Manhattan DA: Cayman ‘better positioned’ to fight terrorism finance

The Cayman Islands is better positioned to police terrorism financing than the U.S., an American congressional subcommittee heard Wednesday.

The comments came from New York County District Attorney Cyrus Vance, who was called before the U.S. House Task Force to Investigate Terrorism Finance.

“On a near daily basis, we encounter a company or network of companies involved in suspicious activity, but we are unable to glean who is actually controlling and benefiting from those entities, and from their illicit activity,” Mr. Vance said. “In other words, we can’t identify the criminal.

“This is not because the entities are incorporated in an offshore tax haven like the Cayman Islands. That country actually collects beneficial ownership information. Often, that entity is incorporated in the United States – and it’s incorporated in the U.S. precisely because we don’t collect beneficial owner information. In this important way, the prosecutor sitting in the Cayman Islands is better positioned to root out terrorism finance in her own markets than I am in ours.”

Mr. Vance gave what he termed a “shocking” account to the congressional subcommittee where a district attorney’s office investigator, “putting on her best French accent,” called an incorporation services company in Delaware, USA. The “undercover” investigator told the company representative she spoke to that she wished to incorporate an entity in Delaware, but wished to remain anonymous because of “estate issues” in France.

“She was told that this would not be a problem, a corporation could be set up in five minutes – she needed to provide only a name and email address,” Mr. Vance said.

Mr. Vance, along with his predecessor in the office, Robert Morgenthau, have long backed the U.S. bill known as the Incorporation Transparency and Law Enforcement Assistance Act.

In 2009, Mr. Morgenthau told a congressional committee that the passage of the legislation through congress would assist local, state and federal investigations into penny stock “pump and dump” schemes, illicit cash movements from state-sponsored terrorist groups and money laundering activities as well.

“The bill focuses on ensuring that law enforcement officials with a valid subpoena or summons may access beneficial ownership information and it explicitly permits states to restrict the provision of beneficial ownership information to persons other than law enforcement,” Mr. Vance said.

The position with regard to beneficial ownership is the same one taken by Cayman Islands Financial Services Minister Wayne Panton, who has supported strengthening the islands’ beneficial ownership registry information, but who has opposed its general release to the public.

U.K. Prime Minister David Cameron has urged all British Overseas Territories to adopt a public beneficial ownership registry.

“We see no need for a [public] central registry that would increase costs to business and the country and also create a potential single data source which motivated and skilled individuals would hack into for gain,” Cayman Islands Premier Alden McLaughlin said earlier this year. “None of the G-20 principles speak to a public registry at all. I suspect this is for a good reason, because it is a bad idea. None of the G-20, other than the U.K. will likely implement it, and neither will the Cayman Islands.”

Money laundering

The U.S. Attorney General’s Office, while investigating criminal allegations against a number of FIFA officials, has flagged up “the centrality of the U.S. financial system” in the numerous bribes and kickbacks described in the scheme.

Those bribe payments, federal prosecutors allege, were made by sports marketing companies to ranking members of FIFA in exchange for receiving the commercialization rights to various football tournaments, including World Cup qualifying matches.

While the indictment filed in the U.S. District Court, Eastern District of New York does acknowledge the “use of shell companies, nominees and numbered bank accounts in tax havens in other secretive banking jurisdictions,” it focuses on the American financial structures used in the racketeering scheme.

“The defendants and their co-conspirators relied heavily on the U.S. financial system in connection with their activities,” the indictment states. “This reliance was significant and sustained and was one of the central methods and means through which they promoted and concealed their schemes.”

Those instances included allegations that:

– FIFA wired billions of dollars from a major Swiss bank to beneficiary accounts in the U.S.

– CONCACAF [FIFA’s regional organization in North and Central America and the Caribbean] and CONMEBOL [FIFA’s regional organization in South America] conducted business in accounts at New York and Florida banks

– The Caribbean Football Union, along with two South American football associations, also conducted business at New York and Florida banks

– FIFA defendants, including Jeffrey Webb and Costas Takkas, personally controlled bank accounts in New York, Miami and San Francisco.