Some time ago in our article This Is The End we commented that the USA-led OECD-developed and OECD-enforced "Standard for Automatic Exchange of Financial Account Information in Tax Matters" is now in full force. This standard effectively made almost every single bank in the world a snitch... and the few ones left are soon to fall. There are no more tax havens left where privacy is respected. There are still a few (very few) low tax places on earth, but they are quickly disappearing as their governments become desperate for cash and as the OECD steps-up their efforts to cut down on tax competition. It would seem that if we are not collectively screwed anywhere in the planet, this is somehow unfair.
BACKSTABBING CLIENTS THE SWISS WAY
The key tax haven bastion to fall was Switzerland. They declared that they will implement this information standard beginning in January 1, 2017. The information they will exchange at that point will be the one related to 2016, which means that if they don't want to face possible liabilities, they must ensure all their clients are pristine tax-wise by the end of 2015. To this regard Swiss banks have begun to blackmail their clients. They are doing so by demanding, that's right, demanding that their clients provide evidence to them that they paid taxes in their own countries on their Swiss deposits. If this is not mindboggling, we don't know what is.
Let us repeat this. Swiss banks, the paramount of bank client privacy who built a country around this principle are now demanding that their clients provide them with evidence that they paid taxes. And what's the penalty if a client would choose not to do so? The bank will close their account. That's right! The bank will close their account!
Switzerland is not alone in so doing. Many banks are sending warning and action letters out to their clients in borderline blackmail terms. What follows is the text of one such letters which was provided to us by an anonymous user. We have been told that in order to protect the guilty (Swiss bank) the letter was anonymized first, but their wording remains intact. Keep reading:
"This Swiss Bank believes that clients are in the best position to achieve their goals and ambitions when their needs are met in accordance with the highest standards of regulatory compliance and principled conduct. We also believe in the importance of being proactive in understanding this complex and rapidly changing regulatory environment, and in working with our clients to navigate through these changes.
As your trusted advisor, we would like to take this opportunity to inform you of your country's tax amnesty program.
It is important to us that your relationship with This Swiss Bank complies with the cross-border business requirements and is in line with all Swiss and Your Country regulations applicable to Your Country clients.
To assist in our efforts, we kindly ask you to provide us with evidence of tax compliance regarding each beneficial owner resident in Your Country of the assets held with This Swiss Bank under the bank account No. XXXXX-XXXXXXX. Please return the attached required statement signed by an independent and registered Professional Accountant based in Your Country before Month, Date, 2015. To enable us to identify the Accountant signing the form, we request that a copy of their Legal Accountancy Permit be attached to the above statement.
It is important that the statement reflects the beneficial owners' actual tax situation. We therefore kindly ask you to promptly inform us of any future change regarding the beneficial owners' tax status.
We would like to draw your attention to the fact that the transfer of assets may be subject to legal, regulatory and contractual restrictions.
Please note that different requirements may apply for foundations, trusts, domiciliary companies and life insurance policies. If you think that you are affected, we kindly ask you to contact us and we will provide you with the respective information and documents."
If you read the letter carefully, you will notice how hypocrite Swiss banks are and as such their clients should not expect otherwise. A few comments follow.
This Swiss Bank believes that clients are in the best position to achieve their goals and ambitions when their needs are met in accordance with the highest standards of regulatory compliance and principled conduct.
This coming from banks that are famous because of helping clients extract money from the clutches of tax vampires. It would seem that now (when their insane profits are threatened) they have seen the light. Whatever.
"This Swiss Bank complies with the cross-border business requirements and is in line with all Swiss and Your Country regulations applicable to Your Country clients."
So, Swiss banks must now comply with other countries' regulations? Gee… and we thought that Switzerland was a sovereign country. Alas, it would seem that this is not the case. Heck! according to this statement, we are all Swiss now!
