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US Pressure on Swiss Banks May End Era of Secret Accounts.

Image: US Pressure on Swiss Banks May End Era of Secret Accounts

By Lisa Barron

The Swiss banking industry is slowly but surely abandoning its legacy of guarding the secrecy of customer accounts.

As many as 40 of the country’s approximately 300 banks have said they would voluntarily turn over client information to the U.S. Department of Justice in return for immunity from prosecution for helping Americans evade taxes, reports USA Today.

The Justice Department set a deadline of Dec. 31 for the banks to take deals protecting them from prosecution in exchange for handing out Americans’ account information.

“What’s really clear is that this [Justice] program is at the limit of what is tolerable for banks in Switzerland,” Sindy Schmiegel of the Swiss Bankers Association in Basel told the newspaper.

The effort is part of a government crackdown on tax evaders and overseas banks that heated up in 2009 after UBS, Switzerland’s biggest bank, agreed to a $780 million settlement for concealing identities and assets from the IRS.

The Justice Department is currently investigating 14 major Swiss financial institutions, including Credit Suisse, Julius Baer, and the Swiss arm of HSBC, for shielding U.S. tax evaders, and many leading banks that are not yet being probed have been urging wealthy clients to turn themselves in to the tax man, Politico reported last month.

“The banks have every incentive to shove their American clients into compliance in order to reduce the penalties,” tax attorney Jeff Neiman, who prosecuted UBS for the U.S. government, told the publication.

Politico cited three letters from Swiss banks to U.S. clients urging them to come clean.

“Your account information may be subject to a treaty request from the United States to the Swiss Federal Tax Administration, which may result in your account information being turned over to the DOJ or IRS,” warned one letter sent by Corner Bank.

Meanwhile, the World Economic Forum taking place this week at Davos, Switzerland, will reportedly hold a forum dedicated to how the country’s banking industry can reinvent itself in the absence of banking secrecy.

“Swiss bankers accept that they are living in a new reality,” Bruno Patusi, head of wealth and asset management at Zurich-based financial services firm EY, told USA Today.

“But we will only see a change in certain areas. Confidentiality is still extremely important. It is true that we are seeing assets flow out [of Switzerland], but that’s partly because the next generation is more interested in spending than saving.”

Related stories:

© 2014 Newsmax. All rights reserved.

The One Industry That Welcomes Obamacare: TV.

At least one major industry is welcoming the introduction of Obamacare.

TV bosses are expecting a $2 billion advertising bonanza as insurance companies jostle for customers once the Affordable Healthcare Act ramps up.

The huge campaigns are likely over the next two years, The Wall Street Journal reports, as companies make their pitch to consumers, who will be required to be insured on Jan. 1.

The television industry forecasts that the companies will spend as much as $1 billion, with some $700 million going to local markets.

“Fundamentally it’s going to be a competition for consumers that will be fought locally, not nationally,” said Dave Lougee, president of Gannett‘s broadcasting division.

Adding to the TV station‘s coffers are states, such as California, Illinois, and Colorado, which already have begun promoting their online insurance exchanges, that will begin Oct. 1, as well as the mandatory nature of the health care law.

And Obamacare opponents show no sign of letting up, either, in their effort to garner support for candidates who continue to oppose healthcare reform. About $500 million already has been put into political advocacy surrounding the health carelaw since 2010, and it is projected that it could reach $1 billion by 2015, the Journal says.

“We are seeing a steady stream of political and advocacy ads that are critical of the law,” said Elizabeth Wilner, vice president of a Kantar Media unit that tracts spending on political ads. “What we aren’t seeing yet is a countering stream of ads that support the law.”

Under the law, most Americans will be required to have health insurance, with fines for those who don’t comply and subsidies for low income households and individuals who can’t afford it.

The spending on political ads could offset the revenue decrease in advertising dollars usually seen in non-election years, one analyst predicts.

“To the extent you can offset some of that, it’s a big deal,” UBS analyst John Janedis said.

© 2013 Newsmax. All rights reserved.

By Courtney Coren

Switzerland Orders Julius Baer to Hand Over US Client Data.

The Swiss government has ordered local bank Julius Baer to hand over data on U.S. clients that will be passed on to U.S. tax authorities, amid signs a long-running tax dispute between the two countries is close to being settled.

