Loophole allows illegal billions to be stashed away in bank accounts

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The country's leading financial daily Hospodarske noviny reported on Monday on a legal loophole which police believe is allowing people to deposit billions of crowns in illegal earnings in their bank accounts. The police say they can't touch cash they know is fishy because there's no law in the Czech Republic requiring citizens to explain the source of their private wealth.

Hospodarske noviny uses the following tall tale to illustrate how easy it is to stash away ill-gotten gains. The Financial Police have nicknamed the case "The Jewish Treasure". Between 2000 and 2002 a businessman from Hradec Kralove opened a total of seventeen bank accounts and life insurance policies, into which he deposited 167 million crowns.

The businessman was already under suspicion by the financial police, and after examining his company's profits, they soon realised the money must have come from somewhere else. But where? The businessman had the following explanation: his parents had lent him the money in 1991. They in turn had received the money in 1974 from a relative - in the form of a parcel containing 6.6 million US dollars in cash. The relative, in turn, had received it from her mother, who'd received it from her sister-in-law, who'd received it from her husband, who'd received it from a Jewish man fleeing the Nazis before 1939.

A total shaggy dog story, for obvious reasons. For one thing, US dollars in circulation before the war would no longer have been legal tender in 1991. Also, historians point out that the Nazis kept an extremely tight rein on the assets of Jewish citizens.

But even though the businessman's story was full of holes, the Financial Police couldn't touch him because they had no proof to link his riches to criminal activity.

In several other countries, such as Belgium, Ireland and the UK, the onus is on the accused to prove the origin of his or wealth. If you can prove where you got it, you can keep it. Some, including the former Social Democrat interior minister Frantisek Bublan, are in favour of introducing a similar system here. His Civic Democrat successor Jiri Pospisil, however, is not.

The presumption of innocence was one of the major changes in Czech society after 1989. Few, it seems, are prepared to give it up in the fight against white collar crime. Even, says Hospodarske noviny, when thousands of people are benefiting from this legal loophole, and billions of crowns are being stashed away.