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Bank Secrecy Bites the Dust in Europe

The pillars of bank secrecy have crumbled under intense global pressure as Switzerland joins four other tax havens in loosening longstanding privacy rules

Switzerland, Austria and Luxembourg announced a relaxation of their banking secrecy laws on Friday (13 March) following mounting pressures on both sides of the Atlantic to crack down non-cooperating tax zones.

The news comes only one day after Liechtenstein and Andorra made similar declarations, as a number of financial centres around the world attempt to pre-empt any decision coming out of the G20 leaders summit on 2 April.

As western governments feel the pinch due to expensive stimulus spending projects coupled with reduced tax receipts, the spotlight has been turned on a handful of geographic locations that profit by harbouring capital owned by companies and wealthy individuals from abroad.

The Swiss government said on Friday that it intends to adopt OECD standards on the sharing of banking information between different countries, citing its desire to avoid being placed on the organization's 'black list' of tax havens.

"If Switzerland were to wind up on a black list it wouldn't only hurt the banking sector," Finance Minister, Hans-Rudolf Merz, said at a press conference in Bern implying that the economy as a whole would suffer.

In the past, Switzerland has said that signing up to OECD standards would compromise the banking secrecy of its clients.

Switzerland's largest bank, UBS (UBS), last month handed over the names of 300 customers to the US government after it produced strong evidence they were avoiding paying tax.

It is estimated that Switzerland holds around $2 trillion worth of capital from abroad reports the BBC.

In a separate announcement on Friday, Luxembourg also said it would cooperate with tax authorities from other countries but will only provide client details once 'concrete proof' of tax evasion is provided.
 
For its part, Austria said will renegotiate current agreements on banking secrecy in the fight against tax fraud and evasion its finance minister, Josef Proell, said on Friday.

It too has only agreed to hand over information once supplied with evidence of tax evasion by individuals with accounts in the country.

"There won't be an automatic exchange of information, but we will renegotiate a number of the 80 tax agreements that we have with other countries," Mr Proell said in Vienna.

"We have been fighting tax evasion and fraud in the past, and we will continue to do so," he added.

France, which has lead calls in recent weeks for a comprehensive review of the 'uncooperative jurisdictions', was initially guarded in its response to the news.

"The devil is in the details," said French Finance Minister, Christine Lagarde, in Paris. "We must go all the way and see if banking secrecy is sufficiently lifted."

UK Prime Minister Gordon Brown said the changes were "the beginning of the end of tax havens." "Tax evasion, which costs the global economy billions of pounds each year, will become more difficult in future."

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Britain's Privacy Casualty in the War on Terror

In a recent report released, Liberty catalogues the numerous ways in which ordinary Britons have increasingly become "suspects" subject to intense surveillance since the advent of the war on terror and calls for stronger privacy protections. A YouGov poll commissioned by the human rights group found that only 17 percent of Britons trust the authorities to keep their personal details completely confidential while 57 percent believe the UK has become a 'surveillance society.'

Liberty's 145-page report, "Overlooked: Surveillance and personal privacy in Britain," explores the increase in surveillance including the mass retention of personal information in government-run databases and the growth of the national DNA database. The report finds that the authorities are increasingly using mass surveillance to profile rather than targeting individual criminal suspects using intelligence-led policing, with disastrous implications for the privacy of law-abiding Britons.

Liberty's Policy Director and principal author of the report, Gareth Crossman, said: "In times of heightened insecurity we quite rightly compromise some of our privacy for public protection, but if we don't pause for thought right now, our children will grow up without any sense of the value of privacy."

Last week Liberty won a six-month battle with the Avon and Somerset Constabulary to have the DNA of an innocent 13-year old boy removed from the National DNA Database (NDNAD). The boy had been falsely accused of writing graffiti. [ATTN: Father available for interview] The DNA of approximately 100,000 innocent children has been retained on the NDNAD.

Key findings of the report include:

* An increase in the use of databases, such as the National Identity Cards Database (National Identity Register) which becomes compulsory in 2010, allow the Government to retain and share unprecedented amounts of individual personal information. Authorities use the information for "data matching" in which computers sift data to identify potential criminal behaviour instead of developing intelligence-led investigations.

* Nearly 440,000 personal communications surveillance authorisations were recorded between June 2005 and March 2006.

*CCTV is not a proven crime deterrent and is poorly regulated, yet the UK is the world leader in CCTV use with approximately 4.2 million cameras.

