Offshore Banks Liability For Client's Tax Evasion

According to Law360 Offshore Tax Havens and Nominee Entities pose a significant regulatory and compliance risks to international financial institutions.

Regulatory authorities around the world, including the U.S. Department of Justice, intensified their investigations into offshore tax havens after the April 3, 2016, publication of names associated with the Panamanian law firm Mossack Fonseca, widely known as the “Panama Papers,” and the firestorm of public outcry.

International financial institutions frequently open accounts in the name of offshore entities. In order to combat the risks of facilitating tax evasion, most financial institutions apply rigorous “know your client” and new client adoption procedures. Even with these processes in place, financial institutions retain limited insight into a client’s true intentions.


While account opening documentation usually includes language admonishing that the account holder solely is responsible for the tax compliance of the assets held in the account, the trend in international enforcement is to question the sufficiency of such clauses.

Regulatory regimes such as the U.S. FATCA and the Organization for Economic Cooperation and Development’s Common Reporting Standard require financial institutions to report information on their account holders to tax authorities. Institutions that fail to implement the reporting schemes carefully and thoroughly face significant automatic withholding of payments from source jurisdictions and potential loss of access to dollar markets.

Financial institutions no longer can afford simply to delegate responsibility for tax compliance of accounts they hold for their clients. Banks and financial institutions that preemptively conduct rigorous risk assessments of offshore entity accounts and implement stricter compliance and oversight measures will be the best prepared to answer when the DOJ or another regulatory authority comes calling.

Does Your Financial Institution Have U.S. Taxpayers

With "Unreported Income" From Offshore Accounts?

Do You Need Them Come Clean NOW before

Their Illegal Activity is Identified! 

 

 

 

 We Can Counsel Them

on Which OVDP Program
is Right for Them?

 

Contact the Tax Lawyers at 

Marini & Associates, P.A.  

 

for a FREE Tax Consultation

at: www.TaxAid.us or www.TaxLaw.ms or

Toll Free at 888-8TaxAid (888) 882-9243