I came across an interesting article on IPolitics.ca about a deepening mystery about Canadian’s holding bank accounts in Liechtenstein. I linked to article below but its behind a registration wall so I copied and pasted the most intriguing passage [Editor’s note: I’ve rerouted the link through google and so the entire article should be available]:
The mystery surrounding Canadian owners of offshore accounts in a secretive bank in Liechtenstein has deepened with the discovery by the Canada Revenue Agency that nearly half the names it was given are not the real owners of the accounts, iPolitics has learned.
CRA’s probe has determined that 51 of the 106 names it received of account holders in the LGT Bank in the tax haven of Liechtenstein “were not the true beneficial owners for the account.”
“With regards to the 51 cases that were not the true beneficial owners for the accounts, the CRA has determined, through audit actions, that they do not have any tax obligation in relation to the information obtained,” explained Philippe Brideau, spokesman for the Canada Revenue Agency. “However, the CRA has taken actions to determine the true beneficiaries and has taken audit actions to ensure compliance with the Income Tax Act.”
Brideau said further details are protected under confidentiality provisions of the Income Tax Act.
I am going to put out the supposition that whoever the “real” owners of these accounts are they aren’t Canadian and furthermore the real owners of these account are residents of a certain other country to the south and the premise of FATCA just got blown out of the water. (The information CRA got was stolen by a disgruntled bank employee so even the bank didn’t know who the real owners are). What is interesting is these “51” people appear to be free and clear as a matter of Canadian law so if a certain other’s countries Justice Department wants to do what it normally wants to do its going to have to pick the same type of fight with Canada that is currently ongoing with Switzerland over club “51”. I am going to post this over at Jack Townsend’s blog to see what he thinks of it.
Mystery deepens around Canadian accounts in secretive offshore tax haven
Interestingly there were four account holders outside of the 51 that were fully compliant and 22 that were partially compliant.
Here is another interesting blurb on this Liechtenstein story of someone who was evading taxes in Canada now deceased:
One of them, former Drumheller mayor Eneas Toshach, died in 2001. His son, Eric Toshach, said he was shocked to learn from auditors that his father, a former radio station owner, had a Liechtenstein foundation and a Swiss account with RBC Dominion.
Eric Toshach, who was the executor of the estate of his father and mother, said that, at the Canada Revenue Agency’s request, he demanded documents from the Liechtenstein financial institutions where his father banked. The paper trail led to more startling discoveries.
For about 10 years, his parents’ RBC Dominion account in Switzerland had periodically wired exactly $9,500 to a bank in Washington State, just a few hours from his parents’ retirement home on Vancouver Island. That amount is just small enough that it doesn’t raise flags: North American bankers are required to fill out what is known as a “large cash transaction report” if someone withdraws more than $10,000 in cash, and any amount of cash over $10,000 must be declared at the U.S.-Canada border. After considering his mother’s frequent shopping trips to Seattle, he suspects his parents were withdrawing the money in cash in the United States to avoid detection in Canada.
“Let’s face it,” Mr. Toshach said, “it should have been in Canada. Myself, I really don’t understand the purpose of it. Canadians all know we’re taxed pretty highly, but look where we live – it’s a pretty good spot.”
That is interesting indeed Tim. Assume you are going to put that on Jack’s thread regarding the Liechtenstein story as told on Bloomberg Business week.
I am almost certain there are Canadian “enablers” as Jack calls them for American whales. This has been rumored for many years. Supposedly a well known German Canadian of ill repute named Karl Heinz Schreiber was hiding money for prominent Germany politicians in Alberta trusts back in the 1980s. There is also a case of a West Virginia doctor engaging in massive medicare fraud who used a Canadian “nominee” to hid his proceeds.
*Here is the bio on Karlheinz Schreiber. Quite the character.
And so to solve this, Congress gives the world FATCA, which as you say it can do nothing about. Oh, never mind!
I found an interesting article named “Are secret accounts offshore havens gone for good – why Mitt Romney closed his swiss account”
Do you think that guy had something to sell? LOL
Attached is the US DOJ letter to the Liechtenstein tax authorities requesting assistance to identify US taxpayers with accounts at the Liechtensteinische Landesbank (LLB). The letter requests a list of US citizens with account balances > US$500,000 for the period 2004 to present who did not file a W-9 form with this bank.
Based on my research, until 2011, the W-9 form was a required document for overseas banks for identified US Persons who invested in US securities for purposes of the QI Qualified Intermediary programme. It was, however, NOT required for US Persons with accounts in banks outside the US who did not hold US securities. The absence of a W-9, even if one was not required, combined with a balance > US$500,000, are the determinants to identify suspected US Person tax evaders.
On a related topic, Liechtenstein is seen as a financial center by the US and in other countries, which is at least partially correct. However, its manufacturing sector is 37% of the value-add in the economy, 10% higher than its financial sector. The US and other countries that have let their manufacturing decline should be so lucky. Here’s a mistaken excerpt from another Reuters correspondent on what makes Liechtenstein tick:
“… few dare to speak out against billionaire Prince Hans-Adam von
und zu Liechtenstein, whose family has ruled the 160-sq-km
(62-sq-mile) principality since 1699 and is credited with
turning a rural backwater into a wealthy banking centre.”
See p. 19 of the attached document for an overview of Liechtenstein’s economy: