Tuesday, 16 June 2015

Bank employee info transfer to US 'illegal'

In April 2012, the Swiss government gave 11 Swiss banks the go-ahead to accommodate a US tax evasion probe and hand over the names of thousands of their employees and consultants working with American clients.
Fearful of harsh US penalties and prosecution, the banks then met Washington's demands, handing over personal information about numerous staff members, and reportedly also making personal documents, emails and details of telephone calls available.
But in a ruling reached on May 28th and made public on Monday, a Geneva court found in favour of a former Credit Suisse employee, who had challenged Switzerland's second largest bank over the information about her given to US authorities in 2012.
The woman, who was not named, had not been informed at the time that information concerning her was being shared — something that ran counter to Switzerland's long cherished bank secrecy practices, which are currently under international pressure.
In the first Swiss court ruling on the controversial practice, the Geneva court noted "the unlawfulness of Credit Suisse's communication to US authorities, outside an international process of mutual assistance, documents containing data" on the former employee, making it possible to identify her.
The court found that the woman, who was not named, "can legitimately consider that she will be at risk if she travels to the United States," and ruled that this impacted her "freedom of movement, (and) constitutes a deprivation of (her) personal liberty".
Lawyer Douglas Hornung, representing the former employee, described the ruling as "an important first-step victory."
It could have implications for the some 400 other current and former employees of Swiss banks who his law firm represents in similar cases.
Credit Suisse, which as a result of the US probes was slapped with a $2.8-billion fine last year after pleading guilty to having helped rich Americans evade taxes, said it had taken note of the Geneva court ruling.
"We plan to appeal," spokesman Jean-Paul Darbellay wrote in a statement sent to AFP.
"The court has decided on an individual case and has not determined that the cooperation under the authorization by the Swiss Federal Council is generally illegal," he said.
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Friday, 5 June 2015

Rothschild Bank to pay $11.5m penalty


NEW JERSEY — Rothschild Bank, the Zurich-based private bank of the Rothschild financial dynasty, has become the latest Swiss bank to be fined by the US justice department for helping Americans conceal assets offshore.
The firm, overseen by Baron David de Rothschild and majority-owned by Paris Orleans, would pay a penalty of $11.5m, the department said on Wednesday.
Banca Credinvest, with headquarters on Lake Lugano, had agreed to pay $3m, it said.
The two banks join seven other Swiss firms that have settled with the US on condition that they reveal how they used shell companies and bank secrecy to conceal undeclared assets. More than 100 firms entered the programme at the end of 2013.
Rothschild Bank, which had US-related accounts with an aggregate balance of a maximum $1.5bn, knew it was "highly probable" that some clients did not comply with income tax and reporting obligations, and that some were hiding behind sham entities in Liechtenstein, Panama and the British Virgin Islands, the justice department said.
Rothschild closed 296 accounts of US taxpayers from August 1 2008, to the end of 2013, and encouraged customers to disclose undeclared assets to the US Internal Revenue Service. It had also obtained waivers from some former US clients to circumvent Swiss secrecy laws that normally prohibit banks from giving client names to foreign authorities, the justice department said.
"Rothschild Bank is pleased to reach this agreement … because this brings this historical matter to a conclusion," company spokesman Kilian Borter said.
On an unrelated front, prosecutors investigating Brazil’s largest corruption scandal said they had notified the US of evidence that at least four foreign companies had paid bribes to win Petrobras contracts. The allegations were against units of Samsung Heavy Industries, Skanska, AP Moeller-Maersk and Toyo Engineering, senior prosecutor Carlos Lima said.
Companies might face charges in Brazil that would restrict local operations and possible sanctions under the US Foreign Corrupt Practices Act, he said last week.
Samsung Heavy Industries "has not been contacted by any law enforcement authorities regarding this issue", the South Korean company said. Toyo and its Brazilian affiliate "are entirely unrelated to the bribery scandal of Petrobras", the Japanese company said.
Maersk said bribes were strictly forbidden for any employee or third party, that commissions were paid within industry norms, and that it had found no indication of improper activity. The Danish company had not been contacted by authorities.
Skanska said it had zero tolerance for unethical business practices and is investigating internally.
Petrobras, which prosecutors see as a victim of individual executives, is controlled by the state and its employees are deemed to be public officials. The US department of justice declined to comment on its role in the investigation. Petrobras did not reply to requests for comment.
In other news on bank settlements with regulators, a trader fired by Deutsche Bank as part of its London interbank offered rate rigging settlement with the New York Department of Financial Services is suing the bank over bonus payments that may total more than £5m.
Yves Paturel filed the suit along with a second trader, Gavin Black, in a London court in January, according to the filing, made available by the court on Wednesday. The pair were dismissed in April. Black has withdrawn his claim.

