“Tax havens are engaged in economic warfare against the United States…”
… Democratic Sen. Carl Levin, chairman of the Senate Homeland Security and Governmental Affairs Committee on Thursday, July 17, 2008
Arrested Banker Tells US Government Everything
Revelations in the trial of an employee of Swiss Bank UBS will have serious repercussions for the Barbados offshore banking industry. The United States government has expanded its anti-tax-evasion strategies by targeting offshore banking, and Barbados and other Caribbean banking centers are squarely in the cross-hairs.
Former UBS banker Bradley C. Birkenfeld pleaded guilty in June 2008 in a US Federal Court in Florida to charges of helping a wealthy American developer to avoid taxes on US$200 million.
But that is not all… in exchange for sentencing consideration, Birkenfeld is singing like the birds about the entire offshore banking industry, and some of his songs lead to Barbados.
Birkenfeld is charged along with Liechtenstein finance executive Mario Staggl. Here is a sample of how they worked…
Both men were accused of creating bogus trusts and sham offshore entities to hide some $20 billion in offshore assets owned by wealthy American clients. UBS is in talks with the Justice Department and Swiss authorities about turning over the names of up to 20,000 American clients.
Mr. Birkenfeld’s work concerned offshore undeclared assets held for wealthy Americans. In his statement of facts, he said that he and other unidentified UBS private bankers urged their American clients to destroy all offshore private banking records held in the United States; to use Swiss credit cards that could not be discovered by American tax authorities; and to falsely characterize money pulled out of Swiss accounts as loans from UBS. The entire business brought in $200 million a year in revenues to UBS.
Prosecutors have been shifting their focus on tax evasion to private banking practices that use undeclared offshore accounts in European tax havens…”
… from the New York Times article Former UBS Banker Pleads Guilty To Aiding Tax Evasion
US Authorities Targeting Barbados Offshore Financial Industry
Senator Carl Levin and many of his colleagues are calling for laws aimed at crippling the offshore banking industry and that is bad news for Barbados – which is mentioned time and time again as “one of those” in the stories surrounding the UBS investigation by US authorities.
The revelations of the UBS employee include the fact that his offshore bank actually trained employees in counter-surveillance, secret writing, smuggling of documents and data-encryption techniques that they used whenever they visited the United States. Birkenfeld’s testimony paints a sinister picture of the entire offshore industry – as if Barbados needed any more of this type of publicity in the United States since our country’s offshore industry was discovered to have played a major role in the Enron fraud.
The US Attack On Barbados As An Offshore Financial & Corporate Center Is Just Starting
The last time Uncle Sam targeted the offshore banking industry, Barbados was able to make all the right noises and escaped without much damage or impact. We may not be so fortunate this time.
In a post-9/11 world, the United States has been very successful in imposing it’s will upon banks and smaller countries. Under the guise of “preventing terrorist funding”, the United States has established the largest and most sophisticated financial monitoring network in history. The UBS investigation is already growing exponentially and will soon be arriving at a Barbados bank near you if it hasn’t quietly done so already.
The UBS investigation is not an end for the United States lawmakers – it is a blunt tool to be used to attack and shut down offshore centers like Barbados.
Our problem with this U.S. attack is three-fold…
1/ Our tourism industry is in trouble in large measure due to circumstances beyond our control (oil, 9/11, distance from major markets). This means an increasing reliance upon foreign exchange derived from our offshore industry.
2/ The increased foreign scrutiny of our offshore financial, banking and corporate sectors may reveal questionable operations that have previously gone unnoticed.
3/ Our country lacks the Integrity, Transparency and Accountability laws – ITAL – that provide the United States with a basic comfort level about our willingness and ability to monitor and control money laundering.
Barbados walks a thin line when it comes to maintaining the country as a profitable offshore center without attracting the wrath of our Canadian and American neighbours to the north – who only have to withdraw a few tax treaties to ruin us.
Integrity Laws In Barbados? We Don’t Have Any!
Our lack of ITAL is increasingly being noticed by the international community – and might be just the final excuse that the American law makers need to gain domestic support for curbing the Barbados offshore financial and corporate industries.
It is now six months since Prime Minister Thompson took office, and so far nothing has happened with ITAL. The Barbados government is six months past due its promise to adopt anti-corruption measures.
Don’t think that Senator Levin and his colleagues haven’t noticed.
Caribbean News World: Caribbean Could Suffer As US Senate Targets Offshore Banking
Canada Globe: Swiss Bankers Trained To Avoid Detection
New York Times: Former UBS Banker Pleads Guilty