Mauritius: Authorities announce new unit against financial crime and new powers to sanction offshore entities

The Bank of Mauritius has announced the creation of a “Market Intelligence Cell” with the mandate of preventing and sanctioning financial crimes which could destabilize the local financial sector, says lemauricien.com.

The BoM has called on the general public to cooperate with the new Cell, assuring that information shared with it will be held confidential, preserving the anonymity of informants if so requested.

A second article reports that the Mauritius Financial Services Commission has been granted new powers to impose administrative sanctions against offshore entities which do not comply with reporting requirements. The new regulations will come into effect as of April 1st 2014.

“In addition, the FSC continues its campaign to reassure India about its commitment to fight against any abuse of the Treaty of double taxation.”

The article also says that Mauritius has decided to include a clause in the framework of the revision of the India-Mauritius treaty referring to “limitation of benefits to further ringfence its jurisdiction from any attempts of round-tripping and money laundering activities,” and that Mauritius has expressed willingness to sign a Tax Information and Exchange Agreement (TIEA) between the two countries.

For more on round-tripping via Mauritius please the Tax Justice Network blog here and here. Mauritius is ranked 19th on the 2013 Financial Secrecy Index.

Offshore provider: company registrations recovering from recession, total now 5% above 2008 levels

Offshore service provider Appleby yesterday published a report (pdf) with statistics on company registrations in Bermuda, British Virgin Islands, Cayman Islands, Guernsey, Isle of Man, Jersey and Mauritius. All of these jurisdictions are in the top 20 on the 2013 Financial Secrecy Index except for the Isle of Man, ranked 34th.

“As the global economy appears to be stabilising, the company registration data reveals that levels of new company registrations in several jurisdictions have accelerated following a faltered growth pattern during the second half of 2012.”

“In the first half of 2013 there were 38,416 new offshore company incorporations in total. Although this represented a small decrease of 3% on the preceding six months in 2012, this was primarily due to a seasonal decline in incorporations in the British Virgin Islands (BVI), which has a disproportional effect on the total figures. Elsewhere, with growth at around 8-9%, most offshore jurisdictions are close to growth levels seen in onshore comparators the UK and Hong Kong. The UK is, as we would expect, leading this growth with an 11% increase.”

Looking a bit closer at the data in the report, it would have made sense to also compare numbers for the first half of 2013 with the same period in 2012 rather than just with the second half.  But this would have shown either a 9% fall year-on-year if BVI is included, or a slight fall of 0,3% if BVI is excluded, which doesn’t fit as well with the upbeat message an offshore service provider wants to be sending to its customer base.

In any case, despite its decline BVI “continues to dominate offshore new company registration activity by volume, and has consistently maintained a six-fold lead ahead of its nearest comparator, the Cayman Islands, and kept up a steady pace of circa 30,000 new companies registered each half year”.

The graph below shows the leading role of the British Virgin Islands among these 7 offshore markets.

New offshore company incorporations, first half 2013

company registrations

*estimated

Source: based on data compiled by Appleby Global

The report also has statistics on the total number of companies registered in the seven jurisdictions: 674.385 as of the 1st half of 2013, a figure “5% larger than pre-recession 2008”.

Luxembourg: Financial industry seeks to compete with Mauritius for Indian offshore business

This brief article on wort.lu on a seminar organized by the Indian Business Chamber Luxembourg is an example of uncritical reporting by media in secrecy jurisdictions.

Under the innocuous title “Business head calls for flights between Luxembourg and India” the article starts with:

“Launching a direct flight connecting Luxembourg to India was among the proposals made at a seminar on cross-border investments on Wednesday.”

and then continues

“The idea was put forward by international tax expert Stéphane Pellet, a partner at “Etude Felten & Associés” at a seminar organised by the Indian Business Chamber Luxembourg (IBCL).”

The Felten & Associes website lists “bank secrecy” as one of its areas of practice.

The speaker “…highlighted a number of opportunities, which Luxembourg could exploit, namely to position the country as a European hub for currency exchange to be held in rupees.”

“The country’s next goal, he said, should be to compete effectively with countries like Mauritius, through which 43 percent of investment to India is done.”

The article fails to mention that Mauritius is a secrecy jurisdiction, that the high levels of investment into India via Mauritius have been linked to round-tripping by Indian investors, and that recent reports find that Mauritius is being used by global accounting firms such as Deloitte to help multinationals avoid tax in Africa. Deloitte, by the way, is one of the corporate members of the India Business Chamber Luxembourg, together with the rest of the Big 4 accounting firms, as well as major banks and clearing houses.

Luxembourg is ranked 2nd on the 2013 Financial Secrecy Index. The accompanying country report notes that: “The local media only rarely dares speak out against finance or financial secrecy, and numerous examples exist of the repression of alternative views.”

Offshore provider: company registrations down, but hopeful of return to pre-2009 levels

According to this report by Appleby Global, registrations were down in the Isle of Man, Mauritius, the British Virgin Islands and the Cayman Islands, while Bermuda and Hong Kong posted increases.

“The extent to which the effects of political pressure on the offshore jurisdictions to conform to emerging regulations around tax and transparency are unknown, however it is unlikely to have had a significant impact given that these jurisdictions are already very accustomed to complying with the evolving regime of transparency and information exchange.” (bold added)

Appleby “is one of the world’s largest providers of offshore legal, fiduciary and administration services”.