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New Delhi, Feb 13 : CBI Director Amar Pratap Singh today said Indians are the largest depositors of black money in foreign banks and about 500 billion US dollars or about Rs 24.5 lakh crore of illegal money has been stashed away by Indians in tax havens.

''India, in particular, has suffered from the flow of illegal funds to tax haven countries such as Switzerland, Lichtenstein, British Virgin islands, Mauritius and others,'' he said speaking at the inauguration of first Interpol global programme on anti-corruption and asset recovery.

Mr Singh said the largest depositors in Swiss Banks were reportedely also Indians.

Highlighting the complex issue of jurisdiction in asset recovery, he said criminals use this very aspect to their advantage, often spreading the crime over two or more countries.

''The global financial market allows money to travel further and faster than ever before. Lack of political will in tax haven countries to part with information also adds to the challenge to trace ill-gotten assets,'' he added.

The CBI Director said getting information about such illegal transactions is a time consuming process as investigators have to peel each layer by sending judicial requests to the country where such deposits have been made.

He said tracing, freezing, confiscation and repatriation of stolen assets is a legal challenge, a complex process which requires expertise and political will.

''Managing the asset recovery investigation is complex, time consuming and costly process. Most important it requires expertise and political will. There are many obstacles to asset recovery. Not only it is a specialised legal process filled with delays and uncertainty, but there are also language barriers and a lack of trust when working with other countries,'' Mr Singh said.

He added that in some of the recent high-profile cases of corruption such as 2G spectrum scam and 2010 Commonwealth Games scam, the CBI found that money was taken to Dubai, Singapore and Mauritius from where it goes to Switzerland and other such tax havens.

Mr Singh further said systems and procedures which are opaque, complicated, centralised and discretionary are a fertile breeding ground for corruption.

He called for innovative solutions to tackle corruption as it is a complex socio-economic and cultural phenomenon.

''The support of the global community through Interpol and other multilateral organisations is essential in tackling corruption and asset recovery,'' he added.

He hoped that the Interpol's global programme will sensitise participating countries to mutual legal assistance in trans border investigations. (UNI)

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500 billion US dollar stashed in tax havens by Indians : CBI

Published on Feb 13, 2012

NEW DELHI (AFP) - Rich Indians have stashed away almost US$500 billion (S$627 billion) of illicit money in tax havens abroad, the country's top police agency said on Monday.

'It is estimated that around US$500 billion of illegal money belonging to Indians is deposited in tax havens abroad,' A. P. Singh, director of the Central Bureau of Investigation (CBI), told an Interpol conference in New Delhi.

Mr Singh said the countries rated as being the least corrupt by Transparency International, a global anti-graft watchdog, turned out to be the ones where 'most of the corrupt money goes'.

'The tax havens include New Zealand which is ranked as the least corrupt country and Switzerland number seven,' he said, according to the Press Trust of India.

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Indians have $627b stashed in tax havens: Police

Rich Indians have stashed away almost $500 billion of illicit money abroad, parking the funds in countries considered the "least corrupt", the country's top police agency said on Monday.

The issue of so-called "black money" has been a major political headache for India's government, which has faced pressure from corruption activists and political opponents to do more to claw back money held abroad.

"It is estimated that around $500 billion of illegal money belonging to Indians is deposited in tax havens abroad," A.P. Singh, director of the Central Bureau of Investigation (CBI), told an Interpol conference in New Delhi.

Singh said the countries rated as least corrupt by Transparency International, a global anti-graft watchdog, turned out to be the ones where "most of the corrupt money goes".

"The tax havens include New Zealand, which is ranked as the least corrupt country, Singapore ranked number five and Switzerland number seven," he said, according to the Press Trust of India.

The CBI chief said that international agreements and other legal hurdles prevented the Indian government from exposing the identity of the tax evaders and bringing the wealth back to the country.

"There are many obstacles to asset recovery. Not only is it a specialised legal process filled with delays and uncertainty, but there are also language barriers and a lack of trust when working with other countries," Singh said.

Heaping further embarrassment on the beleaguered Congress-led government, India's Supreme Court last year accused it of being reluctant to publish details about untaxed money held in overseas bank accounts.

Singh said criminals were using territorial restrictions of investigating agencies to their advantage and spreading their crime to at least two countries before investing in a third.

"For criminals all it involves is setting up of a few shell companies and then making layered transfers from account to another in a matter of hours as there are no boundaries in banking transactions," he said.

The World Bank pegs the cross-border flow of money from criminal activities and tax evasion at around $1.5 trillion, of which $40 billion is in bribes paid to government servants in developing countries, according to Singh.

ASSOCHAM, a prominent Indian trade body and think-tank, recently suggested that the government provide a window to tax evaders to disclose their assets parked abroad in exchange for amnesty.

Those making such disclosures would have to pay half the amount as taxes to the Indian government.

"The fact remains that as on date it may not be possible to get hold of these persons who have stashed money abroad that is why the scheme is an invitation to these people to come forward and pay taxes," it said in a report.