"provide us with evidence of tax compliance"
So… Swiss banks are now working for Your Country's tax collector? Yes. That's right. Swiss banks are now nothing but an extension of your Tax Agency. Doesn't this fill you with a sense of accomplishment and relief? It must be good to know that
"the transfer of assets may be subject to legal, regulatory and contractual restrictions."
In other words, we won't give you your money in your terms, only in ours, if any! Period! How nice to know that your money is now at the entire discretion of Swiss banks to manage as they see fit. Let's say this again; your property is no longer yours to deal as you see fit. How about that? Possession is nine tents of the law?
But why would Switzerland commit economic suicide? Because the USA threatened and blackmailed them with cutting them of from SWIFT, the electronic wire transfer system. Basically, no SWIFT no access to USA (and other) international centers of finance. Not to mention that the USA would cut-off Swiss banks from all USA financial markets.
And what did the Swiss do? Well… Swiss people have been brainwashed for so long by socialist ideas (Swiss is a "social democracy" can you believe that?), that people are convinced that becoming so-called "clean" is the right moral and ethical thing to do. Silly Swiss. As such, Swiss politicians with at least two neurons working and exposing the idiocy of this position stood no chance. They got no public support. Socialism won. Switzerland capitulated.
What could Switzerland have done? They could have banded together and create an organization similar to the Non-Aligned Movement for "the national independence, sovereignty, territorial integrity and security of non-aligned countries". Heck! they could have joined the league and demand the implementation of their principles! Can you imagine the power it would wield if all Tax Havens in the world would have united? They would have been able to cut USA off from other sources of wealth. The balance of power would have been entirely different. But no. Switzerland, the only country that had the clout and gravitas to do so choose the cowardly exit. Betray their customers. Sell them cheap. We don't know if they received the equivalent of 30 pieces of silver for them (we would have to do the math) but what we do know is that they just committed financial and economic suicide.
But Switzerland is not the only one to be blamed. All other tax havens did it. None of them, not one, had the guts to confront this idiocy. Some of them did formally protest, but that's the full extent of their efforts. There was never a real attempt to put a stop to this. We do understand that they were trying to protect their banking business from being cut-off, but the alternative that they chose is far, far worse than being cut-off. The truth is that USA financial markets cannot sustain a generalized cut-off from funds. The cut-off option was a suicidal option, the MAD (Mutual Assured Destruction) option and yet, most politicians (looking to keep their jobs) choose the cowardly way out instead of stand and fight while they still had a chance. Instead they fell for USA's bluff. And now they will pay the consequences. Over the next year the exodus of money from former tax havens will only accelerate. Countries will be far, far worse because of this. Politicians just shot themselves in the toes, foot, ankle, leg, calf, knee, thigh and balls…sorry, not that one… they don't have any.
THE ROAD AHEAD
And where do we go from here? Down, down, down in rounds, rounds, rounds flushed into the toiled of socialist economies and their liquid sewer, the fiat currencies. We told you so, there is no escape. The entire world is firmly set on its path towards collapse. There is nothing you or us can do to prevent it. We can only educate and accelerate their demise because the sooner we are done with it, the sooner we can all begin the reconstruction. One person at the time.
Switzerland has backstabbed their long-life customers in the back and twisted the knife in the wound. There will be hell to pay and Swiss people will be the ones paying it. But, they are not the only ones. All tax havens have done the same one way or another. In a painful way this is good because people (that matter) are now beginning to fully understand the destructiveness of states and the cold-bloodiness of politicians when it comes to protect their jobs. This is a lesson generations to come -with disregard of country, race or beliefs- will never forget. This is how political evolution happens.
Unless you are happy with the current situation. Unless you are happy with being robbed every day. Unless you are happy not controlling your life and not owning your properties. That's OK. That's your choice. Just one thing, when communism under a different name finally arrives, remember we told you so. Enjoy. It's your life…well…it was.
Note: please see the Glossary if you are unfamiliar with certain words.