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Author: GM

The Financial Services Commission (FSC) is pleased to announce that the Belize Companies and Corporate Affairs Registry’s (BCCAR) Online Business Registry System (OBRS) is now live! All registry services under the Business Name Act Cap. 247, Belize Companies Act No. 11 of 2022 and Limited Liability Partnerships Act Cap. 258 are now digital and can easily be accessed via OBRS. This cutting-edge digital platform reduces costs and time to start a business as the public can register and manage their business registration from the convenience of their digital device.

Main features of OBRS include registration of your business entity, access to your business entity profile and history, reminders on annual filing to ensure your business status remains as Active and in Good Standing, verifiable E- certificates of registration or incorporation, name reservation and E- filing. All documents held by the prior registry systems have been digitized and new data security and client confidentiality features have been implemented in this new robust and efficient system.

All BCCAR services can now only be accessed via OBRS. To access OBRS services you must create an account in OBRS by visiting www.obrs.bccar.bz. You will require a valid Social Security ID and an email address. All existing business entities are required to reregister in OBRS to receive a unique 9-digit business Entity number, an E- Certificate and full access to BCCAR services. Payment for services must be done via OBRS.

OBRS Help Desk stations are available as of December 5, 2022, at the Belmopan & Belize City BCCAR offices, at BELTRAIDE, at the Belize City Hall, Belmopan City Hall and at the Corozal and San Pedro Town Hall. Business Registration in Belize is now Digital!

To read the full Press Release and learn more about the Online Business Registry System visit belizefsc.org.bz/18040-2/

While the aim of the US Foreign Account Tax Compliance Act (FATCA) and the OECD’s Common Reporting Standard (CRS) to eradicate tax evasion is legitimate, the provision of unlimited information to treaty partners who have decided to disregard trusts as a matter of public policy should be a reason of significant concern for any Anglo-Saxon jurisdiction seeking to enter into negotiations concerning the provision of automatic information.

That some of the relevant jurisdictions are EU member states should raise further concerns, as there should be a legitimate expectation that member states will respect and, as far as possible, recognise, legal structures originating from other member states.

Practitioners should adopt an activist approach and raise their concerns with their professional bodies and government representatives. In the case of the EU registers of beneficial ownership, assiduous lobbying by STEP, the Law Society and other professional organisations, as well as by activist practitioners, has already succeeded in diverting a major crisis. It is now time to focus efforts on the implementation of the CRS.

To read more about the impact of the OECD’s Common Reporting Standard on trusts at a time when they are under threat in a number of continental European jurisdictions click here.

Source: reaction.withersworldwide.com

Under the standard for automatic exchange of financial account information, jurisdictions obtain financial information from their financial institutions and automatically exchange that information with other jurisdictions on an annual basis. The standard consists of two components: a) the CRS, which contains the reporting and due diligence rules and b) the Model CAA, which contains the detailed rules on the exchange of information. To prevent circumventing the CRS it is designed with a broad scope across three dimensions:

  • The financial information to be reported with respect to reportable accounts includes all types of investment income (including interest, dividends, income from certain insurance contracts and other similar types of income) but also account balances and sales proceeds from financial assets.
  • The financial institutions that are required to report under the CRS do not only include banks and custodians but also other financial institutions such as brokers, certain collective investment vehicles and certain insurance companies.
  • Reportable accounts include accounts held by individuals and entities (which includes trusts and foundations), and the standard includes a requirement to look through passive entities to report on the individuals that ultimately control these entities.

The CRS also describes the due diligence procedures that must be followed by financial institutions to identify reportable accounts.

The CRS will need to be translated into domestic law, whereas the CAA can be executed within existing legal frameworks such as Article 6 of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters or the equivalent of Article 26 in a bilateral tax treaty. Before entering into a reciprocal agreement to exchange information automatically with another country, it is essential that the receiving country has the legal framework and administrative capacity and processes in place to ensure the confidentiality of the information received and that such information is only used for the purposes specified in the instrument.

Review the full Common Reporting Standard here.

Lawyer Patrick Poulin says he helped clients set up offshore corporations in the Caribbean. And that’s what he was working on when he flew to Miami from the Turks and Caicos last year to meet with two Americans who wanted him to invest $2 million from a real estate deal.

