The Crackdown Continues: More Offshore Banks Being Targeted in Israel, Singapore

Banking privacy used to be revered in Switzerland, but the U.S. crackdown on Swiss banks has prompted more than 106 Swiss financial institutions to turn over detailed information on account holders and financial transactions.

These financial institutions have been participating in the Swiss Bank Program, which allows amnesty from criminal prosecution for banks that voluntarily come forward. Since 2013, the U.S. Justice Department has been making deals, collecting penalties, and using information provided by financial institutions to pursue investors who didn't declare their offshore accounts.

As Swiss banks have begun turning on their customers, investors have been looking for places to move their money to. Unfortunately, fewer and fewer places are safe as the U.S. Department of Justice expands the breadth and scope of its investigations.

Since so many Swiss banks are voluntarily coming forward, the DOJ is using its resources to conduct investigations and crack down on banks in other places. According to Bloomberg, two of the most likely targets for a crackdown this upcoming year are Singapore and Israel.

Account holders should know that the DOJ is not giving up on efforts to find offshore monies and go after people with U.S. accounts who didn't declare those accounts and pay taxes on all income. You need to find out what your options are for trying to avoid serious financial penalties and the potential for criminal prosecution.

Participation in a voluntary amnesty program for individuals called Offshore Voluntary Disclosure Program is a possibility for some, but not all investors, but there may also be other solutions as well. Contact a Boston tax attorney to learn more about your options.

Department of Justice is Expanding its Crackdown on Banks

In 2015, 41 Swiss banks participated in the Swiss Bank Program and gave information to the DOJ. Another 40 are expected to participate and give up account holder details this year. The DOJ knows that U.S. investors are moving money, and Bloomberg reports that the DOJ intends to follow the cash. 

The DOJ may target Hong Kong, Lebanon, Liechtenstein, and Cyprus, among other places. However, there is expected to be a heavy focus on both Singapore and Israel in particular.

Although officials would not comment specifically, early reports indicate some taxpayers with undeclared offshore funds used a Singapore money management firm to provide help with withholding information on financial accounts from the IRS. This institution and other financial institutions throughout Singapore could find themselves facing the threat of criminal prosecution.

One bank in Israel has already faced criminal prosecution.  Bank Leumi Le-Israel Ltd. paid $400 million in order to resolve its criminal case.  Bloomberg indicates that “Israeli banks have drawn special focus from the Justice Department,” and this is expected to continue going forward.

With fewer and fewer locations not being targeted by the Department of Justice, account holders will have no place to move money where they can expect privacy. It is a good idea to speak with a tax attorney like Kevin Thorn to find out what options are available to you before the IRS finds out about your accounts and begins taking action against you.

For a consultation, contact Kevin E. Thorn, Managing Partner, at ket@thornlawgroup.com or (617) 692-2989