CSI Blog & Newsroom

 “More than 10 years after the $1,000 bill disappeared from circulation 946,043 of them are still out there, somewhere. The whereabouts of almost $1-billion worth of the banknotes is a mystery rekindled this month at Quebec’s corruption probe when a witness spoke of a safe over-stuffed with cash, including $1,000 notes, inside a political office. Retired on May 12, 2000, for being mostly used in criminal transactions, any $1,000 note deposited at a bank is destroyed, although the bills — nicknamed “pinkies” by gangsters because of the pinkish-purple ink — remain legal tender. Money-laundering experts believe most of the missing bills continue to circulate among criminal elites who use them to pay large debts, with the recipient, in turn, using them to pay their own debts with only a portion of the notes bleeding off into the legitimate banking system,” Adrian Humphreys wrote for the National Post last week. Humphreys continued, “‘They are used now to pay off IOUs, not as traditional cash. They are used for buying and selling but not for cashing, because they know if they cash them, it is traceable,’ said Jeffrey Robinson, a New York-based author of several landmark books on money laundering. ‘They keep paying with them, over and over, and it’s only the last guy in line who has to worry about cashing them.’ The notes were retired as part of the fight against organized crime at the recommendation of the RCMP, said Jeremy Harrison, spokesman for the Bank of Canada. Read the full article here. | Raymond Matt, CFP, CLU, TEP, CHS

“Police in Pakistan have arrested five men after a village council ordered a father to hand over his nine-year-old daughter as compensation in a rape case, officers said Friday. A group of elders in the remote rural area of Bahalak in Punjab province made the ruling to settle a year-long dispute between a farm worker and an influential local landowner, local police station chief Mohammad Khalid told AFP,” an Agence France-Presse article wrote, republished by The Globe and Mail late last week. The article continued highlighting the disturbing culture of rape that exists in Pakistan, “The worker, Arshad, who goes by one name, was accused of involvement in the abduction and rape of landowner Ali Sher’s daughter, Khalid said. ‘The jury on Sunday decreed that Arshad would marry (off) his daughter Sidra to Ali Sher’s 22-year old son Maqsood,’ he explained. ‘Arshad agreed verbally but Sidra, who is too young, remains with her family,’ he said. The marriage was not formally solemnised but the village council made Arshad agree to pay Sher 400,000 rupees ($4,000) – a vast sum for a farm labourer in Pakistan – if he did not honour the ruling.” Violence against women in Pakistan is quickly becoming a global topic – the story of 15-year-old Malala Yousafzai who survived a gunshot to the head during an assassination attempt by Taliban militants has become a lightning rod for global activists seeking education rights for girls and women across the South Asian country. Read the full Agence France-Presse article here. | Raymond Matt, CFP, CLU, TEP, CHS  

“Pulling out of the global financial crisis may at times clash with the goal of making sure that it does not happen again, making the whole process more difficult, the International Monetary Fund’s No. 2 official said in a speech in London. Ending the crisis means boosting demand and restoring jobs and growth. But creating a stronger global economy requires reducing debt in many advanced economies, which can crimp demand, IMF First Deputy Managing Director David Lipton said in a speech at London’s Chatham House think tank,” a Reuters online article wrote yesterday. The article continued, “‘Deleveraging in many advanced economies … will dampen demand, particularly if it happens simultaneously in many sectors in many countries,’ Lipton said, according to prepared remarks. ‘This crisis is proving very hard to end.’ Indebted households, banks and governments must shed debt, but doing it too quickly will undercut the recovery, he said. Countries should put the break on austerity programs in the short-term if growth is faltering – as long as they have credible plans to cut debt in the medium-term. ‘Deleveraging is necessary, but it should be implemented at a speed and in a way that minimizes the impact on growth,’ he said. The IMF has said austerity programs that cut too far, too fast would hurt fragile growth, and has backed giving indebted euro zone countries like Greece and Portugal more time to balance their budgets.” Read the full article here. | Raymond Matt, CFP, CLU, TEP, CHS

