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A Swiss bank has forced 95 year old lady from Canada to declare the funds or to close the account
A 95 old lady had an account with one of the big Swiss banks for the last 40 years. She came in my office with here 70 years old daughter. Both ladies were under shock. They had several meeting with junior bankers. Important clients are served by senior bankers. Clients with small accounts and tax neutral money are managed by junior bankers. Senior bankers are always busy. The junior bankers have criminalized their own clients affirming that they have hided money in Switzerland in order to avoid taxation in the country of residence. They said that a new law came into force abolishing banking secrecy and that the account documentation will be maintained for 10 years after account closing and that Switzerland can exchange tax relevant information with Canada. The ladies have no other substantial assets to pay the living expenses. They need this money kept in Switzerland otherwise they are forced to live on the streets. I tranquilized the ladies and I told them that there is always a solution. I promised to find the most appropriate solution for the ladies. I fixed a new meeting with the junior banker. Due to my presence he was very gentle – compared to the previous meeting. We closed the account. I advised the ladies to go out of the banking system. The ladies have strong family ties to South Africa and to investments in physical gold. We sold all investments. We converted all foreign currencies in Swiss Francs to avoid wire transfer involving other jurisdictions. Therefore, the funds were sent to a gold bar selling company and we have invested in physical gold bars. The gold is kept in a safety box in the name of the 93 old lady. The big advantage is that this solution is very easy to understand. Gold does not generate income which can be subject to tax declaration. We have no taxable income anymore. The old lady was sick. After the decease of the lady the heirs are going to report the funds inherited to the Canada tax authorities. They will have a better tax treatment because they have inherited this black money situation. They had no active part in the hiding process of the funds. Instead to disclose the funds to the tax authorities in Canada immediately and according to the will of the bank, my clients are going to wait until the account holder passes away. They declare the funds when they can collect as much tax benefits as possible. Due to their position as heirs there will be a much better tax treatment during the disclosing procedure. Moreover, my clients will sleep well because they are backed with the physical gold solution having their wealth out of the banking system and stored in a very secure place. This case shows that there are always solutions to fly under the radar. Believe me there is always a solution. This is one of our best success stories.
Russian client with acquired Italian passport
The passport was a real Italian passport and not faked. He opened an accounts with the Italian passport for 65 millions of Euros distributed in seven offshore companies. He showed his passport to the Italian embassy asking if the passport is faked or not. The Italian embassy confirmed that the passport was genuine. Our client used his passport as asset protection instrument because he was afraid that the Russian FSB can take his business and his money away by inventing a criminal act, asking for international legal assistance to Switzerland and claiming back the funds to Russia. Based on his new passport he could hide and protect his fortune from the takeover by the FSB. Unfortunately, his trustee had offered the passport not exclusively to him but distributed to many other clients. One of the trustees clients and Italian passport holders was involved in a money laundering case. During the investigation a list came up with names of all new Italian passport holders. All accounts opened in the names appearing on the list were blocked. During the investigation we learned that the Italian passports sold by the trustee are special passports issued in a special program for the protection of witness in a criminal trial against organized crime in Italy in compliance with specific anti-mafia legislation enacted in Italy. According to Italian law a witness has the right to claim for a new identity with a new name, new address and a new birth certificate. Normally, it takes years and years before such blocked funds are coming in the hands of the account holders again. In a meeting with the prosecutor we wanted to find a more rapid solution for our client and we came finally to a deal: the prosecutor will activate the accounts under the condition that our client will testify against his trustee. It was the firm intention of the prosecutor to collect sufficient evidence to bring the trustee in prison. We convinced our client to come to Switzerland and testify before the judge. A few weeks later the prosecutor separated our case form the rest of the case by giving a new number to the procedure. From a formal legal point of view it was a separate case now. The prosecutor activated the accounts of our client after we demonstrated by edition of around 40 kg on documentary evidence in hard copies that the funds were legally earned and of non criminal source. In co-operation with the prosecutor we negotiated a small fine to be paid by our client for having misused the wrong passports for account opening. By segregation of the case from the big investigation it was easy for the prosecutor to close our case separately, if provided with a different number. We gained years due to the formal segregation of procedures and our client is happy again to have unrestricted access to his Swiss accounts again.
