More Foreign Banks Under U.S. Grand Jury Investigations

An additional 9 European banks are under investigation for suspicion of helping wealthy U.S. citizens avoid U.S. reporting and taxation.

German, French, Luxemburg, Lichtenstein, Spanish, Dutch and English banks are also becoming the brunt of investigations from their own governments for relinquishing private tax data and information that may lead to their citizens avoiding national taxation. Much of this information may find its way to the U.S. Treasury to assist them in investigating the additional 9 European banks. This information may also allow the U.S. Treasury to “expand” the number of banks from 10 to a much higher number, including private banks and corresponding banks. This expansion news has sent waves of concern into the banking world as well as their customers who had relied to the confusion of European banking laws between the EU countries combined with the protective mandates and legislation within each banking country.

On September 21, 2011, Chancellor Angela Merkel’s government signed an agreement with Switzerland that seeks to end a dispute over tax evasion, setting up a clash with German opposition lawmakers who threatened to block the measure. German Finance Minister Wolfgang Schaeuble and his Swiss counterpart, Eveline Widmer-Schlumpf, signed the accord in Berlin on September 21, 2011 after ministers gave their approval at Merkel’s weekly Cabinet meeting. The accord introduces a levy on German bank customers while preserving Swiss banking secrecy. The agreement, completed by negotiators last month, seeks to quell a dispute between the neighboring countries over wealthy Germans holding cross-border accounts with Swiss private banks. It foresees a 2 billion Swiss-franc ($2.2 billion) upfront payment to the German government from banks to cover the failure by their clients to declare holdings, an amount that will later be reimbursed from taxes paid by German customers.

Just a week earlier, Chancellor Angela Merkel’s government agreement with the Swiss, the English bank HSBC Holdings Plc, with bank locations in Switzerland, was told by the English Revenue and Customs (similar in function to the U.S. IRS) that their clients with accounts at its Swiss private bank in Geneva are the target of a widening investigation by U.K. authorities into alleged tax evasion. Revenue and Customs, also known as HMRC, will write to an additional 4,500 clients of the London-based bank, giving them the choice of making a full disclosure or face investigation. About 800 customers have already been sent Code of Practice 9 letters informing them that their tax affairs over the past 20 years will be probed. Similar to the United States, the British tax authority is allocating more staff to widen the probe of Swiss bank account holders. HMRC received the data from its French counterparts after Herve Falciani, a former software technician at HSBC in Geneva, stole details on at least 24,000 accounts. The widening probe of HSBC customers came after the U.K. and Switzerland agreed to settle a dispute over tax evasion by wealthy Britons holding offshore accounts with Swiss private banks. Under the agreement, customers must either make a declaration to HMRC or pay a withholding tax that also covers their past failure to disclose undeclared assets.

As the EU continues its economic slide further into record debt without any hope of an immediate resolution, more human resources are being poured into finding and “expanding” their ever increasing knowledge of asset transfers and foreign bank accounts to bring in more revenue from past acts of citizens as well as current revenue in the form of being compliant and payment of penalties and interest for past years non-reporting and payment of taxes.

On September 14, 2011 Jack Lew, the director of the White House Office of Management and Budget indicated that the Government needed to find at money to keep the country afloat, at least $1.2 trillion. In response to this, IRS Commissioner Douglas Shulman stated: “As we continue to amass more information and pursue more people internationally, the risk to individuals hiding assets offshore is increasing.”

September 9, 2011 was the final extension of time to apply for tax amnesty for Americans and others who failed to timely report foreign bank accounts to the IRS. Those who have come forward have provided valuable information, which then is utilized by the IRS to “expand” the ever-widening scope of their investigations.

Remember in my article detailing with the tax amnesty and the Criminal Investigation Division, CID, the CID required you to fully cooperate in the declaration for declarants to be successfully protected under the Amnesty program. The declaration included:

1. Your full Name
2. Your Social Security Number
3. Your Date of Birth
4. Your Current Address
5. Passport Number and Country of Issue
6. Current Occupation
7. Complete and Comprehensive Explanation for Your Failure to File the FBAR and also Explain the Source of these Funds.
8. Disclose if you or any related entities are currently under audit or criminal investigation by the Internal Revenue Service or any other law enforcement authority.
9. Has the IRS notified you that it intends to commence an examination or investigation?
10. Are you under criminal investigation by any law enforcement authority, if so explain in detail.
11. Do you believe that the IRS has obtained information concerning your tax liability, if so explain.
12. Estimate the annual range of the highest aggregate value of your offshore accounts/assets.
13. For accounts or assets where you have control or are a beneficial owner of the account or asset, list any and all financial institutions and the country where the institution is located. For accounts, please also list the dates the accounts were opened and/or closed. Provide your point of contact at each financial institution.
14. Explain the purpose for establishing the offshore account or assets. For example: Holocaust Compensation or Restitution; inherited account; account established prior to World War II, etc.; if tax non-compliance – explain.
15. List each person or entity affiliated with the account, their formal structure (i.e., if a corporation, foundation, or trust), and the nature of their relationship to the account (i.e. owner, power of attorney, parent entity of corporate account holder, etc.).
16. Explain all face-to-face meetings, and any other communications you had regarding the accounts or assets with the financial institution(s). Also include face-to-face meetings or communications regarding the accounts or assets with independent advisors/investment managers not from the financial institution(s) where the funds are held. Provide the names, locations and dates of these meetings and/or communications.

Items 13, 14 & 15 require the naming of financial institutions, including banks. Over the most recent two Amnesty programs by the U.S. Treasury, applicants come forward had significant input on assisting the U.S. Treasury focus their efforts on foreign banks that establish a pattern of helping U.S. citizens with their overseas bank account and/or the non-reporting of these accounts to the IRS. The results have now lead to the IRS and CID “expanding” on the information collected in the above Amnesty questioning and publically announcing that Americans involved with tax evasion under the Amnesty programs have utilized Europeans banks with the top ten banks now including, but not limited to:
1. Credit Suisse Group AG,
2. Julius Baer Holding AG,
3. Zürcher Kantonalbank,
4. Union Bancaire Privée, aka UBP, and
5. HSBC.
CONCLUSION:
With computers being used more and more by governments and agreements to act in reciprocal agreements to find tax revenues in methods that have been utilized for years by the financial world and the wealthy; it may be only a matter of time before non-transparent cross-boarder private transactions are a thing of the past.