Week 31 - Insights

FATF issues Human Traffic and Financial Flows Report

The recent report from the Financial Action Task Force (FATF) and Asia/Pacific Group on Money Laundering (APG) has been prepared with input from leading financial institutions and associations (Barclays, Standard Chartered, HSBC, Western Union, Ria Financial, the Wolfsberg Group, European and American Bankers’ Alliances and the Meekong Club,) and NGOs (Liberty Asia and Stop the Traffik).

The Report raises awareness about the type of financial information that can identify human trafficking, and highlights potential links between human trafficking and terrorist financing. Financial institutions are identified as being on the front-line of this. Accordingly, they need to incorporate the main findings of the report and to introduce red flag indicators into their compliance procedures to help identify those who are laundering the proceeds of these heinous crimes.

HANSUKE are assisting financial institutions to upgrade their compliance with financial crime legislation and regulations, as well as meeting the specific requirements arising under the Modern Slavery Act 2015.

HMRC press release warns taxpayers of impending RTC deadline

HM Revenue and Customs (HMRC) is urging UK taxpayers to declare any foreign income or profits on offshore assets before 30 September to avoid higher tax penalties. The new legislation, entitled Requirement to Correct (RTC), requires UK taxpayers to notify HMRC about any offshore tax liabilities relating to UK income tax, capital gains tax, or inheritance tax. UK taxpayers may not be aware that renting out a property abroad, transferring income and assets from one country to another, or even renting out a UK property when living abroad could give rise to a tax obligation in the UK.

"Since 2010 we have secured over ￡2.8bn for our vital public services by tackling offshore tax evaders, and we will continue to relentlessly crack down on those not playing by the rules," - Mel Stride MP, Financial Secretary to the Treasury

Failure to correct on or before 30 September 2018, attracts tough financial penalties. The standard penalty is 200% of the tax liability. This penalty can be reduced through voluntary disclosure, co-operation, and through the quality of disclosure to HMRC. In serious cases, where the tax exceeds ￡25,000, additional penalty of up to 10% of the value of the assets will apply. Further, where assets are moved abroad to avoid having details reported to HMRC under FATCA or CRS, enhanced penalties under Schedule 21 to Finance Act 2015 shall apply. From 1 October more than 100 countries, including the UK, will be able to exchange data on financial accounts under CRS. CRS data will significantly enhance HMRC’s ability to detect offshore non-compliance.

Banks need to ensure that they have not acted as enablers of tax evasion or non-compliance. There are separate set of penalties for enablers. Chris Orchard, Head of Tax Investigations & Disputes at Hansuke, formerly of HMRC, is currently assisting financial institutions to prepare. 

FRC issues Revised Guidance on the Strategic Report

The Financial Reporting Council (FRC) has published revised Guidance on the Strategic Report (the “Guidance”), which encourages companies to consider wider stakeholders and broader matters that impact performance over the longer term. The Guidance has been upgraded to incorporate the increasing importance of non-financial reporting information into the organisation’s strategic report. 

The revised guidance places a greater focus on the directors’ duty to promote the success of the company under section 172 of the Companies Act 2006. This is complemented by new legislation that introduces a specific reporting requirement on how directors have had regard to broader matters when performing their duty, including considering the interests of employees, suppliers, customers and other stakeholders as well as impacts on the community and environment. The new legislation is applicable to large companies for financial years beginning on or after 1 January 2019.  

Swanney’s illustrious 15 year tenure as JMLSG Board Secretary comes to end

David Swanney has been instrumental in driving forward the agenda at Joint Money Laundering Steering Group (JMSLG). Swanney was thanked “for his invaluable contribution and dedication to the JMLSG over the past 15 years”. JMSLG stated that, David is held in “high regard across the financial services industry, both within the UK and internationally”. JMSLG announced that Carol Smit is to succeed David as the new Company Secretary and Draftsman, with effect from 1 August 2018.