Guest blogger: Rudolf Elmer, whistleblower
Rudolf Elmer, the whistleblower in the Julius Baer case (see him in The Guardian here) wrote a blog for us in December, with some important suggestions for those working offshore, such as how to spot when business is dirty. Now he has written us another one, with a forward-looking approach.
A positive approach towards Offshore!
Even as a whistleblower I am not against offshore. I am against the abuse of offshore and that is a big difference, because abuse spoils the reputation of legitimate business. Today I want to write about what an accountant, banker, lawyer or employee might do when working offshore, in order to feel good about his or her work.
All of us should deal with the business we are processing in a particular way, so as to:
• comply with internal regulations, local and international anti-money laundering laws;
• reduce the risk of being jailed as a result of not performing the work we are requested to do for legal or ethical and moral reasons;
• strengthen or even rebuild a good reputation of the offshore world
I am convinced the general approach should be as follows:
•Do not do anything unless you understand it -- even if it is a complex offshore structure.
•Do not process any transaction, or set up any bank accounts or accounting files until you are certain that Know your Client (KYC) requirements are completed and signed off by management or directors.
•Do not sign any documents before you have the KYC completed.
•Do not process any transactions until the source of funds have been fully and clearly explained. For example, it is insufficient to say “from the client’s bank account with Bank XYZ.” Be totally specific.
•Wherever you work, make sure that Management or Directors take responsibility; they have signed off on KYC and the explanation of source of funds. If they have not you are at high risk of becoming liable for any misconduct because you accepted the client’s transactions personally.
Central to all of this is that you must “know your customer” in and out -- what the purpose of the transactions are concerned. There is no excuse if you do not know! This clearly means that
•YOU must ask questions initially
•YOU must continue to ask question when the relationship goes on
•YOU must ask question until you are comfortable with the answers. In a worst-case scenario, the judge will ask YOU why YOU had not asked them.
•You only can be comfortable with the answers when you understand them. This way, you can explain to authorities, supervisors or judges why you accepted the funds, or processed the transaction. Why, why, why?
•If YOU are unable to answer those why questions YOU might be committing a criminal offence. You might go to jail for not being able to answer the why questions.
These “Why” questions are a very serious matter these days, and you will be tested if a client of yours is investigated not only by Management but also by Banking Supervisors, by Auditors and eventually by the Judges.
It is not acceptable any more to think “I cannot ask these questions because I will lose the business." If this is so, then you should question why you would want to keep the business. Why would legitimate clients, settlors, beneficiaries, beneficial owners and so on not be in a position to answer those questions?
Unfortunately, many offshore employees have a strong service-oriented mentality, which can be a big problem: asking questions can be embarrassing or feel intrusive. Reflecting on this in hindsight, from a jail cell, is too late. So compare the perceived embarrassment with the real embarrassment of a court case or trial or fine or jail sentence.
Jail sentences are real possibilities now, anywhere: it has happened, and that means prosecution of company staff, not just companies, who have not asked the crucial questions or not understood a piece of business. Times have changed.
If you can answer those questions and understand the answers, you are dealing with legitimate business, even it runs through offshore. This is possible!
Rudolf Elmer, a whistleblower who enjoyed his work.
A positive approach towards Offshore!
Even as a whistleblower I am not against offshore. I am against the abuse of offshore and that is a big difference, because abuse spoils the reputation of legitimate business. Today I want to write about what an accountant, banker, lawyer or employee might do when working offshore, in order to feel good about his or her work.
All of us should deal with the business we are processing in a particular way, so as to:
• comply with internal regulations, local and international anti-money laundering laws;
• reduce the risk of being jailed as a result of not performing the work we are requested to do for legal or ethical and moral reasons;
• strengthen or even rebuild a good reputation of the offshore world
I am convinced the general approach should be as follows:
•Do not do anything unless you understand it -- even if it is a complex offshore structure.
•Do not process any transaction, or set up any bank accounts or accounting files until you are certain that Know your Client (KYC) requirements are completed and signed off by management or directors.
•Do not sign any documents before you have the KYC completed.
•Do not process any transactions until the source of funds have been fully and clearly explained. For example, it is insufficient to say “from the client’s bank account with Bank XYZ.” Be totally specific.
•Wherever you work, make sure that Management or Directors take responsibility; they have signed off on KYC and the explanation of source of funds. If they have not you are at high risk of becoming liable for any misconduct because you accepted the client’s transactions personally.
Central to all of this is that you must “know your customer” in and out -- what the purpose of the transactions are concerned. There is no excuse if you do not know! This clearly means that
•YOU must ask questions initially
•YOU must continue to ask question when the relationship goes on
•YOU must ask question until you are comfortable with the answers. In a worst-case scenario, the judge will ask YOU why YOU had not asked them.
•You only can be comfortable with the answers when you understand them. This way, you can explain to authorities, supervisors or judges why you accepted the funds, or processed the transaction. Why, why, why?
•If YOU are unable to answer those why questions YOU might be committing a criminal offence. You might go to jail for not being able to answer the why questions.
These “Why” questions are a very serious matter these days, and you will be tested if a client of yours is investigated not only by Management but also by Banking Supervisors, by Auditors and eventually by the Judges.
It is not acceptable any more to think “I cannot ask these questions because I will lose the business." If this is so, then you should question why you would want to keep the business. Why would legitimate clients, settlors, beneficiaries, beneficial owners and so on not be in a position to answer those questions?
Unfortunately, many offshore employees have a strong service-oriented mentality, which can be a big problem: asking questions can be embarrassing or feel intrusive. Reflecting on this in hindsight, from a jail cell, is too late. So compare the perceived embarrassment with the real embarrassment of a court case or trial or fine or jail sentence.
Jail sentences are real possibilities now, anywhere: it has happened, and that means prosecution of company staff, not just companies, who have not asked the crucial questions or not understood a piece of business. Times have changed.
If you can answer those questions and understand the answers, you are dealing with legitimate business, even it runs through offshore. This is possible!
Rudolf Elmer, a whistleblower who enjoyed his work.
posted by TJN at 11:47 pm
1 Comments:
The advice given here is common sense and should be very familiar to anyone working in a well regulated jurisdiction 'onshore' or 'offshore'.
I work in an 'offshore' jurisdiction, the company I work for is relatively young.
If business does not have a clear and understandable rationale and is not backed up by clear legal and tax advice then it simply will not be taken on.
p.s. you might want to update the reference 'KYC' to 'CDD' to bring this up to date.
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