Asset Protection BLOG - Mark Nestmann

Big Brother Visits the Tattoo Parlor

Thinking about getting a tattoo?  If you are, better not pay cash!  If you do, the FBI has informed tattoo parlors in Los Angeles, and perhaps other cities, that you might be a terrorist. 

Yes, I'm serious.  You can read the FBI notice yourself by clicking here.  

Of course, paying cash at the tattoo parlor isn't the only thing that's suspicious.  The FBI helpfully warns that people who emit strange odors or who have missing hands or fingers might be suspicious.  So make sure to take a shower, and to wear your prosthesis, when you get your tattoo.

Another indicator of terrorism, apparently, are comments directed against the U.S. government.  So be sure to say nice things about Obama.  And for that matter, about George W. Bush as well.  That covers both political parties.  Also, be sure not to say anything about the blasting caps you recently procured, or about your plans to assassinate local politicians. 

It's also suspicious if a group of people all want the same tattoo.  God forbid you're a member of a fraternity or sorority in which pledges are encouraged to get "inked." 

So what's a tattoo parlor that wants to help the FBI fight terrorism to do?  If you show up with cash, smelling bad, missing limbs, or making vague threats against Obamacare, the tattoo parlor is encouraged to contact the City of Los Angeles Joint Regional Intelligence Center.  Also, it should
require valid identification from all customers and keep records of all purchases.  But my very favorite recommendations are straight out of the Stasi domestic spy manual:

• Talk to customers, ask questions, and listen to and observe their responses
• Watch for people and actions that are out of place
• Make note of suspicious statements, people, and vehicles.

I don't have any tattoos, and I've never spent any time in a tattoo parlor.  However, until it closed a few years ago, one of my favorite hangouts in Scottsdale was a little coffee shop next door to a tattoo parlor.  And every time I visited the coffee shop, I would briefly see some of the tattoo parlor's patrons, and even overhear snatches of conversation.

If anyone would be out of place visiting that parlor, it would be me.  After all, I don't have any tattoos, at least not yet.  Nor do I have piercings in my ears, nose, lips, tongue, or anywhere else, for that matter.  I don't have blue spiky hair, or any knowledge of "World of Warcraft." And, to the best of my knowledge, none of my clothes display Satanic symbols.

So I can just imagine what might transpire if I actually went in the door to inquire about a tattoo.  The patriotic proprietor would excuse himself, go to a back room, and pick up the telephone.

"There's a middle-aged guy carrying a briefcase who just came in to inquire about a tattoo.  He's 30 years older than most of our customers and he's babbling about something called 'limited government," whatever that is. He wants to pay cash, won't give us his Social Security number, and I don't think he took a shower today.  Can you send someone over to pick him up?"

Copyright © by Mark Nestmann

TSA Airport Security Personnel no Longer to Act as "Cash Police"

It's not often that I can report news that's actually favorable to financial privacy.  Today is a happy exception.  I'm pleased to report that the Transportation Security Administration has modified its rules regarding detaining and questioning airline passengers carrying large quantities of cash.

In March 2009, TSA officials in St. Louis detained Steven Bierfeldt after discovering US$4,700 in cash in his carry-on bag.  Bierfeldt, the Director of Development for the Campaign for Liberty (an offshoot of Congressman Ron Paul's presidential campaign), was about to board a domestic flight. 

TSA agents placed Bierfeldt in a small room and began to interrogate him.  Bierfeldt refused to answer the questions.  Instead, he repeatedly asked the agents to explain the scope of their authority to detain and interrogate him.  Not only did the agents refuse to do so, they also told Bierfeldt he was being arrested. 

Fortunately, Bierfeldt had the presence of mind to make an audio recording of the incident on his cellular telephone.  The recording reveals a series of threatening and expletive-laden questions relating to why Bierfeldt was carrying cash.  When he was finally released, Bierfeldt turned the recording over to the American Civil Liberties Union.  Shortly thereafter, the ACLU sued the Department of Homeland Security, which has authority over the TSA, on his behalf.   

TSA officials are authorized to conduct safety-related searches for weapons and explosives. They have no right to interrogate passengers about matters unrelated to passenger safety.  Carrying cash aboard a flight obviously poses no safety risk.  And it's perfectly legal to carry as much cash aboard an airplane as you want.  Unless you're transporting more than US$10,000 in cash across a U.S. border, no reporting is required. 

