This Wednesday morning, I received a phone call from Rob Vrijhof, (right) our long time investment and banking associate in Zurich and a member of the Sovereign Society Council of Experts.
Rob called my attention to the announcement today by the venerable Wegelin & Co., Switzerland’s oldest private bank, that it will stop doing business in the United States and with Americans.
Founded in 1741, the St. Gallen-based bank, said their decision was a response to stricter measures introduced in the U.S. against tax evasion and projected changes in U.S. estate tax laws, which could make some non-U.S. citizens liable for U.S. taxes if they inherit U.S. securities.
The bank did not mention new U.S. government demands that offshore banks giving investment advice to U.S. persons must register and qualify under SEC rules…which is itself a blatantly illegal attempt to extend American law well beyond its normal jurisdictional area (which ends at the U.S. border, regardless of what the feds may have you believe).
So drastic have the IRS/SEC extraterritorial measures become that even members of the U.S. Congress have protested they go too far.
In their letter to investors, Wegelin bank said Swiss banks were being forced into “an untenable position,” and in all fairness, they make a good point…
Given the lack of clear definitions in the IRS proposed rules, Wegelin believes the imposition of being expected – by the IRS – a to know which clients were liable to pay U.S. taxes is “an impossible undertaking.”
“The danger of inadvertently making false declarations to the U.S. tax authorities will be too great,” the letter went on to explain.
The bank gave the United States an added zinger, saying it believes the U.S. government overestimates its attraction as a financial center, thus Wegelin is advising its clients to pull out of all U.S. securities investments.
So the inevitable question, then…Are more banks going to follow in Wegelin’s footsteps?
Bob Bauman, JD
Legal Counsel for The Sovereign Society
Article Source: Sovereign Society