In a joint study with Ecorys, a team from Utrecht University led by Professor Unger have, for the first time estimated the extent of money laundering over time with a gravity model. This research, financed by the Dutch Ministry of Finance, seeks to determine the extent to which money laundering has an undermining effect on the regular economy and the financial system.
The study consists of two parts: the first part examines where criminally earned revenues are placed in the regular economy, the second part estimates the annual amount that is laundered in the Netherlands. The extensive research spanning all variables from 181 countries contains more than 20 million observations and estimates the total amount of global money laundering at 677 billion euros in 2014, or 1.2 percent of the world’s GDP. Of this figure the group estimate 16 billion euros can be attributed to money laundering in the Netherlands.
The team consisting of members of Utrecht University School of Economics; Professor Brigitte Unger, Joras Ferwerda, Alexander van Saase, former USE members Ian Koetsier and Bojken Gjoleka, members of Ecorys Brigitte Slot and Linette Swart and University of Amsterdam Professor Edward Kleemans also propose several policy and future research recommendations, particularly a differentiated money laundering policy given the increasing prevalence of fraud as a money laundering instrument.
Read the English summary here and the full Dutch report here.
This week COFFERS project leader Brigitte Unger spoke with European students to inspire the next generation of money laundering professionals.
With Money laundering high up on the European agenda, more and more pupils from high school show interest in COFFERS and money laundering.
Lucky students from Brabant, Netherlands Anne van Poppel and Nina van Helmond visited Utrecht University School of Economics this week to speak to Professor Unger and learn more about the latest developments in money laundering. Whilst university students from Paris-Dauphine University as well as high school students from across the Netherlands also had the opportunity to speak to Professor Unger via Skype. These burgeoning money laundering professionals are now writing their first research pieces on money laundering which may one day lead to an exciting career in combatting fiscal fraud
Through this initiative USE aims to capitalise upon this interest and inspire as well as foster talent that will be critical to the success of anti-money laundering efforts in the future.
On Thursday, November 1, 2018, COFFERS project coordinator Brigitte Unger presented her research on organised crime and its effects in the Netherlands to a Dutch parliamentary hearing at the House of Representatives.
The parliamentary hearing on the ‘nature, scope and approach of undermining’ addressed a growing problem in the Netherlands. Although there have been notable decreases in the levels of traditional crimes such as robberies, domestic burglaries and violence, new forms of crime have begun to undermine society. These new forms of crime damage social structures themselves or erode public conficence in them.
With criminals now active in residential areas, companies and the internet crime takes place both in the upper and lower worlds with drug trafficking, arms trade and liquidations being prominent examples of undermining criminal activities.
Armed with a budget of 100 million Euros the Dutch Government is seeking to aggressivily combat undermining crime with a further 10 million euros being made available from 2019.
Presenting her research Brigitte Unger demonstrated that the mediums of drug trafficking and fraud were the principal instruments used by criminals in money laundering but expressed concern at the lack of attention given to the increasing fraud and white collar crime in the Netherlands.
Coffers Project Coordinator Brigitte Unger has been appointed to join British Colombia’s Expert Panel on money laundering .
In recognition of her expertise in finance, public economics and money laundering Unger was invited to the panel seeking to develop world leading protections in the real estate sector in British Columbia, which is considered vulnerable to individuals looking to engage in illicit activity and exploit loopholes.
The panel will look at gaps in compliance and enforcement of existing laws, consumer protection, financial services regulations, regulation of real estate professionals and jurisdictional gaps between British Colombia and the federal government.
The panel consisting of other experts such as Maureen Molney ,of Simon Fraser University, and Tsur Somerville, of British Colombia’s School of Business, will present a final report with recommendations to the Minister of Finance in March 2019.
Coffers research team member Leyla Ates has published an article titled “More Transparency Rules, Less Tax Avoidance” in the Autumn 2018 issue of the Progressive Post that is a EU-focused magazine published in English and French.
