Sam Theodore reports: The risk of being exposed to money laundering (ML) scandals is real for the European banking sector – and not just the Nordic groups currently under the spotlight. Investors and analysts are at a loss trying to anticipate when banks will be hit by ML troubles. There are no traditional analytical metrics to flag ML risk. Many believe that it is a black swan. “Bad things can happen to good banks out of the blue,” the market sighed in disbelief when Danske Bank’s ML problems surfaced…. Money laundering remains a major risk for banks
Rudolf Elmer
‘‘I feel really destroyed. I went through a financial, social, professional death.’’
It was in 2011 when Rudolf Elmer stood in front of the press with two CDs in his hand, allegedly containing the names of over 2,000 offshore banking clients. That the disks were, in fact, empty did not prevent the publicity scoop, he recalls in our interview. “What went through my mind is I’m sending a message out to the world. And the message was my story.’’
Tamara Davison reports:
Rudolf Elmer is one of many whistleblowers that have attempted to take on some of the world’s largest institutions and expose illegal handlings. But speaking out came at a high personal cost, culminating in months spent in prison and a psychological breakdown. Fourteen years later, the question remains as to whether justice has been served.
In the pursuit of truth
Last week the owner of Wikileaks, Julian Assange, was rumoured to be expelled from the Ecuadorian embassy where he is currently seeking asylum for breaching ‘asylum terms’. Assange’s name has briefly made headlines again and the debate about whether he is a hero or a criminal reared its head. But as with many whistleblowers, the struggle continues even after the media storm has settled.
‘‘What is happening to Julian Assange is actually the very same thing what happens to most or even every whistleblower,’’ Elmer told me. ‘‘After having blown the whistle life becomes difficult…and secondly, civil society loses interest in what happens with the lives of whistleblowers.’’
‘‘What is happening to Julian Assange is actually the very same thing what happens to most or even every whistleblower”
Elmer had been a private banker and trusted employee of the Swiss financial institution Julius Baer Bank & Trust Company Ltd since the 80s.
After a long career in Zurich, Elmer was promoted to internal auditor at the company in 1994. His new role for Julius Baer would also lead him to the Cayman Islands. When he arrived, the chief accountant of the company welcomed his move to ‘‘the other side of the fence’’.
Indeed, the picturesque Cayman Islands have long become a symbol of shadow banking, the dark side of the financial industries. They are one of many off-shore sanctuaries where tax freedoms and financial loop-holes make for a lucrative place to protect money, and there are a number of recognisable bank institutions that can be found there. The small Caribbean island has been the subject of institutional mishandlings which has since led to the introduction of the Island’s Whistleblowing Protection Law in 2015.
This was not in place, however, in the controversial series of events that led to Elmer losing his job. In 2002, he failed a lie-detector that is employer claimed to be routine – a measure he later tried to dismiss as unlawful with the help of a lawyer. He was abruptly fired from his position without any severance pay or contractual promises.
Threatened and arrested
‘‘They threatened that if I take the bank of court, they’re going to finish me off: a clear message,’’ Elmer recounts upon returning back to Switzerland. Elmer claims that himself, his wife and daughter were all terrorised by individuals associated with his former bank after losing his job.
He instead chose to send confidential back-up data that he still had within his possession to Swiss tax authorities in a bid to raise the alarm. In 2005, instead of going after the bankers implicated in his data he was arrested and held for 30 days for breaching confidentiality laws for attempting to leak the information.
Two years later he threatened to take data public if they didn’t stop following Elmer and his family. The whistleblower claims that Julius Baer employees, set on discrediting Elmer, then disclosed information to his next employer which led to Elmer’s firing, and failure to find further work.
Allegations of other threats conducted by the former financial employee also came to light in the coming years, such as falsifying a document and conducting threatening phone calls, and the pressure on Elmer continued to grow.
In 2011 the story erupted when Elmer delivered the mentioned CDs to Wikileak’s Julian Assange at a public press conference. Among the files shared with WikiLeaks were the alleged names of countless politicians and officials from all over the world, who were implicated in unlawful financial handlings. ‘‘The disks where empty…I’m not that stupid to hand over CD’s publicly when the UK police is next door,’’ Elmer explains. Yet he was arrested shortly after, once again, and this time spent 220 days in solitary confinement.
‘‘My wish was when I was 22 was to have an interesting life, that really happened”, he says when he recalls how his decision to go public would change every aspect of his previous life.
The results of whistleblowing led to an ongoing legal battle between Elmer and various pillars of the Swiss financial and legal systems. In addition, he was discredited from working in finance, a sector he loved, was required to pay staggering legal fees and even had a dramatic collapse which left him in a psychiatric ward for a brief period.
Is Switzerland shielding its financial industry?
