Secret Swiss Bank Accounts Have Cover Blown
NEW YORK ( MainStreet) The Department of Justice (DOJ) announced August 29 that it will "encourage" Swiss banks to cooperate with its tax evasion investigations. Part of the encouragement comes in the form of a joint statement with the Swiss Federal Department of Finance, stating the mountain nation - known for its clocks, neutrality and the tendency of its banks not to ask too many questions about depositor's money - will cooperate with DOJ.
Banks that aided tax evaders - and are currently not under criminal investigation - will be slammed with significant penalties, and they must make complete disclosure of their cross-border activities and provide detailed information on an account-by-account basis for accounts in which U.S. taxpayers have a direct or indirect interest.
"This program will significantly enhance the Justice Department's ongoing efforts to aggressively pursue those who attempt to evade the law by hiding their assets outside of the United States," said Attorney General Eric Holder. "In addition to strengthening our partnership with the Swiss government, the program's requirement that Swiss banks provide detailed account information will improve our ability to bring tax dollars back to the U.S. treasury from across the globe."
These banks will also be required to:
- 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
- Agree to close accounts of account holders who fail to come into compliance with U.S. reporting obligations
The program is sort of a get-out-jail-free card for the banks. If they do everything required they will not be prosecuted.
"The U.S. government is recognizing that there is tax evasion from such accounts," said John O. McGinnis, a professor at Northwestern University School of Law and an expert in international business transactions. "Given that tax evasion harms honest taxpayers, I think this is positive thing for the Justice Department to be doing."
This issue is coming to the forefront as more nations try to keep their tax dollars from crossing borders. The United States, along with Great Britain, France and other countries are cracking down on tax evaders.
Germany arrested soccer club president Uli Hoeness for tax code violations; Italy fined Dolce & Gabbana for tax violations. Spain, accused another soccer icon Lionel Messi for tax fraud.
After their meeting in June, the G8 announced aggressive policies of tax enforcement. They cited these objectives for tax enforcement across borders:
- Tax authorities across the world should automatically share information to fight the scourge of tax evasion.
- Countries should change rules that let companies shift their profits across borders to avoid taxes, and multinationals should report to tax authorities what tax they pay where.
- Companies should know who really owns them and tax collectors and law enforcers should be able to obtain this information easily.
- Developing countries should have the information and capacity to collect the taxes owed them and other countries have a duty to help them.
- Extractive companies should report payments to all governments and governments should publish income from such companies.
According to DOJ since 2009 they have charged more than 30 banking professionals and 68 U.S. account holders with hiding money offshore. One Swiss bank made a plea bargain and a second Swiss bank was indicted and pleaded guilty. DOJ is actively investigating the Swiss-based activities of 14 financial institutions. Other countries involved are India, Luxembourg, Israel and some Caribbean Island nations.