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The Morning Risk Report: Proposed UK Law Aims to Expose Beneficial Owners |
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Construction cranes operate on a building site in London on July 6, 2016. PHOTO: Simon Dawson/Bloomberg
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Good morning. Criminals using the U.K. property market to launder money face prison time under proposed legislation, Risk & Compliance Journal's Samuel Rubenfeld reports.
Foreign companies owning U.K. real estate will have to reveal their true, or "beneficial" owners. Failing to do so could lead to up to five years in prison, according to the bill.
The owners' names will appear on a corporate registry, making it easier for law enforcement to seize assets linked to criminals.
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The U.K. bill defines a beneficial owner as someone who holds more than 25% of the shares of an entity; controls more than 25% of the entity's voting rights; can appoint or remove the entity's directors; or exerts "significant influence or control" over the entity.
The move is part of a wider crackdown on dirty money flowing into the U.K.
Penalties for failing to reveal a beneficial owner include a ban on selling or leasing a property, a possible prison sentence and an unlimited fine. Those failing to register a foreign entity, or committing deception when registering an entity, face up to two years in prison and a fine.
Anonymous ownership of property through shell companies is legal but activists have targeted it in recent years, saying the U.K. has served as a stash-house for assets stolen by corrupt officials around the world and that foreign money has inflated housing prices.
Real estate has a “particular appeal to high-end money launderers” seeking to conceal large amounts of money using few transactions, according to a national risk assessment of money laundering and terrorism financing released last year.
More than £4.2 billion ($5.5 billion) worth of London real estate is bought with suspicious assets, recent research from anticorruption group Transparency International found.
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| Exclusive From Risk & Compliance Journal |
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Former U.S. sanctions official joins law firm. The former director of the U.S. Treasury Department's sanctions office joined the law firm Morrison & Foerster LLP.
John E. Smith, who left the Treasury Department's Office of Foreign Assets Control in April, will be co-head of the law firm's Washington, D.C. office, the firm said. He will be a partner in the firm's global risk and white-collar group, and will spend time in the firm's European and Tokyo offices.
Mr. Smith worked for OFAC for more than 11 years, rising to the directorship in February 2015. -- Samuel Rubenfeld
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Google’s advertising machine keeps racing ahead even as regulators try to construct new guardrails to curtail the internet giant’s global dominance. Alphabet Inc., Google’s parent, reported sales and profit surpassing analysts’ estimates on Monday, WSJ reports, a sign the company’s strength in online ads will help offset the impact of sweeping new European regulations for online privacy and perceived abuses of its position in the market.
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Chinese police detained the chairwoman of a pharmaceutical company which distributed hundreds of thousands of faulty vaccines to medical centres, FT reports. Gao Junfang was detained along with five other company executives from Changsheng Bio-tech, the company confirmed in a statement.
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A box of vials containing the rabies vaccine manufactured by the vaccine maker Changsheng Biotechnology, is seen next to a sealed package of the same vaccines to be recalled at a local disease prevention and control centre in Huangshan, Anhui province, China. PHOTO: REUTERS
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Nike Inc. is raising salaries for more than 7,000 employees after an internal pay review and changing how it awards annual bonuses to its global staff, part of a broad overhaul of compensation at the sportswear giant, WSJ reports. The changes, announced in an internal memo, are the latest example of efforts by Nike management to address concerns about pay equity and reshape the company’s culture, which was jolted this spring by complaints of inappropriate workplace behavior and an executive purge.
Survivors of the Las Vegas massacre on Monday sounded off on the lawsuits filed against them by MGM Resorts International that seek to shield the company from liability in the attack, WSJ reports. MGM earlier this month sued survivors of the deadliest shooting in modern U.S. history, as well as relatives of the deceased, in an effort to protect itself from potentially significant legal claims.
Friends and fans of “Guardians of the Galaxy” director James Gunn are urging Walt Disney Co. to rehire the filmmaker, Bloomberg reports, a rare moment in the #MeToo era when bad behavior has gotten some of the biggest names in Hollywood fired. Disney fired him last week after a conservative website published some of his old Tweets that included jokes about the Holocaust, pedophilia, overweight people and violence against women. He recently said he’d repeatedly apologized.
If Siemens AG set the gold standard over how to respond to scandal, then Volkswagen AG gains a bronze at best, FT reports. Investors and analysts are dismayed at the carmaker’s attempts to clean up its act. VW also lined up a former BMW executive to take over its Audi line.
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Hackers working for Russia claimed “hundreds of victims” last year in a giant and long-running campaign that put them inside the control rooms of U.S. electric utilities where they could have caused blackouts, federal officials said. They said the campaign likely is continuing, WSJ reports.
Silicon Valley has come to Houston, as tech companies push to sign oil and gas companies to lucrative cloud and artificial intelligence deals, WSJ reports. But the relationship between Silicon Valley and the energy industry is complicated.
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Some of South Korea’s biggest companies, along with law firms and a cottage industry of business consultants, are eyeing potential opportunities in North Korea, one of the world’s most difficult business environments, WSJ reports.
The growing trade in oil between the U.S. and China is now at risk, WSJ reports. The threat of Chinese tariffs on U.S. oil, combined with a recent decision by the Organization of the Petroleum Exporting Countries to lift output, suggest more cargoes from Russia and Saudi Arabia, already China’s largest suppliers, are soon bound for the Asian giant.
Fund managers’ caution underscores an unhappy fact about emerging-market sovereign bonds issued in local currencies: On average, they haven’t returned much given their well-chronicled risks, ranging from economic volatility to political upheaval.
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Sergio Marchionne’s exit as the leader of Ferrari NV is likely to upend an Italian sports-car legend whose strategy Mr. Marchionne revolutionized in recent years, WSJ reports. Fiat Chrysler hadn’t specified the nature of Mr. Marchionne’s illness but said earlier this month that he had an operation on his right shoulder. The European operations chief also announced his departure, WSJ reports.
Fannie Mae’s chief executive is slated to leave the mortgage-finance giant by year’s end, WSJ reports, creating a question mark about who will lead an important part of the housing market at a time of uncertainty about its future. Fannie said Monday it is searching for a new CEO.
A senior Pacific Investment Management Co. executive resigned after facing allegations he acted inappropriately toward a colleague, people familiar with the matter said to WSJ.
Goldman Sachs almost doubled the number of women on its senior governing body, Bloomberg reports.
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Follow the WSJ Risk & Compliance Team on Twitter: @WSJRisk, @srubenfeld, @BenDiPietro1 and @LikelyMara.
Send complaints, comments and kudos to Ben DiPietro at ben.dipietro@wsj.com.
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