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The Great GIIN Swindle

Tax is always Taxing. And swindlers will always find ways to evade it. Globally countries have differing ways of trying to ensure their citizens, and in particular the wealthy, pay it. In 2014 the OECD created the CRS (Common Reporting Standard) to enable inter-jurisdicitional transfer of data to identify assets held offshore. Through this mechanism financial institutes are required to report on money held offshore by a country’s citizens to enable the home country to tax the individual on it.

But the US being the US, they decided to bring in their own system and it’s called FATCA – the Foreign Account Tax Compliance Act. Much in the same way as the CRS, it requires institutes to report, so FATCA does the same but to the IRS.

What is FATCA?

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The Foreign Account Tax Compliance Act (FATCA), which was passed as part of the HIRE Act, requires non-US financial Institutions and certain domiciled other non-financial foreign entities report on the foreign assets held by their U.S. account holders or be subject to withholding on withholdable payments. The HIRE Act also contained legislation requiring U.S. persons to report, depending on the value, their foreign financial accounts and foreign assets.

The IRS can then audit those reports and capture non-payment of taxes if US citizens fail to declare their foreign assets in their tax returns. They are legally obliged to report but the fact the IRS can find out a discrepancy if they don’t, is a deterrent to the vast majority of people.

However, there is a loophole…

How to Avoid FATCA reporting and evade US taxes…

Everyone has heard of shell companies. Less so shell banks. The principle is the same, an institute that is created not to properly conducted business in the way you or I would expect, but to be used just as a conduit for illicit cash.

What is a Shell Bank?

A shell bank - whistleblowing & risk solutions

 The 4th AMLD (Anti-Money Laundering Directive), a cornerstone of EU financial regulation, defines shell banks. A shell bank is an institution, either a credit or financial institution, that lacks a meaningful physical presence in the jurisdiction in which it is incorporated. This absence of a substantial operational base, combined with a lack of affiliation with a regulated financial group, marks the primary characteristics of a shell bank. The EU’s 4AMLD prohibits financial institutes from operating with a Shell Bank.

A shell bank is essentially used to store cash. Storing it out of the reach of the home jurisdiction that it ought to be taxed in. Because the global finance system is complex, it is difficult for home countries to adequately track every insitiute, so they create caveats to allow some organisations to not report.

One such organisation is an ‘intermediary’ foreign financial institute. These entities are supposed to be used to move money globally and are not supposed to be ‘repositories’ for cash. But it doesn’t take Einstein to figure out if you have one of these numbers (a GIIN – Global Intermediary Identification Number) and you apply it to your very own shell bank, you can store your money offshore and away from the prying eyes of the IRS.

We have recieved a data dump of all 89,000 institutes holding a GIIN and registered in the Cayman Islands. We anticipate the vast majority of the holding institutes will be conducting legitimate business. But it is inescapable that criminals and tax evaders from the US will be hiding their untaxed wealth in these ‘banks’.

Giin number holding cayman islands entities - whistleblowing & risk solutions
GIIN holding ‘shell banks’ in the Cayman Islands

We are now working to identify, through the Beneficial Owners list, the identities of all US citizens who are owners of one of these 89,000 institutes.

This is the importance of whistleblowing and the passing of data to parties that can stop the illegal evasion of taxes and the movement of illicit funds through entities like shell banks. In almost every major anti-money laundering case globally, you can find a whistleblower behind it doing the right thing.

Report what you know today via our whistleblowing application called Aranea Encrypted, by downloading the app below. We can help secure rewards that are significant in the US if your information leads to the repatriation of revenue to the US. Up to 30% can be claimed in rewards.

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