International banking laws exposed

Written on the 12 May 2009

 

 A UNIVERSITY lecturer has undertaken research that flouts international banking and tax laws.
Griffith University researcher Professor Jason Sharman, used Google and $10,000 to prove international banking and tax laws in the US and UK are a ‘joke’.
In an online experiment, Sharman set up shell corporations and bank accounts without identification — corporations which could easily be used to launder money. In one case, a US provider offered to use their employees’ own social security numbers as the identification required to set up corporations.
Sharman set out to test laws, violating recent global standards stopping anonymous participation in the international financial system. He emailed 45 different corporate service providers across 22 countries soliciting offers to set up anonymous shell corporations – 17 agreed. Of these, 13 were from Organisation for Economic Co-operation and Development (OECD) countries, including seven in the UK, four in the United States, one in Spain, and one in Canada, compared with only four of 28 known tax havens.
From the 17 anonymous corporations, Sharman solicited offers for five bank accounts (two from US, two from UK and one from Liechtenstein) without having to provide any certified identification as to the true owner of the company and account.
“It cost from only $800 to $3000 for up-front costs followed by a slightly smaller amount on an annual basis for each corporation,” he says.
“I found small island offshore centres traditionally thought to be loose with tax and international laws to have standards that are much higher than major OECD economies like the United States and the United Kingdom.”
Sharman suggests that even without direct access to the banking system, anonymous companies could be useful in financial crime by holding share portfolios in the name of a foreign shell company so as to avoid capital gains tax.
“The most flagrant breach of international standards came from a US provider based in Wyoming which offered to use their own employees’ social security numbers as the tax identification number for a corporate vehicle,” he says.
The findings have exposed the problems of financial opacity are for G7 countries - not palm-fringed tropical islands.
“Unlike the Cayman Islands and Panama, the United States, United Kingdom and other OECD states have simply chosen not to comply with international standards they had a large hand in creating.”

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