Stanford Financial Group Executive Indicted On Conspiracy And Obstruction Charges

By offshorebank | Published: May 15, 2009

The former chief investment officer of Stanford Financial Group Laura Pendergest-Holt has been charged with obstruction and conspiracy by a U.S. grand jury in Houston.

The charges relate to the “massive, ongoing fraud” allegedly perpetrated by billionaire financier Sir Allen Standford which could involve up to 8.5 billion US dollars.

The fraud hit South American investors particularly hard, but also a large number of investors throughout the US and the Caribbean.

High-interest certificates of deposit were issued by Stanford International bank, based in Antigua, and marketed as rock-solid investments when in fact they were not backed by liquid assets.

It is alleged that Pedergest-Holt knew about these assets as early as November 2008 but hid this knowledge from prosecutors.

Stanford, former CFO James Davis and 3 Stanford firms are also accused by the SEC of involvement in the CD scheme.

Source: Reuters

Posted in Caribbean Offshore Banks | Tagged , , , , | 1 Comment

Caribbean Banks Worried By Tax Haven Crackdown

By offshorebank | Published: May 4, 2009

Caribbean offshore banks are worried that a worldwide crackdown on tax havens may seriously implications on their business operations. Strict bank secrecy and less restrictive financial regulation have led some islands to prosper during the last decade. But as high-tax countries tighten their belts and look for for funds from external sources these same tax havens are now being accused of “stealing” taxes and allowing money-laundering and other illegal activity to flourish.

Recent scandals and fraud cases involving Stanford and Millennium banks have piled on the pressure and given fuel to those who claim these tax havens should not exist.

“If it was not for bank secrecy, the offshore havens in the Caribbean would be fishing communities again,” said Charles Intriago, a former U.S. federal prosecutor and money laundering expert, “It’s an outrage that these facilities are allowed to exist.”

Many Caribbean islands such as Bermuda, the Cayman Islands and Nevis have been put on a “grey list” by the OECD, an international think-tank which is seeking to harmonize the payment of taxes worldwide. These Caribbean islands will now face pressure to change their laws in accordance with an international standard. Hence the apprehension of said offshore banks, which thrive on being different.

But Carribbean economic leaders have sensed a false note in the OECD demands. At a recent conference on the offshore banking in Miami, Eduardo D’Angelo Silva, chairman of the Cayman Islands Financial Services Association indicated that the OECD was imposing a double standard.

“There are some jurisdictions that are almost criminal in their neglect…The greatest offenders are in the major financial centers of the U.S. and UK,” he said, proceeding to single out the US states of Delaware, Nevada and Wyoming, which place a premium on corporate secrecy.

Source: Guardian.

Posted in Caribbean Offshore Banks | Tagged , , , , , , , | 1 Comment

IRS Signals Intention To Pursue More Offshore Banks

By offshorebank | Published: April 28, 2009

The US IRS is planning to seek out more foreign banks that may have helped wealthy US citizens to evade their taxes.

A case against Swiss bank UBS has already yielded a $780 million fine and the names of about 300 US clients although the IRS is still looking for the names of around 52,000 clients who may have a total of $14.8 billion tucked away.

The IRS is now looking to take similar measures against other foreign banks.

“We are developing John Doe summonses on other banks,” IRS agent Daniel Reeves told Reuters news agency at the OffshoreAlert conference in Miami.

Such summonses would force foreign banks to reveal data about their clients with secret bank accounts. Reeve declined to reveal which banks were being targeted although did mention that “We have identified other offshore banks that are engaged in similar activities.”

It is thought that only international banks with US branches could fall within the remit of such investigations.

Posted in European Offshore Banks | Tagged , , , | 2 Comments

IRS Approach Lets Most Tax Evaders Escape Unscathed

By offshorebank | Published: April 14, 2009

With an estimated $100bn in unpaid taxes lost to the US government each year. the IRS is playing both good cop and bad cop in the run up to April filings.

A “generous” amnesty offer announced by IRS commissioner Doug Shulman has so far yielded unimpressive results. But according to experts its usually only the “little guy” who responds to such call outs.

Big tax evaders, with resources to pay for sophisticated banking services and large legal teams, will instead call the federal government’s bluff, betting that IRS resources are too few to catch those they know little about.

