International Consortium of Investigative Journalists (ICIJ) has uncovered a booming offshore industry that leaves the way open for both tax avoidance and the concealment of assets.

Offshore Secrets

More than 21,500 companies have been identified using this group of 28 so-called nominee directors. The nominees play a key role in keeping secret hundreds of thousands of commercial transactions. They do so by selling their names for use on official company documents, using addresses in obscure locations all over the world.

This is not illegal under UK law, and sometimes nominee directors have a legitimate role. But our evidence suggests this particular group of directors only pretend to control the companies they put their names to.

The companies themselves are often registered anonymously offshore in the British Virgin Islands (BVI), but also in Ireland, New Zealand, Belize and the UK itself. More than a score of UK agencies sell offshore companies, several of which also help supply sham directors.

One British couple, Sarah and Edward Petre-Mears, who migrated from Sark in the Channel Islands to the Caribbean island of Nevis, have sold their services to more than 2,000 entities, with their names appearing on activities ranging from Russian luxury property purchases to pornography and casino sites.

In 1999, the government claimed Britain's sham director industry had been "effectively outlawed" after a judge, Mr Justice Blackburne, said the court would not tolerate "the situation where someone takes on the directorship of so many companies and then totally abrogates responsibility". But our findings show this has failed to be policed.

These nominee fronts conceal a wide variety of real owners, including those that are perfectly legal, from Russian oligarchs to discreet speculators in the British property market. Their only common factor is the wish for secrecy. Some of the owners we have identified include:

• Vladimir Antonov, the London-based billionaire Russian purchaser of Portsmouth FC, who is currently fighting an extradition request from Lithuania, where he controlled a bank. He denies wrongdoing.

• Yair Spitzer, a north London software engineer who bought and sold London flats. He said: "We were advised by UK accountants that this structure … was perfectly legal."

• The Hackmeys, a wealthy Israeli family, one of whom used a BVI company to buy a £26m London office block. Their spokesman said: "The deal was introduced by a [confidential] joint venture partner who set up the deal and structure."

• Nicholas Joannou, whose Armstrong Group sold shares from an address in Berkeley Square, central London. The Guardian was unable to contact him.

• SP Trading, which was linked in 2009 to a Kazakh businessman and an arms to Iran scandal. The nominee directors in Vanuatu turned out to have no knowledge of the company's true activities. They told us there were "very few cases of misuse by clients".

In a parallel investigation Monday's Panorama on BBC1 is due to show a company formation agent offering to assist its undercover reporter to escape tax. The agent, James Turner, of Turner Little in York, offers nominee directors in Belize and says: "They won't even know that they were a director, they just get paid."

A representative of a second company, Atlas Corporate Services, is asked for maximum confidentiality. He explains that many of its nominees are not even aware of how their names are being used. Jesse Hester, who runs Atlas Corporate Services from Mauritius, is seen assuring a potential client that the UK is unlikely to catch up with him. "Tax authorities don't have the resources to chase everybody down … They reckon it's probably the same rough odds as probably winning the lottery," he says.

The revelations launch a week-long series onthe Guardian site designed to strip away anonymity from offshore companies, the most shadowy aspect of the UK's financial industry. The British Virgin Islands are a particularly successful hideaway, thanks to the exceptional secrecy on offer. This Caribbean territory, which is ultimately controlled by the UK, has sold more than a million anonymously-owned offshore entities since launching itself in 1984 as a tax haven.

The purchasers are often people who, for a variety of reasons, some perfectly legitimate, do not wish to advertise what they are doing with their wealth.

But a worldwide research effort has been launched this year by the ICIJ. It aims to identify, country by country, thousands of the true owners.

The Guardian has collaborated with the ICIJ, a non-profit organisation, to analyse many gigabytes of the British data. This week we intend to reveal the names of more owners. We do not suggest criminal wrongdoing by them. Among those we have contacted, not all go so far as to employ nominee directors. Some insist they have done nothing improper, and are merely taking advantage of legitimate tax breaks or the opportunity for privacy. Critics say, however, that the islands' system can be open to abuse because of its lack of transparency.

