The venerable Coutts bank, home of the Queen’s personal accounts, has been drawn into the mounting controversy about private banking with an admission that its Swiss arm is under investigation for aiding and abetting tax evasion.

Royal Bank of Scotland, which owns the 300-year-old Coutts, admitted on Thursday that German prosecutors are investigating current and former employees of the private bank’s Zurich and Geneva offices. The bank looks after £20bn belonging to 32,000 international customers including sovereigns, celebrities and multimillionaire entrepreneurs. Each must show they have at least £1m in free cash to open an account – and even then they may not be allowed in.

Details of the Coutts investigation follow the leak of details of 100,000 accounts at HSBC’s Swiss banking business. That leak, which showed how HSBC clients might evade tax by moving their wealth around in “bricks” of cash and how the bank provided advice on tax avoidance, has lifted the lid on the usually secretive world of Swiss banking. The chancellor, George Osborne, has now promised to include in next month’s budget a new law to target those who aid or abet tax evasion.

Ross McEwan, the chief executive of RBS, admitted Coutts was facing an investigation by Germany and said private banks had been too slow to clean up their businesses following the 2008 crisis. He said: “Any situation like this we take seriously … it is the reputation of our business. This is what has tarnished the banking industry and in my view private banks have taken far too long to catch up with the public’s expectations.”

The disclosure of the investigation raises the prospect of an institution bailed out by UK taxpayers in 2008 facing penalties for helping its clients deprive other countries of tax revenue.

Coutts was founded in 1692 and still operates under the logo of the three gold crowns which the Scot John Campbell used as the bank’s sign when he set up business on the Strand in London. It has been owned by RBS for 15 years.

An account carries cachet and is a symbol of wealth. Customers are promised “the provision of exceptional wealth advice”.

Coutts’ Swiss operation is already one of more than 100 banks which are being investigated by US authorities over possible tax avoidance and RBS said the German authorities had been involved more recently.

McEwan had put the international operations of Coutts up for sale before the German investigation was revealed and on Thursday the Coutts chief executive, Rory Tapner, departed suddenly. The bank said his exit was part of a wider management overhaul.

McEwan said the business had been put on the market because it didn’t make money and he told ITV there were moral as well as business reasons for doing so. “I want to be very clear if we find anything that has evidence of wrongdoing we will come down incredibly hard on any of those issues,” he said.

RBS intends to keep Coutts’ UK business, which is steeped in history. Ledgers kept in the bank’s Strand boardroom contain signatures from famous past clients, including Charles Dickens and Bram Stoker, author of Dracula.

But the bank has not escaped all controversy. After the financial crisis the founder of the Nectar loyalty card scheme, Sir Keith Mills, started a campaign against Coutts after he put his money in savings bonds issued by AIG, the troubled US insurer. Coutts denied it mis-sold the bonds. Last year the bank admitted that thousands of its well-heeled customers may have been given unsuitable investment advice and it was reviewing files going back as far as 1957.

The Geneva operations have only existed since 1987 but are now adding to the litany of conduct issues facing RBS, which is still 81% owned by the taxpayer. It has already been fined for rigging interest rate and currency markets and faces nearly £2bn of penalties for the way it sold mortgage bonds in the runup to the 2008 banking crisis.

The disclosure of the German investigation came deep in the pages of legal warnings attached to RBS’s annual financial results which showed the bank lost£3.5bn last year. It was the bank’s seventh consecutive year of losses, which now total £49bn since the financial crisis, when the government used £45bn of taxpayers’ cash to stop the Edinburgh-based bank collapsing in 2008.

Following the Guardian’s revelation that Stuart Gulliver, the boss of HSBC, has his own Swiss bank account which is routed through Panama, McEwan also faced questions about his banking arrangements. McEwan said: “I’m a proud Kiwi but I work here and I pay taxes here.” He said he had accounts in New Zealand, Australia and the UK, but did not have a Swiss account.

The JFSC have issued an update to Part 4: Section 1 Handbook for regulated financial services businesses [Effective from: 26 February 2015] in regards to the Proceeds of Crime (Jersey) Law 1999 – Schedule 2 (Article 36(1) and (2)) – Financial Services Business

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Citigroup Inc (C.N) said additional government authorities have started probes of possible breaches of anti-money laundering laws at its Banamex USA unit.

The Financial Crimes Enforcement Network, a unit of the U.S. Treasury, and the California Department of Business Oversight have asked the company for information on its compliance with the Bank Secrecy Act and anti-money laundering rules, Citigroup disclosed in an annual filing with the U.S. Securities and Exchange Commission on Wednesday.

