This post appeared on the RenounceUScitizenship blog.
2012 – Wegelin – Sowing The Seeds of U.S. Terror
Wegelin's Fall to Tax-Haven Poster Child http://t.co/MgsdWsERwm – thought it was out of the reach of US bc it had no branches in the U.S.
— U.S. Citizen Abroad (@USCitizenAbroad) December 14, 2013
This article includes:
Two months ago, Wegelin pleaded guilty, even though it had “little to gain” by doing so, it said in court documents. Wegelin said it was seeking “closure.” An attorney for Wegelin declined to comment.
Legal experts said the U.S.’s tactics may offer a blueprint for future actions against foreign banks. Assistant U.S. Attorney Daniel Levy wrote in a sentencing memo that the prosecution of Wegelin would send “a strong message to those who would believe that, without a physical presence in the U.S., they cannot be reached by U.S. law enforcement.”
“Americans who still have these undeclared accounts need to realize the world is shrinking,” Jeffrey Neiman, a former assistant U.S. attorney, said in an interview. He prosecuted UBS, UBSN.VX -0.31% the Swiss bank, for offenses similar to Wegelin’s.
But the legal theories the U.S. used in prosecuting Wegelin haven’t been tested under these specific circumstances. Had Wegelin gone to trial, legal experts said, it could have argued that it had no criminal intent because it didn’t believe it was responsible for adhering to U.S. laws. In Thursday’s court filing, Wegelin said it went to great lengths to attempt to comply with U.S. laws and that it didn’t know it would be punished for “what it was legally entitled to do under Swiss law.” It added: “Swiss banking privacy and its potential for concealing tax evasion by U.S. persons has never been a secret.”
An interesting Wikipedia summary of the story appears here.
It seems clear that the real purpose of Wegelin was to terrorize Swiss banks and to provide a precedent for so doing.
Swiss bank Wegelin ordered to pay in U.S. tax evasion case http://t.co/8xI9n1hdXD – Precedent 4 Swiss bank guilt plea for conduct in Switz
— U.S. Citizen Abroad (@USCitizenAbroad) December 14, 2013
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2013 – OVDP For Swiss Banks – Reaping The Harvest of Terror
Swiss Banks Disclosure Of Americans, Many More Expected By End Of Year http://t.co/CF25slx59G via @forbes – To #OVDP or not to #OVDP
— U.S. Citizen Abroad (@USCitizenAbroad) December 14, 2013
The background, decision and link to Wegelin are described by lawyer Robert Wood and the Economist. The Economist sets the stage follows:
AMERICANS never made up a large portion of Swiss private banks’ international client base, but the price to be paid for allowing some of them to evade tax is proving to be steep—and could be ruinous for some smaller wealth managers. By December 9th most of Switzerland’s 300 or so banks were required to tell their regulator whether they would participate in a voluntary-disclosure programme crafted by the Department of Justice, under which those that have handled untaxed accounts for American clients can wipe the slate clean in exchange for fines. Swiss authorities have urged banks to sign up to avoid the fate of Wegelin, a venerable private bank that closed after being indicted in New York for aiding tax dodgers.
Banks have four choices. They can declare themselves “category two” institutions (those with foreign clients who broke American tax laws), “category three” (those whose foreign clients were clean), “category four” (mostly domestic) or they can choose not to take part. “Category one” comprises 14 large banks, including Credit Suisse and Julius Bär, which cannot participate because they were already under investigation when the programme was set up. They will have to negotiate individual settlements with the American authorities. The only large bank that has already done so is UBS, which paid $780m and handed over information on more than 4,700 American accounts.
As Swiss banks scramble to enter the Department of Justice program for Swiss banks, there is much reference to Wegelin Bank of Switzerland. Rightly or wrongly Wegelin agreed with U.S. prosecutors that it conspired with U.S. taxpayers to hide money from the IRS. In other words, it entered into a plea bargain. It’s unclear what the result would have been if Wegelin had pleaded not guilty and the case had gone to trial. I predict (if the law had been applied) that the U.S. would have lost.