“The damp weather couldn’t keep jivers from dancing the evening away at the Brackendale Art Gallery (BAG) on Saturday, October 20 for another “Village Music at the BAG” series. With doors opened wide, patrons of all ages corralled into Thor Froslev’s cozy fireplace lit gallery to behold the talents of the regionally named Sea ‘T’ Sky Big Band,” Anne Bright writes for The Squamish Reporter. The article continues, “There were visitors from as far away as Chilliwack and the Okanagan, all to tune into the fairly new band. Sea ‘T’ Sky Big Band has 16 local players, and one vocalist, ranging in age from 18 to 81. The youngest member, Naiomi Lu, plays the trumpet and the oldest, retiree Dick Grooms, plays the saxophone. They deliver a fun mixture of tunes ranging from the 1930’s to the songs of today. At the BAG, band members seem to enjoy themselves as much as the audience.” Read the full article here. | Raymond Matt, CFP, CLU, TEP, CHS

“Investors will have their hands full regardless of who wins the U.S. election Tuesday. Here’s what five top analysts think might happen on the markets in the aftermath,” David Pett writes for the Financial Post. Pett continues with views from five economists and strategists to get an idea of how the markets will react as the week goes on after the US election. “Julian Jessop, chief global economist, Capital Economics Mr. Jessop said the conventional wisdom of investors seems to side with Republican presidents, because investors presumably perceive such administrations to be more business-friendly. But while returns have been higher in the first year of a Republican presidency, U.S. equities have on average actually performed slightly better over the full term when a Democrat has occupied the White House. That said, Mr. Jessop thinks a Mitt Romney win over Barack Obama looks like the better outcome this time around, saying his plans would result in a more favourable tax treatment of equities, especially for high earners. “Romney’s plans also include a commitment to dramatically increase domestic energy production and partner closely with Canada and Mexico to achieve North American energy independence by 2020,” he wrote. Thomas Lee, portfolio strategist, J.P. Morgan Mr. Lee told clients that a close election bodes well for equity markets no matter who ends up winning, but returns may be more positive if Romney is victorious based on his research. Equity markets have gained an average 3.3% in the two months following any close election, he said, but gained 6% if the challenger wins. “That makes sense as a close race suggests a degree of dissatisfaction with the incumbent party and therefore incremental optimism if the challenger wins,” he wrote. “Assuming flat markets into election day, this would suggest a post-election rally of 45 points on an Obama win and 85 points on a Romney win.” Mr. Lee added a Romney win would benefit small-caps, domestic cyclicals, financials and health-care stocks. An Obama win, on the other hand, would be good for high-dividend payers and global cyclical stocks.” For the rest of Pett’s article click here. | Raymond Matt, CFP, CLU, TEP, CHS

“Europe’s most glamorous sport—known for its dashing drivers, high-tech cars and exotic locales—is heading into a hairpin turn. Prosecutors in Munich are considering whether to charge Formula One Group Chief Executive Bernie Ecclestone for bribery in connection with $44 million he paid to a banker in 2006-07. A decision, which has been hanging over the sport for months, is expected in the coming weeks,” David Crawford and Laura Stevens wrote yesterday for the Wall Street Journal. Crawford and Stevens continued, “An indictment of the 82-year-old, known in Formula One as ‘Supremo,’ would likely force him out of the sport he has dominated for decades as an owner, manager and public face. More worrisome for Formula One, Mr. Ecclestone’s legal troubles threaten to upend the multibillion-dollar racing circuit’s ties to major sponsors, teams and fans. Mr. Ecclestone said last week that he takes the allegations ‘very seriously’ and is ‘absolutely’ not guilty. He has acknowledged making the payment but said he only did so because he was blackmailed.” It may be remembered that Ecclestone was involved in a mugging a few years ago, “The 80-year-old billionaire was attacked outside the headquarters of his business empire Formula One Holdings in Knightsbridge, central London, on Wednesday night as Fabiana Flosi [31-year-old Brazilian girlfriend] looked on in horror.  He had to be taken to hospital with a head injury after the ambush, during which £200,000 worth of jewellery is believed to have been stolen,” the Daily Mail reported back in 2010. Read the full Wall Street Journal article here. | Raymond Matt, CFP, CLU, TEP, CHS

