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Are we living in 1984?

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Are we living in 1984?

How the Automatic Exchange of Information Act is denying human rights to financial privacy

As we see new laws and regulations that are set to destroy financial bastions and banking privacy – and with that the tax havens of the rich and famous, Paul Robbins, Intermediary Relationship Manager, of IntaCapital Swiss, a dynamic Swiss financing house based in Geneva, gives us an insight into his opinion on the new legislation that, with a single blow, will destroy hundreds of years of banking secrecy.

In a rapidly changing world, more and more governments, authorities and lobby groups are placing enormous pressure on their international counter-parties to pass strict laws that are slowly depriving us of our privacy and our rights to financial secrecy. Citing the reasons as being the fight against terrorism, for some reason many groups believe that by taking away our privacy and financial secrecy will expose and deter terrorists.

Little by little laws are being passed that slowly chip and ebb away at our rights to remain private and our rights to keep our financial and banking affairs from being publicly dissected by governments and authorities. Seemingly initiated by the United States, slowly but surely countries around the world are being forced to sign up to international agreements to diminish its citizens and residents’ personal and privacy rights.

Governments and authorities around the world have thrown up little resistance to demands made by their counterparts to sign international treaties and agreements that wipe away their citizens and residents’ rights. Mainly because a huge by-product of the destruction of financial privacy and banking secrecy means that governments can track down and heavily tax offshore investments and wealth that has intelligently been set aside for a rainy day. The fact that thousands of people have held bank accounts in those private financial bastions for hundreds of years does in no way imply they did so to avoid tax or build cash to buy arms and afflict terror. The main and most common purpose of banking in those jurisdictions that supported banking secrecy – and I include Switzerland as one of the strongest – is the fact that those financial citadels can offer the account holder the soundest investment support, the most expert advice and experience and the highest security, far more superior than any of the other financial centres that do not (or did not) support banking privacy.  That is the reason those jurisdictions attracted investors and subsequently over one-third of the worlds wealth in Switzerland alone[i].

It is often portrayed that public opinion of those who support and protect financial privacy are only the rich and super-rich. Less financially fortunate people don’t really care about their financial secrecy and rights to remain private. Well, I disagree. Banking secrecy aids sound investment foundations for both those individuals who wish to build long-term investments for their family and heirs and offers a stronghold platform for corporations laying down long-term investment strategies.

Many actions have also been taken by governments to close (or render unrecognised) those complicated trusts and financial structures that have been accused of attempting to hide wealth from tax exposure. Whilst many of us would agree that we should all pay our way and pay the taxes due, the owners of those hidden fortunes should still have their rights to their banking privacy respected and the rights to pay those taxes anonymously.

Switzerland still keeps intact that banking secrecy and has done so for hundreds of years. However, sadly it has been forced to give up the identities of its non-resident account holders to their home revenue authorities. Swiss residents still enjoy complete banking privacy and Switzerland is still one of the largest offshore wealth centres globally.

The rights to privacy in other parts of our daily life are also under attack – it’s not just the rights to financial privacy. Some years ago, George Orwell gave us a fictional account of what life would be like in 1984. I believe we all recognise the similarities of Orwell’s imagination and the world as it is today.  The argument to take down and ban certain mobile communication apps that use end-to-end encryption (preventing eavesdropping), just screams at volumes that some government agencies want to spy on the content of its users. Again, citing the fight against terrorism as being the reason.

The most recent piece of legislation, the [1]Automatic Exchange of Information Act, originally entered into force in 2015 with the first round of exchanges effected into force in 2017 and has now absorbed some 100 countries with another 8 coming into force in late 2019/2020. A total of 45 countries (labelled ‘developing nations’) have not yet set the date for their first automatic exchanges), including Montenegro.

The most recent round of countries that signed up to the Act in 2018 and that has come into effect as from January 2019 include Switzerland, Singapore, Monaco and the UAE among other infamous financial jurisdictions.

