Mossack Fonseca slapped with heaviest fine ever by FSC
The fine relates specifically to failures in record keeping, risk assessment and adequate updating of customer due diligence.
The announcement follows an in-depth investigation into Mossack Fonseca & Co (B.V.I) Ltd, following the publication of the Panama Papers in April 2016.
Politicians, business people and celebrities used companies in the VI and elsewhere to disguise transactions and stash wealth, sometimes for illegal purposes, news reports based on the leaked files had alleged. The United Kingdom, Australia and France are among the countries investigating the allegations.
According to the FSC, a thorough six month on-site compliance inspection focused on reviewing specific aspects of the company’s anti-money laundering and risk management procedures; as well as the appointment of a qualified person approved by the FSC to advise on Mossack Fonseca & Co (VI) Ltd’s business affairs and to provide recommendations on the corrective actions required to bring the licencee into full compliance.
VI serious about tackling any breaches
It was on April 8, 2016 that Premier and Minister of Finance Dr The Hon D. Orlando Smith had announced that the Financial Services Commission (FSC) had commenced an investigation into the Panama Papers leak and the allegations being levelled against the Virgin Islands with regard to "dirty money" and tax evasion.
Speaking at a press conference held in the Central Administration Complex the Premier, accompanied by Financial Secretary Neil M. Smith and Permanent Secretary in the Office of the Premier Broderick Penn, had explained that the territory was being measured in its response and was treating the issue very seriously.
The Premier had insisted that the Virgin Islands is among the most rigorously regulated jurisdictions when it comes to financial services.
In a press release today, November 15, 2016, Premier Smith said the enforcement action “clearly demonstrates the effectiveness of the Territory’s independent regulator, the seriousness with which it tackles any breaches of its code and, through the adjustments made to its Risk Assessment Framework, an on-going commitment to strengthening its regime to ensure this remains fit for purpose.”
Premier Smith added, “Achieving this outcome in the face of intense international scrutiny is testament to the FSC’s conviction, dedication and willingness to conduct such a thorough investigation whilst holding to account those who fail to comply with the territory’s structure and regulations. Throughout this time, the FSC has co-operated fully with any requests from other international law enforcement agencies who are conducting their own independent investigations and it will continue to do so as this befits its position as regulator of a leading finance centre."
He further said, “The BVI remains an engaged participant in the international community and is fully involved in initiatives aimed at creating a global tax and regulatory framework that can be implemented consistently to create a level playing field upon which all countries can fairly compete.”
According to the press release, in addition to the enforcement action taken against Mossack Fonseca & Co (VI) Ltd, the FSC has also made adjustments to its Risk Assessment Framework aimed at more consistently detecting potential concerns to reduce the risk of non-compliance whilst also devoting additional resources to assessing the full compliance of all BVI licenced corporate service providers.
FS taking a hit
According to a publication in the Wall Street Journal today, the VI is at risk of losing business to other offshore financial centers.
“Companies and rich families in Asia, accounting for around 70% of BVI’s incorporations each year, are among those pulling back from the British territory, according to people working in the offshore financial industry.”
It further said data from the FSC shows the number of new VI companies fell 40% between April and June from the same three months last year, accelerating a decline in the past few years as the global economy cooled.
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20 Responses to “Mossack Fonseca slapped with heaviest fine ever by FSC”
They appear to disappear into the black hole.
personal privacy - to be shoved down their throat. what are people thinking? FSC should go after financial
entities who demand TOO MUCH personal info and invade privacy, not penalize respect for privacy. BVI is
backwards country.