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Secret structures, hidden crimes: Urgent steps to address hidden ownership, money laundering and tax evasion from developing countries

Added 14/Jan/13

Tax evasion poses an acute challenge to developing and developed countries. From 2000 to 2010, illicit financial flows deprived developing countries of US$5.86 trillion. Tax evasion is not a victimless crime – for people in the developing world, the consequences of tax evasion can be a matter of life and death. If developing countries could recover this untaxed wealth, it could mobilise enormous resources for improving their public services and their citizens’ lives.

The new Eurodad report “Secret structures, hidden crimes” finds that the hidden ownership of companies and other legal structures facilitates tax evasion, corruption and related crimes. It outlines the different ways that individuals abuse companies, trusts and other vehicles in order to evade taxes.

It argues that better information about who owns and controls these companies and other set-ups is key to bringing trillions of dollars of offshore wealth back into the tax net and helping to prevent capital flight in the future.

It argues that all forms of tax evasion can be more effectively fought where they are recognised as a “predicate offence” of money laundering as this makes it a criminal offence to help someone to hide and shift tax-evaded money. For some countries tax evasion is already a predicate offence, but only in a limited set of circumstances.

A first step is to implement a robust interpretation of the Financial Action Task Force’s set of recommendations from February 2012. In Europe, the review of the EU’s Anti-Money Laundering Directive (AMLD) in 2013 will be one of the biggest opportunities. The report recommends that this political opportunity is used to:

  1. Create publically available government registers of the real owners and controllers of companies, trusts and other such legal structures.
  2. Make all tax evasion, a predicate offence of money laundering
  3. Improve compliance with and enforcement of anti-money laundering rules and introduce credible sanctions.

Read the full Eurodad report: Secret structures, hidden crimes: Urgent steps to address hidden ownership, money laundering and tax evasion from developing countries

Read the summary: Secret structures, hidden crimes: Urgent steps to address hidden ownership, money laundering and tax evasion from developing countries: summary

Read the summary report in Spanish here:: Estructuras secretas, crímenes ocultos: Medidas urgentes para hacer frente a la titularidad oculta, el blanqueo de dinero y la evasión fiscal de los países en desarrollo. Resumen

Read the summary report in French here: Ces sociétés écrans qui dissimulent la criminalité financière : quelques mesures urgentes pour mettre fin à l’opacité relative aux propriétaires effectifs, au blanchiment d’argent et à la fraude fiscale en provenance des pays en développement – un résumé