Baron David de Rothschild’s Bank Fined Over U.S. Tax Dodging

Rothschild Bank AG, the Zurich-based private bank of the Rothschild financial dynasty, became the latest Swiss bank to be fined by the U.S. Justice Department for helping Americans conceal assets offshore.
The firm, overseen by Baron David de Rothschild, 72, and majority-owned by Paris Orleans, will pay a penalty of $11.5 million, according to a statement by the Justice Department on Wednesday. Banca Credinvest SA, with headquarters on Switzerland’s Lake Lugano, agreed to pay $3 million, it said.
Rothschild and Banca Credinvest join seven other Swiss firms that have settled with the U.S. in exchange for revealing how they used shell companies and banking secrecy to conceal undeclared assets. More than 100 entered the Justice Department program at the end of 2013.
“More and more information is flowing to the IRS agents and Justice Department prosecutors going after illegally concealed offshore accounts and the financial professionals who help U.S. taxpayers hide assets abroad,” Acting Assistant Attorney General Caroline Ciraolo of the Justice Department’s Tax Division said in the statement.
David de Rothschild, who was born in New York, and his brother Eric transformed Paris Orleans into a holding company providing wealth and asset management services, merger advice and merchant banking. It was originally founded as a French rail company in 1838.

Sham Entities

Rothschild Bank, which had U.S.-related accounts with an aggregate maximum balance of about $1.5 billion, knew it was “highly probable” that some Americans weren’t compliant with income tax and reporting obligations, and that some were hiding behind sham entities in Liechtenstein, Panama and the British Virgin Islands, the Justice Department said.
Edmond de Rothschild group is a separate asset manager and private bank led by Ariane de Rothschild and Benjamin de Rothschild.
The U.S. probe of the Swiss financial industry has already hit the country’s biggest banks, UBS Group AG and Credit Suisse Group AG, for more than $3 billion. About a dozen others, such as Julius Baer Group Ltd. and the Swiss unit of HSBC Holdings Plc, still face separate criminal investigations that may result in fines.
Rothschild closed about 296 U.S.-taxpayer accounts between Aug. 1, 2008 and Dec. 31, 2013 and encouraged customers to voluntarily disclose undeclared assets to the Internal Revenue Service. It also obtained waivers from some former U.S. clients in order to circumvent Swiss secrecy laws that normally prohibit banks from giving client names to foreign authorities, the Justice Department said.
“Rothschild Bank is pleased to reach this agreement with the U.S. DoJ because this brings this historical matter to a conclusion,” Kilian Borter, a company spokesman, said by telephone.
BSI SA, one of the largest private banks in the program, reached the first non-prosecution deal on March 30. It paid $211 million, admitting that it managed about 3,500 U.S. accounts with a peak value of $2.78 billion in 2008.
Lombard Odier, Geneva’s oldest bank, and the Swiss units of Deutsche Bank AG and Schroders Plc are among dozens of other companies waiting to conclude a deal.

Wednesday, 27 May 2015

Tax evasion: EU-Switzerland sign deal 'to end banking secrecy'

People making financial transactions

The EU and Switzerland have signed an agreement that is intended to clamp down on tax evasion, the European Commission has said.
From 2018, EU residents will be prevented from hiding undeclared income in Swiss banks.
The EU and Switzerland will exchange information on the bank accounts which their respective citizens hold.
The EU Commission said it was a "deterrent" against hiding income abroad.
"This new transparency should not only improve member states' ability to track down and tackle tax evaders, but it should also act as a deterrent against hiding income and assets abroad to evade taxes" the EU Commission said.
The Commission is also negotiating similar agreements with Andorra, Liechtenstein and Monaco.
EU commissioner Pierre Moscovici said that the agreed automatic exchange of information was "another blow against tax evaders and (represents) another leap towards fairer taxation in Europe".
It follows an agreement for "strengthened transparency" made between EU member states last year.

BBC News Services

Monday, 25 May 2015

Switzerland has begun revealing alleged foreign tax dodgers that are wanted by tax authorities in their native countries, Swiss newspaper Sonntagszeitung reported.

Swiss Bank

MOSCOW (Sputnik)  Names, birth dates and nationalities of people suspected by their countries of origin to have stashed money in the alpine tax haven are being published in Switzerland's official legal paper Bundesblatt. US nationals will be identified by their initials, Sonntagszeitung said.

Swiss authorities said they had been overwhelmed by requests from Germany, Russia, India and the United States to expose suspected tax cheats. German media have been anxious to find Francisco Jose Ortiz von Bismarck, a descendant of Germany's first chancellor Otto von Bismarck, among those under investigation.

According to the Swiss newspaper, the move will allow those wanted by their governments a chance to seek legal aid.

Switzerland has recently been rolling back its notorious bank secrecy after it came under pressure from tax authorities across the world, specifically from the United States.

