Privacy Oriented

A person called “Obera” on the TalkGold forums wrote this. I highly recommend you get these reports if you want to know about banking secrecy in this day and age.

Obera: I know present to you, for free, the OECD’s latest “Tax Co-operation: Towards a Level Playing Field” annual report. You can download it here: Tax Co-operation 2008: Towards a Level Playing Field: Assessment by the Global Forum on Taxation [2008] (Complete Edition - ISBN 9264039198) [PDF Format]

Normally you would have to pay for it - $92 to the OECD, but since I would hate for that corrupt, socialist, globalist, bossy, misanthropic, elitist organized crime gang to have fuel added to their blazing inferno of dreadfulness, I’ve gotten it for you fine folks. Don’t worry, I didn’t pay for it either…

Here are the links again for anyone who has trouble downloading them, this time at Easy-Share.com:

2008 Tax Report

The Convention on Mutual Administrative Assistance in Tax Matters: Twentieth Anniversary Edition

Improving Access to Bank Information for Tax Purposes: 2007 Progress Report

First Digital International Bank (FDIB) was an offshore bank licensed in Montenegro in 2000 that ended up offering anonymous bank accounts to virtually anyone who wanted one. FDIB’s principals decribed the bank as a “private internet offshore banking solution offering the finest in high-interest paying offshore banking, also exchange provider for gold backed digital currencies, anonymous cash cards.” An excellent concept, I thought. Here I will explore what happened to this bank and its ties to Privacy.li and PrivateGoldTrader.com.

I opened many accounts with FDIB in 2005 and 2006, but I never funded the accounts. That is only because I did not have money to fund them at that time, or I would have. I was glad to see there was a bank with balls out there… They offered account funding by bank wire transfer or by e-currencies, such as e-gold, Pecunix and 1mdc - back in the good ol’ days, before e-gold and 1mdc were worthless. In mid-2005, PrivateGoldTrader started accepting “paper based instruments” on behalf of FDIB for easy account funding with cash, money orders or bank drafts (aka casheir’s cheques).

I never ran across a bad report about this bank from anyone - until it went offline. That lead me to assume they operated with integrity up until they stole most clients’ money (I assume). I read one report saying as much about his account on PowerPrivacy’s forums.

What follows here is a report I wrote about the bank’s demise for the site’s entry on AboutUs.org. For some reason, you later needed an account to access the information because it had been deemed as “Adult” content. That doesn’t make any sense, but here it is, out in the open… Read the rest of this entry »

by Ulrika Lomas, Tax-News.com, Brussels
Friday, November 14, 2008

The European Commission (EC) announced on Thursday that it has adopted an amending proposal to the savings tax directive that will widen the scope of the legislation “with a view to closing existing loopholes and eliminating tax evasion.”

Effective since 2005, the savings tax directive seeks to ensure that paying agents either report interest income received by taxpayers resident in other EU member states or levy a withholding tax on the interest income received. The Commission proposal seeks to tighten the directive, so member states can tax more interest payments channelled through intermediate tax-exempted structures.

The EC proposes to extend the scope of the directive to forms of income obtained through investments in some “innovative financial products” as well as investments in certain life insurances products. It also proposed to simplify the technical operation of the directive to make it more “user friendly and efficient.”

Laszlo Kovacs, Commissioner for Taxation and Customs, said: “The first report on the operation of the savings tax directive concluded that the directive, although effective within the limits of its scope, can be easily circumvented. The current scope of the directive needs to be extended, in order to meet our goal of stamping out tax evasion, which affects the national budgets and creates disadvantages for the honest citizens.”

At present, it is relatively easy for individuals to circumvent the rules of the savings directive by using interposed legal persons or arrangements, such as foundations or trusts, which are not taxed on their income – something that the Commission has long acknowledged.

With regard to interest payments made by paying agents (banks, financial institutions, independent professionals, etc.) established in the EU to certain intermediate structures established outside the EU, the Commission proposes that paying agents in the EU apply the provisions of the directive (exchange of information or withholding tax) at the time of the payment to the intermediate structure, as if this payment was directly made to the individual.

