February 2001 Selected News Clips

FATF To Discuss Latest Report On Money Laundering

The Financial Action Task Force on (FATF) Money Laundering has announced that it will hold a meeting in Paris to discuss its latest report on current money laundering methods and the countries it considers as non-cooperative in the fight against money laundering. The meeting is scheduled to take place between 31 January and 2 February inclusive.

The FATF's latest report is expected to detail current trends and emerging threats from money laundering activities such as on-line banking and internet casinos, and the use of trusts and other non-corporate vehicles to launder money; lawyers, notaries, accountants and other professionals; the role of cash vs. other payment methods in money laundering schemes; and terrorist-related money laundering.

ANOTHER O.E.C.D. LOSS TO HAVENS

LONDON. Offshore haven nations meeting here last weekend won another round in their battle against phony OECD attacks on so-called "harmful tax competition." They insisted the OECD back down from threats to impose anti-haven financial sanctions by July 31, 2000. The OECD got no pledges for demands to exchange tax information on offshore investors and bank accounts. When talks ended, haven delegates agreed only to more talks. The OECD-havens task force meets again in Japan, Feb 15-16.

For the O.E.C.D. anti-haven propaganda line, click here.

CAYMANS EX-BANKER RATS AGAIN

PITTSBURGH, Pa. USA. When the FBI arrested ex-Cayman Island's offshore banker John M. Mathewson in 1996 for laundering money it meant some wealthy Americans would be exposed as tax cheats. The latest chapter unfolds at trial here in Pennsylvania.

BERMUDA BONANZA

HAMILTON. In spite of a new, broader tax information exchange treaty with the US and making foreign tax evasion a local crime, Bermuda IBC incorporations are booming.

SWISS DEFEND BANK SECRECY

BERN. Swiss officials meet EU counterparts next month in an attempt to protect banks' right to maintain secrecy about their customers.

U.S. FORFEITURE SERIES

The Kansas City Star's award winning investigative series on civil forfeiture in America.

U.S. TAX LOOPHOLES EXPLAINED

In an article loaded with thought provoking examples, the N.Y. Times warns that Bush's proposed repeal of gift and estate taxes could mean many more loopholes for avoiding income and capital gains taxes.

Here's the inside story on locating and financing an offshore international business corporation; big profits, low taxes.

More on this story here and here.

WASHINGTON. The IRS proposes new regulations that could scare away a lot of offshore investors from a USA that depends on foreign investment. What's going on here?

Find out!

Another reason to consider an offshore asset protection trust. A new study shows US jury awards in product liability cases have exploded from a median of $500,300 in 1993 to $1.8 million in 1999.

Tax collectors have good reason to dislike the Internet - online commerce offers OPPORTUNITY for tax avoidance.

Comparison of tax rates in offshore jurisdictions here.

Search 1,800 sources for current news articles of interest here.

Every sort of financial information you might want here.

Like an over-fed cavalry riding office chairs to our rescue, US politicians are promising to pass laws that will bring order, security and shield our secrets from prying eyes.But do we want Big Brother defending our privacy?

Sneakemail software also allows you to generate a disposable e-mail address, with messages forwarded to your real e-mail address. If spam starts you can drop the address and begin using a new Sneakemail address.

A federal scheme to assign all Americans a national health identity number was blocked by U.S. Rep. Ron Paul (R-Tex).

OECD Believes That Bush Administration Supports Its Anti-Offshore Initiative

Reporting on last weekend's London talks between the OECD and representatives of a group of offshore jurisdictions, Dan Mitchell, Chairman of the Centre for Freedom and Prosperity (CFP), said: "We went to London to offer support and advice to the low-tax nations. Our goal, as outlined in our strategy memo, was to make sure none of the low-tax countries acquiesced to the OECD's one-sided Memorandum of Understanding. We're happy to report that our mission was accomplished." The CFP is at www.freedomandprosperity.org.