Since the late 2000s, Washington has been pressuring Swiss banks to provide names of its citizens whose money had been traced to accounts in Switzerland. The US Department of Justice sued the Swiss-based banking firm UBS for hundreds of millions of dollars in 2008 and 2009, and has continually pushed for increased transparency.

Bern is now negotiating a deal with the United States to exchange bank account data in a bid to crack down on tax dodgers. A similar preliminary accord was agreed between Bern and Brussels back in March 2015.

The disclosures come a month after a team of international journalists unearthed secret bank records that showed that the London-based global banking giant HSBC's Swiss branch had made large profits between 2005 and 2007 by helping its clients evade taxes

Tuesday, 28 April 2015

Study sees opportunities in the collapse of banking secrecy

Banks belonging to retailers like Migros have an advantage when it comes to collecting "big data" (Keystone)
Banks belonging to retailers
like Migros have an
advantage when it comes
to collecting "big data"

As many as 40 Swiss private banks could disappear in the changing banking landscape, predicts a study released on Thursday. Banks that want to survive should concentrate on using “big data” to provide clients with individualised service and advice, it found.

The end of banking secrecy for customers in key foreign markets and 
restrictions due to the financial crisis have turned the industry inside out, 
said the study. The transformation process is still only in the beginning 
stages and the challenges banks face are major – even existential.

The study, conducted by accountancy firm KPMG and the University of St Gallen, was based on a survey of nearly 50 private and cantonal banks. 
Ninety percent of them believed that  knowing the customers’ habits and preferences would make it easier for them to woo customers by offering 
tailor-made products.

There is no time to lose, according to KPMG board member Philipp Rickert. Banks that take action can succeed in the future, despite, or perhaps 
because of, stricter regulatory requirements, he said.

Retailers like Migros and Coop, which also have banking branches, have abundant experience in the collection of data related to customer behavior 
and preferences, according to KPMG’s Hans Stamm. Retail banks like Postfinance or the cantonal banks also have an advantage.

With digitalisation, the role of customer service representative will  be 
redefined, said Stamm. In addition to wanting access to information around 
the clock, bank customers want personal contact. The customer service agent will become a sort of “mini family officer” who knows his clients and takes time for them.

swissinfo.ch and agencies

Swiss money laundering reports hit record high in 2014

Switzerland's money laundering office received a record number of suspicious activity reports last year, in part due to increased vigilance from Swiss banks.

By Reuters | 28 Apr, 2015, 06.22PM IST 

ZURICH: Switzerland's money laundering office received a record number of suspicious activity reports last year, in part due to increased vigilance from Swiss banks. 

The Alpine nation has faced intense international pressure over bank secrecy, tax evasion and money laundering, most recently highlighted by allegations that the Swiss arm of HSBC had helped clients to dodge taxes. 

The Money Laundering Reporting Office Switzerland (MROS) said on Tuesday that it received 1,753 reports of suspicious activity in 2014, up 24 percent on 2013 and the highest level since MROS was formed in 1998. 
"One explanation for the rather surprisingly high level of reporting may be the increased reporting awareness of financial intermediaries, especially from the banking sector," MROS said in its annual report. 

The total asset value of the activity in the reports topped 3 billion Swiss francs ($3.13 billion), with more than 85 percent of the reports coming from the banking sector. 
MROS analyses reports on suspicious activity related to money laundering and forwards them to Swiss law enforcement agencies where necessary. 

The office forwarded 72 percent of reports to prosecution authorities last year, 7 percent less than in 2013. 

Leaked information detailing how HSBC's Swiss private bank allegedly helped wealthy clients to evade taxes has dragged Switzerland's chequered history of tax compliance and money laundering back into the public spotlight. 
Swiss regulator FINMA had already investigated and criticised the bank in 2010/11 for its poor internal controls and violations of money laundering guidelines. 

Geneva's public prosecutor searched HSBC's lakeside Swiss office in February after opening a criminal inquiry into allegations of aggravated money laundering. 

UBS and Credit Suisse, Switzerland's two biggest banks, have also paid heavy penalties to settle tax evasion cases in the United States in recent years. 

