Issue link: https://maltatoday.uberflip.com/i/1312765
5 maltatoday | WEDNESDAY • 25 NOVEMBER 2020 NEWS 'MaltaFiles' firm Credence fined €261,000 over money laundering shortcomings MATTHEW VELLA CORPORATE services provider Credence, which featured in an extensive European Investigation Collaborations exposé on tax avoidance in Malta, has been fined €261,000 by the Financial Inves- tigation Analysis Unit for breaches of various money laundering obli- gations. Credence Corporate Advisory Services is a Mal- tese law firm which featured in stories on the the existence of Turkish president Recep Tayy- ip Erdoğan's family's offshore network, revealed by The Black Sea as part of its reporting on the #MaltaFiles; and for provid- ing corporate services to Russian billionaire Oleg Boyko's fast loan company, to save millions in tax by remitting profits to Malta. The FIAU said it found short- comings in the company's ob- ligations, specifically failing to identify an ultimate beneficial owner ("UBO") and other de- tails pertaining to the UBO's agent; and in six files classified as 'high' risk, only three files had had enhanced due dilegence per- formed. In another file, it resulted that the client had connections with Iran and Panama, both of which appear on the FATF's list of high risk and other mon- itored jurisdictions. Although the company did collect addi- tional documentation on this client and even appointed two in-house directors, these meas- ures were not deemed sufficient as the nature of the activities involved demanded a higher level of o-going monitoring and a better understanding of the economic rationale behind the transactions taking place. In another file, apart from the fact that the UBO of the entity was featured in adverse media, the company failed to take action to duly understand the activity of the company and mitigate the risks associated with the same. The FIAU said Credence had failed to gather essential infor- mation on why a $30 million loan was necessitated for the company in question, and the nature of the end-customers who recieved the loans, and howthe client would be generating a sufficient return to meet the eventual repayment of the loan. It also transpired that the UBO of one of the clients was a Polit- ically Exposed Person ("PEP") who had also featured in adverse media in relation to bribery and corruption. Although Credence as in-house director was a signa- tory on the client's bank account, this measure was not consid- ered as sufficient to mitigate the risks of the customer. "No sen- ior management approval was sought despite the UBO being a PEP, and that no supporting documentation in relation to the PEP's source of wealth and funds were obtained." Credence failed to carry out EDD on two high-risk custom- ers, one involved in the mining of precious metals and sale of chemicals, the other in renew- able energy; they had no plausi- ble explanation for a $24 million loan and the absorption of an- other €15.9 million loan. In another file, the FIAU called to attention a number of loan agreements with Panamanian companies for capital expendi- ture to a Maltese company that was Credence's client. Lastly, in another file, the Company did not collect source of wealth in- formation on the settlors of the trust, despite these being classi- fied as PEPs. In one file, five credit transac- tions were highlighted, all mak- ing reference to a €20 million loan agreement between the UBO of the client and the client company, for the purpose of rais- ing capital. Credence was unable to provide evidence as to how the UBO could sustain such a high-value loan. While €17 mil- lion were utilised to purchase a company, Credence did not as- certain that the purchase of such a company actually took place or that the company was actually valued at such amount. In another file reviewed, three substantial transactions, one of them a debit transaction exceed- ing $2,500,000, no information was available on this transaction. The FIAU expressed its concern that Credence was dependent on the client's third-party account- ant to provide the information needed, despite the fact Cre- dence also offered directorship services. PAUL COCKS ADPD has welcomed the Church in Malta's recognition of how wellbeing in a country goes be- yond the measure of the Gross Domestic Product (GDP), as high- lighted in a document on wellbe- ing and quality of life published by the Maltese diocese last week. In a statement on Tuesday, AD- PD praised the Church for recog- nising, black on white, that well- being depends on many factors. Before merging into one party, AD and PD had already been in- sisting on the need for holistic pol- icies which recognise that people need healthy societies, and that wellbeing also means living within the limits imposed by nature. Var- ious NGOs have also been work- ing to promote wellbeing. "Our proposals for a better qual- ity of life range from those on the principle of environmental pro- tection to become an enforceable constitutional principle, to eco- nomic and social proposals in the Green New Deal drawn up with our European Green Party part- ners, and in the post-pandemic Green Plan for Malta," the party said. ADPD secretary general Ralph Cassar said that GDP should be just one of a whole set of wellbe- ing indicators used to measure the social and ecological wellbeing of the country. These new indicators should be used to guide economic policy and decisions on where govern- ment spending should be targeted to improve wellbeing. "We propose a multi-year budget plan rather than short-termism inherent in one-year budgeting," he said. "GDP, in fact, does not measure the effects of econom- ic decisions on poverty, equality, the sustainability of the economic model, and the devastating effects of certain policies on the climate and ecosystems." Cassar said it is also high time that the country adopts eco- nomic policies based on the con- cept of 'doughnut economics', which recognise the need to cal- ibrate economies, including on a European and global scale, to provide a good life for all while respecting the ecological limits of our planet. Wellbeing indicators that go beyond GDP sorely needed – ADPD