International Financial Law Prof Blog

Editor: William Byrnes
Texas A&M University
School of Law

Sunday, January 31, 2016

Offshore Tax Prosecutions Remarks by DOJ at ABA Tax Section Mid-Year

Excerpts of Acting Asst Attorney General remarks about offshore tax prosecutions

First, a bit of history for those of you who may not have spent your summer in Switzerland or encouraging countless numbers of clients to participate in the Internal Revenue Service DOJ-U-S-ATTORNEYS-OFFICE(IRS) offshore voluntary disclosure programs.  Offshore tax enforcement has been and remains among the department’s top priorities.  Since 2008, the department has publicly charged more than 100 accountholders and nearly 50 individuals who have aided and assisted U.S. taxpayers in concealing foreign accounts and evading their U.S. tax obligations.  We also reached final criminal resolutions with six foreign financial institutions, including Credit Suisse, which pleaded guilty in May 2014 and agreed to pay $2.6 billion for its role in assisting U.S. taxpayers to evade their U.S. reporting and tax obligations.

On Aug. 29, 2013, the department announced the Swiss Bank Program, which provided a path for Swiss banks to resolve potential criminal liabilities in the United States.  Banks already under criminal investigation related to their Swiss-banking activities, identified as Category 1 banks, and all individuals were expressly excluded from the program.

Under the program, Swiss banks about which we had little or no information came forward and self-identified as having helped U.S. taxpayers to hide foreign accounts and evade their U.S. tax obligations.  In exchange for a non-prosecution agreement, these institutions, identified as Category 2 banks, made a complete disclosure of their cross-border activities, provided detailed information on accounts in which U.S. taxpayers have a direct or indirect interest, are cooperating in treaty requests for account information, are providing detailed information as to other banks that transferred funds into secret accounts or that accepted funds when secret accounts were closed and must cooperate in any related criminal and civil proceedings for the life of those proceedings.  Additionally, the Category 2 banks have paid appropriate penalties, which were mitigated with proof that the U.S. taxpayer declared the account, the account was reported by the bank or the U.S. taxpayer came into a voluntary disclosure program at the bank’s urging.

On March 30, 2015, the department signed the first non-prosecution agreement with BSI SA and announced its goal to complete the Category 2 bank agreements by year end.  I’m very proud to announce that earlier this week, the department signed the final Category 2 bank non-prosecution agreement with HSZH, imposing a penalty in excess of $49 million.  For those who are counting, in the last 10 months, the department executed 78 agreements with 80 banks and imposed more than $1.3 billion in Swiss Bank Program penalties. 

The department also signed a non-prosecution agreement with Finacor, a Swiss asset management firm, reflecting the department’s willingness to reach fair and appropriate resolutions with entities that come forward in a timely manner, disclose all relevant information regarding their illegal activities and cooperate fully and completely, including naming the individuals engaged in criminal conduct.

The conclusion of the Category 2 agreements is a significant milestone in our continuing effort to shut down offshore tax evasion.  Swiss banks have revealed the names of thousands of U.S. accountholders, a substantial number of whom have voluntarily disclosed their accounts to the IRS, and are providing information for treaty requests to obtain the names and account records of those individuals who have refused to waive Swiss bank secrecy.  The program has driven thousands of taxpayers into the IRS voluntary disclosure programs.  In October 2015, the IRS reported more than 54,000 voluntary offshore disclosures and the collection of more than $8 billion in taxes, penalties and interest.  These figures have substantially increased since the program was announced in August 2013, due in part to the pressure applied by the Swiss banks on their accountholders to come into compliance.

Critical to the success of the program, in addition to the unwavering support of the department’s leadership, was the substantial assistance of IRS-Criminal Investigation and the Large Business & International Division.  Special agents, revenue agents and analysts have been dedicated to the program for two years, working side by side with the Tax Division’s civil trial attorneys, prosecutors and support staff to carefully review and consider the tremendous volume of information produced by the Category 2 banks.  I cannot begin to tell you how proud I am of those involved in this program and the rest of the Tax Division, which stepped up to the plate to handle more work and larger dockets, while their colleagues continued this pursuit. 

While I am pleased that we have completed the agreements with the Category 2 banks, it is important to note that our work is far from done, and we do not rest on our laurels.  Tax Division attorneys and IRS personnel are reviewing the information received from Swiss banks that, under Category 3 and Category 4 of the program, maintain that they did not commit any violations of U.S. law, but seek a non-target letter after providing information required by the program.  We are also reviewing the information provided by the Category 2 banks, responses to our treaty requests and information from whistleblowers and cooperators to pursue criminal investigations and work with our colleagues at the IRS on civil enforcement efforts. 

Outside the program, we continue to pursue pending Category 1 bank investigations.  We are looking well beyond Switzerland, to jurisdictions that many of you have added to your passports – for example: Belize, the British Virgin Islands, the Cayman Islands, the Cook Islands, India, Israel, Liechtenstein, Luxembourg, the Marshall Islands and Panama, just to name a few.  We encourage this outreach by practitioners and encourage financial institutions and individuals who have engaged in criminal conduct to contact the department to discuss their options.

While much attention has been paid to our criminal enforcement efforts, we are also using civil enforcement tools to pursue those who continue to conceal foreign accounts and assets and evade their U.S. tax obligations.  For example, we will continue to work with our colleagues at the IRS with respect to the examination and assessment of penalties for violations of the Foreign Bank and Financial Account (FBAR) reporting requirements, file suits to collect outstanding FBAR penalties and defend against complaints for refund of FBAR penalties paid. 

We are also working closely with the IRS in its efforts to obtain foreign account records.  Under the Required Records Doctrine, the department has successfully challenged motions to quash grand jury subpoenas in criminal cases and obtained orders enforcing summonses in civil cases.  At this point, the message is clear: taxpayers are required to maintain foreign records and produce them upon request.

Where the IRS is aware of possible violations of the internal revenue laws by individuals whose identities are unknown, the department has sought and will continue to seek orders authorizing the issuance of “John Doe” summonses.  For instance, this past September, the U.S. District Court for the Southern District of Florida authorized the issuance of summonses to Citibank and Bank of America to produce records identifying U.S. taxpayers with accounts at Belize Bank International Limited, Belize Bank Limited or their affiliates, including other foreign banks that used these two banks’ correspondent accounts to service U.S. clients.  The court also granted the IRS permission to seek records related to Citibank’s and Bank of America’s correspondent accounts for Belize Corporate Services and information related to its deposit accounts at Bank of America.  Belize Corporate Services is incorporated and based in Belize and offers, among other things, the purchase of “shelf” Belizean international business companies.

The government’s offshore enforcement arsenal also includes Bank of Nova Scotia summonses and grand jury subpoenas, which seek to compel a domestic financial institution to produce records located in a foreign country.  These summonses or grand jury subpoenas have been utilized and upheld by courts despite the fact that producing the records in the United States would cause the financial institution to violate the laws of a foreign country.  In appropriate circumstances the department will use – and enforce – such subpoenas and summonses. 

We also stand ready to assist our treaty partners in their own tax enforcement efforts, as evidenced in Dileng v. Commissioner.  Mr. Dileng has unpaid tax liabilities in excess of $2.5 million in Denmark, which he has challenged in Danish courts.  Like many tax treaties, the U.S.-Denmark Tax Treaty contains a provision allowing a treaty partner to request that the counterpart assist in pursuing collection of domestic taxes in the counterpart jurisdiction.  Pursuant to a collection assistance provision in the U.S.-Denmark Tax Treaty, the Danish taxing authority submitted a collection assistance request and a revenue claim to the IRS, requesting that the IRS assist in collecting Mr. Dileng’s Danish liabilities.  Mr. Dileng filed suit, seeking to enjoin collection efforts by the IRS.

