Known for it's tax haven and tax sheltering_ Swiss banking and

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Known for it's tax haven and tax sheltering_ Swiss banking and Powered By Docstoc
					                                                                                   Devin Crandall
                                                                          Swiss/ Offshore Banking

         Known for it’s “tax haven’s” and “tax sheltering”, Swiss banking and offshore banking
has had the reputation for hundreds of years in keeping your money safe and private. Offshore
banking has become increasingly popular for those looking to store money in a safe place without
others finding out about it. This type of banking offers many services that attract clients from all
over the world.

         Swiss banking has great history behind it mostly impart by the way Switzerland is ran
and the laws that govern confidential banking in the country. In 1934 the Swiss came out with a
law in result of Germany and France attempting to push them to reveal private banking
information during the war. This was called the Switzerland Banking Act of 1934. The law
stated that any person working at the bank was held accountable for revealing any private
information and if they went against this law they would be imprisoned. In 1984 the people in
Switzerland voted for this law to remain and won by 73% vote!

         During and after World War 2 the Swiss held many Jew and Nazi accounts. Later Swiss
banking was accused of destroying Jewish bank accounts to hide evidence and keep the money.
“Christoph Meili, a former bank security guard claimed a bank he worked for destroyed records
of Jewish account holders who were murdered during the Holocaust and kept the money so that
heirs of those who died received nothing.” 1Much of the war was actually funded by Nazis
stealing gold from the Jews and sent to Swiss banks to be melted down and used.

       Today Swiss banks are highly revered for privacy and confidentiality that they have
between their client and banker relationship. This is what gives them the reputation now.

What sets a Swiss bank apart from other banks? Like previously mentioned confidentiality of the
account holder is taken very seriously Although this is true, if a crime is being committed in both
the United States and Switzerland, then information can be divulged. “In order to side step this
law, there must be a substantial criminal allegation before a governmental agency, especially a
foreign one, can gain access to account information. Tax evasion, for example, is considered a
misdemeanor in Switzerland rather than a crime.” 2

  “History of Swiss Banks”
  “Swiss Bank Accounts and the law”
         Another difference is that Swiss banking allows an account holder to gain a close
relationship with bankers because unlike retail banking, Swiss banks are private and are available
offering many services that you might not other wise receive in retail banking. Examples include
wealth management, tax concerns, and estate planning. Some people are attracted to Swiss banks
because Switzerland has had a stable and reliable economy for many years. And interestingly has
not been at war with another country since 1505.

         Aside from privacy, one of the greatest benefits of Swiss banking is the tax regulations.
“Swiss residents pay 35% tax on interest or dividends their Swiss bank accounts and investments
earn. For non residents of Switzerland there are no taxes levied on those earnings unless; you
invest in Swiss companies, you’re a U.S. citizen and invest in U.S. securities from your Swiss
bank account, (if you do, you need to report it to the IRS) and you’re a resident that’s part of the
European Union.” 3 An interesting fact is that there is no inheritance tax. If someone dies, the
person who inherits the money is not taxed but must report their holdings with their country’s tax

         There are many types of accounts and services Swiss banks provide for their customers.
Just like retail or private banks in the U.S. Swiss banks offer a variety of accounts to tend to
specific needs of their customers. Some of their more popular accounts to foreigners are their
numbered accounts. Numbered accounts are that only have a number associated with them rather
than a name. These provide more privacy because the teller and others that deal with the account
do not know the person who owns the account. However there will only be a select few people
who do know the name that is associated with that account number. Myths and movies have
portrayed Swiss banks has having anonymous accounts but this is false. There will always be
record of who owns that account despite the great secrecy and privacy.

         An issue the bank often deals with is when accounts go dormant. Many people who set
up an account do not tell or keep record of it anywhere. When that person dies, no one knows
about it or can claim it. The bank has policy that after ten years of no contact with the bank they
will seek out the customer and contact them to assure that they are still living. If they are not alive
they will seek out the heir to that account. Therefore it is crucial that you identify whom you want
your money to go to in the case that you pass away.

  “Swiss Bank Accounts and the law”
         Opening a Swiss bank account is easier then you think. One must be 18 years of age and
following that you can choose between varieties of different accounts. Opening your account by
mail is also possible but just requires more paper work. You will need your passport, tax return,
company documents, and a license showing what you do for a living. You are allowed any
currency in your account, most customers use the U.S. dollar, the pound, or Euro because having
your money in Swiss Franks will accrue a small amount of interest and then would have to pay
withholding tax. Your requirements to open a numbered account require more. You have to
actually go to a Swiss bank, deposit a minimum of 100,000 dollars, and pay 300 dollars a year to
the bank to maintain your money.

        To access your money in your account, you can use similar things as you do in the U.S.
such as credit cards, checks, and bank transfers. However if you are interested in keep your
account secret, you must be cautious in using bank transfers because you will reveal that your
account exists.

        Off shore banking in regards to accounts are very similar to Swiss banking. The history
of offshore banking started years ago off the coast of France. A group of bankers got together on
the Channel Islands wanting to offer off shore banking options to lower taxation and keeping and
increase privacy. From there the off shore industry began to spread to other islands. It has become
more popular in the Caribbean where we see many off shore banks today.

         Offshore banking can be broken down into four main banking sectors; The European
sector, the Caribbean/Central American basin, the Persian Gulf states, and the Asian Pacific
         Some potential advantages to off shore accounts are that people may live in an unstable
economy and therefore move their money to a more stable environment. The advantages are
basically the same as explained with the Swiss accounts mentioned previously. Some interesting
disadvantages are when people abuse these accounts to try and hide when they have done
wrongful acts. “While some might view the secrecy agreement as the protection of privacy, others
might view this practice as an open door for abuses such as tax evasion and hiding income.” 4

         Swiss and Offshore banking more popularly know for their privacy and confidentiality
offer many services that have contributed to their success over the years. They are some of the
largest financial institutions in the world. Anyone looking for these services or a good private
bank to work with might want to consider looking into joining one of these banks.

 “Offshore banking Explained”

“History of Swiss Banks”

“Swiss Bank Accounts and the law”

 “Offshore banking Explained”

“A Brief History Of Swiss Banks”,9171,1881977,00.html

“Swiss Bank Accounts”

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