fedgazette

Montana looks to Swiss-style banking to sweeten the pot

Montana State Roundup

Published July 1, 1996  |  July 1996 issue

Montana would become the first state in the nation to allow Swiss-style bank accounts if enabling legislation were adopted next January.

Legislation currently in the draft stage would be presented in the next state legislative session allowing numbered bank accounts to assure accountholders of confidentiality and anonymity in their transactions. These accounts would be offered only to nonresident aliens for purposes of investment, asset protection and safekeeping.

Proponents of the legislation say attracting foreign depositors and investors would be an economic plus for the state and perhaps encourage new investment dollars in Montana. While the institution would not pay corporate taxes, nor the depositor taxed directly, it is anticipated that a small percent levied on large-dollar accounts would bring in substantial tax revenue to a state with about 800,000 residents.

The depository institution would not engage in lending, and investments would be restricted, says Stephen Maly, a Montana legislative research analyst charged with drafting the legislation. Also embedded in the legislation would be protections against illegal activities, such as money laundering.

Although the state intends to hold the charter of the bank that would offer such accounts, federal banking officials and US Justice and Treasury department representatives have expressed concerns about compliance with regulations. Legislation will be written to answer those concerns, Maly says. "In order for this to work, state banking authorities will have to be quite stringent," Maly says.

Don Hutchinson, Montana's banking commissioner, agrees with Maly that oversight will need to be rigorous. And he says it would likely take a large foreign or US financial institution with international expertise to successfully establish such an institution.

If the enabling legislation were written to everyone's satisfaction and passed by the state Legislature, the market would take over. "The success or failure will rest on market forces," Maly says.

Admitting that offshore banking operations are proliferating around the world, Maly says, Montana's institution would be the first in North America—and would offer financial and political stability not found in many other countries.

Rob Grunewald

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