Dictators accounts - Swiss banks to return assets to their countries
M A Kaiserimam
LondonFunds pillaged from developing countries by dictators and stashed in Swiss banks can be returned to their original jurisdiction to assist with aid projects after historic legal reforms, reports the Times of London.
The Swiss Government has passed a federal act on the restitution of assets of savers, such as Hosni Mubarek, that allows the authorities to confiscate frozen assets and, subject to conditions, return them to the country of origin.
At the same time, London and Berne are on the brink of an historic legal deal that could turn Swiss banks into de facto agents of Revenue & Customs. The UK Government is pressing its counterparts to force Swiss bankers to assess the tax liabilities of UK residents with funds in their institutions.
The move comes as clients of Swiss banks are becoming increasingly nervous after a spate of data thefts, the most recent being the transfer several weeks ago of two computer discs to WikiLeaks by Rudolf Elmer, a former Zurich-based banker. UK lawyers specialising in high-net value clients view the combination of porous Swiss banks with pressure for transparency from the US and the EU as the death-knell for blanket banking secrecy.
The moves led by the US Internal Revenue Service and the British and German tax authorities have pushed Swiss banks, which have historically not troubled clients about their domestic tax positions, on to the back foot.
Many Swiss banks are saying, by way of a huge change from their previous stance, we would now like clients to become tax-compliant in their home jurisdictions, says Judith Ingham, the partner who heads the Geneva office of Withers. And a lot are saying that if you dont become compliant in your home jurisdiction, we will not be able to continue to give you the full service that we have done in the past.
That is a sea change. You can see 55-year-olds trying to make their mouths move in a way that says this. It is not something that theyve ever been interested in or worried about in the past.
The most dramatic development is negotiations between the UK and Swiss governments that would agree a past tax regularisation mechanism, which could operate without the banks having to give names of individual accountholders. London has already created a disclosure facility with the authorities in Liechtenstein that offers UK citizens with a connection to the principality a chance to regularise their past tax sins on relatively favourable terms, provided they do so before HMRC launches a code of practice 9 investigation, in other words a case of suspected serious tax fraud.
The Liechtenstein deal took effect last year and it has triggered a flood of work for English specialist solicitors. The problem with the model from the Swiss perspective is that it requires the identification of individuals and their worldwide assets.
Henry Fea, a Geneva-based partner of Charles Russell, says: The Swiss are hoping to do a deal with the UK that will allow for a withholding of tax on an anonymous basis. How this will happen in practice is rather difficult to imagine. The Swiss banks may do a deal in which they are somehow obliged to apply, say, a 30 per cent tax to the value of the assets of UK residents with funds in their bank and then pass that in lump settlement to the revenue. But how would they know when a liability arises? It is hard enough for us as UK specialist lawyers to know what the liability is.
The Swiss remain relatively sanguine about banking secrecy. Ive been in practice for 23 years and for that entire time weve had the same questions, says René Bösch, head of the financial services group at Homburger, one of Switzerlands most prominent commercial law firms.
It is definitely not the end of banking secrecy, but the end of the philosophy that banking secrecy is absolute and protects from any intervention by the authorities. Over the past 10 to 15 years, Switzerland has agreed to grant mutual assistance in criminal matters so banking secrecy has had holes in it for a long time.
The Geneva and Zurich banks are putting on a brave face. Christoph Winzeler, a lawyer on the senior management team of Swiss Banking, the countrys bankers association, says the financial services fraternity views positively the moves between the Swiss and UK governments.
M A Kaiserimam
LondonFunds pillaged from developing countries by dictators and stashed in Swiss banks can be returned to their original jurisdiction to assist with aid projects after historic legal reforms, reports the Times of London.
The Swiss Government has passed a federal act on the restitution of assets of savers, such as Hosni Mubarek, that allows the authorities to confiscate frozen assets and, subject to conditions, return them to the country of origin.
At the same time, London and Berne are on the brink of an historic legal deal that could turn Swiss banks into de facto agents of Revenue & Customs. The UK Government is pressing its counterparts to force Swiss bankers to assess the tax liabilities of UK residents with funds in their institutions.
The move comes as clients of Swiss banks are becoming increasingly nervous after a spate of data thefts, the most recent being the transfer several weeks ago of two computer discs to WikiLeaks by Rudolf Elmer, a former Zurich-based banker. UK lawyers specialising in high-net value clients view the combination of porous Swiss banks with pressure for transparency from the US and the EU as the death-knell for blanket banking secrecy.
The moves led by the US Internal Revenue Service and the British and German tax authorities have pushed Swiss banks, which have historically not troubled clients about their domestic tax positions, on to the back foot.
Many Swiss banks are saying, by way of a huge change from their previous stance, we would now like clients to become tax-compliant in their home jurisdictions, says Judith Ingham, the partner who heads the Geneva office of Withers. And a lot are saying that if you dont become compliant in your home jurisdiction, we will not be able to continue to give you the full service that we have done in the past.
That is a sea change. You can see 55-year-olds trying to make their mouths move in a way that says this. It is not something that theyve ever been interested in or worried about in the past.
The most dramatic development is negotiations between the UK and Swiss governments that would agree a past tax regularisation mechanism, which could operate without the banks having to give names of individual accountholders. London has already created a disclosure facility with the authorities in Liechtenstein that offers UK citizens with a connection to the principality a chance to regularise their past tax sins on relatively favourable terms, provided they do so before HMRC launches a code of practice 9 investigation, in other words a case of suspected serious tax fraud.
The Liechtenstein deal took effect last year and it has triggered a flood of work for English specialist solicitors. The problem with the model from the Swiss perspective is that it requires the identification of individuals and their worldwide assets.
Henry Fea, a Geneva-based partner of Charles Russell, says: The Swiss are hoping to do a deal with the UK that will allow for a withholding of tax on an anonymous basis. How this will happen in practice is rather difficult to imagine. The Swiss banks may do a deal in which they are somehow obliged to apply, say, a 30 per cent tax to the value of the assets of UK residents with funds in their bank and then pass that in lump settlement to the revenue. But how would they know when a liability arises? It is hard enough for us as UK specialist lawyers to know what the liability is.
The Swiss remain relatively sanguine about banking secrecy. Ive been in practice for 23 years and for that entire time weve had the same questions, says René Bösch, head of the financial services group at Homburger, one of Switzerlands most prominent commercial law firms.
It is definitely not the end of banking secrecy, but the end of the philosophy that banking secrecy is absolute and protects from any intervention by the authorities. Over the past 10 to 15 years, Switzerland has agreed to grant mutual assistance in criminal matters so banking secrecy has had holes in it for a long time.
The Geneva and Zurich banks are putting on a brave face. Christoph Winzeler, a lawyer on the senior management team of Swiss Banking, the countrys bankers association, says the financial services fraternity views positively the moves between the Swiss and UK governments.