Concerning payments of interest to certain intermediate structures established within the EU, including some non-charitable trusts and foundations, those structures will be always obliged to act as a “paying agent upon receipt” under the proposed new regime. This means that the provisions of the directive must be applied by these structures upon receipt of any interest payment, no matter where they are established and regardless of the actual distribution of any sums to the individual beneficial owners. The suggested definition of “paying agent upon receipt” includes all entities and legal arrangements (trusts, foundations etc) which are not taxed on their income under the general rules for direct taxation in their Member State of residence or establishment.

The savings tax directive can also be circumvented by using financial vehicles other than a classical savings account in a bank. To combat this, the Commission proposes extending the scope of the directive to income from securities which are equivalent to debt claims and life insurance contracts whose performance is strictly linked to income from debt claims.

In addition, the Commission proposal seeks to ensure a level playing field between all investment funds or schemes independently of their legal form. This means that income obtained from those investment funds by individuals resident in the EU will be subject to effective taxation.

The savings tax directive has applied in 42 jurisdictions since July 1, 2005. These include 27 member states, 5 non-EU ‘third countries’ (Switzerland, Liechtenstein, Monaco, Andorra and San Marino) and 10 dependent and associated non-EU territories (Anguilla, Aruba, the British Virgin Islands, the Cayman Islands, Guernsey, the Isle of Man, Jersey, Montserrat, the Netherlands Antilles and the Turks and Caicos Islands).

Following the request of the Ecofin Council, the European Commission started discussions with selected Asian financial centres earlier this year regarding the application of the directive, namely Hong Kong, Singapore and Macao. Formal negotiations are also expected to take place with Norway, at its request, whilst other jurisdictions like Bermuda and Iceland have shown interest in participating in the savings taxation arrangements.

I was reading the Offshore section of the TalkGold Forum a while back, and I’d noticed this post. It says the following about Loyal Bank, an offshore bank headquartered in Saint Vincent and the Grenadines.

This is their policy on banking secrecy:

“The Bank had the right to cooperate with national and foreign authorities in information provision in cases where official investigation is being carried out on a client or there is official request for information with reference to an investigation.”

I contacted Loyal Bank to inquiry if this meant a court order and I was told, “No, an official request can be a phone call or faxed letter from an police or legal authority.”

LOL, you might as well bank in the US and save money rather than pay Loyal’s very high fees.

Loyal Bank is the worst bank in Caribbean.

That got me wondering… is that so? Surely banking secrecy is stronger than that by law in St. Vincent. …right? Well, I didn’t look up the law, but I did e-mail Loyal Bank and ask them a serries of questions about this. In fact, I didn’t just stop there. I asked a slew of Caribbean area offshore banks the same questions in e-mails and the following is what I’ve learned after one week’s time from when I sent the initial messages…

Read the rest of this entry »

by Ulrika Lomas, Tax-News.com, Brussels
Thursday, November 06, 2008

During a recent European Free Trade Association meeting, negotiations took place between Liechtenstein and the European Union to finalise an anti-fraud agreement, the conclusion of which would cement Liechtenstein’s commitment to conforming to European standards with regard to cross-border exchange of information.

According to Prime Minister Otmar Hasler, Liechtenstein remains determined to discourage cross-border tax offences. While maintaining that Liechtenstein was fully prepared to co-operate, however, Hasler added that it should not be expected to provide any greater degree of cooperation than that currently conceded by other European Union member states. Indeed, calls for double taxation agreements to be signed with states harbouring additional demands would be met by Liechtenstein’s request to be recognised as a diverse and highly industrialized business location, Hasler said.

The draft form of the anti-fraud agreement reflects Liechtenstein’s commitment to providing legal and administrative assistance, on the basis of a widened concept of fraud. Furthermore, Liechtenstein has also revealed its intention to fully comply with the Organisation for Economic Co-operation and Development’s standards regarding bilateral double taxation agreements.

Ulrika Lomas, Tax-News.com, Brussels
Friday, October 31, 2008

Some 16 new bilateral agreements on exchange of information for tax purposes were signed in the past week between OECD member counties and three offshore financial centres, as the countries stung by the recent banking crisis commence a fresh drive towards “transparency” in global financial regulation and taxation.