The U.S. District Court for the Northern District of Georgia dismissed the suit, finding that an accepted revenue claim must be treated like a U.S. tax assessment for collection purposes within the United States, even though Mr. Dileng is prohibited from challenging those liabilities in U.S. courts.  The court found that the Anti-Injunction Act and the tax exception to the Declaratory Judgment Act barred him from bringing his claim to stop the IRS from collecting and that the United States had not waived sovereign immunity for his suit.  The court further found that collection under the circumstances did not implicate Mr. Dileng’s due process rights because he is indeed challenging his tax liabilities in Danish courts. 

The Dileng case, like similar orders obtained from seven federal courts in 2013 authorizing the IRS to serve John Doe summonses on certain U.S. banks and financial institutions seeking information about persons who used specific credit or debit cards in Norway, demonstrate that the IRS and the department take the United States’ treaty responsibilities seriously.  We will continue to use the collection assistance provisions in our tax treaties to ensure U.S. taxpayers abide by their tax obligations in the United States, and we will continue to do our best to uphold our reciprocal obligations to our treaty partners.

So what can you expect in 2016?  Additional civil enforcement actions and ongoing and new criminal investigations and prosecutions.  Taxpayers who have participated in the IRS voluntary disclosure programs may be contacted and interviewed by the IRS and the department as part of their ongoing cooperation.  Taxpayers who filed returns and FBARs pursuant to the streamlined filing procedures or the Delinquent International Information Return or FBAR submission procedures should be very concerned if they falsely claimed to have engaged in non-willful conduct or acted with reasonable cause.  And financial institutions and individuals who have facilitated the concealment of offshore accounts and the evasion of U.S. tax obligations would be well advised to anticipate an investigation and consider voluntarily disclosing any criminal activity to the department before they become the subject of an investigation.

In the past year, the Tax Division has hired more than 80 new attorneys.  We currently have more than 200 civil trial attorneys, more than 100 prosecutors and approximately 50 appellate attorneys working hard in support of the Tax Division’s mission to enforce the nation’s tax laws fully, fairly and consistently, through both criminal and civil litigation.  We have established an international training series to ensure that our attorneys are familiar with the relevant issues and available tools in offshore enforcement and are working very closely with our partners at the IRS to identify those U.S. taxpayers failing to comply with their tax obligations.  Those who underestimate the ability of the United States to pursue offshore tax evasion do so at their own peril.

January 31, 2016 | Permalink | Comments (0)

Saturday, January 30, 2016

ABA reports Job-offer rate for summer associates is at a 10-year high

The American Bar Association reports that - 

Law firms are increasingly offering jobs to law students they had as summer associates, with 95 percent of those students getting job offers in 2015.  .... The average size of summer associate programs in 2015 came back to prerecession levels ...

Read the ABA story here.

January 30, 2016 in Education | Permalink | Comments (0)

Friday, January 29, 2016

OFAC & BIS Make It Official - Cuba back in business

 

Office of Foreign Assets Control, 31 CFR Part 515, Cuban Assets Control Regulations Download Treasury rule

Effective 27 January, these amendments remove certain payment and financing restrictions for authorized exports and reexports to Cuba of items other than agricultural items OFACor commodities and further facilitate travel to Cuba for authorized purposes by allowing blocked space, code-sharing, and leasing arrangements with Cuban airlines and authorizing additional travel-related and other transactions directly incident to the temporary sojourn of aircraft and vessels. These amendments also authorize additional transactions related to professional meetings and other events, disaster preparedness and response projects, and information and informational materials, including transactions incident to professional media or artistic productions in Cuba.

Bureau of Industry and Security, 15 CFR Part 746, Cuba Licensing Policy Revisions Download Bis rule

This rule revises the licensing policy from possible approval on a case-by-case basis to a general policy of approval for exports and reexports of:

• Telecommunications items that would improve communications to, from, and among the Cuban people;

• Certain commodities and software to human rights organizations or to individuals and non-governmental organizations that promote independent activity intended to strengthen civil society in Cuba;

• Commodities and software to U.S. news bureaus in Cuba whose primary purpose is the gathering and dissemination of news to the general public; and

• Agricultural items that are outside the scope of ‘‘agricultural commodities’’ as defined in part 772 of the EAR (such as insecticides, pesticides and herbicides) as well as agricultural
commodities not eligible for License Exception Agricultural commodities (AGR) (such as those that are specified in an entry on the Commerce Control List, i.e., are not designated EAR99). 

• Items that are necessary to ensure the safety of civil aviation and the safe operation of commercial aircraft engaged in international air transportation, including the export or reexport of such aircraft leased to state owned enterprises. Given a substantial increase in air travel to and from Cuba,  BIS is making the change to emphasize the importance of civil aviation safety and to recognize that access to aircraft used in international air transportation that meet U.S. Federal Aviation Administration and European Aviation Safety Agency operating standards.


January 29, 2016 in Financial Regulation | Permalink | Comments (0)

Korean tax agency uses FATCA to launch 30 offshore tax evasion cases

The Korean Times reported that - South Korea's tax authorities said Wednesday that it has launched probes into 30 offshore tax evasion cases as part of its efforts to clamp down on tax dodging.  A total of 1.3 trillion won (US$1.08 billion) in taxes were slapped on evaders as a result of its offshore probes last year, up 5 percent from 1.2 trillion won in 2014, according to the NTS. ...

The NTS said the U.S.-led Foreign Account Tax Compliance Act (FATCA) took effect at the beginning of this year, which allows the NTS to collect financial data from any financial institutions anywhere in the world that directly or indirectly have an account held by a South Korean national. ...

January 29, 2016 in GATCA | Permalink | Comments (0)

Thursday, January 28, 2016

Swiss Bank Non Prosecution Program (Category 2) Ends with $49M Penalty for HSZH Verwaltungs

Department’s Swiss Bank Program Imposed More Than $1.3 Billion in Penalties on 80 Banks, Which Continue to Cooperate with the Department

The Department of Justice announced today that it reached its final non-prosecution agreement under Category 2 of the Swiss Bank Program, with HSZH Verwaltungs AG (HSZH). Irs_logo The department has executed agreements with 80 banks since March 30, 2015, when it announced the first Swiss Bank Program non-prosecution agreement with BSI SA.  The department has imposed a total of more than $1.36 billion in Swiss Bank penalties, including more than $49 million in penalties from HSZH.  Every bank in the program, including HSZH, is required to cooperate in any related criminal or civil proceedings, and that cooperation continues through 2016 and beyond.  Download HSZH Executed NPA and SOF

The Swiss Bank Program, which was announced on Aug. 29, 2013, provides a path for Swiss banks to resolve potential criminal liabilities in the United States.  Swiss banks eligible to enter the program were required to advise the department by Dec. 31, 2013, that they had reason to believe that they had committed tax-related criminal offenses in connection with undeclared U.S.-related accounts.  Banks already under criminal investigation related to their Swiss-banking activities and all individuals were expressly excluded from the program.

