16 August 2018

English High Court Issues Milestone Judgment in Favour of Quantum Global

The English High Court today issued a milestone judgment in favour of Quantum Global Group and its founder Jean-Claude Bastos de Morais in their dispute with the Angolan sovereign wealth fund.

The Court confirmed its earlier decision to discharge in full a $3 billion worldwide freezing order (WFO) imposed on Quantum Global and Mr Bastos in April. It strongly criticised the eight areas of unfair and misleading presentation to the court by Norton Rose Fulbright, the legal advisors to the Fundo Soberano de Angola (FSDEA).

There was a high degree of culpability in the failures,” Mr Justice Popplewell said of the misleading presentation.

The breaches of duty are sufficiently serious and culpable to warrant discharging the WFO and not granting fresh relief, irrespective of the other grounds of challenge,” the judgment reads.

Furthermore, in respect of one major category of claim, “lawful means conspiracy”, the Judge expressly agreed with the defendants and held that the merits of the claim were so weak they did not pass the threshold of raising a serious issue to be tried on the facts alleged by the FSDEA.

Mr Justice Popplewell also decided against the FSDEA on most matters of jurisdiction: “My conclusion is that there is only a small rump of causes of action in respect of which jurisdiction is established,” he said. This judgment essentially means that most of the FSDEA’s underlying claim has failed in the UK, pending an application to the Court of Appeal against the discharge order, which is expected to be decided this week.

Addressing unsubstantiated allegations originating in the “so-called Paradise Papers” cited by Norton Rose, the judgment states: “There is no evidence to suggest that the use of offshore structures by the group was anything other than the normal and legitimate way the group structured itself for tax, regulatory and other proper business purposes; or that Mr Bastos’ personal use of such structures was not his normal modus operandi for legitimate personal reasons.

Quantum Global will now focus on resolving issues in Mauritius and Switzerland, where the authorities’ freezing of Quantum Global’s bank accounts and suspension of its business license have severely damaged the company’s business, in a case mirroring that in the UK.

The English High Court judgment also addresses facts that are central to the case in Mauritius. The ruling states that limited partnerships in offshore jurisdictions “are not unusual for private equity investments; that they were known about and not disapproved by Deloitte at the time; that the structure was not a matter of criticism by E&Y in their investigations; and that the drawing down of the full committed amounts into the accounts in the names of the Limited Partnerships so as to put them beyond the control of FSDEA was for a legitimate political objective.

The actions by the Mauritius authorities have prevented Quantum Global from managing its investments in Africa and paying its staff for five months. To date, the Mauritius authorities have refused officially to disclose the reason for their actions against Quantum Global and Mr Bastos despite repeated calls for a fair hearing according to due process of law.

06 August 2018

Introduction of substance requirements for companies tax resident in Jersey

The purpose of this consultation is to get feedback from key stakeholders (including companies, industry associations, practitioners and any other interested parties) on the actions required for the Government of Jersey to address concerns raised by the EU’s Code of Conduct Group (Business Taxation) regarding economic substance.

The Government of Jersey is seeking views on the outline proposal contained within this consultation and how the actions within the outline proposal can be implemented. The proposal draws on thinking within the Organisation for Economic Co-operation and Development (OECD) and EU relating to economic substance, as well as looking at legal and regulatory requirements that already exist in Jersey.

Feedback provided will inform the drafting of the relevant legislation and allow government to ensure a smooth transition for companies carrying out relevant activities.

The Finance (Miscellaneous Provisions) Act 2018: Changes to the global business sector


AXIS in association with BLC Robert is pleased to share with you the salient features of legislative amendments touching the global business sector which have been introduced by the Finance (Miscellaneous Provisions) Act (the “Finance Act”) passed by the  National Assembly on 31 July 2018.

The Finance Act gives effect to the measures announced in Budget Speech 2018-2019 to revamp and further modernise the global business sector. In this document, in Part I, we address 5 main aspects of the legislative developments: (A) Changes to the existing regulatory regimes, (B) New obligations for structuring vehicles (C) Changes to the existing tax regime, (D) Changes to the banking and finance legal regime, and (E) AML/CFT compliance. In Part II, we address other legislative amendments which are relevant to the activities within the global business sector.

