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DOJ Program for Banks

Offshore Account Update

Posted on July 24, 2015 |

Swiss banks have taken part in a long-standing practice of secrecy that people throughout the United States have taken advantage of in order to avoid reporting income and paying taxes on some investment income.

BSI SA is a Lugano-based Swiss bank that is one of the top 10 private banks in Switzerland. The bank helped to facilitate tax evasion by helping clients who were based in the United States to create sham trusts and corporations so their identities and account ownership would not be disclosed.

The bank also provided assistance to customers based in the United States with repatriating offshore income, and offered numbered Swiss accounts so accountholders’ identities would be protected.

The Swiss banking industry, however, is rapidly changing as a result of aggressive prosecutions by U.S. tax authorities. The tradition of secrecy is no longer, as banks turn over information on their clients as well as on other financial institutions. The Department of Justice even has a formal Swiss bank program now to allow banks to reach resolutions where criminal prosecution is avoided if they come forward and voluntarily cooperate.

BSI SA became the first Swiss bank to participate in the program, which was started in August of 2013. The Department of Justice announced BSI SA’s involvement in March of 2015.

If you are an accountholder at a Swiss bank and you are concerned there is a chance you are not in compliance with all U.S. tax laws, there is a very real possibility that your bank is going to participate in the Swiss Bank program or otherwise turn over information to U.S. authorities about your offshore dealings.

Once you are being investigated for nondisclosure of foreign accounts or for tax evasion, you are going to be unable to participate in amnesty programs and could face criminal charges and larger fines. Before the IRS and U.S. authorities come knocking on your door, call a Boston tax attorney for help understanding what your options are.

Swiss Bank Program Requires Banks to Provide Information

Banks that suspect they may have violated U.S. tax laws can participate in the Swiss Bank program if they come forward voluntarily before they are under investigation. The banks must, among other things, provide account-by-account information of U.S. connected accountholders, and must provide information on banks that either accepted money from closed secret accounts or that transferred money into closed secret accounts.

Any bank participating in the Swiss Bank Program must agree to cooperate with civil and criminal prosecutions and to provide additional information as requested in treaty requests. The banks must also be willing to close accounts of U.S. accountholders who aren’t in compliance with tax rules.

The information obtained from BSI SA and other participating banks will be used by the DOJ to move forward with additional prosecutions. BSI SA won’t be prosecuted because it has resolved its legal issues through its participation in the program, but other individual investors and banks could face charges. BSI SA also had to pay fines of $211 million as part of resolving the possible criminal charges the institution could face.

More banks are participating in the Swiss Bank program and your bank could be next. Talk to Kevin Thorn, a tax attorney in Boston, today about what your options are for dealing proactively with undeclared offshore accounts.

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

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