Leaving aside the jurisdictional issues (does U.S. law apply in Switzerland) the point is that Wegelin – on is website – specifically agreed that it was assisting U.S. taxpayers evade taxes.
Swiss banks should NOT participate in this U.S. shakedown created by the Department of Justice.
The top 10 reasons include:
1. Wegelin has absolutely NOTHING to do with the circumstances of the vast majority of Swiss banks. The Wegelin situation is analogous to the Swiss banks in category 1 that are NOT eligible to participate (time will show that the Category 1 banks will do better outside the program).
2. The program is being interpreted so idiotically by the Department of “Justice” that almost all the Swiss banks are forced into Category 2 where they agree to pay fines because they can’t prove their American customers were innocent. In other words: You pay “US” because, well just because.
3. The history of OVDP and OVDI has shown that the U.S. simply cannot be trusted. Remember the “Bait and Switch” in OVDP 2009.
4. The U.S. reserves the right to interpret the terms of the program making it impossible for the banks to even know what they are agreeing to. (Incredibly an article in Geneva Launch suggested that Post Finance – a bank owned by the Swiss Government – was entering OVDP because the terms of the program were NOT clear. As one commenter asked: Who is advising these people?)
5. OVDP for Swiss banks is another U.S. program that punishes more innocents (banks and Americans abroad) than it hurts the guilty (who aren’t eligible anyway). Innocent Americans Abroad are being victimized by this program. It is one more example of U.S. immorality!
6. The simple fact is that there are 300 banks in Switzerland – the vast majority are guilty of one and only one thing – Having an American citizen as a client. (Some of which don’t even know they are Americans.) Let the Department of Justice come to Switzerland and prove its case.
7. The administrative costs are too expensive to the banks. Participation makes no business sense.
8. Participation is a betrayal of Swiss citizens of U.S. origin (Countries considering FATCA IGAs take note!) who have no practical connection to the U.S. Some of these Swiss citizens may not even know the U.S. considers them to part of their penalty base U.S. citizens. (We know that the IRS believes that those who did NOT know they were U.S. citizens should pay 5% of their net worth to the IRS in OVDP.)
9. Participation is a betrayal of ALL Swiss citizens because it assumes that the U.S. and not Switzerland makes laws for Switzerland. Remember that the behavior the U.S. doesn’t like is perfectly legal in Switzerland. The banks are being punished for “acting correctly under Swiss law“.
10. I predict that those who do NOT participate will end up with a better deal.
Closing comments and a dose of sanity from Swiss lawyer Douglas Hornung:
The Swiss French-language newspaper “Les Temps” has an opinion editorial by Douglas Hornung, an attorney, who advises Swiss banks NOT to take part in the “plead guilty deal” agreed between the US and Swiss governments. The opinion piece is titled “La majorité des banques suisses doit refuser le «US Program»” and is behind a pay-wall.
Below is a rough translation of the first paragraphs:
“Only banks that have actively solicited clients on American soil have an interest to participate. Bankers who take the time to learn will learn the intricacies of “U.S. Program ” that Swiss diplomats have not seen.
by Douglas Hornung
More and more banks are considering whether to participate in the U.S. “Program” and FINMA , the Federal Supervisory Authority for Financial Markets, is applying pressure to convince banks to participate in the “U.S. Program .” The Swiss authorities and the Swiss Bankers Association emphasize that banks that fail to participate in “U.S. Program”, are liable to criminal prosecution for “conspiracy” that threaten their very existence. The example of the Wegelin bank is highlighted.
In fact, this fear and this example are ruled out: in fact, the United States can not threaten to open a criminal investigation “conspiracy” against most Swiss banks. They can not do that against those who actually had a policy of attracting a major U.S. customer and have in that particular efforts to have this type of clients. In these cases, but in these cases only the United States can put the bank itself at risk by threatening criminal prosecution for “conspiracy ” if it does not cooperate.