Client from St. Petersburg
Our client from St. Petersburg had a couple of accounts with renowned Swiss banks in the name of his offshore companies. A Swiss trustee (in German: Treuhändler) managed his offshore companies and many other offshore companies belonging to other clients. In a transaction of our client from St. Petersburg the trustee used the bank account of a third offshore company belonging to one of the trustees clients in order to avoid disclosure of the name of our clients offshore company in connection with a flow-through transaction. Unfortunately, this account was under investigation in a big criminal case with hundreds of accounts blocked. Our client had nothing to do with the beneficial owner of the other offshore company. The prosecutor in Geneva blocked hundreds of accounts just to make sure to block as many funds as possible. Therefore, he blocked also the account of our clients offshore company. We checked the entire account documentation with the bank. We were looking for sufficient documents allowing us to convince the prosecutor about the legal purpose of the flow-through transaction. We found the transaction report in the bank. The explanation on the transactions background was very poor and not sufficient to convince the prosecutor to activate the account again. Together with the client we collected a statement issued by the final beneficiary of the payment confirming the economic background of the payment. We translated the content of the statement and we presented it to the prosecutor as attachment to a letter we wrote demanding to activate the account again. We explained to the prosecutor that our client had nothing to do with the people investigated. Shortly after, the account was activated again by the prosecutor.
Big Fiduciary Firm
The relationship manager of the big fiduciary firm was not available on the phone. When he contacted the bank nobody was around. He went to the bank and his private banker gave him the advice to appoint a banking lawyer. Nobody gave him a satisfactory response. After he learned that the relationship manager of the trust company was arrested. He was shocked that from one day to the other all his assets in Switzerland were blocked without any reason. We were convinced that this business man was fully innocent. He had nothing to hide. Subsequently, we contacted the Swiss bank and we learned that many accounts were blocked by the federal prosecutor in Bern in view of a huge criminal investigation directed against many people and one of the representatives of the big fiduciary firm. We did not started a bank litigation. The Swiss federal prosecutor has frozen hundreds of Swiss bank accounts. In such international criminal case it can takes years before accounts are liberated again. Normally, accounts are unblocked under the condition that the criminal investigation has finished. What we did? After some calls with the bank and the authorities we identified the chief investigator. We offered to cooperate because our client had nothing to hide. The Federal Prosecutor was interested in background information on the representative of the fiduciary firm and on a direct face-to-face meeting with my client. I convinced my client to come to Switzerland and to participate in the meeting with the Federal Prosecutor. We cooperated and helped the Prosecutor to execute his job and the Prosecutor helped us and released the funds without litigation. After 4 month the assets are in the control of my client again. Due to the huge amount collected with one sole account we advised to split distribute the assets in different banks and jurisdictions in order to have a professional diversification of risks. It’s not advisable to concentrate all the assets in one sole account. It’s a cluster risk. The client is satisfied to have a new structure and to have diversified his wealth.
A Russian client involved in international business has Swiss bank accounts trough some offshore companies managed in Switzerland. Some important documents are in Russian language. Nobody knowing the banking business in this bank can understand Russian language and Russian agreements. It comes out that the compliance officer was not capable to understand the economic background of a big transaction just because he had no translation of the most important documents and agreements. According to Swiss anti-money laundering laws and regulations the economic background of a transaction has to be evidenced by documents enabling a neutral third party to understand the architecture of the transaction. The documents must be collected by the Swiss bank before the transaction can take place. The compliance officer simply blocked the account because he was not sure to have fully understood the economic background of the transaction. Our Swiss law firm called the bank and spoke directly with the compliance officer. Together with the client we made a chart evidencing the flow of funds. The most important agreements were translated in English. Together with the client we made a meeting with the relationship manager and the compliance officer of the bank and we explained again the architecture of the transaction and the account was immediately released and the transaction was executed. No bank litigation has taken place. In this case it was the compliance officer freezing the Swiss bank account and not the federal prosecutor. Such cases are very frequent and can be solved in short time.
Italian relocated to Thailand without informing his bank
A client from Italy had a Swiss bank account since many years. Eight years ago he went to Thailand, first for vacation subsequently to establish a new residence. He has informed me over the phone from Thailand that he is travelling to Zurich, Switzerland and he has invited me to participate to the meeting with his banker in Zurich.
