Executive Summary Automatic Information Exchange (AIE) is a vital transparency tool that could he... more Executive Summary Automatic Information Exchange (AIE) is a vital transparency tool that could help developing countries tackle illicit financial flows worth trillions of dollars that end up hidden in the financial centres of many OECD countries and other tax havens. These flows include money from corruption and crime and especially tax dodging money, which deprives developing countries of resources needed to achieve economic development and ensure their citizens' basic human rights. While the G20 has endorsed AIE as the new global standard for exchange of tax information and rhetorically committed to extending its benefits to developing countries, the latter have de facto been excluded from the design of the implementing framework developed by the OECD, a club of rich countries. The OECD / Global Forum's Working Group on AIE conducted a survey to find out about, among other things, what countries need in order to implement the new framework, called the "Common Reportin...
In a world where billion-dollar corruption and money laundering schemes can travel through develo... more In a world where billion-dollar corruption and money laundering schemes can travel through developed countries’ financial institutions undetected, the only chance for any country’s authorities to successfully address financial crime is to apply cutting edge technology for crime detection. At the core of the fight against illicit financial flows is authorities’ ability to verify the identity of the beneficial owners who control the world’s companies and trusts. Applying advanced analytics and inter-connecting ownership registries is the only way to make sure legitimate businesses flourish, while preventing the abuse of legal vehicles that rob countries off their resources and erode trust in democracy and state institutions. This will also be good for real businesses. By helping businesses easily and effectively check their supply chains and the companies they work with business can better prevent sanctioning risks to their reputation for having engaged with the wrong people.<br><br>Section 1 of this report briefly reviews the concept and importance of beneficial ownership. It describes countries’ contradictory or insufficient measures in relation to beneficial ownership transparency needed to address illicit financial flows related to corruption, money laundering or the financing of terrorism. Section 2 refers to all the relevant data on beneficial ownership that should be collected in the first place to allow for verification. It summarizes the definitions of beneficial ownership depending on the various types of legal vehicles and their combination. It lists all details that should be collected and it adds new innovative proposals for ensuring registered beneficial ownership is accurate and easier to verify. Section 3 and 4 are the core of this paper and describe the IT system that governments should establish to automatically cross-check and verify beneficial ownership information, both in terms of validity (section 3) as well as advanced analytics for redflagging purposes (section 4). Section 5 discusses issues relating to costs and sanctions for noncompliance.
Beneficial ownership transparency has become one of the leading tools to tackle illicit financial... more Beneficial ownership transparency has become one of the leading tools to tackle illicit financial flows related to tax evasion, money laundering, corruption and terrorism finance. It involves identifying the “beneficial owners”, who are the individuals (natural persons) who ultimately own or control legal vehicles such as companies, partnerships, trusts or foundations that operate in the economy by opening bank accounts, holding real estate, or providing goods and services. Without beneficial ownership transparency, criminals are able to engage in illegal activities by hiding behind legal vehicles or nominees. Beneficial ownership transparency reveals who is behind an entity. This report, based on the Financial Secrecy Index, describes the state of play of both legal and beneficial ownership registration in more than 112 jurisdictions for four types of legal vehicles (companies, partnerships, trusts and private foundations). It describes the registration level in each country, and it also weighs the risks based on the number of registered vehicles. For example, if both country A and country B offer secretive companies, but one million companies have been created in country A while none have been created in country B, then the risk posed by country A is much worse in practice than that of country B.
An editorial by the publication Trusts and Trustees and a paper by Jersey Finance criticised our ... more An editorial by the publication Trusts and Trustees and a paper by Jersey Finance criticised our paper “Trusts: Weapons of Mass Injustice?”, in particular regarding trust registration requirements and publicity, evidence on the abuse of trusts and whether current laws already address all potential abuses involving trusts. This paper offers a response to these criticisms and adds more examples on the involvement of trusts in grand corruption cases as well as comments about the legitimacy of using trusts to avoid taxes.
Countries are offering citizenship and residency for investment schemes in an attempt to raise re... more Countries are offering citizenship and residency for investment schemes in an attempt to raise revenues or attract rich individuals. While there may be legitimate reasons for acquiring such residency or citizenship certificates (e.g. visa-free traveling, studying or working in a different country), these schemes can also be exploited by individuals trying to escape legitimate prosecutions for crimes, to engage in money laundering or to violate international sanctions. Also importantly, to avoid reporting under automatic exchange of information for tax purposes. The Common Reporting Standard (CRS) for automatic exchange of information requires financial institutions to determine the account holder’s residency in order to share their information with the relevant jurisdiction’s authority. If the account holder acquires citizenship or residency certificates, not to genuinely move to a different country but only to trick their bank and have them believe that they reside there, their relevant banking information will not be sent to the correct jurisdiction, or may not even be collected at all. This paper describes the different factors that reduce or increase risks of citizenship and residency certificates from being used to avoid the CRS, and proposals on how to address this issue. Annex I contains an updated list of all the jurisdictions offering these schemes, classified by their level of risk.
This Beneficial Ownership (BO) checklist is a preliminary attempt to provide policymakers current... more This Beneficial Ownership (BO) checklist is a preliminary attempt to provide policymakers currently working on establishing BO registries in many countries with all the relevant issues that should be considered and addressed. The checklist does not in any way replace the development of a full standard yet to be completed and adopted. Part 2 of this series will include relevant accounting and financial information that we believe every corporate or commercial registry should provide.
