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8 offshore banks under investigation for aiding tax evasion

DOJ cracks down on UBS, Credit Suisse and others for helping U.S. citizens cheat the IRS

Wiring millions in dirty money to a secret Swiss bank account apparently isn’t just for spy movie villains anymore. The U.S. Department of Justice (DOJ) has targeted eight offshore banks in a federal grand jury investigation, and is clapping manacles on scores of facilitators.

According to the DOJ, eight offshore banks, including UBS AG (which already is under more-public scrutiny for alleged fraud) and Credit Suisse Group AG—the two largest Swiss banks—are under bright lights for potentially facilitating tax evasion by U.S. citizens.

In 2009, federal prosecutors charged UBS with helping American clients to evade their taxes. UBS admitted it fostered tax evasion, and entered into a deferred prosecution agreement with the DOJ. Under the terms of the agreement, UBS paid $780 million in fines, penalties, interest and restitution and turned over data on nearly 5,000 accounts to the U.S. Internal Revenue Service (IRS).

Bloomberg reports that Credit Suisse also has confirmed that it is the subject of a criminal investigation.

The DOJ notes that its prosecution results—thanks to the UBS agreement—have been encouraging to date, having initiated about 150 grand jury investigations of offshore-banking clients. Thirty of these cases have been charged, 24 guilty pleas have been entered, two convictions came after trial and another four cases are still awaiting trial. Additionally, the DOJ says that a number of intermediary people have been indicted, including 10 bankers, two attorneys and one advisor.

However, the DOJ isn’t just resting on the laurels of its litigation results.

“This enforcement effort has dealt fabled Swiss bank secrecy a devastating blow and provided tools that should yield information on thousands of additional U.S. offshore account holders who have undisclosed accounts at UBS and other banks,” the agency said on its website. “Moreover, the publicity surrounding the Tax Division's enforcement action and the subsequent settlement has already produced dramatic behavior changes.”

The IRS says that the crackdown has resulted in an “unprecedented number of taxpayers” to “come in from the cold” and voluntarily disclose their previously hidden foreign accounts as well as pay hundreds of millions to the U.S. Treasury.

For more, read Bloomberg.

Contributing Author

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