U.S. authorities have targeted Belize-based banks in a new expansion of their hunt for Americans suspected of evading taxes by hiding income and assets in offshore accounts.
A federal court in Miami on Wednesday approved special "John Doe" legal summonses seeking information about U.S. taxpayers who may hold undeclared accounts at Belize Bank International Limited or Belize Bank Limited.
The court order gave federal investigators authorization to seek records of so-called correspondent accounts the Belize banks maintain at Bank of America and Citibank. Information from those accounts, which enable foreign banks without a U.S. presence to handle transactions in U.S. dollars, is expected to help the IRS identify U.S. taxpayers who hold or held accounts at the Belize financial institutions.
"These John Doe summonses will provide detailed information about individuals using financial institutions in Belize and, to the extent funds were transferred, other jurisdictions," said Acting Assistant Attorney General Caroline Ciraolo. "But rest assured, we are receiving information from many sources regarding hidden foreign accounts and offshore schemes."
An IRS legal declaration said Belize Bank Limited is incorporated and based in the Central American nation, and directly owns Belize Bank International Limited. Another company, Belize Corporate Services, provides so-called "shelf" corporations, paper companies that can be named as the purported owners of offshore accounts.
All three entities are corporate subsidiaries of BCB Holdings Limited, according to the IRS declaration. That declaration described a federal revenue agent's review of information gathered from Americans who came forward under a voluntary IRS disclosure program and provided information about accounts they once held at the Belize banks.
The court action marks federal investigators' latest use of the special summonses to compel account disclosures by offshore banks suspected of helping wealthy American clients evade U.S. taxes. The IRS previously used the tactic to pursue account data from banks elsewhere around the world, including Switzerland's Zurcher Kantonalbank , Bermuda-based N.T. Butterfield & Son and London-headquartered HSBC's India division.
U.S. investigators also won court approval in 2009 to serve John Doe summonses on Swiss banking giant UBS — the initial target in the continuing federal crackdown on offshore tax evasion.
UBS ultimately turned over information on an estimated 4,450 American clients. The bank, Switzerland's largest, also paid a $780 million fine under a deferred prosecution agreement after acknowledging it had helped clients duck U.S. taxes. USAToday
=============================IRS Digs Deeper for Bank Accounts of Its Citizens Suspected of Evading Taxes
The United States of America is clamping down on their citizens who are suspected of evading taxes by hiding their income and assets in offshore accounts. Once a tax haven for foreigners, financial institutions in Belize are now being targeted to reveal information on accounts belonging to American nationals. An online article has indicated that U.S. District Judge Ursula Ungaro of a Federal Court in Miami, Florida, granted the State’s petition for permission to seek records of Belize Bank International Limited and Belize Bank Limited correspondent accounts at Bank of America and Citibank. That decision means that a Special ‘John Doe’ legal summonses was approved which seeks to access information on US tax payers who may have undeclared accounts at the Belize Bank International Limited or Belize Bank Limited. Through this court order, federal investigators are now authorized to research records of so-called correspondent accounts that the Belize Bank maintain at Bank of America and Citibank. The authorities believe that the information on those accounts from banks who conduct transactions in US dollars whilst not having a presence in the United States will help the IRS find the taxpayers who have accounts at the Belize banking institutions. The article went on to say that there is another company, Belize Corporate Services that provides so-called “shelf” corporations, paper companies that can be named as the purported owners of offshore accounts. All three entities are corporate subsidiaries of BCB Holdings Limited, according to the IRS declaration. That declaration described a federal revenue agent’s review of information gathered from Americans who came forward under a voluntary IRS disclosure program and provided information about accounts they once held at the Belize banks. The court action marks federal investigators’ latest use of the special summonses to compel account disclosures by offshore banks suspected of helping wealthy American clients evade U.S. taxes. The IRS previously used the tactic to pursue account data from banks elsewhere around the world. The US Federal Tax Law requires American taxpayers to pay taxes on all income earned worldwide and to also report foreign financial accounts once the total value of the accounts exceeds $10,000 at any time during the calendar year. Knowingly withholding this information on a foreign account can result in a fine of up to 50 percent of the amount in the account at the time of the violation. Back in 2009, U.S. investigators also won court approval to serve John Doe summonses on Swiss banking giant UBS. UBS ultimately turned over information on an estimated 4,450 American clients. The bank, Switzerland’s largest, also paid a $780 million fine under a deferred prosecution agreement after acknowledging it had helped clients duck U.S. taxes.LOVEFM
============================IRS probes Belize offshore accounts!
“Uncle Sam” has ramped up collection efforts on US taxpayers, including US citizens, Belizeans with dual nationality and green card holders who are believed to be hiding their wealth in offshore jurisdictions in Belize, which has not only been dubbed as a “tax haven” – but has also been listed as one of the major money laundering jurisdictions by the United States Government.
As we go to press tonight, there are concerns over how the latest development will affect the financial landscape, including the channeling of remittances to Belize and investments by US nationals in prime industries such as tourism, since the US probe involves both domestic and international bank transactions carried out by the Belize Bank, the country’s largest commercial bank, with two leading US banks.
