Finter Bank Makes Deal With Department of Justice

Offshore Account Update

Posted on August 14, 2015 |

When UBS AG made a public announcement in August of 2008 that it was under investigation by United States authorities, many of its banking customers took their accounts elsewhere. One of the places they took the accounts to was Finter Bank, a Zurich based bank. After August 2008, Finter Bank had an estimated 283 accounts linked to U.S. accountholders. These accounts had an aggregate minimum balance equal to approximately $235 million.

Because Finter Bank reportedly helped these accountholders evade taxation on their funds kept offshore, Finter was at risk of being criminally prosecuted. The bank no longer faces this risk, as the Department of Justice announced Finter Bank has signed a non-prosecution agreement. The agreement was developed and signed as part of the Swiss Bank Program, which permits foreign banks not yet under criminal investigation to resolve legal violations without charges by complying with certain requirements.

While Finter may no longer need to worry, problems could be just beginning for investors who have their funds offshore. The Swiss Bank Program requires banks to turn over information on customers who may be evading taxes. If you are concerned your account information is going to be turned over to authorities, consider contacting a New Jersey tax law firm today so you can be proactive in exploring participation in amnesty programs that may allow you to limit possible penalties.

Finter Bank Takes Advantage of Swiss Bank Program

The Swiss Bank Program was announced in August 2013, and banks may participate to avoid prosecution if they are willing to close U.S. accounts not in compliance with tax laws; if they provide information on both investors’ accounts and on other banks that may have engaged in transactions involving tax evasion; and if they comply with other specific requirements. Participating banks also pay a fine. In Finter’s case, the fine totaled $5.414 million.

Finter was fined and had to enter into a non-prosecution agreement as a result of a variety of activities the bank did to help clients with tax obligations to the U.S. to conceal the paper trail of their offshore funds. Finter Bank provided accounts that were numbered and coded, and helped accountholders to use sham entities as nominal beneficial owners of accounts. Finter Bank also used hold mail services and allowed U.S. clients to access their funds through credit cards and cash accounts linked to numbered or coded offshore accounts.

The Swiss Bank program will require Finter Bank to cooperate with investigations into accountholders and turn over information on an account-by-account basis for all those U.S.-connected individuals who have offshore accounts and who may not be in full compliance with U.S. tax laws.

The Department of Justice indicated in its announcement of the deal with Finter that it is not too late for accountholders to participate in the IRS’ Offshore Voluntary Disclosure program. This allows accountholders to report offshore accounts voluntarily that were previously undeclared in order to limit penalties and avoid being criminally prosecuted. There are limits on who may participate and fines and payments are required, so speak with a tax law firm in New Jersey if you are interested in potentially participation in OVDP. Call attorney Kevin Thorn today.

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