subject: Asset Forefeiture and the New Tax Treaties by:Aurelia Masterson [print this page] Executive Summary The USA is stepping up its ability to bring asset forfeiture cases successfully against people they call criminals. Bear in mind they have more people in jail per capita than any other country and most of these offenses are lacking victims (victimless crimes where the government statue that was broken is the victim). They are now going to spend more energy on grabbing assets targeting criminal proceeds and assets.
The justice department is putting together teams of financial experts to work on multi-jurisdictional international forfeiture cases. These agencies have agreed to get in on the forfeiture bandwagon: U.S. Department of State Bureau of Diplomatic Security (these are the ones who bodyguard the ambassadors overseas and is a mystery why they were included), Department of Labor Office of the Inspector General, Federal Bureau of Investigation, Immigration and Customs Enforcement, Internal Revenue Service, U.S. Postal Inspection Service, U.S. Secret Service and the Department of Treasury Office of Terrorism and Financial Intelligence, Drug Enforcement Administration, Bureau of Alcohol, Tobacco, Firearms and Explosives, and the Department of Justice Criminal Division. Please bear in mind that these agencies get to expand their payroll and chase assets for forfeiture only to keep much of these assets to cover the costs of the investigation (think additional payroll and employee expenses). It is a never-ending cycle.
The investigative agencies grow bigger and bigger then they seize more and more assets and keep growing. Maybe this is Obamas idea of making productive jobs? If these investigators do not make cases against people they will eventually get laid off. So the police state grows and grows. When they run out of legitimate criminal assets to seize then what?
It Gets Better - Apparently the CIA is involved too. There is a story carried by Reuters, and USA Today stating that the CIA is advertising to hire Wall Street financial professionals. They want laid of bankers and other financial professionals. So they too are apparently getting into this.
Here is the link to read it yourself:
CIA seeks laid-off bankers in N.Y. recruitment drive
Tax Information Exchange Agreements Rest assured this drive for asset forfeiture is tied to the new tax treaties. Elsewhere we explain why no country is going to be able to resist the G-20 high tax nations inspired treaties.
Click here: Banking Warning
The backend for this is going to be asset confiscation. This can be a multi-pronged attack. It is expensive, time consuming and usually not cost effective for a country to go after the confiscation of assets in foreign banks. It requires foreign lawyers, legal bills, diplomatic channels, etc. They can only do so much of this. In the past these cases were usually when there was at least $20,000,000 available for confiscation. There is no solid rule for this. This figure looks like it will be lower in the future but how much lower no one knows. If there are a lot of bank accounts in a given country the USA or any other high tax country so interested might position a team there and hire a local law firm to represent them and chase after thousands of bank accounts.
They prepare the complaint, filings motions etc. only once and file the same things in all their cases basically. This is expected to happen in the large tax haven jurisdictions. Tax evasion is a crime and this leads to money laundering (well anything is defined as money laundering under USA and many other countrys laws). Money laundering is the criminality they need to seize the funds. Dual criminality works with money laundering since all countries have anti-money laundering laws. Some countries like Ecuador and Guatemala have very weak money laundering laws. They will of course seize all the funds. Go try and sue them to get the excess funds back. If one paid the taxes on the money originally would they still do this? Probably would leave one alone if they filed declarations every year and paid tax on the interest earned but do not be so sure. They may find some technicality to go after and do the same to all not banking in the USA.
It Gets Worse If you are in the USA physically and have offshore bank accounts you are in greater jeopardy than if you were living abroad. Of course a criminal case can be brought against you for whatever they think of basically (money laundering, tax evasion, filing false tax returns and conspiracy are popular choices but they are very creative when it comes to creating charges).
There are also asset forfeiture implications. Your home, car, computers, etc can all be contrived to be tools of the crime of operating a bank account offshore illegally. You did this banking from your home, used your car to go to FED EX to file account-opening statements, used your computer to check balances online etc. Will this hold up in a jury trial? Who knows? But it will give the prosecutors all the grounds they need to freeze your assets until the end of the trial. Expect your passport to be seized and not returned until after the trial. You will not be able to leave the country.
Will your bank accounts in the home country get frozen? Count on it. Will they go after anyone or just those with a lot of money who operated offshore business? Study Obama and his policies and take a guess. He goes after anyone he can. He is desperate. His country is on its last legs financially. The major nations of the world are trying to slowly convert their US Dollars into renewable assets before the USD plummets down. The more gradual they are at this the more assets they can buy with their dollars. Probably take at least another six months. If Obama keeps running the printing presses, the dumping of the USD will increase and speed up. As this process continues more and more the less demand there will be for US dollars.
In the next phase of the downfall the USA will need to convert dollars to foreign currencies to conduct commerce. The more US Dollars they print the worse the conversion rate will be when buying foreign currencies. This is something the USA never faced before and Obama is getting desperate. This guy is way over his head and is compensating by playing with an iron hand. The idea is not to load the prisons and courts up but to scare the people into settling by paying taxes and penalties and also to have people stop moving money out of the USA. Of course when the money is in the USA he can get it on the next go around much more easily and more cost effectively. Dont forget all the lawyers filing actions frivolously in a bad economy threatening the money as well.
