September 2009 Archives

Uruguay bank secrecy hangs delicately poised after conflicting statements of intent from rival candidates ahead of October presidential elections.

Just a week after Frente Amplio candidate Jose Mujica signalled his intent to discuss bank secrecy within the Mercosur group in an interview with an Argentinian newspaper, opposition candidate Luis Alberto Lacalle apologized for his rival's remarks at a lunch given by the Uruguay-Argentina chamber of commerce.

When questioned on the issue of bank secrecy, Lacalle stated categorically that he would not hand over bank secrecy if he won the election. He further backed up his statement with the following reasons (translation from an article in Uruguayan newspaper el pais).

- Uruguay politics should be geared towards maximising the nation's comparative advantages.
- Financial activity generates wealth and employment
- For Uruguay to act like small countries such as Luxemourg and Switzerland is completely legitimate.
- It is hypocritical for large countries to try and impose policy in this way when in places like the US state of Delaware ''they wash, iron, and dry'' money (a reference to the number of secret companies formed in that state).
- In the cases where it is called for bank secrecy can still be lifted.

With just weeks to go until the country decides, Mujica looks better placed to win the election.

Wegelin & Company have been Private Bankers since 1741. Recently they provided some insightful commentary about the agreement between the USA and Switzerland related to the 4,450 UBS clients.

What we need to do now, sine ira et studio, (and putting aside all politically motivated window-dressing, all genuine, or merely nominal, moral issues) is to analyze the situation, draw conclusions and, where necessary, act upon them. This is exactly what we intend to do in what follows, by taking a closer look at two important components of American tax law. And, surprise, surprise: the next round of fiscal enforcement staged by the Americans will be devoted not the American super-rich, but to non-Americans who never in their lives had any intention of evading taxes.

Continue reading the wegelin_article.pdf

Swiss private bankers will in future insist that their clients are tax compliant, if remarks made by banking heads at a private banking conference in Zurich are anything to go by.

According to some estimates, Switzerland holds around a third of the $7 million believed to be held in offshore accounts worldwide. In addition to a reputation for reliable banking services, Switzerland's strict bank secrecy is what has compelled so many to open offshore bank accounts in the country.

But attacks on Swiss bank UBS, double-taxation treaties with other european countries like France, and reinterpretations of the line between tax evasion and tax fraud, mean that top swiss private banks are reconsidering the way they do business.

Pierre de Weck, head of Deutche bank private wealth management, indicated that his banks efforts would increasingly focus onshore, saying, "Cross-border onshore accounts will become much more important in the years ahead."

Exactly how the cross-border onshore account will differ from the offshore account I guess we will see, but that the accounts should be 100% tax compliant seemed to be most important.

The heads of Credit Suisse and Julius Baer, two of Switzerland's largest banks that also have offshore operations were indicating the same thing in as many words. ''"Banking secrecy will continue to exist, but not for tax reasons. Private banks will have to offer services on a fully compliant basis.", said Boris Collardi, chief executive of Julius Baer.

Yet separately, private banks which limit their operations to within Swiss borders have been praised for their efforts to maintain bank secrecy. Unlike the global private banks mentioned above, Switzerland's oldest bank, Wegelin has indicated it will no longer accept US clients, in order to preserve bank secrecy even in tax cases.

Source: Wealth Bulletin