Sunday, August 30, 2015

Hypothekarbank Lenzburg AG Pays $560,000, Admits Guilt for US Clients

The Department of Justice announced today that Hypothekarbank Lenzburg AG (HBL) has reached a resolution under the department’s Swiss Bank Program.

According to the terms of the non-prosecution agreement signed today, HBL agrees to cooperate in Justice logo any related criminal or civil proceedings, demonstrate its implementation of controls to stop misconduct involving undeclared U.S. accounts and pay penalties in return for the department’s agreement not to prosecute the bank for tax-related criminal offenses.

HBL was founded in 1868 and is headquartered in Lenzburg, Switzerland.  Its principal business, focused on the Canton of Aargau, Switzerland, is issuing mortgages on real property and lending to businesses.

HBL offered a variety of traditional Swiss banking services that it knew could assist, and that did assist, U.S. clients in the concealment of assets and income from the Internal Revenue Service (IRS).  For example, HBL, upon client request, did not send mail associated with some U.S.-related accounts to the United States.  In addition, HBL offered numbered accounts to its clients, a service by which access to information about an account, including the identity of the accountholder, was limited to only certain employees of HBL.  In a handful of instances, the accountholders of U.S.-related accounts who refused to provide a Form W-9 or who admitted that they were not tax compliant withdrew significant amounts of cash or physical assets when HBL forced these accounts to be closed.

In or about 2008, Swiss bank UBS AG publicly announced that it was the target of a criminal investigation by the IRS and the department, and that it would be exiting and no longer accepting certain U.S. clients.  In a later deferred prosecution agreement, UBS admitted that its cross-border banking business used Swiss privacy law to aid and assist U.S. clients in opening accounts and maintaining undeclared assets and income from the IRS.  HBL opened one account for a U.S. person who exited UBS.  For another long-standing holder of a U.S.-related account, HBL received a transfer of funds from an account held at UBS into a pre-existing account at HBL.

Another accountholder who resided in the United States for many years had two accounts, one of which was a numbered account.  In 2012, the accountholder’s relationship manager requested a Form W-9 for the numbered account and the accountholder refused to provide one.  As a result, the relationship manager directed the accountholder to close the numbered account.  Thereafter, the accountholder came to Lenzburg to close the numbered account.  The accountholder withdrew 240,000 Swiss francs and 12,000 euros and purchased precious metals in the amount of 318,000 Swiss francs.

Since Aug. 1, 2008, HBL had 96 U.S.-related accounts with an aggregate value of $69.8 million.  HBL’s average annual revenue attributable to U.S.-related accounts in the form of fees, commissions and earnings on client funds that were loaned out by HBL was $198,000, or a total of $1.2 million since Aug. 1, 2008.  HBL will pay a penalty of $560,000.

August 30, 2015 in Tax Compliance | Permalink | Comments (0)

Saturday, August 29, 2015

Indiana hiring Director for Graduate Programs

Indiana University McKinney School of Law is conducting a national search for a Director of Graduate Programs.  A link to the application site is here:  https://jobs.iu.edu/joblisting/index.cfm?jlnum=14745&search=2

Director of Graduate Programs

The Director provides administrative leadership to all of the law school’s graduate degree programs: Master of Laws (LL.M), Master of Jurisprudence (MJ), and Doctor of Juridical Science (SJD) degree programs. The Director has overall responsibility for recruitment, administration, student services and advising with respect to all non-JD degree programs. The Director will report to the Associate Dean for Graduate Studies and International Affairs and to the Director of the Master of Jurisprudence, as applicable. 

DUTIES AND RESPONSIBILITIES:
In collaboration with the Associate Dean for Graduate Studies and International Affairs, the Director takes the lead in formulating a strategic plan to market the law school’s non-JD degree programs, and in raising the national and international profile of the school and the programs. The Director will identify and develop new markets for the non-JD degree programs, while building and maintaining existing relationships. 

The Director will design and implement support systems for non-JD students, including orientation, onboarding, admissions, financial aid, and professional development. The Director will work with the faculty track directors of the LL.M programs, with faculty supervising SJD students, and with the director of the MJ program. 

Candidates will have ongoing substantial interaction with international students, faculty, university administration, and other law school departments; and must have strong speaking, writing, and interpersonal skills. Candidates must be able to undertake international travel several times each year. 

The successful candidate should possess the ability to understand existing IU academic policies and operating procedures as well as admissions and recruiting policies and procedures and understand how to apply these policies and procedures to accommodate individual student situations, especially as they apply to international students. Excellent oral and written communication skills; demonstrated ability to work as part of a team. Ability to interact professionally with students, faculty, staff, and the public, experience in cross-cultural and international communications; Ability to work with people from diverse backgrounds and cultures. Availability for substantial international travel.

