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Swiss Banks at the Losing End with Flight of Offshore Accounts

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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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Putin deliberately chose Christmas to attack, says Zelensky as Russia targets Ukrainian energy infrastructure

The Ukrainian Air Force stated that multiple missiles had been launched at the Kharkiv, Dnipro, and Poltava regions in the east.

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Russian President Vladimir Putin chose Christmas Day deliberately to launch a brutal assault on Ukraine’s energy infrastructure, resulting in widespread explosions throughout the country, said Ukrainian President Volodymyr Zelensky on Wednesday.

The attack involved a significant barrage of missiles and drones aimed at critical energy facilities, including a thermal power plant, prompting citizens to seek refuge in metro stations on Christmas morning.

“Today, Putin intentionally chose Christmas for this attack. What could be more inhumane?” Zelensky remarked, asserting that Russia is resolutely pursuing a strategy to cause blackouts across Ukraine.

He emphasised that each large-scale Russian strike necessitates careful preparation, stating, “It is never a spontaneous decision. It is a deliberate choice—not only of targets but also of timing.”

In his statement on X, Zelensky reported that more than 70 missiles, including ballistic types, and over 100 attack drones were launched at Ukraine’s power infrastructure.

Ukrainian Vice Prime Minister Oleksii Kuleba said that at least one person was killed in the Dnipro region due to the attacks. He noted that heating services were disrupted for 155 residential buildings in Ivano-Frankivsk and that around 500,000 residents, or 2,677 buildings, in the Kharkiv region, were left without heat.

Ukrainian Foreign Minister Andrii Sybiha mentioned that one Russian missile had passed through Moldovan and Romanian airspace. He added that Ukraine managed to intercept at least 50 missiles and a considerable number of drones during the attack.

Ukrainian Energy Minister Herman Halushchenko stated that Russia had significantly targeted the country’s energy infrastructure again in a Facebook post. The Ukrainian Air Force stated that multiple missiles had been launched at the Kharkiv, Dnipro, and Poltava regions in the east.

“The electricity distribution system operator is implementing necessary measures to limit consumption in order to reduce the negative impact on the power system,” he explained. “Once the security situation permits, energy workers will assess the damage.”

DTEK, Ukraine’s largest private energy company, reported that a Russian strike hit one of their thermal power plants on the morning of December 25, 2024, marking the 13th attack on Ukraine’s power grid this year. CEO Maxim Timchenko condemned the assault on X, stating, “Denying light and warmth to millions of peace-loving people celebrating Christmas is a depraved and evil act that must be answered.”

In response to the massive missile attack, the Ukrainian state energy operator, Ukrenergo, implemented preemptive power outages nationwide, resulting in electricity shortages in several districts of Kyiv.

In Kharkiv, at least seven strikes ignited fires throughout the city, as reported by regional head Oleh Syniehubov on Telegram. Authorities confirmed at least three injuries. Kharkiv Mayor Ihor Terekhov warned residents, “Kharkiv is under heavy missile fire. A series of explosions have occurred in the city, and ballistic missiles are still incoming. Please stay in safe locations.”

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Russia-bound Azerbaijan Airlines plane with 60 passengers crashes near Kazakhstan’s Aktau

Azerbaijan Airlines in a statement said the flight had made an emergency landing approximately three kilometres near Aktau.

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Russia-bound Azerbaijan Airlines plane with 60 passengers crashes near Kazakhstan’s Aktau

Many people are feared dead after a plane carrying 60 people crashed while making an emergency landing near Kazakhstan’s Aktau city on Wednesday. The authorities said that twelve people survived the crash.

Russian news agencies reported that Azerbaijan Airlines flight J2-8243 was en route from Baku to Grozny in Russia, but was rerouted due to fog in Grozny.

Furthermore, Kazakh media had initially reported that 110 people – 105 passengers and five crew members were on board. Later, the authorities revised the number to 72 – 67 passengers and five crew members.

A visual showed the moment the plane loses altitude and makes a rapid descent before it crashes and bursts into flames. As the plane crashes, plumes of smoke are seen rising on the spot. The plane crashed into an open field and burst into flames.

Kazakhstan’s emergency ministry stated that emergency services extinguished the fire at the crash site, adding that survivors were rushed to a nearby hospital for medical assistance.

Azerbaijan Airlines in a statement said the flight had made an emergency landing approximately three kilometres near Aktau. It added that the Embraer 190 aircraft operated by Azerbaijan Airlines, flight numbered J2-8243 on the Baku-Grozny route, made an emergency landing approximately three kilometres near the city of Aktau. Additional information regarding the incident will be provided to the public, it mentioned. Reports stated that the authorities said they had begun looking into different possible versions of what had happened, including a technical problem.

Meanwhile, in another recent deadly plane crash, 10 people died on Sunday after a small aircraft crashed in a Brazilian town that’s popular with tourists. The 10 deceased were passengers and crew on board. Over a dozen people on the ground were injured in the incident, Brazil’s Civil Defence Agency said.

The Civil Defence Agency said that the plane hit the chimney of a home and then the second floor of a building before crashing into a mobile phone shop in a largely residential neighbourhood of Gramado.  It was not immediately clear what caused the crash.

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YouTuber Zara Dar clarifies misconceptions, denies being Pakistani, and explains decision to quit PhD for OnlyFans

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Zara Dar clarifies her background and career change in a social media post

YouTuber Zara Dar, who sparked significant attention after revealing she was leaving her PhD studies to pursue a full-time career on OnlyFans, has addressed a series of misconceptions circulating about her. In a series of posts on social media platform X, Dar clarified the misinformation and took the opportunity to set the record straight on several points, particularly regarding her background and career shift.

The controversy began when Zara posted a video explaining her decision to quit her PhD in engineering and focus on adult content creation. The video quickly went viral, with some viewers misinterpreting or distorting the details of her story. One of the most prevalent rumors was that Zara Dar was of Pakistani origin.

In her clarification, Zara stated, “With all due respect, I am not Pakistani. I am American, born and raised, with a mixed background: American, Persian, Southern European, Middle Eastern, and Indian.” She explained that her name, “Darcy,” which she shortens to “Dar,” led to confusion, as it resembled that of a different Pakistani influencer, Zara Dar.

Zara also addressed the emergence of fake content under her name, including deepfake videos, and vehemently denied any associations with such material. She emphasized that, despite the false claims, she had not given any exclusive interviews and had only used social media to share her story.

Regarding her decision to leave academia, Zara shared that her shift to OnlyFans, while financially rewarding, also provided her with the freedom she felt was missing in her academic career. “It has given me the freedom to learn and share new content,” she stated, adding that while she had stepped away from her PhD, she would still continue to create educational content on her YouTube channel.

The announcement sent shockwaves across her fanbase, as many were surprised by her drastic career change. However, Zara explained that the decision was motivated not only by financial viability but also by her desire for personal autonomy outside the rigid structures of academia.

As Zara Dar continues to navigate the shift from academia to content creation, she remains committed to building her brand while tackling the misinformation surrounding her. Through her candid social media posts, she aims to keep her followers informed and provide clarity on her personal and professional choices.

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