In countries like Austria or Germany, the owners of “black money” have one big problem: they cannot spend it, at least not in their own countries and not in larger amounts. It may be difficult to convert “white” money into “black” money but it is virtually impossible to do the reverse in a larger way.
The solution is simple in the world of IT: cross-checking official records. If someone buys an apartment, a copy of the purchase contract goes to the tax office. The tax office makes a cross-check to the latest income tax statement. If that does not show any income justifying the purchase, the tax office will start asking questions.
A few years ago, Germany even went so far as to allow tax authorities access to private bank accounts without the account holder even knowing about it. When the law was implemented, it created enormous discussion but in the meantime everyone seems to have gotten used to.
No Austrian or German will ever transfer money to, say, Switzerland, via official bank accounts knowing that tax authorities might look into it. If they want to have money offshore (and a lot of them do), then they have to transport it in cash. In contrast, the Bank of Greece has reported that between 2010-11, about 25 BEUR were transferred from private Greek bank accounts to private accounts offshore. Apparently, there is no cross-checking with tax authorities.
No bank should open an account for an offshore company without being informed who the beneficial owner is. That is not Austrian or German law; it is EU law. So if rules are adhered to, there is no way for a former defense minister to live in a house paid for by an offshore company without someone knowing who the beneficial owner of that offshore company is. No bank would accept a larger money transfer from abroad to a private account without questioning the recipient about the source of that money (or perhaps even reporting it to authorities).
About 2 years ago, in the beginning of the crisis, I had a conversation with a Mercedes dealer in Thessaloniki. I said that with the recession and the new tax controls, his sales would probably go down. He said no. I said that tax authorities would now check out every buyer of a Mercedes to see if he could afford one based on official records. He said yes. So, I asked, what is he going to tell them? The dealer said: he will ask the tax inspector what his monthly salary is. And then he will give him a sum of cash which will discourage the tax inspector to ask further questions.
Well, you can’t beat any such informal system!