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Explosive Revelation$

Thursday, December 6, 2012 21:11

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(Before It's News)

The Internet Post

The world’s biggest banks and multinational corporations have set up a shadowy system to secretly move trillions of dollars—a system that can be exploited by tax evaders, drug runners and even terrorists.

Ernest Backes, circa 1986.

Ernest Backes exposed this dubious system and has launched a personal crusade for international oversight—earning him some high-powered and dangerous enemies.

by Lucy Komisar

n the tax haven of Luxembourg, a little-known outfit called Clearstream handles billions of dollars a year in stock and bond transfers for banks, investment companies and multinational corporations. But a former top official of this “clearinghouse” says Clearstream operates a secret bookkeeping system that allows its clients to hide the money that moves through their accounts.

In these days of global markets, individuals and companies may be buying stocks, bonds or derivatives from a seller who is halfway across the world. Clearinghouses like Clearstream keep track of the “paperwork” for the transactions. Banks with accounts in the clearinghouse use a debit and credit system and, at the end of the day, the accounts (minus “handling fees,” of course) are totaled up. The clearinghouse doesn’t actually send money anywhere, it just debits and credits its members’ accounts. It’s all very efficient. But the money involved is massive. Clearstream handles more than 80 million transactions a year, and claims to have securities on deposit valued at $6.5 trillion.

It’s also an excellent mechanism for laundering drug money or hiding income from the tax collector. Banks are supposed to be subject to local government oversight. But many of Clearstream’s members have real or “virtual” subsidiaries in offshore tax havens, where records are secret and investigators can’t trace transactions. And Clearstream, which keeps the central records of financial trades, doesn’t get even the cursory regulation that applies to offshore banks. On top of that, it deliberately has put in place a system to hide many of its clients’ transactions from any authorities who might come looking.

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Filed under: economics, law Tagged: Clearstream, Debits and credits, Lucy Komisar, Luxembourg, Multinational corporation, Offshore bank, tax, Tax haven For more News Visit: http://tipggita32.wordpress.com