A 12 Point Practical Checklist: The Consequences of 40 Years of Tax Haven Secrets Revealed

In light of recent events relating to leaked documents, Howard Fisher, Alexander Fisher and Geoffrey Morson explore what happened and ponder the consequences for ‘offshore’ service providers who ignore their obligations, they look at the potential problems clients may face and provide the following ‘12-Point Practical Checklist’ for onshore and offshore advisors when dealing with clients and customers, especially those clients with a US connection:   

• Adopt and implement a genuine and sincere compliance culture within your organisation and remember: ethical conduct starts at the top. 
• Adopt and implement due diligence for your legacy transactions as well as for all ongoing and future ones.  Audit yourself, before an outsider does it.  Transnational companies need to be mindful of multi-jurisdictional conflicts in the requirements of due diligence and compliance.  Think globally but act locally. 
• Be aware of the full range of investigative powers and “dawn raid” powers of your local regulators and that they may be acting at the request of foreign governments and sharing data with them. 
• Be aware of the hundreds of crimes over which the US asserts extra-territorial jurisdiction and may seek extradition. 
• Be aware that the USA may now be coming after individuals as well as enterprises. 
• Be mindful of the many different ways that the term “ultimate beneficial ownership” may be interpreted from country to country and from situation to situation.   Use common sense.  Look behind the smoke and mirrors.  Do the right thing that reflects the realities. 
• KYC.  Really and truly Know Your Customer.   Ask your customers straight questions and require straight answers and then document them. And then periodically refresh them by asking the customers about any “changed circumstances”. 
• Be wary of “asset protection” plans that are simply disguised “fraudulent transfers”, designed to evade tax, conceal the proceeds of crime or evade lawful creditors. 
• “He who trains avoids the pains”.  Institute regular training sessions in your organisation.  This will not only help steer the organisation and its personnel clear of trouble:  but if mistakes do occur, it helps show your regulatory agencies (and insurers) that the errors were an aberration, not the result of culpable negligence or the result of systematic lack of internal controls or “wilful blindness.” 
• Comply with FATCA, AEoI / GATCA / CRS and all applicable laws. 
• Don’t overlook cybersecurity and keep monitoring and update it.  If data breaches do occur, take appropriate steps to notify your regulators and customers. 
• Consult with your legal advisors, but note that in many countries the confidentiality of the attorney-client relationship is only granted for outside lawyers, not to in-house counsel, let alone to accountants and other non-lawyers.