Swiss Bank Goes Online

HalAshton writes "In a move that should make it easier to launder money on the internet. A Swiss bank is going online with initial deposits only $5000." U.S. regulators and the IRS are worried. Next thing you know, they'll want back doors into all crypto so that Internet-using tax evaders have a harder time hiding from them.

URLs for MFC Merchant Bank S.A.

It looks like the MFC Merchant Bank S.A. is available at either http://www.mfcbank.ch/ [mfcbank.ch] or http://www.swissnetbanking.com/ [swissnetbanking.com].

"September 15, 1999 -- SwissNetBanking.com, a unique Swiss banking and on-line share trading service, was launched today by Geneva-based MFC Merchant Bank. MFC Merchant Bank S.A. is a wholly owned subsidary of MFC Bancorp Ltd. (Nasdaq: MXBIF and Frankfurt Stock Exchange: MFC GR). The SwissNetBanking.com website will offer investors the opportunity to open a private Swiss Bank account to trade securities over the Internet."

Re:Why does the US have to control everything?

People who go into government in the U.S. don't get respect, and don't get money. At low levels, you get job security. At high levels, the only incentive is power.

Everyone who is at a high level in the U.S. Government is there for the power. Maybe the reason is they want the power to do good, improve the world, and serve humanity. But, no matter why they want power, the only reward, the only great benefit, and the only reason anybody of ability and ambition goes into government work in the U.S. is power.

And then everybody's suprised for some reason when those who have acquired power try to extend it as far as possible.

Swiss banks and money laundry

"In a move that should make it easier to launder money on the internet."

What the hell does that mean? I'm a Swiss citizen and I'm quite fed-up with the systematic association most americans do between crime and my country. I'm sure most US banks have their nasty past as well, but it's oh-so-easy to bash that little country in the middle of nowhere (Europe, that's nowhere to you). I'd like my country to be remembered for different things, such as the WWW itself (T. Berners-Lee invented it at the CERN, near Geneva) or the many hi tech innovations achieved by our universities.

Our banks are, at least officially, doing everything in their power as to stop money laundring activities. Nothing I can personaly do about it. And I happen to have a few Swiss bank accounts.

We happen to have electronic banking in Switzerland, and we've had it for way over 10 years now. I think it's just normal the banks offer the same service to their international customers. And hell if your IRS gets an ulcere, who likes them anyway?

So guys, please revise your stereotypes for once, it's getting a bit tiring. Otherwise I'm gonna start talking about how your big US corporations prefer having the work done by Chinese slave workers.

Not THAT big a deal.

Swiss authorities are becoming more lenient with Swiss bank account information of late. Your safer bets are in the Cayman Islands if you're evading taxes.

Laundering money

... make it easier to launder money on the internet"

Hello? Anybody home? You can't launder electronic cash you fool. The purpose of laundering is to turn cold hard cash in to legitimate earnings. Biggest launderers are obviously criminals (drugs, stolen good, fraudsters, etc). I think what you may mean is "make it easier to put away illegal earnings".

BTW, the easiest way to launder money is to go to Las Vegas (If you're a US resident) or any other casino, buy $9,000 worth of chips from every teller until all your cash is chips, stay 3 days and cash in your chips that you "won". The Casino pays out all transaction over $1000 in cheques, and report all transactions over $10,000. Hint: Don't cash in more than $10,000. Now, take your 10 cheques for $9,500 in to 10 different banks and deposit the winnings. After that, then you can transfer it to your Swiss bank account so the money is there when you get out of jail .

Why does the US have to control everything?

What is it with the American Government and control? They seem to have their hands in just about every conflict out there, trying desperately to control the paths other nations take. Is it based on the belief that they actually know what's best for the world? Does the American government actually believe that it is morally superior to other countries, and that it's laws should be of paramount concern? Obviously the US government has no notion of privacy, but how far is it willing to go? The States seem to be more and more dictatorial when dealing with independent nations, and also when dealing with its own citizens. Are the works of authors such as Orwell required reading for highly placed government jobs?
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MFC Merchant Bank

What self respecting slashdotter is going to trust their money to something called MFC Merchant Bank?

:-) for the humor impaired :-)

Makes one think ...

