The Swiss government shares info on 3.1 million foreign Swiss bank accounts with 75 partner states. Handelszeitung, a German-language Swiss weekly newspaper, reported Monday that the financial surveillance comprises some 7,500 financial institutions in the country, including banks, trusts and insurance companies. The Swiss Federal Tax Authority (FTA) provided data on 3.1 million foreign bank accounts covering financial activity from January 1 to December 31, 2018:
“The FTA currently registers some 7,500 reporting financial institutions (banks, trusts, insurance companies, etc.) that collected the data and transmitted it to the FTA. The FTA sent information on approximately 3.1 million financial accounts to the partner states and obtained information on approximately 2.4 million accounts.” (translated from German)
As well as personally identifying information (such as name and address), the Swiss FTA shares account balances and capital inflows with foreign tax authorities.
At the SXSW conference in 2016, President Barack Obama said of cryptocurrency:
“The question we now have to ask is if it is impossible to make an impenetrable device or system, where the encryption is so strong that there’s no key? There’s no door? At all? Because if government can’t get in, then everybody’s walking around with a Swiss Bank Account in their pocket.”
Well now we know that President Obama was wrong about that. Bitcoin is far more secure and private than a Swiss bank account. This week’s news prompted Lucas Betschart, president of the Bitcoin Association Switzerland, to tweet, “Use #Bitcoin for financial privacy.”
Bitcoin is an open-source, peer-to-peer banking network. It doesn’t require any personally identifying information to open an account, add money, or spend it to another account.
Anyone can open as many bitcoin accounts as they want for free. All bitcoin tracks is essentially the account number and the amount of BTC in each account. The only thing it wants to know about you is do you have the private key (the password) to spend the money in the account.
In recent years Switzerland adopted the international Automatic Exchange of Information (AEOI) regulatory standard. Implementation of AEOI in Switzerland came into effect on January 1, 2017. Today’s news out of the Central European country gave us a look at the scale of the financial surveillance underway. The network of partner governments will expand to around 90 countries next year, affecting an untold number of foreign Swiss bank accounts.
In 2018 the U.S., U.K., Canada, Australia and the Netherlands created the Joint Chiefs of Global Tax Enforcement, or J5. The joint tax authority aims to enforce international tax compliance with regard to cryptocurrencies. This year the J5 opened more than 50 investigations into international tax evasion.
But far more money slips through the cracks in completely legal “tax avoidance” schemes. These take advantage of the complicated tax structure, navigable by the resourceful economic elite, because it was written by and for them. And tax avoidance has nothing to do with cryptocurrency. In 2017, a report from the U.S. Public Interest Research Group on offshore shell companies found that:
“366 of the Fortune 500 companies (roughly 73%) have subsidiaries in offshore tax havens. These firms hold over $2.6 trillion in accumulated offshore profits. The largest culprits? Apple, Pfizer, Microsoft, and General Electric. It’s estimated that if all the Fortune 500 companies repatriated their profits, they would owe $752 billion in back taxes.”
This money isn’t hidden. It’s sheltered in plain sight. It’s sitting in offshore bank accounts tax free. Governments can engage in all the financial surveillance they want. International task forces can open investigations into tax evasion schemes. But the big money is sitting right where Wall Street wants it to be. And it’s the tax authorities themselves, as constituted by legislative statute, that keep it that way.
Last modified: January 10, 2020 2:49 PM UTC