How much black money does Congress have

That is how brazenly the US advertises black money

The whole world is moving into an era of total tax transparency. Only the USA does not participate. And even position themselves as a tax haven.

The Geneva lawyer David Wilson publicly scourged American banking secrecy in July 2016. “The USA is the new Switzerland,” he said at a conference in Amsterdam. Wilson observes that wealthy families are suddenly interested in founding foundations in Delaware or South Dakota. Also from Switzerland.

The partner of the law firm Schellenberg & Wittmer makes no secret of how much that bothers him. Wilson's PowerPoint presentation in Amsterdam contained a cartoon of a fisherman sitting in a boat that said “offshore business”. He fishes for bills. Behind him, a grinning Barack Obama lounges on the landing stage in a folding chair and fishes money out of the boat.

After his courageous appearance, the lawyer received a handwritten letter. Gregory Crawford, President of the Trust Company of Nevada, informed him: “I understand the frustration that has arisen over the United States because of Fatca and the automatic exchange of information around the world. (And I admit that the development has helped my business significantly.) We are living in very interesting times! »

So much chutzpah leaves even a die-hard professional like Wilson speechless. The USA has successfully implemented a level of transparency in other financial centers that would have been unthinkable a decade ago. They inflicted severe penalties on defaulting taxpayers. Proceedings against financial institutions followed. An almost three-digit number of Swiss banks had to pay a total of $ 5.8 billion for aiding and abetting tax evasion. Individual institutes such as the cantonal banks from Zurich and Basel still have to wait for a comparison. Customer advisors went to jail.

Then Congress passed the Foreign Account Tax Compliance Act (Fatca): a law that requires investors to disclose to the IRS if they have a US reference, which includes ownership of American stocks. Building on this, the idea of ​​the automatic exchange of information (AEI) was born, which came into force for the first countries in January 2017. Swiss banks are also starting to provide data to tax authorities abroad, for example in the European Union.

The OECD standard is becoming increasingly popular all over the world. In May, Bahrain, Lebanon, Nauru, Panama and Vanuatu joined the coming regime. But the US, for its part, has not ratified the AEOI. In Congress, which is dominated by the Republicans, a corresponding law would probably have no chance at the moment.

Wilson von Schellenberg & Wittmer calls the behavior of the world's largest economy "hypocritical". It reflects the opinion of many financial experts. "It's no secret that US banks, especially in Miami, are inundated with undeclared money from Latin America," writes Peter Cotorceanu, lawyer at Anaford, Zurich, in a specialist journal. “Expanding the exchange of data would move this money abroad and destroy the US's competitive advantage. How ironic - no, how perverse - that the US, which hypocritically condemned Swiss banks, has become the banking secrecy territory of the day. "

In an interview, Cotorceanu reports that he has received numerous inquiries from people who wanted to transfer money to the USA. If the property is undeclared, he rejects the request. But not everyone is so squeamish. Cotorceanu observes that wealthy families all over the world are thinking about how they can forestall the AEI. Large amounts would be transferred to the USA. “Most of the money will flow this year,” he said in mid-2016. Before the AEOI started in January 2017.

There is a lot of advertising for new money in the USA. Ivan Sacks summarized this succinctly in May 2014. That was the month Credit Suisse pleaded guilty to helping Americans with tax evasion. Sacks is president of the major law firm Withersworldwide from London, which has an important foothold in New York. He lectured at a conference on the benefits of investing in the United States. The first of ten reasons according to his PowerPoint presentation: "Because the USA is the largest tax haven in the world". On the same slide it was written a little smaller that there was confidentiality and security with regard to banking and tax data.

Individual states are particularly active. The Trust Company of Nevada places advertisements promoting the establishment of foundations with the following keywords: asset protection, privacy, possibility of tax savings. In foundations, often no authority knows who the beneficial owner is. Individual states expressly allow anonymity. The industry is experiencing a historic boom. In the agricultural state of South Dakota, the number of companies setting up foundations has increased from 20 to 86 in ten years. There are now $ 226 billion in the trusts.

According to Scott Michel, a lawyer at Caplin & Drysdale in Washington, there were also excesses in the real estate sector. This is where the federal government intervened: a decree by the Treasury Department has been in effect since March, according to which real estate buyers over $ 1 million in the greater Miami area and $ 3 million in Manhattan must be identifiable by name.

But this intervention remains an exception. Incidentally, the US financial lobby has prevailed so far, for whose argument there is a vivid example: a letter from 25 congressmen to Obama from 2011, written at a time when Washington was putting pressure on the now dissolved Wegelin private bank increased. This warns of the requirement to disclose interest payments on foreign assets. There is a threat of a withdrawal of funds in the three-digit billions, combined with the loss of jobs. "Mister President, we ask you to refrain from this regulation permanently."