DOJ Makes Deal with Swiss Bank

The Department of Justice and U.S. authorities have been going after offshore banks that are suspected of helping accountholders in the United States to evade their tax obligation. Banks that believe they could be criminally prosecuted but that are not yet under investigation can head off criminal charges by coming forward voluntarily in order to participate in the DOJ’s Swiss Bank Program. Finter Bank, a Zurich bank, has become the latest bank to sign a non-prosecution agreement through the Swiss Bank Program.

The agreements require the banks to comply with myriad requirements, including paying a fine. What may be of particular concern to accountholders, however, is the requirement that the bank turn over specific account-by-account details on people with offshore accounts and a connection to the United States. Once authorities have this account information, accountholders can face penalties for not filing required annual FBARs (reports of foreign accounts) and for not declaring offshore income and paying all taxes due. If authorities believe you willfully withheld information on your offshore accounts to avoid taxes, you could be prosecuted criminally.

Participation in the Offshore Voluntary Disclosure Program (OVDP) is a possibility for foreign accountholders. If you participate in OVDP, your penalties are less than if the IRS finds out about the accounts on their own, and you can avoid criminal prosecution. Costs of participation in OVDP can still be high, so you should speak with a Boston tax law firm if you are concerned about whether your bank may provide information to U.S. authorities about tax evasion or failures of compliance. Your attorney can help you determine what your best course of action is for moving forward to protect your money.

Finter Bank Accountholders Will Have Information Turned Over As Part of Swiss Bank Program

The Swiss Bank Program is essentially an amnesty program for foreign banks, provided the banks cooperate with requests for information and investigations into tax evasion. A bank that wishes to participate in the Swiss Bank program has to give details about accountholders, but that’s not all. The bank also has to provide other information, including details about any banks that received funds or sent funds to or from offshore accounts.

Finter Bank participated in the Swiss Bank Program because the bank feared prosecution for using numbered and coded accounts for U.S. clients, as well as facilitating other techniques to hide paper trails, enable secrecy of offshore accounts, and allow clients to mask the ownership of offshore accounts. Many investors who had money with UBS AG moved their money to Finter Bank in 2008 when UBS acknowledged publicly it was being investigated by U.S. authorities. Finter Bank had approximately 283 million accounts connected to U.S citizens, with an aggregate minimum balance reaching $235 million.

All of those accountholders could find themselves with legal actions pending if they don’t act quickly. Once you are under investigation, participation in OVDP is generally no longer possible. Before your amnesty options close to you, contact Kevin Thorn for assistance.

For a consultation, contact Kevin E. Thorn, Managing Partner, at ket@thornlawgroup.com or (617) 692-2989