SS&C Advent: Preparing for MiFID II - A Guide for Investment Managers

The updated Markets in Financial Instruments Directive (MiFID II) and accompanying regulation (MiFIR) create a huge and complex rulebook that will transform the way financial markets operate and how trading activity is conducted in the European Union. While designed more for the sell side than buy side, its scope means any investment manager that has dealings with European clients, funds or even assets will be impacted to some extent, and will need to adopt a MiFID II program.

A White Paper and video are now available from SS&C Advent on Preparing for MiFID II.

Outrigger Mauritius Beach Resort reveals its Crystal Marquee for MICE and wedding sectors

Outrigger Mauritius Beach Resort has unveiled Crystal, a unique meeting space in the south of the island. This new concept opens opportunities for the resort in the events and MICE sector, from meetings and conferences to exceptional gala dinners and weddings.

Crystal is a fully air-conditioned transparent marquee. It measures 33 x 17.5 meters, can seat up to 250 people in banquet style and sits on a rooftop area of the hotel giving a wonderful view of the Bel Ombre coast.

The resort setting is ideal for events: 181 sea-facing rooms offer a breathtaking beachfront location alongside the turquoise lagoons of the Indian Ocean. Nestled in the nature reserve of Bel Ombre, the property is only 45 minutes from the airport,

A permanent structure, Crystal can be adapted for many needs. It can be used as a classic conference venue with pitch-dark option, or semi-transparent with ocean views, both incorporating the latest audio-visual technology.

“Crystal is unique in Mauritius and repositions the Outrigger as a full-on MICE destination for events, incentive meetings, weddings and banquets,” says Cyrille Carmona, deputy general manager of the resort. “With Crystal, the sky is the now the limit.”

The Outrigger, highly acclaimed for its dining, now has five food and beverage venues which can deliver MICE events for up to 250 covers.

Carmona says the key MICE points for the Outrigger are its five food and beverage outlets, including Crystal; all the resort’s rooms and suites are sea facing with a private terrace and balcony; there are spacious beachfront, garden and poolside venues for events; customized menus for beach parties and weddings, all the way up to wine and gala dinners; advanced audio-visual services; technical and secretarial services for businesses; lighting and ambience support; live entertainment, and complimentary Wi-Fi.

The Outrigger Mauritius Beach Resort has a dedicated MICE team that tailors proposals and accompanies groups during their events. This team has created a range of original MICE services including team-building activities, nature retreats, personalized wellness experiences, themed gala dinners and private outdoor events.

“With the opening of Crystal at the Outrigger Mauritius Beach Resort, I believe we now have a total package — a very compelling proposition for MICE event organizers worldwide,” says Carmona.

FSC Mauritius issues Communiqué - Online Submission Platform

The Financial Services Commission, Mauritius (“FSC Mauritius”) launched its Online Submissions Platform (OSP) on 01 December 2016. The OSP is the interactive platform allowing Management Companies to submit their applications for a licence online, and to upload the relevant supporting documents.

The number of applications received by FSC Mauritius through the OSP as at date aggregates to 353 Global Business Companies.

The aim of the OSP is to provide a more conducive regulatory environment to establish and conduct operations.

The FSC Mauritius informs its stakeholders that as from 01 August 2017, all applications for Global Business Licences should be made through the OSP platform.

Accordingly, no applications for Global Business Licences submitted in hard copies would be entertained by the FSC Mauritius thereafter.

Financial Services Commission, Mauritius

30 May 2017

European Commission welcomes adoption of new rules to block tax avoidance

The agreed rules will stop companies from escaping tax by exploiting the mismatches between Member States' and non-EU countries' tax systems ("hybrid mismatches"). Today's agreement completes the Anti Tax Avoidance Directive (ATAD) which ensures that binding and robust anti-abuse measures are applied throughout the Single Market.

"Our campaign for fairer taxation in Europe continues to reap results. Today's agreement is further proof of what the EU can achieve when we work together against common challenges. It is another victory for fair taxation and another blow against those companies that try to escape paying their fair share," said Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs.

Today's agreement will ensure that companies cannot avoid taxation by abusing mismatches between countries' tax treatment of certain income or entities, even if the mismatches involve third countries. The new rules, which were endorsed by EU ministers in February and subsequently by the European Parliament, will come into force on 1 January 2020, with a longer phasing-in period of 2022 for one provision (Art. 9a).