For all other Swiss banks , there is no reason to fear of being accused of “conspiracy” because they have nothing ” conspired ” and have only managed the assets of some U.S. customers, often elderly, who represent only a small part of their regular customers. They have not had proactive activities on American soil (organization of cultural events, sports) and have been content to treat clients who come to them naturally. They could also defend themselves vigorously, and successfully, in case – although unlikely – that such a threat materializes.”
@SwissPinoy…
Is this your comment? I think it is there… Sometimes he is slow with his moderation…
Yes, that’s the one. I’m impressed that it made it past typical American censurship! Maybe, I should have waited a bit longer before being critical, but I was rather pessimistic since that type of a remark often gets censured in American forums since it touches on some controversial issues in the world’s most heated and controversial conflict in which America is not a balanced player.
From Jack Townsend
Swiss Banks Participating in US DOJ Program (12/31/13)
Posted: 31 Dec 2013 02:10 PM PST
This is my rough and ready list of participating Swiss banks. I am sure that there are omissions, errors as to categories, etc. I am incorporating this information into the master spreadsheet, so I would appreciate readers advising of additions, corrections, etc.
Aargauische Kantonalbank 2
acrevis Bank AG 4
AEK Bank 1826 4
Appenzeller Kantonalbank 4
Baloise Bank SoBa 3
Bank am Bellevue 3
Bank Coop AG 2
Banque Cantonale de Fribourg 2
Banque Cantonale de Genève 2
Banque Cantonale du Jura 2
Banque cantonale du Valais 2
Banque Cantonale Neuchâteloise 2
Banque Cantonale Vaudois 2
Banque Privee Edmond de Rothschild 2
Basellandschaftliche Kantonalbank 3
Berner Kantonalbank 2
Cembra Money Bank AG 3
Cornèr Banca SA 2
Edmond de Rothschild Group 2
EFG International AG 2
Glarus Bank 4
Graubündner Kantonalbank 2
Hyposwiss Privatbank Zurich AG 2
Hyposwiss Private Bank Geneve SA 2
Linth Bank 2
Lombard Odier & Cie. 2
Luzerner Kantonalbank 2
Migros Bank AG 2
Nidwaldner Kantonalbank 2
Notenstein Privatbank Ltd. 3
Obwaldner Kantonalbank 4
Piquet Galland & Cie SA 2
Post Finance 2
Raiffeisen 3
Rothschild Bank AG, Zurich 2
Saanen Bank 2
St. Galler Kantonalbank 2
Schaffhauser Kantonalbank 2
Schwyzer Kantonalbank 4
Ticino Cantonal Bank 2
Union Bancaire Privee 2
Valiant Holding AG 2
Vontobel Holding AG 3
Valartis Bank (Switzerland) 3
VP Bank (Switzerland) 2
Walliser Kantonalbank 2
Zuger Kantonalbank 2
A tiny flame of resistance burns in Switzerland but will it get snuffed out by the Swiss Federal Supreme Court?
http://www.journalofaccountancy.com/News/20149410.htm
@Em, I would hope that the IRS would provide more information if it thinks that it has a case.
@ SwissPinoy
Proof? They think they don’t need proof. The USA just goes phishing and expects the lowly fish-prey to jump right into the boat.
Also reported on Reuters
http://in.reuters.com/article/2014/01/08/julius-baer-idINL6N0KI3BO20140108
Update — Jan. 27.th 2014.
Pictet & Cie Bank —- List of Crimes.
1996 —– F.S.A— Breach in London.
2003 —– F.S.A. — States rogues operating in Pictet’s London office. Ivan Pictet states that documents were forgeries but were later proved to be genuine in the British Courts. He had documents destroyed in their London office –hoping to hide the crimes.
2007 .- – – The Securities and Exchange Surveillance issued a recommendation that the Prime Minister and The Commissioner of the FSA to take disciplinary action against Pictet Asset Management – Japan Ltd.
2008 .– Dec. – Pictet Bank state – ” We have never chosen any funds linked to Madoff.
2011 – – – Madoff Trustees sue Pictet & Cie. Bank for $156 Million.