HSZH, the final bank to reach a non-prosecution agreement under Category 2 of the Swiss Bank Program, was previously known as Hyposwiss Privatbank AG.  HSZH was founded in 1889 in Solothurn, Switzerland.  In 1988, Schweizerische Bankgesellschaft AG, which was later merged into UBS AG, acquired the bank and renamed it Hyposwiss Privatbank AG.  Hyposwiss Privatbank AG increasingly focused on private banking activities, servicing both domestic and international clients, and at all times, HSZH solely operated on Swiss territory.  In 2002, the bank was acquired from UBS by St. Galler Kantonalbank (SGKB), the state-owned cantonal bank of St. Gallen.  In 2014, HSZH unwound its residual banking operations under the supervision of FINMA, the Swiss banking regulator.  On Jan. 6, 2014, and in connection with the wind-down, the bank changed its name to HSZH Verwaltungs AG.  HSZH returned its banking license, and FINMA released HSZH from its supervision on Nov. 27, 2014. 

Until 2013, HSZH conducted a U.S. cross-border banking business that aided and assisted certain of its U.S. clients in opening and maintaining undeclared accounts in Switzerland and concealing the assets and income they held in these accounts from the U.S. government.  Through its managers, employees and/or others, HSZH knew or had reason to know that some U.S. taxpayers who opened and maintained accounts at HSZH were not complying with their U.S. income tax and reporting obligations. 

HSZH and other banks operating in Switzerland have closely monitored the criminal investigations of UBS and other Swiss banks.  In 2008, UBS publicly announced that it was the target of a criminal investigation by the Internal Revenue Service (IRS) and the department and that it would be exiting and no longer accepting certain U.S. clients.  In February 2009, the department and UBS filed a deferred prosecution agreement, in which UBS admitted that its cross-border banking business used Swiss privacy law to aid and assist U.S. clients in opening and maintaining undeclared assets and income from the IRS.  Since UBS, several other Swiss banks have publicly announced that they were or are the targets of similar criminal investigations and that they would be exiting and not accepting certain U.S. clients.

The senior management of HSZH viewed the exit of U.S. clients by the targeted Swiss banks as a business opportunity to be seized immediately rather than a warning to be heeded.  In addition to 83 accounts opened through two pipelines of U.S. clients transferred from UBS, HSZH opened at least 275 accounts for U.S. clients after August 2008.  Internal bank notes indicate that in September and October 2008, certain external asset managers with whom HSZH entered into agreements were expected to have “many former UBS clients” and would introduce U.S. clients to HSZH.

The first pipeline of undeclared U.S. clients transferred from UBS was solicited by the CEO of HSZH (CEO #1) from a UBS private banker who was a former colleague of CEO #1.  On Aug. 15, 2008, the general counsel of HSZH sent CEO #1 an email containing his views on a new internal bank IRS Form W-9 policy for CEO #1’s review and discussion before sending to SGKB: “In my opinion this policy should be a clarification of the already existing practice in connection with U.S. persons.  The actual situation in the US (UBS, Birkenfeld, etc.) has nothing to do with [HSZH] [redacted] or SGKB.  . . .  Why should we freely throw away a good business opportunity?”  Between Sept. 19, 2008, and Jan. 26, 2009, HSZH knowingly opened six undeclared accounts for U.S. clients with an aggregate total of approximately $9.2 million in peak assets under management; all six undeclared U.S. clients had previously been with UBS. 

The second pipeline of undeclared U.S. clients predominantly from UBS were all introduced and managed by an external asset management firm in Zurich whose head of private banking was formerly in charge of UBS’s North America International business (EAM #1).  In June 2008, the head of HSZH’s EAM Desk provided EAM #1 with HSZH marketing materials, and the Executive Board of HSZH unanimously approved a new business relationship with EAM #1 on Sept. 24, 2008.  On Aug. 18, 2009, HSZH opened the last EAM #1 pipeline account.  On Aug. 20, 2009, the head of private banking for EAM #1 was indicted by the U.S. Attorney’s Office of the Southern District of Florida.

Meetings between HSZH private bankers and U.S. clients took place in multiple locations within the United States, including in Florida, New York, Pennsylvania, Virginia and Washington, D.C.  Some U.S. clients asked for cash on a regular basis, so at times, the HSZH private banker for such clients would personally deliver cash to the clients in the United States in amounts below $10,000 to avoid the reporting requirements. 

HSZH private bankers also met with U.S. clients outside of the United States to provide banking services and investment advice related to their accounts, which included undeclared accounts.  For example, one U.S. client resided in the United States and had assets of more than $90 million in an account at HSZH held by a Liechtenstein foundation.  An HSZH private banker regularly met with this U.S. client in a Swiss hotel, at HSZH or in London.  When meeting in London, the HSZH private banker usually delivered cash amounts of 10,000 to 50,000 Swiss francs or U.S. dollars to the U.S. client, who had a preference to receive used U.S. dollar banknotes.  The funds were wired to the custodian bank for HSZH in London, where the HSZH private banker would withdraw the cash and personally deliver it to the U.S. client in a London hotel. 

HSZH processed significant cash and precious metals withdrawals for U.S.-related accounts at or around the time the clients’ accounts were closed, even though HSZH knew, or had reason to know, that some of the accounts contained undeclared assets.  For example, a U.S. couple that owned more than $24 million in assets in an account nominally held by a Liechtenstein foundation, and known by HSZH to be undeclared, regularly withdrew cash amounts between $10,000 and $30,000 – they requested used bank notes – and repeatedly withdrew gold bars. Five instances in 2010 involved 15 kilograms of gold bars.  When this U.S. couple closed their HSZH account in 2012, they withdrew large cash amounts totaling more than 19 million Swiss francs, as well as 55 kilograms in gold bars during five visits to HSZH.

HSZH serviced approximately 103 U.S. clients who structured their accounts so that they appeared as if they were held by a non-U.S. legal structure, such as an offshore corporation or trust, which aided and abetted the clients’ ability to conceal their accounts from the IRS.  While HSZH did not provide direct structuring services to U.S. clients, HSZH private bankers and members of HSZH’s management suggested the use of structures in some instances for U.S. clients and provided referrals to third-party service providers.  In addition, at least two HSZH private bankers served as board members for structures with U.S. beneficial owners maintained at HSZH.  Despite the decision in 2009 by HSZH to stop this practice due to the risk of conflicts of interest, one HSZH private banker remained a member of an offshore foundation’s board until 2011.  External trust companies created and administered offshore structures incorporated or based in offshore locations such as the British Virgin Islands, Liechtenstein and Panama.

HSZH assisted at least two U.S. taxpayers in further concealing their undeclared funds from the IRS by transferring those funds from UBS in August 2010 through an HSZH account held by a Swiss attorney to an HSZH account held by a sham entity domiciled in Panama that was beneficially owned by the two U.S. taxpayers.  In connection with this transfer, HSZH received a revised Form A from the Swiss attorney listing the two U.S. taxpayers as beneficial owners for one transaction only along with instructions from the Swiss attorney to HSZH that his clients’ funds should be transferred from UBS to HSZH through his account, due to the “understandable interests of his clients, that the target account would not be visible.”  HSZH’s anti-money laundering documentation dated one day after this August 2010 transfer states: “Since this [sic] are U.S. clients, the transfer was made over the account holder’s account due to understandable reasons.  Sender and recipient are identical.”

