The Tax Times: The Swiss Bank Program is Over So What Countries are in the DoJ Sites Now?

On January 28, 2016 we posted DOJ Swiss Bank Program is Over After Netting $1.36 Billion! where we discussed that the Department of Justice announced on January 27, 2016 that it reached its final non-prosecution agreement under Category 2 of the Swiss Bank Program, with HSZH Verwaltungs AG (HSZH).

The department has executed agreements with 80 banks, since March 30, 2015, when it announced the first Swiss Bank Program non-prosecution agreement with BSI SA. By our count it is 94 banks - see our post 93 Swiss Banks Are Turning Over Your Names To The IRS - What Are Your Waiting For?, plus HSZH, but who's counting?

Swiss Bank Program demonstrates that foreign financial institutions with potential U.S. criminal tax liability can greatly mitigate their exposure by taking immediate actions, such as making voluntary disclosures of potential illegal activity to the Tax Division and implementing compliance measures to avoid further violations of U.S. tax law. In our post DoJ is Following The Money Trail Disclosed By Swiss Bank's to Singapore and Israel! we quoted Chief Richard Weber of IRS-Criminal Investigation,

“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.”

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.

“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.”

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.

Following the success of the Swiss Bank Program, the Justice Department is now looking beyond Switzerland to financial institutions in other countries that may be havens for secret offshore accounts or undisclosed assets. Investigators are pursuing the wealth of leads generated through the Swiss Bank Program, and following those leads to countries such as:

Belize,
the British Virgin Islands,
the Cayman Islands,
the Cook Islands,
India,
Israel,
Liechtenstein,
Luxembourg,
the Marshall Islands,
Panama and
Singapore

Non Swiss Foreign banks and financial institutions that serve U.S. customers are well-advised to heed the lessons of the Swiss Bank Program and other Justice Department enforcement actions commenced to date. Not to mention a little thing like 30% FATCA withholding for noncompliant foreign banks!

For US taxpayers with undeclared income from foreign accounts, only those taxpayers that request pre-clearance before their bank is discovered by the IRS and listed, will get the 27 1/2% OVDP penalty. The 50% penalty 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.

Do You Have Undeclared Income From the Foreign Bank?