01 August 2018

Nespresso single origin coffees

Our Coffee Experts have been working hard to ensure Nespresso continues to provide you with the best coffee experience. That's why we're launching a new range of single origin coffees, mastered by craftsmen, inspired by the land.

This new range will be revealed in a few weeks. As part of this launch, Nespresso will gradually discontinue its existing Pure Origin range of coffees.

Pure Origin (Dulsão do Brasil, Indriya from India, Rosabaya de Colombia, Bukeela ka Ethiopia)

Master Origin (India, Indonesia, Colombia, Nicaragua, Ethiopia)

31 July 2018

Quantum Global wins full discharge of Worldwide Freezing Order

Quantum Global Group and its founder Jean Claude Bastos de Morais on Monday won a full discharge of a worldwide freezing order from an English High Court, which found that lawyers representing the Angolan sovereign wealth fund misled the court when they secured the order three months before.

The court imposed the original $3 billion freezing order in April after Norton Rose Fulbright, acting for the Fundo Soberano de Angola (FSDEA), told the court that funds under Quantum’s management were at risk of being dissipated as a result of an alleged fraudulent conspiracy.

Discharging the freezing order on Monday, Mr Justice Popplewell said there was no excuse for the FSDEA’s legal advisers presenting “incomplete material in an unfairly one-sided way” in their original application.

Characterising the disclosure breaches by the FSDEA’s legal advisers as “serious”, “substantial” and “culpable”, Mr Justice Popplewell said: “I have reached a clear view that… the freezing order should be discharged in its entirety and no fresh freezing order granted.

Quantum Global Chairman and Founder Jean-Claude Bastos de Morais said: “I am pleased that the judge has seen fit to discharge the freezing order in its entirety. I have always believed that the truth and facts about our work with the Angolan fund would come out.

The freezing order has heavily impacted our investment projects in Angola and Africa, and caused serious hardship for our employees in Angola, Mauritius and Switzerland, as many of them have not been paid for months. I remain open to a negotiated resolution to our dispute so that we may continue to contribute to economic growth and prosperity for Angola and Africa.

In the hearing on Monday, Quantum Global presented evidence showing that the company had managed the FSDEA funds under valid contracts with rigorous and transparent reporting, that the fees were in line with industry standards, that the fund management mandate was won after a rigorous selection process and that conflicts were properly declared.

The proceedings brought by the claimants were not motivated by a genuine concern of misuse of FSDEA capital or that assets may be dissipated, Quantum Global argued in court. Instead, the claimants were seeking to exit valid and binding contractual arrangements by alleging a tenuous fraud and conspiracy claim, the company’s lawyers said.

Proper disclosure would have put a very different complexion on the application,” Mr Justice Popplewell said.

Mr Justice Popplewell refused the FSDEA permission to appeal and indicated he would give a full judgment in due course.

The FSDEA’s legal advisers informed the court that they intended to challenge the discharge of the freezing order in the Court of Appeal, and Mr Justice Popplewell granted a temporary and significantly modified injunction for $560 million until Friday August 10, by which time the FSDEA’s challenge should be heard by the Court of Appeal.

Quantum Global is also challenging similar freezing orders issued by a court in Mauritius. The company argues that there is no justifiable basis for these actions, like in the case of the English freezing order. Quantum Global has repeatedly called for a fair hearing in Mauritius, highlighting that the basis for the orders has still not been disclosed four months after they were issued.

25 July 2018

Reports of money laundering, cybercrime and dubious investment schemes all on the rise, says the SRA

The risks posed to the public and law firms from money laundering, cybercrime and dubious investment schemes have all reached record levels, according to new statistics.

In our annual Risk Outlook report, we highlight data which suggests criminals are increasingly targeting law firms as a means to steal tens of millions from businesses and the wider public.

