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Examining New Trends in Money Laundering, Tax Evasion and the
Development of the Informal EconomyMarch 18th 2013
Lic. Zenón A. BIAGOSCHFIDESnet President
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Agenda
1. Global budget deficit.2. Tax evasion, tax havens & ML.
Some statistical data.3. International response.4. Some analysis and questions.
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1. Global budget deficit
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• U$S 4.480.000.000.000Global budget deficit
‘2010(Source: www.worldbank.org)
• U$S 3.100.000.000.000 Tax Evasion(Source: www.taxjustice.net)
• U$S 21.000.000.000.000 / U$S 32.000.000.000.000
Money in tax havens(Source: www.taxjustice.net)
• U$S 1.400.000.000.000 / U$$ 3.500.000.000.000
Money Laundering(Source: www.fatf-gafi.org)
Some statistical data
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Budget Deficit
Global Indicators U$S trillions
World GDP ´2011 70Budget Deficit ‘2010 4.48Fundraising ‘2010 16Public expenditure ‘2010 20.48Military expenditures ‘ 2011 1.75Expenditure on education ‘2008 3.22
EEUU - fiscal year deficit 2012 (30/09/2012) U$S 1.09 trillions
(Source: www.worldbank.org )
Deficit ‘2011 Euro Zone (17 countries) Euros 390.7 billions
Deficit ‘2011 European Union (27 countries) Euros 560.8 billions
EEUU - estimated fiscal year deficit 2013 U$S 845 billions(Source: www.cbo.gov/)
(Source: http://epp.eurostat.ec.europa.eu)
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2.Tax evasion,
tax havens & ML.Some statistical data
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• U$S 4.480.000.000.000Global budget deficit
‘2010(Source: www.worldbank.org)
• U$S 3.100.000.000.000 Tax Evasion(Source: www.taxjustice.net)
• U$S 21.000.000.000.000 / U$S 32.000.000.000.000
Money in tax havens(Source: www.taxjustice.net)
• U$S 1.400.000.000.000 / U$$ 3.500.000.000.000
Money Laundering(Source: www.fatf-gafi.org)
Some statistical data
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Different Realities – Informal Economy
(Source: “Shadow Economies All over the World”www.worldbank.org)
G7 countriesInformal Economy
Size%
EEUU 8,6
Japan 11,0
UK 12,5
France 15,0
Canada 15,7
Germany 16,0
Italy 27,0
South América and México
Informal EconomySize
%
Chile 19,3Argentina 25,3Mexico 30,0Ecuador 32,4Venezuela 33,8Colombia 37,3Paraguay 38,8Brazil 39,0Uruguay 50,6Peru 58,0Bolivia 66,1
Simple average = 39,14 %Simple average = 15,11 %
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Tax Evasion - Top Ten
(Source: “The Cost of Tax Abuse” www.taxjustice.net)
Country GDPU$S trillions
Informal Economy
Size%
Average taxaliquot
%
Estimatedtax evasionU$S billions
EEUU 15 8,6 26,9 337Brazil 2 39,0 34,4 280Italy 2 27,0 43,1 239Russia 1 43,8 34,1 221Germany 3 16,0 40,6 215France 3 15,0 44,6 171Japan 5 11,0 28,3 171China 6 12,7 18,0 134UnitedKingdom 2 12,5 38,9 109
Spain 1 22,5 33,9 107TOTAL 2 trillions
64 %Total Percentage
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Different Realities – South America
Country GDPU$S billions
Informal Economy
Size%
Average taxaliquot
%
Estimatedtax evationU$S billions
Argentina 369 25,3 26,1 24Colombia 288 37,3 19,3 21Venezuela 388 33,8 13,6 18Peru 154 58,0 16,0 14Chile 203 19,3 18,6 7Bolivia 20 66,1 28,5 4Uruguay 40 50,6 17,9 4Ecuador 59 32,4 16,0 3Paraguay 18 38,8 11,8 0,8
TOTAL 96
Brazil 2 trillions 39 34,4 280 billions
3 %Total Percentage 12 %
(Source: “The Cost of Tax Abuse” www.taxjustice.net)
Simple average 40,18 %
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Different Realities
World GDP U$S 70 trillions
G 7 Estimated Tax EvasionU$S 1322 billions – 43 %
South America EstimatedTax Evasion (without Brazil)
U$S 96 billions – 3%
G 7 Estimated Informal Economy Size15,11 % GDP
South America EstimatedInformal Economy Size
40,18 % GDP
The estimated G-7´s tax evasion quadruples the same indicator in South American countries.
