Waves of prosecutions over hidden offshore accounts set for US, tax investigator reveals

News - Tax

Written by Ray Clancy

Thursday, 18 March 2010 10:04

US tax authorities are expected to launch another prosecution against a foreign bank soon, similar to the tax evasion case they pressed against Switzerland's UBS, it has been revealed.

According to internal Revenue Service (IRS) agent Linda Osuna, the expected US case against the foreign bank, which she declined to name, would be for ‘the same behaviour that got UBS in trouble’.

Speaking at a money laundering conference in Florida she said the legal action would be within weeks and prosecutions are likely to come in waves in the next six to eight months.

Osuna said further tax evasion cases were likely to result from information brought to light by a voluntary disclosure programme which originally led to 14,700 individuals coming forward before a deadline last October who owned up to holding previously undisclosed accounts overseas.

‘Even after the October 15 date, we’ve had at least 2,000 more, they come in every day. Now, they won’t get out of the penalties and interest, but they are hopeful to get back into compliance,’ Osuna added.

UBS has already settled two law suits relating to accusations that some of its bankers encouraged and helped US citizens to try to conceal assets held in overseas accounts with the Swiss bank. It agreed to turn over 4,450 accounts to US authorities, although this last deal was blocked after a Swiss court ruled in favor of a UBS client, saying her actions did not constitute tax fraud.

The Swiss government plans to ask its parliament to approve the information handover deal it struck with Washington over the UBS case, so that the deal is binding and plugs the legal loophole it says is stopping it from honoring the agreement.

The ruling by a Swiss court in January that such a transfer of accounts data would breach existing Swiss law had thrown cold water on the settlement, according to Laura Stuber, counsel for the US Senate Permanent Subcommittee on Investigations. ‘It could result in the US having to go back to court to get all 50,000 of the UBS account names,’ she added. More than $18 billion was estimated to have been hidden from the IRS in the UBS accounts involved.

The subcommittee has estimated that offshore tax abuse costs the US Treasury $100 billion a year in lost revenue and it is pressing for tougher legislation against tax havens, tax evasion, money laundering and financial fraud.
Last month, a US client of London based HSBC pleaded guilty to conspiracy over assets stashed abroad to evade taxes, the first plea in recent US government tax prosecutions to involve a foreign bank other than UBS.

HSBC, Europe’s biggest bank, also revealed that data on up to 24,000 Swiss client accounts had been stolen by a former employee and ended up in the hands of authorities in France, where the ex-worker fled. The accounts were from a swath of international clients.