Ambassador makes ghostly appearance – not her fault, though
GENEVA, SWITZERLAND / EDITOR’S NOTEPAD – Bloomberg carries an interview with US Ambassador to Switzerland Suzy Levine, which is mainly a rehash of old reliable headline “tax dodger hunt” stories with bits and pieces of interview added. Levine slips into the background, unfortunately, since she has some interesting things to say, and she is the voice of the US government here.
LeVine’s answers are good, but the article fails to address some pertinent issues, notably looking at how dramatically Switzerland is changing its landscape for money laundering (it is) and whether the US is doing an equally good job (maybe).
I’d like to see American journalists go beyond outdated clichés when they report on tax fraud, tax dodgers, money laundering and in particular the current state of Swiss-US relations in these areas.
Financial companies as police officers
Anyone who has opened a commercial bank account in Switzerland in the past two years and who has banking relations outside the country will be familiar with the sometimes draconian measures now taken by Swiss banks to ensure that they are respecting tighter money laundering and fraud laws. An entrepreneur who works with China had his company’s new bank account summarily closed two months later, in 2014, by a zealous UBS employee because, the banker said, China is considered too high risk. The company’s commercial register listing, necessary for opening the account, says it exports to China.
Post Finance, which this summer became a full bank, has stepped up the number of detailed forms for proof of true ownership it requires of any company with dealings in an at-risk country.
On the private side, the saga continues, of US citizens who live in Switzerland who have seen their bank accounts closed, often after years of living in Switzerland. Ditto for some Swiss abroad.
Perhaps the list of at-risk countries for Swiss banks should include the US, where some states continue to take a more lenient approach to registering companies than Switzerland does, and to hosting wealth from the Americas without asking too many questions.
US banks and other financial institutions may soon follow suit, however. Reuters reported 25 August that
“US fund managers and other investment advisers would have to take steps to combat money laundering and report suspicious transactions to authorities under a long-awaited U.S. Treasury rule proposed on Tuesday.”
A Swiss parliamentary committee earlier this month voted to support the ruling Federal Council in an initiative this autumn to strengthen automatic exchange of tax information laws – but it refused to support the council for another change, to 15.048, the money laundering law. This would require banks to seek proof of true ownership for clients who live abroad, even when Switzerland does not have an automatic exchange of information agreement with the country.
In essence, the committee draws the line at banks becoming tax police, noting that Switzerland would be the only country to demand this (they hadn’t yet seen the US Treasury proposal).
“Selon la majorité de la commission, le projet du Conseil fédéral fait assumer une tâche policière aux banques, ce qui n’est pas leur rôle. Le coût de mise en œuvre d’une telle mesure serait par ailleurs important pour le secteur bancaire et d’autant plus préjudiciable à sa compétitivité que la Suisse ferait cavalier seul en introduisant cette obligation. La minorité est pour sa part de l’avis que cette modification législative permet de poursuivre la stratégie pour une place financière accueillant uniquement de l’argent fiscalisé. Ne pas faire ce pas supplémentaire signifie prendre le risque de répéter les erreurs du passé.”
The reality is that this is already happening, as Swiss banks react to the fines they are paying the US government.
This isn’t a complaint about such laws – I’m a strong supporter of Switzerland tightening the rules and getting tougher on checks because as long as the country and its money keep their appeal, corrupt business people will try to park their assets here, and that’s both wrong and poor business practice.
I’d like to see, however, an end to the righteousnous and hyposcrisy that continue to mark US reporting on the subject, often based on a lack of information or unwillingness to question the federal government’s pronouncements.
And then there is Fifa
LeVine is cited on Fifa: “LeVine defended the importance of the Justice Department’s pursuit of corruption within Fifa, days after the Swiss lawyer appointed to lead the soccer body’s reform committee publicly questioned whether the US should be doing so.” There is certainly strong feeling in Switzerland that Fifa needed to be investigated. The push by the US seems to have been necessary and was welcomed by much of the public. But the questions remain unanswered about the ongoing role of the US, the long arm of US law, particularly in extraditing people who are accussed of corruption but who are not US citizens.
Ask the same legal question but change the countries: let’s suppose that Zimbabwe manages to get the American dentist who famously shot a lion this summer extradited to stand trial – after all, the two countries have had an extradition treaty since 1998 (this is a fantasy: the US, like most countries, almost never extradites its own citizens). And buoyed by this success Zimbabwe issues an international warrant for the arrest of two US citizens who are Fifa officials, on charges of corruption. Soccer is a popular sport in Africa and Zimbabwe is no exception. The pair are arrested at a meeting in Egypt, which also has a US extradition treaty, and Egypt agrees to ship them to Zimbabwe to face trial, a process that could take years because of court backlogs.
Ok, it’s fiction, and the dentist’s fate is still up in the air, but the questions about the US playing fair need to be asked, and that’s something journalists for large American publications need to do more often.
For more on Cecil the lion and the dentist, read what Zimbabwe’s First Lady Grace Mugabe had to say this week.