SUGGESTIONS FOR TAX BILL

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Central Bank of Solomon Islands. Photo by CBSI
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CBSI: new law should have anti-laundering and combatting financing terrorism clause

By EDDIE OSIFELO

CENTRAL Bank of Solomon Islands (CBSI) wants to see anti-money laundering/combating the financing of terrorism (AML/CFT) included in the Tax Administration Bill 2022.

Governor Dr Luke Forau stated this when appeared before the Bills and Legislative Committee last Thursday.

The committee is inquiring into the Tax Administration Bill 2022.

“With this early new phenomenon, in other jurisdictions around the world they tend to institute laws to minimise or stop the prevalence.

“Although we have an Act specifically on this area but we think in our view it is necessarily important that an AML CTF must also be featured in these sections or somewhere in this Bill,” he said.

Forau said this is to ensure that sources of funds used to pay taxes are cleaned and not source from money laundering or terrorist financing activities to investigate sources of funds.

“That the funds are not from illegal activities, and if they are found to be from illegal activities, off course Commissioner (Inland Revenue Division) should take this further to the court of law.

“Now the policy rational that we think should be included in this, the country cannot afford to be branded that our tax system facilitates money laundering or terrorism financing activities,” he said.

Forau said one thing is if the country is branded under this and then we are blacklisted, it is very difficult for us to get out of the blacklist and there are so many processes to go through.

“So, we must not put the country’s reputation at risk, if we do then it will lead to other areas especially in international trade.

“So, we suggest that an additional section should be included either in this division or other areas that empower the Commissioner to look at this area,” he added.

Furthermore, he said CBSI does not supervise casinos whether conducting money laundering activities or not.

He said it is high time Government introduce independent bodies to look at supervising this kind of business.

Opposition Leader, Matthew Wale asked if legal business using illicit gains to pay tax, will that have done in cash.

Forau, who was also part of the Money Laundering Commission, said there are couple of ways to look at it.

“Once people of money laundering, they are smart to make their way around, first thing to do to clean up the money.

“Do legit investment and it becomes clean and used to pay tax, use normal legitimacy process the banks,” he said.

He said it is a bit complex, but he thinks authorities need to be trained on this as well.

“We are very far behind in this area.

“There is no capacity in this area locally,” he added.

Wale claimed in the black market economy, rumours stated that $600 million cash are circulating and never entered banking system.

Forau said in the government, especially in IRD and Customs authorities need to build up money laundering section in this bill.

“It is an ongoing thing to train our people every now and then to update on level of activities these people will go, technology change, tactics will change too,” he added.

Wale asked on the crypto currency.

Forau said at the moment, they don’t have any capacity on crypto locally.

“If they go in that space, we don’t have law to stop and we discourage investors to go into crypto currency,” he added.


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