Having an offshore bank account is not illegal in and of itself. The fact that the motivations for doing so are unlawful is beside the point.
The revelations in the Panama Papers created a media frenzy in President Obama’s final days in office when he made a television appearance. There was outrage all over the world at the revelations in these papers, and many of the people named were swiftly branded as criminals and tax cheats.
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The murky reputation of offshore banking is largely due to the fact that it is conducted in private. Offshore banks are complicit in tax evasion and money laundering if they are aware that their customers are concealing their income and wealth in offshore accounts for these reasons.
Unfortunately, some Fund Management Services in Italy providers don’t take this issue seriously enough to put in place the necessary safeguards. This is sometimes intentional and more often the result of a lack of regulation relative to what, say, a bank in the United Kingdom is required to have in place. However, British taxpayers must still disclose information to HM Revenue and Customs about any taxable funds held offshore.Business Administration Company
Effects on tax evasion and money laundering
offshore banking is perfectly legal, then why is there so much fuss about how to stop it?
There are two sides to the issue. Income is the primary consideration. For their economies to function, governments rely on tax revenue and are therefore motivated to crack down on tax evasion and encourage citizens to pay “their fair share.”
Governments are working hard to make tax avoidance unethical, as this is simpler than enacting complex legislation across borders since tax avoidance is not illegal but there will always be loopholes.
Sadly, some Italian companies that offer fund management services don’t take this matter seriously enough to implement the essential security measures. Sometimes this is done on purpose, but more often it happens because there aren’t the same regulations in place that, for example, a bank in the UK would need to have
Second, the secrecy that is inherent to many offshore financial services makes them appealing to criminals who seek to launder money or evade taxes. This is a blatantly illegal activity that must be addressed, but the government isn’t trying to prevent law-abiding citizens from paying their fair share of taxes by any means.
What this means is that anyone who requests to open an offshore account should be considered a higher-risk client and subjected to appropriate enhanced due diligence in regards to ultimate beneficial ownership and the reasons for opening an offshore account.
Therefore, it is essential that offshore financial services providers implement sufficient controls and provide extensive training to their staff in order to identify and report suspicious activity.