In today's electronic world, there are several new instances of sophisticated financial fraud. Some cases are easier to detect, however, in an increasingly uncertain economic environment, mostly because of the unease of the US Dollar and the increasing strength and influence of the Euro. This has resulted in “banking instrument” fraud becoming increasingly common. I decided to write this article because as an international tax lawyer my offices have been receiving more than a dozen requests per month from honest clients looking to make money with a “sophisticated project” simply to discover that the “project” was on par with letters from Nigeria that promise unclaimed fortunes to appear on your doorstep because a dying uncle mentioned you in his will. I also compiled the list below with help from other credible sources I found on the internet.
In general, if you are approached to make a high yield income investment or to become involved in the prime bank investment fraud, then you should carefully look at the documentation that you are asked to sign and always use the advise of an experienced professional such as an accountant or a lawyer. Such documents are normally filled with meaningless legal gibberish that are relatively easy to spot if you are dealing with fraudsters.
Some of the typical phrases you should look for are set out below. Some of them are meaningless and have no legal definition, but they were inserted into the documents or proposal in order to impress unsuspecting investors:
· Ready Willing and Able
· Prime Bank Guarantees (PBGs)
· Prime Bank Notes (PBNs)
· Guaranteed by Top 100 World Prime Bank
· Unconditional S.W.I.F.T. Wire Transfer
· Freely negotiable, irrevocable, clear SWIFT wire transfers
· Callable Conditional Sight Drafts
· Closing Bank
· Issuing Bank
· Fiduciary Bank
· Bank Menu
· International Banking Days
· ICC (International Chamber of Commerce) 400
· UCC (Uniform Commercial Code) Form references
· Banking co-ordinates
· Fresh cut paper
· Seasoned paper
· Collateral Houses, Collateral Source, Collateral Supplier
· Collateral First Transaction
· Grand Master Collateral Commitment
· Validation of the MCC (Master Collateral Commitment)
· Collateral Purchase Orders
· Collateral Provider
· Instruments delivered free of all liens and/or encumbrances
· Non-circumvention and Non-disclosure agreements
· Irrevocable Pay Order
· Irrevocable, irretraceable commitment of funds to purchase instruments
· Lending Bank, Funding Bank, Closing Bank
· Good clean cleared funds of non-criminal origin
· With full corporate and legal responsibility
· Interest at seven and one half percent, payable annually in arrears
· 5, 10, 20 years etc. plus one week or one day
· Fully binding commercial letter contract
· Client Company Principals
· Transaction Trenches
· Millions or Billions of US dollars with rolls and extensions
· Emissions, remission, commissions and fallout
· Transaction parameters
· There is to be no communication with our bank other than through the normal bank channels, no phone call allowed
If you see two or three of the above all in one document, then you ought to seriously consider whether or not fraud is involved and take reputable independent legal advice.
In the next part we will describe more about the most common fraudulent transactions: “Bank Guarantees” and “Discounted Bank Instruments”.
John A. Neocleous is the founder and Managing Partner of NCI Law Group , Neocleous & Neocleous law firm and NCI Finance Group. John has over 14 years of professional experience in the areas of international tax, corporate and criminal law, both as an academic and also as a practitioner in over 50 countries worldwide.
Sunday, September 21, 2008
Sunday, August 10, 2008
Advantages of the Cyprus Economic Zone for Russian Companies Part-2
Usually, Russian companies would pay 35 percent tax on profits, plus a 20 percent VAT tax, and a 40 percent tax for social security and employee benefits, in Russia. However, when Russian business is structured in a way that a Cyprus company owns it (which does not require any physical presence in Russia), all its profits will be legally transferred to Cyprus and is liable for only a 4.5 percent tax on profits and a 15 percent VAT tax. Russian business escapes the 40 percent tax for social services, accordingly. This tax advantage makes it possible to channel profits in the form of dividends at a reduced rate.
As for example, a Cyprus Holding company can be used for international investment purposes. Basically, it is use of the tax incentives and the treaties for the avoidance of double taxation. The most important advantage of a Cyprus Holding Company is that the dividends received by the foreign company can flow totally tax free in Cyprus through the Holding Company, avoiding in this way the payment of any tax on dividends. Furthermore, payments made to non-Cyprus Resident Shareholders there is zero (0) withholding tax, so the Shareholder receives the dividends absolutely tax free.