During the period since Aug. 1, 2008, HSZH held a total of 605 U.S.-related accounts, both declared and undeclared, with an aggregate peak of approximately $1.12 billion in assets under management.  HSZH will pay a penalty of $49.757 million.

NON-PROSECUTION AGREEMENTS EXECUTED UNDER THE SWISS BANK PROGRAM 

NUMBER BANK NAME DATE PRESS RELEASE NPA and Attachments
1 BSI SA 3/30/15 Press Release
NPA and SOF (176.16 KB)
Statement of Facts (209.47 KB)
Board Resolution (64.37 KB)
2 Vadian Bank AG 5/8/15 Press Release NPA and SOF (406.6 KB)
3 Finter Bank Zurich 5/15/15 Press Release NPA and SOF (24.14 MB)
4 Société Générale Private Banking (Lugano-Svizzera) 5/28/15 Press Release NPA and SOF (403.13 KB)
5 MediBank AG 5/28/15 Press Release NPA and SOF (315.33 KB)
6 LBBW (Schweiz) AG 5/28/15 Press Release NPA and SOF (338.89 KB)
7 Scobag Privatbank AG 5/28/15 Press Release NPA and SOF (396.38 KB)
8 Rothschild Bank AG 6/3/15 Press Release NPA and SOF (444.58 KB)
9 Banca Credinvest SA 6/3/15 Press Release NPA and SOF (506.47 KB)

10

Société Générale Private Banking (Suisse) SA 6/9/15 Press Release NPA and SOF (433.58 KB)
11 Berner Kantonalbank AG 6/9/15 Press Release NPA and SOF (411.23 KB)
12 Bank Linth LLB AG 6/19/15 Press Release NPA and SOF (566.31 KB)
13 Bank Sparhafen Zurich AG 6/19/15 Press Release NPA and SOF (439.96 KB)
14 Ersparniskasse Schaffhausen AG 6/26/15 Press Release NPA and SOF (3.16 MB)
15 Privatbank Von Graffenried AG 7/2/15 Press Release NPA and SOF (5.13 MB)
16  Banque Pasche SA 7/9/15 Press Release NPA and SOF (4.05 MB)
17 ARVEST Privatbank AG 7/9/15 Press Release NPA and SOF (3.84 MB)
18 Mercantil Bank (Schweiz) AG 7/16/15 Press Release NPA and SOF (336.05 KB)
19 Banque Cantonale Neuchâteloise 7/16/15 Press Release NPA and SOF (353.24 KB)
20 Nidwaldner Kantonalbank 7/16/15 Press Release NPA and SOF (383.84 KB
21 SB Saanen Bank AG 7/23/15 Press Release NPA and SOF (4.14 MB)
22 Privatbank Bellerive AG 7/23/15 Press Release NPA and SOF (3.19 MB)
23 PKB Privatbank AG 7/30/15 Press Release NPA and SOF (3.19 MB)
24 Falcon Private Bank AG 7/30/15 Press Release NPA and SOF (3.97 MB)
25 Credito Privato Commerciale in liquidazione SA 7/30/15 Press Release NPA and SOF (2.24 MB)
26 Bank EKI Genossenschaft 8/3/15 Press Release NPA and SOF (5.59 MB)
27 Privatbank Reichmuth & Co. 8/6/15 Press Release NPA and SOF (3.49 MB)
28 Banque Cantonale du Jura SA 8/6/15 Press Release NPA and SOF (4.57 MB)
29 Banca Intermobiliare di Investimenti e Gestioni (Suisse) SA 8/6/15 Press Release NPA and SOF (3.62 MB)
30 Bank Zweiplus Ag 8/20/15 Press Release NPA and SOF (3.37 MB)
31 Banca dello Stato del Cantone Ticino 8/20/15 Press Release NPA and SOF (3.88 MB)
32 Hypothekarbank Lenzburg AG 8/27/15 Press Release NPA and SOF (392.71 KB)
33 Schroder & Co. Bank AG 9/3/15 NPA and SOF (4.04 MB)
34 Valiant Bank AG 9/10/15 Press Release NPA and SOF (13.3 MB)
35 Bank La Roche & Co AG 9/15/15 Press Release NPA and SOF (344.31 KB)
36 St. Galler Kantonalbank AG 9/17/15 Press Release NPA and SOF (1.49 MB)
37 E. Gutzwiller & Cie, Banquiers 9/17/15 Press Release NPA and SOF (2.28 MB)
38 Migros Bank AG 9/25/15 Press Release NPA and SOF (503.35 KB)
39 Graubündner Kantonalbank 9/25/15 Press Release NPA and SOF (390.52 KB)
40 BHF-Bank (Schweiz) AG 10/1/15 Press Release NPA and SOF (2.44 MB)
41 Schaffhauser Kantonalbank 10/8/15 Press Release NPA and SOF (897.82 KB)
42 BBVA Suiza S.A. 10/16/15 Press Release NPA and SOF (2.74 MB)
43 Piguet Galland & Cie SA 10/23/15 Press Release NPA and SOF (2.79 MB)
44 Luzerner Kantonalbank AG 10/29/15 Press Release NPA and SOF (391.78 KB)
45 Habib Bank AG Zurich (HBZ) 10/29/15 Press Release NPA and SOF (509.23 KB)
46 Banque Heritage S.A. 10/29/15 Press Release NPA and SOF (352.61 KB)
47 Hyposwiss Private Bank Genève S.A. 10/29/15 Press Release NPA and SOF (425.12 KB)
48 Banque Bonhôte & Cie SA 11/3/15 Press Release NPA and SOF (368.33 KB)
49 Banque Internationale à Luxembourg (Suisse) SA 11/12/15 Press Release NPA and SOF (400.06 KB)
50 Zuger Kantonalbank 11/12/15 Press Release NPA and SOF (382.13 KB)
51 Standard Chartered Bank (Switzerland) SA 11/13/15 Press Release NPA and SOF (472.58 KB)
52 Maerki Baumann & Co. AG 11/17/15 Press Release NPA and SOF (460.31 KB)
53 BNP Paribas (Suisse) SA 11/19/15 Press Release NPA and SOF (497.99 KB)
54 KBL (Switzerland) Ltd. 11/19/15 Press Release NPA and SOF (469.25 KB)
55 Bank CIC 11/19/15 Press Release NPA and SOF (388.06 KB)
56 Privatbank IHAG Zürich AG 11/24/15 Press Release NPA and SOF (464.83 KB)
57 Deutsche Bank (Suisse) SA 11/24/15 Press Release NPA and SOF (431.79 KB)
58 EFG Bank European Financial Group SA, Geneva, and EFG Bank AG 12/3/15 Press Release NPA and SOF (588.89 KB)
59 Aargauische Kantonalbank 12/8/15 Press Release NPA and SOF (468.96 KB)
60 Cornèr Banca SA 12/10/15 Press Release NPA and SOF (446.77 KB)
61 Bank Coop AG 12/10/15 Press Release NPA and SOF (404.48 KB)
62 Crédit Agricole (Suisse) SA 12/15/15 Press Release NPA and SOF (454.09 KB)
63 Dreyfus Sons & Co Ltd, Banquiers 12/15/15 Press Release NPA and SOF (512.32 KB)
64 Baumann & Cie, Banquiers 12/15/15 Press Release NPA and SOF (453.32 KB)
65 Bordier & Cie Switzerland 12/17/15 Press Release NPA and SOF (394.78 KB)
66 PBZ Verwaltungs AG 12/17/15 NPA and SOF (582.22 KB)
67 PostFinance AG 12/17/15 NPA and SOF (385.3 KB)
68 Edmond de Rothschild (Suisse) SA and Edmond de Rothschild (Lugano) SA 12/18/15 Press Release NPA and SOF (480.3 KB)
69 Bank J. Safra Sarasin AG 12/23/15 Press Release NPA and SOF (447.66 KB)
70 Coutts & Co Ltd 12/23/15 Press Release NPA and SOF (460.87 KB)
71 Gonet & Cie 12/23/15 Press Release NPA and SOF (372.35 KB)
72 Banque Cantonal du Valais 12/23/15 Press Release NPA and SOF (481.25 KB)
73 Banque Cantonale Vaudoise 12/23/15 Press Release NPA and SOF (392.63 KB)
74 Bank Lombard Odier & Co Ltd 12/31/15 Press Release                      NPA and SOF
75 DZ Privatbank (Schweiz) AG   12/31/15 Press Release                      NPA and SOF
76 Union Bancaire Privée, UBP SA 1/6/16 Press Release NPA and SOF (495.2 KB)
77 Leodan Privatbank AG 1/20/16 Press Release NPA and SOF (496.86 KB)
78 HSZH Verwaltungs AG 1/27/16 Press Release

