Beneficial Ownership and Legal Responsibility: Concealment, Avoidance and Impunity

Cover
Half Title
Series
Title
Copyright
Dedication
Contents
Preface
1 Introduction: the demand for concealment, avoidance, and impunity
	Introduction
	What motivates the demand?
		Criminality
			Corruption and financial crime
			Money laundering
				The Russian Federation
			Illicit funds flow
				Luxembourg
				The People’s Republic of China
			Tax avoidance and tax evasion
		Civil liability
			Creditors
			Families: dependants, heirs, pre-nups, and divorce
		Kleptocracy
			The United States of America
	Reflections
2 What is meant by “ownership”?
	Introduction
	The philosophy: Kelsen and Wittgenstein
	“Ownership” and “beneficial ownership”
	The common law and equity: legal and equitable title
	Ownership in civil law: usufruct, fiducie, and Treuhand
		Usufruct
		Fiducie and Treuhand
	Ownership in Islam
	Charity
	The structures
		Generic corporations
			Piercing the corporate veil
			Tax haven corporations
			Nominee directors, nominee shareholders
			De facto ownership
		Generic trusts
			The Hague Convention
			The Hague Convention – offshore counter-initiatives
			Trustees
			Beneficiaries
			Offshore trusts
		The wakf
		Foundations
	Reflections
	Appendix: foundation jurisdictions
3 Privacy, confidentiality, and corporate governance
	Introduction
	Privacy
		The meaning of “privacy”
		General Data Protection Regulation (GDPR)
		Privacy and human rights
			The human rights of corporations
			Piercing the corporate veil
	Principles of commercial confidentiality
		Common law approach: English and American
		European Union: Directive (EU) 2016/943 – trade secrets
	Principles of corporate governance
		The United Nations Global Compact (2000) and the United Nations Convention Against Corruption (2004)
		The United Nations Guiding Principles on Business and Human Rights 2011
		G20/OECD Principles of Corporate Governance 2015
		ICGN Global Governance Principles 2021 and ICGN Global Stewardship Principles 2020
		Guiding Principles issued by the Islamic Financial Services Board: corporate governance
		The UK Corporate Governance Code (July 2018)
		An American perspective: Business Roundtable Principles of Corporate Governance 2016
	Reflections
4 Disclosure and registration initiatives
	Part 1: introduction
	Part 2: fundamental transparency strategies
		The World Bank’s StAR Initiative
		G20
			G20 Summits: Brisbane November 2014, Washington DC April 2016, Hangzhou September 2016, Hamburg July 2017, Buenos Aires 2018, Osaka 2019, Rome 2021, Bali 2022
			The 2014 G20 High-Level Principles on Beneficial Ownership Transparency
		Financial Action Task Force
			FATF’s origin and mandate
			FATF 40 Recommendations (2012, amended February 2023)
			Beneficial ownership
				The superseded Guidance on Transparency and Beneficial Ownership (October 2014)
				Beneficial ownership concealed
				Ownership vs control
				FATF and the Egmont Group (July 2018): concealment of beneficial ownership
				Best practices on beneficial ownership for legal persons (October 2019)
				Guidance on beneficial ownership of legal persons (March 2023)
	Part 3: the Organisation for Economic Co-operation and Development (OECD)
		OECD’s origins and mission
		OECD and multinational enterprises
			OECD Due Diligence Guidance for Responsible Business Conduct (2018)
		OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (“Anti-Bribery Convention”)
		OECD and supply chains
		OECD and tax evasion: information exchange
			Exchange of information on request
				A Beneficial Ownership Implementation Toolkit (2019) and Building Effective Beneficial Ownership Frameworks. A joint Global Forum and IDB Toolkit (2021)
			Automatic information exchange: OECD Common Reporting Standard 2014
				The CRS and trusts – a problematic area
				OECD’s Crypto-Asset Reporting Framework (CARF)  and Amendments to the Common Reporting Standard
				How effective is the CRS AEOI regime?
			Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (2016) (BEPS)
			BEPS Project Action 12 – the disclosure of CRS avoidance arrangements and offshore structures
			BEPS: tax challenges arising from digitalisation and the two-pillar solution
	Part 4: United States of America
		“A leading tax and secrecy haven for rich foreigners”?
