Are you a "private banking" client? Well you're in luck...

[Dover]

He sells private sea shells by the seashore...

A somewhat dated article excerpt by Mother Jones. Seems to me that cleaning up a legal system that allows or fails to regulate this activity is the FIRST step toward preventing tax havens/evasion. Is this still going on? Probably.

===

...The world's largest financial institutions are also growing richer by offering private banking services to their top clients. Big-time American players include Merrill Lynch, Chase Manhattan, J.P. Morgan, Morgan Stanley, and Goldman Sachs. The leading U.S. private banker is Citibank, which administers trusts and shell corporations for some 40,000 clients through its operations in New York, London, the Bahamas, the Cayman Islands, the Isle of Jersey, and Switzerland.

To open an account, private banking clients must generally deposit at least $1 million. According to a report by the Senate Permanent Subcommittee on Investigations, private bankers then assign the client a "relationship manager" who creates offshore trusts, handles all financial transactions -- and helps ensure secrecy. "Private banks routinely create shell companies and trusts to shield the identity of the beneficial owner of a bank account," the report states. "Private banks also open accounts under code names and will, when asked, refer to clients by code names or encode account transactions."

One former private banker who had more than 30 clients, each with as many as 15 shell companies, told the subcommittee that his own bank prohibited him from keeping any records linking front operations to their owners. In another case, Federal Reserve examiners asked Bankers Trust to create a database identifying the owners of shell companies. The bank complied -- by setting up the database on the Isle of Jersey in the English Channel, which requires U.S. investigators to request names on a case-by-case basis from Jersey courts. The effort to create and shelter multiple accounts "complicates regulatory oversight and law enforcement," the Senate subcommittee concluded, "making it nearly impossible for an outside reviewer to be sure that all private bank accounts belonging to an individual have been identified."

The secrecy makes it easy for clients of private banks to hide their wealth, whatever its source. Citibank's clients have included the family of Sani Abacha, the former Nigerian general who plundered billions of dollars from his nation's treasury, and dictator Omar Bongo of Gabon, for whom Citibank established a Bahamian shell corporation to stash his looted treasure. Citibank also helped Raul Salinas, brother of former Mexican president Carlos Salinas, by transferring tens of millions of dollars out of Mexico and depositing the money in European banks under the names of untraceable companies registered in the Cayman Islands. Citibank never used Salinas' name in bank communications, referring to him instead as "Confidential Client Number 2," or "CC-2."
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=114x46457

[bbinacan]

1. Is this article 10 years old? n/t

[Dover]

3. Whatsamatta? Can't tell? Coulda been written yesterday?

...But while federal officials are quick to denounce money laundering, the IRS has done almost nothing to ferret out offshore tax cheats. "The IRS has known about this problem forever," says one insider familiar with the agency. "At the rate they're going, the whole tax base will be gone before they do anything about it." Tax specialists say the government is reluctant to go after wealthy Americans with offshore accounts because many of them enjoy significant economic and political clout. In addition, the IRS has been demonized by Republicans on Capitol Hill, hampering its enforcement efforts. Phil Gramm of Texas, chairman of the Senate Banking Committee, has blocked the bill requiring banks to fully disclose their offshore customers and has denounced other attempts at regulation. "Hardworking Americans do not deserve this invasion of their private lives," Gramm wrote to Federal Reserve Chairman Alan Greenspan last year.

