Income protection as whistleblower – instead of breaking the law with tax evasion Deluxe

– How employees from credit institutions and insurance companies help to secure their jobs ? –


“Cu è surdu, orbu e taci, campa cent’ anni ‘mpaci”

“He who is deaf, blind and dumb lives in peace for a hundred years.”

– Sicilian proverb


In the United States of America there is the US tax authority IRS (Internal Revenue Service) and the US stock exchange supervisory authority SEC (Securities and Exchange Commission). The latter only established an “Office of the Whisteblower” in 2011. The sanctions imposed range in the millions, up to more than three figures. Whistleblowers can expect premiums for the support given to the state. Some time ago, for example, a former employee of a Swiss private bank received 104 million US dollars for his discovery of abuses. The German Financial Supervisory Authority BaFin is now following suit by setting up a whistleblower office.


Rewards also in Germany?


Individual finance ministers are also willing to pay a reward for data CDs after discreet negotiations. Some (IT) consultants in the financial services sector pass on insider knowledge about discrete-illegal transactions. Heinrich Kieber, for example, became known early on and a film was dedicated to him – including other celebrities in the Liechtenstein and Swiss financial centres. The potential is likely to be enormous even today, whether it be through camouflage constructs concealing previously tax-free inheritances. Or think, for example, of (sometimes only alleged) foreigners resident in Germany – including personal care at home at Wannsee, which one leads as a foreigner on the basis of a second passport acquired for less than 500 US dollars. You can discreetly pick up your mail on the Internet – as a financial institution you no longer need to send anything abroad.


Federal Supervisory Office for Financial Services (BaFin) courts whistleblower


BaFin’s whistleblower office was opened in 2016 and is aimed at persons who are connected with a bank or insurance company – for example as employees, customers or suppliers – and have knowledge of illegal internal information.

This applies in particular to employees of credit institutions and insurance companies. The field of supervisory law is a broad one. Bribery, such as commission payments, negligent reporting of suspicions of money laundering, inadmissible benefits for policyholders, incorrect calculation of surrender values or of tariff changes in the private health insurance sector are all covered by this. Sometimes it is inadequate IT systems or a lack of time that causes superiors to violate supervisory and other legal regulations with work instructions. For affected employees, this can be an opportunity to replace incompetent superiors or similar employees in other departments. Certainly, there are also exciting cases in which taxes are evaded – for example, because an insurer without a BaFin licence does not pay its insurance tax, or because US or EU embargo regulations are systematically violated in transactions with foreigners, including foreign politicians and diplomats.


Increased risk of discovery at banks and insurance companies


Hardly any bank or insurance company is in a position to really comply with all legal and especially supervisory regulations – so they are inevitably violated. Employees have had to support this up to now. Sometimes, it is only the conscious acceptance of supervisory violations that leads to the saving of employees or the timely implementation of an important project. In this way, the whisteblower can force his employer to maintain the necessary number of employees to meet all regulatory requirements.

If necessary, the whistleblower promotes his own career, not necessarily at the expense of others, although he should not take this into account in order not to put himself in the wrong as an accessory. If he does not report violations, he must expect that someone else will also report him as an accomplice. Whatever the case, the general good should proceed as prescribed in the consistent compliance with all prudential requirements.

Many a compliance manager has become successfully self-employed after a short period of time – in other words, has left his financial house as his former employer. The Internet doesn’t forget anything if you know the search engines that are just right for it. A clear indication that the statement of the press office “we cooperate with the public prosecutor’s office” is one thing – but the system of ongoing violations of the law is simply continued more quietly or discreetly. Here, BaFin now offers individuals the chance to decide to stand on the side of law and order – or to make themselves an accomplice.


Strategic approach depending on the individual case


Even the authors of this article have been receiving stimulating advice from whistleblowers in the banking and insurance industries for years. The impression is that banks and insurers can already no longer count on the loyalty of their employees at all levels. The idea of BaFin is to promote the desired enforcement of supervisory regulations and punishment of violations as correct conduct. Not only redundant sales staff at all levels are also addressed here, or former “strukkis” with a special clientele.


Possibilities in cases of tax evasion and other offences


In the case of divorce and the War of the Roses for money, many a wife has taken the liberty of making a voluntary disclosure and out of revenge – not least in order to receive a “fair” share of the then taxable black money in the form of gain and maintenance. On at

Cartel infringements committed by participating car manufacturers are reported to the Cartel Office and are the only ones to go unpunished, while the others have to pay high sums in the millions. Competitors and (former) employees provide many a tax investigator with ongoing details – and are largely protected. This is because tax authorities keep their files closed, in fact almost without the right of inspection by those concerned. If you want to be absolutely sure, put a person with professional secrecy in between – but not a clergyman, because the secret of confession and pastoral care sometimes exists only as a pious wish on paper, and in the penal code one looks for it in vain.


BaFin relies on whistleblowers’ compliance with the law


Absolute compliance with the law not only has the advantage of healthy sleep. It is a high goal: As hard as it is and as much as one has to deny oneself, and as sorry as one feels for friends, colleagues and superiors – if the law requires it, then such motives and loyalty to the employer who is not complying with the law must be secondary. Then you have to overcome yourself and grow beyond yourself, and register as a whistleblower with BaFin, preferably also with specialist authors for a nice publication for the benefit of the general public.

Recently a psychologist proved that too large personal fortunes no longer demand happiness – if the public prosecutor declares the loss of assets in case of illegal acquisition, then too wealthy people are relieved of their money for their benefit. Some of us later say “Yes, it was all hard, but if you have done your duty, you will always be proud of yourself”.

And whoever does not follow this, runs the risk of very soon being counted among the scoundrels who could have behaved honestly, but who preferred the easy way as helpers and accomplices for unlawful things, for selfish motives. One could certainly also consider the fact that BaFin is recruiting or smuggling in informal staff among the employees of banks and insurers – as it were, setting up its own BaFin-Stasi, including agreements on cooperation with certain services.


Increasing number of unveiling mailboxes


Some editorial offices (such as the SWR with its documentation editorial office “betrifft”, and the Heise-Verlag) as well as various police departments of selected federal states (such as in Baden-Württemberg and NRW) have opened up the possibility for anonymous information via the Internet, including anonymous possible queries.

Finally, larger companies and statutory health insurance companies have called in “Business Keeper AG” for whistleblowers: For some time now, it has been good practice in compliance to supplement the company’s own system of legal management with a whistleblower system for error detection. However, there is a risk that the reported error is a violation of the law that the management has deliberately accepted or decided to commit. It’s like when the gardener has to report problems in the garden to the homeowner – and then tells him he’s found a body buried under the cherry tree, and he asks “Have you told anyone else about this? Therefore, it is always safer to inform the whistleblower office of BaFin.



by Dr. Johannes Fiala and Dipl.-Math. Peter A. Schramm


by courtesy of (published on 12.10.2016)





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About the author

Dr. Johannes Fiala Dr. Johannes Fiala

Dr. Johannes Fiala has been working for more than 25 years as a lawyer and attorney with his own law firm in Munich. He is intensively involved in real estate, financial law, tax and insurance law. The numerous stages of his professional career enable him to provide his clients with comprehensive advice and to act as a lawyer in the event of disputes.
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