Although pressure on “tax havens” worldwide is increasing, wealthier citizens with a lot to lose will fancy their chances keeping silent despite IRS “bad cop” moves like the prosecution of UBS which yielded a $780m fine. The high profile investigation was also instrumental in Credit Suisse’s recent decision to move on or reveal its US offshore banking client base.

It is undeniable that breaking US tax law should be punished, but is it right for the US to put pressure on sovereign nations to change their own laws without first cleaning up its own back yard? Check out this Dan Mitchell speech on the US & Tax Havens, recorded at a Cato Institute Event:

Posted in European Offshore Banks | Tagged , , , , , , | 2 Comments

Millenium Bank ”Ponzi” In Receivership

By offshorebank | Published: March 30, 2009

The SEC has ordered a stop to another alledged Ponzi scheme, close on the heels of Stanford and Madoff. On Thursday the Securities and Exchange Comission got an emergency court order to end US based activities of Millenium Bank, based in the Caribbean Island of St.Vincent. Government regulators in St.Vincent have appointed KPMG as receivers to take over operations and preserve bank records.

It is alledged that Millenium Bank has just $4M of assets left after defrauding investors for nearly a decade.

Millenium Bank started operations in St.Vincent in 2000 but was nearly kicked out in 2003 after having its offshore bank licence revoked. The management later appealed and the licence was reinstated after it was found that the government auditor was not fully qualified!

In a formal SEC statement released on Thursday, two US citizens were charged with defrauding hundreds of investors by claiming to offer CD’s which offered interest rates well above the benchmark.

Instead of investing or lending the deposits, the pair instead funneled Millenium Bank booty into a Las Vegas bank account. Using a parent company, United Trust of Switzerland S.A. the fraudsters gave the operation an air of officiality, claiming that Millenium Bank was a subsidiary of a larger Swiss offshore bank.

Posted in Caribbean Offshore Banks | Tagged , , , , | Leave a comment

AIG Financial Products Division Under Fire From IRS for Dodgy Tax Deals

By offshorebank | Published: March 24, 2009

The IRS is taking issue with some of the tax structures created by a division of AIG, the same unit which caused national outrage in the US and made headlines worldwide over $165 million worth of employee bonuses - says the Wall Street Journal.

Apparently, through an AIG offshore subsidiary US and foreign banks could claim credit in their home jurisdictions for a single tax payment. The IRS contests that the AIG structures had not proved that they “had sufficient economic substance and business purpose” to justify tax benefits.

Some of AIG’s clients included large banks which received bailout money from the US government.

France’s Credit Agricole SA, Bank of Ireland and Bank of America Corp were named in the AIG-IRS lawsuit.

AIG maintained it had not broken any laws, saying it wanted to “ensure that it is not required to pay more than its fair share of taxes,” according to a company spokeswoman.

Posted in European Offshore Banks | Tagged , , , , , | Leave a comment

Monaco Set to Ease Bank Secrecy and Adopt OECD Regulations

By offshorebank | Published: March 17, 2009

Monaco is set to join Austria, Belgium, Luxembourg, Andorra, Liechtenstein, Singapore and Switzerland in easing bank secrecy by signing up to OECD regulations for information sharing and financial transparency.

The principality famous for fast cars, casinos and lounche european socialites seems to have taken the decision, like other european tax havens, in order to avoid being put on a blacklist at the upcoming G20 summit.

Monaco is said to have informed the OECD that it will enforce Article 26 of the OECD’s Model Tax Convention, requiring information exchange in cases of suspected tax evasion. An official announcement is expected this week.

The secretary General of the OECD was in an ebullient mood ”There’s been dramatic progress….there is a new atmosphere”, said Angel Gurria.

“I have read the expressions of skepticism and I find them understandable in the light of history, but I think there’s been a very important change,” he said.

Although the OECD can be understandably pleased with themselves at the domino effect that has played out over the past week, it will take time and domestic acceptance of these regulations for them to be actually enforced.  The process of renogtiating tax treaties could last years, and Switzerland has already begun denying any meaningful change in its bank secrecy.

Mr Gurria acknowledges the task ahead, “This will require changing not just culture and habits, but also laws,” he said.

It is likely that each country will play bit its own rules in determining just to what extent it follows the letter of the law. The game’s not over yet.

