
Money laundering in the UK - akeck
https://www.theguardian.com/world/2019/jul/05/how-britain-can-help-you-get-away-with-stealing-millions-a-five-step-guide
======
cletus
An article about international money laundering that doesn't mention real
estate. Weird. Because real estate in the developed has been, is and will
continue to be a prime vehicle for money laundering by kleptocrats.

Fun fact: all US tax residents, lawful permanent residents and citizens need
to declare all foreign assets to the US government every year if they're over
some pretty low thresholds. You may have to do this not once but twice if
you're over slightly higher thresholds. One is or was known as FBAR and is a
disclosure you need to make to the Department of the Treasury (specifically
FinCEN). The other is Form 8938 and is part of your tax return (so to the
IRS).

Both require you to list all assets you own, co-own or otherwise have
signatory authority over... except for real estate. If you earn money from
real estate (eg by renting it out) then that needs to be declared (and
possibly taxed) but the ownership of the property itself does not. Why? Who
lobbied for that exception?

~~~
dfraser992
BuzzFeed had a series of articles about a number of suspicious deaths of
Russian expats who had fallen out with Putin or otherwise were persona non
grata. Apparently the Home Office / upper echelons of the police were dragging
their heels in investigating them - the general conspiracy theory is no one in
the UK government really wants the flow of money from Russian oligarchs that
is propping up the London property market to dry up. Tie that with May's
speech sometime ago (little reported on) that the UK needs to be "better
friends" with Russia (and this was _after_ Salisbury)...

With this and Brexit and everything else, I really want out of this country.
But then I'd have to move back to the US.

As for the FBAR, it is annoying, but at least only tedious and not onerous. I
will never have enough money to really justify having to fill out these forms
- and the people who really ought to are the ones with enough to hire the
specialists to hide it from the US government.

~~~
kingosticks
The FBAR limit is pretty low, around $10k isn't it? Once over that limit, are
you really saying you could skip filing it on the basis of not having much
money? The FACTA limit is much higher, most people wouldn't need to do that
one.

~~~
dfraser992
It is low - my initial take was this law was written in the 1970s when US
expats were rare and only the really wealthy lived overseas. I was thinking of
the people I've read about who had 100k etc stashed in Swiss bank accounts and
the like. The problem is the potential fines if you get caught not filling out
the forms - I forget the exact numbers, but it's like 50% of the balance (or
all your assets?) and a fixed fine ... It is pretty much an attempt to
borderline bankrupt you.

In reality, however, enforcement is lax - the IRS is getting decimated thanks
to Trump and co. and so going after the small fry is not cost effective. High
profile cases, e.g. Boris Johnson who has American citizenship, are just as
much for PR purposes as enforcing the law. The IRS went after him because he
was selling his house, something like that, and so it was profitable to get
him for avoiding US tax law.

~~~
a_humean
I'm no fan of Johnson, but he did absolutely nothing wrong in that case, and
his personal connection to the US was very weak. He renounced his citizenship
shortly after that episode as are record numbers of very ordinary (income
wise) Americans abroad since FACTA was introduced.

The IRS makes overseas compliance for ordinary and accidental (just happening
to be born on US soil, but otherwise no connection) American citizens very
difficult and opaque, and the penalties are extraordinarily disproportionate
when most of the time they usually owe absolutely nothing to US tax
authorities other than paperwork.

It also makes access to financial products for American citizens and ex-
citizens abroad difficult because local banks don't want to risk dealing with
the millions on non-compliant citizens because they also face very high
penalties for providing services to non-compliant citizens.

Essentially no other country taxes on the basis of citizenship instead of
residency, and they are making a pig's ear of it.

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tompccs
This is interesting, but as someone who has formed a UK limited company (and
yes, it is as easy as the article claims), they've missed that the tricky part
is getting a bank account. The onus is on the banks to carry out checks under
"Know your Client", not Companies House. Registering a company in the UK
doesn't really get you anything, other than a thin veneer of authenticity
among people who don't understand how easy it is.

