The latest edition of the Global Financial Centres Index (GFCI) shows these two leading centers to be considerably more “resilient” than others, ranking as the world’s only “truly global financial centres.”

The GFCI, which is based on surveys of financial experts and professionals, rates financial centers on a point basis. London was on top with a rating of 781, followed by NY with 768. The ratings for these top financial centers fell only 10 and six points respectively since the onset of the crisis.

The next three centers – Singapore, Hong Kong, and Zurich – saw their ratings nosedive by 14, 16, and 17 points respectively. Tokyo has fallen out of the top 10, slipping to 15th place. Chicago is seventh, Boston ninth, San Francisco 17th, and D.C. 21st. Toronto is 11th.

Pender suggests that the only “plausible thesis” is that heightened competition to London and NY can eventually come from Asia. He points specifically to Shanghai, noting that China is running huge surpluses, its banks are well-capitalized, and its government is working hard to turn Shanghai into a global financial center by 2020.

But Shanghai currently ranks 35th on the GFCI, around the same as the British Virgin Islands and the Bahamas. Never mind it plummeting a whopping 30 ratings points over the course of the crisis. And there is considerable competition within Asia for the top financial spot – pitting Shanghai against Tokyo as well as Hong Kong and Singapore.

Perhaps a combined Shang-Kong center can emerge over time. Shanghai has the industrial muscle and economic size and scale, while Hong Kong brings openness and attractiveness to global talent.

But major banking centers are extremely resilient.  Even though New York overtook London during the last economic crisis of the Great Depression, London has come roaring back and once again eclipsed the Big Apple.

The real action will be further down the chain, as the economic crisis continues to wreak havoc on second- and third-tier financial centers.

The National Accountability Bureau presents a document to the court. The NAB is the office that works on corruption cases. Mr Zardari was alleged to have 1.5 Billion USD in assets, which included properties and overseas bank accounts.

The $60 million USD most recently in question was money that the NAB decared in 2003 documents had been placed in a Swiss bank account by Zardari and Benazir Bhutto.

Zadari is accused of earning the $60 million USD illegally through commissions from foreign firms. The money was originally seized and accounts frozen in Switzerland during the court cases which were filed against Bruto and Zadari. The funds were returned to offshore accounts in Zardari’s name after Zadari received amnesty from Pakistani President Pervez Musharraf in 2007.

This story is ongoing and we will update you here as more information becomes available.

That’s how James Stewart chose to categorize those currently scrambling under the governments determination to attack offshore account holders’ privacy in his recent Wall Street Journal article.  While the spurious nature of such a straw man is evident, we’ll continue to look at what he writes before editorializing his work to death.

Do you know anyone with a Swiss bank account? I don’t, which is probably no surprise since the whole point is secrecy. But evidently there are plenty of Americans who do—at least 52,000 at UBS alone—whose identities the Internal Revenue Service and the Department of Justice are trying to learn.

…. I’ve been wondering just why anyone needs or wants a Swiss bank account. For African dictators, international arms traffickers and terrorists, the answer is pretty obvious. And there are certainly citizens of countries whose own banking systems are so precarious, and the risks of persecution for any number of reasons so great, that a Swiss bank account may provide welcome security.

Here our friend has completely missed the boat.  Setting aside the fact that he paints the only people who might need offshore accounts are all sociopaths and criminals, he fails to observe the most obvious reason someone might want to hold assets offshore.  The absurd construction the US calls its civil court system.  Anyone with more than two nickels to rub together is rightfully worried that a plaintiff(s) and a lawyer without said nickels can get together and file any manner of frivilous litigation against them.

An award system that allows the lawyers to work on contingency is great for allowing the disadvantaged to be heard in court, but it is also open license for expensive fishing expeditions.  Those with assets to protect that find them in the line of fire of US courts often find it less time consuming and bothersome to merely pay off plaintiffs, right or wrong, to avoid the cost and hassle of outrageously expensive litigation costs.

But the U.S. is not one of those countries. Despite our recent banking woes, the U.S. has plenty of financial institutions with impeccable balance sheets. It has a legal system second to none that provides ample confidentiality and due-process protections. But it doesn’t offer ironclad secrecy in the face of a legitimate, court-sanctioned subpoena, which means it doesn’t lend itself to tax evasion.

 I don’t even know where to begin with this one, other than to say, “we’ll agree to disagree”.  The U.S. has plenty of financial instiutions with impeccable balance sheets??? Is he kidding here or what?  The only reason most of the major financial institutions that accept retail deposits haven’t been declared insolvent is pure lack of oversight, regulation, and out and out fraud.

UBS says it would violate Swiss financial privacy laws if it complied. In that case, UBS (and its government) should be faced with a simple choice: continue its policy of strict secrecy, in which case UBS should forfeit the right to do business in the U.S.; or compromise, aligning its banking laws with those in the rest of the civilized world.