During the week in question, the British Virgin Islands signed bilateral tax information exchange agreements (TIEAs) with Australia and the United Kingdom. Meanwhile, Guernsey and Jersey each signed bilateral TIEAs with the Nordic economies- Denmark, the Faroe Islands, Finland, Greenland, Iceland, Norway and Sweden.

These new agreements bring to 44 the number of arrangements put in place since 2000 when the OECD began its first offshore crackdown. The Isle of Man is leading, with 11 such pacts; Jersey has signed 10, Guernsey nine, the Netherlands Antilles four and the British Virgin Islands three. Bermuda, also has three of these agreements, having signed its first bilateral pact with the United States in 1986.

In signing these agreements, these offshore centres may well have succeeded in ensuring that they do not get included on any new ‘blacklist’, which is likely to be published some time in 2009.

“The latest agreements represent a significant extension of information exchange networks in place in these jurisdictions, showing their commitment to implementing OECD’s standards of transparency and exchange of information in tax matters,” the organisation noted.

As the OECD observed in its announcement, the global financial crisis and recent tax evasion scandals have strengthened governments’ determination to fight tax evasion and bring increased transparency to cross-border transactions.

“At a time when governments are seeking to forge a more stable world financial system, these are issues that need to be addressed with urgency,” said OECD Secretary-General Angel Gurría said.

The OECD also revealed that progress towards increased openness is being made in other financial centres. Cyprus and Malta have removed the last impediments to a full exchange of information; Belgium has negotiated its first tax treaty with full exchange of information; Bahrain and the United Arab Emirates are implementing the OECD standards; and the government of Hong Kong (China) recently launched a review of its policy on exchange of information.

“The political climate is changing, and financial centres that do not respect the OECD standards will not be allowed to gain a competitive advantage,” Gurría added.

“Every new bilateral agreement demonstrates that we can make progress internationally. It is in the interest of all financial centres to have adequate measures in favour of full transparency as quickly as possible,” he argued.

by Ulrika Lomas, LawAndTax-News.com, Brussels
Wednesday, October 29, 2008

The European Commission will on November 12 present a proposal to amend the Savings Tax Directive in an attempt to ensure “more effective taxation of savings income and eliminate undesirable loopholes which facilitate tax evasion and tax fraud.”

The Commission announced last Friday that amendments to the directive, which have been under discussion for some time, are now all the more urgent “in light of recent events in the area of tax evasion.”

According to a Commission report to the European Council last month, the directive in its current form “has proven effective within the limits set by its scope.” However, this evaluation cited the need for certain amendments to the legislation in order to close possible loopholes and to limit the administrative burden on paying agents.

In a speech given to the European Platform for 3rd Country Finance Centres on October 14, Tax Commissioner Laszlo Kovacs said that the EC is “committed to promoting the co-operation against tax fraud and tax evasion.”

“The sustainable development of all economies relies on the capacity of national tax administrations to effectively exchange information. Increasing the transparency of tax systems makes them less vulnerable for use in tax evasion schemes. This does not mean protecting high tax rates in certain countries, but exactly the opposite, as an increased tax compliance makes easier the lowering of the tax burden for all the honest taxpayers,” he said.

“In return for its partners’ acceptance of these principles, the EU is prepared to offer certain incentives. A concrete example of what we can provide is the Governance incentive tranche under the 10th European Development Fund (EDF). Countries eligible for development aid, and who take detailed commitments to the principles of good governance in the tax area, may receive an additional allocation depending on the quality of their commitment. A number of Caribbean and Pacific countries have taken such commitments, some others have simply refused to do so,” he added.

The savings tax directive applies in 42 jurisdictions: 27 Member states, 5 non EU countries (Switzerland, Liechtenstein, Monaco, Andorra and San Marino) and 10 dependent and associated non-EU territories (Anguilla, Aruba, the British Virgin Islands, the Cayman Islands, Guernsey, the Isle of Man, Jersey, Montserrat, the Netherlands Antilles as well as the Turks and Caicos Islands).

Following the request of the Ecofin Council, the European Commission has started discussions with selected Asian financial centres, namely Hong Kong, Singapore and Macao. Formal negotiations will also start shortly with Norway, at its request, whilst other jurisdictions like Bermuda and Iceland have shown interest in participating in the savings taxation arrangements.

by Mike Godfrey, Tax-News.com, Washington

Wednesday, October 22, 2008

[With the most important parts in bold]

Leaders from the Organisation of Economic Cooperation and Development (OECD) member nations gathered in Paris on Tuesday where a new crackdown on offshore financial centres is expected to be discussed as part of plans aimed at tighter regulation of the global financial system.

