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Swiss Banks at the Losing End with Flight of Offshore Accounts

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7 years ago

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Swiss National Bank

[vc_row][vc_column][vc_column_text]~Rashme Sehgal

There has been a large flight of capital from Swiss banks even prior to the introduction of the Automatic Exchange of Common Information (AECI) from 2018 signed by over 50 countries who are members of the Organisation for Economic Co-operation and Developments (OECD).

The Swiss banking system has paid a heavy price for handling these unaccounted for offshore deposits especially since several of the smaller Swiss banks had specialised in handling such deposits. The blanket of secrecy surrounding Swiss banking transactions had ensured could they look after deposits of largely unaccounted wealth from well-heeled clients across the globe including India. But this is not going to be the case any longer.

Pressure on the Swiss government to provide details of all account holders has resulted in the outflow of millions of dollars of deposits from these banks thereby causing many of the smaller Swiss banks to shut shop. One such high profile Swiss bank that was forced to file for bankruptcy was Hottinger and Cie which was founded in 1786.

A KPMG study showed that 30 per cent of private banks had recorded losses in 2014-15 which resulted in several thousand bankers being laid off from their jobs.

“The smaller private banks dealing with off shore accounts posted huge losses and the result was that bankers handling these account lost their jobs under the restructuring process,” pointed out Louis Tari, a Geneva-based banking and tax advisor.

“With the introduction of the AECI, information of all non-Swiss residents belonging to the OECD countries will be automatically sent to the federal tax authorities in Berne who in turn will despatch this information to the relevant countries. The authorities in these countries can in turn check if the account holder has declared his income or not,” Tari added.

Zurich based banker Hanspeter Baumgartner pointed out, “What is very significant is that Swiss banks have frozen all accounts of account holders with ‘black’ money informing these holders that they should either regularise their account in their country or else their asset will be frozen. The flip side is that Swiss nationals who had accounts in the Bahamas or in Panama have had to declare their accounts.”

“This has seen an influx of francs into Switzerland but the amount is not very large,” Baumgartner added.

The amount of money of Indian national in Swiss banks has been steadily declining and in 2016 amounted to a mere Rs 4482 crore according to data released by Switzerland’s central bank, the Swiss National  Bank. In 2015, the money deposed was Rs 8135 crore while in 2014 it was Rs 12,350 crore.

The figures being projected by the Indian government that billions of dollars had been stashed in Swiss banks by Indian citizens was largely overstated, analysts believe, as Switzerland never saw such massive deposits from any country.

Nathalie Bersier, a lawyer who works as a consultant for Swiss investments in India, said, “From 2009,  the Indian government has been highlighting the issue of black money without realising that the easiest thing to do  is for a client to close a bank account and transfer the money out. Such a flight of capital has already occurred.”

Bersier believes, “In Switzerland, two years ago the perception was that Indian assets were between $ 900 million to $4 billion. Today I would say, the amount would be less than even $900 million.”

“More than half the undeclared money from India that was stashed in Swiss banks has been moved to Dubai and Singapore from where it would have been invested in real estate, gold or re-entered India through the hawala route,” Bersier maintains.

Former Swiss state secretary for International Financial Matters Jacques de Watteville who had visited India in 2016 to negotiate with his counterparts in the Ministry of Finance had refused to hazard a guess about just how much money has been moved out of Swiss banks to be invested in Dubai or Singapore. “There are no official figures on the assets transferred out of Switzerland,” says Watteville.

While in India he had emphasised that, “Combating the menace of black money and tax evasion is also our shared priority. We discussed the need for an early and expeditious exchange of information to bring to justice the tax offenders.”

Many Indian analysts believe some of this money has been routed to the US with the US government actively encouraging foreigners to deposit money in US banks, no questions asked. Some US states and cities have emerged as veritable tax havens. 

South Dakota, to cite an example, has been described by some analysts as the ‘new Switzerland’ and mention of its role as a tax haven was emphasised in the Panama Papers which highlighted that US offshore assets remain anonymous.

The city of Delaware is also said to be another tax haven with over one million registered entities claiming to operate from there.

The fact is that while international disclosure rules comprising the AECI  have been accepted  by the OECD countries, thhe US has refused to accept them and is not a signatory to it. The US NGO Tax Justice Network has pointed out how the US does not practise what it preaches.

