Top Bank Officials On Trial for Tax Evasion

Many U.S. investors have placed their trust in Swiss banks and bankers to maintain the strict secrecy standards that helped the banking industry in Switzerland to grow.  In Switzerland, tax evasion is not a criminal act (although tax fraud and money laundering are illegal).  Furthermore, the law and longstanding traditions make it a crime for Swiss bankers to disclose client names.

Unfortunately, in light of aggressive actions by the Department of Justice and the Internal Revenue Service in the United States, the long history of secrecy in Swiss banking is being undermined. U.S. officials are targeting bankers and financial professionals, and a recent article in Newsweek suggests that attention may be focused on some of the highest level executives at Swiss banks who have turned a blind eye or even helped facilitate U.S. citizens evading their tax obligations.  As bankers are prosecuted, some are turning over information and customer accounts could be provided to the Internal Revenue Service.

Those who have money offshore and who may not be in compliance with current IRS requirements have plenty of reason to be concerned about the crackdown on offshore banks. There are options for voluntary disclosure to minimize penalties and avoid criminal prosecution, but you need to talk to a Boston criminal tax lawyer before you decide on what actions are appropriate for you.

Those at the Top are Being Accused

Since 2007, more than three dozen foreign bankers, as well as around four dozen U.S. clients of American banks, have been prosecuted by U.S. authorities.  The Justice Department has also aggressively gone after banks.  In fact, a DOJ indictment led to the oldest private bank in Switzerland ceasing its operations.

The prosecutions extend into the highest levels of foreign Swiss banks. For example, the former head of UBS’s wealth management for the Americas was arrested, as was his boss.  When the former UBS wealth management head was arrested, he had a binder that he had made with PowerPoint presentations, emails and a host of other documents that demonstrated top-level bank executives were helping to make it possible for U.S. citizens to invest secretly and evade taxes. He was able to turn over this binder to U.S. officials in exchange for a deal that he would not be prosecuted. The binder is being used to provide information that U.S. authorities can use to go after other top executives.

While bankers may be in a difficult place since Swiss laws require them to keep quiet about clients, it is likely many more banks and bankers will be willing to turn over details about U.S. investors in order to avoid jail time. As a result, many investors who are afraid that their accounts will be reported to the government are taking a preemptive step by participating in voluntary disclosure programs.  More than 38,000 U.S. citizens who are Swiss bank clients have come forward and paid $5.5 billion in taxes on hidden assets.

If you are considering reporting your own offshore accounts, be sure to talk to a Boston criminal tax lawyer first so you can protect your financial interests and do everything possible to avoid criminal prosecution.

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