Swiss Bank Goes Online 99
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.
This doesn't make any sense (Score:1)
Even if you crack their account, you can't just drain away millions of dollars. There's a big difference between cracking and defacing a web site and actually embezzling money.
Essentially, your account balance, deposits, etc. are stored as column/row values in an RDBMS. Not only that, but these values have to be in sync with various other tables. What do you mean by "draining away the money"? It doesn't help to just wipe out the numbers - it has to reappear somewhere, in another bank account, meaning updating that bank's row/column values. For this, you need to *transfer* those funds via the Swiss bank's IT process, and normally this is done through file dumps which are transmitted nightly between banks. For this, you need to know the exact file record format, the program logic, the internal relational database structure, and so on.
Even if you manage that, which is extremely unlikely, as you'd need to pore over a shitload of boring COBOL code, it will be spotted fairly quickly on some report when money is missing.
Cracking and sneaking away with millions is good for a movie plot, however.
Re:Not...Other OSbanks online.. (Score:2)
Re:What kind of guaruntees on this? (Score:1)
BTW if you are aiming to brute-force crypto, you are better of sinking your money into loads of FPGAs than a beowulf cluster. (unless you want to simulate nuclear detonations during off hours
If you are using a algorithm and key length that has been broken *very publically* (hell, there is even a HOWTO^H^H^H^H^Hbook about it!), then you deserve everything you get.
Re:Laundering money (Score:1)
If a pizza shop is suspected of being involved in money laundering, they'd use the exact same technique.
-E
URLs for MFC Merchant Bank S.A. (Score:3)
What kind of guaruntees on this? (Score:2)
More importantly, though, what's to stop a small country willing to devote a relatively (for a country) small amount of money to building a distributed computing facility (or a Beowulf cluster, for that matter) and simply smashing away at whatever encryption method the bank is using? Wasn't the 64-bit DES key just brute-forced not too long ago by distributed.net?
If you look at it, the potential gains for a country to have hacked the secruity protocols for the transaction server would far outweigh the initial cost. Throw two or three million dollars into a cluster of PIIIs, and just let them work. It doesn't have to happen in a day. They could take a year before they finally break the key. But when they finally do it, they could drain your account dry. And does anyone know what type of insurance policy Swiss banks use...? I'm sure they're not backed by _our_ government...
Re:This doesn't make any sense (Score:2)
Nobody who is worth their weight in shit relies upon just one level of security when serious financial transactions are happening (and no the exhange of two-fitty for a box of baked beans on ebay does not constitute a serious financial transaction). The big swiss banks have a record of security to protect. Their lure is security. Even when the world goes to hell in a bucket, your money will stay safe in Switzerland. That's how they make the huge profits and get people to line up to open accounts when their level of interest in miniscule. The swiss aren't going to play any games. Putting your money in an online account in a big swiss bank is probably ten times *more* secure and *safer* than giving your money to some two-bit tellar at your local bank, and letting that bank keep it for you. The guy at the window at an American bank has a lot of power. How the hell do you think they give money to you. They know how much money you have, and can take it out of your account on the fly. Serious people don't do this. Things are handled on a need-to-know basis, and most minions in the big banks don't need to know much.
Re:Why does the US have to control everything? (Score:3)
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.
Re:Questions about Swiss Bank accounts (Score:1)
If it's non-computerized, how do they ensure reliable records? what if there's a fire?
Presumably in the same way as banks have kept reliable records since a long time before computers were invented. Don't forget that banks came a long time before computers.
Re:Not THAT big a deal. (Score:2)
This is true. Swiss banks have disclosure treaties with the US and the EU as a condition of joining the united Europeans.
Carribeans are the new Switzerlands.
Re:Why does the US have to control everything? (Score:1)
CJ.
Re:democratic moderation (was Re:Why does the US.. (Score:1)
I'm a little concerned that something marked as flamebait by two people could also be rated as interesting or insightful by others, and ultimately rate quite highly. I think an event like this highlights on of the problems with the moderation - it only takes a couple of people to turn obvious flaimbait into something rated highly. There needs to be a higher volume of moderation to reduce the effect a single person can have.
CJ.
