Results tagged “offshore banking”

A preliminary agreement has been reached in the tax evasion dispute between Swiss Bank UBS and US authorities.

UBS has agreed "in principle" to hand over records of 5'000 of the biggest accounts that allegedly conceal unreported wealth.The agreement diffuses a potentially embarrassing conflict between Swiss and US authorities.

Although the US government originally sought up to 52'000 names, the expectation that these accounts will reveal the most blatant offenders allows them to save face.

The worry for offshore account holders now, is whether this tentative agreement will serve as the launch pad for further probes into other offshore banking centers.

Swiss officials maintain that this development does not compromise the country's bank secrecy laws.

The Obama administration is unveiling a new set of measures aimed at ending the use of tax havens and offshore banking centers by US corporations for tax avoidance purposes. It is expected that not only multinationals but also a large number of wealthy families and individuals that use corporate structures will be affected.

The administration is looking to change a tax-saving technique known as "deferral", which allows large multinational corporations to defer paying tax on overseas earnings until the funds are repatriated. The proposed legislation would seek to limit tax deductions that companies could earn from this and is expected to raise $60.1bn over the next 10 years.

In addition they are seeking to overhaul "check-the-box" rules which allow US companies to choose where their subsidiaries are taxed - often low-tax offshore havens with strict bank secrecy that gladly welcome the capital. The administration hopes to raised $86.5bn through this measure.

Personal account holders are also being targeted. New rules would make it harder for Americans to open offshore bank accounts for tax purposes. They would increase reporting requirements and penalties, and make it harder for offshore account holders to win their cases in court. Authorities expect to claw back just $9bn from this measure over the same period.

While many welcome the administration's moves against tax haven use by "big business", especially considering ruthless IRS rhetoric against personal tax avoidance, others are wondering if there will ever be a limit to government tax collection. As "tax haven loopholes" are closed down one by one, individuals and corporations are forced to take part in the economy of the government's choosing. And with the burden of proof shifted away from the accuser to the accused, we may find ourselves once again sliding backwards into a medieval system of taxation.

Credit Suisse is taking further measures to protect itself, by ordering thousands of its American offshore banking clients to leave or face declaring their account details to the IRS.

The Swiss newspaper Sonntadszeitung has reported that US customers have the option to move their funds to a Credit Suisse subsidiary, CS Private Advisers, which would reveal their accounts to US authorities, or receive a cheque for the balance of their funds.

UBS, Credit Suisse's larger rival, paid US authorities $780m to settle a case brought against it by the US justice Department, in which it was accused of helping wealthy US clients evade taxes. UBS also agreed to name 250 of its clients. Credit Suisse may be offering this choice to its US customers to avoid a high-profile UBS-type investigation. Credit Suisse has between 2,500 and 5,000 US clients with 3bn Swiss Francs in undeclared funds, according to Swiss media sources. 

In a statement, Credit Suisse downplayed any notion of a legal crisis: "Credit Suisse adheres to the highest compliance standards, applicable laws, regulations, and policies..We offer both domestic and international wealth management services to US clients in compliance with all applicable laws, regulations, and policies."

, Jason Sharman, armed with little more than google and a $10,000 dollar budget, set out to form anonymous companies and offshore bank accounts worldwide - with interesting results (see economist article). Where were the places with the most lenient due diligence requirements?

In his 45 attempts to open anonymous shell companies and secret bank accounts Jason was successful in 17 cases, of which 13 were OECD countries. Britain earned top honours. In 45 minutes Jason was able to form an anonymous bearer -share company without identification, complete with nominee directors and a secretary for just  £515.95 ($753).

But when he tried to open accounts in Switzerland and Bermuda, he was asked for documents like a notarized copy of his birth certificate!!

It just goes to show that high-tax governments aren't interested in where the money's coming from - as long as they get a slice of the pie..

Lets see what theatrics tomorrow brings.

Swiss Offshore Banking is still in a strong position according to the chairman of Swiss Bank Julius Baer, Raymond Baer. His statement comes as international investors fear for the privacy of their Swiss bank accounts following Switzerland's decision to adopt OECD regulations regarding information exchange.

"International clients will continue to appreciate the financial privacy traditionally anchored in Switzerland," he said, indicating that Switzerland's reputation may keep it afloat.

"Decisive is that the core of banking secrecy, the protection of privacy, is kept and that it doesn't come to an automatic exchange of information," he added.

These comments are likely to unnerve global leaders and charities looking for blanket adoption of the OECD rules by tax havens like Switzerland. Without automatic exchange of information it could take years for 'stolen' money from tax evasion cases to be repatriated.

