Out and proud: I’m AML and pro-tax

For years, tax has been AML’s dirty little secret.  Many’s the time an MLRO has taken me to one side just before a training session and asked, “Could you just mention, you know, just in passing, *whisper* tax to them – remind them to ask questions, but not to pry…”.  And I’ve lost count of how often I have been asked – and not by junior staff, I hasten to add – whether tax evasion “counts” for money laundering.  Apparently there are three main categories of activity in life: crime, non-crime, and tax matters.

But it seems that public opinion might be shifting – and where the public leads, our customers will follow, what with being part of that public.  The HSBC fiasco has helped, of course: tales of the mega-rich squirrelling away their proceeds of tax evasion will always upset people.  But it’s not just evasion now – it’s avoidance too that’s getting the cold shoulder.  Last week a friend of a friend contacted me to say that she wanted to buy my two novels, but not from Amazon as she is boycotting them for not paying their tax as she feels they should.  (I gave her links to other places – I never let a potential reader escape.)  And then this story appeared on the BBC website, about rich people who are happy to pay their taxes – among them, author JK Rowling, comedians Frank Skinner and Ricky Gervais and retailer Mark Constantine (who set up niffy cosmetics chain Lush).  They state variously that paying tax is a moral issue, that taking action to avoid tax is contemptible, and that tax exiles are unsavoury.

So are we reaching the point where asking customers about their tax situation will no longer be considered prying or prurient, but rather the mark of a socially-responsible organisation?  Might we see one day, on client take-on forms, a requirement for applications to sign the declaration “I confirm that I have met my tax liabilities in full, in all applicable jurisdictions”?  In short, in the same way as businesses now proudly flaunt their green credentials, with energy-efficient window blinds and cycle parking for staff, might they soon start to boast of their pro-tax stance?

This entry was posted in AML, Money laundering and tagged , , , , , , , , . Bookmark the permalink.

7 Responses to Out and proud: I’m AML and pro-tax

  1. Claire says:

    It’s a tough one. I would like to see the bookkeeping of the Principality of Monaco. How they manage a great budget for their small country. No income tax. Business tax, yes. VAT, yes (that is where they make most of their money). Great healthcare at little cost. Great pension plan, child benefits, … Active guidance when unemployed (can’t say that happens here in Belgium). Clean roads. Very little crime. And lots of sunshine (oh yes, that comes free, but hey, they have it and we don’t). Here in Belgium nothing goes as should. The government overspends. Too many people are unemployed. Crime is happening all the time. Social charges are too high and killing business. No wonder people try and cheat when they can. When a company like Omega Pharma can be sold for millions without paying any taxes, something is wrong. Tax is good, we need it. But how taxes are paid is not so good. I believe there should be more tax breaks for small companies and start ups. And less for those big rich companies. But of course, they are the ones that can afford expensive lawyers and consultants to look into those loopholes. I worked for an international lawfirm. The lawyer whose assistant I was, was specialised in European and Spanish competition law, including mergers and acquisitions, restrictive practices, abuse of dominance and State aid. The amount of money companies spend to cheat the EU, governments, and us, the customers, is disgusting. I remember someone telling me: the partners make at least € 1 million per year, in a bad year… It is obvious this situation cannot be solved as long as these tax paradises exist. I think it would be a great thing to create a socially responsible label for companies. I know lots of people don’t care because they only think of their wallet right now. And they cannot think further than how this actually affects their wallet long term (we all end up paying for the government’s bad management and tax money fleeing elsewhere).

  2. You make some excellent observations, as always, Claire. (Regular readers may remember that Claire used to be married to a money launderer, so gives us an interesting perspective.) I find your last comment particularly pertinent: short-term gains often lead to long-term losses. But we live in a short-term world – just look at the decisions made by politicians, who think no further than the next election.
    Best wishes from Susan

  3. Robert James Long says:

    I do hope we’re moving toward that sort of society!

  4. Roy McCarthy says:

    A few exceptions aside no one is going to volunteer to cough up their share of tax if there is a legal way around it. It’s up to individual governments to do the enforcing and, as you say, politicians will only do this if it helps them retain power. Examples – look at Ed Miliband banging a populist drum in the Channel Islands’ direction without having any intention of actual action once elected. In Greece Syriza may actually have a chance of reforming their domestic tax because that will resonate with the voters. Meanwhile the Dublin government of the day will never, of their own volition, repeal the tax breaks given to multi-nationals and thereby seal their own fate at the ballot box.

    • Robert James Long says:

      I think if there is a degree of pressure form society more might cough up. Even in the modern age shame can still be a good motivator and sense of obligation can still inform action. This is particularly true if there is a degree of bad publicity round avoiding it.
      I think for a long time the broadly right wing argument that all tax is some sort of immoral burden to be avoided as opposed to the price for a civilised society (value for money is a debate we should always be having as a society) has dominated civil discourse making avoidance easy as a mental exercise. I wonder if the other idea might now be slowly rearing its head, if nothing else as a reaction to how powerless and put upon many people feel.
      On the plus side of tax evasion, if everyone is doing it or trying to, then no one can now tell me that “They pay my wages!”

      • Dear Robert

        I think this is where the change will come – if enough people vote with their feet away from patronising organisations that either avoid tax themselves, or facilitate avoidance by others. Particularly if the money saved by such avoidance simply goes to bigger bonuses… If Amazon (for instance) “spent” it on charity work, that might save (or at least help) their reputation.

        Best wishes from Susan

    • Dear Roy

      There has been an interesting debate on this in the “Spectator” magazine. Basically, is it fair to expect taxpayers to obey the spirit of the legislation (rather than its exact letter), when to do so would require them to understand the thinking behind the legislation – which in turn would require them to know the legislators and their deliberations (to which very few are party). So all we can do is obey the letter of it all – which suggests that taking “a legal way around it” is just common-sense.

      Best wishes from Susan

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s