Re:money laundering? (Score:1)
That's completely untrue. An attorney who is complicit or accomplice in a crime has no attorney-client privelege (for those actions).
Otherwise, you could have your attorney drive the getaway car, or kill your spouse, or whatever, and they could never put him on the stand.
Attorney-client privlege only applies in LEGITIMATE legal relationships...
Re:money laundering? (Score:1)
Oh, certainly there's no basis in the cases you cited for trying to overturn the privelege. Paying money to the IRS isn't a crime, and there's no logical or legal reason you could compel an attorney to reveal why or who the money is coming from. Same with the tax stamps.
In the current context of money laundering, though, an attorney who moved money from one account to another, or deposited funds, or participated in any material way to such an activity is commiting a crime, as the activity is inherently criminal based on the origin of the money (much as passing counterfeit money is, regardless of if you made it). Paying income taxes on that money wouldn't be criminal, and could thus be done anonymously through your attorney.
Be careful. Be VERY careful. (Score:2)
Internet anonymuity is a double-edged sword. And, of all people, slashdotters should be aware of it.
Hear Hear! (Score:1)
That said, let's remember something: how are many crime bosses caught? How was Al Capone caught? Tax evasion. Who cares what you actually did, but if you made money off of it and didn't give the fed their cut, then you lose. This is why the US is so scared of losing their hold over their citizen's income.
-davek
Re:HOWTO??? (Score:1)
Re:Swiss banks and money laundry (Score:1)
So, I'd also would like to ask story posters to think twice before writing shit about a country they've only heard of in tabloids.
Swiss banks and money laundry (Score:3)
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.
Re:Not...Other OSbanks online.. (Score:1)
Not THAT big a deal. (Score:3)
Re:Laundering money (Score:1)
kinda like crime in general really.
Re:What's the point in laundering? (Score:1)
Actually, Vanautu is a lovely place to live/work. Now, if I could work out a way of setting up a Vanautu Co. on the 'net, paying me every cent it earns (no income tax) and then being able to work remotely from any place in the world... Now that would be cool.
Crack away baby! (Score:2)
Easy! NOT.
Laundering money (Score:4)
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 .
Re:What about security? (Score:1)
Single World economy (Score:1)
This isn't that important... (Score:2)
Everyone seems to be so happy that they too can open a swiss bank account with only $5000. I've got news for you: If all you have to start your account is $5000, you're not saving that much in taxes by doing this. It's a risk/reward trade-off, and you'd have to be a moron to think it's worth it.
Anybody that actually stands to gain (from the tax-evasion persepctive) by putting their money in swiss accounts, has much more money, and doesn't do it via the web. (They fly to Switzerland in their private jet.)
-Brian
Re:Why does the US have to control everything? (Score:1)
Always "Uncle Sam knows best" syndrome, and there's one big and easy counter-example I could throw in to blow the idea out of the water...
Is there no way of getting those in government who have "power" to exert it responsibly, for the people's good, rather than to forward their own agendas as politicians?
(Given that voting for one party or another just brings in another load of megalomaniac politicians...)
HOWTO??? (Score:2)
(joke!)
Re:Laundering money is hard and getting harder (Score:1)
The only way to avoid this is to run a retail operation and then slide the black money into the takings, preferably while creating till rolls to account for it. But this is labour-intensive, and as soon as you bring employees into the conspiracy you create a serious security risk.
On the other hand a really detailed audit is rare. The main art in money laundering is to look sufficiently legitimate that the authorities have no particular reason to start digging. Its camouflage, not armour.
Paul.
Re:What's the point in laundering? (Score:1)
I think you are confusing laundering with tax avoidance/evasion. The two are completely different things.
If you do some research into off-shore banking, you will find certain countries don't tax foreign income.
The general principle is that income is taxed in the place that it is earned. If you earn money abroad and bring it back to the UK then the UK government won't ask for tax on it: they assume it was taxed where you earned it. But if you merely try shunting money through foreign bank accounts then I think you will find the IRS still wants it's cut. To avoid paying tax you have to go and work somewhere that doesn't tax income. Such places exist, but unless you are a multimillionaire you will probably find that by the time you have paid for armed guards, personal health care and all the other bits and pieces of a civilised life, you would have found it cheaper to stay where you were.