Instead, they arrested him at the airport.

The clients, who went by the names of “Bob” and “Abraham,” according to Poulin, were really federal agents who were targeting him as part of a money laundering sting. Poulin eventually pleaded guilty to conspiracy and spent a year in prison.

“My lawyer told me I should have known,” Poulin, 42, said in a telephone interview from his home in Quebec.

The U.S. has since brought charges against at least four other businessmen working as “incorporators” — people who help clients establish offshore shell companies for tax planning or other reasons. The cases come amid a campaign by U.S. prosecutors to pursue suspect foreign incorporators in countries where corporate secrecy laws and the demands of extradition have stifled investigative efforts. The strategy: Lure the service providers out of their overseas havens to the U.S. with aggressive techniques such as undercover operations, wiretaps and stings, case filings show.

New Front

This new front in the long-running battle against money-laundering is opening as part of a broader U.S. crackdown on tax evasion. Taxpayers who seek amnesty under Internal Revenue Service disclosure programs are snitching on the incorporators, as well as naming Swiss banks and the bankers who aided them.

More than 50,000 U.S. taxpayers have avoided charges since 2009 in the offshore tax evasion crackdown; the program required them to disclose which banks and advisers helped them hide assets, according to the U.S. Internal Revenue Service.

“Leads have been pouring into the government with respect to offshore constructs that are available to help people do money laundering, and securities fraud and tax evasion, and all kinds of misdeeds,” said Miriam Fisher, global chair of Latham & Watkins LLP’s tax controversy practice and a former adviser to the assistant attorney general for the Justice Department’s tax division.

Aggressive Strategies

U.S. prosecutors and the FBI declined to comment on active cases and investigations.

The aggressive strategies are likely meant to send a message to incorporators that they’re being watched, said Jeffrey Neiman, a former federal prosecutor who worked on the groundbreaking 2009 tax evasion case against UBS Group AG and whose law firm represented an associate of Poulin.

“It plants the seed around the world that just maybe the government is listening to this conversation,” he said.

By luring incorporators to the U.S. to make an arrest, authorities also avoid often-complicated and lengthy extradition battles, and it’s easier to resolve a case, Neiman said.

About 30 Swiss advisers, for example, have been indicted in the U.S. since 2008, part of a broad probe of tax evasion and undeclared offshore accounts. At least 21 are still at large, among them, Josef Beck. The financial adviser was indicted in 2012 for allegedly conspiring with UBS to help Americans evade taxes. Yet he has never come to the U.S. to face the charges.

In July, authorities lured Michael Dodd, a manager for Panamanian corporate services provider High Secured, along with two associates to New York from overseas. They were arrested and accused of agreeing to launder about $2 million in stock fraud proceeds for an undercover investigator posing as a client.

Vuitton Bag

Dodd was taken into custody at Manhattan’s Gramercy Tavern, according to the government, while Kenneth Landgaard, the provider of a private jet equipped with a safe, and James Robert Shipman Jr., an offshore incorporation specialist, were arrested after landing at a Long Island airport.

The men insisted the cash be packed into a Louis Vuitton bag because they thought real cops could never afford such an expensive item, and asked that conversations take place over encrypted software “so that the NSA can’t listen,” the government alleged in papers filed in Brooklyn federal court. A lawyer for Landgaard declined to comment. Lawyers for the other two men didn’t respond to requests for comment, and their clients haven’t yet entered a plea. All three were denied bail. The case is pending.

High Secured says on its website it provides offshore web-hosting and assists in “setting up complete corporate structures and merchant accounts to individuals and businesses to conduct their financial affairs in a private, secure, reliable, and tax-free environment.”

It was not named as a defendant in the criminal case. Representatives did not immediately respond to two calls placed to the company’s Panama City offices or e-mails seeking comment.

Bigger Operations

Prosecutors are moving up the chain and targeting even bigger operations. U.S. officials last year brought charges against Belize-based IPC Corporate Services founder Robert Bandfield, his employee Andrew Godfrey and several associates at brokerages and other firms. Prosecutors accused them of helping clients, including as many as 100 Americans, profit off of illegal stock trades and launder about $500 million.