Obama is not finished raising taxes; he has not really even begun to raise taxes. If he does load up the prisons, rest assured the prisons will be nothing more than a source of cheap labor to help the USA manufacture goods more economically. The federal government has an 87% conviction rate on the cases they file criminally. They usually charge one with enough offenses for them to die in jail if sentenced. Then they offer a deal, usually with a felony conviction and a short sentence in a minimum-security level prison usually for 18-60 months with no prior convictions).
If you talk to people who have been in prison lately ask them about the deplorable and often close to non-existent health care provided. Some city and county jails are feeding inmates bologna sandwiches on white bread. Some are buying the $1.00 fast food meals for their inmates as prison meals. Ever study what MSG does to the human body? All the fast food and junk food is loaded with MSG. Prison conditions are dropping fast, very fast. There is great variance depending on if it is a city, county, state or federal facility. Each jurisdiction is different. As the local governments and states get closer to bankruptcy the conditions will get worse and worse in prisons. Prison is no place to be in the USA as their economy keeps dropping.
Asset Forfeiture Going Global The FATF is the agency that has caused much of the privacy invasions in worldwide banking in the past. It is the Financial Action Task Force. They are a civilian organization that specifies how the banks around the world are to behave so they do not get blacklisted. A blacklisted bank could not be able to send or receive wires or checks internationally. They cover 82 nations. The new incoming President of FATF who comes from the Netherlands is making international asset forfeiture a priority. See how they work. You read it here first.
The countries we work in are non-cooperative when it comes to asset forfeiture. Tax Information Exchange Agreements are just that, an exchange of information. Forfeiture of assets is a whole other subject, more involved, greater standards of proof etc. but only in the right countries like the ones we use. There is no treaty for asset forfeiture being pushed at this time. Countries do not like this sort of thing since it exposes their citizens to foreign government and foreign court actions. Whatever country you are a citizen of you are going to be affected by this asset forfeiture craze if you bank in a country other than the one you are a citizen in. You must be careful in selecting such a country that is unlikely to cooperate with asset forfeiture except in the most extreme criminality. We use such countries.
Bank Account Closure before Treaty Enactment Date If the bank you are using has your name and identity documents you will shortly be at risk. How soon? A sure bet by the end of 2009 most likely sooner. These treaties are being signed every week now. Will the treaties be retroactive? As a rule no. Most if not all countries have constitutions that specifically prohibit any sort of a retroactive law. We cannot speak for every offshore haven but we seriously doubt we will see any retroactive laws or treaties going back in time before the enactment date of the treaty. Even the USA tries to avoid retroactive laws.
Now let us explain this in depth. If the treaty in the particular country goes into effect say on August 15, 2009 and you still have an account open at the bank then (August 15, 2009), the account history of that bank account going back to day one will get produced if there is a request for it. The USA gave the Swiss bank UBS a request for 52,000 names recently. Just one bank, mind you and just the first round of requests. If we project this out I would expect that the requests from the Swiss alone will eventually reach over 200,000 requests just from the USA. When you add in the other 81 nations in OECD the figure will be somewhat higher. These bank records will lead to requests for more bank records in their search for other accounts these people have sent money to. Now if you closed the bank account where you are the signatory before the treaty goes into effect, then you should escape having your bank records produced in an information request under the new Tax Information Exchange Agreements.
The Treaty will not be used to go after old closed bank accounts that were not in existence at the time of the enactment date of the new treaty calling for the free exchange of banking information. It is a free exchange, just requiring the requests to be individual. Remember the 52,000 requests. There is no reasonable or probably cause requirement. Whatever the requesting country wants to call probable cause will be enough. Do not expect to see banks fighting these requests for information. It is not up to the banks, it is up to their governments and these very same governments signed these treaties.
What to Do You always have options. You can do nothing if you have an offshore account and hope for the best. You can declare anything you should have declared previously and hope for the best. You can close your accounts in any offshore haven before the treaties are signed in that country that could affect you. You can rearrange your affairs using trust agreement banking so as to keep your banking records private and removed from tax treaty information requests. The key is of course to have a law firm in a jurisdiction sign on the bank accounts from a country that does not tax offshore income. This removes any chance of the account coming up in a tax information request as a result of the treaty. This will help you keep your privacy and security.
When information gets requested by governments frequently falls into the public domain. This could expose you to kidnapping, blackmail, extortion, home invasion, robbery etc. It seems under the treaty any government in a treaty with the country where the bank in question is located, could request bank records by saying the account came up somehow in an investigation. Maybe it sent or received a wire from an account tied to someone from his or her own country. Thus a government foreign to you could get all your banking records under this new treaty. They could do whatever they want with these records like enter them into the public domain, publish them, put them into public court records, public tax records, whatever.
There are a lot of corrupt governments in the world. Some governments are dictatorships, some practice discrimination based on religion, sex and race, some are extremely corrupt and criminals have corrupted some governments. Privacy is a major component of freedom.
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Disclaimer Nothing here is to be construed as legal or tax advice. A web page is not a living-breathing lawyer. This is for information purposes only. This is not to be construed as advice to break any laws of any jurisdiction including violations of omission such as not filing documents or filing documents with incorrect information or information omitted.
Aurelia Masterson is an associate of Panama Legal law firm (http://www.panamalaw.org). She has years of experience in the field and now shares her observations of current events, politics, and law with the Internet community. She can be contacted at: aurelia@panamalaw.org.
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