The legislation practically wipes out any banking secrecy that existed in those states. This means that if you are not resident in those states but hold bank accounts or funds therein, the competent financial / tax authority is duty bound to automatically send your information to the tax authorities in your resident state. This move is one that had been initiated some time ago, forced upon most jurisdictions and originated by the United States as a result of their ‘crack down on terror’ after the events of “September 11”, now some 18 years later conveniently morphed into a bona-fide piece of legislation under the guise to crack down on international tax-dodgers.

From our observations, those jurisdictions that have not yet offered a date for their first exchanges of information, i.e. those who are not bound by the Automatic Exchange of Information Act, are enjoying a rapid increase of investment as those who still demand complete banking privacy import their offshore wealth.  One of the largest countries to benefit recently is Montenegro, where the investment climate is strong and where it offers a flat rate of tax at 10% per annum. It offers numerous benefits and incentives to new investors. So, whilst we may see the wealthiest of financial bastions lose some of its investors, smaller states such as Montenegro and the new Republic of Macedonia may bask in the financial sunshine in the foreseeable future.

“The United States has undertaken automatic information exchanges pursuant to FATCA from 2015 and entered into intergovernmental agreements (IGAs) with other jurisdictions to do so. The Model 1A IGAs entered into by the United States acknowledge the need for the United States to achieve equivalent levels of reciprocal automatic information exchange with partner jurisdictions. They also include a political commitment to pursue the adoption of regulations and to advocate and support relevant legislation to achieve such equivalent levels of reciprocal automatic exchange. “ [cited OECD – Global Forum on Transparency and Exchange of Information for Tax Purposes]

[i] https://www.swissinfo.ch/eng/international-money-_switzerland-remains-biggest-offshore-wealth-centre-/44193170

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Using payments to streamline everyday transport

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Using payments to streamline everyday transport 1

By Venceslas Cartier, Global Head of Transportation & Smart Mobility at Ingenico Enterprise Retail

Once upon a time the only way to get from A to B on public transport was with cash – and likely a pre-paid ticket bought from a physical office. Nowadays, thanks to technological developments, options range from contactless and mobile payments, to in-app tickets and more. As payment methods advance, consumers and merchants are naturally moving towards Mobility as a Service (MaaS) systems, integrating various forms of transport services into a single mobility service, accessible on demand.

This move towards MaaS does not only streamline the consumer experience, it has other positive impacts too. Incentivising public transport use reduces environmental pollution, improves mental wellbeing by reducing travel-related stress, and aids productivity by freeing up time otherwise spent driving. With this in mind, let’s take a look at the current trends affecting the transport sector, as well as how payments can optimise transportation for both operators and consumers alike.

Optimising transport with payments

The payment process is integral to any service. A payment service provider (PSP) can provide a range of key benefits to operators by proving a gateway to the transportation open payment ecosystem, and ensuring they meet objectives in 3 key areas.

  1. Environmentally, by reducing the use of personal cars and alleviating pollution and congestion.
  2. Societally, making urban mobility more inclusive in terms of improving access to all areas and for all socioeconomic classes.
  3. Economically, by optimising investment in eco-structure and fostering financial transactions, therefore improving the wealth of the city.

Payments professionals’ expertise and technological solutions can make payments easy again for transport operators. They can provide a range of options so that the customer can choose which one is right for them, leveraging the capabilities of the mobility services’ infrastructure (contactless, mobile wallets, P2P, closed-loop, QR code, and blockchain).

Furthermore, they can help promote inclusion and sustainable urban development. For example, methods such as prepaid virtual cards, or mobility accounts linked to a prepaid account can reduce the risks of excluding the unbanked. The environmental impact per kilometre can also be reduced, along with the use of vehicles with lower emissions per person per kilometre.

Finally, PSPs can put merchants’ minds at ease, providing payment liability, allowing aggregation of all due amounts from all mobility service providers, and collecting payments in one single transaction from users while dispatching revenue between mobility service providers.

Managing coronavirus

Venceslas Cartier

Venceslas Cartier

COVID-19’s disruption to the travel industry cannot be overlooked. In fact, research suggests that public transit ridership is down 70% across the globe since the onset of the virus, longer distance travel has seen reductions of up to 90%, and payment by cash has seen a 60% drop.