 

REQUIRED: Juris Doctor (JD) or Master of Laws (LLM) degree or equivalent from an accredited institution, plus 3 years administrative experience required. Substantial experience working with non-US lawyers or law students and substantial administrative experience, preferably in an academic setting are highly preferred. 

***In order to be considered for this position, applicants must attach both a cover letter and a resume when applying. ***

August 29, 2015 in Education | Permalink | Comments (0)

Friday, August 28, 2015

FATCA FFI Registration System Updates for late 2015

FATCA Online Registration System

We will add new features to the FATCA Online Registration System in late 2015.  

The updated FATCA Registration Online User Guide and Frequently Asked Questions will have more detailed information. Updated features will include:

  • New account options to allow certain financial institutions (FI) to change their FI Type, or member FIs to transfer to another expanded affiliated group (EAG), without having to cancel their current agreement and re-register.  Learn more

  • New account options to allow FIs to update their registration information without having to always begin with Question 1.

  • A new account option to download all registration tables from a single location.

  • A new feature to allow sponsoring entity FIs to add sponsored entities and sponsored subsidiary branches to their FATCA account either individually, or by submitting a file containing multiple records.  Learn more

    • The updated  GIIN Composition Information will include GIIN format for sponsored entities and sponsored subsidiary branches.

  • Addition of new registration questions:

    • Question 3B – country/jurisdiction tax ID

    • Questions 13A and 13B – information on common parent entity

  • Updated country/jurisdiction list. Learn more

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FFI List Search and Download Tool

We will deploy a new release of the FFI List Search and Download Tool in late 2015.

The updated FFI List Search and Download Tool User Guide and Frequently Asked Questions will have more detailed information. The new release will have the following new and updated features:

  • Additional sponsored entities and sponsored subsidiary branches on the published FFI list

  • Updated financial institution names for branches, which will include the financial institution’s name under which the branch is listed

  • Inclusion of two or more valid GIINs for the same financial institution for a short period of time, as a result of FATCA Registration account updates. Learn more

  • Updated FFI List schema and test files, which will include sponsored entities and sponsored subsidiary branches

August 28, 2015 in FATCA | Permalink | Comments (0)

New Release of the Foreign Account Tax Compliance Act (FATCA) International Compliance Management Model (ICMM)

The Internal Revenue Service (IRS) deployed an updated version of FATCA ICMM on August 8, FATCA_roll2015. The updated release validates record-level processing of FATCA 8966 XML Report files, including files that were submitted before August 8, 2015.  The record level processing identified errors within the files and issued new notifications to filers that reflect the outcomes of the validation.  The IRS discovered an issue related to the processing of files submitted between January 12th and August 8th of 2015 that resulted in two erroneous field level error messages.  These are as follows:

• “Account Holder Type Not Valid” error for an individual filer for whom an entity type is not required. This is for Account Reports in which the account holder is an “Individual”. 

• “Pooled Reporting Type Not Populated” error.  The issue applied to Pooled Reports.

The two error messages referenced do not require a response or correction by the filer in the situations described above.  The IRS is correcting this issue and will resend notifications for files that are impacted.  For additional information regarding these two field-level error messages please refer to “Q1” and “Q2” under the “Field Level Errors” category of the Frequently Asked Questions (FAQs).

August 28, 2015 in FATCA | Permalink | Comments (0)

Thursday, August 27, 2015

Will Herve Falciana Face His Day in Court?

Europe Online Magazine reports that: The Swiss Federal Criminal Court will start a trial against former HSBC bank employee Herve Falciani on October 12, on charges that his leaking of client data amounted to economic espionage, violation of bank secrecy laws, among other criminal charges.

Herve Falciani fled Switzerland in 2008 after leaking 100,000 HSBC's customers' financial information unto the Internet and into the hands of various foreign governments and other organizations.  He is reported to have been paid millions of dollars for the financial information.  See HSBC's Whistleblower Leaked Client Information Via Internet 

The high net wealth customer included a portion of tax evaders, money launderers, and politicians.  It is unclear what portion fell into the category of non-compliant and/or criminality and those that were collateral damage.

The case will be closely watched as it brings into question the balancing of many interests, by two examples: the protection of personal and financial data versus the disclosure of noncompliance and nefarious activities; protection against espionage versus whistleblowing.

Although it is reported that Herve Falciana states that he will appear in Court, it is unlikely given the severity of the criminal charges and the unlikelihood that countries that purchased the stolen financial data will extradite him to Switzerland.