The disclosure comes one year after Citigroup revealed a criminal probe by a federal grand jury in Massachusetts and inquiries from the U.S. Federal Deposit Insurance Corp into the matter.

The Financial Crimes Enforcement Network, a unit of the U.S. Treasury, and the California Department of Business Oversight have asked the company for information on its compliance with the Bank Secrecy Act and anti-money laundering rules, Citigroup disclosed in an annual filing with the U.S. Securities and Exchange Commission on Wednesday.

The disclosure comes one year after Citigroup revealed a criminal probe by a federal grand jury in Massachusetts and inquiries from the U.S. Federal Deposit Insurance Corp into the matter.

Citigroup said it is cooperating with the investigations.

Banamex USA is an affiliate of Mexico City-based Banamex, which Citigroup bought in 2001 and which operates a few branches in the United States.

The filing on Wednesday also showed that Citigroup has reduced its estimate of possible unreserved legal costs to $4 billion from $5 billion at the end of September. Citigroup said in January it was recording $2.9 billion in expenses in the fourth quarter to bolster its legal reserves.

Banamex is the second-largest bank in Mexico and was once seen as a model of Citigroup’s strategy of capitalizing on growth in emerging markets. But Banamex’s standing, and Citigroup’s management of the subsidiary, were called into question in 2013 when it lost money on loans to Mexican homebuilding companies and again in 2014 when it disclosed losses from apparent fraud in lending to a supplier of Pemex, the Mexican oil company.

Manuel Medina-Mora, who rose from being CEO of Banamex to chief executive of Citigroup’s global consumer business, said last week that he will retire in June.

The original article can be found at http://reut.rs/1C38Sdl

Italy’s internal revenue service may levy taxes on the illegal earnings of over a dozen suspects in the multi-million-euro MOSE corruption case, sources said Tuesday.

Prosecutors are looking at allegations that 25 million euros in taxpayer money was funneled into political campaigns and away from MOSE, a 5.5-billion-euro system of retractable dikes set to become operable in 2016 after decades of delays.

Some 100 people were initially investigated as part of the probe.

Those who may have to pay taxes on illicit earnings include Emilio Spaziante, a retired general in Italy’s finance police who is serving four years after a plea bargain, former Venice mayor Giorgio Orsoni, ex-Veneto governor Giancarlo Galan, former infrastructure council member Renato Chisso, and Marco Milanese, former right-hand man to ex-economy minister Giulio Tremonti.

The suspects, most of whom are behind bars or under house arrest, may have to pay taxes on a total of 10 million euros under a 1993 law that says the government can levy taxes on illicit income.

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Prosecutors on Tuesday accused a former senior Petrobras executive of racketeering, bribery and money laundering through Switzerland and Uruguay in a widening kickback scandal that has engulfed Brazil’s state-run oil company.

Nestor Cerveró was head of international operations at Petroleo Brasileiro SA, as the company is known, from 2003 to 2008, when prosecutors say he accepted bribes to help engineering and construction firms win contracts with Brazil’s largest company.

The charges against Cerveró follow indictments in December against 39 executives, two of them senior Petrobras executives and most of the rest executives of major Brazilian construction and engineering companies. The charges against Cerveró will require a judge to endorse them before becoming an indictment.

Cerveró and the indicted executives allegedly conspired to inflate the value of billions of dollars in Petrobras contracts, kicking back the excess to Petrobras executives as bribes or campaign contributions to President Dilma Rousseff’s Workers’ Party and its allies in Congress.

The scandal has hurt Rousseff’s popularity as she begins her second term. Rousseff, who was chairwoman of Petrobras’ board of directors from 2003-2010 when much of the alleged corruption took place, has denied knowing about the scheme.

Two alleged Cerveró intermediaries, Fernando Soares and Oscar Algorta, were also charged with racketeering and money laundering, the federal prosecutors office said in a statement.

Soares, also known as “Fernando Baiano,” is a businessman and lobbyist closely associated with the Workers’ Party. He allegedly helped transfer money for Cerveró. Algorta was president of Uruguay-based Jolmey S/A, which was allegedly used to move illicit overseas funds to Cerveró in Brazil.

Authorities were also seeking to seize a penthouse apartment in Rio de Janeiro’s Ipanema beach district valued at 7.5 million reais ($2.6 million) and bank accounts of Jolmey. Jolmey owns the Ipanema apartment and rents it to Cerveró at below-market rates, the prosecutors said.

The former oil executive was arrested in January and is currently in jail.