NPA and SOF (756.21 KB)

 Lexis Guide to FATCA Compliance – NEW 2016 Edition 

Over 1,500 pages of analysis of the FATCA and CRS compliance challenges,  73 chapters by FATCA and CRS contributing experts from over 30 countries.  Besides in-depth, practical analysis, the 2016 edition includes examples, charts, timelines, links to source documents, and compliance analysis pursuant to the IGA and local regulations for many U.S. trading partners and financial centers.   The Lexis Guide to FATCA Compliance, designed from interviews with over 100 financial institutions and professional firms, is a primary reference source for financial institutions and service providers, advisors and government departments.  The 19 newest chapters include by example an in-depth analysis of designing a FATCA internal policy that is compliant with the initial two-year soft enforcement initiative, designing an equivalent form to the W-8, reporting accounts, reporting payments, operational specificity of the mechanisms of information capture, management and exchange by firms and between countries, insights as to the application of FATCA, CRS, and the IGAs within BRIC, SEA and European country chapters.  This fourth edition will provide the financial enterprise’s FATCA compliance officer the tools for developing and maintaining a best practices compliance strategy.No filler of forms and regs – it’s all beef !  

January 28, 2016 | Permalink | Comments (0)

Leodan Privatbank's CEO Directly Assisted US Clients Hide Identities and Hired US Indicted Asset Manager, Signs Non-Prosecution

Leodan, which is organized as a corporation owned by private shareholders, is a small private bank that commenced doing business in September 2009.  Leodan previously was known Irs_logo as PHZ Privat- und Handelsbank Zürich AG until it changed its name in August 2015 as part of a new business strategy.   Leodan focuses on asset management, which encompasses advisory, brokerage and custodial services, for private and institutional clients.   Leodan’s sole office is in Zurich, Switzerland.   On Jan. 11, 2016, a meeting of Leodan’s shareholders was convened, and the shareholders voted to voluntarily wind-down Leodan’s banking operations.  During the period since Aug. 1, 2008, Leodan held a total of 44 U.S.-related accounts, which included both declared and undeclared accounts, with an aggregate peak of approximately $59.42 million in assets under management.  Leodan will pay a penalty of $500,000.  See Download Leodan PHZ Executed NPA and SOF

Until June 2013, Leodan conducted a U.S. cross-border banking business that aided and assisted certain of its U.S. clients in opening and maintaining undeclared accounts in Switzerland and concealing the assets and income they held in these accounts from the U.S. government.  Six private bankers at Leodan, including the Chief Executive Officer, serviced the 44 U.S.-related accounts at the bank.  Leodan offered a variety of traditional Swiss banking services, including hold mail and code-name or numbered account services, that it knew could assist, and did in fact assist, U.S. clients in the concealment of assets and income from the Internal Revenue Service (IRS).  Leodan opened and maintained accounts belonging to U.S. taxpayers who had left other banks being investigated by the department without ensuring that each such account was compliant with U.S. tax law.  Leodan accepted instructions in connection with U.S.-related accounts not to invest in U.S. securities and not to disclose the names of U.S. clients to U.S. tax authorities, including the IRS. Leodan also processed significant securities or precious metals electronic transfers in relation to U.S.-related accounts at or around the time the clients’ accounts were closed, even though Leodan knew, or had reason to know, that some of the accounts contained undeclared assets.

Leodan opened and maintained undeclared accounts in the names of sham structures that were beneficially owned by U.S. taxpayers, while knowing, or having reason to know, that these structures were used by U.S. clients to help conceal their identities from the IRS.  These structured accounts were non-U.S. domiciled entities, such as an offshore corporation or trust, which aided and abetted the clients’ ability to conceal their undeclared accounts from the IRS.  These non-U.S. domiciled entities were established in the British Virgin Islands, Cyprus, Germany, Hong Kong, Liechtenstein and Panama.  Because Swiss law requires Leodan to identify the true beneficial owner of structures on a document called a Form A, it knew that these were U.S. client accounts.  Nonetheless, for certain U.S. client accounts, Leodan private bankers and other employees aided and assisted some of these U.S. clients in concealing these assets and income from the IRS.

On Dec. 22, 2010, the Chief Executive Officer and the Chief Operating Officer of Leodan met in the bank’s offices with an external asset manager (EAM #1) and two private bankers, who were not satisfied with their positions at UBS.  EAM #1 presented his company and proposed a business relationship.  During this meeting, EAM #1 informed Leodan’s management that he was under investigation in the United States.  Later that same month and viewing a potential relationship with EAM #1 as a business opportunity, Leodan made a decision to hire the two private bankers commencing May 2011 and to enter into a business relationship with EAM #1.

Leodan opened 19 U.S.-related accounts for 13 clients of EAM #1.  Of these 19 accounts, 16 were structured accounts held by non-U.S. domiciled entities.  EAM #1 served as a director of his 16 structured accounts at Leodan, and EAM #1 had a power of attorney for the non-U.S. domiciled entity that held the account in its name.  The relationship with EAM #1 brought more than 40 percent of the U.S.-related accounts to Leodan.  EAM #1 was later indicted in the United States for conspiring with U.S. taxpayers to help them evade their U.S. tax obligations.

Between May 2011 and October 2012, Leodan made no efforts to ascertain the status of the criminal investigation against EAM #1. On Oct. 16, 2012, representatives of Leodan’s Board of Directors and Management Board met with representatives of FINMA.  After discussing with FINMA the indictment of EAM #1, which had taken place more than 15 months earlier in July 2011, Leodan made the decision to terminate its relationship with EAM #1 and exit his clients.  Between November 2012 and January 2013, Leodan transferred the 19 U.S.-related accounts of EAM #1 to other banks.  The majority of the assets in these accounts were transferred per the clients’ instructions to one specific Swiss bank and two banks in Liechtenstein, and these transfers continued to aid some of those clients in evading their U.S. taxes.

