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Swiss Banks Making Concessions On Secrecy
Aryabhata writes in with news that should chill the hearts of evil dictators and tax cheats everywhere: one of the last bastions of strong banking secrecy, Switzerland, is bowing to international pressure and agreeing to cooperate with some foreign investigations of wrongdoing. "...the Swiss government announced on Friday that it would cooperate in international tax investigations, breaking with its long-standing tradition of protecting wealthy foreigners accused of hiding billions of dollars. Austria and Luxembourg also said they would help. ... The famed 'numbered accounts' that do not bear the owner's name will still be available for clients willing to pay for added anonymity. ... Over the past month, leaders have made similar promises in Singapore, Liechtenstein, Bermuda, the British islands of Jersey and Guernsey, and tiny Andorra... other 'offshore' banking centers are still available in the Caribbean, Panama, Dubai and elsewhere."
The famed 'numbered accounts' that do not bear the owner's name will still be available for clients willing to pay for added anonymity
Anyone that needs one of those accounts is going to be willing to pay that added fee. So besides the Swiss making a little more money off their money hiding, what changes?
I work for the Department of Redundancy Department.
Hardly a suprise. Tax havens can be overlooked when times are good. Less so now. If the situation of somalia continues I can see some reform of the ship flagging system also takeing place.
Evil Dictators got caught doing wrong... (stop).
Last bastion of free money compromised... (stop).
Secret stash not so secret... (stop).
Mugsy and Lefty may be on the take... (stop).
Slashdot editor KDawson sensationalizes yet another tired story... (stop).
Like cheating an inept and corrupt government is wrong somehow.
What changed under Obama? Nothing Good
Aryabhata writes in with news that should chill the hearts of... tax cheats everywhere..
Well, if cheating on taxes becomes less profitable, they may have a bright future in politics.
I know someone who can get them high positions in the US government...
This author takes full ownership and responsibility for the unpopular opinions outlined above.
Seems like another step towards world government and world currency to me.
Or maybe I need to take the tinfoil hat off.
Oh no, now Madoff is REALLY in the deep stuff!
It's a sad day when everyone who wants some privacy for their finances is automatically suspected of being a tax cheater or whatever - especially on Slashdot.
How does a person get their money out of these numbered accounts? What recourse does a person have if the bank refuses to hand over their money? Depositors certainly aren't going to go to the police if they're hiding money from the government. Is it really wise to hide your money someplace you'll never see it again?
As possibly the only Swiss banker on Slashdot I should perhaps point out that:
- "numbered accounts" are a myth from James Bond movies. They do *not* exist. What is referred to as a "numbered account" is an account where the bank offers to send all communication without referencing the name of the client, as a way of preserving anonymity if the communication is intercepted/stolen
- ID requirements for opening a Swiss bank account today are *more* stringent than in EU. France is notably lax, which is a little ironic (you need to document not only who you are but *how* you got the money, and if there ever is a case where a bank fails to follow these guidelines, they can lose their banking license). Citizens of certain countries will find it nearly impossible to open an account in Switzerland as the level of documentation in their home country is not acceptable for opening a Swiss bank account.
- The Swiss distinguish between tax fraud (fabricating papers, forging signatures etc.) which is a criminal offense and where the bank will hand over information on your account, and tax evasion (failing to list all assets/income) which is *not* a criminal offense in Switzerland. The latter category they have now conceded to assist with on a case by case basis.
It is easy to misunderstand Swiss banking secrecy as some kind of dodgy way of assisting rich foreigners with tax fraud/evasion. In fact there is no difference between the rights of a wealthy foreigner and someone like me who (though not a Swiss national) has a job and get a regular salary in Switzerland. We all have the same rights.
