The Department of Justice and the Internal Revenue Service have kept the pot boiling on their enforcement campaign targeting undisclosed offshore bank accounts and international tax evasion. The new year already has brought three significant developments: the indictment of a major Swiss bank, the release of proposed regulations regarding a sweeping law that requires foreign banks to report their U.S. account holders, and yet another version of a voluntary disclosure program for holders of undisclosed foreign accounts. These developments are all related, and will impact both financial institutions and individual account holders.
On Feb. 2, a district court in the Southern District of New York unsealed the indictment obtained by the DOJ of Wegelin & Co. (Wegelin), Switzerland’s oldest bank, involving an elaborate charge of tax fraud conspiracy and the bank’s alleged assistance to U.S. account holders seeking to hide their assets and evade taxes. This indictment superseded the January 2012 indictment of three bankers from Wegelin, an action that had motivated the 270-year old Wegelin, which clearly saw the writing on the wall, to sell its assets right before its own indictment. Interestingly, many of the allegations against Wegelin pertain to the bank intentionally positioning itself as a “safe” refuge for the hidden assets of U.S. clients fleeing from, or being forced out of, Swiss banking giant UBS, which had entered into a deferred prosecution agreement with the DOJ in 2009 and is believed to have disgorged the names of as many as 4,450 of its U.S. clients with previously undisclosed accounts.
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