Julius Baer said on Tuesday it was working to provide the data, which will be handed over under the terms of an existing Swiss-U.S. double taxation treaty, but declined to comment on how many clients were involved.

Baer is among a group of about a dozen Swiss banks, which also includes Credit Suisse, that are under investigation by U.S. authorities seeking to crack down on funds hidden in Swiss bank accounts.

Editor’s Note: An $87,500 Tax Loophole Discovered by Cherry Hill Accountant

A government-brokered settlement is largely agreed, according to sources familiar with the matter, and is expected to involve billions of dollars of fines and a handover of client names.

However, Swiss Finance Minister Eveline Widmer-Schlumpf needs to find a way to make the deal palatable in Switzerland, given a tradition of bank secrecy which has helped to build the country’s $2 trillion offshore financial industry.

In 2010 the Swiss government turned to lawmakers to force the handover of more than 4,000 files on UBS‘s American clients as part of a landmark $780 million settlement, after the move was contested in court.

Editor’s Note: An $87,500 Tax Loophole Discovered by Cherry Hill Accountant

© 2013 Thomson/Reuters. All rights reserved.
Source: Moneynews.

Tax Cheats Pony up $5.5 Billion in Amnesty Program.

WASHINGTON — The Internal Revenue Service has recouped more than $5.5 billion under a series of programs that offered reduced penalties and no jail time to people who voluntarily disclosed assets they were hiding overseas, government investigators said Friday.

In all, more than 39,000 tax cheats have come clean under the programs.

But there’s more.

Government investigators suspect that thousands of other taxpayers have quietly started reporting foreign accounts without paying any penalties or interest. The number of people reporting foreign accounts to the IRS nearly doubled from 2007 to 2010, to 516,000 accounts, a report by the Government Accountability Office said.

The sharp increase suggests that some people are simply starting to report their accounts without taking part in the disclosure programs, the report said.

“IRS has detected some taxpayers with previously undisclosed offshore accounts attempting to circumvent paying the taxes, interest and penalties that would otherwise be owed,” the report said. “But based on GAO reviews of IRS data, IRS may be missing attempts by other taxpayers attempting to do so.”

Some taxpayers try to avoid penalties through a technique the IRS calls “quiet disclosure,” in which they file amended tax returns that report offshore income from prior years. Others simply declare existing offshore accounts for the first time with their current year’s tax return, the report said.

“If successful, these techniques result in lost revenue for the Treasury and undermine the offshore programs’ fairness and effectiveness,” the report said.

Peter Zeidenberg, a partner at the law firm DLA Piper in Washington, said it’s pretty obvious that people are starting to report foreign accounts that probably existed for years.

“I don’t think you get an increase like that from people just all of a sudden getting the idea I’m going to open an account in Switzerland,” Zeidenberg said.

Acting IRS Commissioner Steven Miller said catching overseas tax dodgers is a top priority of the agency. In a written response to the report, he said the agency is working to improve the way it identifies people who are still trying get around the agency’s disclosure programs.

The IRS has run four voluntary disclosure programs since 2003. The last three — in 2009, 2011 and 2012 — have yielded almost all of the $5.5 billion in back taxes, penalties and interest. The latest program is still open.

The agency stepped up its efforts in 2009, when Swiss banking giant UBS AG agreed to pay a $780 million fine and turn over details on thousands of accounts suspected of holding undeclared assets from American customers.

The GAO’s report looked at data from the 2009 program. More than 10,000 cases from that program have been closed so far. The median account balance: $570,000.

U.S. taxpayers can hold offshore accounts for a number of legitimate reasons, the report says. They may want to diversify their investments, facilitate international business transactions or get easier access to money while living or working overseas.

But, the report notes, “some use them to illegally reduce their tax liabilities, often by not reporting the income earned on these accounts.”

Taxpayers with foreign accounts totaling more than $10,000 must report them to the IRS or face stiff penalties.

The IRS has long had a policy that certain tax evaders who come forward can usually avoid jail time as long as they agree to pay back taxes, interest and hefty penalties. Drug dealers and money launderers need not apply. But if the money was earned legally, tax evaders can usually avoid criminal prosecution.

Fewer than 100 people apply for the program in a typical year, in part because the penalties can far exceed the value of the hidden account, depending on how long the account holder has evaded U.S. taxes.

