Offshore News Digest for Week of September 17, 2001

OFFSHORE BANK SECRECY MAY BE ATTACKED

"With the death toll in the attacks on the World Trade Center and Pentagon estimated at 5,000, will countries like Switzerland and the Cayman Islands lose their coveted bank secrecy?"

SWISS PROBLEMS CONTINUE

GENEVA. Three years into its drive to clean up its image as a haven for dirty money, Switzerland is finding it a very difficult task.

Treaties under discussion with the European Union may undermine traditional Swiss banking secrecy.

GIBRALTAR DISPUTE CONTINUES

UK and Spanish governments are still talking, but no deal.

UNUSUAL COOK ISLAND FREEZE

RAROTONGA, C.I. Domestic politics causes an unprecedented temporary freeze on offshore financial activity in this Pacific haven.

SINGAPORE SLUMP

Hit by the worst recession in 35 years, the city-state suffers.

PAVAROTTI FACES TAX JAIL

MODENA, Italy. World famous tenor Luciano Pavarotti goes on trial in ITALY for alleged back taxes. Was he a resident of MONACO?

REASONABLE U.S. MONEY LAUNDERING RULES?

WASHINGTON. After a review of the US government's largely failed anti-money laundering activities, the Bush administration may allow banks to file fewer reports on "suspicious" cash transfers.

TERRORISM'S WORLD ECONOMY IMPACT

To the radical anti-globalization movement blaming every ill on the global economy, now add the weight of unreasoning fear.

EU OFFICIAL SAYS REDISTRIBUTE WORLD WEALTH

BRUSSELS. Rich nations must give their wealth to the poor nations to avert terrorism, says former Tory MP and Hong Kong governor.

PRECIOUS METALS INVESTMENTS BURIED

NEW YORK CITY. Buried under the World Trade Center rubble is gold worth $110 million and silver valued at $120 million.

E.U. KNOCKS EUROPEAN TAX BREAKS

BRUSSELS. The EU is investigating tax provisions of nine countries claiming they are "unfair" business subsidies.

The European Parliament wisely rejects a "Tobin" tax on international capital financial transactions.

NEW GERMAN LAW ASSUMES ACCUSED GUILT

BERLIN. The government now presumes those suspected of money laundering are guilty until the accused proves their innocence.

U.S. EXPATS IN BRITAIN HURT BY TAX TREATY

The new US-UK tax treaty allows ex-Americans to be hit by the IRS based on past citizenship.

TERRORISM EXCUSE MAY DESTROY FINANCIAL PRIVACY

Government will play on emotions to expand financial controls, curb what remains of financial privacy.

PRIVACY UNDER ATTACK

WASHINGTON. With little debate the US Senate approves legislation making it easier for the FBI to monitor electronic communications.

If the Senate proposal becomes law, FBI agents soon may be able to spy on Internet users legally without a court order.

And the FBI is already questioning Internet service providers and the operators of anonymous remailers.

NET POLICE SEEK MORE POWER

SAN FRANCISCO. Privacy advocates warn against heightened Internet surveillance in the wake of the WTC attacks.

MORE WIRE TAPPING DEMANDED

US officials want to loosen restrictions on FBI surveillance, including roving wiretaps of any phones used by a suspect.

ANTI-CRYPTO WAR BEGINS

US politicians may try to ban communications-scrambling software that supposedly frustrates police wiretaps and US intelligence agencies.

But 'The 2000 Wiretap Report' from the Administrative Office of the US Courts monitored wiretap operations during 2000 and found not even one investigation thwarted by the use of encryption technology.

EXPERTS RALLY TO SUPPORT ENCRYPTION

Reports linking bin Laden to crypto cause privacy experts to assume a tough defensive posture.

HAVENS ALLEGEDLY INVOLVED IN BIN LADEN CASH

This week wild rumors circulated alleging links between various offshore tax and asset haven nations and the terrorist network of Osama bin Laden, the prime suspect in the terrorist attacks on the US, who supposedly used bank accounts and companies in haven countries to finance his activities. They have so far proven false.

PANAMA. Pres. Mireya Moscoso acted on news reports that bin Laden used an offshore company with headquarters here. Our sources tell us investigation showed the reports were wrong.

CARIBBEAN. A French report alleged that bin Laden had financial connections in the Netherlands Antilles, Curacao and The Bahamas.

In the Dominican Republic, Puerto Rico, the US Virgin Islands, St. Maarten and the Cayman Islands foreigners were detained in connection with the attacks.

The CAYMAN ISLANDS is a major focus area for investigation of possible bin Laden financial activities.

BARBADOS says it is already feeling a harmful economic impact resulting from the American terror attacks.

The government of CYPRUS denied charges the island was used as a financial conduit by bin Laden.

GOVERNMENT DEMANDS VAST NEW POWERS

The Bush administration asks for more power to eavesdrop on domestic phone calls, the Internet and voice mail even without a court order.

Proposed legislation provides expanded electronic surveillance, detention of suspects and deportation of immigrants, makes easier subpoenas, search warrants and seizure of assets.

Income tax information privacy restrictions may be waived.

Encryption may have been used by terrorists, so encryption may be curbed.

Congress may consider requiring all Americans to carry electronic "identification cards." Americans may resist.

A NEW KIND OF NATION?

Where electronic identification may become the norm, immigrants may be tracked and airspace over cities like New York and Washington may be off limits to all civilian aircraft.

WHAT IS NEXT IN ANTI-MONEY LAUNDERING?

A summary of where we are and where we may be headed.

SPECIAL REPORT FROM BUSINESS WEEK: “RETHINKING THE AMERICAN ECONOMY”