Brigitte Unger TNI 2007 1 Money Laundering, Tax Evasion, Capital Flight, Tax Havens, the Rule based and the Risk Based Approach: Keep it Simple by Brigitte Unger Paper prepared for the TNI Seminar on Money Laundering, Tax Evasion and Financial Regulation, 12th and 13th June 2007, Amsterdam, organized by Tom Blickman
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Brigitte Unger TNI 20071 Money Laundering, Tax Evasion, Capital Flight, Tax Havens, the Rule based and the Risk Based Approach: Keep it Simple by Brigitte.
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Brigitte Unger TNI 2007 1
Money Laundering, Tax Evasion, Capital Flight, Tax Havens,
the Rule based and the Risk Based Approach:
Keep it Simple
by Brigitte Unger
Paper prepared for the TNI Seminar on Money Laundering, Tax Evasion and Financial Regulation,
12th and 13th June 2007, Amsterdam, organized by Tom Blickman
Brigitte Unger TNI 2007 2
Overview: From the old to the new AML regime in Europe
1. Assessment of money laundering and tax policy
a. Reporting, blacklisting, endangered groups, compliance to FATF recommendations, crime and proceeds,
b. tax evasion c. tax havens
d. Assessment and the change from the rule based to the risk based approach
2. Conceptual confusion about money laundering and tax evasion
3. Differen interpretations of actors to fill the gap
4. Possible solutions
Brigitte Unger TNI 2007 3
Amazon.com
110$ new
222$ second hand
CAIMAN.com
Amazon.co.uk
59,9 £ new
137 £ second hand
Amazon.de
92 € new
194 € second hand
Brigitte Unger TNI 2007 4
Total numbers of unusual and suspicious transactions in the Netherlands in 2005
Special Purpose Entities gross transactions in billion Euro
Brigitte Unger TNI 2007 12
Assessment problems will increase when switching from a rule based to a risk based approach
Brigitte Unger TNI 2007 13
Type of Crime
US
Penal Code
Germany
Austria Switzer
land
Nether
lands
Tax evasion
x if US taxes on crime
if from mix criminal non criminal
Only business and criminal org.
no no no, misdemeanor,only if fraud
Fraud x Only business and criminal org.
Only business and criminal org
x x
2. Conceptual Confusion
Brigitte Unger TNI 2007 14
2. Conceptual Confusion
1. With regard to money laundering and tax evasion
2. Third EU AML Directive effort to harmonize ML definition. But not for tax evasion
‘national souvereignty’
Brigitte Unger TNI 2007 15
3. Different interpretations to fill the gap
Naylor: don’t question the background of the money. More difficulties to assess AML due to risk based approach is accompanied by simplification trends in implementation and enforcement. More freedom, more efficiency but more arbitrariness and less fairnessIncreased role of the courts instead of politicsVan Waarden’s lawyocracy Eventually risk based approach will become again a rule based approach
Brigitte Unger TNI 2007 16
4. Possible solutions• Should tax evasion be part of money laundering
or of corruption?• Keep it simple: A Tobin tax instead • For Europe EU law is stronger than UN
Convention(enforcement by Commission, Council, Court)
• UN Convention: problem of finding enough support by member countries
New Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and on the Financing of Terrorism of 2005 signed by 27 countries, ratified so far only by Romania and Albania.
• Soft law as a first step?
Brigitte Unger TNI 2007 17
Prof. Dr. Brigitte UngerUtrecht School of EconomicsJanskerkhof 123512BL UtrechtThe Netherlands+31-(0)[email protected]