The disclosure programs offered reduced penalties, but they were not a complete amnesty. In the 2009 program, most of the tax cheats were required to forfeit 20 percent of their accounts, the report said.

Miller said the agency is using information from people who have come forward to target banks and financial advisers.

The disclosure programs helped build political momentum to pass a law in 2010 that will require foreign banks to report U.S. account holders to U.S. authorities, said Ian Comisky, partner at Blank, Rome, a law firm based in Philadelphia.

If foreign governments refuse to disclose the information, U.S. banks must withhold 30 percent of certain payments to financial institutions in those countries — a big incentive for countries to cooperate.

Together, the disclosure programs and the new law offer a powerful incentive for tax dodgers to come clean, Comisky said.

“They are more scared, and they are coming in where they might have been sitting out in the cold,” Comisky said. “Now they’re trying to come in, even if there’s a penalty to do so.”

© Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


Shares capped by U.S. budget, Italian worries.

  • A woman looks at an electronic board showing Japan's stock price index at the Tokyo Stock Exchange in Tokyo February 6, 2013. REUTERS/Toru Hanai

    View PhotoReuters/Reuters – A woman looks at an electronic board showing Japan’s stock price index at the Tokyo Stock Exchange in Tokyo February 6, 2013. REUTERS/Toru Hanai


LONDON (Reuters) – World shares steadied, the euro hovered just above a seven-week low and German government bonds rose on Friday, as concerns over the economic fallout from possible U.S.spending cuts and Italy’s political stalemate dampened sentiment.

Automatic spending cuts worth $85 billion are due to be introduced on Friday after U.S. lawmakers failed to reach a deal to avert them.

The International Monetary Fund said on Thursday it would probably slice 0.5 percentage points off its 2 percent 2013 growth forecast for the world’s biggest economy if the cuts are fully implemented.

“Financial markets are eerily calm about the issue. Nobody is talking about the sequestration, and I worry about the seeming lack of interest when market sentiment is far from stable after sharp swings following the Italian election,” said Hiroshi Maeba, head of FX trading Japan at UBS in Tokyo.

After shares in Asia had edged down, European shares also got off to soft start. Italy’s main FTSE MIB <.ftmib> stock market was down 0.5 percent while London’s FTSE 100 <.ftse>, Frankfurt’s DAX <.gdaxi> and Paris’s CAC-40 <.fchi> were all broadly flat. <.l><.eu>

Italy’s political deadlock has raised concerns about its economic rehabilitation program.

The country’s bonds were steady as trading began to gather pace, following their biggest falls in six-months this week. German government bonds, which have been the main beneficiaries of the volatility, opened higher and were last up 9 ticks at 145.07.

New euro zone and UK manufacturing PMI data due just before 0900 GMT are also unlikely to change the picture of a currency bloc in recession and destined, at best, to recover only very slowly in the second half of the year.

China’s equivalent survey, out earlier, showed growth cooling and underlined the country’s patchy economic recovery . The U.S. report is also due out later in the day.

The biggest concern is that political instability in Italy, the euro zone’s third-largest economy, could reignite the bloc’s crisis, now in its fourth year. Some have questioned whether the European Central Bank‘s pledge to help struggling member states which ask for aid can be utilized if there is no workable government.

The euro was slightly higher against the dollar at $1.3090 in earlier trade, a day after it notched its biggest monthly fall against the dollar in nine months.

Italy’s uncertainty is also expected to restrict the weekly repayments of the European Central Bank’s 1 trillion euros worth of crisis loans, details of which are due at 1100 GMT.

(Reporting by Marc Jones)


By Marc Jones | Reuters

Authorities: NY judge opens door to Swiss records.

NEW YORK (AP) — A federal judge on Monday authorized the Internal Revenue Service to requireUBS AG to produce records about U.S. taxpayers who may hold bank accounts in Switzerland to evade hundreds of millions in federal income taxes.

U.S. District Judge William H. Pauley III signed an order authorizing the IRS to issue a summons for information about U.S. taxpayers who may hold accounts at the Swiss bank Wegelin & Co. and other Switzerland-based banks.

Wegelin has no U.S. branches but uses a UBS account to conduct business here, which is why the order applies to UBS.