I anticipated a long and drawn-out lawsuit in this case.   Indeed, I thought the TSA might press for new rules providing explicit authority for agents to confiscate "suspicious" quantities of cash.  However, I was happily surprised to learn last week that the TSA has instead issued new rules that prohibit agents from interrogating passengers on matters unrelated to aircraft safety.  Transporting US$4,700 in your carry-on bag, or US$470,000, for that matter, doesn't qualify. 

However, I still don't recommend that you transport a large quantity of cash on an airplane departing and/or or arriving in a U.S. airport.  The reason is that at some airports, TSA screening may be supplemented by a separate inspection for narcotics.  Most U.S. and foreign currency contains minute traces of narcotics residues.  A drug-sniffing dog is likely to "alert" to any large quantity of cash you're carrying.  That alert may provide probable cause for police to then seize the cash under federal or state civil forfeiture laws.  You may or may not get the cash back, and you'll face an expensive and protracted court battle to prove it came from a legitimate source.

Copyright © 2009 by Mark Nestmann

Offshore Centers Teeter on Brink of Financial Collapse

The mainstream media often paints a picture of offshore centers as outposts of unimaginable wealth, with their economies fueled by the proceeds of money laundering, tax fraud, and other illegal activities.

The truth, as is often the case, is very different from the news reports.  Some offshore centers—think Switzerland, Singapore, and Hong Kong—are in relatively good shape financially.  Their governments can pay bills coming due.  Business continues in a relatively "normal" fashion, or as normal as is possible in the grip of the most serious financial meltdown in nearly a century. 

Numerous offshore centers now face a perfect financial storm.  Their governments spent heavily to beef up infrastructure.  But, they also borrowed heavily to finance these expenditures.   So long as the global economy continued to grow, it was reasonable to believe they could pay the money back.  But in the midst of a global financial collapse, they can no longer afford to do so.

In addition, just as the global economy tanked, the Organization for Economic Cooperation and Development launched a renewed campaign against "harmful tax competition."  The targets, as always, were offshore financial centers.  So at the same time that offshore centers saw revenues shrinking from due to the economic downturn, the OECD forced them to eliminate bank secrecy with respect to inquiries from tax authorities in high-tax countries.  

The British overseas territory of the Cayman Islands, the world's fifth largest banking center, is a case in point.  Facing a US$82 million budget deficit, the Caymans last month appealed to its colonial masters in London for permission to borrow US$310 million from banks.  And despite the fact that banks had already approved the loans, the British Foreign Office said "no." 

The Caymans weren't asking for direct government aid from the British government.  But, because the size of the loans would result in a deficit in the government's operating budget, the Caymans had to ask for London's permission to borrow the money. 

In response to the request, Foreign Office minister Chris Bryant suggested that Cayman introduce—gasp—new taxes.  "I fear you will have no choice but to consider new taxes – perhaps payroll and property taxes," Bryant wrote to McKeeva Bush, head of the Cayman government. 

For the moment, the Caymans have rejected the idea of direct taxes.  Instead, the government will raise customs duties, licensing fees, and other indirect taxes.  It also plans to sharply cut spending.

However, the global financial crisis isn't going away.  Neither is the OECD.  That means the Caymans and other offshore centers will come under increasing pressure to balance revenues and expenditures.  For now, direct taxes on income or property are off the table.  But there's zero assurance that the governments of offshore centers may impose them in the future. 

Copyright © 2009 by Mark Nestmann

If You Have any Connection to an Offshore Trust, You Need This Book

Type the phrase "offshore trust" into a search engine, and you'll get a lot of hits.  When I did so a few minutes ago, I found 109,000 matches on Google. 

When I pulled up three of the first 20 matches, I found a lot about the benefits of an offshore trust.  But I found very little about the rather onerous reporting requirements that apply to offshore trusts a U.S. person creates, or with U.S. beneficiaries.  Or, for that matter, about the draconian penalties that apply for non-compliance with these requirements. 

Don't get me wrong.  Offshore trusts can be immensely useful instruments for asset protection, estate planning, and other uses.  But when an offshore trust has any connection whatsoever to the United States, it's important to understand the legal, tax, and regulatory implications.

That's why I was delighted to receive an e-mail message last week from my old friend and colleague, CPA Vernon Jacobs.  Vern and international tax attorney Richard Duke have written the first edition of a new tax guide for the U.S. grantors and beneficiaries of an offshore trust.  It's called The U.S. Tax Guide for Foreign Trusts.  And it's the only practical guide to the compliance rules for the U.S. grantors and beneficiaries of a foreign trust I've found. 

