On October 13, 2014 Robert Wood published a fascinating post title: “100 Swiss Banks Get Ultimatum: Hand Over Americans Or Face U.S. Prosecution“. Mr. Wood is writing about the Swiss Banks who foolishly entered the “OVDP For Swiss Banks Program” that the Department of Justice announced in August of 2013. I have followed this topic with great interest: arguing that Swiss Banks should NOT have joined OVDP for Swiss Banks and that Americans in Switzerland should NOT join OVDP and take part in the FBAR Fundraiser.
Mr. Wood’s post demonstrates the pitfalls of entering into disclosure agreements with the U.S. Government. In this case (among other things) the U.S. is demanding that “Americans be handed over”. The reality is (as one commenter notes) that what the U.S. Government calls “Americans” the Swiss Government likely calls “Citizens of Switzerland”. Therefore, the U.S. is using the “OVDP for Swiss Banks Program” as a vehicle to force Switzerland to turn their own citizens over to the United States. Interesting. That said, every country that enters into a FATCA IGA (which is really an OVDP program for countries) has agreed to turn its own citizens over to the United States. For example, the “Alliance For The Defence of Canadian Sovereignty“, in it’s video of the FATCA proceedings in the Canadian House of Commons, describes July 1, 2014 as the day that “Canada begins to turn its citizens over to the United States”.
Robert Wood describes the demand to the Swiss Banks in the following way:
Now, from its position of dominance, the Justice Department has made it clear what it wants from the hundred Swiss banks that hurriedly grabbed the DOJ’s settlement deal before January 1, 2014. The U.S. seeks ‘total cooperation’, and that truly means total. Any American names, details, and more. The Justice Department intends to get it all. … (and later)
However, all banks must report to U.S. authorities any information or knowledge of activity relating to U.S. tax. They must reveal all cross-border activities and close the accounts of Americans evading taxes. The 3 tiers of penalties are vastly better than a full-blown U.S. investigation with potential tax evasion charges. Participating banks are required to provide details on American accounts.
In the same way that Americans abroad regret having entered the OVDI/OVDP programs I think the Swiss banks who entered OVDP for Swiss Banks now regret it.
How did we come to this? The answer is that some U.S. Homelanders used a limited number of Swiss banks to evade U.S. taxes. In other words, it was a small number of people who brought us to the point where Americans abroad are being forced to renounce their U.S. citizenship to survive.
But, all of that is old news. For Americans abroad their problems are NOT the state of their tax compliance. Their problem is that they are American.
Mr. Wood ends with some very interesting NEW news. He writes:
Meanwhile, the tax evasion trial of a key Swiss banker and former UBS high-flying executive, Raoul Weil, is commencing in Florida. It comes after a five year wait. Aptly, if he is convicted of helping Americans evade taxes, he could spend five years in jail. After all, if the last five years of IRS and DOJ success has shown anything, it is that the U.S. is all powerful and wants to make examples of high-flying individuals and institutions.
I had completely forgotten about Raoul Weil. Apparently his trial begins today October 14, 2014 in Florida. It will be very newsworthy.
— U.S. Citizen Abroad (@USCitizenAbroad) October 13, 2014
What this Swiss banker could reveal at his trial http://t.co/8JSkaDedlE
— U.S. Citizen Abroad (@USCitizenAbroad) October 13, 2014
It will be fascinating. There are two stories being developed:
Story 1 – The Defendant Is Alleged To Have Helped U.S. Citizens Evade U.S. Taxes
Story 2 – How Raoul Weil Finds Himself Standing Trial In The United States To Begin With
Each story has its own narrative. Each story is important. I came across the following post at International Man about the second story.
— International Man (@intlmandotcom) October 14, 2014
The article referenced in the above tweet is thought provoking. It begins with:
Though it seems farfetched, the prospect of being extradited to North Korea is a chilling thought.
Consider the thought experiment below and see if a similar scenario is as implausible as it initially sounds.
Suppose you are on vacation with your family in China, doing typical tourist things: checking out the Forbidden City, Tiananmen Square, and the Great Wall. However, about five years ago you had made a couple of viral YouTube videos poking fun and making jokes about the North Koreans—particularly their deceased Dear Leader Kim Jong-il. The North Koreans, however, were not amused at all. And despite years passing, they have not forgotten nor forgiven. Insulting the North Korean government and especially the Dear Leader is deemed a very serious “crime.”
The North Korean authorities have charged you with a crime and declared you a fugitive from justice—facing many years in prison. They also put out an international arrest warrant.
When they found out you had checked into a hotel in China—a country which they have good relations with—they sprang into action. An official request was made to extradite you from China to face trial in North Korea.
The Chinese, treaty-bound and respecting the wishes of their ally, oblige.
Then, at 2 in the morning, you’re violently awakened as a squad of heavily armed Chinese police break into your hotel room, point loaded guns at you and your family, and haul you away in your pajamas. After some brief formalities in a Chinese kangaroo court, you’re taken to a jet bound for Pyongyang, where you are promptly convicted by another kangaroo court and thrown into a North Korean prison. The end.
This made-up story is what the world could look like if the international norm of not extraditing people for political “crimes” continues to be eroded.
You will find the complete article (which I highly recommend) here.