Payment of interest on loans is another advantageous method for Russian businesses. Under the Cyprus Law, Russian Company partly owned by Cypriot Company and paying its interest on loans to the Cypriot company, effectively minimizing its taxation. However, the interest payments are not necessarily will be paid to the Cyprus Company. It is the most effective method which allows Russian company to avoid almost all its tax payments..
Russian businesses which structured into a Cypriot companies for maintaining its business activities within territory of Russia, are able to transfer there revenue earned in Russia abroad in the form of dividends and interest, at considerable tax savings. Companies registered in Cyprus jurisdiction pay lower taxes than those paid in Russian jurisdictions.
All the above mentioned structures are based on "Cyprus economic zone” of reduced taxation and perfectly legal, furthermore its tax advantage may be enhanced even more when, under certain circumstances, is combined with other jurisdictions in appropriate legal structures.
In the last 30 years Cyprus has developed into a reputable international business and financial centre due to the very favorable tax regime that the island offers. The admission of Cyprus to the European Union as full member in May 2004, established Cyprus as a prestigious, stable and attractive jurisdiction.
Though the offshore company status was abolished as from January 1, 2003 the favorable tax regime for the international investor has been maintained. In addition, the liberalization of investments coming from non-EU countries and the abolition of maximum and minimum participation percentages in investments in all the sectors of the economy in October 2004 (unless it is otherwise provided by the Law), has transformed Cyprus into a major destination for the location of international, holding companies and worldwide investments.
As for example, a Cyprus Holding company can be used for international investment purposes. Basically, it is use of the tax incentives and the treaties for the avoidance of double taxation. The most important advantage of a Cyprus Holding Company is that the dividends received by the foreign company can flow totally tax free in Cyprus through the Holding Company, avoiding in this way the payment of any tax on dividends. Furthermore, payments made to non-Cyprus Resident Shareholders there is zero (0) withholding tax, so the Shareholder receives the dividends absolutely tax free.
Payment of interest on loans is another advantageous method for Russian businesses. Under the Cyprus Law, Russian Company partly owned by Cypriot Company and paying its interest on loans to the Cypriot company, effectively minimizing its taxation. However, the interest payments are not necessarily will be paid to the Cyprus Company. It is the most effective method which allows Russian company to avoid almost all its tax payments..
Russian businesses which structured into a Cypriot companies for maintaining its business activities within territory of Russia, are able to transfer there revenue earned in Russia abroad in the form of dividends and interest, at considerable tax savings. Companies registered in Cyprus jurisdiction pay lower taxes than those paid in Russian jurisdictions.
All the above mentioned structures are based on "Cyprus economic zone” of reduced taxation and perfectly legal, furthermore its tax advantage may be enhanced even more when, under certain circumstances, is combined with other jurisdictions in appropriate legal structures.
In the last 30 years Cyprus has developed into a reputable international business and financial centre due to the very favorable tax regime that the island offers. The admission of Cyprus to the European Union as full member in May 2004, established Cyprus as a prestigious, stable and attractive jurisdiction.
Though the offshore company status was abolished as from January 1, 2003 the favorable tax regime for the international investor has been maintained. In addition, the liberalization of investments coming from non-EU countries and the abolition of maximum and minimum participation percentages in investments in all the sectors of the economy in October 2004 (unless it is otherwise provided by the Law), has transformed Cyprus into a major destination for the location of international, holding companies and worldwide investments.
Thursday, July 17, 2008
Advantages of the Cyprus Economic Zone for Russian Companies Part - 1
Nicosia, 27 June 2008 - Cyprus is one of the most advantageous places of residency for Russian and Ukrainian companies. It offers a high level of banking, auditing, accounting and legal services, as well as its real estates, which developed Cyprus into a successful international business and financial centre.