2011- – – Pictet & Cie Bank abetted a Bribery Scheme – Oil company sues Pictet for $350Million
2012 – – – April – Geneva Bank Pictet used in Offshore Tax Scheme. ( USA.)
2012 — – June. — Published in Anglo INFO .Geneva.— USA Trust Fund Investors were sent false and fraudulent documents by Pictet Bank in order to collect large fees. ( Like MADOFF)
Even after the SEC in the USA uncovered the fraud Pictet continued to charge fees and drain whatever was left in these accounts. Estimated that $90 million lost in this Pictet Ponzi scheme.
2012 – – – July. — De – Spiegel. — states – Pictet Bank uses a letterbox company in Panama and a tax loophole involving investments in London to gain German millionaires as clients.
2012 – – – August —- German Opposition Leader accuses Swiss Banks of “organised crime.”
2013 — Jan.— Swiss MP’ table motion to freeze Tiab Mahmud’s assets of ” criminal origins”
held in Swiss banks – $18 million held in 5 accounts at Pictet & Cie. Bank. Bahamas.
Ironically the Pictet & Cie.Bank partners are bigger criminals than the criminals who have accounts in the their bank.
The bank is now seeking to re-structure — to cut the partners liability – hoping to off load their decades of criminal responsibilty – and move onwards to carry out new crimes. The Germans are right — the bankers should go to prison if found guilty of financial crimes..
Both Ivan Pictet and Monty Raphael.Q.C. conspired to withhold crucial documents requested by the High Court – the FSA — and the Police Fraud Squad.
Written Parliamentary Questions received by the table office ..
(1) To ask the secretary of state what steps he is taking to ensure that Swiss Banks such as Pictet & Cie do not evade criminal prosecution under EU law even when the illegal act is committed by a London based subsidiary.
(2)To ask the secretary of state what steps he is taking to protect the rights of UK citizens who seek redress following criminal activities by Swiss banks with subsidiary offices located in London.
Quote. ( America’s Top Lawyer .)
You can be the richest man in the world with the best lawyers that money can buy but you cannot win against a man who has got nothing left to lose and is telling the truth.
*** We note that there has been a sharp increase in Peters & Peters partners leaving to go to other practices. Moving does not alleviate them of any responsibility from any illegalities that may have occurred at Peters & Peters during their partnership tenure. From 1999 onwards.
The consensus of opinion is the Pictet & Cie should be prosecuted , and that their U.K. banking licence should be taken away.
Their Solicitors at Peters & Peters .London “ struck off and prosecuted..”
*** Started campaign — June 6th.2008.
5years —- approx 10 .5 million e-mails – – – but still no writs, injunctions or threats of litigation – – – WHY – – – because it is all true.
*** . The bigger they are — the harder they fall.!!! In America —- they would have all been in prison for the last seven years.
Feb 2013,— Pictet & Cie Bank Partners remove their unlimited liability.They realise that all their personal wealth is at risk , the people they have conned might want their money back.
Full Story.***
. ” Google ” or ” Yahoo” .
Insert– ( Charles Pictet. Banker.
Insert– ( Ivan Pictet.Banker.
Insert– ( Jacques de Saussure.Banker.
Insert– ( Nicolas Pictet. Banker.
Insert– ( Jean-Francois Demole.Banker.
Insert — ( Philippe Bertherat. Banker.
Insert– ( Renaud de Planta. Banker.
Update. Jan. 24th. 2014.
Over the last three years we posted the following on hundreds of sites . —
*** Were currently waiting for the West Yorkshire Police ;-
(1) Chief Constable . Sir Norman Bettison
(2) Forces Solicitor. Mike Percival.
(3) Head of Economic Crime Unit. Det Chief Inspector. Steven Taylor.
-to see if they continue to cover up this case like the FSA. – “ watch this space.”
**** We can now state that all the above have been removed from their posts. All three facing criminal allegations.
**** These three senior police officials assisted in covering up the crimes carried out by Pictet & Cie Bank and it’s lawyers.