Original post:
Indians have '$500 bn stashed in tax havens'

13 February 2012 Last updated at 10:27 ET

The chief of India's federal investigation agency says Indians have illegally deposited an estimated $500bn in overseas tax havens.

Central Bureau of Investigation (CBI) director AP Singh said Indians were the largest depositors in foreign banks.

Funds were being sent to tax havens such as Mauritius, Switzerland, Lichtenstein and the British Virgin Islands among others, he said.

Analysts say this flight of capital has helped widen inequality in India.

Mr Singh was speaking at the opening on Monday of the first Interpol global programme on anti-corruption and asset recovery in the Indian capital, Delhi.

"It is estimated that around $500bn of illegal money belonging to Indians is deposited in tax havens abroad. [The] largest depositors in Swiss Banks are also reported to be Indians," The Press Trust of India (PTI) quoted him as saying.

Mr Singh said getting information about such illegal transactions was a time-consuming and expensive process as each country where money had been sent had to be approached for help with investigations.

He said there was a lack of political will in the tax havens to part with any information because they were aware of the extent to which their economies had become "geared to this flow of illegal capitals from the poorer countries", PTI reported.

In a report in November 2010 the US-based group, Global Financial Integrity, said India had lost more than $460bn between 1948, a year after Independence, and 2008 because of companies and the rich illegally funnelling their wealth overseas.

India's underground economy accounted for 50% of the country's gross domestic product, it said.

The report said the illicit outflows of money had increased after economic reforms began in 1991.

In recent months, India's Congress party-led government has been on the back foot on the issue of black money and corruption.

The Supreme Court has also chided the government for not doing enough to unearth illicit money.

Originally posted here:
Tax evasion 'cost India $500bn'

One thing's for sure. Mitt Romney didn't send his money down to the Cayman Islands to work on its tan.

The former Massachusetts governor has been criticized by some for having some of his vast fortune in the Caribbean offshore banking center. Yes, it was politically clumsy. But it was not uncommon, and -- assuming he has filed all the right disclosures -- it was perfectly legal.

But if you're not running for president, and don't have to worry about public relations, what are the legitimate reasons for moving money offshore?

I spoke to Jim Duggan, a partner at Chicago law firm Duggan Bertsch, to get the skinny. He's a tax and estate planning attorney who specializes in wealth management issues for the very rich, and he's been practicing in this area for nearly 20 years.

He says a growing number of wealthy people are looking into moving some of their money offshore. "The interest in offshore planning has increased basically by a factor of five in the last ten years," he says. Clients want to talk to him about it all the time.

Why?

Contrary to popular opinion, it's not really to save on taxes.

That's because American taxpayers are taxed on their worldwide income -- so if you're making $10,000 (or $10 million) in interest on a bank account in, say, the Caymans or Switzerland, you're getting taxed by Uncle Sam as if you're making it in a bank account here.

It's easy to scoff and assume the rich are hiding their money and cheating. Doubtless some are. But enforcement is tight, and the penalties aren't so much draconian as medieval. They are far more severe than for tax evasion onshore.

And there are plenty of tax shelters available here in the U.S. anyway -- such as trusts in low tax states, buying life insurance, and variable annuities.

So what are the real reasons the rich are casing the Caymans with their cash?

There are two, says Duggan: Litigation risk, and political risk.

Yes: Political risk. Or, as he puts in a nice legal euphemism, "jurisdictional diversification."

Litigation risk is the old reason. You could get hit by a crazy lawsuit here in the U.S. The wealthy are an easy mark, and anything onshore is vulnerable. But the U.S. courts don't have jurisdiction overseas and if you plan things right you have at least some chance of protecting money held offshore, Duggan says. "It keeps you away from our court system and the caprices of our courts," he says.

The new reason, though, is political risk: "Diversification from our government, policies, and banking systems," says Duggan. The last few years have shaken faith in our system. Duggan says growing numbers of his clients are worried about the financial system, confiscation -- the whole shebang. "They're concerned about our government, and where our society is headed. There's a lot of socialistic tendencies, capital controls, the redistribution of wealth."

Once again it's easy to scoff. Financially, the very wealthy have probably never had it so good in this country. Corporate profits and financial assets are booming. Tax rates on dividends and long-term capital gains are very, very low. But Duggan says the wealthy feel under attack, and government rhetoric is making them nervous.

But there's a logical problem here. Imagine a future government did decide to confiscate assets. They'd go after the money you held in Switzerland just as much as the money you held in New York, and the penalties for tax evasion would be as medieval as they are now.

The only way to save your money would presumably be to renounce your citizenship and move into exile. Even then the IRS might come after you. Do you want to spend the rest of your life living next to Roman Polanski in France?

Once again, all this makes you see the appeal of holding some gold within a portfolio.

Personally, I don't see any reason to think this administration is going to go after the so-called one percent. Too many of its members are either members of that elite group already -- or have high hopes of joining after they retire.

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Why the Rich Are Really Moving Cash to the Caymans