Even through pressure from foreign countries has forced Switzerland to change its banking-secrecy laws, Swiss private banking is in good shape. Customers value Switzerland for its security, political stability and stable currency, and have continued to pour in new money over the past two years. Tax evasion isn't as important as sometimes supposed; much of the money coming in is from regions with low tax rates, like the Middle East and Asia. With the super-rich likely to see their wealth rise significantly in the coming years, the future is bright for Swiss banks. But, this also hurts the United States by the super rich avoiding taxes by going to Swiss banks. Switzerland plays the role as savior to many US citizens that are rich to avoid paying taxes.
When you’re rich and you don’t want to pay taxes, how about you go to a Swiss Bank near you. The Swiss, have one of the most secretive banking systems around the world. The Cause and effects of banks in Switzerland are positive for the person and the country of Switzerland but negative for other country’s losing people from using their banks they avoid paying taxes. Switzerland was founded in 1291, but was officially considered a country in 1977.They didn’t however become an official United Nations member until 2002. Formally considered a confederation but, similar in structure to a federal republic. Switzerland has one of the most competitive economies in the world according to, https://www.cia.gov/library/publications/the-world-factbook/geos/sz.html. There unemployment rate is among lowest around the world, and the labor force has a lot of highly skilled workers.
In 1934, Switzerland passed the Federal Banking Act, imposing criminal penalties on bankers if they violated their prof...
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... accounts to avoid taxes. The Swiss Federal Council. (2013, May 29). Swiss government peels back bank secrecy rules. CNNMoney. Retrieved March 30, 2014, from http://money.cnn.com/2013/05/29/news/economy/swiss-bank-secrecy
Don't ask, won't tell. (2012, February 11). The Economist. Retrieved March 30, 2014, from http://www.economist.com/node/21547229
Ladd, R. S. (2011, Summer). Swiss miss: the future of banking secrecy laws in light of recent changes in the Swiss system and international attitudes. Transnational Law & Contemporary Problems, 20(2), 539+. Retrieved from http://go.galegroup.com.db19.linccweb.org/ps/i.do?id=GALE%7CA264482429&v=2.1&u=lincclin_pbcc&it=r&p=AONE&sw=w&asid=8079c8c57bf69f6fc300b491ae1cf020
Switzerland. (n.d.). Central Intelligence Agency. Retrieved March 27, 2014, from https://www.cia.gov/library/publications/the-world-factbook/geos/sz.html
The US has a sophisticated banking system that does a good job of allocating resources in productive place for their customers. However, in an area such as investment banking companies can use the deposited money for risky investments such as foreign government and corporate bonds. When these banks lose money on their investments or go out of business, all of the customer 's savings would be gone. Also, in this type of system bankers are more likely to commit fraud such as opening fake accounts vis a vis Wells
With the floodgates open, it would be impractical and unsafe to deal with millions of dollars in cash. Under these circumstances, the implementation of a new and separate banking system is necessary, as the existing global financial institution will not be willing to go against international money laundering laws.
Kennedy, Robert. “Time for CDC to Come Clean.” The Huffington Post. n.p. 01 Mar. 2010. Web. Web. 22 Mar. 2015.
The Bernie Madoff Ponzi Scheme is a well-known case and is known as one of the biggest Ponzi scheme’s. In summary the scheme occurred for many reasons that I will some up into 3 points; A lack in competency by regulatory agencies, a lack of regulation, and finally a breach in ethics by Bernie Madoff himself. To explain further, the regulatory agencies like the lawyers and SEC are supposed to prevent schemes such as this one from happening but because they lacked the skills to correctly assess the situation, interpreting the number of tips they had received regarding scheme that had been filed, and to act on those in an efficient manner. One of the tips was made by Harry Markopolos in 2000, of who correctly predicted that Madoff was guilty of fraud. Even after this tip from Markopolos, Madoff was not arrested until 2009. Many family members were also a part of the fraud along with some non-family members such as Frank DiPascali and a team known as the 17th floor team, who helped Madoff carry out his fraud. The idea behind Madoff’s fraud was that he would produce false statements of their investments and when people wanted to pull out their investments, the money wasn’t actually there, which rightfully rose more than a few eyebrows and ultimately led to his arrest.