Such words provide comfort to those in the business of hiding money for wealthy clients. When I ask Honess at Jerome E. Pyfrom & Co. if he fears a crackdown by the Bahamian government, he remains sanguine. At worst, he predicts, the parliament will make token concessions, such as requiring disclosure of IBC shareholders. Like other offshore firms, Pyfrom & Co is prepared for such an eventuality. It has created a company called Altus Limited to serve as the "shareholder" for its clients' IBCs. Altus is fully controlled by Pyfrom & Co., but its service contract states explicitly that it will make no claim to my IBC's assets and will faithfully follow instructions from the corporation's true owner -- me. "This way, if anyone finds out who the shareholders are, it won't do them any good," Honess says with a laugh...cont'd

http://motherjones.com/politics/2000/11/trillion-dollar-hideaway

[bbinacan]

5. I worked for one of the investment banks

in 2000 and was just learning about offshore accounts and IBCs. They shut all that down. I was allowed to keep the one "offshore" account I had. They were a nice retired couple in Bermuda. The only thing I did was to buy them offshore based mutual funds. I'm sure you know how they work and why they are appropriate for some. If you disagree, please do tell.

[Dover]

6. I'd appreciate a link that gives news about who and how "they shut all that down".

Any legislation, laws, etc. Thanks.

[bbinacan]

7. No news links that I'm aware of.

I lived it. Everything I saw about shutting it down was internal. I know there was legislation passed in the Bahamas, based on a conversation I had with a Bahamian law firm, that killed the IBC idea. At least there anyway. The client I had that was interested in the IBC was not looking to avoid taxes. He wanted to protect his assets from lawsuits. He is an anesthesiologist.

[Dover]

8. Well I'm gonna have to eat some crow. I just found this which is interesting...

The HIRE Act and some legislation embedded in the Patriot Act are meant to enforce new currency
controls by beginning in 2012. So at the very least it has brought a great deal of uncertainty for anyone wishing to set up an overseas account from this country as indicated by the fellow writing this article:


...I’ve read some of the HIRE Act and if you download the pdf file here and skip to page 27, you will see my reason for concern:

Title V – Offset Provisions

Subtitle A: Foreign Account Tax Compliance …

Taxes to Enforce Reporting on Certain Foreign Accounts

The Act adds a whole new chapter to the 1986 Internal Revenue Code, which introduces a whole new tax… a tax on foreign bank accounts. In a nutshell, here’s what it says:

Any funds transferred from the US to any overseas account are subject to a new tax equal to 30 percent of the total amount of the payment – unless the payment is sent to a foreign bank that has agreed to report all American-owned accounts automatically and electronically to the US government.

What kind of payments are included? Almost anything. The act specifically mentions “interest, dividends, rent, salaries, wages, premiums, annuities, compensations, remunerations … and any gross proceeds from the sale or other disposition of any property of a type which can produce interest or dividends from sources within the United States… ”

This is incredible stuff. The section after the section about foreign bank accounts goes on to talk about foreign financial assets, including for example stocks, not just offshore bank accounts. Any holdings of foreign stocks over $50,000 will have to be reported by US taxpayers. And this provision kicks in earlier – starting with the next tax year.

It then continues to talk about foreign trusts, dividends… before drawing to a sudden close, and disappearing to where it came from!

cont'd

http://www.qwealthreport.com/blog/currency-controls-now-law-in-usa-through-hire-act/

[bbinacan]

9. To say the least,

it's all very complicated.

[Dover]

10. That link is very revealing about just how scared and upset the wealthy offshore folks are, imo.

And the same author goes further and says that the HIRE act is so ridiculously "draconian" in its effects that the worldwide backlash will be too great for it to stand up to it.

http://www.qwealthreport.com/blog/hire-act-a-blessing-in-disguise/

[Dover]

11. That link is very revealing about just how scared and upset the wealthy offshore folks are, imo.

And the same author goes further and says that the HIRE act is so ridiculously "draconian" in its effects that the worldwide backlash will be too great for it to stand up to it.

http://www.qwealthreport.com/blog/hire-act-a-blessing-in-disguise/

[onethatcares]

2. this article is 10 years old,

do you think anything has changed except for the amount of money that is being hidden?

[Dover]

4. Sadly...yes. This administration may actually be trying to shut this down, but...

those involved probably aren't working up too much of a sweat.

And our congress-critters are paid very well to keep it that way.