Being realistic, these behavioural shifts are unlikely to revert anytime soon, so it’s important for merchants to keep this in mind when thinking about payment methods. More than 70% of consumers and travellers say they are likely to avoid the use of cash over the next six months. As a result, more than 40 countries have already raised their contactless payment threshold, further helping consumers to avoid contact with frequently touched pin pads.

However, the pandemic has only accelerated the way things were heading already and highlighted the benefits. Within the context of the pandemic, transportation needs to reinvent itself and adapt its processes to suit the shift in commuter habits that we’ve already seen and will continue to see in the future.

Other trends to keep an eye on

Contactless has been steadily growing on the transport scene, as have mobile payments and in-app purchases. In fact, the recent move to mobile and online ticketing is the most promising method so far, having seen significant growth in the last few years and having been accelerated by COVID-19 as discussed above. Once consumers move to these easy, convenient, and seamless methods, it’s rare that they revert – so it’s a good idea for operators to think how they can cater to these preferences.

Speed and convenience are a must for busy travellers – but not at the expense of data security. Finding the right payments partner is therefore crucial so operators can safeguard their customers’ personal data, while also keeping on top of other security regulations/features such as P2P encryption, PCI certification, and tokenisation.

Next steps for operators

Public transport is essential for many peoples’ everyday lives – COVID-19 or no COVID-19. As such, mobility service providers can make a great difference to their service and operations by implementing the right solutions.

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Grey skies ahead – Malta prepares for a gloomy 2021 if they can’t tackle financial crime

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Grey skies ahead – Malta prepares for a gloomy 2021 if they can’t tackle financial crime 2

By Dhanum Nursigadoo, ComplyAdvantage

With the summer drawing to a close, many countries who rely significantly on warm weather tourism will be assessing the impact of Covid-19. Being a small island in the middle of the Mediterranean you would expect Malta to be taking a significant economical hit – just like we are seeing in other popular European holiday destinations – but this doesn’t take into account the strength of the Maltese economy.

Emerging from the eurozone crisis with one of the most dynamic economies strategically positioned between three continents, Malta has had one of the lowest unemployment rates in the EU and has recently seen its GDP growth expand year-on-year.  But perhaps the most important aspect of the Maltese economy has been its attraction for foreign businesses with only a 5% tax on profits. It is no secret that Malta is a tax haven, probably one of the most effective tax havens in the world.

But you can’t pick and choose who takes shelter, and it’s no secret that money launderers have been taking advantage of the regulatory landscape in this archipelago.

The conditions of a tax haven suit criminal enterprises, who can take advantage of the opaque environment and blend their illegal activities with the same operations enjoyed by high net worth individuals and corporations who are looking to reduce their tax bill. And last year Malta’s keenness for secrecy and avoidance resulted in a damning report by Moneyval – the Council of Europe’s Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) body – which found that while the nation had made some efforts to curb money laundering there was still much to be desired in order to bring the tax haven up to standard. Overall, they were of the opinion that Malta viewed combating money laundering as a non-priority and this resulted in branding Malta with low to partial ratings for 30 out of the 40 Financial Action Task Force (FATF) recommendations.

The findings of the report were stated to have the potential to “create within the wider public the perception that there may exist a culture of inactivity or impunity”. This follows on from a series of international high-profile stories regarding Malta and financial crime. Most shocking was the murder of journalist Daphne Caruana Galizia – who investigated corruption and money laundering in her native country – and was killed by a car-bomb three years ago leading to international outrage and condemnation.

Now Malta is in a race against time to turn their reputation around or they will suffer genuine consequences. The FATF have threatened to place Malta on a “greylist” of high-risk jurisdictions unless they have shown a genuine commitment to combatting financial crime and implemented the recommendations of the Moneyval report. If they fail, this would make Malta the first EU country to make the list and join others such as Panama, Syria and Zimbabwe.

The pandemic has actually given Malta more time to meet these obligations, and it has been widely reported that an initial summer deadline has now been moved to October due to the widespread disruption.

