Post by Sapphire Capital on Jul 11, 2008 23:41:33 GMT 4
I want people to think before receiving a wire.
In regards of receiving a wire I have seen a lot of different structures. Some use offshore accounts, some trustees, some.......(had even one demanding diamonds in a bag).
If you use offshore accounts in the sense that the booking bank, meaning the location where your actual account was opened, is in a so called Tax-Haven, you need to be aware of the following:
1. Any wire transfer to and from a tax haven is monitored
2. Any wire from and to a non-OECD-compliant tax haven is flagged
3. Any wire to a a non-OECD-compliant tax haven above 10000$/EURO is reported
You also need to keep in consideration that every currency is booked and moved through the countries of origin, meaning USD in the US, Euro in Europe, YEN in Japan and so on. None of the tax havens have their own clearing centers.
In addition it should come to your realization that after the subpoenas from the US to the SWIFT and the adjustment in reporting as well as under the new information exchange treaties following attempts to trace money laundering and terror financing, all players on the international banking table have all details on the table.
Tracing has been made more affective by putting identifiers on the transfer codes which most people do not see as they are inter bank acknowledged only. Most people also do not see the wire-room-compliance and the subsequent disclosure systems which move all data automatically under pre-determined qualifications.
Given this all wire transfers out of compliant OECD countries now identify the origin of funds and the name and address of the sending party as well as the receiving party. Naturally with IBAN system in almost all countries this allows the pulling of information in the national or international regulatory offices in an effective way. The tracing will identify not only the detailed origin of funds but also the status of the account it is coming from and the term of the relation, the legal signatories with passport and all references where the money originally came from.
As most people will know even the Swiss when wiring now identify the name of the account on the wire.
Some countries ( Monaco, Andorra and Lichtenstein for example) avoid this by putting the name of their bank as originator, doing the wire for "their own account". Following the long standing tradition of fighting tax evasion most high tax countries, meaning almost every country, have implemented rules looking very careful at these "own account" bank wires and especially in USD/EURO/YEN such wires are reported daily on an automatic exchange.
The development is that Australia, Canada, France, Italy, the Netherlands, New Zealand and Sweden, USA and Japan as first since February 28, 2008 have decided to move against the non-OECD-compliant tax havens and have put in-official bank transfer identifiers in use as official and activated the information exchange mechanisms in their Double Taxation Agreements with various states. All European Member States are expected to move in the same direction from April 15 onwards and most have given internal regulatory support for this already. In the US 100 information exchange files have been used to target Andorra towards German and French users because booking via New York allows the catching of the wire codes easily. Within the US 25 arrests have been made, countless audit orders are out for that reason.
Since very seldom accounts in these tax havens are operated under the real beneficiaries name some may feel secure, however there is some things which have to known.
1. if your bank has your name and identification as a signatory, you are on record.
2. if you are known by the bank of making the decicions for a specific account owned in a corporate name or through a trustee, you are on their record
3. legally when you are the decicion maker for a company you are tax wise the legal owner even if registration shows a different name.
4. if you are using a shell company under direct or indirect ownership you will be identified in the bank record under the tax free status
Beside the fact that there have been some piercing of the corporate account information veil such as with Lichtenstein, Switzerland and Andorra and I believe to remember Monaco (which is more complicated) and thus information exchanged between the countries of the OECD under their agreement to combat tax evasion, if any of the 1 to 4 conditions are effectively applicable to you, you will be disclosed if not automatic but on request when a transaction for such accounts is coming up for compliance.
If you are using a legal trustee such as a law-firm please be aware that client-attorney privilege needs legal services, not just fiduciary and it needs a received remuneration and not all countries have a law saying that the payment operation is privileged, some only cover the legal communications. In addition fiduciary operations following implemented laws usually identify when they act for a client account and almost all banks use a pass through tracing code application showing that
a. the wire originates from a fiduciary
b. fiduciary is not acting for his own account
c. origin of funds to the fiduciary account is under transfer code......
d. bank has not checked origination and refers to fiduciary
Such wire transfers when originating from tax haven countries are monitored, if they come from non-OECD compliant tax havens they are reported.