Not saying it's not a problem, but they should have looked into how easy it is
to get banking for these "novelty" businesses.

~~~
fyfy18
All you need is proof of address (a utility bill). The article hints at it,
but identity theft is rather easy in the UK.

A few years ago someone went to a Vodafone store, opened a contract and walked
out with a new iPhone in my name. I'm not exactly sure what they used to do
that, but shortly after I found bank accounts and other phone contracts in my
name, so I assume they used the Vodafone contract as proof of address.

~~~
reallydontask
> All you need is proof of address (a utility bill).

Don't you also need passport/id card? I suppose they have to accept a birth
certificate too, so maybe that's the easiest thing to fake

~~~
bencollier49
You don't need to fake a birth certificate, you just need to 'request a
replacement' in the name you're using. I believe this was a big issue a few
years ago, people requesting birth certificates for people who had died young,
then leveraging those to get passports etc.

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mark212
What this guide leaves out is the most important part: getting a bank account.
I can’t speak to the process in the U.K. but in the United States the “know
your customer” rules are quite strict and accounts for businesses are doubly
so. Just having a set of incorporation papers won’t work and it can’t be done
online (in my experience).

Having a duly registered company with fake directors gets you nowhere without
a bank account.

~~~
dfraser992
I suppose things have changed a bit since I moved to the UK, but in my
experience, the US is infinitely better than than the UK is terms of banking.
It was quite easy to open up a business bank account in the US - took one day.
Here, it is still hell to open up an initial personal bank account - passport,
the residence permits, the proof of address... A few weeks at least. Once you
are in the system, it does get a bit easier, but the UK system is still tied
to the concept of you're associated with a specific branch at a specific
location - it is like the 1950s in some ways. Larger banks are sort of more
efficient, but it is not the US at all.

~~~
ChrisSD
As a UK citizen, that last part doesn't seem true for my personal banking.
Once you have an account it's very easy to open others at different banks.

Just recently I opened a secondary account with an app only bank. Other
finance apps can simply use the API to help you keep track of your own
spending, etc.

Of course immigrants may have additional hurdles with banking in the UK, I
don't know.

~~~
dfraser992
This was 12 years ago, so things have changed, but man... when I first got
here, landlords were wanting 6 months of rent upfront. The system was
obviously designed (or it just came out that way) to make it hard for
immigrants to initially establish themselves. These days, it is going to get a
lot worse once Brexit happens.

Perhaps you misunderstood me or I wasn't clear - when I first got here, I
tried to deposit a check into my account using another branch / office than
the one I where I opened my account. I couldn't. It is not a matter of opening
another account with _another_ bank. From the little I know of the banking
system, things are or were not then, as wholly integrated as they were in the
States. OTOH, the US is only now catching up to the rest of the world w/ Chip
and PIN debt/credit cards....

~~~
polymatter
The UK system is also highly dependent on utility bills as a proof of address
if you are an immigrant.

~~~
foldr
I've always been mystified by the idea that's taken hold in the UK that a
utility bill is some kind of ID. As far as I can see, a modern utility bill
could trivially be faked on a regular printer. (I assume that utility
companies can't verify bills without violating data protection laws.)

~~~
sokoloff
It does elevate “oh, I made a mistake” to concrete fraud/forgery if there’s
reason to go back and look into it.

~~~
foldr
I've always wondered if it would actually constitute fraud if you made a fake
utility bill with your real address on it.

~~~
sokoloff
If you submitted that for reimbursement purposes, I'm sure it would.

If you submitted it for proof of address purposes and you have service from
that utility in your name but with different consumption values, I would think
it would not.

If you submitted it for proof of address purposes and you do not have service
from that utility in your name, I would think it would be.

~~~
foldr
Yes, I mean in the proof of address case. It seems doubtful that providing a
fake document with your real address could constitute fraud, if the document
was being used solely to verify your address. But perhaps there is some other
criminal offense of forgery or some such that is still applicable.

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mnm1
Is it intentional? Of course it's intentional. This is how they bring in
massive amounts of money. No doubt some of it ends up in politicians' coffers,
directly or indirectly. Seeing the consequences of the change in law to allow
this is trivial especially with the guy who kept trying to demonstrate it to
the government. How ironic when the government is the one who intentionally
initiated this. No wonder they charged only the whistleblower with filling
false information. It's not stupidity, it's malice. As it typically is with
humans, despite the obviously incorrect perception to the contrary that some
are fooled by.