Image courtesy: Rudolf Elmer.
Elmer suggests that Switzerland has a ‘‘morally corrupt judicial system to protect the financial industry, as simple as that’’. Although the country’s Supreme Court ruled 3-2 last year that Elmer was not guilty of breaking Swiss financial confidentiality laws – which could have seen him imprisoned for three years – there have been legal hurdles throughout the process.
‘‘(The authorities) have to protect the golden coffer and they can’t accept that a whistleblower or any truth teller or conscientious objector who reports a crime in the financial industry in Switzerland walks away and is the hero. That can’t be’’.
There are examples that back up Elmer’s claims that the Swiss judicial system is either choosing not to pursue criminal cases linked to banks or being ineffective at doing so. In 2017, HSBC paid French prosecutors 300 million euros to end a probe into the Swiss-arm of their company for tax evasion.
Swiss sentences for whistleblowing also appear harsher than other countries. For example in the case of Swiss Leaks’ Hervé Falciani, who Spanish authorities refuse to extradite to Switzerland because there are no equivalent Spanish laws linked to his charge of ‘aggravated financial espionage’. Earlier this year the Financial Times explained that Switzerland remains behind other countries when it comes to protecting whistleblowers, and structures mean that the Swiss financial system is able to continue working unabated.
‘’Has Justice been served? In my case, justice no, on the contrary, life is punished.’’
Rudolf Elmer has pried open the lid on his country’s secretive banking industry and attempted to fight the legal system singlehandedly. However, as of yet, there is no change to the Swiss financial system or the laws established to protect it. And so far, there is little coordination between countries or larger institutions such as the EU or the UN on whistleblowing protections.
‘’Has Justice been served? In my case, justice no, on the contrary, life is punished”, Elmer concludes.
Even though the cost of professional suicide has left a permanent mark on Elmer, he remains an advocate for holding the financial and legal systems accountable. And he considers himself lucky as opposed to other whistleblowers who are now in exile or imprisoned around the world: “‘I do so for the whistleblowers who actually went down the drain, I feel I have a responsibility to do it because I can”…..150sec.com
One of Yahya Jammeh’s first diplomatic acts after seizing power in Gambia was to establish diplomatic ties with Taiwan.
The move was a clear-cut case of checkbook diplomacy, common in West Africa at the time, but it still rocked the boat in 1995. Gambia had violated Beijing’s golden rule of foreign policy – that all countries must see Taiwan as part of China.
The recognition ended up being worth millions for Jammeh.
He also amassed vast sums from business deals he struck with financiers of Hezbollah, a militant group based in Lebanon, which the United States has designated as a terrorist organization since 1997.
In Hezbollah, Jammeh found wealthy investors who needed to launder their money to get around international sanctions — and gave them access to his country’s economy in exchange for a cut of their business.
The two moves defined Jammeh’s approach to international relations. Throughout his 22 years in power, from 1994 to 2016, he often defied the foreign policies of global superpowers – sometimes on principle, sometimes to line his pockets…..– OCCRP
Every country has a duty to combat money laundering and to prevent terrorist financing or any other threats that can compromise the integrity of the international financial system. A robust and resilient anti-money laundering and combating of terrorism financing (AML/CFT) regime is the first step towards being able to implement effective legal, regulatory and operational measures.
Current Efforts by the FATF to Monitor and Take Action against Terrorist Financing
The FATF notes with grave concern and condemns the violent terrorist attack last week that killed at least 40 Indian security forces in Pulwama in the State of Jammu and Kashmir. From this and other recent attacks on schools in Afghanistan and Nigeria, hotels in Kenya, houses of worship in Indonesia, courthouses in Turkey and concerts and train stations in Europe, terrorism continues to threaten societies and citizens around the world. While all these attacks kill, maim, and inspire fear, they cannot occur without money and the means to move funds between terrorist supporters.
This vulnerability makes identifying terrorists’ financial flows and depriving them of funds a crucial tool in disrupting terrorist attacks before they even occur. Financial intelligence helps governments around the world to map out the financial networks of terrorists and has played a critical role in identifying and disrupting foreign terrorist fighter facilitation and other terrorist networks in North America, Europe and Southeast Asia. Further, using financial and law enforcement tools to cut off terrorists from their sources of revenue weakens the networks and infrastructure needed for these groups to accomplish their destructive goals.
The changing nature of the threats posed by ISIL, AQ and affiliates also demonstrate how the risks affecting different jurisdictions around the world continue to change. In order to help jurisdictions better identify and understand the nature of the risks that are affecting them, and how they are developing over time, the FATF will finalise and publish guidance on TF Risk Assessments in June. The current round of assessments of countries implementation of the FATF Standards has demonstrated that significant vulnerabilities remain in countries CFT regimes. Nearly two-thirds of countries assessed are still not taking effective action to investigate and prosecute terrorist financing, and 80% are not effective in relation to targeted financial sanctions. Under the US Presidency, the FATF will hold a workshop to improve countries capacity to investigate and prosecute terrorist financing. This workshop will build on FATF’s efforts to ensure that the criminal offence of terrorist financing is being aggressively pursued by all jurisdictions.
