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According to Law360, The Cayman Islands, Bermuda and Mauritius, three of the world’s most famous tax havens, are among the countries deemed “compliant” or “largely compliant” with international standards for tax information exchange, according to a series of reports released Monday by the Organization for Economic Cooperation and Development.

The island nations, which all pledged in the early 2000s to implement OECD’s standards, were part of a group of 10 countries whose compliance was reviewed by the group's Global Forum on Transparency and Exchange of Information for Tax Purposes.

Mauritius shares the “compliant” badge with Ireland and Norway, while “largely compliant” Bermuda and the Cayman Islands find themselves in a group with Australia, Canada, Germany and Qatar. The Global Forum deemed Jamaica “partially compliant” with the standards and launched a “supplementary report” to boost its compliance rating.

The reports released 08/21/17 were the first results of what the OECD body calls a “new and enhanced peer review process” that began in mid-2016. According to the Global Forum, this second round of reviews has focused on the availability of information about beneficial ownership of certain assets, as required by the Financial Action Task Force international standard.

In its peer review of Bermuda, the Global Forum said that the Caribbean country is still working on implementing recommendations that it made during a 2013 review of its compliance with information exchange and transparency standards, including increasing legal requirements for maintaining ownership, identity and accounting information. Monday’s report for the country doubled down on those recommendations, while asking it to strengthen its compliance with beneficial ownership information standards.

In its review of the Cayman Islands, the Global Forum gave credit to the country for making progress on recommendations that the OECD body made in 2013 during the first round of peer reviews, though it also made a similar recommendation to the country regarding the maintenance of beneficial ownership information.

The Global Forum released a similarly optimistic report earlier this summer in which it found that every country surveyed but one — Trinidad and Tobago — had taken steps to make their tax agencies better at sharing information with one another about foreign-held assets. The Global Forum said that dozens of countries, ranging from Andorra to Guatemala, had made progress on those standards, taking steps to open up their banking records and retain and share information.

Since 2008, the OECD has worked to establish an international standard for tax authorities to communicate with one another and track down foreign income of their residents. Similar efforts have been made by the G-20, the international forum of industrialized and emerging economies. The 142 member countries of the OECD initiated the Common Reporting Standard in 2014 and aim for nations to begin exchanging tax information this year or the next.

 

 

The indictment comes as the first charges to emerge from the probe by special counsel Robert Mueller, the former FBI director who took over the investigation of Russian interference into the 2016 presidential election in May following the firing of FBI director James Comey.

 

The 12-count grand jury indictment alleges that Manafort and business associate Richard W. Gates III received as much as $75 million for secretly advocating on behalf of the party of former Ukrainian president Viktor Yanukovych, which they hid through international money transfers.

According to the indictment, Manafort and Gates acted as lobbyists for the Party of Regions from 2006 onward, receiving payments that they routed through shell companies in Cyprus, the Grenadines and the United Kingdom to assets in the United States. Manafort and Gates acted essentially as undeclared lobbyists on behalf of the Party of Regions, according to the indictment.

“Manafort, without reporting the income to his tax preparer or the United States, spent millions of dollars on luxury goods and services for himself and his extended family through payments wired from offshore nominee accounts to United States vendors,” the indictment says.

Manafort set up companies called Davis Manafort Partners and DMP International LLC in 2005,  which were held by Manafort and his wife and which Gates worked for, according to the indictment. The Party of Regions, a pro-Russia party in Ukraine, hired DMP in 2006 to advocate on its behalf, according to the indictment.

That continued when Yanukovych was elected president in 2010 and after he fled the country in 2014 and the Party of Regions rebranded as the opposition, according to the indictment. The party allegedly paid Manafort and Gates through that period, and eventually through the European Center for a Modern Ukraine, a party-funded mouthpiece that was founded in 2012.

 

The indictment alleges that Manafort and Gates contracted two D.C. area lobbying firms during a multimillion dollar lobbying campaign, telling them they would be representing the government of the Ukraine. The two men allegedly directed lobbying to members of Congress and the administration on behalf of Ukraine without declaring as foreign agents.

According to the indictment, Manafort and Gates used more than a dozen international entities to funnel money into the United States. Manafort allegedly used foreign money to purchase U.S. property, which he then borrowed against to obtain cash.

The indictment’s 12 charges include conspiracy against the United States for having “intentionally conspired to defraud the United States” Treasury Department and DOJ, money laundering, failure to file foreign bank records, acting as an unregistered foreign agent, false statements under the Foreign Agents Registration Act and false statements to investigative officials.

 

 

 

 

 

 

On September 5, 2017 posted How Will the IRS Know About My Foreign Account? where we discussed that Taxpayers who have financial assets outside the United States often ask the question "How will they (IRS) know about my Foreign Account?;" when they are considering how (or whether) to come clean and inform the IRS about their previously undisclosed foreign financial accounts.