To understand where all this comes from, one has to understand the very strong federal system of Switzerland. The Swiss "cantons" are almost as independent as separate states, with a weak and small central government. It boils down to this: the rights of the individual is valued much higher than the rights of the state. This is why the Swiss police cannot (nor the "IRS" or any other government entity) get my account information in Switzerland. This tilt of rights in favor of the individual versus the state also leads to a lot of other differences from most other countries, like that assisted suicide is legal in some cantons, including my canton of Zurich, liberal drug policies etc. In certain cantons you can actually negotiate your tax with the local cantons (who all have different tax rates) directly.
It's really all you need to know. (Discl.: I am Swiss)
Well this is good news for me. When I take over my
small island, and start my tax haven/ banking
empire, I will have less competition.
Now if I could only figure out how to get my bribe
money out of my frozen Swiss accounts,
I would be on my way.
SOOOO RIGHT!
Phil Gramm was chairman of the U.S. Senate Committee on Banking, Housing, and Urban Affairs from 1995-2000 ( http://en.wikipedia.org/wiki/Phil_Gramm ).
He was also one of five co-sponsors of the Commodity Futures Modernization Act of 2000 which spawned the "Enron loophole".
The Gramm-Leach-Bliley Act in 1999 removed controls on US banks and ushered in the problems we face today.
When Gramm quit the Senate, he went to work for UBS, a Swiss bank that paid Gramm to lobby George W. Bush to remove all remaining consumer protection laws for banks and investment firms, which UBS happens to be. http://www.ickypeople.com/2009/02/swiss-bank-steals-20-billion-from-us.html
And hey! There's already a reward being offered - http://2.bp.blogspot.com/_wcOjkvHl9yc/SaI-KGM9j3I/AAAAAAAACTk/a3FJtACPXLo/s1600-h/2881308992_af2090cfd2.jpg
And if you want to know Phil in his own words, ry this link:
http://news.google.com/news?pz=1&ned=us&hl=en&qsid=foT_QIzq_fPwXM
Yes, the irony of an Administration run by Tax Cheats and Leona Hemsleys going after "rich" tax evaders is not lost on the objective (only the true believers **cough**cough** I mean "non-racists").
That aside, Swiss secrecy died well over a decade ago due to drug and money laundering laws.
Your best bet for a truly secret bank account is now (and has been) an Asian chop-account. The chop-account is very popular among the Japanese wealthy due to Japan's high tax rate.
Caribbean or more generally Island (e.g., Isle of Man) accounts tend to be popular among drug dealers for their anonymity and lack of Search Treaties (which killed the value of Swiss numbered accounts). Plus you don't incur the Swiss 35% withholding taxes on your account.
So, if you really wanted a secret account and were competent you'd have your money in somewhere else besides a Swiss account.
I also want to point-out non-Americans have little need to secretly move their assets overseas (to lower tax destinations) because the US is alone in the world in taxing you based on citizenship versus residency.
For example, St. Bono didn't want to pay Irish taxes on his wealth and relocated his business to a low tax country. Ireland has no legal problem with this (although the moral hypocrisy was noted).
Expecting to use relatively small amounts of bribes to control the Government in order to be allowed to avoid paying taxes is wrong somehow.
From scarped cliff or quarried stone she cries "A thousand types are gone, I care for nothing, no not one."
When Phil Gramm (aka Foreclosure Phil - http://www.slate.com/id/2194933/) became an executive with UBS bank, he was sitting in your face.
You're welcome
For many year, organized criminals in the U.S. functioned with impunity. Even though the same unseemly guys were always around when the law was being broken, there was never satisfactory evidence to prove that they, themselves, had broken the law.
Then came the RICO laws.
RICO advanced the law by recognizing and identifying patterns of criminal activity, and then asserting that the people regularly associated with those activities were guilty of racketeering. These laws have worked well in our efforts to deter organized crime.