January 28, 2016 | Permalink | Comments (0)

Wednesday, January 27, 2016

31 countries today sign OECD automatic tax sharing of country-by-country transfer pricing information

As part of continuing efforts to boost transparency by multinational enterprises (MNEs), 31 countries signed today the Multilateral Competent Authority Agreement (MCAA) for the automatic exchange of Country-by-Country reports. The signing ceremony marks an important milestone towards implementation of the OECD/G20 BEPS Project and a significant increase in cross-border cooperation on tax matters.  

The countries include:  Australia, Austria, Belgium, Chile, Costa Rica, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Japan, Liechtenstein, Luxembourg, Malaysia, Mexico, Netherlands, Nigeria, Norway, Poland, Portugal, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Switzerland and United Kingdom.  Notably absent - the United States.

G20 Leaders endorsed a wide-ranging BEPS package in November 2015 that marks a historic opportunity for improving the effectiveness of the international tax system. The OECD_globe_10cm_HD_4cpackage was the result of more than two years of discussion involving all OECD and G20 countries, as well as more than a dozen developing countries. Following endorsement of the BEPS measures, the focus has shifted to designing and putting in place an inclusive framework for monitoring BEPS and supporting implementation of the measures, with all interested countries and jurisdictions invited to participate on an equal footing.

With Country-by-Country reporting tax administrations where a company operates will get aggregate information annually, starting with 2016 accounts, relating to the global allocation of income and taxes paid, together with other indicators of the location of economic activity within the MNE group. It will also cover information about which entities do business in a particular jurisdiction and the business activities each entity engages in. The information will be collected by the country of residence of the MNE group, and will then be exchanged through exchange of information supported by such agreements as signed today. First exchanges will start in 2017-2018 on 2016 information. In case information fails to be exchanged, the Action 13 report on transfer pricing documentation provides for alternative filing so that the playing field is levelled.  

Lexis Guide to FATCA Compliance – NEW 2016 Edition 

Over 1,500 pages of analysis of the FATCA and CRS compliance challenges,  73 chapters by FATCA and CRS contributing experts from over 30 countries.  Besides in-depth, practical analysis, the 2016 edition includes examples, charts, time lines, links to source documents, and compliance analysis pursuant to the IGA and local regulations for many U.S. trading partners and financial centers.   The Lexis Guide to FATCA Compliance, designed from interviews with over 100 financial institutions and professional firms, is a primary reference source for financial institutions and service providers, advisors and government departments.  The 19 newest chapters include by example an in-depth analysis of designing a FATCA internal policy that is compliant with the initial two year soft enforcement initiative, designing an equivalent form to the W-8, reporting accounts, reporting payments, operational specificity of the mechanisms of information capture, management and exchange by firms and between countries, insights as to the application of FATCA, CRS, and the IGAs within BRIC, SEA and European country chapters.  This fourth edition will provide the financial enterprise’s FATCA compliance officer the tools for developing and maintaining a best practices compliance strategy.No filler of forms and regs – it’s all beef !  See Lexis’ order site and request a copy of the forthcoming 2016 edition

January 27, 2016 in BEPS | Permalink | Comments (0)

Tax Considerations of Foreign Individual Investors in U.S. Real Estate Investment

The global economic crisis caused residential home prices in the United States to plummet from 2006-2010.  This, combined with a relatively weak U.S. currency, created a perfect storm for foreign investors to enter the U.S. residential real estate market. Foreign investors need to be educated by their tax advisor about the general tax considerations applicable for real estate, the withholding tax applicable to foreign investors' real estate investment (FIRPTA) upon disposition, and the estate tax.

This Mertens Highlight will first present the landscape of foreign investment in the U.S. real estate market over the past seven years, contrasting Canadian and Chinese real estate investors. Secondly, this Highlight will discuss the general tax considerations for real estate investment, and the Code provisions attaching thereto. In the remaining parts, the foreign real estate investor specific concerns regarding FIRPTA and the U.S. estate tax, with common planning opportunities, are reviewed.

Read the Mertens Highlight here.

January 27, 2016 in Tax Compliance | Permalink | Comments (0)

Tuesday, January 26, 2016

Parliamentary Anger Over UK's Tax Deal With Google - "We Want More!"

S630_HMRC_sign__media_library__960_The Times (London) reports that - Google should be paying hundreds of millions of pounds more tax, experts claimed, as anger grew over a sweetheart deal between the internet giant and HM Revenue & Customs. ...

Google limits its reported profits by booking revenues from advertising sold to UK clients through its international headquarters in Ireland.  The Dublin office then sends licensing fees via a sister company in Amsterdam to an offshoot in Bermuda, where profits are left untaxed.

Read the full story by the Times here.

January 26, 2016 in BEPS | Permalink | Comments (0)

BVI starts collecting beneficial ownership of all companies

Harneys reports that - "The main change is to the treatment of introductions to BVI service providers."

Starting January 1, 2016, registered agents began to collect and retain beneficial owner information for new companies registered in the BVI.  Companies already registered are in a transition period.

January 26, 2016 | Permalink | Comments (0)

Monday, January 25, 2016

Princess of Spain on trial for money laundering & tax evasion

The Guardian reports: The Infanta Cristina, the sister of the king of Spain, has appeared in court on the Balearic island of Mallorca to face charges of tax evasion, the first time a member of the royal family has been arraigned.

Cristina Federica Victoria Antonia de la Santísima Trinidad de Borbón y de Grecia – her full title – and 17 co-defendants face 89 charges ranging from fraud and money laundering to trafficking of influences.

Read the Guardian's story of the trial here.

January 25, 2016 | Permalink | Comments (0)

Sunday, January 24, 2016

Google Settles UK Tax Audit for £130m, Agrees to Change Business Model to Pay UK More Tax

Is this a shakedown or what? Read the BBC story here.

The firm has now agreed to change its accounting system so that a higher proportion of sales activity is registered in Britain rather than Ireland.

It has pledged to pay more tax on those sales in the future.

It has also said that it will use a different structure to account for its profits in the UK from 2005 until 2015.

January 24, 2016 in BEPS | Permalink | Comments (0)

Saturday, January 23, 2016

Will the US Impose IRC Section 891 - Double US Tax Rates - on EU Companies for State Aid Retribution?

Robert Stack, US Treasury official responsible for International Tax Affairs, stated to the Senate Finance Committee on December 1, 2015 that the US Treasury is concerned that the Senate-Finance-CommitteeEU Commission appears to be disproportionately targeting U.S. companies.

Moreover, US Treasury is of the opinion that these actions potentially undermine U.S. rights under our tax treaties (given the US imposition of FATCA and other tax treaty overrides, you’ll snicker at that argument).

Regardless, and most importantly, U.S. Treasury is concerned that the EU Commission is reaching out to tax income that no member state had the right to tax under internationally accepted standards. Rather, from all appearances to the eyes of the US Treasury, the EU Commission is seeking to tax the income of U.S. multinational enterprises that, under current U.S. tax rules, is deferred until such time as the amounts are repatriated to the United States. Robert Stack stated “The mere fact that the U.S. system has left these amounts untaxed until repatriated does not provide under international tax standards a right for another jurisdiction to tax those amounts.”

Senator Orrin Hatch (Utah), Chairperson of the Senate Finance Commt, stated in December 2015 that the EU Commissions “state aid” remedies and recent activities in the Eurozone look like attempts to impose retroactive taxation on a number of U.S.-based multinational companies.

And about BEPS he stated: “At the same time, while international efforts to align tax systems are worth exploring, we shouldn’t be negotiating agreements that undermine our own interests for the sake of some supposedly higher or nobler cause. The interests of the United States – our own economy, our own workers, and our own job creators – should be our sole focus.”

