Group 9, Division AGroup 9, Division ATaru BakshiTaru Bakshi

Sahibjot KaurSahibjot KaurTanmay MukherjeeTanmay MukherjeeSwatantra SaurabhSwatantra Saurabh

V Rameshwar RaoV Rameshwar RaoSikha SonthaliaSikha Sonthalia

Sanjukta Das Sanjukta Das

Switzerland is not a member of the NATO, nor a member of the European Union. The rights of the individual Swiss citizens are protected by three political safeguard

1.A Weak Chief Executive

2.The Referendum

3.The Initiative

Swiss BanksSwiss BanksTwo largest banks of Switzerland are Union Bank of Switzerland and Credit Suisse Group which together account for over 50 percent of the balance sheet total of all banks in Switzerland.

Raiffeisen Group

Regional and local

Cantonal 

• Code of secrecy is over 300 years old

• The first Swiss banking clients were the kings of France

• The Great Council of Geneva, in 1713, established regulations

• Bank secrecy was regulated only by civil law at that time.• Divulging Client Information become Criminal Offence

Two Main Reasons:•Nazi Spies

•French Scandal with Basler Handelsbank

HistoryHistory

After World War IIAfter World War II• Jews Dormant Money• In 1984, the people of Switzerland once again voted in favor

of maintaining bank secrecy by a whopping 73 percent.• Anti money laundering laws have been incorporated into the

Swiss Criminal Code in 1990`s

Money in Swiss BanksMoney in Swiss BanksCountry AmountIndia $1891

billionRussia $610 billionChina $213 billionUK $210 billionUkraine $140 billion

Why Swiss banks areWhy Swiss banks arecounted as safest banks counted as safest banks in the world ?in the world ?

1. Switzerland has had an extremely stable economy and infrastructure for many years.

2. Swiss bankers are also highly trained in investing and know how to grow your money.

3. Swiss franc is considered one of the world's premier currencies with virtually zero inflation and has been historically backed by at least 40 percent gold reserves.

4. Swiss banks are also known to have very sophisticated investment services and Internet banking.

5. Swiss law forbids bankers to disclose the existence of your account without your consent

6. In Switzerland, if a banker divulges information about a bank account without permission, immediate prosecution is begun by the Swiss public attorney

7. Bankers face up to six months in prison and a fine of up to 50,000 Swiss francs

Swiss Bank AccountsSwiss Bank Accounts and the Lawsand the Laws

•Article 47 of the Federal Law ,1934

In following cases there is a duty for bankers to provide information regarding bank account.

•Civil proceedings (such as inheritance or divorce) •Debt recovery and bankruptcies •Criminal proceedings (money laundering, association with a criminal organization, theft, tax fraud, blackmail, etc.) •International mutual legal assistance proceedings

The Swiss Federal Banking Commission (SFBC) may communicate information only to the supervisory authorities in foreign countries subject to three statutory conditions:

1.The information given can't be used for anything other than the direct supervision of the banks and can't be passed on to tax authorities.

2.The requesting foreign authority must itself be bound by official or professional confidentiality and be the intended recipient of the information.

3.The requesting authority may not give information to other authorities or to other public supervisory bodies without the prior agreement of the SFBC

Why world investsWhy world invests in SWISS BANKS?in SWISS BANKS?

Swiss bank accounts are used by :-

• Corrupt Government officials

• Millionaires

•Criminals to hide ill-gotten wealth

• Middle class people

• People staying in countries with unstable

government

In India, Black money refers to funds earned on the black market, on which income and other taxes has not been paid. The total amount of black money deposited in foreign banks by Indians is unknown. Some reports claim a total exceeding US$1.4 trillion are stashed in Switzerland. Other reports, including those reported by Swiss Bankers Association and the Government of Switzerland, claim that these reports are false and fabricated, and the total amount held in all Swiss banks by citizens of India is about US$2 billion.

What is Black What is Black Money?Money?

•In 2011, the Indian government received the names of 782 Indians who had accounts with HSBC. •According to White Paper on Black Money in India report, published in May 2012, Swiss National Bank estimates that the total amount of deposits in all Swiss banks, at the end of 2010, by citizens of India were CHF 1.95 billion (INR 9,295 crore, US$ 2.1 billion).

•In May 2012 that the deposits of Indians in Swiss banks constitute only 0.13 per cent of the total bank deposits of citizens of all countries. Further, the share of Indians in the total bank deposits of citizens of all countries in Swiss banks has reduced from 0.29 per cent in 2006 to 0.13 per cent in 2010.

•The Ministry of Finance through the Investigation Division of the Central Board of Direct Taxes released a White Paper on Black Money giving the Income Tax Department increased powers.

Black Money in IndiaBlack Money in India

Money-laundering Money-laundering Methods & StagesMethods & Stages

There are three stages involved in money laundering; placement, layering and integration.

. The process of placement can be carried out

through many processes including:

• Currency Smuggling • Bank Complicity • Currency Exchanges • Securities Brokers • Blending of Funds • Asset Purchase 

Stage II

• Layering – The purpose of this stage is to make it more difficult to detect and uncover a laundering activity. It is meant to make the trailing of illegal proceeds difficult for the law enforcement agencies. The known methods are:

• Cash converted into Monetary Instruments – Once the placement is successful within the financial system by way of a bank or financial institution, the proceeds can then be converted into monetary instruments. This involves the use of banker’s drafts and money orders.

• Material assets bought with cash then sold – Assets that are bought through illicit funds can be resold locally or abroad and in such a case the assets become more difficult to trace and thus seize.

