Laura Saunders in an October 23, 2015 Wall Street Journal article, enumerates some of the devices used by Swiss Banks to help clients evade their U.S. tax obligations.

She lists the following exposed tactics of the banks:

  • Using numbered or code-named accounts to protect the identity of the account holder.
  • Holding the client’s account in the name of an insurer. This scheme was called having an “insurance wrapper” because like a gift inside a gift-wrapped present, the owner of the account assets IS hidden inside the wrap around insurance company title holder.
  • Holding a client’s mail. The banks charged fees for these services they’d refer to as “cheap insurance” against being discovered.
  • Using code words as substitutes for cash transfers. Clients were instructed to send emails with coded messages like, “Can you download some tunes for us?”
  • Allowing clients to hold title to an account in the name of a sham or nominee entity or foundation that conducts no business its sole purpose being to conceal the identity of the true account owner. These entities would be formed in places like Panama or the British Virgin Islands, where the true owner’s identity is camouflaged in bearer share packages put together by crooked lawyers.
  • Allowing clients to access funds by using bank issued anonymous prepaid debit cards that do not have the client’s name printed on the card to obscure the client’s identity.
  • Helping clients to convert the account balance to gold to frustrate funds tracing. The gold would then be put into a safe deposit box for the client.
  • Sending bank associates to the U.S. to meet with clients, entertain them, collect cash deposits and facilitate the tax evasion scheme.
  • Dividing transfers into amounts below $10,000 to avoid the Bank Secrecy Act’s cash reporting rules and avoid detection.
  • Encouraging prospective clients to transfer funds from Swiss banks already under scrutiny to their bank which would do a better job of protecting secrecy.

All of these activities are the kinds of overt acts that help the government to obtain a criminal tax conviction. Obviously, if you are an individual who has engaged in any of these activities with one or more banks, you need to retain legal counsel to attempt to mitigate exposure to criminal charges and/or egregious civil FBAR penalties.  Most likely, you should enter the Offshore Voluntary Disclosure Program.  The Streamlined Filing Compliance Procedures will not likely be helpful because the kinds of conduct described above clearly establish willfulness, if not criminal responsibility.  Contrariwise, those with unreported offshore accounts who have not engaged in such conduct are probably not tax criminals, do not belong in the OVDP and should consider the Streamlined Filing Compliance Procedures as the means by which to come into compliance with U.S. tax laws.

Robert S. Steinberg, Esquire


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