Our NJ Tax Lawyers Discuss Recent Swiss Ruling on Privacy, Tax Evasion

Offshore Account Update

Posted on October 31, 2016 |

If you have any undeclared offshore accounts in Swiss Banks, it is important to realize the substantial financial threat you face. Many Swiss financial institutions are eagerly coming forward to make deals with U.S. officials in order to avoid criminal prosecution.

When a Swiss bank provides your information to U.S. officials, this can result in an investigation that can lead to civil and criminal penalties. You may be able to minimize some of the penalties and protect yourself from potential criminal charges if you talk with New Jersey international tax lawyers and take action before you come under investigation.

The growing number of banks turning over information to U.S. taxing authorities should be a big concern to anyone with undeclared funds offshore, but one recent case stands out as a major red flag because of how far a bank was willing to go to aid the United States in going after tax evaders. The bank in question is based in Lugano and is called Corner Bank.

Corner Bank not only wanted to give the U.S. info about account holders in a massive data hand off, but it also wanted to provide details on lawyers and law firms which allegedly helped clients to evade taxes. Disclosing lawyers and law firms who helped clients strips those clients of additional privacy, on top of turning over their account details. It could also create a potential risk of law firm records being hacked and leaked, as occurred with the Panama Papers.

Swiss Supreme Court Blocks Bank Efforts to Provide Private Information

It is not clear why exactly Corner Bank wanted to give private information about attorney/client relationships to U.S. authorities. However, it is clear why Corner Bank was working with authorities in the first place. Corner Bank is one of 80 financial institutions in Switzerland which is participating in the Swiss Bank Program that has been created by the U.S. government.

The Swiss Bank program lets banks pay a fine and provide account holder info in exchange for which the bank will be protected from criminal prosecution. Most of the banks participating have given detailed info on offshore accounts, transactions, and account holders, but this is the first time a bank has tried to also give the U.S. government info about entire law firms which have allegedly been part of the offshore tax evasion efforts.

The courts in Switzerland assessed whether the bank could take this action or not. A lower court ruled that turning over the info would be a violation of privacy and the Swiss Supreme Court agreed in a recently-released ruling. The court held that U.S. privacy laws could not guarantee appropriate privacy protections as required by Swiss law.

While this is good news, the Court's decision still doesn't fix the fact the bank was so eager to sell out its customers and other financial professionals. The more eager Swiss banks are to turn over private info, the more problems their customers will face. An international tax lawyer like Kevin Thorn should be consulted by those with money offshore in undeclared accounts so account holders can understand what options are available to them before taxing authorities pursue investigations based on Swiss bank data.

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