Money LaunderingMoney Laundering – – Stage IIIStage III

Stage III Stage III

• Integration – This is the movement of previously laundered money into the economy mainly through the banking system and thus such monies appear to be normal business earnings. This is dissimilar to layering, for in the integration process detection and identification of laundered funds is provided through informants. The known methods used are:

• Property Dealing.• Front Companies and False Loans• Foreign Bank Complicity• False Import/Export Invoices

Hasan Ali Khan (born c. 1954) is an Indian businessman. In 2007, Indian authorities began investigating Khan for suspicion of money laundering. He allegedly stashed away billions into Swiss bank accounts with the help of Kolkata based businessman, Kashinath Tapuria using hawala.

Hasan Ali was arrested by Enforcement Directorate and the Income Tax Department on charges of stashing over 36,000 crore in foreign banks. ED lawyers said Khan had financed international arms dealer Adnan Khashoggi on several occasions.[22]

India Today claimed that it had verified a letter confirming the US$8

billion in black money was in a Swiss bank UBS account, and the government of India too has verified this with UBS.

Hasan Ali Case – Hasan Ali Case – Hawala SystemHawala System

How the HAWALA System works?How the HAWALA System works?

Hawala

Central Board of Direct Taxes: is a statutory authority functioning across India under the Central Board of Revenue Act of 1963. The Member(Investigation) of the CBDT,exercises control over the Investigation Division of the Central Board of Direct Taxes. The Member controls the:Directorate General of Income Tax InvestigationDirectorate of Income Tax Intelligence and Criminal Investigation.Chief Commissioner of Income Tax Central.

The Director General of Income Tax (International Taxation) is in charge of taxation issues arising from cross-border transactions and transfer pricing. This organisation has been in operation for nearly 50 years, is primarily responsible for combating the menace of black money, has offices in more than 800 buildings spread over 510 cities and towns across India and has over 55,000 employees and even employees who are deputed from premier police organisations to aid the department.

1.Enforcement Directorate2.Financial Intelligence Unit3.Central Board of Excise and Customs and Directorate of Revenue Intelligence4.Central Economic Intelligence Bureau

Regulation & Monitoring Regulation & Monitoring of Black Money of Black Money

• In addition to the primary agencies listed above, India has 10 additional separate departments operating under the central government of India - such as National Investigation Agency and National Crimes Record Bureau - to help locate, investigate and prosecute black money cases. Discovery and enforcement is also assisted by India's Central Bureau of Investigation and state police.

• In addition to direct efforts, the Indian central government coordinates its efforts with state governments with dedicated departments to monitor and stop corporate frauds, bank frauds, frauds by non-banking financial companies, sales tax frauds and income tax-related frauds.

Government appointed a high-level committee headed by MC Joshi the then CBDT Chairman in June 2011 to study the generation and curbing of black money. The committee finalised its draft report on 30 January 2012. Its key observation and recommendations were:The two major national parties (an apparent reference to Indian National Congress, BJP) claim to have incomes of merely 500 crore (US$77 million) and 200 crore (US$31 million). But this isn’t "even a fraction" of their expenses. These parties spend between 10000 crore (US$1.5 billion) and 15000 crore (US$2.3 billion) annually on election expenses alone.[

Change maximum punishment under Prevention of Corruption Act from the present 3, 5 and 7 years to 2, 7 and 10 years rigorous imprisonment and also changes in the years of punishment in the Income Tax Act.

Tax Information Exchange AgreementsTo curb black money, India has signed TIEA with 13 countries -Gibraltar, Bahamas,Bermuda, the British Virgin Islands, the Isle of Man, the Cayman Islands, Jersey,Liberia,Monaco,Macau,Argentina,Guernsey and Bahrain - where money is believed to have been stashed away. India and Switzerland, claims a report, have agreed to allow India to routinely obtain banking information about Indians in Switzerland from the 1st April 2011

MC Joshi CommitteeMC Joshi Committee on Black Moneyon Black Money

The few names of the Swiss bank Account holders, which are displayed below include names of prominent public figures and people from the corporate world. Though the wiki leaks have claimed another 985 Indian Account holders in Swiss banks. Some of the prominent names appearing arePrabodh Mehta[ 28,000 crore],,Ramdev Pasvan[3500 cr.],Neara Radiya[2,89,990 cr.],Rajeev Gandhi[1,98,000 cr.],A Raja[7,800 cr.],Harshad Mehta[1,35,800 cr.],Ketan Parekh[8,200 cr],Rendezvous Sports World[29,800 cr.],H.D.Kumaraswamy[14,500 cr.],C.P.Krishnan Nair[4,520 cr.],Lalu Prasad Yadav[29,800 cr],Jyotiraditya Madhavrao Scindia[9,000 cr.],Kalanidhimaran[15,000 cr.],Karunanidhi[35,000 cr.],Suresh Kalmadi[5,900 cr.],

• According to the data provided by the Swiss banking association , India have more black money then the rest of the world combined.

• The black money market situation in India is epidemic. India currently tops the least for monies in the entire world with almost US $ 1,456 billion in Swiss banks(USD 1.4 trillion approximately) in the form of unaccounted money.

Why world invests in SWISS BANKS?Why world invests in SWISS BANKS?

Effect on IndiaEffect on India

• Tax evasionTax evasion• Terrorism ActivitiesTerrorism Activities• Drug traffickingDrug trafficking• Counterfeiting of Indian currencyCounterfeiting of Indian currency• Transnational organized crimeTransnational organized crime• Human trafficking Human trafficking • CorruptionCorruption

Preventive MeasuresPreventive Measures• Governments Efforts

– Prevention of Money-Laundering Act, 2002 came into effect on 1 July 2005

– Proposed Indo-Swiss tax treaty• Memberships

– Financial Action Task Force (FATF)– Asia Pacific Group (APG)– Egmont Group of Financial Intelligence

Units

Thank YouThank You

Group 9, Group 9, Divison A Divison A