The FATF and its global Standards to counter the financing of terrorism (CFT) play a central role in this effort. ….FATF-Against Terrorist Financing
One of the largest leaks of banking records and related documents ever reveals an $8.8 billion network of offshore companies that allowed corrupt politicians and criminals to secretly launder money and hide assets abroad. Here’s the #TroikaLaundromat OCCRP Troika Laundromat …
While governments and citizens of Eastern Europe were struggling with the recent financial crisis and trying to borrow money from international financial institutions, billions of euros circulated in the region in an illegal, parallel, system that enriched organized crime figures and corrupt politicians.The system is built on hundreds, maybe thousands, of ever-morphing phantom companies…..Proxy-Platform
What Is The ‘Troika Laundromat’ And How Did It Work?
What is the ‘Troika Laundromat’?
How did it work?
How much money was involved?
Are there examples?……TheGuardian
5 important efforts by black women to boost diversity in tech, media, and finance.
Across industries, from tech to media and finance, statistics show people of color lack representation.
Brittney Oliver reports: Black Americans have a higher unemployment rate than other racial groups, according to the Bureau of Labor Statistics, and much has been written about how that inequality goes straight up the ladder to the boardroom. Across industries, from tech to media and finance, statistics show people of color lack representation. Here are five initiatives, by six black women, that are attempting to address those employment gaps–and connect people of color with jobs….Fastcompany
Hearing of the European Parliament on Malta / 17 Black
For more than two years a corruption scandal has been smouldering in Malta, centred around two of Prime Minister Joseph Muscat’s closest confidants: His Chief of Staff Keith Schembri and Tourism Minister Konrad Mizzi. Several leaks and the Daphne Project of investigative journalists revealed that Schembri’s secret shell company was to receive a million-dollar sum from a company called „17 Black“. To date, Schembri has not been able to refute this suspicion.
The first part of the hearing of the Special Committee of the European Parliament on Monday evening will be an exchange of views with the Maltese Minister of Justice, Owen Bonnici. The second part will feature Matthew Caruana Galizia, son of Daphne Caruana Galizia, and a journalist from the Daphne project. The Daphne Project is an association of journalists led by Forbidden Stories, which continues the investigations of the Maltese journalist Daphne Caruana Galizia, who was murdered last year.
Moneyval did not accept the invitation of the European Parliament’s special committee on the grounds that Malta was currently undergoing a mutual evaluation by Moneyval and that, therefore, there was no wish to comment publicly on Malta.Sven Giegold Video
The lack of women in finance is unfair to women and bad for banks, International Monetary Fund Managing Director Christine Lagarde told Yahoo Finance this week at the World Economic Forum.
“There’s something wrong,” said Lagarde, who has helmed the IMF since 2011. “If you look at the composition of boards in that sector, only 20% of them are women. If you look at the CEOs of the financial sector, only 2% are women … our societies don’t look like that. And if you look at graduates from universities and business schools, it doesn’t look like 20% or 2%. It’s a lot more than that.”…The lack of women in finance
By Kathleen A. Lahey: Women in 1995 and the establishment of the Sustainable Development Goals (SDGs) in 2015, increasing attention has been focused on how tax laws shape women’s lives, affect their access to property, incomes, and public services, and transmit gendered social expectations and stereotypes within societies, across borders, and through the generations.
Attention to the gender impact of tax laws has been accelerated by key trends in public finance policy frameworks. Beginning in 2005, the OECD and other international organizations began to recommend that countries at all levels of development focus on tax and spending cuts to stimulate economic growth. In the aftermath of the 2007/2008 global financial crisis, although many countries responded to the crisis by expanding selected spending measures to offset the recessionary effects of the crisis, the IMF began in 2010 to turn the focus back to fiscal consolidation through tax and spending cuts to promote economic recovery. Since then, the majority of countries at all levels of development began to replace crisis policies with fiscal austerity programs to cut spending on public resources and shift revenue production from progressive tax structures to regressive consumption taxes and privatization of public assets and services.
During this past decade, income inequalities have increased gaps between rich and poor due to lower levels of taxation on high incomes, increased business and individual use of transnational tax reductions and tax havens, over-reliance on shortterm extractive revenues and tax incentives to the corporate sector, and falling levels of public support for key drivers of economic development such as health, education, transportation, and income security spending…Gender, Taxation, and Equality in Developing Countries