* The National DNA database is the largest in the world with 3.9 million samples. Expansion of the NDNAD by taking samples upon arrest rather than conviction has disproportionately affected black men with nearly 40% of black men represented, versus 13% of Asian men and 9% of white men.

Liberty's recommendations include:

* New legislation must be introduced to regulate the use of CCTV and to offer greater protection for every individual's personal details being held on Government-run databases.

* The Information Commissioner, Britain's privacy watchdog, must be given sufficient resources and powers to effectively regulate privacy and data protection.

* Judges must be allowed to review authorisations for access to personal communications such as email, mobile and phone calls and the role of the Investigatory Powers Tribunal should be extended.

* There must be no new powers for police to take DNA samples and removing an innocent person's DNA from the database must be made simpler.

Notes to Editors

1. All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2,510 adults. Fieldwork was undertaken between 7th - 11th September 2007. The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+). The questions were as follows:

Thinking about the Government and public sector authorities, such as the police, NHS, etc

* 'The Government and public sector authorities can be trusted to keep my personal information COMPLETELY confidential'

Agree 17%
Disagree 54%

* 'The government and public sector authorities hold too MUCH personal information about me'

Agree 48%
Disagree 18%

*'The UK has become a SURVEILLANCE society'

Agree 57%
Disagree 19%

2. Gareth Crossman is the Policy Director of Liberty and the author of the four-year study into surveillance and privacy rights in Britain. He formerly worked as a solicitor specialising in criminal defence litigation. After leaving private practice he briefly worked in journalism before joining Liberty's legal department. Gareth has written for Parliamentary and general audiences on a wide range of issues. He has particular expertise in UK Government anti terrorism policy, privacy and data protection, and criminal justice issues.  He regularly gives evidence to Parliamentary Committees including the
Home Affairs and Constitutional Affairs Select Committees as well as the Joint Committee on Human Rights, the United Nations Committee against Torture and the European Parliament's Committee on the Transport and Illegal Detention of Prisoners.

The above article by Liberty Human Rights Org.

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Subject:

COMMENT: Where the Business of Snooping Gets Done.

Federal Express is famous for its overnight deliveries, and now it may have become, overnight, the one delivery company to avoid at all costs -- if you value your personal and financial privacy.

A front page Wall Street Journal feature article (5/26) details how FedEx voluntarily has become a willing partner to the US federal police establishment, turning over names, addresses, credit card information and
lists of when and where FedEx customers send and receive packages.

Mind you, this is done under the guise of 'fighting terrorism,' since FedEx management decided soon after the 9-11 terror attacks that it would cooperate with almost any government information request. In the past
FedEx and most other delivery companies insisted on a valid search warrant or court order before surrendering customer information. UPS says it still follows that traditional rule.

But FedEx has gone further, granting US Customs inspectors access to the company's database of international shipments, including names and address of shippers, package origin and destination, credit card information and
payment details (names of banks), all things the US government is not entitled to outside of a criminal investigation. 'Our guys just love it,' says one senior Customs official overseeing inspections at international courier companies.

I'll just bet they do love it -- and you can also be sure that the FBI and other police do not confine their use of all this information to terrorism investigations. It is well known that PATRIOT Act powers, supposedly aimed
at suspected terrorists, have been used to nab phone solicitors, nightclubs in Las Vegas, CD-counterfeiters, even a call girl ring in New Orleans.

Now FedEx has opened a whole new universe of people for eager government snoops.

This is a replay, for much bigger stakes, of what the IRS did four years ago with credit cards issued by offshore banks, alleged to be used to evade taxes. Because VISA, MasterCard and AmEx processed the offshore card charges in US facilities, the IRS got court orders to grab millions of card transactions without the names attached. Only AmEx stood up for card holder privacy and the others caved in to the IRS. About a thousand people out of what the IRS claimed were millions fessed up during a phony IRS amnesty.

At least the credit card companies, however misguided, were co-operating in investigations of a specific alleged crime. FedEx, on the hand, is laying wide open customers for no better reason than their flag waving management wants to do so.

What makes all this even more horrific (and illegal) is that these demands for information often are based on nothing more than government bureaucrats accusations, not on due process search warrants or any other judicial review.

One of the current FedEx slogans is 'Where the business of shipping gets done.' Just change 'shipping' to 'snooping' -- and plan accordingly.

That's the way it looks from here.

Bob Bauman, Editor