In what can be seen, in retrospect, as
a monumental and culminating moment that was preceded with months of threats
and subtle pressure, the US Government has just about erased any semblance of
the ill reputed Swiss Banking Secrecy Law that has been around for over 75
years.
The Swiss economy has been, at the best
of times, dependent on its financial services for a little over 10% of GDP
output. With the ‘liberal’ interpretation of the existing Swiss Banking Secrecy
Law, the Swiss Government hopes to circumvent the hurdles of its own law that
once made the country the unassailable alpine equivalent of Fort Knox. Suddenly
a number of loopholes appear that will enable the US Government to demand and get
information. With the financial sector in deep trouble worldwide with many
layoffs, the leading institutions UBS and Credit Suisse will find that the
planned 10% culling of their workforces may well be the tip of the proverbial iceberg.
The Swiss Banking Secrecy Law had encouraged
hoarding the money of tax evaders, shady business men, outright criminals,
potentates and conglomerates in the safe havens of Swiss banks, with no
questions asked and none answered, which was then later morphed to a new form
that officially discouraged and denounced ‘dirty’ money, but was only a fig
leaf for a continuation of “best practices” of stashing away black money and
money laundering. It was in a way the ‘don’t ask don’t tell’ equivalent of disingenuousness,
where clients had to declare that the monies were legal – No further questions
asked.
Investigative agencies tracking these
funds were stymied with a simple “if you provide us with all relevant details
of the account and criminal evidence, we will cooperate”. In effect, this
prevented a “John Doe Summons”, as in many cases it was difficult nay impossible
to provide account details, as the funds were stashed under aliases, PO Box companies,
opaque trusts and holdings.
The new agreement, which will be an
addendum to the Double Taxation Avoidance Agreement (DTAA), will put any US citizen or
US person with an account balance that exceeds 50’000 Swiss Francs liable to be
subject to intensive scrutiny. These could include missing w-9 IRS forms or
suspicious cash withdrawals or just about any behaviour.
In what is reminiscent of the paranoia
that befalls society today, where anything that does not conform to an
expectation is automatically a crime, such as spending a little too much time
in the toilet cabin of an aircraft!
Leave Your Comments