The Paradise Papers – the Secret Is UBO
Even people who promote good causes may have something to hide from taxes. The latest example is the singer of an Irish rock band that was listed in the leak of Paradise Papers that exposes high-ranking personalities, including monarchs, to charges of murder. ;tax evasion.
Tax evasion is a huge global problem that affects all social classes and all income groups, including people who like to portray themselves as philanthropists and social benefactors strongly involved in charity work. Celebrities and the biggest and most famous sports stars in the world do business in tax havens, as do big brands, business leaders and politicians. While they are winning, governments around the world are losing $ 700 billion in tax revenue every year, according to estimates by the International Network on Tax Justice .
Leaks become more important
Offshore leaks in 2013 were the beginning, followed by Swiss leaks, Bahamian leaks or Panama Papers in 2015/2016. With 11.5 million files and 2.6 TB of data, the Panama Papers were the biggest leak, leading to more global investigation efforts to unravel how tax havens work.
With 13.4 million files and 1.4 TB of data, the second-largest leak in history reveals how international elites use complex structures of trusts, foundations and front companies to optimize their taxes or even hide their money from the tax authorities. The sensitive documents come from the law firm offshore Appleby from two other business service providers and company registers from 19 tax havens.
This is not just about tax evasion
This renewed leak enormously increases the regulatory pressure to finally tackle offshore secrecy and anonymous trusts as they are not only effective vehicles for tax evasion, but also for money laundering. money, corruption and the financing of terrorism. Many regulators around the world have already issued rules requiring financial institutions to identify and verify the beneficial owners of their business clients.
No bank wants to be part of a scandal or see its name suffer from leaks like those of Paradise Papers, and banks can indeed do a lot to limit their reputational risk and regulatory fines through to a better KYC.
UBO – Blind spot and painful point of the achievable?
The identification and verification of the ultimate usufruct (UBO) must become an essential component of customer integration and ongoing due diligence processes (CDD). However, many institutions still rely on self-declaration of clients or perform a slow and expensive manual due diligence to understand property structures. The problem is complex and can not be underestimated, with millions of new businesses registered each year worldwide.
Finding the real UBO, it's like looking for the needle in the haystack, but technology and analysis can help streamline processes, increase transparency and reduce risk. End-to-end KYC solutions, such as Siron® KYC support the risk classification process of new and existing customers and use third-party databases to associate customer information with sanction lists and monitoring. owners and politically exposed persons.
With the publication of the Panama Papers, FICO has already integrated the database Offshore Leaks of the International Consortium of Investigative Journalists (ICIJ) in order to identify clients at the same time. 39 Using this data to explore assigning appropriate risk levels for customer due diligence requirements. The ICIJ database contains information on nearly 500,000 offshore entities, is continuously updated and includes information about Paradise Papers.
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