Cerveró was charged last year with allegedly sharing with Soares $15 million in kickbacks related to the purchase of a $586 million drill ship bought from South Korean shipbuilder Samsung Heavy Industries Co Ltd.

Cerveró has denied receiving any bribes.

“The new charges are clumsy. The facts are not true,” his lawyer Edson Ribeiro said by email.

Cerveró has been under investigation since last year in connection with Petrobras’ controversial 2006 purchase of a refinery in Pasadena, Texas. ($1 = 2.8820 Brazilian reais)

Copyright (2015) Thomson Reuters

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Advisers who “facilitate or encourage” tax evasion by companies or individuals should be prosecuted, a senior UK Treasury official has said.

In an interview on the BBC’s Andrew Marr show, chief secretary to the Treasury Danny Alexander proposed a new criminal offence of “corporate failure to prevent economic crime”, aimed particularly at banks and accountancy firms that promoted illegal tax evasion. Those guilty of the offence should face the same financial penalty as the taxpayer, he said.

Alexander is a member of the Liberal Democrats, the junior partner in the UK’s coalition government. He told Marr that he hoped to act on the plans before of the general election in May, but that they would otherwise be included in his party’s manifesto.

The proposed financial penalties would create a “very tough disincentive” to firms, Alexander said.

“I am going to seek to pursue this within government over the next few weeks, because I think we do have time, potentially, in the budget or through other processes that we are going through, to take these ideas forward,” he said.

“Organisations, be they accountants, banks or whatever, who help people evade tax will be liable for this new offence and crucially liable for financial penalties. So that, for example, if their customers have to pay back hundreds of millions of pounds in tax, then those organisations should have to match that with hundreds of millions of pounds of their own money,” he said.

Chancellor George Osborne told MPs in the House of Commons yesterday: “Ahead of the budget I set the Treasury to work on providing further ways to pursue not just the tax evaders but those providing them with advice. Anyone involved in tax evasion, whatever your role, this government is coming after you. Unlike the last government, who simply turned a blind eye, this government is taking action now and will do so again at the budget.”

“Any proposal to introduce a new criminal offence needs careful thought, and consultation with the legal community in particular, before it is introduced,” said James Bullock of Pinsent Masons.

“It should not be forgotten that there is a current proposal for a strict liability offence of offshore tax evasion,” he said. “This was consulted on in the autumn of 2014 having been announced by the chancellor in the spring. We were promised draft legislation and a further consultation in late 2014 – but this never happened, and the assumption has been that this proposal has either been quietly ‘dropped’ or at least kicked into the next parliament.”

“Either way, it would be nice to hear what the proposals for this very contoversial proposal are before embarking on yet another one,” said Bullock. “The next government, of whichever colour and complexion, would be much better off concentrating on more prosecutions and investigations within the existing framework, than in coming up with new proposals.”

“The specific proposal – creating an obligation on the corporate to prevent tax evasion, with criminal sanction for failure to do so, has close parallels with both anti-money laundering legislation and the anti-bribery legislation,” said Bullock. “We are assuming it would contain a defence for corporates that were able to show that they had taken adequate steps to prevent tax evasion.”

“Whilst it would be unlikely to result in many convictions it would have the merit of promoting cultural and behavioural change – as the anti-money laundering and anti-bribery legislation has done. However, it clearly needs careful thought and consultation before it is introduced into legislation,” he said.

In September 2014, new attorney general Jeremy Wright told a conference in Cambridge that the UK government was “considering proposals for the creation of an offence of a corporate failure to prevent economic crime”. This new offence would be “modelled” on the existing criminal offence of failure to prevent bribery, and would tackle fraud, money laundering and other economic crimes, he said.

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Goodyear Tire & Rubber Co. will pay financial regulators more than $16 million to settle charges that its subsidiary in Kenya bribed government and private sector employees to land tire sales.

The Securities and Exchange Commission said Goodyear failed to prevent or detect more than $3.2 million in bribes that Kenya subsidiary employees generally paid in cash to employees in the Kenya Ports Authority, Armed Forces Canteen Organization, Nzoia Sugar Company, Kenyan Air Force, Ministry of Roads, Ministry of State for Defense, East African Portland Cement Co., and Telkom Kenya Ltd.

Goodyear is accused of violating the Foreign Corrupt Practices Act and falsely recording the bribes as legitimate business expenses in the books and records of the subsidiaries, which were consolidated into Goodyear’s books and records.

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Comsure Collas Crill Regulatory Risk Academy for 2015  – Thursday 5th February 2015

Many thanks to all who attended to make this a successful event.