{"id":3474,"date":"2019-09-24T15:02:02","date_gmt":"2019-09-24T15:02:02","guid":{"rendered":"https:\/\/diskdrive33.com\/mks\/?p=3474"},"modified":"2019-09-24T15:02:02","modified_gmt":"2019-09-24T15:02:02","slug":"offshore-shell-companies-reveal-the-hypocrisy-of-u-s-service-providers","status":"publish","type":"post","link":"https:\/\/diskdrive33.com\/mks\/2019\/09\/24\/offshore-shell-companies-reveal-the-hypocrisy-of-u-s-service-providers\/","title":{"rendered":"Offshore shell companies reveal the hypocrisy of U.S. service providers"},"content":{"rendered":"<p class=\"BodyA\"><strong>It may be perceived that Transparency International (TI), and its now-rebranded former U.S. branch, the Coalition for Integrity (CI), and I do not get along. In fact, we all want the same thing. However, we do not agree on the means to achieve the shared ambition of reducing global corruption.<\/strong><\/p>\n<p class=\"BodyA\">The excellent <span class=\"Hyperlink0\"><span lang=\"PT\"><a href=\"https:\/\/www.fcpablog.com\/blog\/2019\/5\/1\/end-anonymous-shell-companies-to-protect-national-security.html\" target=\"_blank\" rel=\"noopener noreferrer\"><strong>post<\/strong><\/a><\/span><\/span><span class=\"None\">\u00a0published in May by Shruti Shah and Michael Hershman, in which they called for the U.S. government to act by involving the Financial Crimes Enforcement Network (<\/span><span class=\"None\">FinCEN<\/span><span class=\"None\">) in the overseeing of U.S. shell companies drew my attention for several reasons, not least of which is that I have been <\/span><span class=\"None\">expressing<\/span><span class=\"None\"> the same opinion for several years on the FCPA Blog, too.<\/span><\/p>\n<p class=\"BodyA\"><span class=\"None\">The authors make a number of excellent points, including the link between grand corruption and the violation of human rights, accurately concluding that the recent developments and unrest<\/span><span class=\"None\"> in Venezuela <\/span><span class=\"None\">are indicative of what happens when the corrupt oversee a state. I have long-advocated that grand corruption should be <\/span><span class=\"Hyperlink1\"><a href=\"http:\/\/www.theglobeandmail.com\/report-on-business\/rob-commentary\/an-international-anti-corruption-court-is-a-fine-idea-but-not-necessary\/article30381824\/\" target=\"_blank\" rel=\"noopener noreferrer\"><strong>considered<\/strong><\/a> a crime against humanity<\/span><span class=\"None\"> under Article 7(1)(k) of the Rome Statute establishing the International Criminal Court. I have written articles on the subject and <\/span><span class=\"Hyperlink1\"><a href=\"https:\/\/www.c5-online.com\/5th-miami-forum-on-fraud-asset-tracing-recovery-596l17-mia\/agenda\/grand-corruption-a-crime-against-humanity-strategies-to-fund-and-effect-substantial-recoveries-of-value\/\" target=\"_blank\" rel=\"noopener noreferrer\"><strong>discussed<\/strong><\/a> its implications<\/span><span class=\"None\">.<\/span><\/p>\n<p class=\"BodyA\"><span class=\"None\">The issue of anonymous shell companies being vehicles for grand corruption, and resultant money laundering, is already well established. What I am pleased to see is that TI and CI are at last targeting the U.S. over the regulatory failings of company ownership. I have previously drawn attention to the U.S. and its &#8220;offshore&#8221; service <a href=\"https:\/\/www.theglobeandmail.com\/report-on-business\/rob-commentary\/panama-papers-better-tax-rules-can-help-but-there-will-always-be-cheats\/article29513440\/\" target=\"_blank\" rel=\"noopener noreferrer\"><strong>providers<\/strong><\/a> in <\/span><span class=\"Hyperlink2\">Nevada and Delaware<\/span><span class=\"None\">, for example, as being regulatory blackholes.<\/span><\/p>\n<p class=\"BodyA\"><span class=\"None\">The U.S. often portrays herself as the world\u2019s police force. In many respects she is, but not where offshore services are concerned. The U.S. bangs on relentlessly about the problems of money laundering and targeting the rest of the globe to change their ways or face sanctions &#8212; when, in actual fact, she needs to get her own house in order. The U.S. stance is hypocritical. It is right that the authors take it to task.<\/span><\/p>\n<p class=\"BodyA\"><span class=\"None\">When the Panama\/Paradise Papers broke, there were few Americans implicated. Why? Because Americans had no need to seek offshore services elsewhere: they were readily available on their own doorstep.<\/span><\/p>\n<p class=\"BodyA\"><span class=\"None\">One of the core advocacy <\/span><span class=\"None\">objectives<\/span><span class=\"None\"> of TI and CI is to achieve greater transparency: something I also advocate, but with the rider that this does not necessarily involve a need for breaching an individual\u2019s private life or destroying valuable investigative material by the blunt instrument of public company<\/span><span class=\"None\"> registers<\/span><span class=\"None\">. My adopted home of the British Virgin Islands (BVI) has been a regular target for criticism by both TI and CI, especially since the Panama\/Paradise Papers hit the news.