Switzerland is among a host of countries who have committed to a multilateral sharing of tax information in an agreement developed by the Organisation for Economic Cooperation and Development ( OECD) 

Monday, 23 February 2015

Italy, Switzerland Sign Tax-Information Deal

Italians authorized to seek information on Italian residents who hold assets in Swiss accounts

MILAN—Italy and Switzerland signed on Monday an agreement to exchange tax-relevant information as part of wider negotiations on contentious financial issues between the two countries.
The agreement will allow Italian tax authorities to ask for financial information about Italian residents who hold assets in Swiss bank accounts. So far, these requests weren’t possible due to secrecy laws covering assets stashed in Swiss banks.
To be applicable, the agreement needs to be ratified by both countries’ parliament. This will likely happen by mid-2017, officials from both countries said.
”This is a very important step forward in the relationship between the two countries,” Italy’s Economy Minister Pier Carlo Padoan said. Italy will sign a similar agreement with Liechtenstein on Feb. 26, Mr. Padoan said.
The Italy-Switzerland agreement caps three years of negotiations between the two countries on a number of controversial tax and financial matters. It will make it harder for Italians to hide assets stashed in Swiss bank accounts, to which Italian tax dodgers have traditionally turned to hide undeclared money.
The signing of the agreement will have an immediate effect on Italian residents who decide to adhere to a tax amnesty the Italian government launched in January.
According to the law introducing the “voluntary disclosure” program, Italians who decide to repatriate undeclared assets from Switzerland would have had to pay taxes on the money stashed in the Alpine country in the past 10 years.
With this agreement, they will now pay taxes only on the funds hidden in Swiss bank accounts in the past five years. They will also be subject to lower sanctions.
Mr. Padoan declined to give an estimated amount for the proceeds of the voluntary-disclosure program.
“We have budgeted one euro. I can guarantee it will be more than that,” he said.
Apart from the agreement on the exchange of information upon request, the two countries signed a map for future negotiations on other financial and tax issues, such as the taxation of Italian cross-border commuters.
Currently, the 70,000 Italians who cross the Swiss border every day for work are taxed by Swiss authorities only if they live within 20 kilometers (12 miles) of the frontier.
Swiss tax authorities then pay back 38% of those tax proceeds to the Italian border towns where the commuters live.
The two countries agreed to change this regime. In the future, both countries will tax cross-border commuters. Switzerland has so far agreed with Italy it will apply its tax rates but withdraw only up to 70% of the proceeds due.
Then the workers will be taxed by Italy and will be able to deduct from their Italian tax bill the amounts withdrawn by the Swiss authorities.
Mr. Padoan said the tax burden for these workers won’t immediately change, but is likely to rise in the future.
The two countries said they agreed to go on negotiating to facilitate access to the Italian market for Swiss financial companies as well as on some tax provisions for the inhabitants of Campione D’Italia, an Italian exclave in Swiss territory.
Write to Giovanni Legorano at giovanni.legorano@wsj.com

Thursday, 22 January 2015

Swiss bankers pitch 'superior banking' services; Indian corporate leaders not impressed

The discussions between Swiss bankers and corporate leaders are not focussed on providing 'safe haven' to funds, but on  better banking services.

DAVOS: In a major departure from their earlier practice of luring wealthy clients in the name of 'safe havens', Swiss bankers are now pitching 'superior banking' services to their prospective clients- although Indian corporate leaders do not appear much impressed. 

Nonetheless, a large number of Indians present here at Davos have scheduled meeting with bankers and top executives of various small and large Swiss banks, even as many of them say these meetings would be about corporate banking related requirements rather than for 'wealth management' services. 

The annual WEF meeting in this Swiss ski resort town has always been a perfect place for the bankers from Switzerland- based financial institutions to sign up new clients or get new business from existing customers, including those from India. 

However, a global crackdown against secrecy practices of Swiss banks, as also continuing attempts by Indian authorities to bring to task those suspected to have stashed black money in Switzerland-based banks, appear to be bearing fruit -- at least with regard to the dealings related to Indians' funds finding their way to banks in this Alpine country. 

A number of corporate leaders and some Swiss bankers said here that the discussions between them are not focussed on providing 'safe haven' to funds, but rather the clients are being promised better banking services than anywhere else in the world. 

The change in approach, however, is not being received well by the Indians looking to do business with Swiss banks, as 'better services' can be availed in various other parts of the world and the main attraction for Switzerland had alway remained the 'safe haven' tag. 

On condition of anonymity, some attendees of the WEF summit said that the bankers are also pitching for arranging 'business deals' to mask the flow of black money, but such banks are very few as of now. 

Some other banks have tried innovative ideas to lure rich clients from India and other countries by providing services like 'cash courier' as well as by offering large metal vaults to store currency notes, gold, artworks and other valuables. 

Also on the platter was advice to put money in virtual currencies, especially in the wake of Bitcoin ATMs becoming operational in Zurich. 

As per the latest data available with the European nation's central bank, Swiss National Bank, total funds held by Indians in Swiss banks declined to a record low of about Rs 9,000 crore (1.42 billion Swiss francs) at the end of 2012, but rose again to over Rs 14,000 crore in 2013. The data for 2014 is yet to be published. 

The overall funds held in Swiss banks by entities from across the world, however, continue to decline amid fading secrecy benefits. Last year, India and Switzerland reached a major agreement wherein the Alpine nation has agreed to cooperate in a big way in the Indian government's fight against black money.