Secret offshore bank accounts – Gurdial Singh Nijar

Source: The Sun Daily

(Deputy President, HAKAM)

THE rich, the famous, the infamous, the corrupt, politicians, their relatives – a motley crowd indeed. One thing in common: secret offshore bank accounts. Via a Panama law firm – labelled as “a huge money launderer” in January by the prosecutor investigating the sweeping corruption in Brazil.

Now why would anyone want to take the trouble of engaging the services of this law firm – probably at huge cost? Why indeed! Perhaps to avoid the prying taxman, or the zealous regulatory authorities like central banks, anti-corruption agencies, and such like?

The Panama Papers leak has shattered to smithereens the bullet-proof secrecy guarantee given by the Panamian law firm – Mossack Fonseca. The historically biggest ever leak of documents caused the immediate resignation of Iceland’s prime minister – who held such an account together with his wife.

Front-paged are faces of celebrities: footballer Messi, Bollywood’s evergreen Amitabh Bachan. Even our very own are featured: the son of a high politician. He has naturally denied any wrongdoing – supported by a rich chorus of the usual. He opened an account for a short period and then closed it. No business done. No wrongdoing imputed. Other sons and relatives feature prominently, like the son of Ghana’s former president.

Even before this expose, several governments had raised concerns that off-shore secret accounts were robbing countries of the badly-needed tax income. As long ago as 2011, US Democratic presidential contender Bernie Sands raised concerns of wealthy citizens and large corporations stashing cash in offshore accounts.

Apparently there are countless firms dedicated to a worldwide industry that harbours trillions of dollars. Reportedly, it may deprive nations of as much as US$200 billion in tax revenues each year, tax and legal experts say.

It’s not just the tax haven angle. It also includes criminals hiding wrongdoings. Offshore accounts have multiplied during the past several decades, used increasingly to launder money, evade taxes or finance terrorism. Those seeking to break the law thus enjoy the same secrecy as accounts used for legitimate purposes.

Which brings me to the gist of this article. We have our own Anti-Money Laundering and Anti-Terrorism Financing and Proceeds of Unlawful Activities Act (AMLATFA). It has been amended twice to give it more bite and extends to cover proceeds of unlawful activities. The Act defines “money laundering” very broadly.

It is laundering (making “bad” money clean) if anybody disguises or transfers or brings into Malaysia proceeds of any unlawful activity; or conceals or disguises the true nature or origin of such proceeds. (More activities are criminalised – but I am simplifying these to give you the flavour of the kind of situations covered.) The involvement can be direct or indirect.

The key phrase is: “proceeds of any unlawful activity”. It is defined to cover any property derived or obtained – directly or indirectly – by any person as a result of the unlawful activity. So, for example, if the monies or properties can be traced eventually to an unlawful activity, including hiding money in offshore accounts to avoid paying taxes – it is a crime. Unlawful activity means any serious offence and the Act lists some 290 such offences under more than 40 laws.

What is little known is that it’s not only the white and blue-collar crimes that are caught by the Act. The Act can be used against those who deal with money connected with offences such as: failure to submit income tax returns, operating an unregistered timber business, carrying on a money-changing, money-lending or pawn-broking business without licence; or giving false trade descriptions.

There often is a connect between money laundering and such apparently minor offences. Money from questionable sources is hidden and not reported to the tax authorities, for example.

Extensive powers are given to investigate and recover proceeds of unlawful activities. When money, for example, is routed through convoluted processes involving offshore accounts in havens such as Cayman Island and the like – it raises alarms. Such proceeds can be frozen, seized and forfeited.

The authorities have indeed acted against the obvious criminals involved in drugs, kidnapping, trafficking in persons and smuggling of migrants.

The Panama Papers leak should now kick-start prompt action against a wider range of the rich and powerful holding accounts offshore and subverting our country’s interest.

Gurdial Singh Nijar - file pic
Gurdial Singh Nijar – file pic


Gurdial is about to end his 16-year stint as a law professor at University of Malaya, and Deputy President of HAKAM.


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