Andrew Quinlan, the president of CFP, commended low-tax countries, stating: "Taxpayers around the world owe a debt of gratitude to Prime Minister Owen Arthur of Barbados and Sir Ronald Sanders, Antigua's High Commissioner in London. These gentlemen played an instrumental role in the negotiations and refused to be bullied by the OECD."

Messrs Mitchell and Quinlan (who were not official participants at the meeting) say that the OECD misrepresented the new Bush administration's position on the 'harmful tax competition' issue by saying that the new administration actively supports their initiative - including the threat to use financial protectionism against low-tax nations. Mr. Mitchell strongly condemned this tactic, noting that "Neither President Bush nor Treasury Secretary O'Neill have expressed any support for the OECD's campaign against low taxes and financial privacy. Indeed, we are very optimistic that the new administration will take the opposite position once they have a chance to review the issue."

OECD And Offshore Task Force Members Failed To Agree In London Talks

A statement released on last weekend's London OECD talks by Antigua and Barbuda High Commissioner Sir Ronald Sanders reveals that the OECD spent most of the time trying to claw back ground it was seen to have lost in Barbados on January 8th/9th.

CHANNEL ISLANDS TAX SELL OUT?

Fresh from a Paris OECD meeting, Channel Islands officials are making appeasement noises that could mean tax hikes for offshore clients.

GIBRALTAR CAVES

Instead of fighting for its rights, Gibraltar seems ready to cave in to OECD blacklist demands.

PACIFIC SOLIDARITY AGAINST O.E.C.D.

The Cook Islands Prime Minister criticized the OECD for blacklisting the small offshore financial centers of the Pacific, defending the tiny, impoverished island nation of NIUE and its fledgling offshore financial community.

Chase Manhattan and the Bank of N.Y. arbitrarily have banned all transactions with Niue, protesting but unable to defend itself.

WILD WEST SWITZERLAND?

DENVER, Colorado. This American state has approved a depository fund's application to operate what is said to be the US's first foreign capital trust fund for wealthy foreigners. But why would anyone voluntarily place assets under the potential control of the IRS, US courts and government?

U.S. COURT CURBS CASH FORFEITURE 

NEW YORK. Citing a 1998 US Supreme Court decision, US v. Bajakajian, a US district court rules forfeiture of all unreported currency derived from a legal source is an unconstitutional “excessive fine” under the 8th Amendment.

BAHAMAS OECD-FATF SELL OUT ANALYZED

A leading Bahamian says: "The sovereignty of the Bahamas has been compromised, while the goal for which it was compromised remains unattained, an may be unattainable." A penetrating analysis of the death of a tax haven.

O.E.C.D. VIOLATES INTERNATIONAL LAW

A former OECD attorney says the OECD attack on haven nations violates World Trade Organization rules and international law.

BLACKLISTED PANAMA PLANS DEFENSE

The Center for Freedom and Prosperity had a successful 5 day visit in Panama, helping to build defenses against OECD and FATF blacklisting.

CFP president Quinlan told a cheering audience in Panama that CFP would take on the cozy, Paris based OECD-FATF club. "To use a football term, we need to tackle them, knock them down, grind them into the ground and hurt them."

CORPORATE TAX RACE

A new study proves European nations with lower corporate tax rates profit most from new business and investment.

U.S. FORGED I.D. EPIDEMIC

Computer technology has created a flood of hardly detectable forged IDs and credit cards in America.

Total Web Anonymity For You, And The CIA

A software package which can keep the CIA's legions of snoops safe from detection as they trawl the Net in search of international evildoers ought to be good enough for your daily dogtrot through cyberspace. That's the pitch for SafeWeb's soon-to-be-released product Triangle Boy, which it is claimed will make it possible for one to surf the Web without leaving a trace.

SafeWeb already offers a free browsing gateway which uses 128-bit SSL, disables cookies and scripts and hides the surfer's IP, for pretty good on-line anonymity.

But according to an article in Monday's Wall Street Journal, the Agency is eager to involve itself in the more fully-featured Triangle Boy through its business development and capital investment arm In-Q-Tel.