Posted in European Offshore Banks | Tagged , , , , , | 3 Comments

1.7 Trillion USD Held In Swiss Banks Offshore

By offshorebank | Published: March 16, 2009

More than 1.7 Trillion USD of offshore investments are held at swiss banks, according to Swiss weekly newspaper NZZ am SONNTAG

The figures come from a report by the Swiss Bankers Association which estimates up to 2.9 trillion swiss francs of ‘offshore’ wealth is managed by Swiss banks out of a total 5.2 trillion.

It is thought that the majority of this figure is composed of private rather than institutional investors

“In fact private persons are behind many institutional investors,” said Swiss Bankers Association spokesman Thomas Sutter.

The extent of personal wealth stored in swiss offshore banks is almost twice as much as originally thought. This could have a huge impact on the outflow of assets from swiss banks, after news of Switzerland’s agreement to adopt OECD standards for transparency and information exchange last Friday.

The rules are set to open up Swiss bank secrecy, allowing information to be passed on to foreign authorities in cases of tax evasion. Although Switzerland has said it limit such information exchange to ’specific and concrete requests’ many foreign investors may well feel they do not have the same level of protection previously offered.

Switzerland will enter into negotiations soon with up to 70 countries in order to enforce the new regulations but allow a fair transition period, according to foreign minister Micheline Calmy-Rey (allowing investors a chance to withdraw).

Since signing on to the OECD, the Swiss will be making sure other tax havens follow suit. Singapore, Austria, Liechtenstein and Luxembourg have already made similar arrangements.

“Now Switzerland is no longer on the defensive in tax matters and no longer needs to hide. On the contrary, we can confidently demand other tax and financial centres to meet these international standards too,” Calmey-Rey told NZZ in an interview.

With Switzerland ‘easing’ its bank secrecy, offshore investors are running out of jurisdictions which can claim to guarantee their privacy. Panama and Honk Kong to date are two major banking centres which have not agreed to OECD interference. Smaller nations with offshore banks that have stayed under the international radar may also be options.

Posted in European Offshore Banks | Tagged , , , , , | 1 Comment

Switzerland Accepts Concessions on Bank Secrecy

By offshorebank | Published: March 13, 2009

Switzerland has agreed to sign up to the OECD’s international rules on data sharing and transparency, to prevent itself from being added to a blacklist of uncooperative tax havens.

Coming just a day after Liechtenstein and Luxembourg announced similar measures, this will come as a great pr boost for high-tax nations looking to eradicate the use of tax havens for tax evasion.

Although this seems to mark a great change in Swiss Banking Secrecy, the Swiss have introduced their own exceptions such as only responding to ”concrete and jusitified” requests for information from foreign governments - i.e no fishing expeditions.  Swiss banks can also be expected to guard customers against ‘unjustified watching from abroad’.

Furthermore  Switzerland is “maintaining banking secrecy and resolutely refused all automatic transmission of information”, it said.

It is expected that Switzerland may sign further agreements with foreign governments on a case by case basis.

So far, nothing so heavy so as to suggest a complete overhaul of banking secrecy - with the G20 summit not far off - will it be enough?

Posted in European Offshore Banks | Tagged , , , , , , | 1 Comment

Jersey prepares for scrutiny of offshore banking

By offshorebank | Published: March 9, 2009

With Gordon Brown urging further crackdowns against tax havens, it seems Jersey will be next in line.  After recent scandals in Switzerland and Liechtenstein it would be extremely difficult for the British Prime Minister to ignore what’s going on in his own back yard.

Cracking Jersey will not be easy however, with intense lobbying from wealthy interests likely to play their part. Jersey is a huge offshore financial center.

There were £206 billion, or $290 billion, in bank deposits in Jersey at the end of 2008, compared with £157 billion in Guernsey, while there were £241.2 billion in funds under administration, compared with £200 billion in Guernsey.

“Blaming offshore centers for these frauds is a convenient smokescreen designed to play into the hands of populist sentiment,” says Stephen Platt, chairman of a law firm on Jersey, Baker Platt.

Other may argue that relative to other offshore jurisdictions, Jersey and is well regulated. But pro-transparency lobby groups may disagree:

“We regard Jersey and Guernsey as not particularly transparent or cooperative,” said John Christensen, a director at the Tax Justice Network.

Offshore banks could be in for an interesting year.

Posted in European Offshore Banks | Tagged , , , , , , , | Leave a comment