		An evolutionary process: 9/11 onwards
			Patriot Act 2001
			Foreign Account Tax Compliance Act 2010 (FATCA)
			Final Rule on Customer Due Diligence Requirements for Financial Institutions, under the Bank Secrecy Act (FinCEN, May 2016)
			Financial Action Task Force Mutual Evaluation Report on the United States (December 2016)
			OECD Global Forum on Transparency and Exchange of Information for Tax Purposes Peer Review Report on the Exchange of Information on Request (Second Round) on the United States (July 2018)
			Geographic Targeting Orders (GTOs) 2016
			Corporate Transparency Act 2021
			“Enablers” – a stalled initiative?
	Part 5: European Union
		Fifth Anti-Money-Laundering Directive (5AMLD)
		Impact of 5AMLD on the Crown Dependencies and the British Overseas Territories
		November 2022 – an unexpected and seismic shift away from disclosure
		Reaction of the United Kingdom
		Consequences for the United Kingdom’s Crown Dependencies and British Overseas Territories
		“Unshell” – rules to prevent the misuse of shell companies for tax purposes: ATAD 3
	Part 6: The Council of Europe MONEYVAL
	Part 7: United Kingdom
		Registration shortcomings at the UK’s Companies House
		Economic Crime (Transparency and Enforcement) Act 2022
		Unexplained Wealth Orders
		Economic Crime and Corporate Transparency Act 2023
	Part 8: Reflections
5 Chimeric structures: concealment, avoidance, and impunity
	Introduction
	Adaptation of principles and structures: tools of abuse
	Chimeric structures
		Trusts
			United States Dynastic Trusts
			BVI VISTA Trust
			Cayman STAR Trust
			Cook Islands International Relationship Property Trust
				Purpose and “relationship”
				Who benefits?
				Registration
				Family businesses
				Limitations on the powers of the trustees
				Foreign courts
				Capacity and “forced heirship”
				Duration
				Disclosure and publication
				Governing law
				Taxation
			Isle of Man trusts
				Trusts Act 1995
				Recognition
				Forced heirship
			Non-charitable purpose trusts
				How classic trusts and non-charitable purpose trusts compare
				The practical effect of holding assets in a non-charitable purpose trust
				Are they truly trusts? Uncertainty and the Hague Convention
				Transparency concerns – no-man’s land?
				Technical analysis of the Isle of Man Purpose Trusts Act 1996
		Foundations
			Cayman Islands Foundation Companies
			Liechtenstein private-benefit foundation
			Nevis Multiform Foundation
			New Hampshire Foundation
			Panama Private Foundation
		BVI business companies
			Capacity, powers, and immunity
			Types of company
			Types of shares
			Bearer shares
			Registered agent
			Charges and company accounts
		Variable-Interest Entity (VIE) – the People’s Republic of China and the Cayman Islands
		Bahamas Executive Entities
		Liechtenstein Anstalt
		Isle of Man life assurance policies
			Overview
			Insurable interest
			Isle of Man – 230 years later
			Insurance and tax planning: overview
			Insurance policies structured as trusts
			Applications
			Advantages for the client
			“Janitors insurance”
	Reflections
	Appendix: correlation of chimeric structures and tools of abuse
6 Crypto-assets
	Introduction
	Terminology
		Blockchain
		Crypto-assets
		Cryptocurrency
		Non-fungible tokens (NFTs)
		Smart contracts
		Virtual asset and virtual asset service providers (VASPs)
	Cryptocurrency and crypto-assets
		Cryptocurrency from an ownership perspective
		Initial Coin Offerings
		Cryptocurrency: due diligence and regulation
			European Union: Fifth Anti-Money-Laundering Directive (Directive EU 2018/843 30 May 2018)
			European Union – Markets in Crypto-assets Regulation (MiCA) (Regulation (EU) 2023/1114 31 May 2023)
			Financial Action Task Force
	Blockchain
		The smart contracts fallacy
		United States of America: Delaware – blockchain maintenance of corporate records
		United States of America: Wyoming – Decentralised Autonomous Organisations (DAOs)
		Non-fungible tokens
			Terminology and tokenisation
			NFTs as personal property
		Provable ownership
			Extinction/creation vs persistent thing – and unintended consequences
			Are NFTs subject to regulation?
	Reflections
7 Final reflections
Index