Swiss lawyer urges governments to help tax evaders "come clean"
“Bank secrecy can no longer be misused to permit the evasion of tax.”
The importance of this statement is highlighted by the identity of its author: Philip Marcovici, partner in Zurich of one of the largest international law firms, Baker & McKenzie, and Chair of that firm’s Global Private Banking Practice Group (“Time for Calm on Secrecy” Financial Times, June 18, 2008).
Marcovici stresses the changing international environment: “Wealth owners need to understand that non-compliance with tax laws is simply not an option in today’s environment. Breaking the law carries criminal, financial and reputational risks”.
The role of the wealth management industry is criticized by Marcovici as outdated:
"In today’s transparent world, wealth owners are badly served by advisers who emphasise bank secrecy as a means of avoiding taxation. It is surprising that Singapore, a model of strategic planning, seems to be falling into the trap of secrecy-based private banking, maintaining a system that attracts Europe’s tax evaders fleeing the tightening grip of the EU Directive [on the Taxation of Savings] . . . "
He continues:
"At the moment, the wealth management industry is not doing enough to address the real long term needs of wealth owners. While a substantial and growing business, in all too many quarters little effort is made to understand the changing international environment within which banks operate and on training and knowledge management.
Given that many advisers and intermediaries are living in the past, great care needs to be taken by wealth owners who obtain advice from those who have a financial interest in enabling assets to continue to be maintained on a non-declared basis."
Marcovici recognizes that the efforts to confront cross-border tax evasion and for governments to exchange tax related information have become more intense: the U.S. Qualified Intermediary rules, technology, the growing ease with which tax authorities can obtain credit card, financial and other information, greater co-operation among governments resulting in wide information sharing, and the EU Savings Tax Directive and efforts to close loopholes in that Directive.
Marcovici declares, however, that “it is also time for governments to make it easier for taxpayers to ‘come clean’,” urging a “creative approach to resolving a global problem.”
"Wealth owners must become familiar with ways to address issues of undeclared money including voluntary disclosure, amnesty arrangements and review of statutes of limitations and other relevant rules that can help families to “come clean”. Wealth owners are doing their children no favours by not thinking seriously about the future…..
A solution to the issue of undeclared funds will need to involve financial institutions and governments working together co-operatively . . . While bank secrecy has been abused, many wealth owners deserve a sympathetic approach to regularizing undeclared monies. That will require the co-operation of government and banks and other providers of services to wealth owners."
The Marcovici article demonstrates the concerns of wealth owners with undeclared funds about their fate, unless there is a “sympathetic approach” by governments to wealth owners “regularizing” those undeclared funds. However, as wealth owners become more concerned about their illegal activities, why should governments be "sympathetic" to helping wealth owners climb out of their self-created illegal morass?
The importance of this statement is highlighted by the identity of its author: Philip Marcovici, partner in Zurich of one of the largest international law firms, Baker & McKenzie, and Chair of that firm’s Global Private Banking Practice Group (“Time for Calm on Secrecy” Financial Times, June 18, 2008).
Marcovici stresses the changing international environment: “Wealth owners need to understand that non-compliance with tax laws is simply not an option in today’s environment. Breaking the law carries criminal, financial and reputational risks”.
The role of the wealth management industry is criticized by Marcovici as outdated:
"In today’s transparent world, wealth owners are badly served by advisers who emphasise bank secrecy as a means of avoiding taxation. It is surprising that Singapore, a model of strategic planning, seems to be falling into the trap of secrecy-based private banking, maintaining a system that attracts Europe’s tax evaders fleeing the tightening grip of the EU Directive [on the Taxation of Savings] . . . "
He continues:
"At the moment, the wealth management industry is not doing enough to address the real long term needs of wealth owners. While a substantial and growing business, in all too many quarters little effort is made to understand the changing international environment within which banks operate and on training and knowledge management.
Given that many advisers and intermediaries are living in the past, great care needs to be taken by wealth owners who obtain advice from those who have a financial interest in enabling assets to continue to be maintained on a non-declared basis."
Marcovici recognizes that the efforts to confront cross-border tax evasion and for governments to exchange tax related information have become more intense: the U.S. Qualified Intermediary rules, technology, the growing ease with which tax authorities can obtain credit card, financial and other information, greater co-operation among governments resulting in wide information sharing, and the EU Savings Tax Directive and efforts to close loopholes in that Directive.
Marcovici declares, however, that “it is also time for governments to make it easier for taxpayers to ‘come clean’,” urging a “creative approach to resolving a global problem.”
"Wealth owners must become familiar with ways to address issues of undeclared money including voluntary disclosure, amnesty arrangements and review of statutes of limitations and other relevant rules that can help families to “come clean”. Wealth owners are doing their children no favours by not thinking seriously about the future…..
A solution to the issue of undeclared funds will need to involve financial institutions and governments working together co-operatively . . . While bank secrecy has been abused, many wealth owners deserve a sympathetic approach to regularizing undeclared monies. That will require the co-operation of government and banks and other providers of services to wealth owners."
The Marcovici article demonstrates the concerns of wealth owners with undeclared funds about their fate, unless there is a “sympathetic approach” by governments to wealth owners “regularizing” those undeclared funds. However, as wealth owners become more concerned about their illegal activities, why should governments be "sympathetic" to helping wealth owners climb out of their self-created illegal morass?
posted by TJN at 12:00 am
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