“Republican New Jersey Governor Chris Christie, a fierce critic of Barack Obama, praised the president and the federal government’s response to the massive storm Sandy, which caused widespread damage and power outages along the East Coast,” Susan Heavey wrote for Reuters earlier this week, republished by The National Post. Heavey’s coverage continued, “Christie has attacked Obama repeatedly on the campaign trail and said the Democrat does not deserve a second term in the White House, instead backing Republican challenger Mitt Romney in the Nov. 6 election. But just hours after the worst of the storm knocked out power for 2.4 million people in New Jersey, just south of New York City, Christie applauded Obama and the Federal Emergency Management Agency in interviews on major television networks. ‘The president has been outstanding in this. The folks at FEMA … have been excellent,’ said Christie, once thought to be a contender for the White House or possibly Romney’s vice presidential pick. Christie’s praise came a week before the presidential election, with polls showing the race as a dead heat. ‘I don’t give a damn about Election Day. It doesn’t matter a lick to me at the moment,’ Christie later told reporters in a press conference about the storm damage. ‘I’ve got bigger fish to fry.’ Sandy made landfall in New Jersey on Monday night, leaving behind a trail of flooded homes, toppled trees and downed power lines in the nation’s most densely populated region. At least 30 people were reported killed along the eastern seaboard. Obama’s handling of the storm’s aftermath as well as Romney’s response to it have the potential to become political issues and both campaigns are taking care to avoid missteps.” Read the full article here. | Raymond Matt, CFP, CLU, TEP, CHS

So how will they do it?  John Lorinc outlines eight places CRA will check for unreported income in an Advisor.ca article – here are a few to get you thinking.

“Repairs or renovations. If your company owns real estate, make sure you don’t claim capital improvements as repairs that can be deducted. Jonathan Garbutt, a tax lawyer, says Revenue Canada will home in on cash-intensive businesses that buy, renovate, and sell buildings because unreported cash income can be used to pay contractors under the table. “Revenue Canada knows this scam and is looking at families with cash businesses and also property flips where there have been big cap gains in an unduly short time,” he explains. Net-worth audit. Toronto tax lawyer David Piccolo says Revenue Canada will look to see if your lifestyle is roughly equivalent to your income and net worth. That comparison may involve estimates on your investments and other assets, especially if they include equities whose values fluctuate. “When you have a net-worth audit,” Piccolo counsels, “you almost have to go through it with a fine-tooth comb” to see if Revenue Canada’s assumptions are accurate. Inferred revenues. With cash-intensive businesses, such as restaurants, Revenue Canada has taken to double-checking reported company revenues by indirect means, such as extrapolating total sales based on tip income declared by wait staff.” To read Lorinc’s full list click here. | Raymond Matt, CFP, CLU, TEP, CHS

“Sometimes it’s best to not say anything at all. But for the Bank of Canada, that isn’t an option right now,” Gordon Isfeld wrote for the Financial Post yesterday. Isfeld continued, “It’s been a couple of weeks of uncharacteristic confusion in financial markets over perceived mixed messages from the central bank on its monetary policy — all in stark contrast to its oft-touted goal of clarity and transparency. First, comments in a Vancouver Island speech on Oct. 15 were quickly interpreted on Bay Street as a critical shift in thinking by Mark Carney and his inner circle. Mr. Carney did not include in his speech an often-repeated line that ‘modest withdrawal of the present considerable monetary policy stimulus may become appropriate.’ By dropping what had become a standard line of interest-rate guidance, he set some tongues wagging. Was that a hawkish or dovish move? Others were confused by the addition of another line, saying the bank ‘would clearly declare’ its intentions if it decided to ‘lean against emerging imbalances in household debt.’ Wasn’t Mr. Carney actually offering a less hawkish assessment, setting the stage for telegraphed rate increases?” Read the full article here. | Raymond Matt, CFP, CLU, TEP, CHS

“Former Cuban leader Fidel Castro said he doesn’t even suffer from a headache in an article he published in state-media Monday criticizing those who spread rumours he was on his death bed,” Paul Haven wrote for The Associated Press yesterday. The article, published by The Globe and Mail, continued, “The article is accompanied by photos taken by son Alex Castro that show the 86-year-old revolutionary icon standing outside near some trees wearing a checked shirt and cowboy hat, including one in which he is seen reading Friday’s copy of the Communist Party newspaper Granma. ‘I don’t even remember what a headache feels like,’ Mr. Castro claims, adding that he was releasing the photos to show ‘how dishonest’ the rumour mongers have been.” Quite the coincidence that the Castro health rumors coincide with the 50-year anniversary of the Cuban Missile Crisis which saw the world gripped in fright of a nuclear Armageddon during the 13-day standoff in October of 1962 thanks to the relationship of Russia, the United States and Cuba.  Much attention has been paid by the media to this anniversary with stories of current nuclear-armed countries, new ‘threats’ and further fear-monger style stories about future relationships with Iran and Russia. Read the full article here. | Raymond Matt, CFP, CLU, TEP, CHS