More than half of the offshore service providers tested with hidden cameras by the CBC in Canada and Barbados provided advice that wouldn’t stand up to scrutiny, according to CBC experts.
One of the schemes involved a Canadian-Swiss banker and his plan for hiding undeclared cash in Switzerland using a method that, a panel of experts consulted by CBC News, said is virtually "untraceable."
"He [is proposing] the most untraceable method," said one insider, who used to run one of Canada’s largest offshore banking companies. “He is making the wiring of funds redundant. You don't have to carry a suitcase of cash.… This is money laundering," he said after reviewing the video footage.
As part of the joint investigation with Enquete, the CBC’s French-language investigative program, CBC News hired a private investigator, who is also a restaurant and bar owner in Toronto, to test 15 different offshore service providers.
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He also would propose creating an offshore company to avoid paying taxes on a Canadian business.
Rossi initially told the undercover businessman that “there is no place to hide anymore if you have undeclared assets” and that he “normally only [does] legit stuff."
But within half an hour, Rossi explained how, in the 1990s, he had deposited large amounts of cash in banks in Switzerland.
“You wouldn’t believe how many times I walk in with bags of cash,” he told the undercover businessman.
Rossi said it was easier to do before 1997, when Switzerland changed its money laundering laws.
"Now you have to find out about the nature of the business. I'm not saying it … can't be done because if we can prove everything is fine, then, money either as cash or in a bank account, it's still money," Rossi said. "It's not that it is completely impossible."
'Old man' scheme
Rossi proposed what he described as the "old man' scheme — a plan that is untraceable because no money physically crosses borders.
Rossi suggested the undercover business owner could pair up with an individual in Canada who had money stashed in Switzerland, but wanted it back in Canada.
That person would transfer money, for example a million dollars, from his Swiss bank account into a new Swiss account set up for the undercover businessman.
The undercover businessman would give his million dollars in cash to the individual in Canada.
A middleman would get five per cent commission.
"You just give it to somebody here that needs it here and he gives it to you over there"” Rossi said. "It's much easier. For you,100 per cent safe." Still, Rossi added that he would not be part of this scheme if it went ahead but made it clear he knew people who could help.
"I don’t want to be involved. That’s a big risk," he said on the hidden camera footage.
CBC News consulted various law enforcement, money laundering and tax experts about the proposed scheme who all said the plan would be illegal under both Canadian and Swiss law.
"It’s actually fraud. It’s fraud on the Canadian taxpayer, fraud on the Canadian government,” said Clement, who now heads up the Clement Advisory Group that focuses on white-collar crime. "The money then that’s going over there and committing the fraud ends up being money laundering and so those charges exist for that offence as well."
Impossible to detect
Clement said these types of schemes are almost impossible to detect.
"Eventually it’s going to surface, but how many million or hundreds of millions is he able to move before that happens is anybody’s guess," he said. "As we know during the black market peso exchange, which happened in south Florida, hundreds of millions of dollars were moved before the authorities got onto that scheme."
CBC News also showed the footage to Jack Blum, an expert on white-collar financial crime in Washington
"Currency in one place is exchanged for a bank account in another place ... and it's beautiful and clean because there's no record, no paper record and nobody can figure it out," he said.
CBC News has only been able to reach Rossi by email. He said that he recalled he couldn’t’ help the undercover businessman with his request.
"I also recall that I suggested him to declare his assets to avoid problems in the future," he wrote.
"It looks like this is grossly misrepresenting what was discussed between [the businessman] and myself," Rossi added, in a second email to CBC News. "You know very well that I pressed [the businessman] hard to explore tax optimizations within the law and did advise him not to hide assets and even to consider self-declaration."