Liechtenstein and Andorra have agreed to relax their bank secrecy rules in response to global pressure against tax havens.

The two countries are both on a blacklist of uncooperative offshore financial centres drawn up by the OECD, which also includes Monaco.

Liechtenstein is under particular pressure from Germany and the US, who say the tax haven is aiding their citizens to evade taxes under the current bank secrecy laws. The principality agreed today to comply with international OECD standards for tax transparency, in the hope that this will avert some of the pressure facing them. The principality expects that they will not be the only one to cooperate:
 
"I'm quite sure Switzerland will take similar steps in the near future," Crown Prince Alois von und zu Liechtenstein said.

They must be riding on this assumption because if Switerland stands firm they will leave Liechtenstein out in the cold.

Luckily for the Prince Andorra also 'came out' today, promising to pass a law by November that will improve its transparency and get it removed from the OECD blacklist.

A G20 meeting scheduled for April is likely to result in a new blacklist which may or may not include Switzerland. Until now it has resisted international pressure to be more transparent, while smaller tax havens have not been lucky. Switzerland, Austria and Luxembourg are said to be collaborating in finding ways to keep their bank secrecy intact.

The Swiss finance Minister has said that she will comment on Liechtenstein's recent declaration 'shortly'.

It's common knowledge that almost all big companies and the wealthiest people in the world use offshore banking to supplement their expanding waistlines. No one wants to see their hard earned money being swindled away by an inept government but the problem comes when governments themselves reward these fat cats for failure.

The CEO's and chairmen of huge corporate banks have knowingly used offshore subsidiaries to restructure their organizations to be more 'tax efficient'. Then afterwards the majority had a second go at the cream by dripping tax free bonuses into various offshore bank accounts worldwide. Now that these banks have failed, taxpayers are being forced to pay even more to prop up 'investment banks' and banker's bonuses which they never asked for in the first place.

Government crackdowns can come and go, jurisdictions will go in and out of favour, but one thing about offshore banking that is abundantly clear is that it's not going away any time soon. The OECD may put pressure on Switzerland or the Cayman Islands, but this does not mean that they have shut down other emerging jurisdictions that are rising to take their place, or even those which no has heard of...yet.

Its time for the little guy to get his own back. Why fight a losing battle against big corporations with lower overheads and a tax-engineered offshore base that pays a fraction of the rate you pay? The fat cats don't want you banking offshore because they don't want an 'exclusive' privilege shared out among the ''hoi polloi''.

The truth is, moving offshore is one of the things that can really 'make or break' a business, and its not limited to the old boys club. Many businesses, especially those catering to an online or international market, have legitimate and pressing reasons for banking offshore:

- The ability to send and receive large payments without getting bound up in red tape.

- The segregation of risk between different parts of a business or between business partners.

- Low or zero tax on employee salaries and purchases of new equipment or real estate.

- A business (e.g. online gambling) which is not legal in one country may be legally operated from another.

These advantages can often make the difference between a merely average business and an extremely profitable one. Are you ready to take this make or break step and catapult your enterprise into the big time?

Britain's crown dependencies and overseas territories are scrambling to defend themselves against the latest rhetoric issued by high-tax countries.

Supposedly 'leading' offshore centres are pleading for a more discriminate approach to distinguish themselves from the 'dirtier' unregulated tax havens.

Geoff Cook of Jersey Finance, which represents the island's financial industry, says: "The thing we worry about is we are being tarred with the same brush as everyone else."

Of international leaders: "They are desperate to find any way they can of increasing their tax collection and they are desperate to deflect attention away from the domestic situation."

The Cayman Islands took a similar stance:"We fear a very indiscriminate position will be
taken which owes more to protectionism and prejudice than judgement and intellectual application,"  said Deborah Drummond, deputy financial secretary of the Islands.

Last week the US administration offered encouragement for new anti-tax haven legislation that builds on the 'stop tax haven abuse act' introduced by then Senator Obama. If passed, numerous tax havens, among them many British colonies and territories may find themselves on the receiving end of sanctions which force them to be more transparent. The UK, Germany and France have also called for a crackdown on tax havens, hoping to make it a top issue at April's G20 summit.

Tax evasion scandals linked to swiss offshore banking and Liechtenstein have increased pressure, as has the banking crisis, when it was revealed that banks were some of the heaviest users of offshore jurisdictions.

Although it is widely opined by experts that offshore banking is not a major factor in the global financial crisis, many governments may find it easy to target offshore tax havens, leveraging on their close links to the banking sector.

