Will Further Crackdowns in the Offshore Centres Really Assist the Fight Against Money Laundering Post September 11th?

Anthony Travers, OBE, is the Senior Partner of Maples and Calder and Managing Partner of Maples and Calder, Europe.

The confusion inherent in the title of this article characterises the flawed thinking that has surrounded the central issue from inception: the need for high tax jurisdictions to obtain greater and uniform transparency for all cross-border institutional and personal financial transactions with a view to maximising tax revenues collected. No-one supposes in the 21st Century that aiding and abetting cross-border tax evasion is a sensible or sustainable pastime. But the public relation machines that have been used to shape public opinion need now to be reined in. It was one thing to introduce transparency with regard to the proceeds of crime and then to include tax evasion as a crime; it is another to move the goal posts again to include tax avoidance and in maintaining political momentum to poach the otherwise worthy goal of anti-terrorism legislation in the cause. At the least, there should be some pause for mature reflection if we are to avoid a double standard of risible proportions. The onshore jurisdictions, the UK apart, should be given time for their legislation to catch up.

The relationship between money laundering and terrorist funding is merely a new confusion of an overworked and out of control public relations machine. It is hard to see the comparison; money laundering is a process by which (apparently) large sums of money (the so-called "statistics" are anecdotal) pass through one or more accounts or vehicles and are then used for legitimate purpose. Terrorism may well involve something that is quite the opposite; the transfer of small sums of money (apparently very small), possibly legitimately earned, which are passed through accounts or vehicles to be used for a criminal purpose. It is no surprise to some of us to see that the common thread between money laundering, terrorism and tax transparency is the use of the "secrecy" jurisdiction.

This confusion does not stand any scrutiny. To the extent that terrorism is funded by the proceeds of crime the anti-money laundering legislation in jurisdictions like the Cayman Islands, Bermuda and Jersey is and has been for over a decade as good as it gets. The real problem is that it is not uniform enough in terms of the onshore jurisdictions and nor can it ever apply to the underground cash transference networks that operate far outside the reach of FINCEN or any other...

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