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Undercover investigation reveals role of British overseas territories in moving suspect money
Published on February 17, 2016Email To Friend    Print Version

A new investigation from advocacy group Global Witness, shown recently on CBS’ 60 Minutes, showed the role that British overseas territories can play in facilitating the movement of suspect funds into the US.

Wearing a hidden camera, a Global Witness investigator met with 13 New York law firms, including the then-president of the American Bar Association (ABA), James Silkenat. Posing as an adviser to a foreign government official, the investigator asked the lawyers how to anonymously move large sums of money that should have raised suspicions of corruption.

In all but one case, the lawyers provided suggestions on how to get the money into the US without detection. In many cases, the lawyers suggested using companies or trusts from the overseas territories to move the money. The meetings were all preliminary; none of the law firms took the investigator on as a client.

John Jankoff, a partner at Jankoff and Gabe, was secretly filmed saying: “The first problem you have is you can’t bring the money into the US because the United States has an anti-corruption act. So you have to move the money to a neutral site, like the Cayman Islands, the Isle of Man, whatever. The money goes there, then they… you set up a corporation, [that] says I would like to buy a brownstone in New York.”

Hugh Finnegan, James Silkenat’s colleague at Sullivan and Worcester, suggested that the minister set up an American LLC but that “pretty quickly you’d go offshore” and have the LLC “owned by somebody from the Cayman Islands or wherever”.

Marc Koplik, a partner at Henderson and Koplik, and his colleague were secretly filmed suggesting that the fictitious minister use a Cayman Islands entity or a Bermuda trust company to hide his identity, and that he obtain a bank account in Gibraltar.

“We’re making life easy for the criminal and corrupt, which in turn has devastating consequences for people all over the world. What’s needed is for information on who owns and controls companies, the so-called beneficial owners, to be out in the public for all to see,” said Rosie Sharpe, campaigner at Global Witness.

Montserrat is in the process of creating a public registry of beneficial owners. Gibraltar is required by the EU anti-money laundering directive to give access to beneficial ownership to anyone who can demonstrate a legitimate interest. Company ownership in the other overseas territories is still secret.

“The UK’s Overseas Territories say that their regimes are good enough to stop corruption and tax evasion, but this shocking investigation suggests that’s far from the reality. The UK government is holding an Anti-Corruption Summit in London this year: this must address the problem in the UK’s backyard of the overseas territories, as well as the city, if the summit is to be a success and for the UK to have any credibility as a world leader in fighting corruption,” said Joseph Stead, campaigner at Christian Aid.

This exposé comes as global momentum is building to clamp down on the abuse of anonymously-owned companies. The UK and EU are now taking concrete steps to give the public access to registers of company owners, which would make it much easier to identify the actual human being behind a company.

The meetings took place in June 2014. James Silkenat responded to Global Witness’ approach for comment saying that he had acted properly, and that he had no intention of taking on its investigator as a client. During the meeting with the investigator, he said that he would need to find out more about the investigator and make sure that no crimes had been committed. He said that if crimes had been committed, they would have to report them.

The investigator said he was advising an African minister who had accumulated hundreds of millions of dollars, and wanted to buy a Gulfstream jet, a brownstone and a yacht. He deliberately posed as someone designed to raise red flags for money laundering, according to indicators set by the international community and enshrined in voluntary guidelines laid out by the ABA.

The investigator said he was from West Africa, a region prone to corruption; that he worked for a government minister, or “politically exposed person” as the jargon has it; and that he needed to conceal the person who was really behind the money. These are all things that should have sounded alarm bells for lawyers.

While most of the lawyers asked for some information about the minister, and his source of funds, only one lawyer refused to provide assistance during the meeting itself, and one followed up by email saying that he couldn’t work with the investigator. A number indicated that they would need to carry out more checks before they could do so. None of the lawyers broke the law or agreed to take on the investigator as a client.
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