If you're a U.S. citizen or U.S. resident alien who has (or wants to have) an offshore trust, you need this book.  If you're the U.S. beneficiary of an offshore trust, you also need this book.  Indeed, if you have any connection whatsoever to an offshore trust with a U.S. grantor or beneficiaries, you need this book.  That includes trustees for offshore trusts, professional advisors who facilitate the formation of offshore trusts, asset manager for offshore trusts, and accountants who keeps the books for offshore trusts.

For years, I've been trying to get Vern to increase the price he charges for his excellent work.  Unfortunately for Vern—but fortunately for you—I haven't convinced him to do so.  You can purchase a digital copy of The U.S. Tax Guide for Foreign Trusts for only US$65, or a printed copy for only US$87. 

To learn more about this book, see http://www.offshorepress.com/faptax.htm.  Again, if you have any involvement whatsoever in an offshore trust with a U.S. connection, you need a copy of it in your library.

Is Expatriation for You?

The United States is one of only two countries that imposes tax on a citizen's worldwide income, no matter where that citizen lives.  (The other country is, of all places, Eritrea.)

For citizens of most high-tax countries, it's easy to legally avoid the obligation to pay tax on your worldwide income.  You simply relocate to a lower-tax jurisdiction, or one that only taxes local income.  After an extended period—normally 1-2 years—you become "non-resident" for tax purposes.  You no longer have the obligation to pay tax on your worldwide income to the country that issued your passport.  You may, however, still be subject to gift and estate taxes. 

But not the USA.  To permanently disconnect from the obligation to pay U.S. income tax, U.S. citizens must not only leave the United States.  They must also take the radical step of giving up U.S. citizenship and passport.  This process (from a U.S. standpoint) is called expatriation.  Before giving up U.S. citizenship, they must acquire citizenship and a passport from another country. 

If you're wealthy, expatriating could result in big tax savings.  The total combined state-federal income tax burden for most high earners is close to 50%.  And President Obama promises to hike that burden to pay for his spending plans.  If you anticipate earning US$2 million over the next five years, expatriation could save you a cool US$1 million in income tax during that period.  Not to mention millions more in the years ahead, and millions more again in estate tax savings. 

Expatriation also eliminates the increasing difficulties that U.S. citizens face when they invest or do business overseas.  Most non-U.S. banks and brokers now prohibit anyone with any connection to the United States from opening an account.  This is a result of the U.S. government's intensifying crackdown against anything "offshore."  Foreign entrepreneurs may avoid joint ventures with U.S. citizens, for fear of U.S. tax or regulatory entanglements.  If you give up your U.S. citizenship and passport, you eliminate these problems.

Only a few hundred people, many of whom are not wealthy, give up their U.S. citizenship annually.  But despite this reality, expatriates remain vulnerable to political bombast.  The image of wealthy former U.S. citizens living tax-free in tropical paradises is an irresistible populist target.  Former Congressman Sam Gibbons, a Florida Democrat, once spoke of  "the despicable act of renouncing allegiance to the United States."  Former Congressman Martin Frost, a Texas Democrat, supported tax penalties on expatriates on the basis of "basic patriotism and basic fairness."  The result has been a series of increasingly stringent laws penalizing expatriate Americans. 

Until 2008, it was relatively easy to circumvent these anti-expatriation rules.  But last June, Congress replaced the existing law in its entirety with an "exit tax."  The exit tax establishes a legal fiction that you sell all your worldwide property the day before expatriation.  If you're a "covered expatriate" (which I'll define momentarily), you must then pay tax on this fictional gain.  Unrealized gains in non-grantor trusts and some retirement and pension plans are exempt from the exit tax.  Instead, payouts that would taxable to a U.S. person are subject to a 30% withholding tax. 

Only certain dual citizens and minors with few ties to the United States are exempted from these requirements.  Long-term green-card holders must also pay the exit tax, if they've lived in the United States for at least eight of the 15 years preceding expatriation. 

How are you supposed to pay the tax without selling your assets?  That's your problem!  However, the law permits deferral by posting acceptable security with the U.S. Treasury and paying an interest charge on the amount deferred.

