Why Truly Confidential Offshore Bank Accounts Are Hard To Find

The offshore banking dream is persistent. When people think of offshore bank accounts they think of yachts, fast cars and perhaps a balmy tax have lifestyle to complement it.

Maybe it involves moving to another country entirely, life in a far land supported by a Swiss bank account.

One of the hardest first steps is finding offshore banking that you can trust. But offshore bank accounts are made hard to find by design, and the primary stages during offshore account opening can be treacherous.

How many investors have trouble finding an offshore bank account that really keeps their information confidential?

Continue reading article on confidential offshore bank accounts.

UBS Offshore Bank Accounts: IRS Delegates Tax Evasion Cases To Elite Squad of Auditors

The UBS offshore bank accounts which US authorities suspect conceal billions of dollars in black money are to be handled by an elite squad of bean counters with the expertise to take them on.

A new office within the large and mid size business division will monitor the global transactions of super-affluent US citizens.  This division has the most experience in sifting through complex international tax treaties, cross-border transactions and secret offshore companies – making it better suited to taking on the sophisticated structures assembled by tax lawyers.

The quaint town of Basel, UBS HQ and scene of a running battle over Swiss bank secrecy

US authorities expect to receive data on the 4,450 accounts within the coming months but it is not at all certain that they will receive all the information they want.

Although the Swiss government is in receipt of the relevant records, it now has up to a year to decide whether it wants to give them to the IRS. Meanwhile swiss bank account holders have the right to appeal the release of their confidential information.

UK Gov Forces Release of Confidential Offshore Bank Details

Details of secret bank accounts in various offshore banking centers like the Channel Islands and British Virgin Islands will be handed over to HMRC following a court ruling.

More than 300 UK banks and foreign banks with British operations  were ordered to disclose offshore bank account details on up to 500,000 UK citizens

HM Revenue and Customs expects to recoup around £500 million in unreported wealth believes is stored in the offshore bank accounts.

Swiss Government Would Seize Financial Records To Deny IRS Access

The Swiss government promised Wednesday to prevent secret offshore bank account records from reaching IRS hands even if bank UBS were to allow it.

In court papers at a Federal court in Miami, Switzerland stated that it “will use its legal authority to ensure that the bank cannot be pressured to transmit the information illegally, including if necessary by issuing an order taking effective control of the data at UBS that is the subject of the summons.”

“It is hoped that it will be unnecessary for the Government of Switzerland to take the extraordinary action of issuing an order to seize the information at issue, but such an action should be expected if the IRS continues to pressure UBS to violate Swiss law.”

This is not the first time the Swiss have come under pressure from the US to change their sovereign law. US instigated “anti-money laundering” measures came into force in 2004 that effectively signalled the end of the “numbered bank account“.

Some American UBS clients have already pleaded guilty to tax crimes voluntarily, but the US goverment is hoping to catch up to 52,000 more.

Gibraltar Signs TIEA With US To Avoid Blacklisting

Gibraltar said yesterday that it has signed a TIEA with the US, the first such agreement signed in the Rock’s history.

The agreement was signed in London, ahead of today’s G20 summit where offshore financial centers and bank secrecy are likely to feature prominently on the agenda. Gibraltar, a tiny rock hanging off the Spain’s southern tip, is hoping to be excluded from any blacklist compiled or presented at the G20 meeting. Although it is part of the EU and commits to its financial oversight, Gibraltar has developed a steady reputation over the past few years as a low tax haven.

This TIEA is going to punch a hole in that carefully developed offshore reputation – at least as far as Americans are concerned.

Gibraltar must now provide the US ”with access to information it needs to enforce US tax laws, including information related to bank accounts in Gibraltar” – according to a joint statement from the two countries.

The agreements broad remit will also permit the US “to seek information from Gibraltar and vice versa on all types of taxes in both civil and criminal matters.”

Perhaps under the US umbrella Gibraltar hopes to fend off further secrecy attacks from its neighbours. For US citizens the game is already up.

Source: AFP

IRS Lures US Tax Evaders With Chance To Escape Criminal Charges

The IRS will offer US tax evaders the chance to escape criminal charges and higher fines if they turn over details of their offshore bank accounts within the next 6 months, reports the AFP.

If they turn in their offshore accounts and agree to pay all taxes due, tax evaders will instead face a civil penalty of 20%.

The internal memo from IRS deputy enforcement chief Linda Stiff did mention however that these more lenient rules would not apply to those already under investigation.

Interestingly, the smallest penalty of 5% is reserved for those who own offshore bank accounts but did not open or deposit money in them. This means that by just having an offshore account, never mind actually cheating on his taxes, the US citizen already owes the IRS money!!!

