Offshore Accountholders Take Note: More Tax Havens Are Being Uncovered

For those with offshore funds, privacy was often one of the leading reasons for investing in foreign countries. Unfortunately, the long traditions of banking privacy in many offshore financial meccas is quickly coming to an end.  Because of the Swiss Bank Program, many banks from Switzerland are making deals with U.S. authorities for banks to avoid criminal prosecution by providing account holder info to the U.S. government. An increasing number of countries are also entering into agreements to exchange information about offshore accounts in order to try to stop tax evasion.

Even in countries where privacy is still valued, there is a risk of information being illicitly leaked. For example, the recent release of the Panama Papers involved records from a large law firm in Panama which helped investors with offshore accounts. Now, there has been a new leak of information on more than 175,000 Bahamian companies, foundations, and trusts which were registered in the Bahamas between 1990 and 2016. This information sheds light on who owns offshore accounts because many of these accounts are held in the names of these corporations, foundations or trusts. 

Those who have invested offshore should be aware of the fact that their information may become public, either because of cooperation with taxing authorities or because of illicit leaked information. If you have money invested in a foreign bank, you need to take action now to decide what your best options are. A Boston international tax attorney can provide assistance.

Leak Reveals Information on Bahamas Companies

The recent leak of information from the Bahamas included 1.3 million files. The information from the leak has been put into a searchable database which contains the names of financiers, entrepreneurs, politicians, and others who are associated with offshore accounts.  This is a big deal because the Bahamas has not provided any type of searchable database of directors, which has resulted in the U.S. having difficulty investigating possible money laundering or tax evasion taking place in the Bahamas.

The leaked information could create major problems for investors who thought their private data was safe due to the Bahama's long history of protecting private account holder info. The Bahamas was put onto a black list in 2000 by the Organization for Economic Co-Operation and Development (OECD), which is the world's leading tax policy forum, because the OECD determined the Bahamas was aiding in tax evasion.

While the passage of nine new laws resulted in the Bahamas being removed from the list the next year, it was put back onto a “gray list,” in 2009 for “nonconformity with international standards.”  The Bahamas is also on the European Union's list of 30 countries which are considered non-cooperative tax havens.

While investors may have felt confident their info was safe because the Bahamas has not cooperated with taxing authorities, the repeated leaks of confidential info on offshore accounts mean that no information anywhere is safe from being made publicly available. 

Investors with offshore funds in the Bahamas or elsewhere need to be prepared for the possibility their info will become public either because of bank or government cooperation with taxing authorities or because of the unauthorized leak of data. Kevin Thorn is an international tax attorney, can help those with investments offshore to decide on the right steps to take in light of the risks.

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