continue to be the target of U.S. prosecutors pursuing a global campaign against evaders of federal taxes, spurred by data acquired in their crackdown on Swiss banks.
Prosecutors are trying to determine what role financial professionals in Hong Kong play in tax evasion, according to people familiar with the matter. They are examining how much taxable money was moved to the former British colony that returned to China in 1997, whether accounts were based there in name only and what banks were involved, the people said.
The push follows the government’s success in penetrating Swiss bank secrecy and learning from insiders how UBS AG helped Americans evade taxes. UBS, the largest Swiss bank by assets, avoided prosecution by agreeing in February to pay $780 million and disclose account data on 250 clients. In August, it agreed to supply information on another 4,450.
The government has made it very clear that they are interested in other secrecy jurisdictions, especially Hong Kong & Singapore.
The UBS clients who used Hong Kong & Singapore corporations told prosecutors how their bankers and lawyers helped them set up offshore corporations so their assets would be hidden in accounts that didn’t bear their names, court records show.
Hong Kong hasn’t been the only tax jurisdiction implicated in the past year. UBS admitted in February that it helped U.S. clients create sham companies in Panama and the British Virgin Islands, while hiding the true owners from the U.S. Internal Revenue Service. UBS clients who pleaded guilty also implicated Singapore, Liechtenstein, Mexico and the Cayman Islands.
The IRS is analyzing a trove of information from more than 7,500 taxpayers who voluntarily disclosed their offshore accounts this year to avoid prosecution. To qualify, clients had to disclose everyone who handled their money overseas and everywhere it went.
“We’re going to be scouring the 7,500 disclosures to identify financial institutions, advisers and others” who helped taxpayers cheat on taxes, IRS Commissioner Douglas Shulman said.
He said the IRS is hiring 800 people in the next year and increasing staff in eight overseas offices, including Hong Kong. It also will open offices in Beijing, Sydney and Panama City.
We originally posted "Singapore Banks ... No Longer a Safe Haven For Tax Cheats!" on May 7, 2013 where we discussed that Banks in Singapore are urgently scrutinizing their account holders as an imminent deadline on stricter tax evasion measures forces them to decide whether to send some of their wealthiest clients packing.
Before 2014, all financial institutions in Singapore must identify accounts they strongly suspect hold proceeds of fraudulent or willful tax evasion and, where necessary, close them. After that, handling the proceeds of tax crimes will be a criminal offence under changes to the city-state's anti-money laundering law. Bankers may now feel compelled to give up some of the lucrative accounts that have fuelled a boom in Singapore's assets under management to more than $1 trillion, with 50 percent growth in the five years to 2011, according to the latest government data.
New foreign clients may find that banks become far more picky and inquisitive as the change in mindset takes hold.
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Singapore Inland RevenueReuters