All Swiss banking activities aren't intended to skirt the law, but then, neither were John Gotti's activities. But the purpose and benefits of Swiss secrecy laws are, by patterns of their use, obvious. No, the banker didn't evade taxes. He simply engaged in practices carefully crafted to enable others to do so. By pattern and association, under RICO, the banker could be charged with racketeering because he repeatedly and specifically enables the practice of money laundering.
So you can tell me that Swiss bankers aren't running huge scale rackets. But that incenses me. To quote Judge Judy: "Don't pee on my leg and then tell me it's raining."
The Swiss bankers are becoming "cooperative" now in hopes that the rest of the advanced world of criminal justice doesn't finish painting the full picture of Swiss banking "ethics." The white collars on their shirts are the only outstanding signs of cleanliness there.
I have two words for you: yeah, right.
You can't have a government without taxes. Period. (Granted, they don't have to be income taxes, but there does have to be some kind of tax.)
And I note that you want to credit capitalism for everything. Strangely, I remember quite a few ways they regulated business to make things better. You know, after trust busting to get rid of those companies that had, in essence, their own private armies. Or their own colonies that were, in effect, wage slaves (you had to get all your supplies from the company store... guess where your paycheck went back to?).
So no, I don't think of progressive taxation as evil. If anything, reading what you wrote makes me want to vote for a tax increase.
All I need to know is that you are a Swiss leech.
I am sick and tired of supporting your most profitable industry with my tax dollars.
And then corrupt customs agents will conveniently lose your report and then you'll get scrubbed.
not to mention that victims of mere clerical error are going to get screwed.
Remember US vs $124,700?
This idea has fatal flaws.
i think you are on the right track, but I wouldn't put THAT much faith in the feds.
Is looking more and more like a viable solution for future banking needs.
---- Booth was a patriot ----
Not as unlikely as you might think. IIRC, last year a disgruntled employee of a Lichtenstein bank sold a CD with client info to the German BND for a couple million euros. Subsequently, the CEO of Deutsche Post Klaus Zumwinkel got busted for tax evasion.
Free Manning, jail Obama.
Aryabhata writes in with news that should chill the hearts of decent people everywhere: one of the last bastions of strong banking secrecy, Switzerland, is bowing to international pressure
Fixed that for you, you scumbag statist.
The slashdot comment text box wraps lines automatically.
You don't
have to
do it
yourself.
More on.
I am sick and tired of supporting your most profitable industry with my tax dollars.
Then we should switch from income and capital gains taxes to land value taxation. Not only does it cause less economic distortion, it's impossible to stick an acre of Manhattan in a Swiss bank account.
Yay, Luxembourg on Slashdot!
Your employer negotiates knowing all about the "payroll taxes" they'll have to pay too. Add up everything your employer spends on you. That's your compensation. That's what they can afford to spend on you. You're worth more than that, of course, and that's how they get their profit, but it's beneficial, because without the infrastructure, support and coordination they provide, you wouldn't be worth more (well, depending on what it is you do for them, of course. It's kind of hard to design rocket components as a one-man operation, though.)
Ask yourself, if taxes were taken out of the equation, would you really expect not to be able to negotiate salary and benefits up to roughly the same level? Why? If the employer can afford to spend it now, why couldn't they in a low-tax environment? They'll still be competing with other companies for employees.
Can you be Even More Awesome?!
This would be a non-issue in the US if we adopted the Fair Tax Plan ( http://www.fairtax.org/site/PageServer?pagename=about_main ) or something similar.
You can only do two things with money; spend it or invest it. Under a Fair Tax Plan you are always paying your "fair share" of taxes whenever you buy something. Even underground economies must buy stuff, so the illegal proceeds of various endeavors still generate a "fair share".
When you place your money for investment, you create the means for producing goods and services. (Remember, even putting it in the bank is a type of investment in the economy.)
The questions of "due process", personal privacy and interfering with sovereign nations disappear if there is no basis for tax evasion. People who sell and buy underground to avoid paying the taxes would then be committing tax fraud, and that is a "serious crime" and does not come under the protection of Swiss bank secrecy.
