NPR reports that aggressive measures by the US to go after tax dodgers is working. Switzerland’s oldest bank was forced to shut down last week after prosecution by the US secured a $57.8 million fine:
The prosecution of the Swiss banks is part of a U.S.-led international push that has been building for years. It takes advantage of newly enacted U.S. law and freshly negotiated bilateral tax treaties and global protocols.
Patricia Brown, an international tax expert and former Treasury Department official who now heads the graduate tax program at the University of Miami School of Law, says the effort is aimed squarely at shutting down offshore tax havens and secret accounts, illegal under U.S. law, ranging from the Caribbean to Europe and Asia.
“The number of places where people can hide is getting much smaller,” says Brown, who was the Treasury Department’s deputy international tax counsel between 1999 and 2008. “It’s getting much harder for countries like Switzerland to thumb their nose at the U.S.”
Although Switzerland, as the world’s largest tax haven, has come in for particular scrutiny, the pressure is also being felt in the Cayman Islands, Barbados, the Bahamas and Singapore, all of which have in the past been prime destinations for secret cash.
Another encouraging sign is the willingness of foreign banks to share information with the US.
“Bank secrecy is essentially eroding before our eyes,” Michel says. “I think the combination of the fear factor that has kicked in for not only Americans with money offshore, countries that don’t want to be on the wrong side of this issue and the legislative weight of FATCA means that within three to five years it will be exceptionally difficult for any American to hide money in any financial institution.”
Asked whether the end is near for the tax haven, the University of Miami’s Brown laughs. “I wouldn’t go that far,” she says, “but I would say there has been progress in the last five years that I would have expected to take 15, at least.”
Harvard’s Shay credits the recent push for greater disclosure partly to the 2008 financial crisis. Lack of transparency at the banks was a major contributing factor to the crisis. Now that governments have leverage to demand changes, they aren’t about to give it up.