Closing secret accounts

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Closing secret accounts

The government is discussing with authorities in Switzerland ways to obtain client information on secret accounts in private banks. It hopes to collect details of those secret accounts held by its nationals and companies suspected of tax evasion or money laundering beginning in January of next year.

The bilateral taxation treaty signed in 1981 lacks a provision to release financial information, barring Korea any access to client data on accounts in Swiss banks even if Korea suspects illegitimate wealth of its nationals is hidden there.

Due to the Swiss law that prohibits release of bank information, the government’s access will likely be limited to specific individuals with criminal records or those suspected of tax irregularities. Still, the release of limited information will likely be instrumental in checking the flight of illicit funds.

Swiss private banks for centuries have acted as safe havens to hide the wealth of the world’s ultrarich, corrupt politicians and individuals seeking to avoid taxes. All this was due to the law on banking secrecy and government support for the private banking industry.

Many former presidents and politicians have been suspected of hiding massive wealth in secret bank accounts there. The country’s name came up every time a political bribery scandal erupted. But authorities chasing criminal funds and tax cheats have always hit a snag due to Switzerland’s rigid policy against sharing its client’s information.

According to the Organization of Economic Cooperation and Development, some $5 trillion to $7 trillion in funds are stashed away in tax havens in Switzerland and other parts of Europe, the Caribbean, Asia and certain Latin American countries.

The government currently has treaties to share client information with six havens, including Bermuda, Samoa and the Bahamas. The Prosecutors’ Office recently set up a division probing offshore funds and the National Tax Office also has a division for hunting down capital flight by tax cheats.

In the eyes of the rest of the population, it would be justice to stalk clandestine offshore wealth deposits and money laundering by a certain group of the rich and powerful.

The government should seek similar treaties on client information with other popular havens in the Cayman Islands and Liechtenstein so that illicit capital from Korea has nowhere to hide. If this happens, law-enforcement authorities will no longer have an excuse to drop investigations of politically sensitive bribery and money-laundering scandals citing privacy laws of offshore tax havens.
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