Part 1 - AL-Tax

Chapter 13institutions. In some cases, these branches are prepared to open accounts and issuecards for customers under assumed or unverified names, or in the names of offshorecorporations or trusts established by them for their customers.In order to launder funds, those funds must necessarily be placed in a moneylaunderingscheme. As such, a critical element of many money-laundering schemesis the wire transfer. Wire transfers are a cheap and fast means of moving fundswithin countries and across borders, and multiple transfers can be readily andcheaply executed to obscure the passage of funds within a money-launderingscheme (FATF, 2004). However, wire transfers create a ‘paper trail’ and even theinterposition of multiple intermediaries, such as offshore dummy corporations,or the structuring of transfers in low-value amounts below disclosable thresholdsmay not be sufficient to escape detection.13.2 The authorities are on the lookoutThe revenue authorities (for example, the US Internal Revenue Service and theCanada Revenue Authority) are empowered under the anti-avoidance provisionsof their taxation laws to demand bank account and credit card files, and completetransaction histories of taxpayers suspected of using money-laundering schemesto evade taxation. While, for example, it is not illegal for individuals to have offshorecredit cards, the use of such cards to evade paying taxes is illegal, andexposes the user to civil and criminal penalties. The US Internal Revenue Servicehas, on several occasions, obtained orders from US courts requiring AmericanExpress, MasterCard, and Visa to provide records on transactions to enablethe identification of the holders of credit cards issuing by banks in tax havens(IRS Offshore Credit Card Program, www.irs.gov).Evidence of money laundering is easier to obtain than may be commonly perceived.The US and Canadian authorities have been able to bring criminal proceedingsagainst investment companies, financial institutions and brokerage houses forparticipation in money-laundering schemes thanks to the contacts that they havewithin the financial sectors of the major offshore jurisdictions. Individuals takingfrequent trips to tax havens in order to shelter assets or recycle cash also leavepaper trails of their travels with the airline companies. On demand, the airlinecompanies will furnish to the US and Canadian authorities the lists of their frequentflyers to those tax havens.The major industrialized countries, members of G7 (as it then was), created theFinancial Action Task Force on Money Laundering (FATF), an intergovernmental315