U.S. Banks Provide a Safe Tax Haven for Foreign Cash

We’re all in it together...it doesn’t seem to matter what country you live in, there’s a certain percent of it’s population that will seek a comfort tax zone outside their country to evade taxes. It’s been going on seemingly forever but recent legislation has imposed new rules and regulations which may hamper the opening of a bank account in one of the U.S. safe tax haven banks. The laws and hopefully soon to be laws aren’t meant to harass law abiding foreign depositors. It’s intend to halt the corruption and money laundering that seems to be a bit out of control.

Under U.S. law, permanent residents of the United States must pay taxes on the interest they earn in whatever financial institute they’ve deposited their money. Foreigners, who don’t live in the United States, don’t have to report anything, except for Canadians who have a sharing agreement with the U.S. The U.S. doesn’t tax interest earned in U.S. banks by foreigners who reside abroad, and unlike the U.S. accounts held by U.S. citizens, the accounts of foreigners aren’t required to be reported to the IRS.

It is estimated there are over $4 trillion of foreign deposits in U.S. banks with the majority held by foreign governments, official institutions, various organisations, and foreign banks. A much smaller amount of less than $1 trillion are held in the name of individuals and those would be subject to the new rules.

Banks Aiding Corruption - Don’t Ask Questions

The small nation of Equatorial Guinea, in west Africa, has a population of 700,000 and President Teodoro Obiang has ruled since 1979. Due to a country rich in oil, Obiang, according to Fortune Magazine, had a huge fortune which included an estimate of over $700 million that was held in one U.S. bank in 2006. President Obiang is well known for robbing his country and has acquired property in the United States and Spain. He had control over state funds that were deposited by American oil companies that were active in Equatorial Guineas to Riggs Bank in Washington, D.C. which after being investigated were no longer in business. Riggs Banks paid $41 million in civil and criminal fines for violations of banking regulations. Obiang’s passed his talent on to his son Teodorin who is now is deep trouble and fighting with the the United State Department of Justice.

President Obiang’s son, Teodorin, who earns roughly $60,000 a year as Minister of Agriculture and Forestry, has been squandering money for years and has over $70 million dollars worth of property in the United States. The United States Department of Justice filed in October 2011, an asset forfeiture claim against the properties that are believed to have been purchased through money earned by corrupt actions. The Department of Justice is attempting to recover the properties to benefit the Equatorial Guinea people. Let’s hope they succeed and in the process perhaps it will stir enough anger among the people to finally be able to get rid of the nice Obiang dynasty. The Obiang’s are not the only ones who abuse their power but with the U.S. working along side with foreign countries more can be done to control tax evasion and bank accounts held by corrupt people.

Back to the Tax Havens Banks of the U.S.

By allowing citizens from other countries and not getting needed information to open banking accounts in the United States we are enabling tax cheating in their home countries. The Foreign Account Tax Compliance Act requires foreign financial institutions to file information on accounts owned by U.S. taxpayers. This is a start but is one-sided and helps the U.S. but not the foreign countries who collect and share information. We also need to be willing to collect and share information.

The politicians in Florida have banded together to protect the interests of their foreign investors by stressing that many are from corrupt countries and need to be protected from tyrants, kidnappers, etc. and so their identities should be kept secret. They are opposing a bipartisan bill introduced by Senators Carl Leven and Chuck Grassley in August 2011. They say the law will drive away current foreign account holders but if the account is held legally why would the legal owner want it closed?

Senators Carl Levin (D-Mich.) and Chuck Grassley (R-Iowa) introduced a bipartisan bill, S.1483, the Incorporation Transparency and Law Enforcement Assistance Act, this summer to eliminate shell corporations. Bill Summary & Status - 112th Congress (2011 - 2012) - S.1483 - All Information - THOMAS (Library of Congress)

A companion bill was introduced in November in the House by Representatives Maloney (D-N.Y.), Frank (D-Mass.) and Lynch (D-Mass.).
Bill Summary & Status - 112th Congress (2011 - 2012) - H.R.3416 - Related Bills - THOMAS (Library of Congress)

Whether it’s an individual or a corporation, the act of purposely moving funds from the original country in order to evade paying taxes is detrimental to the people of their country, the wealth of their country and the growth of their country. This is simply out and out Corruption with only one goal in mind... and it's obvious not to help the people, just to continue fattening the already overflowing caches already amassed.