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Thursday, October 18, 2012

How to Launder Money – Swiss Style

 

An interesting crime story has come out in France and Switzerland. It may prove to be the nail in the coffin for bank secrecy in Switzerland.

 

The Swiss and French police arrested seventeen individuals a week ago (including an assistant Mayor in Paris). A woman (known only as “M”) is the center of attention of a drug smuggling ring. Apparently she ran a very big operation smuggling marijuana from Morocco into France.

 

Authorities followed the money from the drug operation from France to Geneva, Switzerland, where the loot was laundered through HSBC and GPF SA (never heard of them). This was a family affair; M’s brothers were working for the Geneva based banks.

 

The money laundering operation is an interesting part of the story. The sequence of events:

 

A)   The drug operation generated big amounts of small denomination Euro bills.

 

B)   The cash from drug sales all over France were brought back to Paris.

 

C)   M’s brothers in Geneva knew wealthy individuals in France (and presumably Germany too) who had “Black Accounts” in Switzerland. (Nothing to do with the drug smuggling)

 

D)   Individuals who have Black Accounts in Switzerland have a noose around their neck. Switzerland (with a gun to its head) is negotiating tax treaties with all of its neighbors that would result in divulging the “names” of the account holders.

 

E)   European Black Account holders know the clock is ticking. They know the result will be that they will lose all, or a big part, of the money they have stashed in Swiss banks. (That’s what happened to the US “names”)

 

F)    Black Account holders want their money back, but they can’t transfer the money to another bank, as bank wire transfers are completely transparent to authorities.

 

G)   The only solution for Black Accounts is to get access to cash. This is very hard to do, as there are guards on Swiss borders, and one can’t really trust the Swiss bankers any longer.

 

H)   Enter M and her brothers. They provided the following services:

 

- M (and her agents) covertly delivered cash money to wealthy individuals in France.

 

- In return, the Black Accounts were debited (or closed) in Switzerland.

 

-  The money from the Black Accounts was transferred to a separate account controlled by M’s brothers.

    

- M’s brothers are Swiss citizens, and as a result have banking secrecy laws that protect them. When the money finally got into the brother’s accounts, the laundering has been completed.

 

- M charged a fee of 8% for the laundering. The drug money was transferred to the black account holders. Everyone was happy with this solution.

 

According to news reports (Link) the amounts involved are in excess of $100Mn. In the scheme of things this is not such a large amount, but is sure makes the Swiss banking industry look bad. The head of the Geneva Financial Center, Bernard Droux, had this to say:

 
“We were surprised that it should still be possible to do this today. This is a practice that has been forbidden by law for more than 20 years,” 

 

“Shocked” you say? Sorry Bernard, this type of scam has been going on for the past sixty years!

 

The Swiss don’t condone this type of activity. The Swiss police contributed to the investigation that led to the arrests. That doesn’t matter, the damage has been done. The fact is that the Swiss banks are still a conduit for laundering drug (and other illegal) money; the Swiss banks are continuing to facilitate capital flight and tax evasion from Switzerland’s direct neighbors.

 

Any bargaining position that the Swiss had with the EU countries regarding tax treaties that would have maintained the essence of banking secrecy has been shot to hell over the revelations. Switzerland will have to fold its cards, end banking secrecy and give up the “names” of European black account holders.

 

There are an awful lot of people who are crapping in their pants over this development. The list of pant shitters includes any European with a black Swiss account, it most certainly includes a bunch of bankers in Geneva, Chiasso, Lugano, and Zurich.

 

Comments

  1. I don’t know if this has anything to do with Swiss Banking. In Switzerland, someone transferred money from his account to another. The laundering happened in the Euro countries where cash was delivered. I guess in other countries you could argue that “M”‘s brother receiving large amounts of money would raise suspicion. But then again, they were caught. You could see this in Latin America where people use Miami to stash cash. Suppose it came out that the US was thinking about revealing the names of these account holders to their governments. So drug dealers in Colombia agree to deliver cash for them if they wire their Miami money to another account. The holder of the other account reports it as income from foreign oil consulting, and pays tax on it. It would have a good chance at going undiscovered.

    • I’ll sum it up this way. The customery definition of money laundering is getting the cas into the BANKING SYSTEM. Drug dealers use high cash front businesses (casinos) to get them money legitimately deposited. In this case the cash was exchanged between private parties. It could have happened in any country. It happened in Swiss because that is where the customers had their money, and they had an incentive to make a withdrawl of cash. Like I said, same thing could easily happen in Miami.

      • Forget logic, JamesD. Hate the rich, the savers, the job creators and the hard-workers.

        Hate the brave patriots that take risks to keep their governments from violating more of their rights and privacy, and getting even further out-of-control in their spending.

  2. Don’t understand G. Are there currency controls in place that say you can’t take large amounts of cash out of Switzerland? Or that the Swiss banks won’t honor a withdrawal from one of those accounts? If so, then how did M’s relatives ever expect to access the monies wired to them that they were advancing cash against?

    • I mentioned that this $100mm is small beer in the scheme of things. So the other options you speak of are also are being used by some.

      But there is risk to this. You can’t just leave Switzerland with ten pounds of gold or E200k in cash. You can go to jail for that.

      Two people can sit in a restaurant in Paris. One has a bag full of money. The other has a computer, and a black account. The one with the computer can go online and make an in-bank transfer of funds (no external wire) between accounts. When the transaction is confirmed, the bag changes hands, and everyone is happy.

