Bulletin 24

Printable Version

SPAIN: Beneficial ownership regime now in force

Spain’s Ministerial Order 319/2018 was issued on 21 March, requiring Spanish non-listed companies to disclose their ultimate beneficial owners to the Companies Registry, and to keep the information updated. Companies with an indirect ultimate beneficial owner must also identify the legal persons that intervene in the chain of control of the Spanish company. The Order implements part of the EU Fourth Anti-Money Laundering Directive , but Spain has yet to fully implement the Directive’s other provisions – almost a year after its deadline for doing so.

MONEY LAUNDERING: Art-dealing scandal exposes weak regulation

The unregulated nature of the international fine-art market has been highlighted by the Beaufort Securities scandal, in which the UK’s regulator declared the broker to be insolvent, and the United States Department of Justice alleged it ‘laundered the fraudulent proceeds [of a trading scheme] through offshore bank accounts and the art world, including the proposed purchase of a Picasso painting’. According to one private wealth law firm, the global art market’s USD50 billion value and lack of ownership transparency have led to it being used to launder the proceeds of crime.

AUTOMATIC EXCHANGE OF INFORMATION: Comprehensive table of bilateral exchange deals

The OECD has published an updated list of all bilateral relationships currently in place for the automatic exchange of bank account information. More than 2,700 such relationships have been activated among the 80 jurisdictions committed to the Common Reporting Standard.

US: New tax rules must be vetted for unnecessary regulatory burden

The US Treasury has agreed not to implement any controversial new tax rules before they have been scrutinised by the Office of Management of Budget (OMB). It must notify the OMB in advance of any proposals that ‘prescribe a rule of conduct backed by an assessable payment’, and cannot gazette them until the OMB has conducted its review. Measures introduced by the Tax Cuts and Jobs Act are exempt from the procedure.

CORPORATE TAXATION: Developing countries are advised to block mining companies’ profit-shifting abuse

The OECD Centre for Tax Policy and Administration has advised developing countries with significant mineral resources on how they can prevent multinational mining companies shifting their profits out of the jurisdiction by making excessive interest payments.

AUTOMATIC EXCHANGE OF INFORMATION: OECD drafts scheme to prevent misuse of citizenship by investment

Next month’s meeting of G20 countries in Paris will see the launch of the OECD’s plans to prevent individuals using citizenship by investment schemes to circumvent the exchange of their financial account information between countries. It says it has received a ‘substantial response’ to its consultation on the problem and has prepared a wide range of proposals to address it, including spontaneous exchange of information about individuals that have obtained residence/citizenship through such a scheme.

EU: Fifth Anti-Money Laundering Directive now set for statute books

The European Parliament in April overwhelmingly voted to support an agreement reached with Member States in December, fixing the wording of the Fifth Anti-Money Laundering Directive. The Directive will give the public full access to information on the beneficial owners of firms operating in the EU, although the corresponding information for trusts will be limited to those with a ‘legitimate interest’, the definition of which is governed by the law of the Member State where the beneficial ownership information of the trust or similar legal arrangement is registered.

EU: Companies to be prevented from moving tax residency

The European Commission has proposed a new directive to prevent companies moving their tax residency from one Member State to another for ‘artificial’ reasons, such as minimising corporation tax or circumventing the rights of its employees or creditors. Giving Member States the power to prevent such departures is consistent with EU freedom of establishment principles and the European Court of Justice’s decision in the Polbud case in October last year, says the Commission.

NETHERLANDS: Coalition government in trouble over dividend tax abolition

A political controversy has erupted in the Netherlands regarding the coalition government’s scrapping of the 15 per cent dividend tax on its accession in October 2017. Last week Prime Minister Mark Rutte narrowly survived a censure vote accusing him of withholding information on the decision, which is widely thought to have been taken to attract Unilever’s head office out of the UK.

BENEFICIAL OWNERSHIP: British MPs try to force overseas territories to open up company registers

British Members of Parliament from both major parties are pushing an amendment to the Sanctions and Anti-Money Laundering Bill that aims to force Britain’s Crown Dependencies and Overseas Territories to open their registers of company beneficial ownership to the public.

EU: Ireland refuses to extradite tax fraudster to Britain

The Irish Supreme Court has refused to extradite an Irish national who has been sentenced to a prison term for tax fraud in the UK and absconded to Ireland while on bail. The Court rejected the UK’s European Arrest Warrant against Thomas Joseph O’Connor, because the UK’s forthcoming departure from the European Union means he would be at risk of imprisonment in the UK when it is no longer an EU Member State (Irish Minister for Justice v O’Connor, 2018 IESC 3).

EU: Central banks prepare for possible financial unrest at onset of Brexit

The European Central Bank and the Bank of England are to convene a technical working group whose remit is ‘risk management in the period around 30 March 2019 in the area of financial services’, that being the date of the UK’s exit from the European Union. It is not clear what risks are associated with the date, as the draft withdrawal agreement made between the EU and UK means that EU law in relation to financial services will remain applicable to and in the UK until 31 December 2020.

CYPRUS: Passport Sales Revealed

THE CYPRIOT government extended around 3,300 passports to foreign investors in the past ten years, the Cyprus News Agency reported on Monday citing official data submitted to the parliament. By contrast, the number of naturalised persons who either spent seven years in Cyprus or married a Cypriot citizen was 5,800, the CNA reported, citing Green lawmaker Giorgos Perdikis, who also tabled a draft law that aims at offering more transparency in the government’s citizenship-by-investment scheme which allows investors to get a Cypriot passport within months after they invest as little as €2m on the island.

Sources: STEP | IFC Review

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