Swiss authorities dragging their feet on returning Pak money

[SBD-3]

ISLAMABAD: The Swiss authorities have not enthusiastically welcomed Pakistan’s request to recover the untaxed billions of dollars of Pakistanis money stowed away illegally in Swiss banks.



A senior-level FBR team, which recently visited Switzerland, has kick-started Islamabad’s move to recover the untaxed billions of dollars that Pakistanis put away illegally in the Swiss banks but it is expected to be a long-drawn process.



“The Swiss authorities appear dragging their feet on the issue but Pakistan has taken the first step of re-negotiating the avoidence of Double Taxation Agreement (DTA),” a government source said, adding that the Swiss banks have a lot of influence on their government.



It is said that first Pakistan and Switzerland would re-negotiate the DTA for the purpose of getting its Clause 26 amended, which will open the door for process of information sharing.There would be a lot more to be done later and it is believed that the process may take years. The sources said that so far only the US, the UK and Germany have been able to get the untaxed billions of their respective nationals from the Swiss banks. In the case of the US, it took them four to five years, the source said.



The Government of Pakistan believes that around US$200 billion of Pakistani nationals is stowed away illegally in the central European country’s secretive banking system.The government is working to seek help through the new Swiss laws to exchange confidential information about the ill-gotten monies stashed behind the secrecy wall of Switzerland’s banking system. Under a new Swiss law known as The Restitution of Illicit Asset Act, the Swiss government allows the exchange of confidential information about the money deposited in its banks.



The Federal Board of Revenue (FBR) had taken up the matter with the Ministry of Foreign Affairs to approach the Swiss government, expressing Pakistan’s desire to renegotiate the existing tax treaty and seek a suitable set of dates and choice of venue to start the process.



Subsequently, the Swiss authorities have expressed willingness to renegotiate the current Pak-Swiss agreement. The two sides met last month to formally kick-start the process.



Pakistan’s DTA with Switzerland was signed in 2005 and enforced in 2008. The DTA is, however, deficient and does not enable either country to exchange meaningful tax information about their respective taxpayers. Now the two sides would re-negotiate the DTA’s Clause 26 for the required information sharing.



It is assumed that Pakistani nationals have over $200 billion stashed in the Swiss banks. One of the directors of Credit Suisse AG Bank has stated on record that $97 billion of worth of Pakistani capital is deposited in his bank.



Similarly, Micheline Calmy-Rey, the then Swiss foreign minister, is reported to have put the figure of Pakistani money hidden in Switzerland at $200 billion — a statement that has not been contradicted.
Swiss authorities dragging their feet on returning Pak money - thenews.com.pk

 

[Al Bhatti]

Aug 27, 2014

Swiss Banks Lost $383 Billion Funds Amid Probes, PwC Says

Banks in Switzerland lost 350 billion Swiss francs ($383 billion) from foreign clients over the past six years amid an international crackdown on offshore tax evasion, according to PricewaterhouseCoopers AG.

Foreign clients withdrew as much as 100 billion francs to pay fines to governments in their countries of residence, PwC said today in its Swiss private banking study. About 250 billion francs was repatriated or transfered to another financial center, according to the document.

“The Swiss private banking center has faced enormous challenges since 2008,” PwC said. “The banks will be able to attract net new money if they succeed in bringing regularized assets back to Switzerland by emphasizing their high-quality service and strong performance.”

Switzerland’s private banking industry and traditional financial secrecy is under unprecedented scrutiny from tax authorities in the U.S. and Europe. The U.S. is probing about a dozen Swiss banks, while another 100 Swiss wealth managers entered a Justice Department voluntary disclosure program at the end of last year. France, the U.K., Germany and Italy are among countries seeking to recoup undeclared fortunes stashed offshore.
Swiss Banks Lost $383 Billion Funds Amid Probes, PwC Says - Bloomberg

--------------------------------------

Fri Sep 5, 2014

RPT-No more secrets - Swiss banks learn to shape up, not shut up

* Industry shaken up by tax-evasion probes, end of secrecy

* Big push into Asia as reputations damaged in U.S.

* Shift from 'importing clients to exporting services'

* Industry expected to shrink to the large and the niche

Switzerland's allure as a place to stash cash has been badly damaged by a U.S.-led campaign against tax cheats, and the country's roughly 140 private banks can no longer rely on a reputation for secrecy to attract wealthy customers.

To try and compensate for the hundreds of billions of Swiss francs withdrawn in the wake of the tax probes, banks that once relied on word-of-mouth referral have brushed up their sales pitches and hit the road to attract new clients, particularly in Asia, the world's fastest production line for multi-millionaires and billionaires.

"The key paradigm shift is that, in the old days, Swiss private banking imported clients," said Zeno Staub, the chief executive of Swiss bank Vontobel. "Now we export services."

To compete across borders, banks either need scale, or a specialist niche. Industry experts expect a gradual wave of takeovers and closures to shrink the sector, possibly by up to a third, once long-running U.S tax investigations involving dozens of banks conclude. Some are expected to be wrapped up in the next 12 months, but others could drag on.

The tectonic shifts expected in an industry steeped in hundreds of years of tradition prompted speculation last week of a tie-up between Credit Suisse, the country's second-biggest bank, and Julius Baer, its third-largest listed wealth manager.

Analysts questioned the logic of such a takeover for Credit Suisse, which only recently agreed to pay $2.6 billion to settle a tax probe with the United States, hollowing out its reserves for such a big deal.