On January 15, 2016, the Finance Committee Members (Republicans and Democrats jointly) sent a letter to US Treasury stating that if the EU Commission imposes retroactive state aid penalties that impact US MNEs, then the US should respond with IRC Section 891 that allows the USA to double the tax rates on governments that “re-capture” that state aid.

Netherlands, Belgium, Luxembourg, and Ireland will need to tread cautiously. IRC Section 891 allows up to an 80 percent corporate tax rate to be applied to members of MNE groups of countries. IRC Section 891 states that under the laws of any foreign country, U.S. corporations are subjected to discriminatory or extraterritorial taxes, US tax may be doubled, up to a maximum 80 percent, for corporations of such foreign country. When the lobby of the top US MNEs gets the Dems and the GOP on-board for a very rare common front, EU watch out.

Download Finance Commt statement

Download 12.1.15 RELEASE Hatch Statement at Finance Hearing on OECD BEPS Reports

Download JCT Report

William Byrnes is the author of the 3,000 page treatise: Practical Guide to U.S. Transfer Pricing.

January 23, 2016 in BEPS | Permalink | Comments (0)

Libor rigging defense: I conned the mastermind for bribes and never did any rigging

Bloomberg Business reports that "Broker Conned Nerdy Hayes Without Rigging Libor, Lawyer Says.  For 10 months in 2009, Noel Cryan took tens of thousands of pounds in payments from Tom Hayes to rig Libor. According to his lawyer, he never actually did anything."  

Read the full story at Bloomberg

 

January 23, 2016 in Financial Regulation | Permalink | Comments (0)

Friday, January 22, 2016

Brazil Offers Tax Amnesty for Offshore Tax Evaders

Mayer Brown reports that - On January 13th, 2016, Law No. 13,254/2016 was enacted, thereby implementing a Special Regime for Monetary and Tax Regulation (“RERCT”).

The RERCT allows people or legal entities, residents or domiciled in Brazil on December 31, 2014, to voluntarily declare legally obtained goods or titles that were previously undeclared. The RERCT also allows the amendment of declarations that were made inaccurately or with omission of assets that were in possession before December 31st, 2014, whether they were remitted, obtained abroad or repatriated by residents or entities domiciled in Brazil.

Read the Mayer Brown analysis here.  Law here.

OECD 2015 Update on Voluntary Disclosure Programs here.

 

January 22, 2016 in Tax Compliance | Permalink | Comments (0)

OFAC Lifts Iran Sanctions - OFAC Orders Downloads herein

On July 14, 2015, the P5+1 (China, France, Germany, Russia, the United Kingdom, and the United States), the European Union, and Iran reached a Joint Comprehensive Plan of Action OFAC (JCPOA) to ensure that Iran’s nuclear program will be exclusively peaceful.  October 18, 2015 marked Adoption Day of the JCPOA, the date on which the JCPOA came into effect and participants began taking steps necessary to implement their JCPOA commitments. 
 
On January 16, 2016, marks Implementation Day of the JCPOA.  On this historic day, the International Atomic Energy Agency (IAEA) has verified that Iran has implemented its key nuclear-related measures described in the JCPOA, and the Secretary State has confirmed the IAEA’s verification.  As a result of Iran verifiably meeting its nuclear commitments, the United States is today lifting nuclear-related sanctions on Iran, as described in the JCPOA.  See OFAC orders here.
 
In connection with reaching Implementation Day, today the Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued several documents.  Specifically, OFAC posted to its website: Guidance Relating to the Lifting of Certain Sanctions Pursuant to the Joint Comprehensive Plan of Action on Implementation Day; Frequently Asked Questions Relating to the Lifting of Certain U.S. Sanctions Under the Joint Comprehensive Plan of Action (JCPOA) on Implementation Day; General License H: Authorizing Certain Transactions relating to Foreign Entities Owned or Controlled by a United States Person; and a Statement of Licensing Policy for Activities Related to the Export or Re-Export to Iran of Commercial Passenger Aircraft and Related Parts and Services. The aforementioned documents are effective January 16, 2015. 
 
    
OFAC has also published to its website additional information regarding actions to give effect to other JCPOA commitments, including removals from the Specially Designated Nationals and Blocked Persons List, the Foreign Sanctions Evaders List, and/or the Non-SDN Iran Sanctions Act List, as appropriate.  In addition, OFAC has made available on its website a list of persons identified as blocked solely pursuant to Executive Order 13599 (“E.O. 13599 List”), which consists of persons that OFAC previously identified as meeting the definition of the Government of Iran or an Iranian financial institution.  Information regarding these changes to OFAC’s sanctions lists is available on OFAC’s Recent Actions website. This information will be published subsequently in the Federal Register.
 
Effective Implementation Day, all specific licenses that: (1) were issued pursuant to OFAC’s Second Amended Statement of Licensing Policy on Activities Related to the Safety of Iran’s Civil Aviation Industry, and (2) have an expiration date on or before July 14, 2015, are hereby authorized to remain in effect according to their terms until May 31, 2016.

See also Baker McKenzie's analysis at EU and US Sanctions Relief for Iran Under the Joint Comprehensive Plan of Action Goes into Effect

January 22, 2016 in FinCEN | Permalink | Comments (0)

Thursday, January 21, 2016

Council of Europe Tells Guernsey to strengthen AML and Terrorst Financing financial penalties

Council of Europe experts on money laundering and the financing of terrorism have urged the United Kingdom’s Crown Dependency of Guernsey to increase the penalties which can be Moneyval logo applied to financial institutions in this area.

Further progress is needed in the number of investigations, prosecutions and convictions concerning money laundering and the financing of terrorism, and the use of restraint and confiscation orders could also be improved.

Overall, however, Guernsey has a mature legal and regulatory system, which has been enhanced by the introduction of modern legislation covering all important aspects of the finance industry.

These are among the main findings of the latest report on Guernsey from the Council of Europe’s Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (or MONEYVAL). (see also the summary of the report)

The report contains an analysis of Guernsey’s implementation of international and European standards on money laundering and terrorist financing, as well as a recommended action plan.

Guernsey has been asked to report back to MONEYVAL at its plenary meeting in September 2017 on the follow-up given to the report.

* * *

The Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL) is a Council of Europe body that assesses compliance with the relevant international and European standards to counter money laundering and terrorist financing, and makes recommendations to national authorities. 28 Council of Europe member states are currently subject to MONEYVAL’s evaluation procedures, as well as Israel, the Holy See (including the Vatican City State), the United Kingdom’s Crown Dependencies of Guernsey, Isle of Man and Jersey and the British Overseas Territory of Gibraltar.

January 21, 2016 | Permalink | Comments (0)

Wednesday, January 20, 2016

IRS Notice 2016-08 Extends FATCA Account Certifications for Preexisting Accounts & Nonparticipating FFIs and Reliance on Electronically Furnished Forms W-8 and W-9

Irs_logoThe IRS issued Notice 16-08 announcing that it will extend timelines or modify four elements of FATCA - 

(1) modify the date for submitting to the IRS the preexisting account certifications required of certain foreign financial institutions (FFIs);

(2) specify the period and date for submitting to the IRS the periodic certification of compliance for a registered deemed compliant FFI; 

(3) modify the transitional information reporting rules for accounts of nonparticipating FFIs to eliminate the requirement to report on gross proceeds for the 2015 year; and

(4) specify the circumstances under which a withholding agent may rely on electronically furnished Forms W-8 and W-9 collected by intermediaries and flow-through entities.

