Money-Rx Blog

Wall Street Journal reports that the U.S., Canada, Sweden, Australia, Italy and France yesterday confirmed they are investigating dozens of their citizens for allegedly hiding assets at a bank in Liechtenstein. The United Kingdom and Germany said last week that they are investigating hundreds of their citizens named in the LGT Bank client roster, which was provided by a former LGT employee.

German prosecutors say they have expanded their investigation to include a second, unidentified Liechtenstein-based bank. That investigation began as evidence found during searches in Germany revealed some clients were using more than one bank for services suitable for tax evasion...

It's a well known secret that Lichtenstein is a tax haven for fatcats with heavy offshore funds. But this is the first time that so many governments have decided to coordinate crackdowns on offenders with accounts in these banks. How did this come about? It seems that German secret services spied on banks in Lichtenstein for years and recruited inside informants...The BND foreign intelligence services managed to persuade leading figures in Lichtenstein's banking sector to provide information in exchange for large sums of money, the Berliner Zeitung daily said.

Reuters reports that U.S. Internal Revenue Service announced it was "initiating enforcement action" involving more than 100 U.S. taxpayers with Liechtenstein bank accounts. Levin [US Senator Carl Levin, D-MI] said there are about 50 tax havens worldwide that have effectively "declared war on honest taxpayers." He said, "In the United States alone, offshore tax evasion produces an estimated $100 billion in unpaid taxes each year.

And this is probably more than enough to trigger a flurry of legislation in the House, in all probability to be sponsored by Mr. Offshore Tax Hater - Rep. Rahm Emmanuel. Be interesting to find out out who those 100 U.S. nationals on that list are. I'm guessing there'll be at least a dozen names which could create a big political backlash if the names were released to the media. Not to mention ties to U.S. banks and hedge fund operators.

You also have to consider why this is not surprising. I mean, its childs play to set up an offshore base in havens like Lichtenstein. Did you know that by using a company like LLoyd's Funds International you can set up your own bank in Lichtenstein? For only $9500, you could set up your own bank, deposit funds into it and start handing out loans and credit cards to customers. Mind-boggling, but true. So if you want to cook up the figures or wipe out your tracks, what better way to do it than open your own bank? And this has been going on for decades. It's impossible to predict how many people are sitting with billions in their own personal offshore banks. All of this is going to come out sooner or later anyway. Bring out the popcorn and settle back.