The Genoese built a fortress on the site of present-day Monaco in 1215. The current ruling Grimaldi family secured control in the late 13th century, and a principality was established in 1338. Economic development was spurred in the late 19th century with a railroad linkup to France and the opening of a casino. Since then, the principality's mild climate, splendid scenery, and gambling facilities have made Monaco world famous as a tourist and recreation center.

Today, Prince Albert II exercises his sovereign authority over Monaco in accordance with the Constitution and laws of 1962. He represents the Principality in all foreign relations.

Monaco is not a member of the European Union but is very closely linked to it via a customs union with France, and as such its currency is the same as that of France: the euro. Before 2002, Monaco minted its own franc coins, the Monegasque franc. Monaco has acquired the right to mint euro coins with their own insignias on their national side.

Monaco levies no income tax on individuals. The absence of a personal income tax in the principality has attracted to it a considerable number of wealthy "tax refugee" residents from European countries who derive the majority of their income from activity outside Monaco; celebrities such as Formula One drivers attract most of the attention, but the vast majority of them are less well-known business people.

Currently around seventy banks operate in Monaco providing 300,000 bank accounts. Banks of Monaco provide bank account mostly to Monaco non-residents: around 85% of customers are non-residents and only 15% residents (50,000 local customers versus 250,000 foreigners). Total turnover of banking sector is above $1.5 billion. Despite the fact that large part of Monaco banking customers are physical persons, number of corporate clients also rises steadily.

First Deputy Head of the Federal Financial Monitoring Service, Yuri Korotky, stated in an interview with the Rossiyskaya Gazeta daily that they forecasts an outburst of pyramid schemes and scams, as well as a worsening of the criminal situation related to currency speculations, speculative deals with precious metals, money surrogate and cash out operations and transferring money to offshore bank accounts.

According to the interview there's a distinct threat of criminal groups grabbing assets and strengthening their control through financial scams.

"Taking into account the difficult financial situation of many our banks and enterprises we forecast the growth of deliberate bankruptcy and open raider attacks on the most liquid assets and property." "There is a high risk of devalued assets to be bought out by organized criminal groups. This is fraught with property redistribution in favor of criminals. It is very dangerous, as in fact, it means the risk of legalizing criminal money."

Now that the threat has been identified and the risks to the stability of the Russian society have been publicly disclosed, Yuro Korotky went on to describe some of the measures the government would take to reduce money-laundering in order to combat criminal groups from siphoning money offshore via credit deficit pyramid schemes and scams built on bogus credit swaps of rogue investment projects.

"We have to sharpen instruments of fighting financial fraudsters. It is expedient to submit amendments to the anti-laundering law that would make budget fund operations subjected to obligatory control. Moreover, it would be useful to mark special accounts through which budget funds flow."

The bottom line is that Yuri Korotky's agency, Rosfinmonitoring, forecasts the worsening of the criminal situation as it concerns currency speculations, speculative deals with precious metals, money surrogate and cash out operations and transferring money to offshore bank accounts.

The Swiss Government is assembling a team of lawyers diplomats and experts to help defend its banking industry as pressure to prize open its bank secrecy grows.

The taskforce is to be led by Finance Minister Hans-Rudolf Merz, Justice Minister Widmer-Schlumpf and Foreign Minister Calmy-Rey , according to the Finance minister himself.

"The mandate of the committee is to protect the interests of our country in the case of UBS and in the context of bank secrecy and Switzerland as a financial center," Merz said.

The committee will seek to respond to claims that Swiss bank secrecy if folding under US pressure, after it gave UBS the greenlight to disclose 250 US clients last week.

The banking industry amounts to around 15% of Swiss GNP and bankers warn that the loss of banking secrecy could cut the financial sector in half.

Despite a settlement already agreed by UBS with the American government the US is still looking for further details of american offshore bank accounts holders and the government needs backup to put a positive spin on its privacy laws.

Among Swiss bankers themselves nothing is certain.

"Politicians tend to talk a lot. Banking secrecy is of course not safe: it is threatened." said the chairman of the Swiss Private Banker's association.

European Leaders have engaged in yet more sabre rattling over offshore banking, with a seven-point plan agreed in Berlin calling for ''sanctions'' against ''uncooperative jursidictions''.
At a meeting of G20 Nations the European representatives pledged to end tax havens by applying uniform rules to the worldwide financial markets.

French President Nicholas Sarkozy affirmed that he wanted to ''put a stop to tax havens''. Furthermore he unveiled plans for the next G20 summit in April to ''overhaul the system'', with sanctions to reign in non compliers.

