Can You Explain HOW You Earned Your Money?



As International Tax professionals, we hear of entrepreneurs who have made money through legal businesses internationally.  Yet have a problem....they cannot spend it.

Well, they can probably spend it in the developing world, but when they try to spend it in a developed economy like North America, or the UK?  They encounter the same problem.  Financial institutions want documentation that proves how the money was earned and properly taxed.  This especially arises for big ticket purchases like condos.

This may be a problem for one reason.  Some entrepreneurs have failed to declare and pay taxes on the funds they earned.  

Soon they find themselves stuck. 

They have money which was legally earned but NOT declared to the relevant authorities and properly taxed.

So what can they do? Easy. Declare it and pay all the taxes and penalties.

In terms of the US, many have written about the Financial Crimes Enforcement Network (or Fincen) and how frequently banks report suspicious transactions.  Now in the UK, I am reading about the UWO.  An unexplained wealth order (UWO), is a new crime-fighting tool that requires suspected buyers to explain how they obtained the cash to buy a property.

In a recent Financial Times article, a woman who allegedly spent £16m in Harrods, Zamira Hajiyeva is alleged to have received the UK’s first unexplained wealth order (UWO).  The UK National Crime Agency (NCA) was curious to learn, among other things, how she could afford a five-bedroom house on Knightsbridge’s Walton Street, bought through a company registered to the British Virgin Islands in 2009, for £11.5m. She was subsequently arrested by police acting on an extradition request from her home country of Azerbaijan, where she is charged with embezzlement and where her banker husband is in jail. While Hajiyeva may be the first Knightsbridge resident to receive an UWO, she is unlikely to be the last.

Other efforts to clean up London’s property market continue. A new register of the beneficial owners of overseas companies owning UK property should come into force around 2021. High-value homes are appealing because of the large amounts that can be parked in a single deal

Now is as good a time as any to pay your taxes and ensure that all your business affairs are in proper order.

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