Some of the main factors and advantages which secure Cyprus’ attractiveness to international businesses and investments are the following:
1. 10% corporate tax rate for business profits;
2. No withholding taxes imposed on dividends, interest and royalties for non-residents (whether a company or an individual);
3. Income from dividends is exempt from income or corporation tax;
4. The attractive platform and tax regime that Cyprus provides for a holding company (i.e. subject to certain conditions full exemption from local taxation in respect of dividends received by a holding company from its local and foreign subsidiaries);
5. The attractive platform and tax regime that Cyprus provides for international trusts;
6. The network of favorable double taxation treaties that Cyprus maintains with more than 40 countries including Russia and most of the ex Soviet Union Republics;
7. Tax advantages available to non-residents including non - E.U. residents;
8. Cypriot tax regime permits losses to be carried forward indefinitely;
9. The geographic location of Cyprus, located at the crossroads of Europe, Asia and Africa;
One of the mentioned above factors is a double taxation treaty between Russia and Cyprus, which provides to Russians many tax advantages. Agreement was signed between Russia and Cyprus for the avoidance of double taxation with respect to taxes on income and capital, back on 17 August 1999. The treaty provides for either the exemption of income in the source country or the provision of tax credit in respect of the foreign tax paid by the country of tax residence.
By John Neocleous
To be continued
Some of the main factors and advantages which secure Cyprus’ attractiveness to international businesses and investments are the following:
1. 10% corporate tax rate for business profits;
2. No withholding taxes imposed on dividends, interest and royalties for non-residents (whether a company or an individual);
3. Income from dividends is exempt from income or corporation tax;
4. The attractive platform and tax regime that Cyprus provides for a holding company (i.e. subject to certain conditions full exemption from local taxation in respect of dividends received by a holding company from its local and foreign subsidiaries);
5. The attractive platform and tax regime that Cyprus provides for international trusts;
6. The network of favorable double taxation treaties that Cyprus maintains with more than 40 countries including Russia and most of the ex Soviet Union Republics;
7. Tax advantages available to non-residents including non - E.U. residents;
8. Cypriot tax regime permits losses to be carried forward indefinitely;
9. The geographic location of Cyprus, located at the crossroads of Europe, Asia and Africa;
One of the mentioned above factors is a double taxation treaty between Russia and Cyprus, which provides to Russians many tax advantages. Agreement was signed between Russia and Cyprus for the avoidance of double taxation with respect to taxes on income and capital, back on 17 August 1999. The treaty provides for either the exemption of income in the source country or the provision of tax credit in respect of the foreign tax paid by the country of tax residence.
By John Neocleous
To be continued
Tuesday, July 15, 2008
NEOCLEOUS & NEOCLEOUS LAW FIRM WILL REPRESENT CYPRUS FAMILIES BEFORE THE EUROPEAN COURT OF HUMAN RIGHTS IN STRASBOURG
Nicosia, Cyprus, June 1, 2008 - The case of Onoufriou v Turkey is part of a number of pilot Cases brought upon by Greek-Cypriot refugees against the Turkish Government and will be presented by Mr. Andreas Neocleous and Mr. Ioannis John Neocleous before the European Court of Human Rights in Strasbourg.
On April 23rd 2008, the European Court of Human Rights (ECHR) decided that the applicant could not be deemed to have lost entitlement to his property.
Displaced Greek Cypriots such as the applicant may apply for compensation to the Court for losses due to the denial of access to and loss of control, use, and enjoyment of his property.
Thirty-two petitions of Greek Cypriot refugees against Turkey have been accepted by the European Court of Human Rights and will be examined soon.
Eight more applications will follow, which are considered pilot cases for determining the future of the so called compensation committee. This committee has been set up in the Turkish occupied areas of Cyprus, and it hopes to become an effective domestic remedy for Greek Cypriots, who must first apply with regards to claims on their property.
Apart from the above cases, 1.500 additional petitions are pending before the ECHR. The Court decided to freeze them in view of the decisions to be taken regarding the eight pilot cases.
Cyprus has been divided since 1974 when Turkey invaded and occupied its northern third.
At the present time, Neocleous & Neocleous Law Firm (NCI Law Group’s Cyprus Office) is handling over 15 cases which are currently under the consideration of the European Court of Human Rights (ECHR).
- By John Neocleous
On April 23rd 2008, the European Court of Human Rights (ECHR) decided that the applicant could not be deemed to have lost entitlement to his property.
Displaced Greek Cypriots such as the applicant may apply for compensation to the Court for losses due to the denial of access to and loss of control, use, and enjoyment of his property.