Executive Summary Automatic Information Exchange (AIE) is a vital transparency tool that could he... more Executive Summary Automatic Information Exchange (AIE) is a vital transparency tool that could help developing countries tackle illicit financial flows worth trillions of dollars that end up hidden in the financial centres of many OECD countries and other tax havens. These flows include money from corruption and crime and especially tax dodging money, which deprives developing countries of resources needed to achieve economic development and ensure their citizens' basic human rights. While the G20 has endorsed AIE as the new global standard for exchange of tax information and rhetorically committed to extending its benefits to developing countries, the latter have de facto been excluded from the design of the implementing framework developed by the OECD, a club of rich countries. The OECD / Global Forum's Working Group on AIE conducted a survey to find out about, among other things, what countries need in order to implement the new framework, called the "Common Reportin...
In a world where billion-dollar corruption and money laundering schemes can travel through develo... more In a world where billion-dollar corruption and money laundering schemes can travel through developed countries’ financial institutions undetected, the only chance for any country’s authorities to successfully address financial crime is to apply cutting edge technology for crime detection. At the core of the fight against illicit financial flows is authorities’ ability to verify the identity of the beneficial owners who control the world’s companies and trusts. Applying advanced analytics and inter-connecting ownership registries is the only way to make sure legitimate businesses flourish, while preventing the abuse of legal vehicles that rob countries off their resources and erode trust in democracy and state institutions. This will also be good for real businesses. By helping businesses easily and effectively check their supply chains and the companies they work with business can better prevent sanctioning risks to their reputation for having engaged with the wrong people.<br><br>Section 1 of this report briefly reviews the concept and importance of beneficial ownership. It describes countries’ contradictory or insufficient measures in relation to beneficial ownership transparency needed to address illicit financial flows related to corruption, money laundering or the financing of terrorism. Section 2 refers to all the relevant data on beneficial ownership that should be collected in the first place to allow for verification. It summarizes the definitions of beneficial ownership depending on the various types of legal vehicles and their combination. It lists all details that should be collected and it adds new innovative proposals for ensuring registered beneficial ownership is accurate and easier to verify. Section 3 and 4 are the core of this paper and describe the IT system that governments should establish to automatically cross-check and verify beneficial ownership information, both in terms of validity (section 3) as well as advanced analytics for redflagging purposes (section 4). Section 5 discusses issues relating to costs and sanctions for noncompliance.
Beneficial ownership transparency has become one of the leading tools to tackle illicit financial... more Beneficial ownership transparency has become one of the leading tools to tackle illicit financial flows related to tax evasion, money laundering, corruption and terrorism finance. It involves identifying the “beneficial owners”, who are the individuals (natural persons) who ultimately own or control legal vehicles such as companies, partnerships, trusts or foundations that operate in the economy by opening bank accounts, holding real estate, or providing goods and services. Without beneficial ownership transparency, criminals are able to engage in illegal activities by hiding behind legal vehicles or nominees. Beneficial ownership transparency reveals who is behind an entity. This report, based on the Financial Secrecy Index, describes the state of play of both legal and beneficial ownership registration in more than 112 jurisdictions for four types of legal vehicles (companies, partnerships, trusts and private foundations). It describes the registration level in each country, and it also weighs the risks based on the number of registered vehicles. For example, if both country A and country B offer secretive companies, but one million companies have been created in country A while none have been created in country B, then the risk posed by country A is much worse in practice than that of country B.
An editorial by the publication Trusts and Trustees and a paper by Jersey Finance criticised our ... more An editorial by the publication Trusts and Trustees and a paper by Jersey Finance criticised our paper “Trusts: Weapons of Mass Injustice?”, in particular regarding trust registration requirements and publicity, evidence on the abuse of trusts and whether current laws already address all potential abuses involving trusts. This paper offers a response to these criticisms and adds more examples on the involvement of trusts in grand corruption cases as well as comments about the legitimacy of using trusts to avoid taxes.
Countries are offering citizenship and residency for investment schemes in an attempt to raise re... more Countries are offering citizenship and residency for investment schemes in an attempt to raise revenues or attract rich individuals. While there may be legitimate reasons for acquiring such residency or citizenship certificates (e.g. visa-free traveling, studying or working in a different country), these schemes can also be exploited by individuals trying to escape legitimate prosecutions for crimes, to engage in money laundering or to violate international sanctions. Also importantly, to avoid reporting under automatic exchange of information for tax purposes. The Common Reporting Standard (CRS) for automatic exchange of information requires financial institutions to determine the account holder’s residency in order to share their information with the relevant jurisdiction’s authority. If the account holder acquires citizenship or residency certificates, not to genuinely move to a different country but only to trick their bank and have them believe that they reside there, their relevant banking information will not be sent to the correct jurisdiction, or may not even be collected at all. This paper describes the different factors that reduce or increase risks of citizenship and residency certificates from being used to avoid the CRS, and proposals on how to address this issue. Annex I contains an updated list of all the jurisdictions offering these schemes, classified by their level of risk.
This Beneficial Ownership (BO) checklist is a preliminary attempt to provide policymakers current... more This Beneficial Ownership (BO) checklist is a preliminary attempt to provide policymakers currently working on establishing BO registries in many countries with all the relevant issues that should be considered and addressed. The checklist does not in any way replace the development of a full standard yet to be completed and adopted. Part 2 of this series will include relevant accounting and financial information that we believe every corporate or commercial registry should provide.
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Papers by Andres Knobel