Miami federal judge Ursula Ungaro—who 10 years ago had presided over litigation in the telecommunications saga of Jeffrey Prosser against the Government of Belize—granted a petition this Wednesday, September 16, to the Internal Revenue Service (IRS), the United States government agency responsible for tax law enforcement, which will allow the IRS to issue two “John Doe” summonses to Bank of America and Citibank, both of Miami, Florida, in order to probe into offshore accounts held by thousands of Americans who may have stashed their wealth in The Jewel.
Offshore accounts in Belize should only be held by non-residents – not by persons living in Belize.
The IRS summonses are engineered to probe into financial transactions facilitated over the last 8 years (December 31, 2006 to December 31, 2014) by Belize’s largest commercial bank, the Belize Bank, and its offshore counterpart – Belize Bank International, both subsidiaries of BCB Holdings, which had their correspondent banking relations with Bank of America severed at the end of April 2015, purportedly after the US bank cited “a business model mismatch.”
The summonses also extend to a third related Belizean company, Belize Corporate Services (BCS) Limited.
A statement from the US Department of Justice, Office of Public Affairs, explained that: “The John Doe summonses approved today direct 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 BBIL and BBL’s 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 BCS and information related to BCS’s deposit accounts at Bank of America.”
The IRS has received similar court orders to probe into accounts held by US citizens at Wegelin & Co. in Switzerland and CIBC FirstCaribbean International Bank (FCIB) in Barbados in order to evade federal income taxes.
“Federal tax law requires U.S. taxpayers to pay taxes on all income earned worldwide. U.S. taxpayers must also report foreign financial accounts if the total value of the accounts exceeds $10,000 at any time during the calendar year. Willful failure to report a foreign account can result in a fine of up to 50 percent of the amount in the account at the time of the violation,” the US Department of Justice statement says.
The IRS petition filed with the United States District Court in Miami cited an example of how US taxes were evaded: “the United States District Court for the District of Oregon sentenced John Anthony Williams to 51 months in prison for multiple counts including wire fraud, mail fraud, and money laundering… Williams was a financial advisor and estate planner who defrauded one of his elderly clients out of more than $400,000… In an attempt to hide his actions, Williams formed an offshore company in Belize, opened a bank account at BBIL, and wire transferred the stolen funds to the account,” the IRS petition outlined.
According to the IRS petition, US taxpayers often place assets and income in undisclosed foreign bank accounts in countries known for their financial secrecy, sometimes by using shell companies which hide the identity of the person or persons who actually own the accounts.
“While the taxpayers employing such tactics are notoriously — and intentionally — difficult to track, they cannot hide their activity completely. Critically, their activities are often reflected in the records of the foreign banks’ correspondent bank account. Foreign banks maintain so-called correspondent accounts at U.S. banks to conduct transactions involving U.S. currency,” the IRS explained.
“The Department and the IRS are using every tool available to identify and investigate those individuals determined to evade their U.S. tax and reporting obligations through the use of offshore financial accounts and foreign entities,” said Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.
“These John Doe summonses will provide detailed information about individuals using financial institutions in Belize and, to the extent funds were transferred, other jurisdictions. But rest assured, we are receiving information from many sources regarding hidden foreign accounts and offshore schemes. The time to come clean is now – before we knock on your door,” she said.
The IRS has a program for voluntary disclosures – the Offshore Voluntary Disclosure Program (OVDP), specifically designed for taxpayers with exposure to potential criminal liability and/or substantial civil penalties due to a willful failure to report foreign financial assets and pay all taxes due in respect of those assets.
In early April, nearly three weeks before Bank of America severed its relations with the Belize Bank, Prime Minister and Minister of Finance Dean Barrow spoke of a “crisis” situation unfolding in Belize’s banking sector on the occasion of the Summit of the Americas in Panama.
Barrow said that, “…there are the continuing statements classifying our jurisdictions as harmful tax havens. This is designed to put our offshore sector out of business, denying us one of our few diversification opportunities. Then, despite the fact that we make every effort to comply scrupulously with the plethora of legislative and enforcement measures required of us by big country edicts, there are annual declarations designating even our onshore financial services as vulnerable to money laundering. It is a kind of damnation by innuendo, since no bill of indictment listing any specific instances of violation is ever offered. But the implication that doing business with us is fraught with risk, is crippling our jurisdictions.
“So that even as we speak, there is a crisis in my own country and in several others in the Eastern Caribbean, where the big US banks are ‘de-risking’ by terminating their correspondent relationships with our domestic banks. Indeed, even our Central Banks are being cut off, and our financial and trade architecture cannot survive this phenomenon.”
Since that alarm bell was sounded, at least two other Belize banks, a domestic and an international bank registered in Belize, have reportedly faced a fate similar to Belize Bank and Belize Bank International, with their correspondent banking relations being severed by the US bank.
On edge over these developments, domestic banks in Belize have been hard at work trying to put in place alternative correspondent banking relations to try to avoid disruptions in wire transfers and other related services to their clients.Amandala