Bank Secrecy Acts and Confidentiality Ordinances
The first Bank Secrecy Act in the Caribbean was adopted in the Bahamas in 1964. Until then, Switzerland had always been the “renowned banking haven” – known throughout the world for its “private banking”. The Cayman Islands government soon followed the Bahamas Bank Secrecy Act, with almost identical legislation a year later. The growth of the Cayman Islands into the top offshore banking center was spurred on originally by their Secrecy Act.
Today, all the tax havens have Secrecy or Confidentiality Ordinances. One exception is Bermuda, which never officially adopted a secrecy act – as Bermuda’s “common law” and isolated “jurisdiction” had always served it well.
As it turned out, the Secrecy/Confidentiality Acts and Ordinances were a boost to offshore businesses for the Caribbean and Pacific tax DAKON P 26 lux Z havens, and for the most part, they still are.
While the original idea of Banking Secrecy was a good one for the offshore havens, it was not (and never will) well received by the US Treasury Department and their enforcement agency – the IRS.
While no one would argue that these countries have every right to adopt and promote their bank secrecy, it has caused problems, including attracting a criminal element; drug money laundering issues, and tax evasion issues for citizens from Industrial nations like the US, UK, Canada and Australia.
Bank Secrecy alone has worked well for the end users for over forty years, but under US law (and the laws of other industrialized nations – Japan, UK, Canada, Australia) it is income tax evasion (a felony) just having an offshore bank account and not reporting the income on one’s tax return. In the U.S., the mere existence of the bank and security accounts are reportable on a Form TD 90-22.1. Few Americans want to report. http://www.ustax.ch/pdf/2005_f9022-1.pdf
But Secrecy and Confidentiality Ordinances offer protection against creditors and “others”; and where taxes alone are not the issue, bank secrecy along with “jurisdiction” add up to “asset protection’, privacy and more.
Privacy: One author writes: “People can’t find your offshore assets.” The Bank Secrecy Acts in the Bahamas (Cayman, Anguilla and the BVI) are said to impenetrable.
Exception: All these countries have Mutual Legal Assistance Treaties with the United States and other nations which allow for cooperation in criminal matters (i.e.,
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