Paul.
Swiss banks... (Score:1)
-komet (an englishman in switzerland)
Attorney-run bank, why not? (Score:2)
Reading this thread is giving me more info. about money laundering that I'd ever previously had, so I am writing from a position of ignorance, but this 3-step way to relative secrecy raises a few questions for me.
1) Why not a bank run by attorneys Dewey, Heidit & Diep in which every account is run this way? i.e. you hire Messrs Dewey et al not just as bankers, but as attorneys in the particular financial affairs of your account. And they don't ask, don't tell.
2) What sort of rules govern secrecy of account info in the US? Are these rules based in part on eligibility for FDIC insurance? If so, what if my richest friend and I wanted to start a non-FDIC-insured bank? Realizing that such a bank would probably
Insight appreciated,
timothy
Swiss banks being truly secret? (Score:1)
Swiss authorities have always cooperated with US investigators, you might as well "hide" your money in a US bank, since they roll over almost as easy, but everybody knows it.
Why does the US have to control everything? (Score:3)
--
MFC Merchant Bank (Score:4)
:-) for the humor impaired
Makes one think ... (Score:4)
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:Hear Hear! (Score:1)
Re:What kind of guaruntees on this? (Score:2)
I've had all of my stash at www.sfnb.com for years now. They were the first Internet-only bank and I jumped at the chance to open an account with them.
So, if you did break into my account, what would you do? Write yourself a check and have it mailed to your house? Transfer my money into your account?
I'm not saying it's not without risk. You could, if you wanted to be a dick, transfer $10,000 out of my savings into my checking, then write out a check on-line for $10,000 to your favorite charity.
Or, sell something big you don't own on e-bay, get the cash from the buyer through an escrow service, then buy the product from somewhere else, use my account's funds to pay for it, then have the product shipped to the ebay buyer's house, then escrow service releases money to you when buyer gets the product you never owned. (sound familiar?)
OK, damn, never mind, it can be risky. Great, excuse me while I got change my password again.
But I still don't see net banking as much of a security risk as debit/ATM cards where possession of a tiny 4-digit code and card can get you instant cash from the account.
Re:money laundering? (Score:1)
Re:Super Swiss Security (Score:1)
And don't forget that not everyone in Switzerland is a millionaire... there are banks for regular people as well. Even if you're only a foreigner staying in Switzerland for an extended period of time.
Don't assume anything as far as technical security goes, though - having worked on several internet banking projects in Switzerland, I've noticed that the security problems are pretty much evenly distributed worldwide.
They do get the trains arriving on time, though.
Re:HEllo (Score:1)
Just kidding.
Swiss banks blah blah blah (Score:1)
Re:Wingspan: "No foreigners!" (Score:1)
Not quite true. Non-Resident Aliens can open a Non-Interest Bearing account if they really need a US bank account.
Re:Canadian use (Score:1)
You would be better off using other Off-shore banks like the Isle of Man ones.
What's the point in laundering? (Score:1)
Internal Revenue Service, right?
Doesn't it seem logical that one could legally be External ?
You don't need to launder money to avoid the tax man.
If you do some research into off-shore banking, you will find certain countries don't tax foreign income.
Re:What's the point in laundering? (Score:1)
Sorry, I wasn't clearer. I'm well aware of the differences. It just seems that people doing the laundering are also usually caught with tax evasion. My point was: BOTH are un-needed if you check into off-shore banking.
> But if you merely try shunting money through foreign bank accounts then I think you will find the IRS still wants it's cut.
In the US you can use a W-8 form to show that your foreign company is not eligable to be taxed, BUT ONLY IF the foreign company does not have a US tax payer's identification number (TIN.) Some countries don't tax foreign income, so basically the company is able to earn money tax free. Why else do you think off-shore banking/companies are popular with millionaries?!
BTW, the foreign company WILL have a number in the jurisdiction that it is registered in, but that can not be used as a TIN outside its jurisdiction.
I have met people who have been external to the IRS for a number of years, so I know it is possible.
Work smarter, not harder.