Fortunately, the first US$600,000 of unrealized gain isn't subject to the exit tax.  This amount is adjusted annually for inflation, and for 2009 the exemption is US$626,000.  The exemption doubles for a married couple, both of whom expatriate. In addition, even if your unrealized gains exceed US$626,000, the exit tax only applies to you if you're a "covered expatriate."  This means you:

• Have a global net worth exceeding US$2 million (US$4 million for a married couple); and/or
• An average annual net income tax liability for the five preceding years ending before the date of expatriation the loss of U.S. citizenship or residence exceeding US$124,000 (adjusted for inflation, US$136,000); and/or
• Fail to certify under penalties of perjury that they have complied with all U.S. federal tax obligations for the preceding five years or fail to submit evidence of compliance as required by regulation.

There's also a very sneaky substitute estate tax provision in the exit tax law.  Let's say you expatriate, and then 20 years in the future make a gift to family members remaining in the United States.  If you're a "covered expatriate" at the time you make the gift, U.S. recipients must pay a tax when they receive it.  And not at ordinary income tax rates, but on the highest estate tax rate existing at the time!  However, a covered expatriate can make annual gifts up to US$13,000 to any U.S. person without a tax consequence to the recipient.  The US$13,000 exclusion is adjusted annually for inflation. 

The best that can be said about the exit tax is that it offers a relatively clean break with the U.S. tax system as of the date of expatriation.  Unlike prior law, there is no longer a 10-year period after expatriation during which punitive tax and immigration rules apply. 

Is expatriation for you?  The decision to give up U.S. citizenship is a serious one.  It also requires substantial advance planning, including the acquisition of a second passport, if you don't already have one.  It's a step you should take only after consulting with your family and professional advisors.  But it's the only way that U.S. citizens and long-term residents can eliminate U.S. tax liability on their non-U.S. income, wherever they live.  And it's a tax avoidance option that Congress may eventually eliminate altogether.

(The Nestmann Group can provide consultation on every aspect of expatriation, from acquisition of a second passport to the actual loss of U.S. nationality.  For more information, contact Mark Nestmann at info@nestmann.com.)

Copyright © 2009 by Mark Nestmann

Global Tax Wackos at it Again

You have to admit they never give up.  Even if the ideas they're pushing have been thoroughly discredited for decades.

I'm speaking of an idea that even the economist who originally proposed the idea now rejects: a global tax on foreign exchange transactions.

Last week, The New York Times published an article by former French foreign minister Dr. Philippe Douste-Blazy.  It proposes a "tiny levy" of 0.005% on transactions involving the world’s most traded currencies: the dollar, euro, pound sterling and yen.  This tax, Douste-Blazy says, will raise US$33 billion annually to fight poverty and disease in the world's poorest countries.

Imposing tax on forex transactions isn't a new idea.  Back in 1978, economics professor (and Nobel Laureate) Dr. James Tobin suggested that such a tax could potentially help curb volatility in emerging market economies.  This type of tax has come to be called a "Tobin Tax"—over Dr. Tobin's objections.

Dr. Tobin proposed the tax to inhibit speculation in third-world countries, allowing them to pursue more independent economic policies.  But the United Nations hijacked his idea, primarily because the tax offered the agency a funding source independent of individual donor governments.

So beginning in the mid-1990s, the UN made the Tobin Tax the centerpiece of its funding proposals to redistribute wealth and income.  Only it would be imposed at 0.05%, a rate 10 times higher than Douste-Blazy now proposes.   According to a 2001 report from the UN's "High-Level Panel on Financing for Development," such a tax would generate up US$400 billion annually. 

(And just to prove there's nothing new in current efforts by global tax authorities to end bank secrecy in tax matters…there's not.  The same 2001 report proposed that all governments collect private financial data on individual taxpayers and share it with other governments.  It also suggested that governments should have the permanent right to tax individuals who exercise their right to emigrate from their homeland. An "International Tax Organization" would oversee these efforts and "take a lead role in restraining tax competition.") 

It remains to be seen if the countries issuing the currencies Douste-Blazy wants to tax will go along with this idea.  If they do, it will be one more blow against freedom of movement, tax competition, and financial privacy.  But a Tobin Tax, if imposed, will not have the effect its proponents claim.

To understand why, consider how forex markets operate.  Investors risk trillions of dollars in these markets daily, but someone has to take the other side of every trade.  The broker-dealers that do so immediate try to off-load the risks they've assumed to other brokers.  If speculators are short U.S. dollars, brokers may have an oversupply of yen.  The brokers try to sell the excess yen to other dealers.  This practice encourages hedging, increases liquidity, and helps reduce currency volatility. 