They build on the solid anti-avoidance safeguards initiated by the Juncker Commission and agreed at EU level. In addition to the ambitious Anti Tax Avoidance Directive, agreed in 2016, a host of new tax transparency rules have been adopted to ensure fairer and more open taxation throughout Europe.

Since January 2017, Member States have been obliged to automatically exchange information on financial accounts, as an important step against offshore tax evasion. From July this year, similar transparency rules will apply for tax rulings, while multinationals will have to provide country-by-country reports to tax authorities by the end of the year. The Council and the European Parliament are currently negotiating other important proposals to prevent tax abuse, including public country-by-country reporting, stronger Anti-Money Laundering provisions and tighter good governance rules for EU funds. A number of other substantial corporate tax reforms have also been proposed, notably the re-launch of the Common Consolidated Corporate Tax Base (CCCTB) in October 2016. Member States are also working on a common EU list of non-cooperative jurisdictions, to tackle third countries that refuse to adhere to tax good governance standards. The list should be ready by the end of the year.

In the coming weeks, the Commission will bring forward another new transparency initiative, with a proposal for intermediaries to report cross-border tax planning schemes.

May 2017 directive on hybrid mismatches with third countries

OECD releases peer review document for assessment of the BEPS Action 6 minimum standard

Today the OECD released the key document, approved by the Inclusive Framework on BEPS, which will form the basis of the peer review of the Action 6 minimum standard on preventing the granting of treaty benefits in inappropriate circumstances.

The Action 6 minimum standard is one of the four BEPS minimum standards. Each of the four BEPS minimum standards is subject to peer review in order to ensure timely and accurate implementation and thus safeguard the level playing field. All members of the Inclusive Framework on BEPS commit to implementing the minimum standards and participating in the peer reviews.

The document released today forms the basis on which the peer review process will be undertaken. The document includes the Terms of Reference which sets out the criteria for assessing the implementation of the Action 6 minimum standard, and the Methodology which sets out the procedural mechanism by which the review will be conducted.

Mrinal Roy: Crisis management, BAI Saga and India - Calling a Spade a Spade

It is obvious that India will never turn down a call for a helping hand from Mauritius. While finding a solution to end the hardships and anguish of the victims of BAI remains a priority, this unprecedented initiative of seeking help from India to resolve domestic problems of our own making raises a series of questions of principles… India cannot be the panacea for our blunders. By doing so the government is exposing its inability to manage the affairs of the country competently…

The recent flagrant lapses in respect of licences granted to Alvaro Sobrinho shows that the regulatory bodies have not yet learnt the lessons of the BAI debacle. Politicians must also learn to stay clear of political meddling in the strict application of rules and regulations by regulatory bodies. Going forward, urgent steps must also be taken to inculcate a culture of supervisory rigour among regulators and strict compliance with rules and regulations among operators to prevent any risk of crisis in our financial services sector. It is only then that we will prevent hiccups in the future and truly establish the standing and repute of Mauritius as a clean and vibrant financial services centre.

Mauritius Times

Africa subsidises the rest of the world by over $40 billion in one year, according to new research

Much more wealth is leaving the world’s most impoverished continent than is entering it, according to new research into total financial flows into and out of Africa.  The study finds that African countries receive $161.6 billion in resources such as loans, remittances and aid each year, but lose $203 billion through factors including tax avoidance, debt payments and resource extraction, creating an annual net financial deficit of over $40 billion.

The research shows that according to the most recent figures available in 2015:

• African countries received around $19 billion in aid but over three times that much ($68 billion) was taken out in capital flight, mainly by multinational companies deliberately misreporting the value of their imports or exports to reduce tax.
• African governments received $32.8 billion in loans but paid $18 billion in debt interest and principal payments, with the overall level of debt rising rapidly.
• An estimated $29 billion a year was stolen from Africa in illegal logging, fishing and the trade in wildlife and plants.
• Tim Jones, economist from the Jubilee Debt Campaign, said: "The African continent is rich, but the rest of the world profits from its wealth through unjust debt payments, multinational company profits and hiding proceeds from tax avoidance and corruption." 

