Agents pursue ‘leavers’ who moved Swiss bank accounts to other offshore centres
US tax authorities are intensifying their efforts to find tax evaders and the bankers who assist them, deploying agents to examine reams of data collected from the Panama Papers, Swiss banks and whistleblowers.
The Department of Justice and Internal Revenue Service are tracing accounts shifted by Americans from Switzerland to other countries such as Israel, Singapore and Hong Kong.
“I think there are areas of offshore tax evasion that still have to be pursued,’’ Don Fort, deputy director of the IRS’s criminal investigations division, told the Financial Times. “The key is trying to tie that information together and follow the money and see where it leads.’’
US authorities were pursuing so-called leavers, or citizens who moved their accounts to other offshore locales after the Swiss banks came under investigation, said lawyers involved in the matter.
“I think what they’re doing is they’re trying to triage and find the most egregious instances of non-compliance to prosecute and the rest of them are being sent out for civil audits,” said Bryan Skarlatos, a New York tax attorney.
Mr Fort said: “Part of the Swiss bank programme’s goal was to figure out: When individuals fled Switzerland where did the money go?”
Last year UBS agreed to turn over information about an American client with an account in Singapore after the DoJ took action in court.
Credit Suisse is facing a fresh inquiry into its practices despite having pleaded guilty in 2014 to aiding Americans who evade taxes.
Bank Hapoalim, Israel’s largest bank, said in October that it put aside a total of $120m and was in settlement talks with the DoJ to resolve the tax evasion investigation. Accounts held with Israeli Discount Bank have also been brought to the attention of US authorities.
The release of the Panama Papers, a trove of 11.5m documents leaked from the law firm Mossack Fonseca, has aided investigators globally who are looking at the banks and bankers who set up shell companies.
An estimated 9m Americans reside abroad. Last year only 1.1m of them filed Foreign Bank and Financial Accounts forms disclosing that they had offshore accounts.
“That means there is still a huge non-compliance problem,” added Mr Skarlatos.
Officials indicated that over the next year “significant” resources would be devoted to analysing and exploiting all available data gathered by the government to pursue international tax enforcement.
The effort to track accounts around the globe comes as IRS resources are shrinking. Enforcement staffing is down 25 per cent since 2010 and agents have been diverted from traditional investigations to tackle the rise of identity theft tax fraud.
Despite the challenges Mr Fort said investigators were spending more time on international cases than they were even two years ago.
“I’ll continue to appoint significant resources in this area,” Mr Fort said.
Since the blockbuster $780m settlement with UBS in 2009, global tax programmes have generated large amounts of information about account holders and their private bankers.
The DoJ said 76 banks had taken advantage of a programme announced in 2013 to encourage Swiss banks to turn over information about their US operations and clients and avoid sanctions in return.
More than 45,000 Americans have signed up for the IRS voluntary disclosure programme, which allows them to avoid criminal prosecution if they come clean with the details of their undeclared offshore bank accounts.