He told me that he feels that the bank did some mistakes. He wants to check the file of the bank-account with me. He insisted in having me beside him during the meeting with his banker. He said to me that he wants to speak and negotiate with his bank at the same eye level. I made a Power of Attorney which I sent to him to collect his signature. I fixed a meeting with the Swiss bank for the day of his arrival to Zurich. I went with him to meet the banker. We checked the entire bank-account documentation, including the transaction papers, credit advice and debit advice. No mistakes have been detected.
At the end of the meeting the banker asked some questions on his family situation. We have realized that the banker was informed that he went to Thailand 8 years ago and I decided to verify, if the banker made a note in the file evidencing the chance of residence. The note was correct. The new residence was written in the file. I asked the banker to give me a print out of the computer system evidencing the electronic KYC. In the electronic KYC mask I have realized that the residence was still Italy and not Thailand. No trance in the electronic file on his new residence. As Italian resident the client was subject to the EU Directive on Taxation of Savings. That means that the bank has collected the withholding tax on all his savings for the last 8 years despite his domicile in Thailand. This mistake was expensive for my client because he paid taxes without any duty. The bank has not adjusted the electronic mask according to the clients input given 8 years ago. Therefore, the bank has compensated my client for his non justified taxation he has suffered the last 8 years. My client has been compensated with EUR 15000 to EUR 30000 per year during the last 8 years.
The client asked for my physical presence in order to ensure a same eye level confrontation with his banker and we came out of the bank as winner with the right to be compensated a substantial amount of money. My client has paid me a flat fee amounting to EUR 3500 (agreed before the meeting) for my services in connection with this half day meeting. The client was so happy to have engaged me that he invited me to see him in Thailand for a weekend.
A 75 years old client from Jordan suffered substantial losses due to risky investments concentrated in an exotic and illiquid fund product strongly recommended by his Swiss banker. We asked him if he had a discretionary asset management agreement in place with the bank. His answer was no. He said that no discretionary mandate and no advisory agreement were signed by him. His banker never proposed him to sign even an advisory agreement. Each transaction was subject to his specific approval. Normally, in a situation like this, the client has to take responsibility for the consequences arising out of the investments ordered by him. We asked the bank to send us all documentation. Fifteen files arrived. When we checked the documentation we learned that the bank account relationship started more than ten years ago with very conservative investments. Four years after the beginning of the account relationship, the client received an Arabic speaking relationship manager.
His new banker recommended to disinvest his conservative fiduciary investments and to reinvest in some more profitable funds. At the beginning this strategy was very successful. Each day the banker contacted his client in order to convince him to invest more and more funds in this fund. The client invested more and more. Both parties were happy. It was an intensive relationship between the client and his banker. The bank made huge commissions and the client made money. In 2008 the situation changed. The fund lost substantial value. From his initial investment of USD 15 millions the client had afterwards less than USD 5 millions. He suffered a damage in the amount of more than USD 10 millions.
According to a decision of the Swiss Federal Supreme Court the contractual basis of a bank account relationship exceeding two years has to be considered as an advisory agreement under the condition that the relationship between the bank and the client is very intensive. Even if there is no advisory agreement in writing, an oral advisory agreement has to be assumed if we have a long relationship with the bank and an intensive communication between the client and the bank.
We contacted the bank and we discussed the situation. A professional advice takes care about sufficient diversification – which was not the case here, because 85% of the assets were invested in the same fund. A lack on diversification constitutes a serious breach of the most basic principles in the classic Swiss asset management industry. The high concentration of risks was admitted by the bank and the bank compensated our client. After some hard negotiations on the effective value on the damage suffered by our client we find a settlement with the bank.
In case like this it is not sufficient to speak with the client about his account and his damage. What we need is the edition of all account documentation. Based on all documents we make a so-called Health Check on the account relationship. Due to our experience we are in a position to detect very quickly if the bank made mistakes.
In this case no advisory agreement in writing was in place. The long duration and the intensive nature of the bank account relationship with many investments qualified the contractual relationship with the bank as an oral and effective advisory agreement with all legal consequences in favour of the client. Without file inspection and accurate study of the account history it would have been impossible to obtain a compensation from the bank for the damages suffered by our client.