UBS and the "Surprise" over Private Banking

With recent news of UBS (UBS) helping Americans evade tax and previously Germans using Switzerland for the same purpose, I'd just like to highlight that private banking and its use for tax evasion are a pretty badly kept secret and nothing new. I have always seen "private banking services" as nearly synonymous with "tax evasion". Thus it's a bit funny that suddenly a government acts surprised.

While I haven't personally worked within the private banking world, I can imagine it's a place of double-speak where the term "tax efficiency" is probably the term to use for tax evasion.

What is interesting about the "discovery" in the US, and the decision by UBS to wind down its offshore services in the US, is that it still leaves open the question "well, what about UBS's services in other countries?" Private banking exists all over the world, especially for the rich in developing countries where tax authorities don't have the means, nor sometimes the willingness, to track down wealth. It's highly likely UBS and other private banking providers are up to the same tricks in most countries. I'm not saying this is a surprise, again it's a badly kept secret, but it's funny that UBS basically says "we'll stop this criminal activity in the US." Full stop. Because it leaves open, well, that they will continue in the rest of the world.

The real fun could come if UBS is forced to divulge its long list of client names. Likely to be some well known people amongst the 20,000 names or so...

Under pressure from the authorities, UBS is considering whether to divulge the names of up to 20,000 of its well-heeled American clients, according to people close to the inquiry, a step that would have once been unthinkable to Swiss bankers, whose traditions of secrecy date to the Middle Ages.

 

And while Switzerland might be getting the heat right now...  we should also think about the up and coming Switzerland of Asia, Singapore. This clean, straight, respectable looking place has a thriving private banking industry with its own badly kept secrets as well. In fact, the entire private banking industry could probably be worth a massive crackdown, if the will ever actually existed.

Comments

[buyitcheap:]

Ah, there's the tax gap! it was hiding in Europe!

2008 Jul 21 09:11 AM

[shepherd777:]

It is unbelieveable what nonsense you are telling here. American citizens are the criminals. They defraud the IRS and exploit the Swiss Bank Secrecy Laws for their pursuit. You can sue all matress makers, because some people hide money under them without reporting to the IRS. You can sue all gun makers, because they aid criminals to kill people. See this: US law (still) does not prohibit US citizens to export money. US law does not require foreign banks to report savings of US citizens to the IRS. American's free citizens, however, are forced by law to report foreign savings over USD 10,000.-. This is just mistrust and misguidance, because most countries have a double taxation agreement with the US (yes, Switzerland too) and collect withholding tax for Uncle Sam. So the story of billions of tax evasion on foreign earnings on assets is a fabricated hoax of Messrs. Levin and Colemean. They should know that the QI agreement the US signed with Switzerland and other counties expressly contemplates that US citizens are not required to provide a W-9 form as long as the bank account does not hold US securities. So, if there are 19,000 undeclared accounts they are fully legal as long as there are no US securities in it. Facit: There was no wrongdoing of UBS. Now that UBS has closed their business to offer offshore accounts to US citizens, Americans can be proud that they just unmounted another part of their democratic freedoms. Welcome Mr. Orwell and if you don't trust banks, put your savings under your matress and tell the IRS.

2008 Jul 21 07:51 PM

[mexalite:]

Dear Editor,

You are very very wrong!
Firstly, there is a vast difference between tax evasion & tax efficiency. The former is a criminal offence and the latter is a LEGALIZED service that private bankers give to their clients. I could give you a simple good example. When pb advise clients to go into insurance policy and the investment earnings from the policy are usually tax free so the tax saved is what you call tax evasion?!?!
Secondly, private banking is not all about "tax evasion", it ranges from giving legalized estate/succession/inve... planning to giving access to closed ended hedge funds/private equity/structured/disc... investment products that suits the tailored need of every wealthily individual. Its just like going for a tailor-made shirt than buying off the shelves.
Lastly, you are right that Singapore has a thriving private banking industry but you are very wrong to infer that we are doing something wrong here. We indeed have strict banking secrecy laws here but we also have strict laws punishing money launderers!! N you might then wonder why the need for the strict banking secrecy…. I can tell you in this region (except Singapore)…. If you are rich you better be confidential cuz very soon you would find your loved ones missing and ur phone ringing…..same for many developing countries

Regards
Singaporean within the private banking industry

2008 Jul 23 09:13 AM

[Suze:]

Many of the US senators and congressman are all also private banking clients. They know all to well of the scheme of private banking.

Many American private banks practice/copy what UBS does. Look at Merrill Lynch, Citibank, JPMorgan, Northern Trusts, Goldman Sachs, Morgan Stanley who send their private bankers to Indonesia, flying into Indonesia on Monday and going back to Singapore on Friday, staying in hotels in Jakarta. Each of these private bankers is instructed to write on the Indonesian immigration form that s/he is going to Indonesia for other reasons, other than TAKING MONEY from the country, bad mouthing about Indonesia, and helping rich people in Indonesia hide their money from the tax authority of Indonesia.

On another note.
The best place to hide money for Americans is CHINA. The Chinese government will not be willing to be indoctrinated by any government in the world including the US and the CNY keeps on appreciating (it should go as high as 1USD=5CNY).

2008 Jul 23 02:45 PM