Aisha Dodwell, a campaigner with Global Justice Now said: “There’s such a powerful narrative in Western societies that Africa is poor and that it needs our help. This research shows that what African countries really need is for the rest of the world to stop systematically looting them.  While the form of colonial plunder may have changed over time, its basic nature remains unchanged.”

Martin Drewry, director of Health Poverty Action said:  “To end poverty we need to focus our efforts on preventing the policies and practices that are causing it.  That means we need to stop our tax havens facilitating the theft of billions, clamp down on illegal activities and compensate African countries for the impact of climate change that they did not cause. “

Bernard Adaba, policy analyst with ISODEC in Ghana said: “'Development' is a lost cause in Africa while we are haemorrhaging billions every year to extractive industries, western tax havens and illegal logging and fishing. Some serious structural changes need to be made to promote economic policies that enable African countries to best serve the needs of their people rather than simply being cash cows for Western corporations and governments. The bleeding of Africa must stop!"

The report Honest Accounts 2017: How the world profits from Africa’s wealth, published by a coalition of UK and African organisations, including Global Justice Now, Health Poverty Action and Jubilee Debt Campaign, makes a series of recommendations as to how the system extracting wealth from Africa could be dismantled. These recommendations include promoting economic policies that lead to equitable development, preventing companies with subsidiaries based in tax havens from operating in African countries, and transforming aid into a process that genuinely benefits Africa.

Shu-Yi Oei: The Offshore Tax Enforcement Dragnet

Taxpayers who hide assets abroad to evade taxes present a serious enforcement challenge for the United States. In response, the U.S. has developed a family of initiatives that punish and rehabilitate non-compliant taxpayers, raise revenues, and require widespread reporting of offshore financial information by financial institutions and taxpayers. Yet, while these initiatives help catch willful tax cheats, they have also adversely affected immigrants, Americans living abroad, and “accidental Americans.” 

This Article critiques the United States’ offshore tax enforcement initiatives, such as FATCA and the offshore voluntary disclosure programs. It argues that the U.S. has prioritized two problematic policy commitments in designing enforcement at the expense of competing considerations: First, the U.S. has attempted to equalize enforcement against taxpayers with solely domestic holdings and those with harder-to-detect offshore holdings by imposing harsher reporting requirements and penalties on the latter. But in doing so, it has failed to appropriately distinguish among differently situated taxpayers with offshore holdings. Second, the U.S. has focused on revenue and enforcement, ignoring the significant compliance costs and social harms that its initiatives create. 

The confluence of these two policy commitments risks creating high costs for the wrong taxpayers. While offshore tax enforcement may have been designed to catch high-net-worth tax cheats, it may instead impose disproportionate burdens on those immigrants and expatriates who have less ability to complain, comply, or “substitute out” of the law’s grasp. This Article argues that the U.S. should redesign its enforcement approach to minimize these risks and suggests reforms to this end.

SSRN

CERT-MU White Paper: The WannaCry Ransomware

The world has experienced a massive global ransomware cyber-attack known as “WannaCrypt” or “WannaCry” (Ransom: Win32/WannaCrypt) since Friday, May 12 2017. Hundreds of thousands computers worldwide have been hit and affected more than 150 countries. WannaCry is far more dangerous than other common ransomware types because of its ability to spread itself across an organisation’s network by exploiting a critical vulnerability in Windows computers, which was patched by Microsoft in March 2017 (MS17-010). The exploit, known as “Eternal Blue,” was released online in April in the latest of a series of leaks by a group known as the Shadow Brokers, who claimed that it had stolen the data from the Equation cyber espionage group.

CERT-MU Security Alert: The Global Wanna Cry Ransomware Attack - Technical Advisory ​ ​

CERT-MU Technical Advisory on the Wanna Cry Global Ransomware Attack

THE MASSIVE WANNA CRY GLOBAL RANSOMWARE ATTACK

Original Issue Date: 14th May 2017

Updated: 15th May 2017

Severity Rating: High

Technical Advisory

Loss of Direction

The extremely damaging “entrée en scène” of the new government the last two years did not augur much good. A lot of it was about getting the upper hand in politics than improving the image of the country as a good venue for doing business. Despite the first budget of the government and announcement the following year of a series of long term redress measures called ‘Vision 2030’, nothing much happened to add substance.