Cheers
Re:Makes one think ... (Score:2)
I cannot remember the show, other than it was on PBS, but they were interviewing a FED economist and he said something that cause me to have an epiphany. What he said was something like:
Now, I'm an electrical engineer, and feedback is something I understand far better than any economist. One of the things you learn in control systems theory is that a system with lots of phase lag (i.e. it takes a long time from control input to response output) will be unstable if the loop feedback isn't lowpass filtered. The economy has a great deal of lag to it, but the FED's reactions to the vagarities of the market is almost instantanious. Also, you don't hit a system with step functions (sudden changes from one value to another) unless you want it to ring. The FED always makes step changes in the prime rate. Result: instablity.
My solution: The FED should be required to make all changes over a long period (say, six months), with a small increment each week. This would do two things:
Of course, since the FED would lose power under my plan, that is exactly why it will never happen.
money laundering? (Score:2)
1) Get an attorney
2) Have Him/Her set up a bank account for you
3) Instruct Him/Her on the handling of the account.. ie balance transfers, payments, etc.
Thus, everything you do regarding your money is protected by the attorney-client priviledge. Yes, whatever government is looking at you can get bank records, but they can never make your or your attorney say a word...
our wonderful government (Score:1)
On a somewhat unrealted note, if our gov't deems computers with clock speeds over 1 GHz to be capable of helping design nuclear weapons, who is to say every country in the world won't have some nuclear device in 30 years? I think the playing field is being leveled really fast. I hope it settles without the world blowing up. Unfortunatly people don't give up power easily...
Level playing fields are a good thing. Somehow I thought that had something to do with democracy.
Why README?!?!?! (Score:1)
Sorry to waste your time, really
jsm
Re:Coutts (Score:1)
But they are bankers to the Queen (and to my immediate boss), and they will give you a handwritten statement if you want one.
Good point about there being Swiss banks and "Swiss banks" -- the vast majority of the domestic market is served by Kantonalbanks, which are similar to US Savings and Loan institutions. I was talking about the "high end" of the banking market. I utterly agree with you about security problems.
Sweet trains, though, I agree.
jsm
Super Swiss Security (Score:2)
That's because they write down your balance in a ledger. With a fountain pen. (I kid you not, I've seen it done). And that is the banker's book. You pay through the nose for a full-service Swiss bank account, but you get total confidentiality, and you don't have to worry about computer security.
If, on the other hand, you sign up for a spivvy online banking service, then I for one would definitely not just assume that it's any more secure than Hotmail. I would do plenty of due diligence (for starters, I'd check whether they're members of the Swiss Bankers' Association) before I started trusting them to the extent I would a Swiss banker. It could be that all you're getting is the same service as your local American bank, but with a flashy
jsm
Re:Swiss banks and money laundry (README!!) (Score:2)
And I happen to have a few Swiss bank accounts.
If you're living in Switzerland, I'll bet that your accounts are either with UBS or Credit Suisse, or with the local Kantonalbank. That's a different kettle of rostis from what we're talking about here, which is the Geneva and Zurich private banks. These banks sell a product, and that product is secrecy, and a fair proportion of the people who are prepared to pay for secrecy want it for some nefarious purpose.
There are utterly legitimate reasons for wanting a secret bank account (if I was a Chinese businessman living in Indonesia, I'd want one, for example), but these are definitely the exception rather than the rule.
It's true that Switzerland has cleaned up its act of late, and now has decent money laundering laws. It's not a real den of laundering like some of the West Indies financial centres. But it still comes with the territory.
jsm
PS: I'd prefer to remember Switzerland for the Jungfrau and for Lake Neuchatel.
Re:Laundering money (Score:4)
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 (Score:4)
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)
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.. (Score:5)
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 (Score:5)
In the words of Tim Rice and Andrew Lloyd Webber:
(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
Swiss Bank Privacy (Score:2)
Re: The Future of Banking... (Score:1)
The Global Financial Jackboot [zolatimes.com]
Concepts in Digital Cash [zolatimes.com]
Digital Cash and the Regulators [zolatimes.com]
More by Grabbe here [zolatimes.com]
---jsm, please drop me a line.