Swiss Bank Accounts. 2014.
Is your monies safe in these accounts —- definitely NOT.
Would you get your money back if every body decided to withdraw all their accounts – NO WAY.
Economic Experts say that there would only enough money to repay 50% of their clients.
Are you going to be in the 50% — that loose your money.– Get it out NOW.
2012 — – June. — Published in Anglo INFO .Geneva.— USA Trust Fund Investors were sent false and fraudulent documents by Pictet Bank.Switzerland. in order to collect large fees. ( Like MADOFF) —Even after the SEC in the USA uncovered the fraud Pictet continued to charge fees and drain whatever was left in these accounts. Estimated that $90,000,000 million lost in this Pictet Ponzi scheme.
2012 – – – July. — De – Spiegel. — states – Pictet Bank uses a letterbox company in
Panama and a tax loophole involving investments in London to gain
German millionaires as clients.
2012 – – – August —- German Opposition Leader accuses Swiss Banks of “organised crime.”
All the fines that crooked Swiss banks have incurred in the last few years exceeds £15.Billion.
It is also calculated that the secrecy ” agreements” with regards to tax evation by their clients will cost the banks another £45 Billion.
The banks are panicking — the are quickly restructuring their banks —- from partnerships —
to ” LIMITED COMPANIES.” —– this will probably mean that in the future — they could
pay you only 10% of your monies ” if you are one of the lucky ones” —- and it be legal.
Sods —– Law.
January.—- 2014.
For almost two decades we have strived to get justice for the injustice we have suffered at the hands of a world renowned bank— PICTET & CIE. BANK.
Two yorkshiremen both running their own small family businesses trying to resolve the problem by taking all the correct legal procedures to recover their monies.
The matter was raised in Parliament – twice– the FSA investigated the matter concluding that PICTET had rogues operating in their London Bank — but the rogues had left —saying no one left to prosecute.??? —– so there.
We then approached the Financial Ombudsman Service. (FOS) — our case was dealt with by seven different people —- then our numerous E-Mails were ignored — nobody would speak to us ——-so there.
We then asked the SFO ( Serious Fraud Office.) to investigate our case —- the criteria of our case ticked all their boxes. — we were instructed not to send them any documents/evidence.—— in fact they wrote to us advising us to go to the Citizen’s Advice Bureau.(CAB.)
Richard Alderman the SFO boss —- who responded to our letter was the same man who would not investigate the “ Madoff” scandal or the “Libor” fiasco.
The MP’s committee —- said he was sloppy— and the SFO was run like “ Fred Karno’s Circus” ——- so there.
Our M.P. approached our local Chief Constable to investigate—– he was called—- Sir Norman Bettison— Chief Constable of West Yorkshire Police —- a force that made “ Dad’s Army” look like the S.A.S. They were inept – corrupt —malicious — from top to bottom. We were criminally dealt with by the Forces Solicitor—- the Head of the Economic Crime Unit —-and the Chief Constable —– so there.
We were then advised to pass our complaint against West Yorkshire Police to the I.P.C.C. – which we did — they advised us to make our complaint to —- the West Yorkshire Police — we did with reluctance — all we got was abuse and obfuscation. —– so there.
Sir Norman Bettison —- The Forces solicitor— and the Head of the Economic Crime —- have all been removed from their posts and facing criminal allegations.
—— so there.
We even sought justice through the Courts — culminating in a visit to the Court of Appeal-London.— On leaving the Courts of Appeal that day our barrister a “rising star” informed us — that if that was Justice then you can keep it. He quit the law and moved to Canada —– so there.
A few years later we learned that one of the judges in our case at the Court of Appeal was related to a senior executive of the Pictet Bank —–so there.
Pictet & Cie .Bank — voted private bank of the year 2013.
Ivan Pictet —- Voted banker of the year 2012. —- the senior partner — lied on numerous occasions and had documents destroyed — also said genuine documents were forgeries. —– so there.
