IT USED TO BE A TREND in the developing world and elsewhere that “leaders” would loot the national treasury and simply deposit the money in a Swiss bank account.
Sundry lesser mortals and assorted criminals could also avail themselves of a Swiss numbered account. In this neck of the woods these enterprising persons might have been able to maintain a United States dollars account and live happily ever after.
Now, it seems that those persons whose business model is crime and corruption are going to find the post crime management of their business harder than undertaking the predicate crime.
To a criminal, it probably doesn’t seem right that after he has “worked” so hard, he (or she) can’t just cruise the world, have dream homes in several countries, a suite of cars and other pleasure objects and when the end nears, pass the remainder to their slobbering offspring.
It would be amusing if not so tragic that after Sani Abacha, who it is alleged looted some US$4.3 billion from Nigeria died, his family found it an essential element of their human rights that they should be entitled to this estate and contested court action to ensure they could bask in this infinity pool of suspected illicit money.
Earlier this year, Switzerland agreed to give back to Nigeria US$380 million that was allegedly looted by the former military dictator.
The World Bank will oversee the transfer in the interest of transparency. Switzerland had long held on to to its right to maintain secrecy in this and other instances, claiming client confidentiality. However, it is dismantling much of the secrecy infrastructure, not because of any moral enlightenment, but because as usual, money talks.
The crisis of 2009 reinforced international cooperation in fighting tax evasion and marked a real turning point. Many countries teetering on the brink of financial collapse, woke up to the realisation that they could not afford the illicit outflows of cash. They have managed to get at the Swiss authorities through the route of tax evasion. Concerted efforts on the part of the Organisation for Economic Cooperation and Development (OECD), the European Union and US have succeeded in bringing the Swiss to the transparency table. To avoid being marginalised and subjected to increased pressure, Switzerland, along with around 100 other countries, will put an end to its treasured practice of banking secrecy when the treaty on automatic exchange of information between tax authorities comes into force in 2018. The US has been relentless in its bid to stem the flow of money to Switzerland on which it could collect taxes. Swiss bank Credit Suisse in 2014 agreed to a US fine of over US$2 billion for “extensive and wide-ranging conspiracy” relating to tax evasion by US clients.
Other countries are using international tax agreements to smoke out the illicit money. On February 13, 2014, the OECD presented a common global standard for the automatic exchange of tax information between countries. The standard is officially called the Automatic Exchange of Information (AEOI), and informally referred to as “GATCA”, or global FATCA (the Foreign Account Tax Compliance Act). Developed in conjunction with G-20 economies, the standard came as a response to FATCA, a regulation which requires foreign financial institutions to provide reports to the Internal Revenue Service on their US clients.
For a long time it seemed like fortress Switzerland would never open the secrecy vaults, but the self-interest of other nations has trumped the confidentiality mantra of the Swiss and combined action has quite rightly closed the door to a safe sanctuary for the benefits of crime and corruption. The FIFA arrests are a dramatic case in point. Countries with well documented cases of crime and corruption can approach the Swiss for information and depending on reciprocal agreements are now more than likely to get assistance.
Louis Parris is a certified compliance professional, consultant and publisher of the Caribbean Banking Intelligence Anti-Money Laundering Compliance Newsletter. The second of this three-part series titled Nowhere To Hide, will be published next week.Email: louisp@caribsurf.com
