On March 30, 2015, the Department
of Justice (the "DOJ") publicized a settlement under The Swiss Bank
Program, potentially exposing thousands of U.S. taxpayers to a 50 percent
penalty for failure to report their offshore bank accounts. The Swiss Bank
Program seeks to resolve the potential criminal liability of various Swiss
banks. The voluntary program offers the banks a non-prosecution agreement in
exchange for the payment of a hefty fine contingent upon their cooperation in
disclosing the financial information of U.S. persons. BSI S.A of Switzerland entered
into such a NPA and agreed to pay $211 million to the Department. It will provide
the Department with financial information on more than 3,000 U.S.-related bank
accounts, including accounts where the money was transferred to another
country. The DOJ intends to use this information to prosecute individual
taxpayers. However, under the terms of the 2014 Offshore Voluntary Disclosure
Program (OVDP), U.S. taxpayers may avoid harsher sanctions by declaring their
offshore accounts and paying a penalty equal to 27.5 percent of the highest
value of the accounts during the prior 8 year period. The FAQs published under the OVDP
state that a 50 percent offshore penalty applies if a foreign financial
institution at which the taxpayer has or had an account has been publicly
identified as being under investigation or as cooperating with a government
investigation. Thus, BSI, S.A. was added to the list of banks which trigger the
50 percent penalty. The higher penalty applies to the total value of all of the
taxpayer's undeclared offshore accounts and not just to the balance of the
account at BSI S.A. FAQ 7.5 clearly states that once the 50 percent
miscellaneous offshore penalty applies to any of the taxpayer's accounts, it
will apply to all of the taxpayer's assets subject to the penalty. Thus,
taxpayers with a relatively small BSI S.A. account balance, but with larger
unreported account balances at other institutions, will be exposed under the
OVDP to a higher penalty on all of their accounts. U.S. persons with unreported accounts at any
of the foreign financial institutions on the following list are subject to the
50 percent penalty:
BSI SA
UBS AG
Credit Suisse
AG, Credit Suisse Fides, and Clariden Leu Ltd.
Wegelin &
Co.
Liechtensteinische
Landesbank AG
Zurcher
Kantonalbank
swisspartners
Investment Network AG, swisspartners Wealth Management AG, swisspartners
Insurance Company SPC Ltd. and swisspartners Versicherung AG
CIBC
FirstCaribbean International Bank Limited, its predecessors, subsidiaries and
affiliates
Stanford
International Bank, Ltd., Stanford Group Company, and Stanford Trust Company,
Ltd.
The Hong Kong
and Shanghai Banking Corporation Limited in India (HSBC India)
The Bank of
N.T. Butterfield & Son Limited (also known as Butterfield Bank and Bank of
Butterfield), its predecessors, subsidiaries and affiliates
Sovereign
Management & Legal, Ltd., its predecessors, subsidiaries, and affiliates
(effective December 19, 2014
Bank Leumi
le-Israel B.M., The Bank Leumi le-Israel Trust Company Ltd, Bank Leumi
(Luxembourg) S.A., Leumi Private Bank S.A., and Bank Leumi USA
Other institutions may be added to
the list over the next few months.