An undercover investigator, posing as a corrupt stock promoter, paid the incorporator and his associates $9,600 for help setting up a corporate structure designed for illegal trading and money laundering, prosecutors said in court papers in Brooklyn. Bandfield and Godfrey told the investigator they might be able to return laundered funds on prepaid debit cards in $50,000 installments, the government alleged.

“We can make it so it’s not attached to you,” both men told the investigator during a 2013 meeting in Belize, according to prosecutors. Bandfield, 71, was arrested in September 2014 at the Miami airport on his way back to Belize. His lawyer declined to comment on the case. Bandfield has pleaded not guilty to federal charges. His case is pending. Godfrey, IPC and all but two of the associates haven’t appeared in the case and couldn’t be located for comment. One of the associates who answered the charges has denied wrongdoing; the other’s lawyer declined to comment on the charges.

The government’s crackdown comes as offshore tax shells proliferate. President Barack Obama said in a 2009 speech that one Cayman Islands address had as many as 12,000 corporations registered to it. Bloomberg News found the number was closer to 19,000.

Seek Confidentiality

Not all offshore incorporation is a smokescreen for illegal activity, of course. Some account holders are wealthy people who seek confidentiality because they could be targets of extortion, Fisher said.

Poulin, who is working on a book about his experiences, said he believed he was providing legitimate services offering clients privacy and help with minimizing taxes. He started out in incorporation work by handling real estate deals for “people coming down on vacation, people wanting to buy a condo,” he said. The discussions became, “let’s do some tax planning while we’re at it,” he said.

For the agents posing as clients, he set up an entity called, “Zero Exposure Inc.,” according to court documents. Following his arrest, Poulin said he was told he faced the possibility of 10 years in prison if convicted at trial for money laundering. With defense fees approaching $100,000, he decided to plead guilty to a lesser charge, he said.

He said he turned away people who were obviously criminals seeking help with funds associated with prostitution, drugs or terrorism.

“The line between unhappy creditor and fraud, it’s not super easy to define,” he said.

Source: Bloomberg

Double Taxation Avoidance Agreement or DTAA is an agreement between two countries which aims to avoid taxation of the same income in both countries. India has signed the DTAA with several countries.

During assessment of an assessee to whom DTAA applies, the provisions of the Income Tax Act apply only to the extent they are more beneficial to the assessee. Provisions of the DTAA prevail over the statutory provisions. Non resident Indians residing in any of the DTAA countries can avail of tax benefits provided under DTAA by timely submission of the following documents.

Tax residency certificate

The Tax Residency Certificate (TRC) can be obtained from the government of the country in which the NRI resides. Certain information in the TRC is mandatory. They have to be furnished to make a valid submission of TRC to the Indian tax deductor.

Name, status (individual , company, firm etc), address, nationality, country, tax identification number of the person in that country, tax status, period for which the tax certificate is issued should all be mentioned in the TRC. The TRC containing details mentioned above should be duly verified by the government of the country or the specified territory of which the NRI claims to be a resident for the purposes of tax.

Self declaration-cumindemnity form

This form is to be submitted in the format prescribed by the particular bank. Information such as account number, country of residence, period for which TRC is submitted, tax rate applicable under DTAA needs to be mentioned in the form.

Other documents

The NRI is required to submit a self-attested copy of PAN card and a self-attested copy of his passport and visa. If the passport has been renewed during the financial year, a copy of PIO card will also have to be submitted.

Points to note

– The documents listed above must be furnished on an annual basis for claiming DTAA tax benefits each year.

– If the TRC is not submitted within the timelines required by the deductor, the deductor (eg. Bank) will deduct tax on NRO deposits at the presently applicable rate of 30.9%.

Source: The Economic Times

India and Mauritius are set to limit the benefits of their double tax avoidance agreement (DTAA) to only genuine businesses bringing foreign direct investment to India by inserting a new clause in the treaty straight from New Delhi’s yet to be implemented General Anti-Avoidance Rules (GAAR).

