The risks and penalties of money laundering for charities and how to guard against it
Following the leaking of the so-called “Panama Papers” earlier this year, the then Prime Minister, David Cameron, announced the creation of a “cross-agency taskforce” (the “Taskforce”) to analyse all the information made available. On 8 November 2016, the Chancellor of the Exchequer, Philip Hammond MP, gave an update to the House of Commons by way of a written ministerial statement on the progress of the Taskforce. In summary, some 22 individuals are subject to current civil and criminal investigations for suspected tax evasion and a further 43 “high-net worth individuals” are under special review while their links to Panama are further investigated.
By way of a reminder, in April 2016 the International Consortium of Investigative Journalists leaked some 11.5 million documents obtained from the Panamanian law firm, Mossack Fonseca. The documents were said to detail how wealthy individuals from across the world had apparently used Panama as a means to shelter assets from the attention of their home governments. Whilst many may have done so legitimately, the suggestion in the world’s media was that some did so to obtain tax advantages; others, to hide the gains from nefarious activities and thereby launder the proceeds of crime. On 10 April 2016, David Cameron confirmed that a taskforce (i.e. the Taskforce) would be established to investigate the papers. The Taskforce would be jointly led by HM Revenue & Customs (“HMRC”) (responsible for tax collection and enforcement) and the National Crime Agency (the “NCA”) (responsible for tackling money laundering). The Taskforce would be assisted by staff from the Serious Fraud Office (the “SFO”) and the Financial Conduct Authority (the “FCA”). Mr Cameron said that the Taskforce would be provided with an initial tranche of £10 million to support its work.
As noted above, on 8 November 2016 the Chancellor of the Exchequer provided an update to the House of Commons on the work of the Taskforce. In his written ministerial statement, the Chancellor reported that the Taskforce, amongst other things, has:
The long term objective of the Government is to make the UK a “hostile place” for those seeking to move, hide or use the proceeds of crime or corruption (see our previous blogs on this matter, the last of which can be found by clicking here). At the same time, HMRC, and other enforcement bodies, have been provided with a growing armoury of powers to tackle tax evasion and money laundering. HMRC will, for example, be able to prosecute corporates for domestic and overseas tax evasion once the Criminal Finances Bill (currently proceeding to Parliament) becomes law. The Government is adopting a multifaceted approach: targeting both the offender and those that advised them. See our discussion of this matter here. The Taskforce is also indicative of how government will approach this activity in the future with agencies, such as the SFO and the NCA, increasingly adopting a joined-up approach. All the indicators suggest the risk of facing criminal investigation and prosecution have increased for investors, companies and their advisors.
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