Thirty-two petitions of Greek Cypriot refugees against Turkey have been accepted by the European Court of Human Rights and will be examined soon.
Eight more applications will follow, which are considered pilot cases for determining the future of the so called compensation committee. This committee has been set up in the Turkish occupied areas of Cyprus, and it hopes to become an effective domestic remedy for Greek Cypriots, who must first apply with regards to claims on their property.
Apart from the above cases, 1.500 additional petitions are pending before the ECHR. The Court decided to freeze them in view of the decisions to be taken regarding the eight pilot cases.
Cyprus has been divided since 1974 when Turkey invaded and occupied its northern third.
At the present time, Neocleous & Neocleous Law Firm (NCI Law Group’s Cyprus Office) is handling over 15 cases which are currently under the consideration of the European Court of Human Rights (ECHR).
- By John Neocleous
Monday, June 30, 2008
Neocleous & Neocleous and NCI Law Group (Cyprus)
Neocleous & Neocleous and NCI Law Group (Cyprus) Announce Closure of its Bellevue Office Location
Bellevue, WA April 1, 2008
Due to overwhelming number of cases handled by the European offices as well as the relocation of managing partners to Europe, the USA office was officially closed on April 1, 2008, and the administration of its cases transferred to the European Offices in Cyprus and Switzerland.
The European Offices addresses for NCI Law Group are (as of July 1st, 2008):
Cyprus Office
Nikis Centre
11 Kyriakos Matsis Ave.
5th Floor
1086 Nicosia
Cyprus
Tel: +357-22-680-670
Fax: +357-22-426-921
E-mail: info@ncilawgroup.com
Swiss Office
16 Place St. Francois
1003 Lausanne
Switzerland
Tel: +41-21-643-1028
Fax: +41-21-643-1027
E-mail: info@ncilawgroup.com
NCI Law is an international law firm founded by Ioannis John Neocleous that serves the needs of businesses, governments, non-profit organizations and individual clients around the world. We provide a broad array of corporate legal services to a diverse client base that ranges from start-up ventures to large multinational companies since 1996.
Bellevue, WA April 1, 2008
Due to overwhelming number of cases handled by the European offices as well as the relocation of managing partners to Europe, the USA office was officially closed on April 1, 2008, and the administration of its cases transferred to the European Offices in Cyprus and Switzerland.
The European Offices addresses for NCI Law Group are (as of July 1st, 2008):
Cyprus Office
Nikis Centre
11 Kyriakos Matsis Ave.
5th Floor
1086 Nicosia
Cyprus
Tel: +357-22-680-670
Fax: +357-22-426-921
E-mail: info@ncilawgroup.com
Swiss Office
16 Place St. Francois
1003 Lausanne
Switzerland
Tel: +41-21-643-1028
Fax: +41-21-643-1027
E-mail: info@ncilawgroup.com
NCI Law is an international law firm founded by Ioannis John Neocleous that serves the needs of businesses, governments, non-profit organizations and individual clients around the world. We provide a broad array of corporate legal services to a diverse client base that ranges from start-up ventures to large multinational companies since 1996.
Thursday, June 26, 2008
NCI Law Group Launches its New Web Site
Nicosia, Cyprus, June 18, 2008 – NCI Law Group Ltd. announced today the launch of its new corporate Web site www.ncilawgroup.com, which is highlighting its legal and corporate services, worldwide.
The new web site provides its visitors with information ranging from business summaries, to services descriptions on each one of the NCI Law Group international office and its partners, “at-a-glance”.
Each service page of the site identifies services provided by our Group says Mr. Ioannis John Neocleous, Managing Director while our “Latest News” section will be monitoring updates not only on oncoming or ongoing events of the Group, but provide latest updates on any changes in legal, tax and other areas related to our businesses. We believe that it is of great benefit to our Clients to keep them up to date.
The new web site provides its visitors with information ranging from business summaries, to services descriptions on each one of the NCI Law Group international office and its partners, “at-a-glance”.
Each service page of the site identifies services provided by our Group says Mr. Ioannis John Neocleous, Managing Director while our “Latest News” section will be monitoring updates not only on oncoming or ongoing events of the Group, but provide latest updates on any changes in legal, tax and other areas related to our businesses. We believe that it is of great benefit to our Clients to keep them up to date.
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