Now it's time for a little Economics 101, directed to our former French foreign minister.  Anytime the cost of something increases, people tend to buy less of it.  So if governments impose a tax on foreign exchange, even a tiny one, transaction costs will increase.  That will discourage trading, decrease liquidity, and increase volatility.  It will also lead to a much smaller revenues than Douste-Blazy —much less the United Nations—suggests.

So what's the real purpose of his suggestion?  The only reason I can come up with to resurrect this thoroughly discredited idea is because it presents an opportunity to impose a truly global tax.  And to construct a foundation over which to enforce other global tax initiatives.

Are you ready for a global tax agency that can levy tax payments anywhere in the world?  For global restrictions on emigration?  Or for globally enforced capital controls? 

If you are, then you should love the idea of the Tobin Tax.  But if not, you at least have some intellectual ammunition to take on your friends, business associates, and family members when they suggest that it might be a good idea.  It's not. 

Copyright © 2009 by Mark Nestmann

IRS Extends Deadline for Reporting Unacknowledged Offshore Accounts

It couldn't have happened at a better time.  The IRS today announced an extension of time for "voluntary disclosures" by taxpayers with unreported offshore accounts.  It extended the previous Sept. 23 deadline three weeks, until Oct. 15, 2009.   (I've written previously about this program here.)

Given the overwhelming response to this initiative, the extension couldn't come at a better time.  The IRS has already processed more than 3,000 applications under the program, with many coming in just the last few days, compared to 88 for all of 2008. 

If you're a U.S. taxpayer with unreported offshore income and/or accounts, I highly recommend you consider enrolling in the program.  But speak to a tax advisor first, because there are numerous issues to consider before putting yourself at the mercy of the IRS. 

Copyright © 2009 by Mark Nestmann

Inventor Awarded $388 Million for Taxpayer Abuse

Ordinarily, I despise lawsuits.  But, I just learned of one jury award I can endorse unequivocally.

On August 14, a jury in Nevada awarded inventor Gilbert Hyatt a whopping US$388 million in his lawsuit against California's Franchise Tax Board.  (The FTB is California's version of the IRS.)

The jury award consists of $138 million in liability and compensatory damages and an additional $250 million in punitive damages.  But Hyatt shouldn't start counting his money anytime soon.  The FTB is certain to appeal the award.  Even if it doesn't, the presiding judge may reduce the judgment.  And then, Hyatt has to figure out how to collect against a state that is essentially bankrupt.

What exactly did the FTB do to Hyatt?  The jury found that it committed fraud and other abuses against him during an audit in the early 1990s.  While living in California, Hyatt received a lucrative microprocessor patent for which he eventually received a US$40 million licensing fee.  Prior to receiving the fee, Hyatt moved to Nevada.  

Naturally, the FTB insisted that Hyatt was still a California resident.  It demanded millions of dollars in taxes, interest and penalties.  Then, the harassment began.  Among other allegations the jury found credible, Hyatt claimed the FTB went through his garbage, spread false rumors about him, and repeatedly disclosed his social security number.   

Although the FTB would surely disagree, this is a very encouraging case.  If Nevada is willing to hear lawsuits against out-of-state tax collectors for allegations of outrageous conduct against its residents, other states may follow suit.

What about the IRS?  You can sue the IRS for damages resulting from an IRS employee's reckless or intentional disregard of tax collection procedures.  But it's difficult and expensive to litigate against it.  In one malicious prosecution claim, the IRS paid out US$1.34 million to a Texas couple.  That's the largest payout I've heard of, and every dollar went to pay their legal bills.  

And Gilbert Hyatt?  Unless an appeals court stays (suspends) the judgment, he can try to collect his judgment.  We can only hope…

Copyright © 2009 by Mark Nestmann

U.S. Uses Roving Border Checkpoints to Escalate the War on Cash

I just returned to Phoenix from a week's vacation on the beach in San Diego.  My all-too-brief holiday was very pleasant, with the exception of the time spent waiting in line at checkpoints manned by agents of the U.S. Border Patrol—five in all on Interstate 8 between Gila Bend, Arizona and San Diego.

I'm white as a ghost, and over 50, so I don't fit the profile of an illegal immigrant, terrorist, or drug smuggler.  That allowed me to proceed unmolested after brief interrogations by hulking Border Patrol agents.  But what shocked me was that at one checkpoint, agents brought out dogs to inspect each vehicle passing through.  Presumably, if the dog had alerted to the presence of who-knows-what, I would have been subjected to a thorough search of my vehicle.