It remains to be seen whether other nations in the G20 group including Brazil, India and China will be as enthusiastic as the Europeans in this latest crusade.

For some this latest bout of verbal swordplay is just a way of sidestepping the main issue at hand: mismanagement of the global financial crisis. Frederick Erixon, director of the European Centre for International Political Economy reckoned the antics were little more than finger pointing.

"They are pointing the finger at tax havens but the problems we're having in the financial system have very little to do with tax havens..They couldn't agree on something more substantial so they went for the easy targets: tax havens and hedge funds. It's all a smokescreen."

The British delegates must certainly have felt like fat kids caught with their finger in the pie since is former British colonies (and some still under direct control) which are hoarding the vast majority of offshore monies.

UK chancellor of the Exchequer Alistair Darling held hands with German Chancellor Angela Merkel in calling for the  Swiss government stop allowing foreigners to hide their wealth and avoid tax, yet made little mention of tax havens linked to the British.

"If it wants to be part of the international community, it's got to be open," Darling was quoted as saying.

With each government going for its own slice of the pie and personal 'most wanted' list, it may be hard for a group with such disperse motives to reach a meaningful agreement any time soon.

The Vatican is expected to demand the closure of all tax havens in its official statement, the encyclical, which is released March 18th. The paper has been long awaited but was postponed last year in order to conduct further research into the reasons for the financial crisis. Last December a Vatican issued policy paper blamed the financial crisis on offshore banking centres such as the channel islands The paper also blamed offshore banking for its contribution to the global deficit, and for its use in transferring money from poverty stricken to rich countries. According to the Vatican, if taxed at source these funds could be much better utilized in helping the citizens of these underdeveloped countries The pope's move coinncides with momentum from developed countries for greater regulation of offshore banking, with Barack Obama in particluar calling for an end to widespread tax evasion by US citizens Obama's campaign has been hurt by allegations of tax avoidance by his nominees. It remains to be seen whether the Pope's squeaky clean image will not likewise be damaged by his lieutenants. It is hard to imagine that that not even a single Cardinal has an offshore company or bank account.

The following Q&A is from the Jacobs Report with permission from Vernon K. Jacobs

QUESTION: Hello, how do I disclose an offshore account to the us government? I know
you are probably very busy but I was hoping you could give me a couple pointers.
Any help appreciated. Thank you so much. Warmest Regards,

REPLY: The first step is to get a copy of the form and instructions at
http://www.irs.gov/pub/irs-access/f90221_accessible.pdf
The IRS provides answers to a number of questions at
http://www.irs.gov/businesses/small/article/0,,id=148845,00.html

This form was modified as of Dec. 31, 2008 and includes a little bit of additional information from the previous form.

The instructions explain that the form is not required if the total value of all foreign financial accounts combined is $10,000 or less during the prior calendar year. Additional exceptions are described in the instructions to the form.

A more detailed discussion of the various exceptions is available for $16 at
http://www.rpifs.com/fbar.htm.

You can also find my response to dozens of questions about this form at this Yahoo Group. Click on "Messages" and then use the search tool.

Vern

As required by U.S. Treasury Regulations governing tax practitioners, any written tax
advice contained herein cannot be used by any taxpayer for the purpose of avoiding
certain tax penalties that may be imposed under the Internal Revenue Code. For further
details see http://www.offshorepress.com/vkjcpa/disclosurerules.htm

Gordon Brown is planning to spearhead a global crackdown on offshore tax havens and tax evasion using offshore bank accounts. A tough 'worldwide' regulatory tax and banking system is the pipeline that aims to cover every country.

Speaking at a downing street press conference he said "We want the whole of the world to take action. That will mean action against regulatory and tax havens in parts of the world which have escaped the regulatory attention they need. The changes we make will have to apply to all jurisdictions around the world."

While the US is more concerned about tax losses in the Cayman Islands, the tip of Brown's lance appears to be aimed at Switzerland, and especially at individual tax avoiders in that country. The government claims that investigations into tax avoidance frequently led to Switzerland, but others may view the decision as rather more political.

Brown is shying away from attacking British tax havens and big business, instead focusing on easier targets such as rich people and foreigners. Targeting the island havens like Jersey or the Isle of Man would be attacking the cozy links he has developed with corporate UK over the past 10 years. He may also be wary of damaging the competitiveness of UK companies which is actively maintained by their low tax base.