With unbridled zeal, the government went around pulling down brutally the BAI group early in its mandate, introducing highly controversial legislation likely to erode Constitutional liberties and undermining public institutions. Interference in Air Mauritius, which eventually led to the unceremonious sacking of its Chief Executive, rocked public confidence even further.

Mauritius Times

Gareth Vaughan: It's time to end the madness

Gareth Vaughan argues it's time to ban offshore trust and company service providers from NZ activities, licence local ones, and hold them to account if their clients break the law in a move away from the Wild West

interest.co.nz

European Commission launches reflection on harnessing globalisation

Based on a fair assessment of the benefits and downsides of globalisation, today's Paper aims to launch a debate on how the EU and its Member States can shape globalisation in a way that anticipates the future and improves the lives of Europeans.

Frans Timmermans, First Vice-President of the Commission, said: "Globalisation is good for the European economy overall, but this means little to our citizens if the benefits are not shared fairly and more evenly. Europe must help rewrite the global rulebook so that free trade becomes fair trade. So that globalisation becomes sustainable and works for all Europeans. At the same time, we must focus our policies on getting people the education and skills they need to keep up with the evolution of our economies. Better redistribution will help guarantee the social cohesion and solidarity this Union is based on."

Jyrki Katainen, Vice-President for Jobs, Growth, Investment and Competitiveness, said: "Globalisation is a formidable force bringing benefits to Europe and the rest of the world but also many challenges. To preserve the benefits of openness but also address its drawbacks, Europe must promote a stronger rules-based global order, act resolutely against unfair practices, make our societies more resilient and our economies more competitive in the face of a fast changing environment."

The reflection paper takes an honest look at what globalisation has brought to the EU. The fact is that, even if the EU has greatly benefitted from globalisation, it has also brought many challenges. Around the world, globalisation has helped lift hundreds of millions of people out of poverty and enabled poorer countries to catch up. For the EU, global trade has boosted EU economic growth, with every €1 billion of additional exports supporting 14,000 jobs. Cheaper imports also benefit poorer households in particular. But these benefits are not automatic nor are they evenly distributed among our citizens. Europe is also impacted by the fact that other countries do not all share the same standards in areas such as employment, environmental or safety standards, meaning that European companies are less able to compete on price alone with their foreign counterparts; this can lead to factory closures, job losses or downward pressure on workers' pay and conditions.

However, the solution lies neither in protectionism nor in laissez-faire politics. The evidence presented in the Reflection Paper shows clearly that globalisation can be beneficial where it is properly harnessed.  The EU must ensure a better distribution of the benefits of globalisation by working together with Member States and regions as well as with international partners and other stakeholders. We should seize together the opportunity to shape globalisation in line with our own values and interests.

Today's Reflection Paper opens up a vital debate on how the EU can best harness globalisation and respond to its opportunities and challenges:

• On the external front, the paper focuses on the need to shape a truly sustainable global order, based on shared rules and a common agenda. The EU has always stood for a strong and effective 'multilateral' global rulebook and should continue to develop it in a way that addresses new challenges and ensures effective enforcement. For example, the EU could push for new rules to create a level-playing field by addressing harmful and unfair behaviour like tax evasion, government subsidies or social dumping. Effective trade defence instruments and a multilateral investment court could also help the EU act decisively against countries or companies that engage in unfair practices.
• On the domestic front, the paper suggests tools to protect and empower citizens through robust social policies and providing the necessary education and training support throughout their lives. Progressive tax policies, investing in innovation and strong welfare policies could all help redistribute wealth more fairly. Meanwhile, use of EU structural funds to assist vulnerable regions and the EU Globalisation Adjustment Fund to help displaced workers find another job can help mitigate negative impacts.

Tax Havens and International Human Rights

While tax havens and low tax areas are themselves not necessarily bound by relevant international human rights norms, through their very existence and the use of structuring and fiscal opportunities in such jurisdictions by actors who are bound by international human rights norm, they impact the international human rights continuum.