Its motives, reportedly, are simply to carry out normal Internet surveillance tasks anonymously, but some suggest that the real reason is to figure out how to crack the program so it can spy on people using it.

But why is the OECD holding out? [To Dropping Sanctions]

A possible explanation is arrogance. The OECD feels it can push around smaller nations and don’t have to worry about the consequences. After all, what can the Cayman Islands, the Bahamas, Dominica, St. Vincent. St. Lucia, Grenada, Tonga or Barbados, either acting individually or together do to the United States, Japan, Italy, New Zealand, France or Sweden?

Answer: precious little.

Another reason for the hard-line and unreasonable attitude is that the OECD has found itself in the embarrassing position of having to defend itself against charges that its approach was riddled with hypocrisy; meaning that while it was telling the world that the small countries were sanctuaries which gave money launderers free rein to operate, the United States, Britain, Switzerland and France were being classified as the world’s leading centres for the cleaning of illegal money. Yet the rich countries were never blacklisted or threatened with penalties.

After smearing so many small countries, the OECD obviously feels it can’t lift the deadline and the threat of sanctions because it would give the blacklisted victims bragging rights. It would allow them to say that it was a case of David slaying Goliath.

But this is not about bragging rights or stories about the small defeating the large. Instead, it’s about the economic development of the blacklisted states.

St. Lucia’s Prime Minister, Dr. Kenny Anthony, and his counterpart in St. Kitts-Nevis, Dr. Desmond Douglas, have insisted all along that the OECD action wasn’t motivated by a desire to end money laundering as the then United States Treasury Secretary, Larry Summers, and Britain’s Chancellor of the Exchequer, Gordon Brown, had claimed.

Instead, it was simply to shut down the competition, which the industrialised nations were facing from the islands.

As they are probably saying among themselves, climbing down by backing off the sanctions and the deadline would be more than the United States, Britain, Japan, the Netherlands and the other industrialised country can take.

This is where the new Bush administration can show that it really means business by turning over a new policy leaf. The top economic advisor in the White House, Larry Lindsey, and the Secretary of the Treasury, Paul O’Neil, can put a fresh stamp on tax policy in the United States, by ending the Clinton administration’s effort to dictate tax policy to sovereign nations in the Caribbean and the Pacific.

This entire dispute is about raising taxes and about competition in financial services and it’s about time that the OECD admits it.

AUSTRALIAN PASSPORT SCANDAL

HONG KONG. A $20 million racket in which emigrants paid bribes for Australian passports is smashed with 29 arrests here.

HILLARY'S MISTAKE

Red faces in the Caribbean over that infamous non-letter.

VIRTUAL GOLD MONEY:

GoldMoney is an online payment system that combines the world's oldest money, gold, with Internet technology to provide a safe, easy and inexpensive way to transact business 24 hours a day.

THOSE GUILTY SUPER RICH AMERICANS

If you're a billionaire, you can afford the US estate taxes, but what about everybody else?

I.R.S. AUDITS DOWN, PROTESTS UP

Chances of a US taxpayer being audited by the IRS dropped to less than 1 in 200 last year. Reasons; smaller staff and new limits on IRS power.

400 US tax protesters meet to plan anti-IRS strategy.

An interactive guide to filing US income taxes, with calculators, step-by-step instructions and deduction checklists.

U.S.-U.K. OFFSHORE INVESTMENT REPORTING

We reported on Feb. 2 that a last minute Clinton-IRS proposal to require reporting of foreign citizens' US interest earnings to their home governments would scare away badly needed investors. Now it appears the UK Inland Revenue issued a similar reporting proposal on Feb. 16 covering foreign investors in Britain. Not a coincidence!

Democrat Rep. Major Robert Owens Argues For Caribbean Against OECD

In a surprising development, Democrat Representative Major Robert Owens (D - NY) has written a letter to Treasury Secretary Paul O'Neill complaining about US support for the OECD's campaign against offshore jurisdictions. Saying that "the OECD's attack on international tax competition undermines the ability of these nations to develop and/or maintain financial services industries", Major Owens asks Paul O'Neill to "re-examine American support for the OECD's anti-tax competition campaign".