Ivan Pictet in Oct. 2013 —- Given the Legion of Honour — but saying that —- honours were given to Hitler — Eichmann — Mussolini —Franco — he’s in fitting company. —-so there.
MONTY RAPHAEL.Q.C. — Peters & Peters.London. They were the banks lawyers.
Monty Raphael.Q.C. along with Ivan Pictet withheld crucial documents requested by the High Court —- the FSA —- and the police Fraud Squad. —-so there.
Monty Raphael.Q.C. became an Honorary Queens Counsellor in March. 2012.
Monty Raphael.Q.C. became a Master of the Bench in Nov.2012.
An expert in Fraud —the Doyen of Fraud Lawyers. —– so there.
This says a lot about Banks — the consensus of opinion is that they are highly paid “crooks” —- no wonder they voted Ivan Pictet banker of the year.
Full Story.—- “google ”
Insert.
Ivan Pictet.Banker.
Monty Raphael.Q.C.
Ivan Pictet/Monty Raphael.
@jack loach, Pictet Bank is one bank out of about 300. One single bank is not “all Swiss banks”.
As expected, the Swiss-U.S. Programme, which is a FATCA-like “agreement” to identify USPs with bank accounts in Switzerland back to 2008, is starting to out USCs working in Switzerland. A USC with a Swiss “C” permit (permanent residence) posted this message today on another board. Note that his/her sign-on is “Teacher29”, probably indicating what this non-filer US citizen does for a living in Switzerland:
http://www.englishforum.ch/finance-banking-taxation/199710-disclosure-financial-institutions-advice.html
I sarcastically wonder which evil Swiss bank facilitated her in her tax evasion efforts. Was it one of the dastardly supermarket chain banks? Or was it the PostFinance at the Swiss Post branch near her home? Or did s/he manage to open a current and a savings account at a cantonal bank, where the school may have sent him/her? Evil is in the eye of the beholder.
@Innocente
Virginia La Torre Jeker is convinced this will spread outside Switzerland:
https://taxconnections.com/taxblog/swiss-continue-to-cave-in/
@bubblebustin, the US believes in the equal destruction of expats. It won’t destroy one more than another. They will all be destroyed equally.
@Bubblebustin..
Once the DOJ and IRS taste blood, they look for other victims. It could be charitably called “Revenue Poaching”. That is an Allison term for US CBT application of taxing whereever you live, but it applies with the spreading cancer of OVDP for banks in other countries too. A real legacy for Obama.
They’re only getting away with this because Switzerland has been stigmatized as being a tax haven. DoJ is going to have to redefine its definition of ‘tax haven’ to include Canada, and ‘tax evaders’ to include those who were unaware of their tax filing obligations. Most Canadian banks would fit the same profile that Swiss banks opting for Category 2 do: may have non-compliant US taxpayers. Think they can get away with the Programme in Canada?
@ All:
As previously discussed, the Economist wrote this about the Swiss-US Programme: “The programme does not distinguish between banks that willingly catered to tax dodgers and those that inadvertently served them. As a result, banks that believe they are clean but cannot be certain may join category two to be on the safe side.”
http://www.economist.com/news/finance-and-economics/21591639-wealth-managers-are-paying-clients-sins-even-if-they-were-unaware
Retail banks throughout the world that have USCs as customers would likely have to classify themselves as Category 2, if the Programme were further roll out, because they would not know – and why should they – if their USC customers resident in the country were US tax compliant.
The head of the Swiss bank regulatory authority, Raaflaub, who whipped the Swiss banks into joining the poorly thought-out US Programme, resigned from his office several weeks ago under pressure. His US counterpart, Kathryn Keneally, Asst Attorney General, Tax Division, will look increasingly silly as the programme is revealed for what it is – an expensive undertaking that outs USC minnows working in Switzerland with normal current and savings accounts at retail banks and not “offshore” accounts. Last week she boasted in Arizona that the programme was identifying banks that had not been targeted, essentially confirming this.