Julius Baer is in the midst of its own U.S. criminal investigation for aiding tax evasion, and a source familiar with the matter said the case for a deal between the two banks was weak for now and that any possible merger would be at least two to five years away.

But the speculation of such a tie-up underlines the sense of change afoot in the wood-panelled private banks of Geneva and Zurich, from which rich clients withdrew a net 350 billion Swiss francs ($381 billion) between 2008 and 2014, according to an estimate from accounting firm PricewaterhouseCoopers.

Profits have been eroded by the outflows and clients' preference for low-risk holdings, which generate weaker returns for banks. The number of loss-making banks rose by almost 50 percent in 2013 to 34 compared to a year ago, according to a study by auditor KPMG that looked at 94 Swiss private banks.

The KPMG study, which excluded some big banks like UBS and Credit Suisse, also showed private banks' return on equity - a key measure of profitability - fell by more than 75 percent between 2006 and 2013.

BONED-UP BANKERS

Before the 2007-08 financial crisis and subsequent increase in regulatory vigilance, not much had fundamentally changed in the world of Switzerland's often family-run private banks since the Napoleonic era. Customers came to Zurich and Geneva to park their money, and the bankers did not have to do much to keep it.

Once-a-year meetings with clients left plenty of time for long lunches and afternoon tipples.

Now, with the threat of hefty sanctions for tax evasion and customers anxious for returns in an era of record low interest rates, bankers have to bone up on investment trends and regulatory small print.

"We're moving from what we would call an asset-gathering business to an advice and investment management business," said Anthony Cerquone, the global head of human resources at UBS's wealth management arm. "The asset gathering was much less active than our model today."

UBS's client advisors have to complete a wealth management diploma to sharpen up their advisory skills and their awareness of compliance, on top of having a chief investment officer who sets the bank's 'House View' on investments.

At Geneva-based Lombard Odier the most popular internal training programmes are on client interaction, and risk and compliance, a bank spokesman said.

Lombard Odier and crosstown rival Pictet & Cie broke with more than two centuries of tradition last week when they published financial results for the first time.

The two banks, both still partially run by their founding families, had to make the disclosures after changing their structure to limited partnerships, which cap their partners' exposure to potential fines from U.S. tax probes.

INDIGESTION

Rum tales of how Swiss banks helped clients evade taxes - such as smuggling a client's diamonds into the United States in a toothpaste tube - have hurt their reputation in North America, but among China's monied classes, they still have cachet.

"The Swiss name, Swiss banks still appeal to a lot of them. After 2008, a lot of them had bad experiences with big banks," said Ang Eng Hieang, a veteran of Singapore's private banking industry, who joined Swiss bank Bordier & Cie in 2012 as executive director.

Since 2009, when the veil of Swiss banking secrecy was first lifted after UBS agreed to pay $780 million in fines and pass on information about tax-evading U.S. citizens, the country's big banks have been channelling resources into Asia.

UBS, the world's largest private bank, has cut staff numbers by almost 11 percent in Switzerland, while growing numbers in Asia Pacific by 7.4 percent. Credit Suisse has cut the number of relationship managers in Switzerland by 15 percent since 2009, but bulked up its headcount in Asia Pacific by almost a third.

Bordier & Cie has spent the past two years trying to build up an Asian business from scratch, and around 15 percent of account holders are now from Asia.

The bank helps advise clients on a wide range of investment matters from bond yields and Tokyo property prices to pieces of art from China's cultural revolution and charges a relationship fee and a transaction fee for its services.

"We seek to be transparent; we show our clients where our products are from, and we show them our mark-up," said Ang. "We want to be a trusted intermediary."

Back in Switzerland, the industry is still coming to terms with the new open landscape.

"The industry is still digesting the legacy situation," said Vontobel's Staub. "As we all know, when we have eaten too much, digesting takes a bit of time." ($1 = 0.9191 Swiss franc)

RPT-No more secrets - Swiss banks learn to shape up, not shut up| Reuters

 

[Dr. Strangelove]

forget this money it probably has already been moved somewhere else

 

[Al Bhatti]

@Chak Bamu this is just one of the many places where Pakistan’s money is going, and Pakistan's money is still leaving the boundaries of Pakistan even as we speak.

Pakistan is not a poor country, Pakistan has been made a poor country.

forget this money it probably has already been moved somewhere else

Yes.

And when for example 60-70 % of Pakistan’s money will no longer be in Swiss banks they (Swiss banks officials) will reveal the details of the money they have at hand which will be the left over 30-40%. And then the politicians will use this against each other in political debates and rallies to fool people again that so and so party was saying we had X amount in Swiss banks and infact we have only X amount and here is the official statement from Swiss banks officials.

Not just limited to below two, pictures are for illustration purposes to describe the sweet smiles of all the others involved in it at that time:

 

[Chak Bamu]

@Al Bhatti , If we had stable government and a continuation of constitutional rule of law, Pakistan would become an investment destination. It is not that complicated or difficult to understand.

 

[nair]

@Al Bhatti , If we had stable government and a continuation of constitutional rule of law, Pakistan would become an investment destination. It is not that complicated or difficult to understand.

Can anyone tell me what happens to these deposits, if the depositor is died......

 

[Jf Thunder]

Can anyone tell me what happens to these deposits, if the depositor is died......

he would specify in his will, otherwise they would most likely be given to his relatives according to their shares in accordance to Islam, or the constitution of the IRP, or a court order in a special case