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Banks Are Still Providing Accountholder Information to U.S. Authorities

Offshore Account Update

Posted on January 29, 2016 |

Swiss Banks used to be well-known for their discretion and many U.S. citizens and U.S.-connected individuals kept money in offshore accounts for privacy. The Swiss Bank Program, however, incentivizes banks that believe they could be charged with facilitating tax evasion to come forward and report on their customers. 

If banks participate in the Swiss Bank Program, pay a fine, and cooperate with U.S. authorities, the banks will minimize the penalties they face for their own failures to follow tax rules. Many financial institutions have taken advantage of the Swiss Bank Program and the Department of Justice has announced four additional banks can be added to the lengthy list of institutions turning over details on accountholders.

Those with funds in any offshore banks need to understand that privacy is no longer guaranteed and there is a very real threat that U.S. authorities will be provided with their account information and identifying details.

If you have not always been in 100 percent compliance with requirements to report foreign accounts and pay tax on income held abroad, you need to speak with a Boston tax evasion attorney before your bank gives the DOJ the information necessary to investigate you.

More Banks Providing Customer Account Details to DOJ

Banks that believed they had broken tax laws were encouraged to voluntarily report their actions under the Swiss Bank Program. Four banks, Luzerner Kantonalbank AG (Luzerner), Habib Bank AG Zurich (HBZ), Banque Heritage S.A. and Hyposwiss Private Bank Genève S.A. (Hyposwiss Geneva), are among the many financial institutions that made voluntary disclosures.

These four institutions have now signed resolution agreements with the Department of Justice, so they no longer need to worry about facing charges. The four institutions will collectively pay around $25 million in penalties. 

The institutions will pay these penalties for engaging in a wide variety of behaviors considered unlawful, including allowing accountholders to maintain numbered accounts or accounts in the names of sham entities; facilitating the movement and withdrawal of undeclared offshore funds while evading reporting requirements; and holding mail for U.S. accountholders. 

The institutions also engaged in other behaviors considered to unlawfully aid in tax evasion, including allowing the use of insurance-wrapped accounts held in the names of insurance companies and helping clients create foreign entities.

In addition to fines and implementing controls to prevent further assistance with offshore tax evasion, these financial institutions must now provide details about their accountholders to authorities in the United States.

These details include both identifying information and information about the movements of money and the balances of accounts. If authorities move forward with criminal or civil prosecutions, the four banks have also agreed to cooperate fully and aid in investigations and prosecutions.

If you had an offshore account at these institutions or other banks participating in the Swiss Bank Program, now is the time to take action. Other U.S. citizens with undeclared offshore accounts may also wish to begin exploring their options rather than waiting for their own banks to turn over information. Contact tax evasion attorney Kevin Thorn to learn more about what you can do to try to reduce or avoid penalties for undeclared funds kept offshore.

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

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