On second thoughts, this Democrat alliance with a right-wing Republican cause publicly espoused by House Majority Leader Dick Armey and Deputy Senate Majority Leader Don Nickles is not so surprising: the 63-year old African-American Major Owens has represented New York's 11th District, an area housing considerable numbers of Caribbean immigrants, since 1982. Similar logic underpinned Senator Hilary Clinton's letter-that-wasn't on the same subject to Secretary O'Neill.

Despite the barrage of Congressional letters to the Treasury Secretary, and Paul O'Neill's appointment of a seasoned tax professional, Pam Olson, as Deputy Assistant Secretary for Tax Policy, the Treasury has issued no clear statement about its intentions towards the OECD.

Last weekend's G7 summit in Palermo was Paul O'Neill's first opportunity to discuss the issue with his international colleagues, and in his somewhat Delphic closing statement after the summit there are words to encourage both sides in the dispute:

"We also urged Russia to move quickly to take action against money laundering, as outlined by the Financial Action Task Force (FATF) in June 2000. Finally, we reviewed developments in our shared effort to fight financial abuse. We look forward to continued steps by identified jurisdictions to undertake needed reforms and urged the IMF and World Bank to help countries implement relevant anti-money laundering standards. At the same time, we reiterated our commitment to implement coordinated countermeasures in cases in of ongoing non-cooperation, based on recommendations by FATF. We also reaffirmed our support for efforts to address harmful tax practices. While I indicated to my colleagues that certain aspects of these efforts are under review by the new Administration, I support the priority placed on transparency and cooperation to facilitate effective tax information exchange. At the same time, it is critical to clarify that this project is not about dictating to any country what should be the appropriate level of tax rates.'

This rather moderate line is very different from the 'slash-and-burn' rhetoric employed by his gung-ho predecessor, Larry Summers. So there is hope . . . but the fight goes on.

E.U. ANTI-SWISS ATTACK

With a week to go before the Swiss vote in a referendum on whether to join the European Union, the EU Commission joined the French in efforts to annoy the Swiss into voting "No!"

This was too much even for the pro-EU Swiss president.

IN DEFENSE OF MARC RICH

ZUG, Switzerland. The Clinton-pardoned MARC RICH is a leading employer, local celebrity, respected expatriate and big taxpayer here.

And one observer tells why Marc Rich is his hero. (It's not Bill (Clinton).

U.S. SENATE STAFF REPORT LIVES ON

How obscure US Senate staff members grabbed world headlines charging that every major US bank allows billions in offshore laundered dirty money to flow onshore through correspondent accounts. (All part of the FATF PR campaign).

Later this week Senate hearings will be held on this trumped up report, the work of one leftist US Senator, Carl LEVIN (D-Mich), and his anti-offshore staff. (Who's in charge of the Senate, anyway?) Already 4 offshore banks have been shut down as a result, based on little more than accusations.

MARSHALL ISLANDS HIT O.E.C.D.

MAJURO, Marshall Islands. Officials here say "heal thy self" to the US government and OECD, claiming both have a double standard when dealing with tax havens.

EVILS OF U.S. ESTATE TAXES

Why small business owners are hurt by US estate taxes.

A leading African American newspaper founded by the son of freed slaves, is battling an IRS 55% estate tax claim on the paper's value. The family must come up with $4 million to keep the paper.

The Cato Institute explains why richies such as George SOROS, Warren BUFFETT and Paul NEWMAN love the estate tax; they've got theirs!

And the wealthiest Americans are paying relatively less taxes.

U.S. TAX PROTESTERS IMPRISONED

A California couple who helped their clients evade at least $13.8 million in US income taxes were sentenced to long prison terms last week, after they told a judge that the tax laws were invalid and did not apply to them.