I remind myself that Kathryn Keneally, while a partner at Fulbright & Jaworski, worked to protect the heirs to the Ferdinand Marcos estate, a dictator who was implicated in murder of 10,000 dissidents. In addition to lacking morals, her poorly designed US Programme shows that she lacks common sense.
Excuse my French, but the Assistant Attorney General is a see-you-next-tuesday.
Two banks on Just Me’s “US Programme” list might be worth commenting on:
1) Piquet Galland & Cie SA, category 2: This is a private bank in the French speaking area of Switzerland. The Galland part of the bank was owned by the Johnson family of Wisconsin (“Johnson Wax”) from 1976 until 2010. The Johnsons somehow had the foresight to sell it.
2) Cembra Money Bank AG, category 3: This is a local consumer lender that was owned by General Electric until it was spun off several months ago (previously called “GE Money Bank”). There were various reports that it had a policy of not accepting USCs as customers, even though the USCs were resident in Switzerland. GE also showed foresight.
An article in Agefi discusses the fact that US (private) banks in Switzerland have not accepted US customers, even if resident in Switzerland:
“While none of the (US banks in Switzerland) has yet expressed its participation in the U.S. program, Raoul Würgler Oliver said that “some U.S. banks in Switzerland have long had a policy of not accepting U.S. customers” (read Agefi yesterday). The Assistant Secretary General of the Association of Foreign Banks in Switzerland indicated in this sense why they may not be worried by the U.S. program.”
Although 99.99% of Brock readers would not get past the receptionist in a private bank and this might be irrelevant to us, these US private banks also had the good sense not to open accounts for USCs here.
Is it a coincidence that the Johnsons got out of Swiss private banking after 34 years and that GE Money Bank and the US private banks in Switzerland did not accept any USCs as customers? Or did someone in the USG tip them off?
http://translate.google.com/translate?sl=auto&tl=en&js=n&prev=_t&hl=en&ie=UTF-8&u=http%3A%2F%2Fagefi.com%2Fune%2Fdetail%2Farchive%2F2014%2Fjanuary%2Fartikel%2Fbanques-americaines-a-l-abri-de-l-us-program.html
French:
http://agefi.com/une/detail/archive/2014/january/artikel/banques-americaines-a-l-abri-de-l-us-program.html
Barclay’s caught in Swiss Programme
http://taxconnections.com/taxblog/barclays-swiss-private-bank-is-part-of-us-tax-deal/#.Uv5nPHm4x1E
Kathryn Keneally is the Assistant Attorney General responsible for the Swiss-US Programme, which is causing banks in Switzerland to freeze accounts of their US citizen customers resident in Switzerland until US tax compliance can be demonstrated. As has been mentioned elsewhere, prior to Ms. Keneally becoming Asst Attorney General, she was a partner at Norton Rose Fulbright/ Fulbright & Jaworski where, among other things, she helped protect the heirs to the Ferdinand Marcos estate. As is well known, Ferdinand Marcos looted the Philippines treasury of several billion dollars and also has been implicated in the murder of 10,000 dissidents.
Interestingly enough, subsequent to her resignation from Fulbright & Jaworski in early 2012, Norton Rose Fulbright organized itself under Swiss law as a “Swiss Verein”. What does this mean?
“Welcome to the Swiss Verein Club Norton Rose Fullbright
The rumour that has been spreading for some time has now been officially announced this month. UK based law firm Norton Rose and US law firm Fullbright & Jaworski LLP will be combined to create what will be known as Norton Rose Fullbright by June 1st, 2013, creating a 3,800 lawyer enterprise, making it one of the world’s biggest law firms consisting of 55 offices worldwide. Although the firm will be under one banner, but it will be acted on a model known as a Swiss Verein, a consolidation structure that has been sweeping the legal market these days. This news came right before the official announcement of the three way tie up between Salans, SNR Denton and Fraser Milner Casgrain forming Dentons, also under the Swiss Verein structure.
This form of union is not new as it was first introduced by Baker & Mckenzie and then followed by firms such as DLA Piper, Hogan Lovells, Squire Sanders, and the highly publicized King & Wood Mallesons.