Gerard Ryle, the director of the ICIJ, said: "We are applying specialist software to crunch through literally hundreds of thousands of offshore entities to look for patterns. We are marrying our findings with old-fashioned shoe leather and interviews from key insiders who can provide further context on this little known and loosely regulated world. We are satisfied that the information we have is authentic."

Ryle believes the ICIJ's global project, when it is completed next year, will haul into the open a shadowy financial system estimated to conceal the movement around the world of trillions of dollars.

Offshore secrets

Guardian team: David Leigh, Harold Frayman and James Ball.

The project is a collaboration between the Guardian and the International Consortium of Investigative Journalists (ICIJ) headed by Gerald Ryle in Washington DC. Guardian investigations editor David Leigh is a member of ICIJ, a global network of reporters in more than 60 countries who collaborate on in-depth investigative stories that cross national boundaries. The ICIJ was founded in 1997 as a project of the Center for Public Integrity, a Washington DC-based non-profit.

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The guardian, The Observer, Jamie Doward, Saturday 24 November 2012

The Cayman Islands: will they really come clean about their tax practices?
Photograph: Martin Barraud/Getty Images

Radical plans to force the UK's tax havens to reveal the names behind hidden companies, account holders and trusts have been drawn up by the Treasury.

The news has delighted tax justice campaigners, who predict that the move, which is expected to be unveiled in the chancellor's autumn statement and come into force in 2014, will have major consequences for those trying to hide their money offshore.

A leaked document reveals that the UK plans to impose its own version of the US Foreign Account Tax Compliance Act (Fatca) on the crown dependencies of Jersey, Guernsey and the Isle of Man, as well as its overseas territories, such as the Cayman Islands.

Fatca, which will come into force in the middle of next year, requires foreign banks to report American account holders to the US Inland Revenue Service. The draft UK equivalent, seen by the magazine International Tax Review, will require British tax havens to make similar disclosures about UK account holders to UK tax authorities.

"It's a complete bombshell for these places," Richard Murphy, a tax expert who has seen the draft plan, told the Observer. "Some people will try to flee, but this is going to change the whole of the offshore market."

He explained that the draft plan amounted to the UK using US legislation to give tax havens an ultimatum: "It's either they give the UK the same data that they want to give the US or the UK won't pass their laws to let data flow to the US."

The ultimatum is crucial, Murphy suggested. If the UK refuses to pass the laws, its tax havens "might just as well shut up shop since there would be almost no banks or other institutions willing to locate there".

News of the plans is likely to surprise many tax experts. This month, responding to an international development committee report, the government publicly rejected the need for a UK version of Fatca.

Joseph Stead, Christian Aid's senior adviser on economic justice, said that if the draft was implemented it "would be the beginning of the end for tax haven secrecy".

However, he said it was vital that it should not just be the UK which obtains full information disclosure from its tax havens: "We should ensure that other countries get it too, so they can catch up with people and companies hiding money. Otherwise there will be tax haven secrecy for some countries and not others.

"Poor countries lose billions every year to tax dodging and tax havens are often involved. We hope the UK government will use the G8 meeting it is hosting next year to agree action to ensure a global end to tax haven secrecy."

The Treasury declined to comment but confirmed to the Review that it was assisting the UK's crown dependencies and overseas territories to produce their response to Fatca.

However, former Liberal Democrat Treasury spokesman Lord Oakeshott was sceptical about whether the plan could succeed. "Tax havens really coming clean are as likely as a snowy Christmas day in the Cayman Islands," he said.

Last night the Labour shadow chancellor, Ed Balls, outlined a five-point plan for tackling tax avoidance. In an article for the Huffington Post, Balls writes: "We urgently need to look at how UK tax laws can be made stronger so as to properly deter tax avoidance."

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