Here I tend to agree.  If UBS and Switzerland by extension want bank secrecy within the confines of Swizterland they should be able to have it.  HOWEVER, in cases where US citizens have gone to Swizterland he argues that it should align its banking rules with those of the US if it wants to serve US citizens.  Here I violently disagree.  To do so not only tramples on Switzerland’s sovereignty, it seriously undermines the credibility of anyone who thinks or declares that Americans are “free”.  They most certainly are not.  

What’s completely “unsaid” in his strawman attack of those looking to shelter their assets is that ordinary American citizens were merely looking for the same kind of tax advantages and shelters from liability that corporations, those foreign and domestic enjoy every day in the good old USA.  Well, the argument stems that “corporations are different”.  I reject that flatly.  Nowhere in the constitution, that I’m aware of are corporations afforded protections or unalienable rights.  The reality is, however, the US has become a country by and for the corporation, with individuals the only ones left to be taxed into oblivion to pay for greedy corporate pigmen, bent on breaking already lenient rules on risk taking and taxation until the paid for government declares them “too big to fail” and reaches into the ordinary citizens’ pocket again to pay for their largess.

In a corrupt and obviously unfair environment such as this, is it any wonder that an ordinary citizen would doubt the future intentions of a system bent on taxing and redistirbuting its wealth to the richest of its corporate citizens while leaving everyone else the victim of misguided growth policies?

Swiss banks must now register with the SEC to provide services to US taxpayers,  which means their American clients will have to sign a form guaranteeing the exchange of their financial records with the IRS. Not only this but many banks also do not want to put themselves in a position that would invite further blackmail.

Now US tax payers who want to open an offshore account are running out of places to turn to. The days of the secret numbered bank account seem a distant memory. The US government, spearheaded by the IRS, is intent on reclaiming $50 billion dollars which it claims to have lost to tax evasion.

Strict rules define how US citizens  can open Non-US accounts, seemingly governed by the principle of “innocent until proven guilty”.

American citizens have to report offshore bank accounts of more than $10,000 and pay tax on income earned over $80,000, irregardless of domicile (theoretically they could be paying tax from space).

Source: bloomberg

Why so cyncical?  Well, primarily because despite the massive amount of offshore banking and offshore accounts located in the british dependencies, sacred cow middle european havens, and far east havens of hong kong, singapore, and macau, not ONE of these offshore havens was named in the blacklist.

I recently received this email from the people at capital conservator.  It sounds like they are in the process of creating another guide to going offshore.  If i can get my hands on some of the advance material I will post it here.

Here is the email I received:

A little banking privacy heads up…

The spotlight has been on bank secrecy recently,
and I thought as an e-course “insider” you should
be the first to know the real truth about
international financial privacy and “secrecy jurisdictions”.

Although the time leading up to the April Tax filing
will always be filled with offshore horror stories,
this year especially has seen unusual sabre-rattling.

Fortunately we’ve outlined the real truth behind
bank secrecy in a free pdf report

Specifically, what’s in store for offshore
tax havens after the latest wave of “offshore warfare”?

Will your privacy be affected by “Stop Tax Haven Abuse 2.0″?

Meanwhile the Capital Conservator engine
room is dreaming up a new e-book;
“The Blackbelt Guide To Offshore”
to be released in the next couple of months.

I’ll be honest, a load of our competitors
offshore don’t want “The Black Belt Guide”
released, it’s not the kind of information
that usually gets disseminated among “civilians”.

Keep your eyes peeled for updates

The new penalty limits were introduced, amidst the high profile and investigation of UBS, Switzerland’s largest banking institution.  UBS was charged with, admitted wrongdoing, and agreed to a fine with the IRS over assisting US taxpayers with tax evasion through use of offshore structures and offshore accounts that UBS helped setup.

The case and investigation involved thousands of  U.S. citizens with Swiss bank accounts, and has left many a wealthy U.S. citizen scrambling.

The goal of the new IRS program is to get those same people who are panicking over the potential for liability to come forward and wipe the slate clean.  However, there are some problems, perhaps, with the way the IRS structured the voluntary compliance program.

One of the major points of emphasis is with those who are holding U.S. securities held in an offshore account.  Attorneys working with clients say a number are slow to come forward once they calculate the costs of doing so.

In order to disclose their offshore holdings are too high, especially for those who have seen their account balances shrink dramatically in light of the recent downdraft in world equity prices.

Some believe the IRS miscalculated when estimating what it would take to encourage volutary disclosure by these account holders.

The way the IRS is calculating penalties, offshore account holders must pay taxes, interest, and penalties in arrears for six years.  In addition they owe a penalty of 20% of the amount in the account in the year when the account was at its highest value.  Many are considering to continue to remain in the shadows given the cost of coming forward.