Bernard Madoff had full control of the organizational leadership of Bernard Madoff Investments Securities LLC. Madoff used charisma to convince his friends, members of elite groups, and his employees to believe in him. He tricked his clients into believing that they were investing in something special. He would often turn potential investors down, which helped Bernard in targeting the investors with more money to invest. Bernard Madoff created a system which promised high returns in the short term and was nothing but the Ponzi scheme. The system’s idea relied on funds from the new investors to pay misrepresented and extremely high returns to existing investors. He was doing this for years; convincing wealthy individuals and charities to invest billions of dollars into his hedge fund. And they did so because of the extremely high returns, which were promised by Madoff’s firm. If anyone would have looked deeply into the structure of his firm, it would have definitely shown that something is wrong. This is because nobody can make such big money in the market, especially if no one else could at the time. How could one person, Madoff, hold all of his clients’ assets, price them, and manage them? It is clearly a conflict of interest. His company was showing high profits year after year; despite most of the companies in the market having losses. In fact, Bernard Madoff’s case is absolutely stunning when you consider the range and number of investors who got caught up in it.
Binhammer, H. H. & Peter S. Sephton. Money, Banking and the Financial System. Nelson, 2001.
In previous years the big financial institutions that are “too big to fail” have come to realize that they can “cheat” the system and make big money on it by making poor decisions and knowing that they will be bailed out without having any responsibly for their actions. And when they do it they also escape jail time for such action because of the fear that if a criminal case was filed against any one of the so called “too big to fail” financial institutions it...
Rahn, Richard W. "In Defense of Tax Havens." Wall Street Journal - Eastern Edition 18 Mar. 2009: A15. Academic Search Premier. EBSCO. Web. 1 Oct. 2011.
In the world of multinational corporations (MNCs) whose headquarters are based in the United States, the transfer of intellectual property and profits to tax haven countries has become a common and lucrative business practice. Through the use of foreign holding companies, or so-called “Controlled Foreign Corporation (CFC)”, MNCs have been able to generate higher profits while avoiding high U.S. corporate income tax rates on worldwide earnings. Overall, 83 of the 100 largest publicly traded U.S. corporations have subsidiaries in locations listed as tax havens or financial privacy jurisdictions, according to the Government Accountability Office (Hirsch 1). The underlining purpose behind the use of tax haven countries is so that foreign holding
Gregor Meerganz von Medeazza, Economic and Political Weekly, Vol. 41, No. 11, Money, Banking and Finance (Mar. 18-24, 2006), pp. 949-952
Another way to discourage dictators is to cut their funds. If Swiss banks pay closer attention to accounts to make sure embezzlement is not taking place, dictators will have no place to keep there millions of dollars in stolen money.
Offshore banking is the action of having a bank account outside of the country of residence. Since its start, offshore banking has become a considerably lucrative business. Many of those who take part in offshore banking are looking for a secure location to place their income or seize the opportunity of having lower taxes. However, there are those who misuse the privilege of a foreign bank and use the business ventures for illegal actions rather than the original purpose of the dealings. Offshore banks seem to have an impartial acceptance of quite a few clients within the bank that create a lower standard of ethics in contrast to the ethics meant to be held—this includes those of a political position. Furthermore, this has the potential to be detrimental to the economy.
Kopel, David , and Stephen D-Andrilli. "What America Can Learn From Switzerland." guncite. 13 Feb. 1990. Web. 12 Jan. 2014.
Because of the strong ethical component of this designation, its principles should be adopted by financial professions everywhere in the world, especially in post-2007 financial crisis days, partly started by a lack of moral principles and diligence. While for chocolate-lovers Switzerland is synonymous with a yummy heaven, for me the country, being the banking center of the continental Europe, equals to well-established traditions in the financial industry. If you want to learn something excellent, gain the knowledge from the best. Switzerland is one such place that will give me the opportunity to combine the values of both the highly-regarded education in finance and hands-on analysis of theories, applied in Swiss banking and financial systems.
Tax havens: Super-rich 'hiding' at least $21tn. (n.d.). BBC News. Retrieved April 4, 2014, from http://m.bbc.com/news/business-18944097