 

(1) modify the date for submitting to the IRS the preexisting account certifications

Under current rules, the preexisting account certification must be made no later than 60 days following the date that is two years after the effective date of the FFI agreement. For example, a participating FFI or reporting Model 2 FFI that has an FFI agreement with an effective date of June 30, 2014, must submit a preexisting account certification to the IRS by August 29, 2016.  A participating FFI or reporting Model 2 FFI also is required under the Chapter 4 regulations and the FFI agreement to periodically certify to the IRS that it has complied with the terms of the FFI agreement (“periodic certification of compliance”).  If a participating FFI or reporting Model 2 FFI has an FFI agreement with an effective date of June 30, 2014, the first certification period for the FFI ends on December 31, 2017, and the FFI’s first periodic certification of compliance must be made on or before July 1, 2018.

The amended rules will allow preexisting account certification to be submitted at the same time that the participating FFI or reporting Model 2 FFI is required to submit its first periodic certification of compliance.  Therefore, the preexisting account certification will be due to the IRS by July 1, 2018, for a participating FFI or reporting Model 2 FFI that has an FFI agreement with an effective date of June 30, 2014, instead of by August 29, 2016.  However, the extension does not apply to preexisting account certification  deadlines for a participating FFI or reporting Model 2 FFI to complete the due diligence procedures for preexisting accounts, and FFIs will therefore be required to certify to the completion of those procedures within the time required.

(2) specify the period and date for submitting to the IRS the periodic certification of compliance for a registered deemed compliant FFI

Local FFIs and restricted funds will be allowed to submit their one-time certifications regarding preexisting accounts at the same time that they submit the first periodic certification of registered deemed-compliant FFI status.  Subsequent certification periods will continue to be the three-calendar-year period following the previous certification period.  For example, a registered deemed-compliant FFI that is a local FFI and that has such status on June 30, 2014, will be required to make its one-time certification regarding preexisting accounts and its first periodic certification of registered deemed-compliant FFI status on or before July 1, 2018.

(3) modify the transitional information reporting rules for accounts of nonparticipating FFIs to eliminate the requirement to report on gross proceeds for the 2015 year

With respect to calendar year 2015, a participating FFI, reporting Model 2 FFI, or registered deemed-compliant FFI is not required to report gross proceeds paid to or with respect to an account held by a nonparticipating FFI.

(4) specify the circumstances under which a withholding agent may rely on electronically furnished Forms W-8 and W-9 collected by intermediaries and flow-through entities

Under the provisions for 'standards of knowledge', a withholding agent may rely on a Form W-8 or W-9 that has been collected from the beneficial owner or payee of the payment through an electronic system maintained by an NQI, NWP, or NWT and furnished to the withholding agent by such NQI, NWP, or NWT, provided that the NQI, NWP, or NWT is a direct or indirect account holder of the withholding agent and the withholding agent obtains from the NQI, NWP, or NWT a written statement confirming that the electronic documentation was generated from a system that meets the regulatory requirements as applicable, and the withholding agent does not have actual knowledge that such statement is incorrect.

  • The electronic system must ensure that the information received is the information sent, and must document all occasions of user access that result in the submission renewal, or modification of a Form W-8.  In addition, the design and operation of the electronic system, including access procedures, must make it reasonably certain that the person accessing the system and furnishing Form W-8 is the person named in the Form.
  • Same information as paper Form W-8. The electronic transmission must provide the withholding agent or payor with exactly the same information as the paper Form W-8.
  • Perjury statement and signature requirements. The electronic transmission must contain an electronic signature by the person whose name is on the Form W-8 and the signature must be under penalties of perjury.
  • Perjury statement. The perjury statement must contain the language that appears on the paper Form W-8. The electronic system must inform the person whose name is on the Form W-8 that the person must make the declaration contained in the perjury statement and that the declaration is made by signing the Form W-8. The instructions and the language of the perjury statement must immediately follow the person's certifying statements and immediately precede the person's electronic signature.
  • Electronic signature. The act of the electronic signature must be effected by the person whose name is on the electronic Form W-8. The signature must also authenticate and verify the submission. For this purpose, the terms authenticate and verify have the same meanings as they do when applied to a written signature on a paper Form W-8. An electronic signature can be in any form that satisfies the foregoing requirements. The electronic signature must be the final entry in the person's Form W-8 submission.
  • Requests for electronic Form W-8 data. Upon request by the Internal Revenue Service during an examination, the withholding agent must supply a hard copy of the electronic Form W-8 and a statement that, to the best of the withholding agent's knowledge, the electronic Form W-8 was filed by the person whose name is on the form. The hard copy of the electronic Form W-8 must provide exactly the same information as, but need not be identical to, the paper Form W-8.

Download IRS FATCA Notice 16-08

William Byrnes is the author of Lexis Guide to FATCA Compliance – 4th (2016) Edition 

Over 1,500 pages of analysis of the FATCA and CRS compliance challenges,  73 chapters by FATCA and CRS contributing experts from over 30 countries.  Besides in-depth, practical analysis, the 2016 edition includes examples, charts, time lines, links to source documents, and compliance analysis pursuant to the IGA and local regulations for many U.S. trading partners and financial centers.   The 19 newest chapters include by example an in-depth analysis of designing a FATCA internal policy that is compliant with the initial two year soft enforcement initiative, designing an equivalent form to the W-8, reporting accounts, reporting payments, operational specificity of the mechanisms of information capture, management and exchange by firms and between countries, insights as to the application of FATCA, CRS, and the IGAs within BRIC, SEA and European country chapters.  This fourth edition will provide the financial enterprise’s FATCA compliance officer the tools for developing and maintaining a best practices compliance strategy.  No filler of forms and regs – it’s all beef !  Request a copy of the forthcoming 2016 edition – http://www.lexisnexis.com/store/catalog/booktemplate/productdetail.jsp?pageName=relatedProducts&prodId=prod19190327

 

January 20, 2016 | Permalink | Comments (0)

Having It All? Combining Whole Life With Indexed Universal Life

Today’s insurance product marketplace is flooded with options, leaving most clients familiar with the overwhelming feeling that they must choose one.  Insurance carriers, however, have ThinkAdvisor Having It All? Combining Whole Life With Indexed Universal Lifeanswered this issue with product innovation—and the next product trend may be one that allows clients to combine the guarantees of traditional whole life insurance with the upside participation potential of an indexed universal life insurance (IUL) product. 

Understanding the details of these new products can help clients experience the best of both worlds, eliminating the need to choose between valuable features by combining elements of both into a single, optimal value product.

Read ThinkAdvisor's Law Professor Column Having It All? Combining Whole Life With Indexed Universal Life

January 20, 2016 in Financial Services | Permalink | Comments (0)

Tuesday, January 19, 2016

IRS Amends Offshore Account Streamlined Procedures

Professor Jack Townsend (Houston) reports that the IRS has updated its FAQs for the Streamlined Filing Procedures for Non-Compliant Offshore Accounts of US Persons.   He found Irs_logothat the most important change relates to taxpayers' certification of their 'non-wilfulness'.

Streamlined Filing Compliance Procedures for U.S. Taxpayers Residing in the United States Frequently Asked Questions and Answers

 

January 19, 2016 | Permalink | Comments (0)