Some people also misunderstand the difference between institutional accounts and non-institutional accounts. Whereas institutional accounts are using identifiers which include regulatory details and licensing and almost always are in the high volume, non-institutional accounts are in the low to medium volume and usually small, medium sized companies or private accounts.
If you are part of a larger transaction which pays you as a side of the transaction such origination is institutional, the wire to you will be to a non-institution. If the wire is received by a non-fiduciary or non-institutional account such wire is red flagged when it is not a constant appearance and customary to this account. For example the payment of wages or partnership income etc from an investment firm to a private account is institution to non-institution. However non only do institutions keep such accounts separate from their transaction facilities, the receiving account is an established non-institutional account and the transfer carries cross over codes. In the case of a transaction account wire you will not find a cross over code but an institutional account code which red flags any non-institutional account which is non-fiduciary and not on the list of high volume accounts. If such is employed in regards of a tax haven it triggers registration, if it is employed by the use of a Non-OECD compliant tax haven it triggers a suspicious activity notification of a high priority. (SAR=Suspicious Activity Reports, are filed in masses every day but in order to distinguish between the more normal reports which are done by the bank mostly to show they comply and there is actually nothing, there are those who are issued with a priority number and looked at first)
The solution:
When using wire receiving services:
1. do not use Non-OECD compliant countries
2. when using non-OECD compliant countries never wire direct into your country or your accounts
3. when using fiduciary services do this either through specially structured accounts or in a country which does not do the sourcing of bank activities
4. do not mix institutional and non-institutional sourcing.
5. if you can not avoid 4. employ a code stripping through a special remittance service.
Just keep in mind tax evasion is a crime, tax planning is not, money laundering is a crime and in most countries structuring is a crime, remittance is not.
Last not Least, using Non-Tax Havens in amiable and good legal environment is more effective than counting on bank secrecy which only exists in theory. A wire to and from Lichtenstein is looked at but a wire to or from Vienna, Austria is not and so for this reason wires origination from other countries.
So I hope people start thinking before they give out wire coordinates for offshore tax havens.
In regards of receiving a wire I have seen a lot of different structures. Some use offshore accounts, some trustees, some.......(had even one demanding diamonds in a bag).
If you use offshore accounts in the sense that the booking bank, meaning the location where your actual account was opened, is in a so called Tax-Haven, you need to be aware of the following:
1. Any wire transfer to and from a tax haven is monitored
2. Any wire from and to a non-OECD-compliant tax haven is flagged
3. Any wire to a a non-OECD-compliant tax haven above 10000$/EURO is reported
You also need to keep in consideration that every currency is booked and moved through the countries of origin, meaning USD in the US, Euro in Europe, YEN in Japan and so on. None of the tax havens have their own clearing centers.
In addition it should come to your realization that after the subpoenas from the US to the SWIFT and the adjustment in reporting as well as under the new information exchange treaties following attempts to trace money laundering and terror financing, all players on the international banking table have all details on the table.
Tracing has been made more affective by putting identifiers on the transfer codes which most people do not see as they are inter bank acknowledged only. Most people also do not see the wire-room-compliance and the subsequent disclosure systems which move all data automatically under pre-determined qualifications.
Given this all wire transfers out of compliant OECD countries now identify the origin of funds and the name and address of the sending party as well as the receiving party. Naturally with IBAN system in almost all countries this allows the pulling of information in the national or international regulatory offices in an effective way. The tracing will identify not only the detailed origin of funds but also the status of the account it is coming from and the term of the relation, the legal signatories with passport and all references where the money originally came from.
As most people will know even the Swiss when wiring now identify the name of the account on the wire.
Some countries ( Monaco, Andorra and Lichtenstein for example) avoid this by putting the name of their bank as originator, doing the wire for "their own account". Following the long standing tradition of fighting tax evasion most high tax countries, meaning almost every country, have implemented rules looking very careful at these "own account" bank wires and especially in USD/EURO/YEN such wires are reported daily on an automatic exchange.
