What Happens When A Country Signs the New Tax Treaty – The banks will then become diligent in watching for newly closed accounts and large sums being removed because these banks have a good chance of becoming insolvent as capital diminishes. Plus, the bank workers do want to keep their jobs for as long as possible. What you can expect to see is what is going on in Hong Kong. Basically, account closures and sudden removals of large amounts of money will be looked upon as suspicious transactions and the accounts will be frozen pending an investigation to see if the person is closing account or removing funds for tax evasion. This means court cases will be piling up in these countries as clients sue to get their money out. These investigations keep the funds in the bank and the process can easily take one or two years to resolve. The idea here is to not wait until the law goes through; by then it’s too late. Move your money out now before it becomes a suspicious transaction. Do not close the bank account. Just leave a very small balance there and wait for the bank to close it for inactivity or low balance. There is no chance for any of the smaller jurisdictions to continue not sharing the information for taxes based only on suspicion. If they do not comply they will be driven out of global banking. They are not talking about the privacy invasion. They are not saying that if some government gets your banking information it can wind up in a court file or in the public domain and then you are exposed to all. The governments do not care about you and your bank secrecy.

Bank Failures in the Tax Havens – This is inevitable. When the treaties are signed there is going to be capital flight. People will mistakenly think other jurisdictions are safer. They will resort to trust account banking. They will buy and hold gold, real estate etc. They will do other thing with their money but out of the banks a lot of the money is going. This can push the offshore tax haven banks into insolvency easily As soon as one depositor demands his money and the bank does not give it to them in a reasonable amount of time (few days maximum) that person has the right to file a complaint with the banking superintendent and push the bank into liquidation. Liquidation is where the banks assets are sold and a proportionate amount of the assets are paid to each depositor. Usually the recovered amount is less than 50%, 30% would be a good liquidation. Worst I remember is nothing, a big Latvia Bank went some years ago and the recovery was 2%. Liquidations are very scary. The lawyers and accountants bilk as much money as they can out of these. People that have loans with the bank settle these loans out for 1/10th or less, because they know the liquidation needs money fast. During the liquidation it becomes apparent that some of the banks loans have no real collateral worth anything. The amount of money spent in legal fees to find this out can be massive. The real estate owned by the bank gets sold for a lot under its fair market value. In a word it is a royal fleecing of the depositors under cover of law. There are liquidation lawyers and accountants who get rich off of these liquidations. Disgusting really when you watch them unfold professionally.

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