February 27, 2021

US chasing $130m in undeclared offshore accounts in Cayman Islands

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caymanBy Pat Sweet From CCH Daily

Two financial institutions based in the have pleaded guilty in a court to helping US taxpayers hide more than $130m (£92m) in offshore accounts in order to evade taxes, and could be forced to reveal the names of account holders, in the first conviction of a non-Swiss financial institution
16 Mar 2016

Following their guilty plea in a court in New York, Cayman National Securities Ltd () and Cayman National Trust Co Ltd () will pay a total of $6m in financial penalties and are to provide the US authorities with unredacted client files for the US taxpayers who held the undeclared accounts. Preet Bharara, US attorney for the southern district of New York, said: ‘The guilty pleas of these two Cayman Island companies today represent the first convictions of financial institutions outside Switzerland for conspiring with US taxpayers to evade their lawful and legitimate taxes.

‘The plea agreements require these Cayman entities to provide this office with the client files, because we are committed to finding and prosecuting not only banks that help US taxpayers evade taxes, but also individual taxpayers who find criminal ways not to pay their fair share.

‘We will follow them no matter how far they go to hide their accounts, whether it is Switzerland, the Cayman Islands, or some other tax haven.’

The court heard that from at least 2001 until 2011, CNS and CNT, which are both located in Grand Cayman and organized under the laws of the Cayman Islands, assisted US taxpayers in evading their US tax obligations to the Internal Revenue Service (IRS) by using undeclared accounts.

The prosecution said CNS and CNT opened, and/or encouraged many US clients to open accounts held in the name of sham Caymanian companies and trusts in order to trade in US securities, thereby helping them conceal their beneficial ownership of the accounts.

At their high-water mark in 2009, CNS and CNT had approximately $137m in assets under management relating to undeclared accounts held by U. taxpayer-clients. From 2001 to 2011, CNS and CNT earned more than $3.4m in gross revenues from the undeclared US taxpayer accounts that they maintained.

Despite learning about the investigation of Swiss bank UBS in 2008, for assisting US taxpayers to evade their US tax obligations, CNS and CNT continued to maintain these undeclared accounts for US taxpayers and did not start to make any changes in their approach until 2011 and 2012.

Around June 2011, CNT hired a new president, who spearheaded a review of CNT’s files. In the course of that review, not a single file was found to be complete and without tax or other issues, the court heard. Moreover, with respect to the structures that had US beneficial owners, CNT’s files contained little, if any, evidence of tax compliance.

For more on this story go to: https://www.cchdaily.co.uk/us-chasing-130m-undeclared-offshore-accounts-cayman-islands#sthash.FGLDaGD9.dpuf

IMAGE: www.motherjones.com

See also today’s Editorial “Banking frauds: Why isn’t any PERSON(S) held responsible and prosecuted?”

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