U.S. Attorney Preet Bharara said the summons was “the latest step in our efforts to identify and prosecute U.S. taxpayers who think they can evade their legal responsibility to pay taxes by secreting their money away in anonymous off-shore accounts at Wegelin and other banks, and to recover hundreds of millions of dollars that is owed to the IRS.”

Wegelin pleaded guilty Jan. 3 to conspiring with at least 100 U.S. taxpayers to hide more than $1.2 billion in secret Swiss bank accounts from 2002 to 2011, agreeing to pay $74 million in all, including fines and restitution. At the time, prosecutors said Wegelin in 2008 and 2009 opened and serviced dozens of new accounts for U.S. taxpayers as it tried to capture clients lost by UBS after word surfaced that that UBS was being investigated for helping U.S. taxpayers evade taxes and hide assets in Swiss bank accounts.

Wegelin employees told U.S. taxpayer-clients that their undeclared accounts would not be disclosed to U.S. authorities because the bank had a long tradition of secrecy, prosecutors said. They added that the employees persuaded U.S. taxpayer-clients to move money from UBS to Wegelin by claiming that, unlike UBS, Wegelin did not have offices outside of Switzerland and would be less vulnerable to U.S. law enforcement.

Wegelin, headquartered in St. Gallen, Switzerland, said in a statement at the time of the plea that it had cooperated with the probe “within the bounds allowed for by Swiss law” since learning that it was under U.S. investigation.

A message left with a lawyer for UBS for comment was not immediately returned.


Associated Press

Exclusive: Bank probes find manipulation in Singapore’s offshore FX market – source.


SINGAPORE (Reuters) – Internal reviews by banks in Singaporehave found evidence that traders colluded to manipulate rates in the offshore foreign exchange market, according to a source with knowledge of the inquiries.

The discovery widens a global lending rate scandal into new markets, as fallout from the Libor case puts banks under added scrutiny and spurs both regulators and institutions to reconsider how certain key interest and currency rates are set.

The probes found evidence showing that traders from several banks communicated with each other over electronic messaging about what rates they were going to submit for the local banking association’s fixings for non-deliverable foreign exchange forwards (NDFs), aiming to benefit their trading books.

“Traders were talking to traders, saying: ‘I need you to help me today, I need to fix low,'” said the bank source, who asked not to be identified due to the confidential nature of the reviews.

NDFs are derivatives that let companies and investors hedge or speculate on emerging market currencies when exchange controls make it difficult for foreigners to participate directly in the spot market.

The contracts are settled in dollars, so there is no exchange of the underlying currency, but they can affect spot exchange rates.

The Monetary Authority of Singapore ordered banks that help set local interbank lending rates andNDF rates to review the fixing process last year as U.S. and British regulators cracked down on manipulation of the London interbank offered rate (Libor), a benchmark used to set interest rates for around $600 trillion worth of securities.

The investigations into Libor led to fines of $1.5 billion for UBS AG and $451 million for Barclays Plc for rate rigging. Regulatory probes stemming from the Libor cases in the United States and Britain have also revealed evidence of attempted manipulation of benchmark interbank lending rates in Tokyo, Hong Kong and Australia.

Banking watchdogs in Britain and elsewhere in Europe have begun trying to reform the way Libor and other interbank rates are set, to try to ensure the numbers can’t be manipulated.

The Singapore bank probes show that the focus is now turning to other benchmarks, amid concern that they too were manipulated.

The biggest banks in the Asian NDF markets include UBS, JPMorgan Chase & Co, DBS Group Holdings Ltd and HSBC Holdings Plc.

The source did not make specific comments about possible wrongdoing by individual banks or traders and Reuters has no independent evidence of such wrongdoing.

UBS, JPMorgan, DBS and HSBC declined to comment. Reuters also contacted the other 14 banks involved in setting NDF rates. Twelve said they had no comment while two did not respond to repeated telephone and e-mail requests for comment.


Under the NDF rate-setting process, organized by the Association of Banks in Singapore (ABS), banks submit their reading of the spot price for the Indonesian rupiah, Malaysian ringgit and Vietnamese dong every working day at 11:00 a.m. (10 p.m. ET).

A settlement rate for NDF contracts due to expire is then calculated by taking the average of the submissions, excluding the highest and lowest quarters of contributions from the banks.

While the exclusion of the rates at the top and the bottom of the range is meant to ensure that one bank cannot try to improperly skew the rate, the concern is that collusion by traders at multiple banks could influence the result.