In fact, a Swiss financial analyst on condition of anonymity, has accused the US of having crushed Swiss banks. Since trusts can operate as shell companies in some US states, it is ironical that a Swiss trust company has gone ahead and opened an office in South Dakota. The analyst feels that some of the flight of capital from Switzerland has ended up in the US.

This is because while non-US banks and financial institutions across the world have to reveal American account details, this is not the case with US deposits by offshore account holders.

Bersier does not see too much emerging from the Federal Council consultations with the Indian government on the need to detect, recover and repatriate illegal deposits.

“The key issue is what pressure the Indian government can exert on the Swiss government,” says Bersier. “The US threatened to close all Swiss banks operating in the US which led to the Swiss immediately signing a treaty with the US and UK. There are no Swiss banks operating in India.”

On the subject of the AEOI Information between the Swiss and Indian governments expected to be operationalised by 2018, she remains equally cynical.

Erecting the AEOI platform is all very well, she feels, but it is too little too late. Berseir believes that by the time it becomes operational, all the illegal deposits will have been moved out. There are any number of countries where this money can be moved to.

While some signatories of the AEOI are committed to sharing information from 2017, others will start providing information from 2018. Till then, we have to wait and watch.[/vc_column_text][/vc_column][/vc_row]

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Kremlin denies US media reports on Donald Trump’s phone call with Vladimir Putin

Donald Trump said on the campaign trail that he could end the fighting within hours and has indicated he would talk directly with Russian President Putin.

Published

2 weeks ago

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November 11, 2024

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Kremlin denies US media reports on Donald Trump’s phone call with Vladimir Putin

The Kremlin today denied a US media report that Russian President Vladimir Putin and US president-elect Donald Trump had spoken on the phone last week about the Ukraine conflict.

Earlier on Sunday, The Washington Post reported that Donald Trump spoke to Vladimir Pution on call, urging him not to inflame the conflict. Speaking on the matter, Kremlin spokesman Dmitry Peskov told the media that the report was completely false information, and denied any phone call took place.

It was reported that US President-elect Donald Trump has spoken to Russian President Vladimir Putin and urged him not to escalate the war in Ukraine. It said that Donald Trump held the call from his Mar-a-Lago estate in Florida on Thursday, just days after his stunning election victory over Democratic rival Kamala Harris. The report also mentioned that both the leaders expressed an interest in further conversations to discuss the resolution of Ukraine’s war soon.

Notably, Donald Trump said on the campaign trail that he could end the fighting within hours and has indicated he would talk directly with Russian President Putin. However, the US President elect has not said how he intends to strike a peace deal or what terms he is proposing.

Donald Trump’s election is seen as carrying the potential to upend the almost three-year Ukraine conflict, as he insists on a quick end to the fighting and casts doubt on Washington’s multi-billion dollar support for Kyiv.

Meanwhile, Ukrainian President Volodymyr Zelensky spoke with Trump on Wednesday, with the Republican’s billionaire backer Elon Musk also notably joining them on the call. Volodymyr Zelensky described the call as excellent, adding that he and Trump had agreed to maintain close dialogue and advance our cooperation.

Additionally, the outgoing Democratic administration of President Joe Biden has confirmed that it will send as much aid as possible to Ukraine before Trump’s inauguration on January 20.

Joe Biden’s National Security Advisor Jake Sullivan said the White House aims to put Ukraine in the strongest possible position on the battlefield so that it is ultimately in the strongest possible position at the negotiating table.

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India calls out Canada’s move to ban Australia Today for airing S Jaishankar’s press conference

The MEA said that these actions yet again highlight the hypocrisy of Canada towards freedom of speech.

Published

2 weeks ago

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November 7, 2024

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India calls out Canada’s move to ban Australia Today for airing S Jaishankar's press conference

A few hours after Australia Today aired External Affairs Minister S Jaishankar’s press conference in Australia, Canada banned the outlet. The External Affairs Minister gave remarks on the India-Canada diplomatic standoff. 

Reacting to this, India on Thursday said it was surprised by Canada’s move to ban the outlet and emphasized that it highlighted Ottawa’s hypocrisy towards freedom of speech. Australia Today, which is an important outlet for the Indian community in the country, had aired the joint press conference of S Jaishankar and his Australian counterpart Penny Wong in Canberra.

