Fed reportedly spooked over Swiss bank's online plans

Copyright ) 1999 Nando Media Copyright ) 1999 Associated Press

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ARLINGTON, Va. (September 20, 1999 11:38 a.m. EDT http://www.nandotimes.com) - U.S. regulators are concerned about a Swiss bank's plans to allow people to open accounts online with starting deposits as low as $5,000, USA Today reported.

MFC Merchant Bank, based in Geneva, Switzerland, will offer the online accounts starting Oct. 15, the newspaper reported Monday. It quoted a bank vice president, Peter Jessop, as saying the bank will never give the U.S. Internal Revenue Service "details on our clients unless our clients ask us to."

Oliver Ireland, associate general counsel of the U.S. Federal Reserve, told the newspaper that the plan by MFC Merchant Bank was "a problem we will see more of."

Fed spokesmen didn't immediately return telephone calls seeking comment Monday.

U.S. citizens, who are legally allowed to have accounts in foreign banks, are required to report such accounts to the IRS. U.S. regulators told USA Today, however, that reporting the accounts is "an honor system."

The U.S. Securities and Exchange Commission has blocked MFC Merchant Bank's plan to let U.S. citizens do securities trading through online accounts with the bank, the newspaper said.

SEC spokesman Christopher Ullman had no immediate comment.

http://www.nando.com/noframes/business/story/0,2469,500035833-500057894-500030305-0,00.html

-- Homer Beanfang (Bats@inbellfry.com), September 20, 1999

Answers

To read about the long term effects of this kind of technological development, please read "The Sovereign Individual" By Lord Davidson and Henry Reese-Mogg.

-- Jim the Window Washer (Rational@man.com), September 20, 1999.

Window scratcher,

why the hell should I read anything by the good Lord and his side kick crony????

The have kind of blown it a couple times------especially with that awesome work -----"The Great Reckoning"

Of course they just may have been a decade late in their predictions.

(the above is sarcasm, don't get excited!!)

-- David Butts (dciinc@aol.com), September 20, 1999.

All this is is filling out an on line account application. One would still have to mail or wire a check, or has the long anticipated e- cash finally arrived? Until it does, I can't see how this is that big a deal.

-- Downstreamer (downstream@bigfoot.com), September 20, 1999.

Whoooo Hoooo!

Just in time for Y2K! Say goodbye to the Federal Reserve!

-- @ (@@@.@), September 20, 1999.

I don't see this as terribly exciting at this point. During Y2K your money is no safer in a Swiss bank than it is in an American one. Digital is as digital does.

-- cody (cody@y2ksurvive.com), September 20, 1999.

Cody,

Ah yes, but it is a damn good tax shelter, and probably better insured than the FDIC. Until now only the wealthy could do this, but at $5000 I bet a lot of people who are nervous about Y2K will take advantage of this rather than keeping it in a safe at home.

-- @ (@@@.@), September 20, 1999.

Not "safe at home" but rather "Not at home, but safe from Uncle Sam."

Re-read the actual thing the Fed's are worried about - it's the fact that the Swiss won't tell them how much is deposited by who and for what purpose in what account.

The accounts themselves don't matter, it's the security of the account that worries them. The US-regulated banks still have the "know your customer" requirements in place, the only thing the "postponed" program would have done was to expand the "tattle on your customer program" to savings and loans and state banks.

-- Robert A. Cook, PE (Marietta, GA) (cook.r@csaatl.com), September 20, 1999.

But my point is one would have to send a tracable check or wire transfer from the US to start the account. So what's the big deal? A few years ago all the prognosticators were saying (encripted) ecash by the end of the decade. Where is it or whats the hold up?

-- Downstreamer (downstream@bigfoot.com), September 20, 1999.

As far as Y2K is concerned, one's money would be far safer stashed somewhere at home than in a foreign country thousands of miles away. If the banks collapse, or the power grid goes down or telecommunications go down, how would you get your money from Switzerland? In good times this makes sense but in Y2K times I don't think so.

-- cody (cody@y2ksurvive.com), September 20, 1999.

Yee-haw!! Good news if it's not a Y2K 8,9,10.

-- A (A@AisA.com), September 20, 1999.

Sign me up.

-- Mori-Nu (silkenet@yahoo.com), September 21, 1999.

Downstreamer,

You've never heard of offshore bank-accounts? Believe me there are ways to get around those little technicalities. Speak to a good financial lawyer - they'll help you.

Cody,

I'd beg to differ with you on where your money is safer. The Fed hasn't been too convincing lately except that they like screwing us. If any country knows how to keep your money safe - it's Switzerland.

-- @ (@@@.@), September 21, 1999.

I believe that a wire transfer for $9,999 sent overseas is not subject to scrutiny, being under the $10,000 limit at which it is reported. Or buy foreign travellers cheques made payable to a fictitious person with your signature - the bank only wants to know the signatures match. Will the Swiss bank issue a credit card so a cash transfer can be made?

-- Laurane (familyties@rttinc.com), September 21, 1999.

Laurane,

I think you are thinking along the right lines, though I'd be a bit concerned about a wire transfer. Even though they say they don't check on less than $10,000 you're still linked to your original bank where you made the withdrawal. The traveler's checks idea could work, just make sure you purchase them at a bank or organization that is not related to your original bank.

-- @ (@@@.@), September 21, 1999.

Government hates competition. Any questions?

Why do you think Delta is down in Colombia shooting people over drugs? Morality? It reminds me of that line from the movie "Highlander": "There can be only one". The Gov. wants to be that one and will wipe you silly if you provide too much.

Government hates competition. Any questions?

-- CygnusXI (noburnt@toast.net), September 21, 1999.

From Tom Friedman's new book, "We have moved from a world where the big eat the small to a world where the fast eat the slow." Especially post y2k, the Big Gov's too big and slow."

Sure I'm familiar with offshore accounts. My point is this deal is nothing new until the encripted wire transfers get integrated into the on-line concept.

Warning: You guys don't think the gov looks for $9,900 wires?

-- Downstreamer (downstream@bigfoot.com), September 21, 1999.

Many offshore banks offer ATM cards (debit and/or credit, depending on the banks and your balance). Heretofore it has required a rather large balance. Card withdrawals usually limited by "secured by" your balance, though that doesn't have to be in a cash account -- can be in stocks or bonds or metals held by the bank. Be interesting to see developments in this area -- to see if the offshore banks are going to come around to offering accounts to the little guy ("retail") offshore (in the U.S.), not just to the wealthy.

Now, I know I'm gonna get flack -- someone will say there ARE accounts available for the little guy. Yeah, but can you get your money back out of the account? Also, beware of outfits charging you $1000, $2000, $5000 ... for an "introduction" to a bank to get an offshore account.

-- A (A@AisA.com), September 21, 1999.

"As of the 15th of October, You may register to open an account with SwissNetBanking.com, with trading set to commence on 1st November [1999]"

"We regret that the services or securities otherwise offered by SwissNetBanking.com are not being offered in the United States, to US residents or US persons as defined under US securities law or in Canada to Canadian citizens resident in Canada."

"This service is not available to persons resident in the United Kingdom, and Japan ..." http://www.swissnetbanking.com/welcome.htm

Still think the U.S. is still the land of the free?

-- A (A@AisA.com), November 23, 1999.