  3. DC Plantation Serf says:

    In today’s news, Obama has a Cayman Island account. Nothing to see here, move along.

    Financial privacy is only for the connected. For everybody else pay the vig to the criminal syndicate called “government”.

    • You see, having an account in the Cayman Islands is very pleb. If you are in the elites, you control companies which control other companies which control accounts which live offshore. And no one can ever prove that you are in control of the company in question.

      Taxes are just for the little people. The truly rich dont pay tax.

  4. Legalize the freakin’ drugs, tax ‘em and do away with ALL this crap.

    • plasticmoney888 says:

      If you are corrupt there to much money to make it illegal.
      Its just as available as if it was legal except that unfortunately the fact that its illegal makes it the major cause of violent crimes in America including violent gang crimes, lawyers getting rich, Prison being constructed, huge anti drug agencies, harassment of honest people, toxic substance etc…
      All this wile billions of drug are traded every day on the streets of the US. Look it doesn’t take rocket scientist to know that if hundred of billions of dollars worth of drugs are still being sold the money also still needs to find new places. All this crap about Switzerland is a side show to get more taxes.
      There is so much money involve in drugs on a daily basis that they surely have figured long ago more sophisticated ways then being exposed in a swiss bank.
      Legalize it and its game over. Addicts need help not prison.

  5. “It sure makes the Swiss banking industry look bad.”

    No, It makes fascism look bad. The Drug War is a complete ####ing scam. No Drug War Scam, no gorss inequality in taxes, no money laundering and no demand for “black” accounts. Simple as that, so the fascist banking laws aren’t looking so good either.

    God bless the Swiss and their righteous upholding of basic human rights and privacy. May they prevail.

    God help the brave patriots that tried to keep from enabling the out-of-control waste and class warfare being pertrated by governments and their revenue/theft agencies worldwide.

    • Bubba and Truth are spot on. Legalize all drugs and tax them like liquor sales. No more criminal turf wars and “swat” raids terrorizing ordinary citizens. This will never happen because it would be a death blow to the prosecutor/prison industrial complex; plus the nanny state can’t stand people making their own lifestyle choices.

      • Mike,
        You’re missing a BIG one here. The CIA is in the drug trade so this is the single biggest reason drugs will not be legalized anytime soon.
        And we, the people in the know, just watch the gullible public being played on their weaknesses, naivete, and stupidity.

  6. The smart money doesn’t hold anything in their name.

    Keeping it under “ACME Holdings” lets the customer keep their privacy, no matter their nationality.

  7. I have nothing to say about this entirely private affair except to ask, “Who are the victims?”

    I see no one suffering from the provision of marijuana. No one victimized through the holding of Swiss accounts. No one in pain because money moved from one place to another…

    In fact, all I do see are satisfied customers all around.

    • What about all the government leeches who couldn’t steal, oh, sorry, I meant “tax”, the savings of successful people? They are hurting like hell for more cash!!!

  8. With all the search for tax evaders why nothing is done against the Grand Cayman’s

  9. The more I see of this, the less difference I see between the cartels and national governments. They are both ongoing criminal enterprises.

  10. I fail to see where a “scam” has been committed unless one refers to the endless war on certain drugs; the ongoing government scam that artificually drives up market prices of drugs which benefits untouchable entities with plausible deniability like the CIA (Criminal Intelligence Agency) and perpetuates the make-work socialism/mercantilism benefitting the criminal industrial complex by providing an endless supply of criminal fodder to prosecute and incarcerate at great expense. The victim here is individual freedom and liberty.

    The victimless so-called crime that occured sounds like it was a brilliant customer service driven operation which met the market needs of people in France interested in using a great plant and successful people with black accounts in Switzerland who are trying to protect their wealth from armed robbery at the hands of the criminal syndicates referred to as governments (which have no resources they do not take by force from the people over whom they lord authority at gun point). Too bad these people got caught. The real crime here is government theft and persecution of those who take countermeasures to prevent it.

  11. The whole point of this article is government is and will always be a scam! Your RIGHT to labor is your right. What all these capitalist did was want to protect and increase capital so they could enjoy the fruits of THEIR labor. All drug laws should be abolished. Drug dealers probably don’t want this as free markets ALWAYS drive prices down. When people finally wake up and quit falling for class warfare or thinking the government knows best, then we might have a great planet without the government killing over 100 million people in the last century in the name of peace. Why Switzerland has lost its courage will be its downfall.

  12. Woman provides product to customers.

    Woman facilitates the removal of rightfully-owned funds from bank.

    I don’t see a problem here. The only problem is the overreaching State trying to interfere in legitimate business and steal the property of wealthy individuals.

    The government-employed thieves should be in prison, not the people simply trying to engage in commerce.

  13. A majority of the Sheeple on both sides of the Atlantic will pick up the cues from the media and scorn these “tax evaders” who are not “paying their fair share” any court case would be a slam-dunk guilty verdict. These tax evaders are “stealing” from the 99% by forcing them to pay the taxes the rich are dodging!

    Anyone reading this and seeing a dark future? Also does it not point toward gold as the ultimate money? You don’t have to take it out of your country, or park it in any bank where they might facilitate its transfer to a government. Physical gold held outside the banking system and you avoid all these clever thieves after your wealth. (side benefit it allows you to sidestep inflation and paper currency debasement)

  14. Stop criminalizing drugs. Don’t tax anything. Stop ALL this bullshit.

  15. This has false flag written all over it

  16. Here’s an idea: legalize drugs and DON’T tax them