As the government dramatically ramps up its efforts to ferret out unreported foreign accounts, reports of Swiss banks settling with the Justice Department become almost everyday news. Yesterday Societe Generale Private Banking S.A. and Berner Kantonalbank AG became the newest banks to settle with the United States.
Both Societe Generale and Berner Kantonalbank agreed to help the IRS find Americans who moved money to other banks and to assist in efforts to find taxpayers that hid assets from the government.
U.S. taxpayers with more than $10,000 in foreign financial holdings must annually report their holdings. Failure to report may be criminal and usually carries huge civil fines that can equal the highest historical balance of the foreign account. Those penalties can be levied even if that account is now liquidated and closed.
Obama’s Foreign Account Tax Compliance Act (FATCA) requires all foreign banks to begin culling through their records and report account holders or signatories with ties to the United States. Although FATCA applies worldwide and is now in effect, it hasn’t stopped the Justice Department from targeting specific banks that have helped Americans hide money or move money to other banks in the hopes of avoiding detection.
The Justice Department recently offered an amnesty to Swiss banks. Those banks that cooperate and pay a fine do not get criminally prosecuted. Switzerland’s oldest private bank, Wegelin, went under after being prosecuted in January of 2013. To avoid a similar fate, most Swiss banks are now cooperating or have signalled an intent to do so.
Societe Generale and Berner Kantonalbank will pay a combined total of $22.4 million to avoid prosecution.
In announcing the settlement, an IRS spokesperson said, “These two resolutions with Societe Generale Private Banking (Suisse) SA and Berner Kantonalbank AG represent the ongoing commitment by the IRS and the Department of Justice to ensure that U.S. taxpayers report foreign bank accounts and pay taxes on all income earned from those accounts.”
The IRS says that Societe Generale admitted that some of its bankers helped Americans hide their offshore accounts by using false names and putting the accounts in the names of nominee entities based in Panama and the British Virgin Islands.
It’s not just U.S. citizens or those with unreported Swiss accounts that should be worrying. The IRS foreign reporting rules apply to all U.S. citizens, American expats living overseas, green card holders and dual nationals no matter where they live.
Although the Justice Department’s amnesty program is aimed at Swiss banks, the IRS and Justice Department have acknowledged looking into banks in Brazil, India, Israel, the Caribbean, and Liechtenstein. An IRS official recently told an offshore fraud group in Miami that Latin American banks are being scrutinized as well.
FATCA requires all banks worldwide to begin reporting accounts with U.S. ties this year. Banks that don’t cooperate are subject to punitive withholding requirements and are more likely to come under criminal investigation.
Between FATCA and the government’s aggressive enforcement policies, hiding money offshore has become near impossible and certainly not worth the risk. Luckily there are amnesty options but those disappear once a bank turns over names or agrees to cooperate. That means time is quickly running out.
Have questions about FATCA or FBAR reporting? Give us a call. Our tax lawyers have helped people all over the world with a wide variety of offshore reporting concerns. Our services are protected by the attorney -client privilege, are confidential and in most cases can be handled for a reasonable flat fee. There is never a charge for an initial consultation.
Need more information? Contact attorney Beth Canfield at or by telephone at (414) 223-0464.
MahanyLaw – America’s FBAR Lawyers
Updated List of Cooperating Banks:
- UBS AG
- Credit Suisse AG, Credit Suisse Fides, and Clariden Leu Ltd.
- Wegelin & Co.
- Liechtensteinische Landesbank AG
- Zurcher Kantonalbank
- swisspartners Investment Network AG, swisspartners Wealth Management AG, swisspartners Insurance Company SPC Ltd., and swisspartners Versicherung AG
- CIBC FirstCaribbean International Bank Limited, its predecessors, subsidiaries, and affiliates
- Stanford International Bank, Ltd., Stanford Group Company, and Stanford Trust Company, Ltd.
- The Hong Kong and Shanghai Banking Corporation Limited in India (HSBC India)
- The Bank of N.T. Butterfield & Son Limited (also known as Butterfield Bank and Bank of Butterfield), its predecessors, subsidiaries, and affiliates
- Sovereign Management & Legal, Ltd., its predecessors, subsidiaries, and affiliates
- Bank Leumi le-Israel B.M., The Bank Leumi le-Israel Trust Company Ltd, Bank Leumi (Luxembourg) S.A., Leumi Private Bank S.A., and Bank Leumi USA
- BSI SA
- Vadian Bank AG
- Finter Bank Zurich AG
- Societe Generale Private Banking (Lugano-Svizzera) SA
- MediBank AG
- LBBW (Schweiz) AG
- Scobag Privatbank AG
- Rothschild Bank AG
- Banca Credinvest SA
- Societe Generale Private Bank
- Berner Kantonalbank