Tax Havens and International Human Rights analyses the use of fiscal and taxation initiatives, considering the various mechanisms through which human rights law abuses may be perpetrated or facilitated using tax havens. Structures in the Isle of Man, the Grand Duchy of Luxembourg, the Principality of Liechtenstein, the Cayman Islands, the Republic of Panama, Mauritius, Singapore and the State of Delaware are examined as being representative of low tax areas. The book explores the human rights abuses inherent in the use of such offshore entities such as companies with nominee shareholders and nominee directors, trusts, and foundations. Paul Beckett effectively demonstrates the distortive effect to which the use of such initiatives and structures can give rise, not merely where human rights are abused, but also where human rights are cited in justification of activities undertaken.

Anil Gujadhur: The Makings of a Good Financial Centre

Mauritius may not be able to compete with a highly sophisticated long-established place like London. But we made a start sometime in the late 1980s and early 1990s. We attracted some new types of business, on the promise we’ll not deviate from established principles. As in the case of other successful international financial centres, the objective was to go on adding to the existing mass of our financial activities, based on a solid reputation for harbouring sound business and fostering attractive living conditions for expatriates having the skills to expand the scope of our global business.

Mauritius Times

AML / CFT: When Compliance Is Not Enough

This article outlines a case in Australia involving an employee of a reporting entity who was charged with money laundering even though he followed the AML/CFT program of the company in identifying customers. The article questions just how far a reporting entity should go to identify the beneficial owner and the problem that appears to exist where a risk based assessment for AML does not protect an employee from being charged with criminal money laundering.

Malkara Consulting

EY: 2017 Africa Attractiveness Program – Connectivity redefined

Africa’s growth will improve off 2016 – the worst year for the continent in nearly 20 years.

• Africa’s growth will improve following 2016.
• Selected key economies will continue excelling.

Low growth was largely driven by external factors, particularly oil prices, which meant two of the largest three economies in Sub-Saharan African (SSA) i.e. Nigeria and Angola had to accept lower receipts for their exports.

As a result, both economies fell into recession, with Nigeria hit particularly hard, as the nation dealt not only with reduced terms of trade, but with lower production levels as a result of domestic insurgency.

South Africa’s growth in 2016 was only marginally positive (0.3%), while Angola’s growth for the year is likely to be flat. All three of these economies are expected to grow more strongly in the year ahead, although each one is dependent on a combination of global commodity price recovery, and structural economic reform.

At the other end of the spectrum, Cote d’Ivoire remains one of the fastest growing countries globally, although once again, highly dependent on commodity (cocoa) prices, and its ability to manage internal conflict. Staying in West Africa, Ghana’s prospects are also looking increasingly promising, with a newly elected administration promising to manage the public purse more prudently.

East Africa remains the most buoyant of all, with the four key economies (Kenya, Ethiopia, Tanzania, and Uganda) all poised for growth of 6%+ for the rest of the decade.

For most of the sub-continent, inflation has peaked and is declining, allowing the space for central banks to ease interest rates. This in itself will add stimulus to economic growth, and should interest rates at the very least remain stable, consumer disposable income will support even stronger growth through 2017.

However, there are a number of risks that need to be managed. Countries with high and rising twin fiscal and trade deficits remain at risk of currency devaluation. This becomes all the more evident where national debt levels are either rising too rapidly or are already at high levels.

Mozambique is the most notable example, although this has not impacted its growth outlook.

Commodity prices are also key to growth assumptions. Oil prices have fallen back to US$50 after trading at US$55 in the first two months of 2017. Price moves will depend on OPEC’s ability to get member countries to stick to agree to production levels. China remains critical to commodity prices more broadly, as its recent slowdown has already illustrated. Given these unknowns, policy certainty and economic reform are critical to stimulating growth and reducing the impact of exogenous influences.

By 2030 Africa remains on track to be a US$3t economy. To achieve that will require accelerating diversification initiatives and thereby boosting resilience to external shocks.

Download: Connectivity redefined

The Republic of Mauritius’s Regulatory Sandbox Could Attract Blockchain Startups

As part of their 2016–2017 budget, the Republic of Mauritius, which is an island nation off the southeastern coast of Africa, included regulatory sandbox legislation that can be used by blockchain technology companies to develop and commercialize their applications in the country with access to the African and Indian markets.

In an effort to learn more about the opportunities for blockchain startups in Mauritius, Bitcoin Magazine reached out to James Duchenne, who is the co-founder of Volt Markets and an honorary representative of the Republic of Mauritius’s Board of Investment, the national investment promotion agency.

Bitcoin Magazine

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