The revised treaty, however, is likely to allow existing investments in India by Mauritius based entities to exit without any tax liability in India under what is referred to as a grandfathering clause. Prime Minister Narendra Modi had in March assured Mauritius that while working to prevent treaty abuse, India would not do anything that would harm the island nation’s financial sector.

One of the new provisions likely to be incorporated in the DTAA is a limitation of benefit clause that would deny the benefit of zero capital gains tax to Indian investments of a Mauritus based entity, “the main purpose or one of the main purposes of which is to avoid taxes.” This clause represents the core principle of India’s anti-avoidance rules that would be implemented from 2017 to prevent treaty abuse by shell companies in other countries through which unaccounted foreign wealth of some Indians flow back into India in the form of FDI. India had introduced such a provision in the recently revised DTAA with the Republic of Poland as well.

There are also discussions to specify that only those Mauritius based entities that invest about 1.5 million Mauritian rupee there a year and therefore can be considered genuine businesses can avail of the treaty benefit.

Under the India-Mauritius DTAA, foreign institutional investors (FIIs) participating in India’s equity markets get taxed for short term capital gains only in Mauritius. Since the tax rate there is zero, Mauritius incorporated FIIs’ trading income in India goes un-taxed. Not paying tax in either of the countries by an investor results in the abuse of a treaty meant only to prevent double taxation.

India, which levies a 15% short term capital gains tax on listed securities, had tried several ways to check this problem including the introduction of GAAR. Under investor pressure, India had deferred its implementation from April 1 this year by two years and made its application prospectively to investments made on or after April 1, 2017.

“It is a real challenge for any developing country to find the right balance between the conflicting pressures of increasing revenue receipts and of encouraging investments. In the process of curbing treaty abuse, the economy should not be impacted more than the revenue that could be realised,” said S.P. Singh, Senior Director, Deloitte.

Once GAAR is in force, the tax department would be able to lift the corporate veil of entities, go deeper into ownership structures, beneficial ownerships, voting rights etc and see if a particular entity is an artificial structure without any real economic activity and is meant to avoid taxes. Like these anti-avoidance rules, the revised tax treaty too would try to deny tax benefits to arrangements that are only-on-paper so that incentives reach go to genuine FDI inflows.


After almost a year of wrangling, the EU Council and the European Parliament have finally reached an agreement on a new Anti-Money Laundering Directive.

The 4th AML Directive expands the scope of its predecessor (which was adopted in 2005, before the global banking scandals and the push towards tax transparency) in a number of respects.

In particular, the new directive requires EU Member States to maintain central registers containing information about the Ultimate Beneficial Owners (‘UBOs’) of companies, as well as other legal entities.

These central registers will be accessible to the authorities with no restrictions; to the responsible parties; and to anyone showing a ‘legitimate interest’ in relation to money laundering, terrorism financing and associated offences, like corruption, fraud and tax crimes. A press release issued by the EU suggests that this will include eg investigative journalists.

The publication of details concerning the beneficiaries of trusts gave rise to an intense debate, as beneficiaries of a trust are in a very different position than, say, shareholders of a company. In many circumstances, beneficiaries are not aware of their position and often include minor and vulnerable family members. Accordingly, after intense lobbying by professional bodies, the final version of the 4th Money Laundering Directive has limited the circumstances in which information concerning trusts ought to be published on the new registers. Furthermore, only trusts governed by the national law of a EU Member State will be under an obligation to disclose the relevant information, and only where taxes are involved.

However, a potential pitfall relates to those trusts that own a substantial shareholding in EU companies, etc. In these circumstances, the company will have to provide details about its beneficial owners, which means that details about the settlor, trustee, protector, and the beneficiaries may become public.

The new Directive also clarifies the rules that are applicable to ‘politically exposed persons’, ie, persons exposed to higher risks of corruption on the basis of their political role (eg, Heads of State, Cabinet members, judges of the Supreme Courts, members of Parliament and their families). In the event of high risk business relations, adequate measures will have to be taken in order to establish the source of wealth and the source of funds used.

EU Member States will have a two-year period to implement the Anti-Money Laundering Directive in their national legal systems.

Furthermore, MEPs approved regulatory rules on the transfer of funds that seeks to facilitate the traceability of payers and recipients and their property, which will be directly applicable in every Member State 20 days after publication of the rules within the EU Official Gazette.