------
CryptoPunk
1\. Transaction reporting requirements are a blatant violation of privacy.
Stopping crime is not a sufficient justification for warrantless mass
surveillance of private interactions.

2\. If money is dirty, you should be able to prove a crime was committed to
procure that money. If you can't, then the allegation is mere suspicion, and
we've entered the territory of "guilty until proven innocent" civil
forfeiture.

~~~
bjackman
I don't agree with your first point, but it sounds like the basis for a
coherent argument.

However I think your second point is arguing against a statement the article
doesn't make at all. The article is really arguing about making it possible to
prove guilt, not just seizing everyone's assets and then checking if they're
dirty!

~~~
CryptoPunk
>>The article is really arguing about making it possible to prove guilt

That's not how free societies work. The state must find evidence of a crime
and then use that evidence to prove the crime occurred. It cannot require
everyone to document their activity, and pass it off to authorities, under
pain of imprisonment, so that authorities are given evidence of crimes as they
occur.

The idea that anything not vetted by the state should be suspected of being
"dirty", and shunned, is a dangerous ideological framework that favors tyranny
and extreme centralization of power.

------
rajeshp1986
This is well known that UK laws protect people who commit financial crimes in
other countries. UK is the destination for all corrupt Indian politicians and
businessmen who committed financial crimes.

[0] - [https://qz.com/india/1301746/nirav-modi-to-vijay-mallya-
high...](https://qz.com/india/1301746/nirav-modi-to-vijay-mallya-high-profile-
indian-fugitives-whove-fled-to-the-uk/)

------
cascom
At the end of the day people need to reconcile the fact that there is a
tension between financial privacy and transparency for the sake of fighting
crime. Additionally, there is the fact that the implementation of policy is
typically a messy affair, and the added complexity that the state may not be
the “good guy” (take civil abuses of civil forfeiture in the US as an example)
makes the whole topic one that where clear lines are hard to draw.

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zxcvbn4038
Despite the clickbait title of the article, this isn’t complete information.
Plenty of locales will be happy to take your money and register your company -
named, numbered, owned by Larry, Moe, and Curly no problem.

However banks still have their “know your customer” requirements, and
generally need to understand and verify the ultimate owner of an entity. That
is where the checks are. Just registering a company doesn’t give you access to
a bank account. Where companies like HSBC get in trouble is they do the
verification incorrectly, wink, and don’t discover the error until someone
points it out to them.

Money coming in and out of traditional tax havens gets a lot of scrutiny. As
someone mentioned earlier most current money laundering schemes involve real
estate or buying profitable businesses. I’ve read the mexican drug cartels
will buy winning lottery tickets from people (at full value!) because it
allows them to justify their income.

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coldtea
> _Among the characters who have used British shell companies to hide their
> money are Paul Manafort, disgraced former chairman of Donald Trump’s
> election campaign, and Viktor Yanukovich, overthrown president of Ukraine,
> among thousands of lower-profile opportunists._

Including tons of other establishment figures, global leaders, kleptocrats,
and business moguls, but of course only those in the eye of the British
"national interests" or out of grace with the establishment on both sides of
the pond, like Manafort and Yanukovich are mentioned in the BBC...

------
stefek99
Disappointed. I was hoping to learn something useful, instead "you can open a
company without an ID" \- anyone can do it. But what about making money?

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yboris
Obligatory mention for the US: Delaware, the scumbag state - allowing tax
avoidance.

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onetimemanytime
OK, so you put the dirty $$ in the banking system. Then what? This can work in
Russia and alike places but at least in USA you would have to declare it and
answer soon or later how you got it. The former Economy Minister having $1.7
Billion in his account might ring a bell or two.

Having it there and not being able to use is...useless.

~~~
Nomentatus
The usual trick is to then have your corporation (pile of illegal cash) loan
"you" money - that was Manafort's way, for example. No tax owed on a loan,
it's not income.

~~~
C1sc0cat
HMRC are onto that one and are suing a lot of people over those scheames.

~~~
tomatocracy
It's more controversial than that. The government effectively passed a
retrospective tax on this arrangement, called the 'loan charge' because they
thought it should have been against the rules but it turned out in many
instances it actually wasn't.