There are 18 banks on the panel for the rupiah, 15 for the ringgit and 12 for the dong.

The Monetary Authority of Singapore told banks in the city state last July to review the way they set interbank lending rates, in the wake of the Libor scandal.

As bank officials pored over documents and communications, they came across evidence that raised alarm bells over activities in the NDF markets as well, spurring an extension of the reviews to those markets in September, the source said.

In Singapore, benchmark rates for both interbank lending and certain NDFs are set by panels of banks organized by the ABS. Thomson Reuters, parent company of Reuters News, calculates and distributes the spot reference rates for the rupiah, ringgit and dong NDF markets on behalf of the ABS, as well as other interbank lending and currency rates. “Thomson Reuters supports any measures that create more robust benchmarks for the market and we fully cooperate with regulators, authorities and benchmark sponsors’ investigations as required,” a Thomson Reuters spokeswoman said.

In December, the Monetary Authority of Singapore issued a statement setting out the banks’ obligations under the reviews, although it has not made clear whether it would take action of its own based on the results.

“The banks have to immediately report any irregularities they uncover to MAS, and have to take appropriate disciplinary action against staff involved in such irregularities,” the statement said.

“The reviews are ongoing, and it is premature to speculate on the outcome of these reviews at this stage.”

The central bank provided no further comment when asked by Reuters about the probes’ findings.

The source said most banks had submitted their reviews to the authorities at the end of last year but did not say what disciplinary actions if any were planned for banks or traders who tried to manipulate rates.

The MAS said last year that it was working with the ABS to review the way NDF rates and the city state’s benchmark lending rates are set. The association declined to comment for this story.

Banks dealing in over-the-counter products in Singapore such as NDFs follow a code-of-conduct set by the Singapore Foreign Exchange Market Committee, known as The Blue Book.

That includes a requirement that: “dealers and brokers shall not engage in manipulative or deceptive conduct or any form of conduct which would give other users of the market a false or misleading impression as to prevailing market conditions.”


Trading volumes in the NDF markets are much smaller than for derivatives linked to Libor, although they are hefty enough to effect spot rates for the underlying emerging market currencies.

For the Indonesian rupiah, the biggest market fixed in Singapore, daily turnover is estimated between $700 million and $1.3 billion, according to an HSBC report. Since NDFs are traded over the counter, there is no fixed data on volumes.

Traders say even a small movement in an NDF fixing could have a big impact on a bank’s trading book if it had a large number of contracts expiring.

Many of the traders involved were junior and did not appear to think they were doing anything wrong, said the source.

The NDF market in Singapore developed after the Asian financial crisis, when capital fled the region causing several area currencies including the rupiah to slump in value. NDFs gave banks a way around controls that governments subsequently imposed on their currencies to curb those capital flows.

Of the 40 to 50 NDF traders based in Singapore, roughly half had either been put on leave, including those suspended while their activities in the market were under investigation, or left their jobs during the Singapore probes, the source said. It was not clear how many may have been or will be reinstated after the probes’ completion.

“A lot of banks are stuck, traders are suspended or have left, so the market is seeing around half its usual volume,” the source said.

Flows in Indonesian rupiah and Malaysian ringgit NDFs have been thin since the last quarter of 2012 according to Thomson Reuters IFR Markets, although volumes in ringgit NDFs picked up at the start of this year.

The action by U.S. authorities last month against UBS for its part in the Libor scandal included a criminal charge against the Swiss bank’s Japanese subsidiary for yen Libor manipulation.

The charge sheet by the Commodities Futures Trading Commission against the bank also revealed other markets in Asia where problems emerged.

“Through its internal investigation, UBS identified evidence of similar misconduct involving submissions for at least the Hong Kong Interbank Offered Rate (“HIBOR”), the Singapore Interbank Offered Rate (“SIBOR”), the Singapore Swap Offer Rate (“SOR”) and the Australian Bank Bill Swap Rate (“BBSW”),” a footnote in the charge sheet read.

The Hong Kong Monetary Authority said in December that it was looking into the findings on Hibor.

The Australian Securities and Investments Commission declined to comment on the BBSW.

(Reporting by Rachel Armstrong; Editing by Michael Flaherty and Edmund Klamann)


By Rachel Armstrong | Reuters

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