The new EU Money Laundering Directive represents a new step towards transparency and the introduction of public registers on the ultimate beneficial ownership of companies and other entities raises fundamental questions about the right to privacy. Withers has been following developments in this area very closely and we are actively advising clients on the impact of transparency, which includes FATCA, the Common Reporting Standard and, now, the 4th Money Laundering Directive.

Source: withersworldwide

(Reuters) – Citigroup Inc (C.N) said additional government authorities have started probes of possible breaches of anti-money laundering laws at its Banamex USA unit.

The Financial Crimes Enforcement Network, a unit of the U.S. Treasury, and the California Department of Business Oversight have asked the company for information on its compliance with the Bank Secrecy Act and anti-money laundering rules, Citigroup disclosed in an annual filing with the U.S. Securities and Exchange Commission on Wednesday.

The disclosure comes one year after Citigroup revealed a criminal probe by a federal grand jury in Massachusetts and inquiries from the U.S. Federal Deposit Insurance Corp into the matter.

Citigroup said it is cooperating with the investigations.

Banamex USA is an affiliate of Mexico City-based Banamex, which Citigroup bought in 2001 and which operates a few branches in the United States.

The filing on Wednesday also showed that Citigroup has reduced its estimate of possible unreserved legal costs to $4 billion from $5 billion at the end of September. Citigroup said in January it was recording $2.9 billion in expenses in the fourth quarter to bolster its legal reserves.

Banamex is the second-largest bank in Mexico and was once seen as a model of Citigroup’s strategy of capitalizing on growth in emerging markets. But Banamex’s standing, and Citigroup’s management of the subsidiary, were called into question in 2013 when it lost money on loans to Mexican homebuilding companies and again in 2014 when it disclosed losses from apparent fraud in lending to a supplier of Pemex, the Mexican oil company.

Manuel Medina-Mora, who rose from being CEO of Banamex to chief executive of Citigroup’s global consumer business, said last week that he will retire in June.

(Reporting by David Henry in New York; Editing by Andrew Hay)

Tuesday, 3 March, 2015
President Obama is planning to introduce a fiduciary rule forcing financial advisors to act in their clients’ best interests when makingObama recommendations about retirement savings products.

The rule originated at the US Department of Labour (DoL), which states that some advisors habitually promote particular investment products to retirees in return for a commission from the supplier. A report from the White House’s Council of Economic Advisers suggests that such conflicts of interest – which include not just cash incentives but also free holidays and prestige cars – cost clients USD17 billion a year in detrimental investment advice.

Financial advisors currently do not have a legal duty to act as fiduciaries on their clients’ behalf. Placing them under a duty to put their clients’ interests before anyone else’s would, the DoL believes, counter these damaging practices.

The DoL first proposed the rule in 2010 in relation to financial accounts covered by the Employee Retirement Income Security Act. Introduction of the rule has been opposed at every step by the financial services industry, which claims it would remove incentives for financial advisors to take on less profitable supplier accounts and thus raise the cost of public access to investment advice. The industry has recruited members of Congress, including Republican representative Ann Wagner, to oppose the plan.

Democrat politicians, including Elizabeth Warren, Cory Booker and Nancy Pelosi, support the rule, as do several industry bodies. ‘By accepting backdoor payments from Wall Street firms and imposing hidden fees, these advisers offer bad counsel that can result in retirees losing more than a quarter of their retirement savings’, said Pelosi.

Obama dismisses the lobbying as the activities of groups with vested interests, and points out that other countries that have implemented similar rules have not seen sharp rises in the cost of financial advice.

However, the rule has also been criticised by the Securities Exchange Commission, which along with the Financial Industry Regulatory Authority (FINRA) already regulates the industry.

Obama has asked the DoL to revise the proposal for re-submission to the White House’s Office of Management and Budget (OMB) in the hope that this will placate the industry’s desire to see the scope of the fiduciary rule narrowed down as much as possible.
The OMB’s review process can take months, however, and would in any case have to be followed by a public consultation. It is uncertain that the proposed rule will ever reach the statute book.

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