<\/span><\/p>\n<blockquote>\n<p style=\"text-align: right;\"><strong>The fact remains that the BVI is well regulated<\/strong><\/p>\n<\/blockquote>\n<p class=\"BodyA\"><span class=\"None\">The fact remains that the BVI is well regulated. Ultimate Beneficial Ownership (UBO) details of BVI companies <\/span><span class=\"None\">are <\/span><span class=\"None\">not only readily available, but they have been verified. The UBO information is available to <\/span><span class=\"None\">competent <\/span><span class=\"None\">foreign authorities\/law enforcement\/tax agencies within seven days if it is a normal <\/span><span class=\"None\">Egmont Group\/FIU <\/span><span class=\"None\">request, or within 24-hours in the case of an emergency, via the BVI\u2019s <\/span><span class=\"Hyperlink1\"><a href=\"https:\/\/totalserve.eu\/Assets\/Images\/uploadedContent\/CMS\/documentsImages\/no15of2017beneficialownershipsecuresearchsystemact,20171497518594.pdf\" target=\"_blank\" rel=\"noopener noreferrer\"><strong>Beneficial Ownership Secure Search System Act 2017<\/strong><\/a><\/span><span class=\"None\">. Add to this the <\/span><span class=\"Hyperlink1\"><a href=\"http:\/\/www.bvi.gov.vg\/tiea\" target=\"_blank\" rel=\"noopener noreferrer\"><strong>Tax Information Exchange Agreements<\/strong><\/a><\/span><span class=\"None\"> already in place, and it is clear that the BVI has upped its game and is now a leading light where offshore services are concerned. <\/span><\/p>\n<p class=\"BodyA\"><span class=\"None\">Where the authors and I are likely to part ways on agreement is that I believe that privacy is a right worth defending; and that the unintended consequence of moving away from a system of controlled transparency (like the BVI\u2019s), to a purely open one (as advocated by TI\/CI) is that large pools of valuable UBO investigative material linking wrongdoers to offshore companies will be destroyed. Why? Because crooks will not opt to openly link their names to their asset-holding vehicles for all the world to see at the click of a mouse.\u00a0 The answer to all our problems is not an open public register of UBO information.<\/span><\/p>\n<p class=\"BodyA\"><span class=\"None\">Conversely, the U.S. offshore world is decidedly shady and reeks of corruption. As the authors quite rightly pointed out in their piece, there is a total lack of transparency in these areas of the U.S., where UBO information isn\u2019t collected, and even where it is, it appears not to have been verified.<\/span><\/p>\n<p class=\"BodyA\"><span class=\"None\">Where the TI\/CI proposals will fail is under the current U.S. regime. There is absolutely no appetite for transparency where U.S. shell companies are concerned. Far too many of them are owned by those in powerful positions. It would be tantamount to a turkey voting for Thanksgiving.<\/span><\/p>\n<p class=\"Default\">This said, I wish the authors well with their endeavors. There may well be a gentle and encouraging swing towards their position as they have highlighted. But I struggle to believe that ultimately the powerful Delaware and Nevada caucuses to Congress will embrace their ambitions. There are far too many politically-connected individuals who have been using the inherent secrecy of the U.S. offshore services.<\/p>\n<p class=\"Default\">I suspect that FinCEN may well consider that taking on the collection of the UBO data falls within its remit. Sadly, I don\u2019t believe that those in Congress who are in a position to make the changes by legislation will share that perspective. But kudos to Ms. Shah and Mr. Hershman for at least drawing attention to what is an American problem that never gets the negative publicity it so richly deserves.<\/p>\n<p class=\"Default\"><em>With thanks to Tony McClements, Senior Investigator at Martin Kenney &amp; Co, for his assistance with this post. He served for 33 years with UK police forces and has specialized in Fraud &amp; Financial Investigation since 1998. He is also a lecturer in these subjects at the University of Central Lancashire (UCLAN).<\/em><\/p>\n<p class=\"Default\"><em>_____<\/em><\/p>\n<p class=\"Body\"><span class=\"None\"><em>Martin Kenney, pictured above, is Managing Partner of Martin Kenney &amp; Co., Solicitors, a specialist investigative and asset recovery practice based in the BVI, focused on multi-jurisdictional fraud and grand corruption cases\u00a0<\/em><\/span><strong><a href=\"https:\/\/diskdrive33.com\/mks\/\" target=\"_blank\" rel=\"noopener noreferrer\">www.martinkenney.com<\/a><\/strong><span class=\"None\"><em>\u00a0|<\/em><\/span><strong><a href=\"http:\/\/www.twitter.com\/MKSolicitors\" target=\"_blank\" rel=\"noopener noreferrer\">@MKSolicitors<\/a><\/strong><span class=\"None\"><em>. In 2014 he was the recipient of the ACFE\u2019s highest honour: the Cressey Award for life-time achievement in the detection and deterrence of fraud. He was selected as one of the Top Thought Leaders of the Legal Profession in 2018 by Who&#8217;s Who Legal International and as the number one offshore lawyer for asset recovery in 2018.<\/em><\/span><\/p>\n<p><strong><a href=\"https:\/\/www.fcpablog.com\/blog\/2019\/7\/18\/offshore-shell-companies-reveal-the-hypocrisy-of-us-service.html\">This article originally appeared on the FCPA Blog<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The U.S. often portrays herself as the world\u2019s police force. In many respects she is, but not where offshore services are concerned.<\/p>\n","protected":false},"author":2,"featured_media":3475,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[81],"tags":[75,109,110,196],"class_list":["post-3474","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-opinion","tag-offshore","tag-panama-papers","tag-paradise-papers","tag-usa"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.8 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Offshore shell companies reveal the hypocrisy of U.S. service providers - MKS<\/title>\n<meta name=\"robots\" content=\"noindex, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Offshore shell companies reveal the hypocrisy of U.S. service providers - MKS\" \/>\n<meta property=\"og:description\" content=\"The U.S. often portrays herself as the world\u2019s police force. 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