"The mind works quicker than you think!"
1. Get an island.
2. Form a government on it that guarantees the privacy of all banking customers.
3. Make income tax illegal on the island and include a provision in the island's constitution that the government, banks, and businesses of the island do not cooperate with foreign countries' investigations if the alleged offense is not illegal on the island.
4. Wait about a month for every drug dealer, dictator, tax cheat, and even a few legitimate people to bring their money to your island.
5. ???
6. Profit!!!
Like it or not, there is a tax treaty between Switzerland and America ( www.irs.gov/pub/irs-trty/swiss.pdf ). It clearly defines in what cases the USA or Switzerland can get information from each other regarding taxes and it deals with double taxation. The agreement is between the two countries, so if the USA doesn't like it, why did it agree to it in the first place and why are we not discussing renegotiation of the agreement?
I find it brutally ironic that a nation who alleges to bring "democracy" to the world is always found to be the bully of the playground.
The US has a long history (one could call it a tradition) of not honouring the agreements it underwrites, that's part of why the US is no longer trusted as a trade partner. It survives by force only.
What has happened is that the US has blackmailed Switzerland where bank secrecy is a democratically elected law. A bit like the DeCSS case where a Norwegian teenager was arrested for something that was perfectly legal in his country.
There are agreements in place. I'm saddened that the Swiss caved in, because once you give in to blackmail it keeps happening, and the world really needs more people to hold the US to account. They should have asked the US to honour the agreements.
....can you find all those countries mentioned on the world map in less than a minute? "here there be dragons" does not count as an answer. Go!
We are all packets in the Internet of life!
Anyone that needs one of those accounts is going to be willing to pay that added fee. So besides the Swiss making a little more money off their money hiding, what changes?
A numbered account means that the counterparty is codifyed by a number for bank internal purposes. That means that only very few, usually very high level employees know the identity behind the number.
Until twenty years ago it was possible to circumvent the "know your customer" rule, by using a shady lawyer as an intermediary. This is no more possible. So unless you find a bank that is willing to commit a crime you cannot open an annonymous account in Switzerland; period.
And yes, IAAB.
ich bin der musikant
mit taschenrechner in der hand
kraftwerk
You think like a ReThuglican Jew
I'm writing this from my comfortable chair in the Swiss bank I'm currently working.
I love banking secrecy. :-)
The Welfare State We're In (another link) describe parts of current governmental policies which while maybe meant to be good, fail miserably. Some of them are the areas you mention.
That of course only if a) I understand you post correctly and b) I'm not mistaken about the book and author (I did not read it, I've just read some longer summary of it, then forgot the exact name) - hopefully sufficient for ./ posting :)
By the way, I do not say that paying taxes is either good or bad but I do tend to agree with you if I take a look at the current (or I can even say almost any) government of my country and see what did they achieve with all the money the taxpayers are paying.
hany
I understand people would like to hide money from government when you see what they do with there tax income...
I don't do so, but I will be glad to do it, if for example, my government use my money to attack other country.
Fortunately, I live in Switzerland. Our army is only a defence army. Our bank are only protecting privacy of there customers which is a basic concept of freedom. And as the English expression said well, it's not on your business !
Quick story. My grandparents were just starting out during the Great Depression so it left them with a big distrust in banks. They both worked hard through their lives and ended up purchasing and running a couple motels later in life, then selling them and handling the mortgages themselves -- which means, the people who bought the mortgages were sending their monthly payments directly to my grandparents, for 30 years.
In cash. Because my grandmother was probably a tax cheat. But that's an aside.
Here's the thing: her kids and grandkids didn't know about any of this. I'm not even sure her husband really did because granddad was a great guy and a lot of fun but he didn't get involved in the day-to-day finances of the household because, well, he was a little flaky and would give money to down-and-out strangers, so gramma just made sure he only had what he needed. He passed away and she went on living in the house.
