The End of Offshore Banking

The recent actions by the US Justice Department and the IRS against the UBS highlight the increasing pressure on the so called offshore banking model. Private Banks in Switzerland, Liechtenstein, Luxembourg, Austria, Singapore, and many Caribbean jurisdictions are well known for managing money which has left the home country of his owner without taxation. But offshore banking is much wider spread. Even some Swiss take their money to neighbouring German banks in order to avoid Swiss taxation.

We are convinced that offshore banking will largely come to an end within the next 10 years due to a triple assault by cash strapped governments around the world. This triple assault is happening right now, lead by the US and major EU-countries to end offshore banking as we know it.

• Pressure on governments of offshore banking destinations is mounting: Especially on all countries which are on a “black / grey list” of the OECD, allegedly providing save haven to tax evaders. Major EU countries and the G20 countries have announced that they want a joint initiative against “30 to 40 countries” which are suspected to “hide” substantial offshore assets. Luxemburg, Switzerland and Liechtenstein have already given in and announced that they will co-operate and forward information in cases of tax evasion in accordance with OECD standards.

• Pressure on the banking industry: Governments and courts are increasingly attacking certain banks through legal actions. Various law suits of the US government against the UBS are only the tip of the iceberg. We will see much more action in the coming years.
  

• Pressure on individual investors: Governments and tax authorities are aggressively prosecuting individuals with undeclared assets. In a recent case the German government’s intelligence service obtained a data CD from a criminal informant containing thousands of names of investors who had shifted their assets into Liechtenstein trust funds.
  

In consequence, the banking secret will become largely obsolete. Governments and judges will force banks to hand over client data across borders. But beware – not only banking clients of Swiss banks will get hurt. Banks in many countries are hiding assets of citizens of other countries. Retaliatory actions can provoke a big show down of disclosing confidential client data in many countries. Therefore, banking secrecy, financial privacy and numbered bank accounts are – to a large degree - a thing of the past.