The other side of bank secrecy

December 12, 2008

For many, the words bank secrecy and offshore centre tend to raise James Bond-like scenarios of illicit bags of cash smuggled across the border to be locked away in a coded safety box. But often the rich of this world have legitimate reasons to open a protected bank account in Switzerland or other tucked-away offshore locations.
Some, like the residents of oil-rich Gulf countries, do not even have worry about the tax man as these nations are largely tax free. “Offshore does not mean that the money is undeclared,” said Jonathan Ivinson, head of tax at international law firm Hogan and Hartson.
Despite a global crack-down on money-laundering and tax evasion, bankers say many affluent clients from places like Latin America will continue to keep their money away, safe from a potential coup.  In countries where corruption is rife, people would rather not let their local banker know how much money they earn for fear of kidnapping.
“It obviously depends a lot on how worried, how unhappy you are about the jurisdiction you live in,” said Prince Max, the second son of Liechtenstein‘s ruling monarch and the head of the
country’s largest bank LGT. “If you live in a highly volatile and unstable country it is very rational for people to address this risk.”
– Lisa Jucca

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