Why is this story even news? There are many banks in the United States (e.g. Wingspan) that offer full Internet service, and I would not be surprised if they have foreign clients.

What's news is that a foreign agent is offering these services to Americans -- your money is growing delocalized. The IRS can audit your house, your cars, your mistresses and your drugs because they all have to be near your person. With the advent of speed-of-light communication (i.e. asset/information transfer) and, more importantly, authentication and security, the scrutiny over your assets is growing more and more ethereal.

Hence, one realizes that the US, more than anything, else, is the dominant controlling entity in the arena of world finance -- this pisses me off, because it is counter to the notion of laissez-faire (sp?) capitalism that I hold dear, and I think America should return to. The most insulting aspect of this is that the powers-that-be cast this control as "stability" -- Alan Greenspan will tell you that he is a macropsychologist more than an economist. Damn patronizing.

I hope security technology, Internet banking and private currency continues to grow, and bulldoze the attitudes of naivete in the masses and power-inebriation in the controlling "economists."

Please feel free to deride me as an optimist.


*** Proven iconoclast, aspiring bohemian. ***

Re:Laundering money

No, I think you're being too harsh on this one. The Swiss Internet account would be very useful in the "rinse cycle" of a laundering operation. If you'd already introduced your dirty money (not just cash -- the results of wire fraud and securities stings also need to be laundered) into the banking system in, say, Colombia, then you would still need to get it to a more respectable jurisdiction if you didn't want to attract raised eyebrows when it came back into the US. An internet-available Swiss account would be very useful for this -- big transfers coming in from Switzerland are not subjected to anything like the same sort of scrutiny as transfers coming in from, say, Antigua.

Oh yeah, and your casino idea is strictly small-time. You could do it a couple of times, but before long, the casinos would begin to recognise you, and on your next visit to Vegas, you'd be greeted by a Secret Service man asking about your strange unwillingness to gamble. Believe me, it happens -- the casinos' obligation to report suspected money launderers does not start at $10,000, and they have very good systems for keeping track of "funny" behaviour, developed to catch card-counters.

You'd be better off actually gambling with that money to cover your tracks. If you lost less than 40% of your initial stake, you'd be paying well below what is considered the market price for laundered funds.

But the classic method of money laundering is to open a pizza restaurant. It's very hard for a lawman to estimate how much pizza you sell, so make lousy pizzas, but claim to the IRS that you're doing a roaring trade. Then you have a very good excuse for having loads of cash round the shop, and it will be tax-paid and for all practical purposes clean. (And even if the IRS catches you, they are legally prohibited from grassing you up to the Feds -- strange but true)

jsm

More detail on this particular bank

A few things don't quite add up here ... as far as I'm aware, they should not be advertising broking services into the US without prior approval by the SEC. (From the article cited)

The Securities and Exchange Commission, meanwhile, has blocked the bank's plans to let U.S. residents place trades through the accounts.

I also note that MFC Merchant Bank SA is owned by a company with quotes on NASDAQ and the Frankfurt Neuer Markt, which makes it very atypical for a Swiss bank (almost all of which are partnerships). And their main service appears to be discount brokerage in American equities, which once more doesn't scream "Swiss Bank" to me.

[brief pause]

Yup, I was right. A quick trawl through EDGAR [sec.gov] reveals that they're a subsidiary of MFC Bancorp, incorporated in Yukon Territory of Canada. They used to be part of Mercer (the paper and pulp people) and now they're a Swiss Bank, having bought an operation from an unnamed vendor and then acquired the shell of an insolvent Swiss bank: (from 20-F report)

In September 1997, the Company acquired all of the shares of Bank Rinderknecht AG ("BRA") for approximately U.S.$7.0 million. BRA, headquartered in Zurich, Switzerland, was active in private banking and securities trading for Swiss and foreign customers since 1870. BRA had been placed in liquidation by the Swiss Federal Banking Commission in August 1997.

The other major asset of this company is a sizeable interest in the Wabush Iron Ore mine in Newfoundland, for those who care.

Far be it from me to say "bunch of opportunists cashing in on the good name of Swiss banking", but if the cap fits . . .