Reports of money laundering involving firms have risen by two thirds since 2016, with 60 cases reported to us in the first quarter of 2018, compared to just 36 in the final quarter of 2016.

Relating to potential dubious investment schemes, there have now been reported losses of £47.4m since 2015. This has led to more than 100 claims to the Compensation Fund. To help address this, we have issued a series of warnings and acted where solicitors have participated in schemes designed to defraud the public.

Reports of cybercrime are also up 50% year-on-year, reaching a record level of 157 reports for 2017. These cases have brought the total reported client money stolen by cyber criminals to more than £20 million in just two years.

Paul Philip, SRA Chief Executive, said: "Our Risk Outlook helps solicitors to respond to the risks we see in the sector, supporting firms and protecting the public. Many of the risks we are highlighting are not new, but none of us can afford to be complacent.

Although we know that very few solicitors would ever knowingly become involved in criminal or dishonest schemes, everyone needs to know the warning signs to look out for. It is important that law firms take steps to protect client money and information. Our recent warning notices on money laundering and dubious investment schemes aim to help them in this.

For the first time, we are highlighting how claims are managed as a key risk. This follows concerns over issues such as firms failing to properly check on the validity of personal injury claims or charging fees which cannot be justified in areas such as payment protection insurance claims.

The Risk Outlook also reminds solicitors they must not draft the terms of non-disclosure agreements in a way that suggests a person may not report misconduct to a regulator or a law enforcement agency or make a protected disclosure.

A guide to risk management, the report offers legal professionals definitive, up-to-date information and advice on current risks. The Outlook highlights ten priority risks including money laundering, access to legal services, protecting client money and diversity in the profession.

More information on the ten risks is available here:


The full report is available here:

The Sustainability of International Finance Centres

The issue facing many international financial centres (IFCs) today is whether, realistically, they can survive increasing transparency on tax and beneficial ownership. Is the model broken? The answer to this popular question varies from jurisdiction to jurisdiction. However, clear themes emerge which rationally predict sustainability of the offering.

24 July 2018

KYC360: Top skills that make a good compliance officer

The fundamental duty of a compliance officer is to keep the ethical integrity of a company uninjured. Let’s take a look at some of the important skills that make a really good compliance officer.

23 July 2018

The missing profits of nations

Between 1985 and 2018, the global average statutory corporate tax rate fell by more than half. This column uses new macroeconomic data to argue that profit shifting is a key driver of this decline. Close to 40% of multinational profits were artificially shifted to tax havens in 2015, and this massive tax avoidance – and the failure to curb it – are in effect leading more and more countries to give up on taxing multinational companies.

Initial coin offerings: Financing growth with cryptocurrency token sales

Initial coin offerings, whereby a blockchain-based venture raises capital by selling cryptographically secured digital assets (or ‘tokens’), may represent a significant innovation in entrepreneurial finance. This column studies a sample of 453 tokens that completed ICOs to investigate what types of issuer and token are successful. Tokens that offer voluntary disclosure, credibly commit to the project, and signal quality or potential to create substantial value tend to be more successful, and a founder or CEO with an entrepreneurial professional background is also beneficial.

19 July 2018

High level discussions between the Financial Services Commission (FSC) and the Securities and Exchange Board of India (SEBI)


COMMUNIQUÉ

High level discussions between the Financial Services Commission (FSC) and the Securities and Exchange Board of India (SEBI)

The Chief Executive of the FSC and his delegation had a meeting with the SEBI on Wednesday 18th July 2018 in Mumbai.

The meeting was held within the framework of the existing MoU between the two regulatory bodies, and was cordial, constructive and fruitful. Both institutions reaffirmed the need for constant engagement and collaboration in regulatory matters between Mauritius and India.

In line with discussions held, FSC received the comfort that SEBI acknowledges all initiatives undertaken by Mauritius to ensure full adherence to best international norms and practices with respect to regulatory oversight and enforcement.

SEBI gave the assurance that it is neither working on, nor contemplating to produce any list at its level, which will identify Mauritius as a High Risk jurisdiction.

