The Tax Times: DoJ is Following The Money Trail Disclosed By Swiss Bank's to Singapore and Israel!

On October 9, 2015 we posted OVDP Penalty Increased To 50% For 55 Foreign Banks Asset Management Firms! which supplements our earlier post OVDP Penalty Increased To 50% For 50 Foreign Banks! , where we discuss that in accordance with the terms of the Swiss Bank Program, each bank mitigated its penalty by encouraging U.S. account holders to come into compliance with their U.S. tax and disclosure obligations. Under the program, banks are required to:

Make a complete disclosure of their cross-border activities;

Provide detailed information on an account-by-account basis for accounts in which U.S. taxpayers have a direct or indirect interest;

Cooperate in treaty requests for account information;

Provide detailed information as to other banks that transferred funds into secret accounts or that accepted funds when secret accounts were closed (a/k/a Levers List);

Agree to close accounts of account holders who fail to come into compliance with U.S. reporting obligations; and

Pay appropriate penalties.

Banks meeting all of the above requirements are eligible for a non-prosecution agreement.

“With each Additional Agreement,
the World where Criminals can Hide Their Money
is Becoming Smaller and Smaller.

Those Who Circumvent Offshore Disclosure Laws

Have Little Room to Hide.”

said Chief Richard Weber of IRS-Criminal Investigation.

Now Bloomberg reports that the flood of information is now giving U.S. investigators intelligence to try to build new cases against individuals and institutions in other countries, said Caroline Ciraolo, the Justice Department’s top tax prosecutor. Financial institutions in Singapore and Israel are possible targets, according to lawyers and prosecutors.

“The money is moving out of Switzerland to a variety of jurisdictions,” said Ciraolo, an acting assistant attorney general.

“We’re following leads and following the money, wherever that leads us.”

U.S. agents interviewed taxpayers who used a Singapore money management firm to hide assets from the IRS, said Bryan Skarlatos and Scott Michel, lawyers who separately represent some of those Americans. They wouldn’t identify the firm, and Ciraolo wouldn’t discuss it.

“Certainly, Singapore would be one of the jurisdictions that we’re looking at,” Ciraolo said.

Societe Generale SA’s Swiss private banking unit admitted in its settlement that it transferred assets of U.S. customers to “corporate and individual accounts at other banks in Switzerland, Hong Kong, Israel, Lebanon, Liechtenstein and Cyprus,” according to its statement of facts. The unit paid a $17.8 million fine. A bank spokesman declined to comment.

In its settlement document, Banque Pasche SA said that client money was transferred to banks located in Israel and Hong Kong “in an attempt to further escape detection.” An e-mail and phone call to the bank weren't returned.

We previously posted the various IRS problems with Israeli Banks:

" Bank Leumi to Face $300 Million Settlement Option to Close an Investigation Regarding Their Aiding Americans to Evade Taxes"

on Thursday, September 8, 2011 "More Tax Problems for U.S. Citizens with Foreign Bank Accounts in Israel" and

on Monday, March 11, 2013 "IRS Targets Israeli Banks and Their US Client;"

The data coming directly from Swiss banks are supplementing a separate trove the IRS gathered from 50,000 U.S. taxpayers who disclosed their offshore accounts and paid $7 billion in back taxes, fines and penalties since 2009.

Many US taxpayers disguised their money in entities set up in tax havens outside of Switzerland. Of 54 banks that settled:

18 held assets in corporations, foundations or trusts in Liechtenstein;
15 in Panama;
11 in the British Virgin Islands, and
4 in Hong Kong.

The DOJ is getting some very valuable information served up on a silver platter as a result of the OVDP program and its non-prosecution agreements with Swiss banks.

With roughly 96 Swiss banks taking the DOJ deal and FATCA requiring the entire world to report to the IRS resulting in increasing disclosures, everyone American is eventually going to be discovered.
Banks worldwide want to know if there US clients are compliant with the IRS.

Within the OVDP, people who pre-cleared before the various effective dates are generally safe from the higher 50% penalty. As additional banks are added to the list, only those American taxpayers that request pre-clearance before their bank is listed, will get the 27 1/2% OVDP penalty. The 50% penalty now applies to all taxpayers with accounts at financial institutions or with facilitators which are named, are cooperating or are identified in a court filing such as a John Doe summons.

Although the 50% penalty is high, willful civil violations can result in tax, penalties and interest totaling 325% of the highest balance in the account for the most recent six years period. Recent guidance suggests that the IRS could be more lenient in the future, but the IRS’s definition of leniency can still make the OVDP a very good deal that provides certainty.

Do You Have Undeclared Income From the Foreign Bank?