The development is that Australia, Canada, France, Italy, the Netherlands, New Zealand and Sweden, USA and Japan as first since February 28, 2008 have decided to move against the non-OECD-compliant tax havens and have put in-official bank transfer identifiers in use as official and activated the information exchange mechanisms in their Double Taxation Agreements with various states. All European Member States are expected to move in the same direction from April 15 onwards and most have given internal regulatory support for this already. In the US 100 information exchange files have been used to target Andorra towards German and French users because booking via New York allows the catching of the wire codes easily. Within the US 25 arrests have been made, countless audit orders are out for that reason.
Since very seldom accounts in these tax havens are operated under the real beneficiaries name some may feel secure, however there is some things which have to known.
1. if your bank has your name and identification as a signatory, you are on record.
2. if you are known by the bank of making the decicions for a specific account owned in a corporate name or through a trustee, you are on their record
3. legally when you are the decicion maker for a company you are tax wise the legal owner even if registration shows a different name.
4. if you are using a shell company under direct or indirect ownership you will be identified in the bank record under the tax free status
Beside the fact that there have been some piercing of the corporate account information veil such as with Lichtenstein, Switzerland and Andorra and I believe to remember Monaco (which is more complicated) and thus information exchanged between the countries of the OECD under their agreement to combat tax evasion, if any of the 1 to 4 conditions are effectively applicable to you, you will be disclosed if not automatic but on request when a transaction for such accounts is coming up for compliance.
If you are using a legal trustee such as a law-firm please be aware that client-attorney privilege needs legal services, not just fiduciary and it needs a received remuneration and not all countries have a law saying that the payment operation is privileged, some only cover the legal communications. In addition fiduciary operations following implemented laws usually identify when they act for a client account and almost all banks use a pass through tracing code application showing that
a. the wire originates from a fiduciary
b. fiduciary is not acting for his own account
c. origin of funds to the fiduciary account is under transfer code......
d. bank has not checked origination and refers to fiduciary
Such wire transfers when originating from tax haven countries are monitored, if they come from non-OECD compliant tax havens they are reported.
Some people also misunderstand the difference between institutional accounts and non-institutional accounts. Whereas institutional accounts are using identifiers which include regulatory details and licensing and almost always are in the high volume, non-institutional accounts are in the low to medium volume and usually small, medium sized companies or private accounts.
If you are part of a larger transaction which pays you as a side of the transaction such origination is institutional, the wire to you will be to a non-institution. If the wire is received by a non-fiduciary or non-institutional account such wire is red flagged when it is not a constant appearance and customary to this account. For example the payment of wages or partnership income etc from an investment firm to a private account is institution to non-institution. However non only do institutions keep such accounts separate from their transaction facilities, the receiving account is an established non-institutional account and the transfer carries cross over codes. In the case of a transaction account wire you will not find a cross over code but an institutional account code which red flags any non-institutional account which is non-fiduciary and not on the list of high volume accounts. If such is employed in regards of a tax haven it triggers registration, if it is employed by the use of a Non-OECD compliant tax haven it triggers a suspicious activity notification of a high priority. (SAR=Suspicious Activity Reports, are filed in masses every day but in order to distinguish between the more normal reports which are done by the bank mostly to show they comply and there is actually nothing, there are those who are issued with a priority number and looked at first)
The solution:
When using wire receiving services:
1. do not use Non-OECD compliant countries
2. when using non-OECD compliant countries never wire direct into your country or your accounts
3. when using fiduciary services do this either through specially structured accounts or in a country which does not do the sourcing of bank activities
4. do not mix institutional and non-institutional sourcing.
5. if you can not avoid 4. employ a code stripping through a special remittance service.
Just keep in mind tax evasion is a crime, tax planning is not, money laundering is a crime and in most countries structuring is a crime, remittance is not.
Last not Least, using Non-Tax Havens in amiable and good legal environment is more effective than counting on bank secrecy which only exists in theory. A wire to and from Lichtenstein is looked at but a wire to or from Vienna, Austria is not and so for this reason wires origination from other countries.
So I hope people start thinking before they give out wire coordinates for offshore tax havens.