SEBI further affirmed that recent media reports are speculative in nature regarding Mauritius and that it has no adverse concerns with respect to the Mauritius jurisdiction.

Both FSC and SEBI have agreed to continue their collaboration and the FSC Representative Office in Mumbai continues to be a key point of contact for SEBI.

Other avenues of collaboration between FSC and SEBI in areas of Financial Technologies and capacity building have equally been discussed.

Financial Services Commission
19 July 2018

17 July 2018

TJN: Country by country reports: why “automatic” is no replacement for “public”

A critical battle is currently being waged in the international tax policy arena over the implementation of country by country reporting, a reporting process that deters and detects tax avoidance by multinational companies, among other things, by requiring companies to provide a global picture of their activities, structures and the taxes that they pay. While country by country reporting would have been quickly written off just a few years ago, the practice is now widely accepted as necessary for the healthy functioning of economies. On the backfoot, some actors pushing to make the implementation of country by country reporting as toothless as possible are now claiming “confidentiality” concerns. But do their concerns have any merit or are they just crying wolf?

16 July 2018

Mauritius: Another Upset in the Financial Sector

Mauritius must take all the steps necessary so as to rectify the negative portrayal coming out of the MER-ESAMLG exercise, and restore the trust and confidence of African partners using all means at its disposal, so that there is no replay of the DTAA episode with India

The Platform for Collaboration on Tax Invites Final Comments on a Revised Version of its Report on the “Taxation of Offshore Indirect Transfers of Assets”

The Platform for Collaboration on Tax – a joint initiative of the IMF, OECD, UN and World Bank Group – has undertaken, at the request of the G20, the development of a series of “toolkit” reports to help guide developing countries in the implementation of policy options for issues in international taxation of greatest relevance to these countries. One such issue identified by developing countries themselves is the taxation of offshore indirect transfers of assets. Though an important area of international tax policy, no unifying principle has been adopted by individual countries on how to treat these transactions. This issue is, though, addressed in both main double taxation model treaties, of the OECD and the UN. Countries now follow very different approaches in their domestic law—and many treaties now in effect do not include the relevant model treaty provisions.

The Platform sought public feedback on a previous draft of this report, which was posted for comment from late summer through October of 2017. [1] That draft generated huge interest —with 19 sets of detailed comments received from various groups, including country authorities, civil society organizations, and the private sector. These groups represented a much larger number of individual entities. [2] Given the volume of thoughtful comments, and some of the concerns raised, the Platform partners spent considerable time digesting and responding to the comments in a new draft of the report, posted here with some new questions for consideration. Reactions are again sought, by September 24, 2018, from interested stakeholders.

Furthermore, a new ten-page document is also posted here, systematically detailing the comments received, identifying the parties who made them, and describing how the new draft responds to those comments. The authors have not agreed with or adjusted the text for every comment received—not least because in a number of cases different commenters took diametrically opposing views on quite fundamental issues. However, most comments have been addressed, and the new version attempts to clarify a number of issues which caused some confusion for many readers. We encourage readers to review this companion document before reading the new version of the report itself.

Questions to consider when reviewing the new version

1. Has the draft better clarified the economic rationale for taxing such transfers by offshore indirect owners?

2. The new draft does not express a preference for either of the described legislative approaches to taxing these transfers—is this made clear?

3. Does the draft adequately reduce any perceived emphasis on such offshore transfers as constituting tax avoidance, and make clear that the economic rationale for so taxing them is not as an anti-avoidance device?

Comments should be sent by e-mail no later than September 24, 2018 to GlobalTaxPlatform@worldbank.org, a common comment box for all the Platform organizations.

Please note that all comments received will be made publicly available. Comments submitted in the name of a collective “grouping” or “coalition”, or by any person submitting comments on behalf of another person or group of persons, should identify all enterprises or individuals who are members of that collective group, or the person(s) on whose behalf the commentator(s) are acting.

