Luxembourg and the two wars of Switzerland (for now)

This article and especially the link to the New York Times is required reading for all those who thought that peace had broken out about tax havens with the signing of 12 pieces of paper, otherwise known as the standard OECD double taxation agreement.

http://www.nytimes.com/2009/08/31/business/global/31iht-tax.html

While the ink on the Franco-Swiss piece of paper called double taxation agreement isn’t yet even dry, the French rooster is scratching everything that is crawling and scribbling by the tax havens’ side. It has three thousand names of French customers in Swiss banks, but did not say which ones. All the children of the fatherland, who are hiding things in Switzerland, are invited to go and denounce themselves to the "regularization cell”. It will close on December 31, 2009. What comes then is the tax audit. Of course, the 3,000 names will not be made public. Those who know they are hiding something in Switzerland do not know if the French tax inspectors know. Therefore, to report or not to report, that is the question. The answer, I guess, is very French: double it or quits.

To all defenders of bank secrecy there are of course 2 immediate issues.

1. How did the French authorities get these names?

Official responses:
a. It is the fruit of a long tax investigation
b. Two financial institutions have submitted their names "spontaneously"
c. By “non- anonymous informants” who were not paid.

So bank secrecy has been defeated by three different methods at least. The first one is probably a mixture of cooperation with the intelligence services that have "paid someone anonymous" or that simply intercepted electronic communications of any kind. Amazing and interesting at the same time. Nobody in Switzerland, Luxembourg, and Austria and in the islands knows what services throughout the world know, ready to act. This is called "actionable" intelligence.

2. How can we guarantee bank secrecy in these conditions?
Simply, we cannot. Why defend it then? Is it really worth defending the indefensible because it is an open invitation to tax evasion that in addition doesn’t even keep its promise of absolute confidentiality? How can one ever compensate the foreign customer, caught in the scheme? Shouldn’t we be suspicious of a customer who would come along anyway and tempt fate? He probably has more to hide than he says. And how are we dealing with institutions that violate the banking secrecy "spontaneously"? Several doing this at the same time would be the equivalent of a spontaneous implosion of the system.

It is also interesting to realize how tomorrow’s news were announced on feierwon.blogspot.com over the last few weeks. As they are coming true faster than expected, let’s reread those old news of tomorrow as they are amazingly fresh.

Egide Thein
htpp://feierwon.blogspot.com