The USA - the new Switzerland.

Tax havens are bad for the countries they hide money from. They reduce the money those governments can spend on vital social and economic development programs like education, healthcare and infrastructure. Deprived of resources by corrupt officials, governments can’t meet their people’s basic needs. No one expects offshore havens to disappear anytime soon. Swiss banks still hold about $1.9 trillion in assets not reported by account holders in their home countries, according to Gabriel Zucman, an economics professor at the University of California at Berkeley. For decades, Switzerland has been the global capital of secret bank accounts. That may be changing. Fear and regulatory pressure is pushing the globalised rich to bring tens or even hundreds of billions of portfolio investments out of Europe and into the US, and to do so within the next year and a half.

Shifting money from offshore secrecy havens to the U.S. has become a brisk business for Rothschild & Co. One Turkish client is moving assets from the Bahamas to Nevada. Another Rothschild client, a family from Asia, is moving assets from Bermuda into Nevada. Andrew Penney, a managing director at Rothschild & Co., gave a talk on how the world’s wealthy elite can avoid paying taxes. His message was clear: You can help your clients move their fortunes to the United States, free of taxes and hidden from their governments. Rothschild, the centuries-old financial institution, has opened a trust company in Reno, Nevada. It is now moving the fortunes of wealthy foreign clients out of offshore havens such as Bermuda, subject to the new international disclosure requirements, and into Rothschild-run trusts in Nevada, which are exempt.

After years of lambasting other countries for helping rich Americans hide their money offshore, the U.S. is emerging as a leading tax and secrecy haven for rich foreigners. By resisting new global disclosure standards, the U.S. is creating a hot new market, becoming the go-to place to stash foreign wealth. Everyone from London lawyers to Swiss trust companies is getting in on the act, helping the world’s rich move accounts from places like the Bahamas and the British Virgin Islands to Nevada, Wyoming, and South Dakota.

“How ironic—no, how perverse—that the USA, which has been so sanctimonious in its condemnation of Swiss banks, has become the banking secrecy jurisdiction du jour,” wrote Peter A. Cotorceanu, a lawyer at Anaford AG, a Zurich law firm, in a recent legal journal. “That ‘giant sucking sound’ you hear? It is the sound of money rushing to the USA.”

Geneva-based Cisa Trust Co. SA, which advises wealthy Latin Americans, is applying to open in Pierre, South Dakota, to “serve the needs of our foreign clients,” said John J. Ryan Jr., Cisa’s president.

Trident Trust Co., one of the world’s biggest providers of offshore trusts, moved dozens of accounts out of Switzerland, Grand Cayman, and other locales and into Sioux Falls, S.D., in December, ahead of a Jan. 1 disclosure deadline.

“Cayman was slammed in December, closing things that people were withdrawing,” said Alice Rokahr, the president of Trident in South Dakota, one of several states promoting low taxes and confidentiality in their trust laws. “I was surprised at how many were coming across that were formerly Swiss bank accounts, but they want out of Switzerland.”

The OECD drew up stiff standards to help other countries ferret out tax dodgers. Since 2014, 97 jurisdictions have agreed to impose new disclosure requirements for bank accounts, trusts, and some other investments held by international customers. Of the nations the OECD asked to sign on, only a handful have declined: Bahrain, Nauru, Vanuatu—and the United States. The U.S. Treasury proposals for standards similar to the OECD’s for foreign-held accounts in the U.S. have stalled in the face of opposition from the Republican-controlled Congress and the banking industry.

For financial advisers, the current state of play is simply a good business opportunity. In a draft of his San Francisco presentation, Rothschild’s Penney wrote that the U.S. “is effectively the biggest tax haven in the world.” The U.S., he added, lacks “the resources to enforce foreign tax laws and has little appetite to do so.”

Christian Kalin, chairman of Henley & Partners, an ultra-multinational residency and citizenship advisory firm, says: “The US is a black hole of information for other countries now. Financial information goes in to the US, but does not come out.”

Bolton Global Capital, a Boston-area financial advisory firm, recently circulated this hypothetical example in an e-mail: A wealthy Mexican opens a U.S. bank account using a company in the British Virgin Islands. As a result, only the company’s name would be sent to the BVI government, while the identity of the person owning the account would not be shared with Mexican authorities. The U.S. failure to sign onto the OECD information-sharing standard is “proving to be a strong driver of growth for our business,” wrote Bolton’s chief executive officer, Ray Grenier, in a marketing e-mail to bankers. His firm is seeing a spike in accounts moved out of European banks—“Switzerland in particular”.