[1] Original posted questions

1. Does this report effectively address the rationale(s) for taxing offshore indirect transfers of assets?

2. Does it lay out a clear principle for taxing offshore indirect transfers of assets?

3. Is the definition of an offshore indirect transfer of assets clear?

4. Is the discussion regarding source and residence taxation in this context balanced and robustly argued?

5. Is the suggested possible expansion of the definition of immovable property for the purposes of the taxation of offshore indirect transfers reasonable?

6. Is the concept of location-specific rents helpful in addressing these issues? If so, how is it best formulated in practical terms?

7. Are there other implementation approaches that should be considered?

8. Is the report’s preference for the ‘deemed disposal’ method appropriate?

9. Are the complexities in the taxation of these international transactions adequately represented?

Please do not restrict yourself to these questions; any other views you have on addressing the taxation of offshore indirect transfers of assets would be welcome.

[2] The first posted draft of the document, along with all comments received, can be found at the following link: http://www.imf.org/en/news/articles/2017/07/31/pr17308-the-platform-for-collaboration-on-tax-invites

11 July 2018

Mauritius: The Ombudsperson for Financial Services Bill is being finalised, says Prime Minister

The Ombudsperson for Financial Services Bill is being finalised in consultation with all relevant stakeholders. The objective of the Bill is to better protect consumers of banking and financial services. It provides for the establishment of the Office of Ombudsperson for Financial Services to deal with complaints received and recommend appropriate remedial actions. The Bill will cover licensees of the Bank of Mauritius (BoM) and the Financial Services Commission, as well as Credit Unions. 

The Prime Minister, Minister of Home Affairs, External Communications and National Development Unit and Minister of Finance and Economic Development, Mr Pravind Kumar Jugnauth, made this announcement yesterday in the National Assembly during his reply to a Parliamentary Question relating to the number of complaints received by the BoM from members of the public against commercial banks.

He indicated that the BoM has received, during the period January 2015 to March 2018, 4 590 complaints from members of the public, the majority of which relate to fees and charges and repayment of loans.

The BoM, Mr Jugnauth pointed out, investigates all complaints referred to it, and where warranted, conducts special examinations at the banks. He underlined that most of the complaints addressed to the BoM were unfounded and therefore, did not warrant supervisory actions, adding that in some cases, and to the extent that the law permits, the BoM had directed banks to redress grievances of the complainants to their satisfaction. In a few instances, banks were required to compensate customers. In exceptional circumstances, banks had agreed to give the customers more time and agreed to restructure their loans, he said.

The Prime Minister further highlighted that on a half-yearly basis, the BoM holds a Complaints Handling Committee with senior representatives of banks to improve the customer complaint redressal mechanism, and the systems and procedures in relation to complaints. He explained that complaints are separately taken up at bank-level during trilateral meetings with the BoM, in the presence of the Board Representatives, Chief Executives and External Auditors. The complaints are also discussed at the Banking Committee where the Chief Executives of the banks are present, he said.

Mr Jugnauth recalled that the report entitled ‘Banking Your Future’ has been revived and a Working Group, comprising representatives of the BoM, the Mauritius Bankers Association and commercial banks, is currently looking into the recommendations made in the Banking Your Future Report. The objective of the Working Group, he emphasised, is to ensure a fair bank-customer relationship and an inclusive banking sector.

Moreover, the Prime Minister indicated that the BoM has issued directives in certain cases and collaborated by taking necessary measures.

10 July 2018

Global Innovation Index 2018: China Cracks Top 20. Top Rankings: Switzerland, Netherlands, Sweden, UK, Singapore, U.S.

China broke into the world's top 20 most-innovative economies as Switzerland retained its number-one spot in the Global Innovation Index (GII) ranking published annually by Cornell University, INSEAD and the World Intellectual Property Organization (WIPO). Rounding out the GII 2018 top ten: The Netherlands, Sweden, the United Kingdom, Singapore, United States of America, Finland, Denmark, Germany and Ireland.