As we head into the autumn, there are signs that Malta has begun to take action. The Malta Financial Services Authority (MFSA) has created and established an empowered AML now headed up by Anthony Eddington, formerly of the UK’s Financial Conduct Authority and who has previous experience of tackling anti-financial crime at Deutsche Bank. This team has already begun working closely with international experts, specifically partners in the US through the US embassy in Malta and the United States Commodities Futures Trading Commission (CFTC). In May this collaboration led to 25 new cases focused on money laundering in particular, and with plans to increase standard inspections and on-site investigations into businesses in Malta, it appears there is a change to the country’s priorities.

Importantly, the report highlighted a problem for countries that choose to become tax havens. In some cases it was not that the Maltese authorities deliberately turned a blind-eye, but simply that they did not have the necessary knowledge to effectively tackle financial crime in the first place. Law enforcement appeared unable to even recognise when crime was occurring.

But this blurring of financial compliance will not help businesses if Malta does indeed become “greylisted” this year. While not as devastating as being blacklisted (the two occupants of this list are Iran and North Korea) there are significant detrimental effects to being put on the FATF greylist. Although this signals that the country is committed to developing AML/CFT plans (unlike the blacklist) it still sends out a warning signal to the world that this is a high-risk area, with the country in question subject to increased monitoring and potential sanctions from the IMF and the World Bank. Make no mistake, being put on the greylist will be catastrophic for Malta’s economy.

It remains to be seen how the work to avoid such a calamity will affect Malta’s tax haven status. Perhaps with an increased fight against financial crime there will be less ability to defend one of Europe’s most competitive tax regimes. But if Malta does not show they are genuinely committed to tackling this problem, then the pandemic disruption to the island’s tourism may be minor in comparison to the grey clouds that now approach their shores.

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How will the UK prepare a supply chain for the distribution of the Covid-19 vaccines?

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How will the UK prepare a supply chain for the distribution of the Covid-19 vaccines? 3

By Don Marshall, Marketing role at Exporta.

The challenge of mobilising a supply chain for the introduction of a global and nationwide vaccine will be enormously complex. The process will be costly, and it’s likely the figures will stretch to the hundreds of millions for both the production of the vaccine itself and its distribution across the UK. We must prepare and plan a supply chain strategy to ensure it reaches those most in need in a timely and safe manner.

The task of immunising a whole population is something that has never been planned or likely imagined by anyone within a standard supply chain. A supply chain that goes directly from the manufacturer to the end consumer, or user/ patient in this case, is complex and goes beyond the scope of any single logistics company. It would have to be conceived and delivered via a large joint effort and collaboration between multiple organisations. Effectively distributing the vaccine will depend on the source of manufacture, its storage requirements, and protection of the vaccines from manufacture through to patient administration.

The majority of vaccines require storage within a specific temperature range and need to be handled safely and in hygienic conditions. Depending on where the vaccines are manufactured, the transport legs will vary; if they are coming from overseas, air freight will increase cost and complexity. In addition to supplying the vaccine, syringes, needles and containers also need to be taken into account when preparing the supply chain.

Securing the specific types of boxes or containers i.e. the lidded containers normally used for transporting pharmaceutical products will mean acquiring them from all available stockists and manufacturers. Delivery vehicles would then need to be considered, with temperature-control factored in. The medical supply chain can inform their approach to distribution by assessing data from previous supply chains, and how large quantities of vaccines have been sent out in the past. Collating successful vaccine delivery examples from other parts of the world would be advantageous here, the more we can do to prepare for a logistical challenge of this magnitude, the better.

The distribution of this COVID vaccine will be unique in its scale and for that reason, additional supply chains will need to be mobilised. Apart from medical supply chains, those best suited for this type of transportation are the fresh/frozen food industries and supermarkets. I would mobilise these businesses to assist with the vaccine’s distribution wherever possible and use their car parks and facilities for the temporary medical centres needed to administer the vaccine to the public.

Using the food industry and supermarket networks would leave the current pharmaceutical supply chains intact for health services, pharmacies and the NHS. It would protect those vital services and continue to serve communities across the UK. Inevitably, it would place a short term strain on food supply chains, but these are supply chains that are well-equipped and versed in coping with excess demand i.e. the spike endured from the brief spell of public panic buying at the start of the crisis. With adequate resourcing and planning, I believe the UK supply chain can and will handle this challenge.

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