Then she had a couple of strokes that left her blind, and was still living in the house, and at some point we were cleaning out some of the 50 years' worth of crap she'd accumulated so she woudn't trip over stuff walking around the house while blind, and she mentioned that while we were cleaning, we maybe should get the money out from under her mattress. She said there was a lot of money, maybe even $10,000, under her bed. We were like, "dude." We thought it was a crazy, dangerous thing to keep that kind of money in the house.
So we lifted up the mattress and found an enormous pile of manila envelopes, put them in a trash bag, went home, and started counting. It came out to more like $100,000 in cash. It was crazy: we felt like drug lords. We had some issues depositing it in her account, actually, because that kind of cash gets people very interested in where it came from.
And the point of this whole story is that about three months after we did this, a nice guy knocked on her front door and said he was from the city and they needed to know where the water line had been run through the front yard so they could dig an underground power cable through and she walked out in the front yard and talked to him for ten minutes, and when she went back inside she noticed all the drawers were open in the kitchen (because she ran into one) and her bedroom had been searched, including under her mattress.
(And as an aside, even in a crappy bank account bearing 3% interest, even in a bad economy, that same amount of money would've been worth enormously more had she not stuck it under her bed.)
Nostalgia's not what it used to be.
The article says "This news will chill the evil dictators", that is very ironic. The reason people have anonymous accounts in the first place is to hide their money from the dictators, and totalitarian governments such as the European Union Socialist Staes. This news is a dictators dream, of being able to easier catch tax evaders.
Cannon Ciota
The reason Swiss bank secrecy laws developed was because of German requests for information after the Nazis came to power - if you were Jewish and had money out of the country, which you could use to escape, they wanted it, and they wanted your name and address. Some banks cooperated, so the laws were written to require secrecy, though they weren't always obeyed. And yes, Bad Guys have also taken advantage of banking privacy, but that's not why it's there.
But even if the banks do become required to cooperate with specific requests from other governments, that's better than being required to participate in the wholesale information vacuum cleaner processes that are increasingly happening in less privacy-friendly countries.
Also, there's tax evasion and there's tax avoidance. You're not required to structure your financial activities in ways that maximize taxes in your home country, though structuring them to avoid taxable activities usually requires foreign corporations as well as foreign bank accounts. For Americans, it seems to be more popular to use Caribbean or Latin American banks (Caymans, Panama, etc.), where you can easily set up a corporation and invest in it, and where the local corporate taxes are cheap or zero.
Bill Stewart
New Fast-Compression-only CPR http://preview.tinyurl.com/dy575ks
Ok, unless you're a government, a billion here and and a billion there still does add up to real money after a while...
According to the folks on the radio (which is at least as authoritative as reading something on the Internet), Madoff probably only got about $10-20B in actual money from his victims. The rest was all smoke and lies (and as you say, they're not going to find it, because most of it never existed, though he probably did have the money sitting in interest-bearing investments when he wasn't spending it or paying it in dividends to investors who wanted to take some of their earnings out.) Not that lying to people is moral either, or that it isn't a shock to find out that most of your balance never existed, even if what you put in hasn't entirely vanished.
Bill Stewart
New Fast-Compression-only CPR http://preview.tinyurl.com/dy575ks
A lot of those places would be ripe for being toppled over. It wouldn't be much of a stretch to do multiple if not all of them at the same time.
What's a few small islands or easily knocked over countries between friends with tax haven problems?
Twitter supports and protects racists - by smearing their critics with the "Hate Speech" label.
Oops, the nationmaster link is to GDP PPP and the statemaster link is to GDP. Here's the links that point to the same economic measure (GDP). Sweden is between Illinois and Californa there. http://www.statemaster.com/graph/eco_gdp_percap-product-current-dollars-per-capita http://www.nationmaster.com/graph/eco_gdp_percap-economy-gdp-per-capita