There are loads of reasons why firms choose to operate under the verein structure. For one, it acts more as a marketing tool than anything else allowing the firms to expand on its international recognition under a single organization without the need to comply with the regulations and tax codes of each country in which the verein operates. It also conveniently avoids regulations regarding the qualifications of law firm owners and also the requirement of filing tax returns around the world. Most significantly though, there is no need to share commercial or professional liability for the debts or actions of other member firms and no sharing of revenues.”
I like that part that says that the Swiss verein structure allows “the firms to expand … without the need to comply with the regulations and tax codes of each country in which the verein operates. It also conveniently avoids regulations regarding the qualifications of law firm owners and also the requirement of filing tax returns around the world.”
Of course, this all happened following Ms Keneally’s departure as a partner so possibly she would not have been in favor of “avoiding … the requirement of filing tax returns around the world.” Still, Kathy, it looks like a tax dodge by your old law firm.
@Innocente, lawyers and politicians dodging taxes is not the problem. It’s the serfs who must be kept in the chains at any cost!
According to an insider at a Swiss retail bank, the OVDI for Swiss banks (“US Programme”) is going poorly for them. The deadline is month-end April and they applied for an extension until month-end June. A primary reason is that their customers cannot get the US tax work done by the deadline.
Comments:
1) There are (a lot) more US tax customers this year than last year but the number of practitioners is the same.
– The US tax practitioner capacity issue in Switzerland was discussed in an article posted at IBS several weeks ago.
2) I suspect, but don’t know, that other banks have applied for the two month extension.
3) Asst Attorney General Kathryn Keneally was quoted in a recent Swiss newspaper article as saying that there will be no further extensions beyond June.
– Once again, Kathryn Keneally is showing a lack of judgment.
@Innocente
Kathryn Keneally is probably feeling the sting of Senator Carl Levin’s criticism of the DOJ at the recent hearings. Not that it excuses her, just always remember where the real lack of judgement begins. 🙂
@Just Me:
There is clearly pressure from Carl Levin to move forward with punishing the Swiss banks since the 2009 tax treaty still hasn’t been approved by the Senate and, besides Levin making his bullying threats, the US Programme is one of the few routes available.
Although the insider only mentioned that the delay was caused by lack of capacity at US tax firms in Switzerland*, I would venture that there is at least another important issue involving liquidity:
OVDP: If a USP decides to enter OVDP an upfront payment of at least 27.5% of the person’s includible assets value must be made (it probably approaches 40% to even 50% for many). Finding the liquidity could be rather difficult due to:
a. The assets includible in an OVDP would normally include a USP’s residence and pension assets (participation in pension plans is obligatory here) in addition to bank accounts. Neither a person’s house nor his pension assets can be turned into cash at short notice, if at all.
b. Generally, Swiss banks will no longer lend to USPs in Switzerland so USPs can’t borrow the funds here to pay the 27.5% to around 40% OVDP upfront payment.
c. Many USPs here have had their bank accounts partially or fully frozen until they submit FBARs including for 2013, which is due June 30, 2014. If the US tax practitioner is to file the 2013 FBAR, there is again this capacity issue.
* – The lack of US tax practitioner capacity would impact all retail banks in Switzerland since this is where US emigrants and duals with derived US citizenship resident in Switzerland would have their US taxes prepared. As an opinion, this lack of capacity would not impact Americans who have or had relationships with Swiss private banks since they would most likely live in the US and not here.
The US Programme bagged mostly Swiss retail banks and very few private banks, opposite of what was intended. An analogy to the US Programme might be as follows:
A Cadillac/ Chevrolet car dealer decides to have a big Cadillac promotion with lots of banners, advertising and games for the kids. A lot of people show up and many Chevrolets are sold but few Cadillacs, the intended goal. However, the car dealer’s sales director proclaims the success of the promotion at a subsequent GM sales conference and mentions how many cars were sold, but doesn’t reveal that they only moved a few Cadillacs. That would describe Kathryn Keneally’s tactic at the Arizona tax conference.