August 27, 2015 in FATCA | Permalink | Comments (1)

Wednesday, August 26, 2015

Is Bahamas FATCA compliant? OECD "Oui", EU "We Don't Care".

The Bahamas Weekly reports that the OECD has found Bahamas "largely compliant" with the Oecdinformation due diligence, collection, and exchange standards necessary to implement effectively the U.S.' FATCA regime, and flush out U.S. non compliant account holders of Bahamian financial institutions.  The Bahamas is also able to comply with the automatic exchange of information system required by the OECD Common Reporting Standards (CRS, a.k.a. GATCA).

The EU Commission on the other hand, and several EU member states, include Bahamas as a black listed country, which may require heightened compliance diligence or loss of tax benefits, like deductions, for intra group transactions involving Bahamas.  The EU has not yet enacted sanctions against the countries, like Bahamas, that it has included on its blacklist, which the EU established based amalgamating its member states blacklists.  The EU Commission, in its communique, stated that its blacklist "can be used to screen non-cooperative tax jurisdictions and develop a common EU strategy to deal with them."  

See my previous post EU Commission Publishes Black List of Tax Havens, Demands EU Tax Harmonization.

August 26, 2015 in FATCA | Permalink | Comments (0)

Tuesday, August 25, 2015

Citizens Bank of Pennsylvania Settles Unfair and Deceptive Practices for $8.8 Million Fine and Restitution

The Federal Deposit Insurance Corporation (FDIC) announced a settlement with Citizens Bank of FDIC logoPennsylvania, Philadelphia, Pennsylvania (CBPA), for unfair and deceptive practices in violation of Section 5 of the Federal Trade Commission Act. Under the settlement, CBPA agreed to an Order for Restitution and Order to Pay Civil Money Penalty (Order). The Order requires CBPA to pay a civil money penalty of $3 million and provide restitution of approximately $5.8 million to consumers and businesses who held more than 475,000 accounts affected by the violations.

The FDIC determined that CBPA engaged in unfair and deceptive practices related to the processes by which the bank reconciled deposit discrepancies, specifically the procedures for reconciling discrepancies between the amount of a deposit as stated on an account holder's deposit slip and the actual amount of the deposit. In some cases, CBPA's procedures resulted in consumers and businesses not receiving the full amount of their actual deposits. The Order requires CBPA to correct the violations of law, ensure future compliance with Section 5, and develop and implement a comprehensive restitution plan for all consumers and businesses adversely impacted by the violations. The Order requires CBPA to make restitution to affected consumers and businesses for deposit underpayments that occurred between January 2008 and November 2013. CBPA will provide restitution without requiring any action by those who were affected.

The FDIC is taking this action in coordination with separate actions by the Consumer Financial Protection Bureau (CFPB) and the Office of the Comptroller of the Currency (OCC). The CFPB's action is against Citizens Financial Group, Inc., Citizens Bank, N.A., and CBPA. The OCC's action is against Citizens Bank, N.A. Each action relates to similar unfair and deceptive practices.

August 25, 2015 in Financial Regulation | Permalink | Comments (0)

Meet us at International Fiscal Association in Basel?

Dr. Andrew Morriss (Dean, Texas A&M & international tax economist) and I look forward to Logo_IFA_Basel_2015meeting other academics and professionals at international tax 69th IFA Congress held in the city of Basel  from Sunday, August 30 to Thursday, September 3.  

Email me so that we can link up at the Congress.

The International Fiscal Association (IFA) was established in 1938 with its headquarters in the Netherlands. It is the only non-governmental and non-sectoral international organisation dealing with fiscal matters.   Government officials, MNE counsel, senior partners, and academics from 111 countries:

Its objects are the study and advancement of international and comparative law in regard to public finance, specifically international and comparative fiscal law and the financial and economic aspects of taxation.

STUDY 1:  TAX INCENTIVES ON RESEARCH AND DEVELOPMENT (R&D)

STUDY 2: PRACTICAL PROTECTION OF TAXPAYERS’ FUNDAMENTAL RIGHTS

SEMINAR A: “PATENT BOXES”

SEMINAR B: THE TAXATION OF EXPATRIATES

SEMINAR C: CROSS-BORDER SUPPLY OF SERVICES AND VAT/GST: DEVELOPMENT OF IFA PROPOSALS

SEMINAR D: PRACTICAL PROTECTION OF TAXPAYERS IN THE EXCHANGE OF INFORMATION PROCESS

SEMINAR E: CROSS-BORDER MERGERS OF COMPANIES

SEMINAR F: IFA/EU: “STATE AID REVIEW AS A MEANS TO COMBAT AGGRESSIVE TAX PLANNING”