Now in its 11th edition, the GII is a detailed quantitative tool that helps global decision makers better understand how to stimulate the innovative activity that drives economic and human development. The GII ranks 126 economies based on 80 indicators, ranging from intellectual property filing rates to mobile-application creation, education spending and scientific and technical publications.

China's number 17 ranking this year represents a breakthrough for an economy witnessing rapid transformation guided by government policy prioritizing research and development-intensive ingenuity. While the United States fell back to number six in the GII 2018, it is an innovation powerhouse that has produced many of the world's leading hi-tech firms and life-changing innovations.

"China's rapid rise reflects a strategic direction set from the top leadership to developing world-class capacity in innovation and to moving the structural basis of the economy to more knowledge-intensive industries that rely on innovation to maintain competitive advantage," said WIPO Director General Francis Gurry. "It heralds the arrival of multipolar innovation".

Innovation achievers growing

A group of middle and lower-income economies perform significantly better on innovation than their level of development would predict.

Twenty economies comprise these 'innovation achievers' in 2018, three more than in 2017. The sub-Saharan Africa region boasts six innovation achievers, including Kenya, Rwanda and South Africa, while five economies hail from Eastern Europe. Indonesia, Malaysia, Thailand, and Viet Nam continue to move up the rankings, steering closer to regional powerhouses like China, Japan, Singapore, and Republic of Korea.

"Over time, a number of emerging economies stand out for being real movers and shakers in the innovation landscape, " said Soumitra Dutta, Former Dean and Professor of Management at Cornell University. "Aside from China, which is already in the top 25, the middle-income economy closest to this top group is Malaysia. Other interesting cases are India, Iran, Mexico, Thailand and Viet Nam which consistently climb in the rankings."

New findings and updates for the GII

Among other notable GII inclusions this year :

  • An updated survey of "top science and technology clusters" around the world, adding scientific publishing to international patent applications to highlight areas of particularly intensive innovative activity. The areas around Tokyo-Yokohama and Shenzhen-Hong Kong lead the list, while the U.S. boasts the greatest number of hotspots with 26;
  • A new "IPC Green Inventory" that shows a worrying waning growth rate in environmentally friendly energy-related patenting, with green patent publishing rates peaking in 2012;
  • An expanded look at economies that innovate efficiently - translating investments in education, research and R&D expenditures into high-quality innovation outputs. Leaders are Switzerland, Luxembourg, China, the Netherlands, Ukraine, the Republic of Moldova, Malta, Hungary, Germany, and Sweden;
  • A new indicator, mobile-application "app" creation, with Cyprus, Finland and Lithuania as the global leaders in the development of mobile apps relative to GDP.

GII 2018 theme: "Energizing the World with Innovation"

The theme of the 2018 GII edition is "Energizing the World with Innovation," looking at the need for expanded innovative work in climate-friendly green technology amid rising energy demands worldwide. Projections indicate that by 2040 the world will require up to 30% more energy than it needs today and conventional approaches to expanding the energy supply are unsustainable in the face of climate change.

"Innovation is clearly necessary to address the energy/environment equation, but let us keep in  mind that such innovation cannot be only technological. New social, economic and business models are required, including through efforts to promote smart cities, mobility solutions based on shared vehicles - and a global citizenry with better information on the impacts of various energy policies." said Bruno Lanvin, INSEAD Executive Director for Global Indices. "Ultimately, we must ensure that the solutions to our energy challenges are suited to local needs, do not entail additional disruptions, and reduce inequalities."

Among GII findings on the state of clean-energy innovation: New technological advancements are needed across the entire energy value chain and public policy will play a central role in guiding the transition to cleaner energy.

"For the energy sector, innovation is critical to companies' strategy. Energy executives are well aware of the shifting ground they face, how well companies innovate using new types of energy and distribution technologies will determine their ability to survive the transformation. This market will be evolving for decades to come. As our research shows, as renewables become more viable, the power industry has the potential of being a bonanza for innovation," said Barry Jaruzelski, Principal at Strategy&, PwC's strategy consulting business, which is one of the GII Knowledge Partners.

