Investors who used offshore accounts to hide money from the IRS are facing increased risks as the federal government launches new investigations into UBS and other offshore banks.  When banks and bankers make deals with the Department of Justice and with the Internal Revenue Service, these deals often involve turning over client information to the federal authorities.

U.S. citizens who have not filed an annual IRS Form 8983 and an annual Report of Foreign Bank and Financial Accounts (FBAR) may face criminal prosecution, as well as large civil fines. Participation in an Offshore Voluntary Disclosure Program (OVDP) can limit the fines and penalties. However, there is a list of “bad banks” and investors with those accounts may end up paying more.

From 2000 to 2008, CEO of Circle Net, Gregg Kaminsky, deposited money via wire transfer from two different U.S. companies into an account with Union Bank of Switzerland (UBS).  Kaminsky also moved money out of his Swiss account into other accounts that he had in Hong Kong and Thailand. 

Anyone with money offshore must file an annual Report of Foreign Bank and Financial Accounts (FBAR).  George Landegger, chairman of the international pulp mill company Parsons & Whittemore, failed to file these FBARs for accounts he had offshore at Swiss banks. Landegger had undisclosed accounts from the early 2000’s until 2010 and at one point, the balance reached more than $8.4 million.  

The Department of Justice has added another bank to the list of financial institutions it has successfully targeted as part of its crackdown on tax evasion. Bank Leumi, an Israel bank with a presence in seven countries, has entered into a deferred prosecution with the Department of Justice.