 SEMINAR G: IFA/OECD

SEMINAR H: THE TAXATION OF GLOBAL FAMILIES

SEMINAR I: EFFECTIVENESS OF PARTICIPATION EXEMPTION

SEMINAR J: RECENT DEVELOPMENTS IN INTERNATIONAL TAXATION

SEMINAR K: PRACTICAL PROTECTION OF TAXPAYERS IN THE TAX LITIGATION PROCESS

 SEMINAR L: TIMING ISSUES IN THE APPLICATION OF TAX TREATIES

August 25, 2015 in OECD | Permalink | Comments (0)

Monday, August 24, 2015

Howdy Aggie 1Ls!

12th Man SIgned TshirtAggie Law’s orientation week just wrapped up – and mine as well as one of the 11 new Texas A&M law faculty.  The Dean, Andy Morriss, hosted an incoming Aggie BBQ - and Texas BBQ is good BBQ.

139 new Texas Aggies hailing from more than 60 universities, already greeting me in the ‘Howdy’ tradition at every turn. 

I’m looking forward to engaging with Aggie diversity - one-fifth the first member of the family to graduate from college, quarter ethnically diverse, and majority female.    

Just watched the Aggie incoming student interviews.  Quotes like “Aggie land is home”, “I feel like I could walk up to anyone and start a conversation with them” and “It’s like a big family here” - think I am going to like it here – a lot.

Especially after my first Aggie football game - against the Arkansas Razorbacks - Sept 26th.

Howdy Aggie 1Ls and GigEm!

GigEm Week Events and Schedule

August 24, 2015 in Education | Permalink | Comments (0)

Cuba Update - Tourist Travel Still Illegal

On July 22, 2015, the Bureau of Industry and Security (BIS) published a rule in the Federal
Register
 to implement the rescission of Cuba’s State Sponsor of Terrorism designation. The rule BureauOfIndustryAndSecurity-Seal.svgremoved anti-terrorism (AT) license requirements from Cuba and eliminated references to Cuba as a State Sponsor of Terrorism in the Export Administration Regulations (EAR), while maintaining preexisting license requirements for all items subject to the EAR unless authorized by a license exception. The rule also removed Cuba from Country Group E:1 (terrorist supporting countries) in Supplement No. 1 to Part 740 of the EAR , making Cuba eligible for a general 25 percent de minimis level and portions of four license exceptions.

However, the United States continues to maintain a comprehensive embargo on trade with Cuba. The export and reexport to Cuba of all items subject to the EAR still requires a BIS license, unless authorized by a license exception specified in § 746.2(a)(1) of the EAR.

Licensing Policy

There is a general policy of denial for exports and reexports to Cuba of items subject to the Export Administration Regulations (EAR), as described in Section 746.2(b) of the EAR. However, there are exceptions to the general policy of denial, some of which are listed below:

  • Medicines and medical devices, whether sold or donated, are generally approved.
  • Vessels and aircraft on temporary sojourn to Cuba are reviewed on a case-by-case basis when they are used to deliver humanitarian goods or services or when their use is consistent with the foreign policy interests of the United States.
  • Items necessary for the environmental protection of U.S. and international air quality, waters and coastlines, including items related to renewable energy or energy efficiency, are generally approved.

In addition to authorization provided under licenses, there is authorization provided by license exception.

Other U.S. Government Agencies

Please be aware that other U.S. Government agencies administer regulations that could also impact your export or reexport transaction. For example, the Department of the Treasury’s Office of Foreign Assets Control (OFAC)maintains certain Cuba-related sanctions. Exporters and reexporters are responsible for complying with all applicable regulatory requirements.

Related to Travel Between the United States and Cuba

August 24, 2015 in OFAC | Permalink | Comments (0)

Sunday, August 23, 2015

US Post Office Breaks Up Costa Rican Based Business Opportunity Fraud Targeting Americans

A U.S. citizen charged in connection with the operation of a series of fraudulent business opportunities based in Costa Rica was sentenced to prison in Miami.

John White, aka Gregory Garrett, was sentenced by U.S. District Court Judge Patricia A. Seitz of the Post office logo
Southern District of Florida to serve 70 months in prison and five years of supervised release.  White was also ordered to pay $6,412,006.19 in restitution.  White is one of 12 defendants charged in connection with a series of business opportunity fraud ventures that operated in Costa Rica.  Nine of those other defendants have been convicted in the United States with sentences ranging from three to 16 years in prison and the two remaining defendants are not yet in the custody of the United States.