In a weekly media briefing, MEA spokesperson Randhir Jaiswal said that they understand that the social media handles, pages of this particular outlet, which is an important diaspora outlet, have been blocked and are not available for viewers in Canada. He continued that this happened just an hour or a few hours after this particular handle carried the press conference of S Jaishankar with Penny Wong. He called out the incident, mentioning that they are surprised, and the matter looks strange to them.

He further underlined that these are the actions which yet again highlight the hypocrisy of Canada towards freedom of speech. He noted that the External Affairs Minister spoke about three things: Canada making allegations and a pattern had developed without any specific evidence, surveillance of Indian diplomats in Canada, which he termed as unacceptable, and  the political space which has been given in Canada to anti-India elements. 

With this one can draw conclusions, why Australia Today channel was blocked by Canada, the spokesperson said. Australia Today focuses on news and analytical pieces related to the Indian community in Australia and elsewhere across the world.

This incident follows days after devotees were attacked by pro-Khalistani at a Hindu temple in Canada’s Brampton, with S Jaishankar calling it deeply concerning. Furthermore, Prime Minister Narendra Modi also condemned the attack and said that there were cowardly attempts to intimidate Indian diplomats.

The diplomatic standoff between India and Canada began in September last year when Canadian Prime Minister Justin Trudeau alleged that Indian government agents might have been involved in the killing of Khalistani terrorist Hardeep Singh Nijjar, a claim outrightly rejected by New Delhi.

Later in October 2024, ties between both the countries nosedived when Canada termed the Indian High Commissioner a person of interest in its investigation into Nijjar’s murder. Issuing a strongly worded statement, India dismissed the fresh charge and recalled the envoy and some diplomats, while expelling six Canadian officials, including Canada’s acting High Commissioner.

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PM Modi congratulates Donald Trump on winning US President election

The Prime Minister urged Trump to work for the betterment of the people and to promote global peace, stability and prosperity.

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2 weeks ago

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November 6, 2024

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Prime Minister Narendra Modi on Wednesday congratulated Donald Trump on winning the 2024 US Presidential election and said he is looking forward to renewing their collaboration to further strengthen the India-US partnership.

The Prime Minister urged Trump to work for the betterment of the people and to promote global peace, stability and prosperity.

“Heartiest congratulations my friend @realDonaldTrump on your historic election victory. As you build on the successes of your previous term, I look forward to renewing our collaboration to further strengthen the India-US Comprehensive Global and Strategic Partnership. Together, let’s work for the betterment of our people and to promote global peace, stability and prosperity,” PM Modi posted on his X handle.

With the results being announced for the 2024 US election on November 6, Trump became the 47th President of the United States.

Former US President Trump appeared to be on track for a remarkable political comeback in the White House race. Projections suggested that he was poised to secure the necessary 270 electoral college votes, effectively blocking Democratic candidate Kamala Harris from winning the election.

The relationship between Trump and Modi has been characterised by robust diplomatic ties, strategic collaboration, and a noticeable personal rapport. Their friendship was prominently displayed during major events such as “Howdy, Modi” in Houston in 2019 and “Namaste Trump” in Ahmedabad in 2020, where they addressed large audiences and expressed their mutual respect.

On a strategic level, Trump and Modi found common ground in matters of defense and security, both adopting a strong stance against terrorism, which reinforced their alliance, particularly concerning threats from Pakistan.

As he approaches a notable victory in the US election, Republican Presidential candidate Trump expressed gratitude to his supporters today, calling it a magnificent victory for the American people. He also referenced the assassination attempt on July 13, stating, “God spared my life for a reason.”

The 78-year-old candidate is currently projected to secure 267 electoral college votes, just three shy of the decisive 270, while his opponent, incumbent Vice President Kamala Harris, holds 224 electoral votes.

Trump described the Republican campaign as the greatest political movement of all time, asserting, “We are going to help our country heal, secure our borders, and we made history for a reason tonight. This is an incredible political victory. I want to thank the American people. I will fight for you and your family with every breath I have.”

He noted that Democrats are now looking at a projected total of 315 electoral votes.

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