During the course of an operation against foreign criminal organizations involved in money laundering, eleven people were arrested by the police of Spain in Barcelona. These people, mostly Russians and Ukrainians, allegedly channeled money from the British Virgin Islands and Cyprus, through a network of offshore companies, and purchased real estate in Spain. Through this scheme, the arrested group laundered about 10 million Euros.
There was a similar operation held on June 28 when eight people were arrested, and police seized property worth about 62 million Euros.
Close relative of ex-Punjab chief minister was asked to appear before the Enforcement Directorate and bring personal financial documents, in connection with probe against him for alleged forex contraventions and failure to pay taxes for foreign assets. He should explain the alleged movement of funds to Switzerland, and creating a trust and subsidiary companies in the British Virgin Islands.
Previously, this case had been investigated by the Income Tax Department, and there was a court hearing in Punjab. The next hearing of the case will take place on July 26. The case was initiated when the Income Tax Department got information about him allegedly holding offshore account in Switzerland. An investigation was started, gathering necessary documents from a competent court in Punjab and RBI, suspecting “contravention of the Foreign Exchange Management Act (FEMA)”.
An Advisory Warning published by the BVI FSC on 6 July, 2016, informs the public of the entity known as FXGlory Ltd., which has been offering online investment products and trading in other forex related products and services, and presenting itself as being incorporated and regulated in the British Virgin Islands. The company offers its services through the website www.fxglory.com, where it is falsely claimed to be located in the BVI.
However, the Financial Services Commission confirms that FXGlory Ltd. has never been incorporated as a business company in the British Virgin Islands, as well as has never been licensed to provide financial services in or from the jurisdiction. It is advised that members of the public should be extremely cautious if conducting any business with FXGlory Ltd.
Former special investigator at the Export-Import Bank of the US, Brian McCormick, and former official at the NY department of justice working with cases involving illegal assets, Sharon Levin, told about the illegal activities involving former Taiwan President Chen Shui-bian. They revealed the actions of Chen and his son in buying luxury property in Manhattan through an offshore shell company. The case became known in 2009, and the luxury property was seized by the US Department of Justice in November 2012, on the allegations that it was purchased with money received through bribery, and later auctioned for US$1.5mln.
According to McCormick, the apartment was purchased by Pegasus Virginia LLC, owned by West 28th Street LLC, the company managed by another company incorporated in the British Virgin Islands. In its turn, the BVI company was owned by a trust fund based in St Kitts and Nevis. The document issued by the trust fund was signed by former Taiwan president’s son. The funds to buy the apartment were transferred through Taiwan, the US, the British Virgin Islands, Hong Kong and Switzerland.
BVI-incorporated company Sable Mining was indicted on bribery, along with Liberia government officials. The grand jury of the country accused the defendants, among which there is the AIM-listed BVI company, of bribery among other crimes, having alleged them of conspiring to use their positions to amend Liberia’s public procurement and concessions law. The President ordered an inquiry into Sable’s acquisition of an iron ore concession in northern Liberia.
The defendants were alleged of changing the law to give the power to the Minister of Lands, Mines and Energy to declare a concession area as a non-bidding area. It was not said what kind of benefits the BVI company could get from the change of the law, however the watchdog Global Witness claimed that the amendment allowed the company to win the concession without a tender. Sable Mining did not give any comments on the allegations, covering a period including 2010 and 2011.
According to the journalist investigations, the BVI’s bearer share laws allowing to omit the names of beneficial owners were used as the British Virgin Islands became the main jurisdiction for corporate formation by the law firm Mossack and Fonseca.
When the firm started, the companies were formed more often in Panama, but gradually BVI was chosen as the primary jurisdiction, with Panama retaining just small percentage of companies incorporated. Already in 2004, Mossack and Fonseca were registering over 6,000 companies annually in the BVI, and this preference was until 2015. Many BVI companies incorporated by the Panamanian law firm intentionally held bank accounts in other jurisdictions, thus making it extremely difficult or even impossible to identify their owners, corporate officers and directors.
The information about more than 100,000 secret firms registered in the British Virgin Islands, leaked from the Panamanian company Mossack Fonseca, which has local office, has a great impact on the jurisdiction. According to the Bloomberg agency, BVI is now under increased scrutiny as it was involved more than any other country (including Cayman Islands which has distanced itself from the countries mentioned in the confidential data).
UK Prime Minister David Cameron is urged to take action in relation to the British Virgin Islands, and it is even suggested that he should take “direct rule” of the overseas territories that do not comply with UK tax law. According to Bloomberg’s agency, “The revelation that more than half of the companies exposed by the Panama Papers was registered in the British Virgin Islands has put a spotlight on the UK’s awkward and ambiguous relationship with its overseas territory.”
In its turn, the BVI government issued a press release where expressed confidence in its regulatory structures, and promised a “thorough investigation” into their alleged misuse or abuse.
BVI-based company Aman Resorts Group Ltd, which previously agreed to be put into bankruptcy protection in the United States, then filed a lawsuit in NY bankruptcy court against Russian real estate developer Vladislav Doronin accusing him of gutting its asset, the holding company owning Aman Resorts, through a wrong foreclosure action. The lawsuit against two firms controlled by Russian entrepreneur seeks to “rescind the purported sale”, and return to the BVI group any assets from the hotel operations during the period after the deal. According to the filed lawsuit, Doronin’s company Pontwelly Holding Co improperly foreclosed on the holding company Silverlink Resorts Ltd., and then transferred its interest in Silverlink to Doronin’s A H Overseas. As a result, according to the lawsuit, Aman Resorts, created for purchasing Silverlink, was left with $US70mln in creditor obligations.
American businessman Omar Amanat and Doronin had been co-investors in the resorts, and formed a joint venture in 2014. The resorts were controlled through a number of companies. According to Doronin’s side, the long-standing dispute over the hotels ownership was settled on March 7 in the UK court.
According to investigation newly carried by advocacy group Global Witness, British Overseas Territories, including BVI, can play an important role in facilitating movement of suspect funds into the United States.
With a hidden camera, investigators met with 13 NY law firms, representing themselves as advisors to a foreign government official, and asking how to anonymously move large amounts of money that could have raised suspicions of corruption. In many cases, the lawyers provided suggestions on how to use companies or trusts from the overseas territories to move the money.
With exception of Montserrat and Gibraltar, company ownership in the other overseas territories still remains secret. The UK and EU are now on their way to provide public access to registers of company owners, which would make it easier to identify the actual person standing behind the company.
According to the article from Bloomberg Businessweek, by Jesse Drucker, the US is becoming the “leading tax and secrecy haven for rich foreigners”, as it remained one of a few countries not to have signed on to an international standards preventing wealthy individuals from tax evasion. So, they move their bank accounts from traditional offshore jurisdictions like the British Virgin Islands, Bahamas, and others, to U.S. states of Nevada, South Dakota, and Wyoming.
For example, the trust company in Nevada, by financial services firm Rothschild & Co. Scott Cripps, informed Bloomberg that its wealthy customers were moving money out of traditional offshore tax havens into such jurisdictions as Nevada.