“The defendants in this scheme promised victims the American dream while knowing they in fact were being ripped off,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “We will continue to prosecute those who would deprive Americans of their savings just so they can make a quick buck.” 

White was indicted by a federal grand jury in Miami on Nov. 29, 2011, arrested in Costa Rica in 2012, extradited to the United States in 2015 and pleaded guilty on April 29, 2015, to one count of conspiracy to commit mail and wire fraud in connection with the business opportunity scheme. 

As part of his guilty plea, White admitted that from 2005 to 2008, he and his co-conspirators fraudulently induced individuals in the United States to buy business opportunities in USA Beverages Inc., Twin Peaks Gourmet Coffee Inc., Cards-R-Us Inc., Premier Cards Inc. and The Coffee Man Inc.  White and his co-conspirators claimed that these opportunities would allow purchasers to sell coffee or greeting cards from display racks located at other retail establishments.  The business opportunities cost thousands of dollars each, with most purchasers paying at least $10,000.  Each company operated for several months and after one company closed, the next opened.

White admitted that the conspiracy used various means to make it appear to potential purchasers that the businesses were located entirely in the United States.  The companies used bank accounts, office space and other services in the Southern District of Florida and elsewhere.  In reality, White and his co-conspirators operated out of call centers in Costa Rica. 

White admitted that he and his co-conspirators made numerous false statements to potential purchasers of the business opportunities, including that purchasers likely would earn substantial profits; that prior purchasers of the business opportunities were earning substantial profits; that purchasers would sell a guaranteed minimum amount of merchandise, such as greeting cards and beverages; and that the business opportunity worked with locators familiar with the potential purchaser’s area who would secure or had already secured high-traffic locations for the potential purchaser’s merchandise stands.  Potential purchasers also were falsely told that the profits of the companies were based in part on the profits of the business opportunity purchasers, thus creating the false impression that the companies had a stake in the purchasers’ success and in finding good locations.

As alleged in the indictment against White and others, the companies employed various types of sales representatives, including fronters, closers and references.  A fronter spoke to potential purchasers when the prospective purchasers initially contacted the company in response to an advertisement.  A closer subsequently spoke to potential purchasers to close deals and references spoke to potential purchasers about the financial success they had purportedly experienced since purchasing one of the business opportunities.  The companies also employed locators, who were typically characterized by the sales representatives as third parties who worked with the companies to find high-traffic locations for the prospective purchaser’s merchandise display racks.  White admitted that he worked as a fronter and reference using aliases.

“This international and domestic investigation shows the Postal Inspection Service’s resolve to protect Americans from business opportunity scams,” said Postal Inspector in Charge Ronald Verrochio of the U.S. Postal Inspection Service (USPIS) Miami Division. 

August 23, 2015 in AML | Permalink | Comments (0)

Saturday, August 22, 2015

Costa Rican Telemarketer Convicted for Money Laundering

An Ohio man was convicted yesterday after a two-day jury trial for his role in a Costa Rican telemarketing scheme.

Paul Ronald Toth Jr., 40, of Wintersville, Ohio, was convicted of one count of conspiracy to commit Justice logomoney laundering and six counts of international money-laundering concealment.  Sentencing before U.S. District Judge Robert J. Conrad Jr. of the Western District of North Carolina will be scheduled at a later date.

According to the evidence presented at trial, Toth was involved in a telemarketing scheme in which his co-conspirators contacted U.S. residents from call centers in Costa Rica, falsely informing them that they had won substantial cash prizes in “sweepstakes.”  To claim the cash prizes, the victims – many of whom were elderly – were instructed to send a purported “refundable insurance fee.”  

The trial evidence showed that, between approximately November 2009 and November 2010, Toth was a United States-based “smasher” who facilitated the laundering of funds received from the elderly victims.  Specifically, according to the evidence presented at trial, Toth and others he recruited and supervised received over $300,000 from victims and, using various individuals as senders and recipients to conceal the fraudulent nature of the transactions, wired over $200,000 of those funds to co-conspirators in Costa Rica.  The evidence further demonstrated that Toth kept the remainder as his profit.

August 22, 2015 in AML | Permalink | Comments (0)

Friday, August 21, 2015

Bank Zweiplus and Banca Stato Admit Assisting US Tax Evaders- Enter Non Prosecution Agreements

The Department of Justice announced today that bank zweiplus ag (Bank Zweiplus) and Banca dello Stato del Cantone Ticino (Banca Stato) have reached resolutions under the department’s Swiss Bank Program.  