While the European Council has taken important steps to enhance the exchange of information between tax administrations in order to promote tax transparency and fair tax systems in EU countries. This in turn creates a deeper and fairer single market. However, ambiguity in disclosure obligations and a high threshold requirement risks leaving the door open wide enough for dubious tax schemes to slip through.
Read the full article at the Progressive Post here.
This week COFFERS Richard Murphy was at the OECD debating with Arthur Laffer on the virtues and vices of tax competition. Richard prosecuted the position that tax competition is by definition always harmful – it is an unequivocal vice. He argued that tax competition harms free, fair and competitive markets preventing markets from delivering on the promise of socially optimal allocation. Tax competition also erodes democracy, the rule of law and the state. Richard suggests that the use of a COFFERS tool will help. With Andrew Baker of Sheffield University, Richard has developed a method for multilateral tax spillover analysis, the analysis of how much harm one country’s tax rules or tax rule application harms other countries.
Read Richard’s full argument here.
COFFERS’ Ronen Palan spoke at a conference organised by Spear’s, the specialist wealth management magazine, on changes in the international tax system and the future of Asset Management Industry. The panel, which included James Quarmby, Partner, Stephenson Harwood LLP, Robert Brodrick, Partner, Payne Hicks Beach and Clare Maurice, Senior Partner, Maurice Turnor Gardner LLP, focused on the Common Reporting Standard and the Tax Gap in Europe. Other members on the panel raised concerns that CRS was irresponsible because it may hand crucial information to corrupt and authoritarian governments, information that may place clients, as well as practitioners, in danger of false imprisonment, blackmail and even kidnapping. Ronen argued that the industry’s failure to engage constructively with regulators, its habit of blanket denial of its role in enabling tax avoidance and wealth inequality (or that tax avoidance even takes place), and a focus only on the negative aspect of regulation results in blunt regulatory weapons such as FATCA or CRS. Following the letter of the law, rather than the spirit of the law is a poor line of defence. Unless the industry comes clean about its role in enabling tax abuse, its concerns are unlikely to be heeded by governments. Ronen predicted that there will be more, not less, regulations in the future aimed at preventing tax abuse, including an EU version of FATCA, and in time, regulation of financial engineering products and Fintech.
New COFFERS research reveals the US to be the EU’s greatest supplier of financial secrecy, which in turn enables tax abuse, corruption, money-laundering and the financing of terrorism. Tax havens currently blacklisted by the EU are responsible for just 1 per cent of the financial secrecy services threatening EU member states, while one-third (34 per cent) is supplied by financial centres from within the EU targeting other member states.
The academic working paper, an EU focused policy paper, the press release and the underlying raw data can be all downloaded at: https://www.taxjustice.net/the-bilateral-financial-secrecy-index/“
Coffers research team member Richard Murphy, Professor of Practice in International Political Economy at City, University of London, has been investigating the tax gap as part of the work the Coffers team is doing. The tax gap is the difference between the amount of tax that should be paid to a tax authority in a period and the amount actually paid. On 25 September Richard was invited to give evidence to the Canadian Senate in Ottawa on new legislation that is being considered for implementation. The new legislation makes tax gap measurement a mandatory requirement for Canada’s tax authority. This is what he had to say in his introductory comments:
On September 13, COFFERS consortium partner, the Tax Justice Network organized a COFFERS-themed workshop entitled, ‘Corporate Tax Haven Index’. The workshop followed the 4th African Tax Research Network Congress in Ifrane, Morocco. COFFERS work package leader Markus Meinzer introduced the Corporate Tax Haven Index (CTHI) concept and with Leyla Ates (COFFERS and Altinbas University) shared with participants the results of a pilot study.
The research underpinning the CTHI is one of the planned outputs of the COFFERS project. The CTHI measures how intensely a jurisdiction abuses its autonomy over CIT rates and base rules to enable and incite tax spillovers; the impact of one jurisdiction’s rules and practices on another’s rule-setting autonomy. The CTHI provides a measure of the ‘success’ of a jurisdiction in the pursuit of a corporate tax haven strategy.