The initiative is being led by the governments of France and Germany, and could lead to the drawing up of a new ‘black list’ of offshore jurisdictions still deemed to be ‘uncooperative’ or with tight banking secrecy and confidentiality laws. Switzerland, Luxembourg and Austria - all jurisdictions with a measure of banking secrecy - have apparently boycotted the meeting.

From an offshore point of view, the recent rhetoric from the French government concerning the current banking crisis is worrying. Last week, President Nicolas Sarkozy questioned why banks that have received backing from the government should continue “operating in tax havens,” while Prime Minister Francois Fillon described offshore financial centres as the “dark pockets” of global finance which should be eliminated altogether.

The OECD launched its campaign against ‘harmful’ tax competition at the turn of the century, naming more than 30 jurisdictions on its blacklist, since which time the majority have been removed after promising to put in place tax reforms that effectively removed the distinction between ‘onshore’ and ‘offshore’ regimes.

Meanwhile, the OECD’s Financial Action Task Force, which was more concerned with anti-money laundering, also placed more than a dozen jurisdictions on its blacklist, all of which have been removed after putting in place legislation which some argue is even tougher than in some onshore countries. Despite this, French Budget Minister Eric Woerth has suggested the need for a new [FATF] blacklist to be released some time in 2009.

It is thought that about 18 leaders attended Tuesday’s meeting, and most are likely to be sympathetic to the Franco-German position. However, the US was notable by its absence at the meeting with the looming Presidential election taking precedence. Nonetheless, Washington is almost certain to support another offshore crackdown in the months and years ahead, whoever is in the White House.

After Just Six Months, Liechtenstein Cracks, Announces Plans to Curb Bank Secrecy.

About a half-year since the LGT banking clients private information breach, otherwise known as the “2008 Liechtenstein tax affair“, the government of Liechtenstein has finally given in to international “pressure”, mostly media pressure, as far as I can tell, and it has turned it’s back on financial privacy, sovereignty, independence and decency. And another one bites the dust!

Who wants to bet that in the years to come we will see the same MO in Andorra and Monaco, the other two naughty microstates still on the dreaded OECD’s tax haven “blacklist”? I think this is merely a game, an operation, a contrivance.

Read the rest of this entry »

…or at least that’s what the International Tax Review is reporting in their May 6th, 2008 article that can be found here. I could not determine how true this is just from the article. The statements they link to don’t show anything but the VFSC’s main page when I click the link.

Article excerpts follow.

Australia’s investigation of tax evasion by individuals and businesses has forced the Pacific tax haven of Vanuatu to reverse its long standing policy of banking secrecy.

As part of the operation called Project Wickenby, a long-running multi-agency inquiry into the abuse of offshore financial centres, Australian Federal Police (AFP) officers arrested a senior accountant, Robert Agius, in Perth in Western Australia.

Following the arrest of Agius, the Vanuatu Financial Services Commission (VFSC), the jurisdiction’s regulator, said that it would overturn its policy of banking secrecy. A complete overhaul of Vanuatu’s legal structure related to companies would be introduced shortly and put into force by the end of the year. Australia’s tax commissioner Michael D’Ascenzo has previously identified Vanuatu as the chief target of the tax office.

The commissioner of the VFSC, George Andrews, said the regulator would, in future, penalise Vanuatu institutions which provided services allowing Australian citizens and companies to avoid domestic tax. All company and trust service providers will be licensed by the VFSC and any breaches of regulation could lead to revocation of an operating licence.

That is sad and too bad. Why they don’t just sign some treaties and make some agreements with Australia and maybe New Zealand in the future, I don’t know. That’s what they should do. Don’t just throw it all away! Say it ain’t so, Vanuatu!

It is funny how the article mentions that the bank accounts they busted were set up with Westpac and ANZ, because those two banks aren’t covered by Vanuatu’s banking secrecy legistlation. They are domestic banks and only the offshore banks are protected (bound by secrecy laws).