Unreported Credit Suisse Bank Accounts are a High Risk

Unreported Credit Suisse Bank Accounts are a High Risk

Unreported Credit Suisse Bank Accounts

Over the past 10 to 20 years several Swiss banks and foreign financial institutions in Switzerland have entered into deferred prosecution agreements with the United States. For many years, it was common for Americans to utilize Swiss bank accounts (usually ‘numbered accounts’) to hide money offshore and to avoid having to report income generated from foreign investments to the U.S. Government. In recent years, Credit Suisse has had multiple issues and run-ins with the US government, most notably entering into a  2014 plea agreement with the Department of Justice (Credit Suisse AG”) and a deferred prosecution agreement back in 2021 (‘Credit Suisse Securities (Europe) LLC ). Fast forward to 2023 and the Senate Finance Committee published an investigation involving Credit Suisse’s role in facilitating US/offshore tax evasion schemes. Let’s take a brief look at some of the key excerpts from the investigation report and findings:

Senate Finance Committee Investigation

• • • The Democratic staff of the Senate Finance Committee (“the Committee”) conducted an investigation of Zurich-based financial institution Credit Suisse AG (“Credit Suisse”) over more than two years, examining the bank’s wealth management division and its handling of accounts owned or controlled by United States citizens. The purpose of the investigation was to understand whether the bank violated the terms of its 2014 plea agreement with the Department of Justice (“DOJ”) involving the bank’s participation in a conspiracy to assist thousands of wealthy U.S. taxpayers in hiding offshore accounts from the Internal Revenue Service (“IRS”).

The Committee’s Findings

• • • The Committee’s investigation identified major violations of Credit Suisse’s plea agreement, including failing to report what may be an ongoing criminal tax conspiracy involving nearly $100 million in secret offshore accounts belonging to a family of dual U.S.–Latin American citizens (hereinafter “the Family”). 1 The Credit Suisse accounts were closed in 2013, but the funds were transferred to other banks without notifying DOJ, as required by Credit Suisse’s 2014 plea agreement. The Committee also obtained voluminous records detailing the role Credit Suisse employees played in assisting U.S. businessman Dan Horsky in concealing over $220 million in offshore accounts from the IRS. In both instances, Credit Suisse failed to disclose the accounts to DOJ after entering into its plea agreement, and only did so after whistleblowers notified U.S. authorities of the existence of the accounts.

• • • The Committee’s investigation also uncovered almost two dozen additional large, potentially undeclared accounts held by Credit Suisse belonging to ultra-high net worth U.S. persons. In 2022, Credit Suisse disclosed to the Committee that in connection with its ongoing cooperation with DOJ it had identified 10 additional large client relationships involving U.S. persons, with each client holding accounts in excess of $20 million. Days prior to the release of this report, Credit Suisse also disclosed that a review in response to the Committee’s investigation identified another 13 large accounts in excess of $20 million that may be held by U.S. persons. It is deeply concerning that almost nine years after executives testified before Congress that the bank would clean up its act, Credit Suisse is still disclosing hundreds of millions of dollars in secret offshore accounts belonging to wealthy U.S. taxpayers.

The Committee Determined Immediate Action is Needed

• • • The Committee believes that the findings of this report merit immediate, rigorous investigations by DOJ and the IRS into whether Credit Suisse should face additional penalties for violating its plea agreement. The Committee also believes that any entity that acquires Credit Suisse or the Swiss government should assume responsibility for any fines resulting from any potential violations of Credit Suisse’s plea agreement with DOJ.3 DOJ and the IRS should also conduct investigations into other financial institutions implicated in this report for enabling any civil or criminal failure to file a foreign bank account registration (“FBAR”) violations.

Current Year vs Prior Year Non-Compliance

Once a taxpayer has missed the tax and reporting (such as FBAR and FATCA) requirements for prior years, they will want to be careful before submitting their information to the IRS in the current year. That is because they may risk making a quiet disclosure if they just begin filing forward in the current year and/or mass filing previous year forms without doing so under one of the approved IRS offshore submission procedures. Before filing prior untimely foreign reporting forms, taxpayers should consider speaking with a Board-Certified Tax Law Specialist that specializes exclusively in these types of offshore disclosure matters.

Avoid False Offshore Disclosure Submissions (Willful vs Non-Willful)

In recent years, the IRS has increased the level of scrutiny for certain streamlined procedure submissions. When a person is non-willful, they have an excellent chance of making a successful submission to Streamlined Procedures. If they are willful, they would submit to the IRS Voluntary Disclosure Program instead. But, if a willful taxpayer submits an intentionally false narrative under the Streamlined Procedures (and gets caught), they may become subject to significant fines and penalties. 

Golding & Golding: About Our International Tax Law Firm

Golding & Golding specializes exclusively in international tax, specifically IRS offshore disclosure. 

Contact our firm today for assistance.