Accounting for influence: How the Big Four are embedded in EU policy-making on tax avoidance

We pay our taxes, so why don’t corporations? This new report shows how the Big Four are embedded in EU policy-making on tax avoidance, and concludes that it is time to kick this industry out of EU anti-tax avoidance policy.

Secteur financier: les conséquences de l’incompétence et du manque de vigilance?

Le secteur financier local n’a pas bonne presse à l’étranger. Des rapports critiquent la juridiction mauricienne. N’y a-t-il pas eu manque de vigilance de la part des responsables du secteur. Ecoutez les commentaires de Jérôme Boulle.

Blanchiment d’argent: les reproches de l’ESAAMLG et les réponses mauriciennes

Le rapport de l’Eastern and Southern African Anti-Money Laundering Group (ESAAMLG) fait couler beaucoup d’encre. Dévoilé dans l’édition du 6 juillet de l’express, il met en exergue les lacunes qui permettraient le blanchiment et le financement du terrorisme. Or, l’express s’est procuré une copie du Status Report des autorités mauriciennes contenant les principaux résultats ainsi que les réfutations du camp mauricien. Celui-ci date du lundi 9 juillet.

L'Express

06 July 2018

Suppression des GBC 2 : Des questions persistent

L’une des mesures phares annoncées dans le Budget 2018-19 pour le secteur financier concerne l’abolition du régime GBC 2 (Global Business Category 2) d’ici janvier 2019. Pourquoi rien n’a été communiqué dessus auparavant? Quelles sont les alternatives proposées? Comment se passera la transition? Autant de questions qui restent posées dans ce même milieu

03 July 2018

CipherTrace: New Q2 2018 Report Reveals Dramatic Increase in Crypto Theft and Corresponding Three-fold Rise in Cryptocurrency Money Laundering

New research released today in the CipherTrace 2018 Q2 Cryptocurrency Anti-Money Laundering Report finds that three times more cryptocurrency was stolen from exchanges in the first half of 2018 than in all of 2017. The report also explains why Cyber extortionists, dark markets and ransomware perpetrators prefer bitcoin for their cryptocurrency payments. Furthermore, these dirty funds all need to be “laundered,” which results in a multi-billion-dollar and growing cryptocurrency money laundering problem that is attracting the attention of regulators globally.

The research report, which looks at the state of the cryptocurrency Anti-Money Laundering (AML) market, provides insights into the pending global cooperation and crackdown by the G20 international 37-nation financial crime-fighting Financial Action Task Force (FATF). The current rules, which seem strict on the surface, call for exchanges to: be registered or licensed, verify customers’ identities, prevent money laundering, and report suspicious trading and transactions. Unfortunately, they are voluntary. But according to Reuters, the FATF is currently discussing making crypto exchange rules binding. Additional global enforcement action is also expected from US Financial Crimes Enforcement Network (FinCEN), and it will likely target money laundering services, crypto-to-crypto exchanges and privacy coins.

Until now, the lack of regulatory guidance has hindered the broader adoption of cryptocurrencies. Now we are seeing the big guys coming together asking for cryptocurrency anti-money laundering regulation—it is inevitable, it will be unified, and it will be global.  There will be little room for privacy coins without AML or mixers in these Know Your Customer and Anti-Money Laundering regulated regimes. This will also be a wake-up call for virtual currency exchanges and financial institutions, exposing them to the risk of facing stiff penalties,” commented Dave Jevans, CEO, CipherTrace and co-chair of the Cryptocurrency Working Group at the APWG.org.

