How Effective Are Leaks Database Monitoring Solutions For Regulatory Compliance?

How Effective Are Leaks Database Monitoring Solutions For Regulatory Compliance?

Just 10 years ago, no one in the world realized the shadow economy running parallel and the massive scale of hidden financial assets by the members of royal families around the globe, top executives, billionaires, world leaders and filthy rich of the world. People did not even understand the concept of offshore accounts, how offshore accounts can be used to hide financial assets? How do tax havens facilitate financial crimes for the world elite? How shell companies are exploited to hide questionable financial assets by the global political elites? And the mere scale of corruption, embezzlement and money laundering committed by the popular politicians, respected global leaders and world billionaires.

In this blog, we will learn how Ongoing Leaks Database Monitoring Solution can benefit the financial firms? Why should the financial industry invest in International Leaks Database Monitoring Solution? And how International Leaks Database Monitoring Services could protect the financial firms from clients involved in financial crimes in the offshore accounts. But let’s first learn what offshore accounts are? How shell companies work? And how many tax havens are there in the world right now?

Offshore Accounts: What are they?

Offshore banking means having your financial assets in a country other than your home country. Offshore banks usually operate under the international banking license. Offshore accounts are usually set up to deal with cross-border businesses. One dark aspect of having an offshore account is it helps facilitate money laundering and tax evasion. 

There is nothing wrong in having an offshore account, however, using an offshore account to hide your financial assets from public scrutiny, and evading taxes in your home country is unethical and in real terms, it is a financial crime. 

How do Shell Corporations Facilitate Financial Crimes?

In theory, shell companies are meant to be set up by the corporations and sometimes by individuals to oversee their legitimate business transactions. On the contrary, and in reality, shell companies end up being utilized by the financial criminals to obscure the identity of ultimate beneficial owners and hide their source of money.

Shell companies are now used as a vehicle to hide financial assets by the world’s billionaires, and people sitting in the echelons of power to evade high income taxes, and sustain their generational wealth without giving their share of taxes. Shell companies help them to appear legitimate and evade detection by the government organization, international regulatory bodies and law enforcement bodies. Internationally Leaked Documents Screening Services helps to spot clients involved in using shell companies to conduct their financial crimes. 

How Many Tax Havens Exist in the Globe Today?

The term tax haven has gathered a negative connotation after the international documents leaks by ICIJ. However, tax havens are usually countries that lower their tax rates to attract foreign investors and bring in investments from around the globe in order to boost their economy. 

Currently, there are 75 countries operating as tax havens. Out of all, Switzerland is known as the best tax haven with a nominal tax rate and lax regulations. Switzerland also shares 5.11% of the tax haven share in the year 2021.

One major drawback of tax havens is that it also provides financial secrecy to the filthy rich which provides them with a cover to commit financial crimes, hide their financial assets and get away with their crimes. 

Following are some of the most preferred tax havens by the filthy rich, political elite and world billionaires. 

  1. Switzerland
  2. British Virgin Island
  3. Panama
  4. Singapore
  5. UAE
  6. Monaco
  7. Cayman Islands
  8. England
  9. United States
  10. Netherland

How ICIJ Leaked Databases Could Facilitate AML Compliance? 

This shadow world that facilitates overwhelming amounts of corruption dismantled by the ICIJ ended up having far reaching impact on the world than the ICIJ journalists and their partners could have ever imagined. It resulted in the resignations of world leaders, led to high-profile investigations and shattered the reputation of the celebrated ultra rich. 

International Leak Databases now serves as a credible database for Anti-Money Laundering compliance. Before boarding a potential client, financial firms can screen them against millions of leaked documents like Panama Papers, Pandora Papers, and Offshore Leaks by employing Online Leaked Documents Screening system. Since financial firms are obligated to comply with Anti-Money Laundering compliance requirements, they can use leaked documents monitoring systems to check whether their potential client is involved in any criminal activity and exposed in internationally leaked documents. This can help organizations to detect high risk clients. 

Financial firms are prohibited by the law enforcement agencies, government organizations and international regulatory bodies like Financial Action Task Force (FATF) to conduct business or offer any financial services to the clients that may be involved in criminal activities. Doing so ends up having damaging repercussions for a firm. 

Given the evolving sophistication of criminal actors in committing financial crimes, the financial firms must stay vigilant and upscale their compliance measures by having International Leaks Database Monitoring Solution.