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Schaffhauser Kantonalbank (SHKB) Enters Into Agreement with the Department of Justice

Offshore Account Update

Posted in on December 11, 2015

U.S. authorities are trying to find offshore funds that taxes may not have been paid on.  There are many different initiatives underway aimed at identifying people who have accounts offshore but who have not declared those accounts or paid income taxes on money earned. 

One of the initiatives, the Swiss Bank Program, encourages banks to come forward and turn their customers in, in exchange for the bank reducing its own penalties. Banks have increasingly been taking advantage of this option, at the expense of foreign accountholders. Now, another Swiss bank has provided information and agreed to cooperate with U.S. authorities on investigations into tax evasion.

There are amnesty options for people with foreign accounts who may not have reported those accounts and who may not have paid taxes on them. As banks take advantage of the amnesty program targeted towards them, you may wish to explore your own options if you have undeclared offshore funds. A New Jersey tax law firm with experience handling voluntary disclosures can provide assistance.

Another Swiss Bank Gives Up Customer Data to the DOJ

Schaffhauser Kantonalbank (SHKB) has joined the ever-growing list of banks that are providing information on customers to U.S. authorities.  SHKB had previously had a long history of trying to protect client privacy. Although SHKB had entered into a Qualified Intermediary Agreement with the IRS in 2001 to make sure offshore investment income was subject to U.S. withholding tax, the institution had changed its policies to protect consumers shortly after signing the agreement.

For example, SHKB required customers to have their mail held and required customers to stop investing in U.S. securities so SHKB would not have to provide client information to U.S. authorities, as the Qualified Intermediary Agreement would otherwise have required.

SHKB also accepted funds and opened accounts for U.S. accountholders who took money out of other banks because the Department of Justice was reaching deals with those banks, and engaged in a wide range of other behavior, including facilitating withdrawals of undeclared funds, structuring transactions to avoid reporting requirements triggered by transactions of $10,000 or more, and issuing cards to make it easier for people to access their offshore funds.

Because SHKB knew, or should have known, that its efforts were helping U.S. citizens to evade their tax obligation, the bank faced the potential threat of criminal prosecution. Instead, it came forward to participate in an amnesty program called the Swiss Bank Program.  The terms of the program require SHBK to cooperate with requests for information and to provide information about accountholders that can be used by the Department of Justice or IRS.

The fact this bank is turning over information- as many other banks have done and many future banks will do- is troubling to investors who may find the IRS discovering their offshore tax haven.  If the IRS begins investigating you before you have come forward voluntarily, you could face potential criminal penalties.

If you are concerned about what the implications of the Swiss Bank program could be for your offshore accounts or want information on the Offshore Voluntary Disclosure Program (OVDP), contact an NJ tax law firm like Thorn Law Group as soon as possible.


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