Confessions have apparently doubled in recent months as the IRS looks to implement a ‘carrot’ approach where the stick has already failed. Since locking horns with UBS over 50,000 US clients with swiss bank accounts, US authorities have still not received promises for more than 300 or so names and accounts. It is hoped that by offering this latest amnesty, US clients will come forward with evidence which may be used as leverage against UBS.

Liechtenstein to enter tax talks with Britain

Liechtenstein is to enter into discussions with Britain about how to encourage British tax payers to own up to their undeclared offshore accounts.

As part of an operation is clean up its secretive image, Liechtenstein is beginning to negotiate bilateral tax agreements with several other European countries on an informal level.

The million (or billion?) dollar question is how to get wealthy UK citizens to voluntarily hand themselves over without having to enforce huge penalties. Coaxing from both sides could nudge them in the ‘right’ direction.

“We anticipate that such an approach could pave the way not only for the existing clients of our own financial centre but also for clients of other financial centres,” said Liechtenstein’s  prime minister Klaus Tschuetscher.

Liechtenstein has been uder pressure to lift its bank secrecy since a scandal last year involving the country’s biggest bank, LGT, where information concerning the offshore bank accounts of some of Germany’s wealthiest citizens was leaked to authorities.

In a move that appeared to concede Liechtenstein agreed earlier this month to sign up to article 26 of the OECD’s model tax convention, which involves tax-information exchange between member states.

Swiss Minister Sacrifices Merc In Bank Secrecy Row

Switzerland’s Defense Minsiter Ueli Maurer has given up his Mercedes S430, permitting himself to be driven around in a Renault Espace as a sign of his anger at Germany’s position on swiss bank secrecy.

“The tax dispute has annoyed and angered him so much that he has switched to another pool car,” Maurer’s spokesman said on Sunday.
In an exchange of fisticuffs a Swiss minister accused Steinbrueck of acting like a Nazi, but the finance minister defended himself by saying he had learned to “formulate his remarks regarding tax havens in Switzerland in an unambiguous way.”

His statements however provoked criticisms even among fellow Germans.

“The completely inappropriate way the finance minster has expressed himself to Switzerland in the legitimate fight against tax havens is inacceptable,” Volker Kauder, the Christian Democratic Union’s parliamentary group leader, told a German newspaper.

Some of the tools in Steinbrueck’s blitzkreig could involve penalising German banks with subsidiaries in Switzerland or imposing more restrictive controls on them to ensure that all their transactions are ‘transparent’.

Switzerland NOT on EU Tax Blacklist Says Czech PM

The Czech Prime Minister Mirek Topolanek has said that Switzerland will not be put on any EU blacklist, according to Swiss TV. Topolanek currently holds the EU’s one year revolving Presidency.

Countries which had accepted OECD standards for tax information exchange would not be blacklisted. Offshore jurisdictions Luxembourg, Austria, Liechtenstein, Belgium and Andorra have all signed in addition to Switzerland. ”These countries which have accepted these standards, they are not on this blacklist” Topolanek told Swiss TV.

Tax Havens have been scrambling over each other the past few weeks in order to be wiped off any potential blacklist. Switzerland has said that it will allow some concessions on its strict bank secrecy such as co-operating in cases of tax evasion where there is concrete and specific evidence of the crime.

Liechtenstein Bank Reports Tough Year For Offshore Banking And Wealth Management

Concerns over privacy are hitting traditional tax haven banks where it hurts.

Liechtenstein’s third biggest bank (VP Bank) has reported a net loss of 80.3 million CHF for 2008. VP Bank also suffered net outflows of 1.13 billion CHF

The past year has not been easy for any bank but especially so for banks in traditional offshore jurisdictions such as Switzerland and Liechtenstein. America’s high-profile pursuit of UBS clients and Liechtenstein’s LGT bank scandal in which thousands of personal records were stolen have raised doubts over the future of banking secrecy in these countries.

2009 will be an important year in terms of political developments with regard to banking secrecy, with high tax countries not in a legal position to prize open private records, yet still keen to achieve their goals by exerting ‘pressure’ on secrecy jurisdictions. This ‘pressure’ may come in the form of economic or other sanctions for Switzerland and Liechtenstein if they fail to offer concessions.

This is a fact VP Bank has already acknowledged, says CEO Adolf Real,

“We will continue to give high priority to the protection of our clients’ privacy. At the same time, we have to take account of the changed legal conditions in the countries where our clients are domiciled in our advice and asset management,”

Liechtenstein is probably the more threatened of the two tax havens, having already been blacklisted along with Andorra and Monaco by the Organisation for Economic Cooperation and Development for being an ‘uncooperative’ tax haven.

It is interesting that smaller countries are the first to be blacklisted, since they have less resources to lobby high-tax nations.