The Age Of FATCA Is Upon Us: Credit Suisse Admits Guilt For Money Laundering

As Credit Suisse (CS) pled guilty for conspiring to aid US tax evasion and swallowed $2.6 billion in fines in federal court in Alexandria, Va., Eric Holder sensed the historic moment he oversaw – a new precedent for US extortion. UBS paid “only” $885 million when it misrepresented mortgage-backed bonds during the housing bubble. Surely, as CS swallows these new fines, banks the world over are shuddering. 

What perhaps makes the situation more interesting than the exorbitant fine is the fact that a financial institution was forced to plead guilty of criminal acts. It took months to determine the penalty, which, against the bank’s will, includes a monitor henceforth placed on the bank’s operations. Credit Suisse is the largest financial company to plead guilty to the non-crime of “money laundering” in 20 years.

The plea marks the end of an era. One of the shell entities implicated, according to the government, dated back a century – or just after the creation of the federal tax code and the income tax.  

Of the $2.6 billion fine, The Department of Justice will receive $1.8 billion and New York State’s top financial regulator, Benjamin Lawsky, will receive $715 million of the stolen loot. 

“This case shows that no financial institution, no matter its size or global reach, is above the law,” Eric Holder said. “A company’s profitability or market share can never and will never be used as a shield from prosecution or penalty.  And this action should put that misguided notion definitively to rest.”

With the Foreign Account Tax Compliance Act (FATCA) coming into full effect on January 1, 2016, and the US government actively prosecuting banks,  only savvy Americans will be able to find financial institutions abroad to service them. We saw this coming and have written about it extensively. Europe will not be a better place to be than the US, and not just because the US sees itself as the world’s police officer.

The European Union wants to steal the savings of Europe, and are currently paving the way to make this possible, just like the US. Only the most astute of money managers will survive The End Of The Monetary System As We Know It (TEOTMSAWKI). That means being sensitive and open-minded to the changing economic climate and being very aware of all of the rapid changes descending upon the world banking system.

Not The First Victim

Credit Suisse is not the first victim of the new US crusade to extort (tax) its citizens all over the planet. 

In 2009 the Swiss bank UBS settled with the US government over similar accusations for $780 million and to hand over the names of Americans with secret bank accounts.

“For US taxpayers it is going to be impossible to hide money in Switzerland, and it is just a matter of time that this is the case also for Germans and Britons,” Asher Rubinstein, a partner at Rubinstein & Rubinstein LLP in New York, told Reuters at the time. “Switzerland will no longer be a tax haven.”

Switzerland’s oldest bank, Wegelin & Co., pled guilty to similar charges in 2013 and thereafter went out of business. A smaller Swiss bank with no US presence, Bank Frey, is in the process of shutting down for similar reasons, which is a perfect example of how government regulation forces smaller enterprises out of business, hurting the overall economy, while “too-big-to-fail” institutions remain in business.

So Little Time To Fall In Line

We now see that there is no hiding from the long arm of the US Extortion Racket.

Banks, scared of being taken out by the US government, are rushing to demonstrate compliance. Recently, forty-seven countries signed up to automatically share bank data, including key financial centers Singapore and Switzerland.

Signatories includes all 34 members of the Organisation for Economic Co-operation and Development (OECD),  Liechtenstein, Luxembourg, and the British jurisdictions of Jersey and Guernsey, all of which have been considered safehavens in the past. The OECD also ensured the participation of 18 non-OECD nations, such as Singapore.

Being touted as a major step towards cracking down on global tax evasion, the agreements demonstrate how financial privacy is a thing of the past, and how nobody’s money is safe from over-reaching, tyrannical governments – unless they structure themselves properly with high level advice.

The 47 countries have committed themselves to passing new domestic laws allowing them to collect information on all bank accounts and automatically exchange it with other participating countries. 

Get Structured Now

The Credit Suisse settlement demonstrates the hopeless task banks ensuring they will not be persecuted by the US government for alleged wrongdoing, possibly causing them to lose their license and ability to operate. Banking will become a dramatically consolidated industry in the next 2-5 years and the banks left standing will act like law enforcement authorities in many ways.

There is still many questions left to be answered about the Credit Suisse case. One of which is what will happen to all the American clients who were banking there? 

“It is a mystery to me that the US government didn’t require as part of the agreement that the bank cough up some of the names of US clients with secret Swiss bank accounts,” said Carl Levin, a senator who headed the committee that had published the report on Credit Suisse. Over 22,000 accounts were held by Americans at CS. Most failed to provide tax authorities with required information. The settlement leaves “no accountability for taxes owed.” 

If I were one of these Americans, I might be holding my breath.

Most countries will soon have entered into info-sharing agreements in the coming years,  and so you need to get structured now if you don’t want to fall under their dragnet even if you are not fortunate enough to not be an American. If you are from any Western country you can assume bank privacy is dead… the only way to keep some privacy and security for your assets is to Fatca proof yourself through offshore companies and trusts. 

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Andrew Makarik

to@welovecostarica.com

Andrew Makarik is the main editor of WeLoveCostaRica, a fan of this sunny country. He is also a loving husband and a has a lovely daughter. By being a devoted family man and the biggest Costa Rica fan, he wants to make more people feel at home there. WeLoveCostaRica unites people and helps them find new home or a new travel destination. This website is a friendly community where everyone can find not only information, but also new friends and travel pals. Andrew is also passionate about IT and programming, so he himself maintains a friendly atmosphere in this cozy environment of WeLoveCostaRica.com.