For decades, the Border Patrol has operated dozens of these interior traffic checkpoints.  And in 1976, the Supreme Court ruled that warrantless stops and searches near the border don't violate the U.S. Constitution.  But over the last decade the number of these checkpoints as proliferated. 

Today, there are about 30 permanent checkpoints and numerous additional temporary or "roving" checkpoints along the Mexican border, and a few along the Canadian border.  Apologists for the Border Patrol say warrantless searches of vehicles at these checkpoints is necessary to fight the War on Terrorism, the War on Illegal Immigration, and the War on (Some) Drugs. 

However, organized criminal interests learned long ago to post lookouts near the permanent checkpoints.  Whenever they're unmanned, they alert their colleagues that the coast is clear.  In recent years, it appears from press reports that most arrests at these permanent checkpoints are tourists transporting small quantities of marijuana for recreational use.

Which brings us to the roving checkpoints, and the friendly dogs that inhabit them.  These are more difficult for the professional smugglers to avoid, but hardly impossible. They simply send vehicles ahead of a major shipment of narcotics or illegal immigrants and then choose whatever route is unmanned at the time.  Again, press reports indicate that most arrests appear to be of recreational drug users.

I personally think it's ridiculous for the government to prohibit anyone from indulging in their favorite libation, but there's also a much larger issue.  What else are the dogs sniffing for?

It's my guess that it's cash, not drugs, immigrants, or anything else is what the Border Patrol dogs are after.  Since more than 95% of circulating U.S. currency is contaminated with drug residues, it's a lead-pipe cinch for a dog to "alert" on any large quantity of cash you might be transporting in a border area.  And that's backed up by numerous reports of cash seizures at these checkpoints, inevitably accompanied by a press release from the Border Patrol.

U.S. courts have repeatedly ruled that possession of a large sum of currency is "strong evidence" of a connection to trafficking in illegal drugs.  Merely possessing currency provides the government with sufficient evidence to seize it, unless you can provide clear and credible evidence that it's NOT connected to illegal drugs.  And even then, Border Patrol Agents—or any other law enforcement authority—can still seize it, and force you to sue in court to try to get it back.

The creeping militarization of our border areas gives me, well, the creeps.  It's not effective at stopping illegal immigration or illegal drug trafficking.  What it is effective at is establishing a de facto prohibition against moving any meaningful quantity of cash near a U.S. border.

Copyright © 2009 by Mark Nestmann

Austria Capitulates on Banking Secrecy

For a little while, it looked as if little Austria would be the mouse that roared.

As I previously reported, on July 9, Austria's Parliament failed to approve a resolution relaxing the country's strict banking secrecy laws as the OECD demands.

But yesterday, September 1, the parliament approved a law to ease banking secrecy in the last EU country on the Organization for Economic Co-operation and Development's (OECD) "gray list" of tax havens.  It was a challenge to assemble a two-thirds majority necessary to weaken the law, but Austria's leaders persuaded legislators of the importance for Austria to get off the OECD's odious list.

Under current law, Austrian authorities will only release account data to foreign authorities if a criminal proceeding is underway in that country against a named individual.  In addition, authorities must convince an Austrian court to order the data to be released. 

This simple and common sense system will be replaced with a network of new tax treaties and tax information exchange agreements.  The agreements will call for Austria to release information on financial accounts held by a foreign investor at the request of foreign tax authorities.  The request may be in regard to any tax inquiry—civil, criminal, or administrative.  However—and this is very important—the inquiry must be about a specific investor.  Austria is under no obligation to comply with wholesale "fishing expeditions," such as the infamous "John Doe subpoenas" invoked by the U.S. Internal Revenue Service against banking giant UBS.

Even so, this is a significant setback for banking secrecy.  Nearly a decade ago, the OECD's bastard stepchild, the Financial Action Task Force (FATF), issued a "money-laundering blacklist." The countries on this list, in the FATF's opinion, weren't doing enough to prevent their financial system from being used by money launderers.  Among other requirements, the FATF demanded that these countries (Austria among them) eliminate all opportunities for anonymity in the banking system. 

However, the new anti-laundering rules mainly inconvenience legitimate customers.  Money launderers long ago began using less traceable methods to move money.  It's almost certain the OECD's new rules for greater transparency in tax investigations will have the same effect. 

Copyright © 2009 by Mark Nestmann