Since Aug. 1, 2008, Bank Zweiplus maintained and serviced 44 U.S.-related accounts with an Justice logoaggregate value of approximately $12.1 million. Bank Zweiplus cooperated with the department during its participation in the Swiss Bank Program and encouraged its U.S. clients to enter the IRS Offshore Voluntary Disclosure Program.  Bank Zweiplus will pay a penalty of $1.089 million.  

Banca Stato maintained and serviced 187 U.S.-related accounts with an aggregate maximum balance of approximately $137 million.  But Banca Stato will pay a proportionately smaller penalty than Bank Zweiplus, of $3.393 million.   

Bank Zweiplus was founded in July 2008 as a retail bank based in Zurich.  Offices located in Geneva and Basel, Switzerland, were closed in 2008 and 2012, respectively. 

Bank Zweiplus was aware that U.S. taxpayers have a legal duty to report to the Internal Revenue Service (IRS) their ownership of bank accounts outside the United States and to pay taxes on income earned in such accounts.  Nevertheless, in disregard of U.S. laws, the bank provided a variety of traditional Swiss banking services that assisted some U.S. taxpayers in concealing their undeclared accounts.  For example, Bank Zweiplus maintained numbered accounts and accounts held in the name of structures which were effectively owned or controlled by U.S. persons, including structures in the British Virgin Islands and the Bahamas.

Banca Stato was established in 1915 and is headquartered in Bellinzona, Switzerland.  Banca Stato was aware that U.S. taxpayers had a legal duty to report to the IRS and pay taxes on the basis of all of their income, including income earned in accounts that the U.S. taxpayers maintained at the bank.  Despite this, the bank opened and serviced accounts for U.S. clients who the bank knew or had reason to know were not complying with their U.S. income tax obligations. 

In 2001, Banca Stato entered into a Qualified Intermediary Agreement with the IRS.  In 2001, the bank issued an internal directive prohibiting U.S. persons without a Form W-9 on file with the bank from buying U.S. securities.  However, prior to 2011, Banca Stato’s relationship managers were not instructed to, and did not, evaluate or screen incoming U.S. clients for U.S. tax compliance status.  At that time, more than 70 percent of the assets under management were related to U.S. accountholders who had not provided a Form W-9 to the bank.

In 2011, Banca Stato implemented a project that it called “Colombo” to change the manner in which it handled U.S. clients.  The bank recognized both risks and rewards of handling U.S. clients.  As to the former, the bank recognized that “[w]e can no longer have clients who are U.S. Persons who have not signed the W-9 form.”  But the bank also recognized an opportunity to attract new U.S. clients because many Swiss banks declined to service U.S. persons from Ticino, Switzerland, and the bank perceived “a huge demand from fully tax-compliant U.S. Persons . . . attracted by the brand BancaStato (especially because we have no branches in the US).”

Banca Stato entered into a relationship with a Lugano-based U.S. Securities and Exchange-registered investment advisory firm to partner in attracting U.S. persons living and working in the Ticino region who could not open or maintain accounts at other institutions.  The bank paid the firm a one-time finder’s fee of 0.5 percent on the incoming funds.  Despite the bank’s decision to refuse to open new accounts of U.S. persons without a Form W-9, it did not always adhere to this policy.

Banca Stato offered a variety of traditional Swiss banking services that it knew would and in certain instances did assist U.S. clients in concealing assets and income from the IRS, including hold mail and code name or numbered accounts.  In addition, the bank employed a variety of other means or conduct that it knew or should have known would assist U.S. taxpayers in concealing their Banca Stato accounts, including opening accounts for U.S. taxpayers who left other banks being investigated by the department and allowing U.S. clients to direct repeated wire transfers between $9,000 and $9,900 in an effort to conceal their Swiss bank accounts from U.S. authorities.

Download Banca Stato Executed NPA and SOF (3.88 MB)

August 21, 2015 in FATCA | Permalink | Comments (0)

Is EU Commission backtracking or turning up the heat on international financial centers?

The EU Commission has confirmed its continued endorsement of Guernsey as a cooperative jurisdiction following a meeting between officials in Brussels.

This news was welcomed in Guernsey, which has a strong record in meeting international standards Comision_Europea_logo.svg as a cooperative and highly transparent jurisdiction - including as an 'early adopter' of the Common Reporting Standards ahead of some European countries.

Responding to the news, Guernsey's Chief Minister, Jonathan Le Tocq, has written to European Tax Commissioner Pierre Moscovici, stating: "Guernsey welcomes the Commission's confirmation at the meeting that it considers Guernsey to be a cooperative jurisdiction. This recognises not only Guernsey's adherence to the OECD and Global Forum international standards on transparency and information exchange, but also that our corporate tax regime has been assessed as compliant with the EU's Code of Conduct on Corporate Taxation, and hence not containing harmful measures."

