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January 24, 2019

London lawyer fined for anti-money laundering failures, PEP issues over wealthy clients

A solicitor, who was also a money laundering reporting officer (MLRO), has been fined £45,000 for failing to conduct anti-money laundering checks for wealthy clients believed to be linked to the Panama Papers scandal.

Khalid Mohammed Sharif, a partner at London-based Child & Child, was involved in the law firm’s establishment of an offshore company used to manage London properties worth almost £60 million for clients.

However, he failed to take any or adequate steps to ascertain if the clients were politically exposed persons (PEPs) or reportedly linked to the proceeds of crime, the Solicitors Regulation Authority (SRA) said.

The property owners are reported be the daughters of a central Asian head of state, however, Sharif did not conduct the necessary due diligence checks which would of likely revealed that they were PEPs.

Child & Child instructed law firm Mossack Fonseca to incorporate the company in the British Virgin Islands, according to the Guardian. Mossack Fonseca was the law firm central to the Panama Papers scandal, and has since shut down.

Last year, the SRA said Sharif had also failed to apply enhanced customer due diligence in respect of the clients, in a situation which presented a higher risk of money laundering, or “where the customer had not been physically present for identification purposes.”

In addition to the £45,000 fine, the Solicitors Disciplinary Tribunal ordered Sharif to pay costs of £40,000.

October 18, 2018

Germany: Santander bank caught up in major tax evasion investigation

Prosecutors in Germany have launched a probe into the role Spanish bank Santander may have played in a widespread tax fraud scheme.

The probe, which has seen the authorities examine the role of other banks, looks at allegations that Santander executed trades that facilitated ‘severe tax evasion’ between 2007 and 2011.

Reuters, which reported the story, explained that the models were created to generate tax rebates.

“A bank would agree to sell a company stock, for example to a pension fund, before the dividend payout but delivered it after it had been paid. The bank and the fund would both reclaim withholding tax,” the news agency explained.

“Sometimes banks sold shares they did not own and agreed to buy them later in a practice known as short selling. The stock was traded rapidly around a syndicate of banks, investors and hedge funds to create the impression of numerous owners, prosecutors say. The profits from the deals were shared.”

It added that, “in order to generate bigger profits, the pensions funds could also buy large volumes of stocks, using loans from banks.”

A Santander spokesman reportedly said that it was “fully cooperating” with the German authorities.

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