New Sophisticated Technology Tracks Cryptocurrency Through the Blockchain Ecosystem

These developments are driving a significant and increased demand for crypto AML intelligence. In response, today CipherTrace is also launching the general availability of its new Cryptocurrency AML Compliance Solution to help exchanges, hedge funds, ICOs, money transfer agents and banks safely participate in crypto asset markets while minimizing compliance efforts and costs. This fast and powerful tool—which can handle massive numbers of transactions and value—traces the flow of funds through the crypto ecosystem to find the “tainted money.”
  • CipherTrace’s superior cryptocurrency intelligence is a result of advanced cryptocurrency intelligence gathering techniques and machine learning algorithms. These are guided by a deep understanding of eCrime and blockchain threat vectors applied to vast amounts of private and open source data. The CipherTrace AML solution features the first Crypto Intelligence Sharing Network for the best attribution on the market with 1.5 to 2 million new attribution data points added per week.
  • CipherTrace technology calculates risk scores for transactions based on whether the funds have traveled through illegal dark markets, money mixers, gambling sites or are associated with known criminals. This transaction risk rating also simplifies compliance efforts by rapidly identifying and highlighting risky transactions for further scrutiny or action.
  • The industry-leading CipherTrace API provides near real-time transaction risk scoring for exchanges, financial institutions and other high-volume users. The API also can trigger deeper analysis required for Suspicious Activity Reports (SARs). Bulk upload and analysis capabilities further speed up complex investigations and larger audits.
  • With CipherTrace’s intuitive user interface (UI), non-technical users can perform analysis, which starts with a visual representation of the transaction. Once a transaction is identified as high-risk or non-compliant, the user can click to drill down and look for relationships, or search back through related transactions or multiple parts of a transaction and see any useful patterns.
  • In addition, users can step forward and backward in the transaction history of suspicious transactions. The platform’s UI further makes it easy to perform deeper inspection and analysis of suspicious transactions, trace flows and link blockchain events.

CipherTrace’s cryptocurrency intelligence, bitcoin forensics and crypto transaction risk score help to assure compliance and build trust in the blockchain economy for all law-abiding participants.

Already, clients in crypto exchanges, hedge funds and law enforcement are seeing massive improvements in the time it takes them to investigate, monitor and report on AML violations,” said Stephen Ryan, COO, CipherTrace.

Many of these RegTech and cryptocurrency technologies—which were once thought experimental or just for cryptos—are fast becoming mainstream compliance expectations among regulators. Cryptocurrency exchanges have invested extensively in legal services and detailed AML programs. Now, they must back this commitment by investing in compliance infrastructure and giving their compliance professionals the resources and tools they need to get the job done,” said Joe Ciccolo, CAMS, CFE, AMLCA, President, BitAML, Inc.

CipherTrace: Cryptocurrency Anti-Money Laundering Report - Q2 2018

Cryptocurrency AML Regulation Grows Globally in Response to Increasing Exchange Theft, Crypto Used in Crimes, and a Related Rise in Money Laundering

The phenomenal growth in the value of cryptocurrencies like Bitcoin over recent years has attracted investors, speculators, and thieves. In the last two years alone, some of the best and brightest criminal minds made off with $1.2  billion in cryptocurrency from exchanges. 

Key takeaways
  • In Q1and Q2 of 2018, nearly three times as much cryptocurrency was stolen as in all of 2017
  • Cyber extortionists, dark markets and ransomware perpetrators prefer bitcoin
  • Crypto money laundering is enabled by mixers, chain hopping and privacy coins
  • US FinCEN will enforce Anti-Money Laundering (AML) regulations globally
  • AML regulation and international cooperation is a FATF priority

FSC issues Public notice: Surrender of the Custodian Licence of Deutsche Bank (Mauritius) Limited


PUBLIC NOTICE

Surrender of the Custodian Licence of Deutsche Bank (Mauritius) Limited

The Financial Services Commission, Mauritius (the “FSC Mauritius”) wishes to inform the public that Deutsche Bank (Mauritius) Limited, having its registered address at 4th Floor, Barkly Wharf, Le Caudan Waterfront, Port Louis has surrendered its Custodian Licence in accordance with section 28 (5) of the Financial Services Act (the “FSA”).

Pursuant to Section 28(9) of the FSA, the public is hereby notified that the Custodian Licence of Deutsche Bank (Mauritius) Limited stands terminated with effect from 30 June 2018.

You may contact the FSC Mauritius for any further information.

Financial Services Commission, Mauritius
03 July 2018