The endorsement from the EU comes soon after the Commission included Guernsey on a list that some commentators had misperceived as a 'black list' of un-cooperative jurisdictions. The list, published on 17 June, was widely criticised, including by the OECD, for a lack of transparent and consistent methodology and has subsequently had its name changed for clarity. 

Dominic Wheatley, Chief Executive of Guernsey Finance - the promotional agency for the Island's finance industry internationally, said: "We welcome the EU's endorsement of Guernsey as a cooperative jurisdiction which is fully consistent with the findings of its Code of Conduct Group on Corporate Taxation in 2012. This clarification should give full confidence to all those looking to do business in Guernsey and enjoy the high quality of the financial business environment here."

"While the confirmation of the Commission's view is positive for Guernsey, the contribution that Guernsey makes to the European economy should not be overlooked. Research published by KPMG earlier this year showed that Guernsey funds have a total population of £155.4 billion assets under administration and that almost half of that is invested into continental (non-UK) Europe, demonstrating Guernsey is also an important business partner for the EU."

"It has also been welcome to have confirmation from organisations such as the European Investment Fund that not only do they also recognise that Guernsey was not in any way 'black listed', but also that they are aware of the positive recognition of Guernsey's track record by the OECD."

Guernsey Press Release

EU Blacklists

August 21, 2015 in Financial Centers | Permalink | Comments (0)

Thursday, August 20, 2015

Is the IRS indicating that FATCA isn't going to work?

Dr. Jack Manhire gets a tip of the hat for pointing out the following blog post on Federal Tax Crimes

  •  The IRS might use a summons (presumably John Doe Summons) to obtain offshore credit Irs_logo card information to track and identify U.S. offshore account depositors through correspondent banks.
  • The IRS may reinstitute a broker initiative to issues summons to brokers to identify U.S. beneficial owners of foreign corporations with U.S. brokerage accounts.

What this information indicates to  me?

(1) The IRS is not so certain that FATCA reporting will be effective to catch the non-compliant taxpayers.

(2) The IRS estimates that many Americans with foreign accounts are noncompliant. 

Given that the IRS has forced billions in spending in four years to bring about FATCA compliance, I find it disturbing that it may not think it is working.  Worse is that this tool was always at the IRS disposal, just like the credit card John Doe Summons, and it is a good tool.  So why not ask for funding to use it back in 2009 instead of FATCA? 

It appears that the strategy for bringing non-compliant taxpayers into compliance is hodge podge, without thought to the ramifications of each, as a whole, and without addressing underlying problems, like taxpayer education and easy to file FBAR.  At least Treasury modified the FBAR date to coincide with the 1040 filing date.  But the forms are still uncoordinated with different questions, different filing procedures, different penalties.  Just not good administration techniques.

See Treasury's Taxpayer Advocate discloses FATCA Imposes Unnecessary Burdens, Will Not Improve Compliance

August 20, 2015 in FATCA | Permalink | Comments (0)

Key Derivatives Cases 2015 - Newly Released

Rupert Macey-DareUniversity of Oxford - Saint Cross College; Middle Temple; Minerva Chambers

Link to Paper Here 

The paper considers key derivatives cases in the English courts from 2015, namely: Wani v Royal Bank of 6a00d8341c4eab53ef019104927134970c-800wiScotland, Dexia v Commune di Prato, Enasarco v Lehmans, SwissMarine v O.W. Supply, and MHB Bank v Shanpark.

Derivative products covered include: base rate swaps, interest rate swaps, caps, collars and corridors, extendable swaps, constant proportional portfolio insurance (CPPI) funds, fund options, and contracts for difference (CFDs).

ISDA 1992 and 2002 Master Agreement provisions considered include s. 2 Obligations, s. 6 Early Termination, s. 6(f) Set-off, s.13(b) Jurisdiction, s.14 Definitions of Loss and Market Quotation.

Additional cases will be added in due course.

August 20, 2015 in Financial Regulation | Permalink | Comments (0)

Wednesday, August 19, 2015

FTC Warns Consumers That Personal Financial Data May Be At Risk Through Brokering

If the friend of a friend is my friend, and the enemy of a friend is my enemy, then is the seller of data FTC logoto a scammer also a scammer? In a case announced today, the FTC said it might well be.