I'm not casting any aspersions on this firm -- the fact that they're regulated by the Swiss authorities provides a baseline guarantee that they're a legitimate bank -- one cannot just march into Geneva and set up business without any checks. But they are not, IMO, a "proper" Swiss bank of the kind you read about in James Bond novels. Everyone should do their own due diligence before making an investment decision -- you should check out the 20-F I linked to, at least, before moving any of your money.

jsm

Re:Not...Other OSbanks online..

www.bil.lu is Banque Internationale a Luxembourg, which is a subsidiary of the Dexia group, while fortisbank.lu is a member of the Fortis group. Both of these are well-known international banking groups whose financial strength is beyond question. I've never heard of Robecobank, so I can't commment on that.

AC's post on the tax/secrecy regime in Luxembourg is broadly right, but I have to make two caveats:

1)The bank secrecy in Luxembourg is not as total as AC implies -- Luxembourg is fully compliant with the EU's Money Laundering Directive, so if it suspects that you are laundering money, it will give up your details (end of story). That includes tax evasion, but it will usually only grass you for this in response to a specific inquiry from domestic tax authorities.

2) It has to be said that Luxembourg's tax haven status is not definitely secure for all time. It is a source of vast irritation to the Germans that Luxembourg bank accounts siphon off a material chunk of their potential tax base. Because of this, there are negotiations underway to introduce a common withholding tax in Europe, in which case Luxembourg would be obliged to deduct a proportion of your tax at source.

If you're serious about banking secrecy, then Austria is the place for you, as you can still get proper numbered bank accounts there if you hurry -- ("proper" numbered accounts are ones where literally nobody knows your name, as opposed to Swiss accounts where the CEO of the bank has a ledger of names vs. numbers). It's entirely illegal under EU law, but the Austrians have been dragging their feet on implementation.

Or, if you want to be really secret, a bank in Antigua is the current vehicle of choice. But don't come running to me when they disappear with your money.

jsm

Ask Slashdot: Anonymous banking

If nobody knows your name how do they identify you, and how do you transfer money, etc?

In the words of Tim Rice and Andrew Lloyd Webber:

Oh what bliss to sign your cheques as 3-1-0-2-7!
Never been an account in the name of Eva Peron!

(from Evita)

Basically, you can sign a cheque with your number instead of your name (you may want to go to a big bank to do this rather than your local Wells Fargo). Or you can ask for money to be transferred from your anonymous account to your checking account. To do this, you'll need to know the a/c number, plus probably a password arranged with your banker.

But you shouldn't really be using a Swiss a/c for your everyday bank account. It's only worthwhile if you're only occasionally withdrawing money to buy a boat, or because your family has just been made refugees by a coup (a good reason for bank secrecy). Or something else which would make the trip to Switzerland worthwhile. A really good banker will meet you anywhere in the world with a suitcase full of cash, although this service costs a bit more.

Is this done on the phone? How do they know you, by your voice? What if the person who recognizes you is dead - how do you carry out transactions?

See above. Passwords are sometimes used, or the banker may indeed recognise your voice, or you may prefer to do business face to face. The death of your banker is a serious problem -- that's not a silly question at all, and is a real problem for the industry -- they will usually have a secondary banker assigned to your account. When a senior Swiss banker has a heart attack or something, it's a real crisis for a Swiss bank; they have to work some serious overtime sorting out his accounts.

And...what if the ledger of names/numbers gets burned in a fire? Billions of dollars in one book lost?

In principle, yes. In practice, the Swiss solution to this is "well don't let it get burned then". It would probably be possible to reconstruct about 70% of the book from other records, but there would be a real problem here.

The price of secrecy is that you forgo a lot of these safeguards. There is a huge pool of "orphan assets" in the Swiss banking system (including, scandalously, a lot of accounts of German Jews which went dormant in the 1930s). It's quite possible to lose money in the system entirely -- and unless your heirs know exactly the right questions to ask of your bankers, they'll never admit to the account's existence.

I once seriously considered giving up my job and working as a "treasure hunter" in the Swiss banking system, to help people look for this kind of asset. But you really need a Swiss lawyer's certificate to be in that kind of business. So I took up programming instead.

jsm