Tags: Money | Travel | Antiquities | Art | Switzerland | Swiss

Swiss Crack Down on Illegal Freeport Holdings

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Monday, 28 Dec 2015 12:14 PM Current | Bio | Archive

Some of the wealthiest people worldwide have hidden prized artworks and other high-end assets in freeports, to avoid paying taxes and to shelter undeclared valuables, but those days may be coming to an end.

Originally, freeports (or bonded warehouses) were used to house manufactured goods and commodities on the move. The Swiss were pioneers in offering freeport storage, but the holding units have turned into treasure chests filled with hidden art, objects, gold, jewels, weaponry, wine, and cash.

Geneva freeports are rumored to have billions of dollars worth of art in their coffers and companies no longer are anxious to insure art held in them. Art insurance policies commonly give worldwide coverage.

If a collector insures an object in New York and moves it to Geneva or Singapore, it is insured, and insurance carriers don’t want to provide that kind of service anymore because of terrorist threats.

An amendment to the Swiss Customs Act (effective Jan. 1, 2016) gives new power to administrators and customs to monitor and control the entry and exit of goods held in freeports.

The Swiss parliament approved strict regulations for freeports and customs’ warehouses, and it intends to crackdown on money laundering, tax evasion, the smuggling of antiquities and stolen art — and other illegal activities.

The Swiss also will enforce a six-month time limit on the storage of goods intended for export. They want transparency. Permission to store in freeports will only be given to those who have a registered home or office abroad.

Freeport authorities now must state in inventory records what is being housed and give the identity of owners and buyers of goods.

That is causing panic in the art world. Anonymity has been the name of the game for decades. No one wants sources to be discovered. That would mean a potential loss in future sales and deals.

Sensitive goods as investments must also be fully disclosed. Said goods include wine, cigars, automobiles, motorcycles, and furniture.

According to Art News, the Swiss government stated, “With the introduction of the new amendment, the legislature wishes to ensure the required transparency towards domestic and foreign authorities on the stored goods. In addition, Switzerland's position in the fight against money laundering has been strengthened."

The Swiss Federal Audit Office believes long-term storage of exceedingly expensive goods is indicative of illegal storage for the purposes of tax optimization or to circumvent trade regulations of cultural goods and weaponry.

Undeclared money from offshore bank accounts also has been piled in freeports.

Moguls are upset that the new laws will expose their hidden assets and allegedly are scrambling to find other ways of doing it, while black market traders illicitly dealing in stolen antiquities and art will have a difficult time veiling their actions under the new Swiss laws.

Everyone will be required to reveal the contents of crates going in and out of duty-free warehouses. Of course, most likely many will lie to authorities about what is in crates but if they are opened and it is discovered someone gave false information, they will face jail time, stiff fines, and their goods will be confiscated.

Uber-warehouses for the ultra-rich have provided security and confidentiality, little to no scrutiny, anonymity, and shelter from paying taxes, but the Swiss want to wipe away those advantages. No longer will freeports be used as permanent homes for accumulated wealth. Stored items must be in transit and all transaction must be declared.

Singapore and Luxembourg freeports have become luxurious facilities, and items stashed in them range from paintings, sculpture, fine wine, jewelry, cash, coins, antiquities, classic cars, tapestries, rugs, precious metals, and data.

Clients include collectors, museums, galleries, and art investment firms.

In Singapore, freeports house a diamond exchange, rooms for Christie’s auction house, and lavish show rooms where sellers can offer art and objects in privacy.

Most freeports have iron-clad security. The Luxembourg compound has more than 300 cameras and vaulted rooms, and only can be accessed by a biometric reading.

Singapore uses vibration-detection technology and some vaults have seven-ton doors.

Gold storage is a part of Singapore’s strategy because it wants to become the Switzerland of the East. Some of its clients house as much as 200-tons of gold!

With that kind of wealth stacked in a room, there better be impenetrable security.

But, as one dealer recently told me, “It’s great to have security, but no matter how fancy it gets, eventually someone will crack the system or an inside job will take place, and most of those who store assets in freeports won’t sue, because they hid accumulated wealth from their governments to avoid taxes.

"They can’t reveal how much they have, without severe penalties and possible criminal charges. So, if some of the wealthiest people are robbed in freeports, they’re screwed! There’s justice in that!”

Patricia Jobe Pierce is a freelance writer, art historian, art dealer-consultant, certified AAA appraiser, public speaker, photographer and American art authenticator for museums, auction houses and collectors. She graduated from Boston University with a BFA in 1965, is owner and director of Pierce Galleries, Inc. in Nantucket and Hingham, Mass., and is author of many works, including, "Art Collecting & Investing: The Inner Workings and the Underbelly of the Art World." For more of her submissions, Click Here Now.




 

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The Swiss parliament intends to crackdown on money laundering, tax evasion, the smuggling of antiquities and stolen art. Permission to store in freeports will only be given to those who have a registered home or office abroad. That is causing panic in the art world.
Antiquities, Art, Switzerland, Swiss
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2015-14-28
Monday, 28 Dec 2015 12:14 PM
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