Here’s the backstory: In 2013, we told you about a case we brought against Ideal Financial Solutions. That company, says the FTC, bought information that let it raid consumers’ bank and credit card accounts for millions — without the consumers’ OK or even knowledge. At the time, it was clear that many of these consumers had applied for online payday loans. But what wasn’t clear at the time was where Ideal Financial Solutions had gotten those bank account and credit card numbers.

Until now. Today, the FTC said that a data broker operation — Sequoia One, LLC, Gen X Marketing Group, LLC, and four principals — collected sensitive information from online payday loan applications, including Social Security numbers, credit card and bank account numbers. Then, says the FTC, they turned around and sold it to companies that included non-lenders like Ideal Financial Solutions, which the defendants knew were taking money from peoples’ bank accounts and credit cards. And, says the FTC, the defendants actually helped hide Ideal Financial’s scam.

Three of the defendants — Paul T. McDonnell, Theresa D. Bartholomew, and John E. Bartholomew, Jr. — agreed to settle the FTC charges. The proposed order imposes a monetary judgment, and says they can’t sell or benefit from selling consumer information from now on. The case against the rest of the defendants will be litigated.

So, what’s a person to do? Mainly this: think long and hard before you give out your Social Security number or bank or credit card information. Sometimes, you have to, if you want the service or offer. But stop and think: what do you know about the company, their website, or how they’ll protect your information? And if you think something has gone amiss with information you’ve already shared, tell the FTC.

FTC Press Release

August 19, 2015 in Financial Regulation | Permalink | Comments (0)

Tuesday, August 18, 2015

Where are the jobs for graduates? The big 4

According to the AICPA report Trends in the Supply of Accounting Graduates and the Demand for Public Accounting Recruits, hiring at public accounting firms jumped 7% to reach record levels in 2013–14. Ninety-one percent of all firms said they expect to hire accounting graduates at the same or higher levels in 2015. ...

- Read the full story at: http://www.journalofaccountancy.com/news/2015/aug/public-accounting-firm-jobs-hiring-201512792.html#sthash.7KVfuESt.dpuf

August 18, 2015 in Education | Permalink | Comments (0)

Update on Voluntary Disclosure Programmes: A Pathway to Tax Compliance

OECDThis second edition reflects the wealth of practical experience gained by 47 countries gained in relation to voluntary disclosure programmes. In addition, the guidance on the design and implementation of the programmes has been updated, particularly taking into account the views of private client advisers. 

 When the OECD published the first edition its report on Voluntary Disclosure Programmes in 2010, it was just 18 months after the G20 Leaders had declared the end of the era of banking secrecy and called upon countries to implement the standard on exchange of information on request. In that very short time, considerable progress in the global fight against offshore evasion had been made, with more than 500 tax information exchange agreements having been put in place that comply with the standard.

 The work of the Global Forum on Transparency and Exchange of information for Tax Purposes was reorganised to deliver a robust programme of peer reviews to ensure that agreed standards were being effectively implemented. At the same time, the OECD has always recognised the importance of offering taxpayers the opportunity to become compliant and has encouraged governments to enable people who want to regularise their tax affairs to declare the income and wealth they have concealed in the past. Voluntary disclosure programmes offer such taxpayers a way to do this and for governments a way to secure payment of missing revenue, using relatively limited administrative resources.

 Since 2010, a very substantial amount of further progress has been made in the area of international exchange of information and transparency in tax matters. The Global Forum now has more than 125 members and an impressive body of results from the ongoing programme of peer reviews.

Another major milestone in tax transparency was reached in 2014 with the adoption of the OECD Standard for Automatic Exchange of Financial Account Information in Tax Matters. Most financial centres have publicly committed to implementation and are working on a specific and ambitious timetable leading to the first automatic information exchanges in 2017 or 2018.

 With the implementation of the Standard being underway and providing the basis for a new level of transparency in tax matters, the time is right to update the guidance on voluntary disclosure programmes published in 2010.

 This updated report reflects the wealth of practical experience gained by 47 countries gained in relation to voluntary disclosure programmes. In addition, the guidance on the design and implementation of the programmes has been updated, particularly taking into account the views of private client advisers.

August 18, 2015 in OECD | Permalink | Comments (0)

Monday, August 17, 2015

Retirement: Pros and cons of fixed-index annuities

USA Today story 

“Fixed index annuities are the current flavor and will remain so while consumers perceive the market indexes potentially rising,” says William Byrnes, an associate dean at Texas A&M University School of Law in Fort Worth.

Sales of FIAs rose 14% to $38.7 billion in 2013 and another 24% to $48 billion in 2014, or about 21% of all annuity sales .... read about the upsides, the downsides, and the costs at USA Today

August 17, 2015 in Financial Services | Permalink | Comments (0)