Even so, its smacks of hypocrisy may well be a case of riding on the coat-tails of the UBS scandal to go for individual Swiss bank account holders in this way.

The knives are out....
SEC Release: The Securities and Exchange Commission today charged Robert Allen Stanford and three of his companies for orchestrating a fraudulent, multi-billion dollar investment scheme centering on an $8 billion CD program.

Stanford's companies include Antiguan-based Stanford International Bank (SIB), Houston-based broker-dealer and investment adviser Stanford Group Company (SGC), and investment adviser Stanford Capital Management. The SEC also charged SIB chief financial officer James Davis as well as Laura Pendergest-Holt, chief investment officer of Stanford Financial Group (SFG), in the enforcement action.

Pursuant to the SEC's request for emergency relief for the benefit of defrauded investors, U.S. District Judge Reed O'Connor entered a temporary restraining order, froze the defendants' assets, and appointed a receiver to marshal those assets.

The SEC's complaint charges violations of the anti-fraud provisions of the Securities Act of 1933, the Securities Exchange Act of 1934 and the Investment Advisers Act, and registration provisions of the Investment Company Act. In addition to emergency and interim relief that has been obtained, the SEC seeks a final judgment permanently enjoining the defendants from future violations of the relevant provisions of the federal securities laws and ordering them to pay financial penalties and disgorgement of ill-gotten gains with prejudgment interest.

With Stanford's attorney already bailing this one looks a dead cert. This question is, how did he keep is a secret for so long?

Investors looking to avoid the EU Savings Tax Directive by moving to Singapore may have pulled the short straw. Under pressure from OECD countries over its impressive bank secrecy, Singapore has looked to buckle up with its senior finance minister denying that it is a tax haven, and encouraging further OECD cooperation.

The mininster for Finance and Transport Lim Hwee Hua has said that although the Republic has low taxes, it has a strong rule of law and is looking to adopt the Organisation of Economic Cooperation and Development (OECD) standard for transparency and effective exchange of tax information.

'We will be engaging the OECD and the industry to study this OECD standard with a view to endorsing it,' said Lim.

This news may frighten many investors who have invested in Singapore offshore banking following the introduction of the EU Savings Tax Directive in 2005. It requires countries that are signatories to either deduct withholding tax at source or disclose details of foreign depositors to their home jurisdictions.

The directive caused many investors to flee out of havens that were affected by the measure such as the Channel Islands, Switzerland and the Cayman Islands to farther fields such as Honk Kong and Singapore.

Singapore saw a huge expansion of its wealth management business due to its perceived independence from the EU. Total assets in the Singaporean banking system grew from $150 billion in 1998 to $1.173 trillion by the end of 2007 reports citynewswire.

Countries which have agreed to comply with the EU directive are Andorra, Anguilla, Aruba, Austria, Belgium, British Virgin Islands, Cayman Islands, Channel Islands, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Isle of Man, Italy, Latvia, Lichtenstein, Lithuania, Luxembourg, Malta, Monaco, Montserrat, Netherlands, Netherlands Antilles, Poland, Portugal, San Marino, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turks and Caicos, the UK - but up until now, not Singapore or Hong Kong. See OECD website for recent bilateral tax agreements

Both are huge banking centers in their own right and attractive to foreign investors - but for how long?

Liechtenstein's ultra secret bank secrecy has come under renewed attack from the EU.
It was a hard nut to crack. Eventually Liechtenstein's bank secrecy was broken by a rogue bank employee paid handsomely by the German government. But now the EU's blood is up it wants its pound of flesh in the form of new information exchange agreements.
What's in store for Liechtenstein's secretive offshore banking?

With a bewildering number of offshore jurisdictions out there, how do you find one that can suit a broad range of investment objectives?

What sets the Seychelles apart from the others?

A remote group of Paradise Islands somewhere in the Indian Ocean, at first glance the Seychelles don't appear to break any tax haven stereotypes. Yet with the global economic climate changing, and tax and privacy issues with it, that tax haven stereotype is itself in motion.

QUESTION: I subscribe to a variety of financial newsletters. Several have suggested for more then several years that it would be "prudent" to open a foreign bank/brokerage account so as to move a portion of one's liquid assets "offshore" (out of USA). The thinking is that the US dollar is going to flat line at some point in the not too distant future...and that ownership of certain investments (such as gold, gold stocks, foreign currencies, etc) might be outlawed by a us congress/administration that was implementing currency exchange controls, etc. While they also mention trusts as another vehicle to consider, the emphasis is not on protection from creditor lawsuits, etc. It is protection from US govt interference in one's investment decisions.