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Different realities – Participation of total global banking assets
(Source: www.pwc.com )
• 60.6 %USA + UK +Germany+ France +Italy + Canada
+ Australia + Japan
• 12.3%BRIC =
China + India + Russia +Brazil
• 0.1 % Argentina
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• U$S 4.480.000.000.000Global budget deficit
‘2010(Source: www.worldbank.org)
• U$S 3.100.000.000.000 Tax Evasion(Source: www.taxjustice.net)
• U$S 21.000.000.000.000 / U$S 32.000.000.000.000
Money in tax havens(Source: www.taxjustice.net)
• U$S 1.400.000.000.000 / U$$ 3.500.000.000.000
Money Laundering(Source: www.fatf-gafi.org)
Some statistical data
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2010’ Ranking - Main contributors
(Source: “The Price of Offshore Revisited”www.taxjustice.net)
Argentina: U$S 399 billions
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2010’ Ranking – Assets managed by 50 major global private banks
TOTAL: U$S 12.100.000.000.000(Source: “The Price of Offshore Revisited”
www.taxjustice.net)
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• U$S 4.480.000.000.000Global budget deficit
‘2010(Source: www.worldbank.org)
• U$S 3.100.000.000.000 Tax Evasion(Source: www.taxjustice.net)
• U$S 21.000.000.000.000 / U$S 32.000.000.000.000
Money in tax havens(Source: www.taxjustice.net)
• U$S 1.400.000.000.000 / U$$ 3.500.000.000.000
Money Laundering(Source: www.fatf-gafi.org)
Some statistical data
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Cost of money laundering raises, at a sum that varies between 1.4 trillion and 3.5 trillion dollars.
Source: www.fatf-gafi.org
Some statistical data
The cost of money laundering is estimated between 2 and 5 % of global GDP.
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Argentina – AML framework
Date Issue
2000 Argentina enacted the first AML law No. 25.246, including taxcrimes as predicate offences.
2011Law No. 26.683 authorized the Financial Intelligence Unit to handle suspicious activity reports of proceeds from serious tax offenses.
2011 / 2012Resolutions of the Financial Intelligence Unit describes the parties obligations to report money laundering cases of proceeds from tax crimes.
Some statistical data
GDP U$S 369 billions
Informal Economy Size 25,3 %
Estimated tax evation U$S 24 billions
Participation of total global banking assets 0,1 %
Money in tax havens U$S 399 billions
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3. International response
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FATF/GAFI New Recommendation 3 – Tax Crimes
“When deciding on the range of offences to be covered as predicate offences under each of the categories listed above, each country may decide, in accordance with its domestic law, how it will define those offences and the
nature of any particular elements of those offences that make them serious offences.”
Participation in an organised criminal
group and racketeering
Terrorism, including terrorist financing
Trafficking in human beings and migrant
smuggling
Sexual exploitation, including sexual exploitation of
children
Illicit trafficking in narcotic drugs and
psychotropic substances
Illicit arms traffickingIllicit trafficking in stolen and other
goodsCorruption and
bribery Fraud Counterfeitingcurrency
Counterfeiting and piracy of products Environmental crime Murder, grievous
bodily injuryKidnapping, illegal
restraint and hostage-taking
Robbery or theft
Smuggling
Tax crimes (related to direct
taxes and indirect taxes)
Extortion ForgeryPiracy
Insider trading and market manipulation
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Organisation for Economic Co-operation and Development (OECD)
• Global Forum on Transparency and Exchange of Information for Tax Purposes.• 109 countries.• “Peer Review” evaluation process.
Tax Transparency
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Foreign Account Tax Compliance Act(FATCA)
• Law approved in the United States in March 2010. • Objectives:
– Force evasors to comply with their tax obligations in compliance with laws. – Identify evasors that hide their profits abroad– Force “Foreing Financial Institutions” (FFIs) to identify “U.S. Person” that keep accounts
abroad for its subsequent IRS report (Internal Revenue Service).
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4. Some analysis and questions.
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Some analysis and questions
As the resources for the implementation of criminal policy tools are not enough, Is it convenient to give the same priority to the control of money laundering coming from
the so-called serious crimes to money laundering coming from tax evasion?Would it be more appropriate for the FATF to apply a risk based approach suitable for
the different realities of the regions of the world?
Do the money laundering figures estimated by the FATF include tax evasion as the origin of laundered funds?
Why do the FATF recommend to apply the same tools used for the control of money laundering coming from organized crime, to the money laundering coming from tax
evasion?
Where do funds that finance those huge budget deficits come from?Could they come, to some extent, from offshore centers?
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Some analysis and questions
How should the private banking business of the major financial institutions of the world be reformulated from this new reality?
Are the consequences to the economic, political and institutional order of organized crime comparable to the consequences of tax crimes?
Isn´t the inclusion of tax crimes and the application of a risk-based approach contradictory?
Is the global money laundering prevention system the best framework to fight tax crime?
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Without underestimating the importance of the evasion control as State policy,
Wouldn't it be more convenient to accept that the most effective way for its reduction is achieved through good administration of public resources with responsibility, transparency and efficiency?
Some analysis and questions
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