So, I don’t say that on the blog very often (though my brothers would likely tell a different story from our years at home). But I’m sooo saying it now.

When the IRS won its prominent battle with UBS, I said (as did many tax and finance bloggers) that a win would only lead to more investigations. In terms of timing, the end of the Voluntary Disclosure Program last year was kind of a line in the sand. I predicted more vigorous prosecutions would follow.

Cut to today. Sure enough, another high profile tax evasion case has been announced. The US Department of Justice has launched a criminal investigation into whether clients of the international bank, HSBC, have violated banking secrecy laws. Notifications letters received by those clients are said to resemble those sent to UBS clients.

For its part, HSBC is declining comment. However, the bank has made it known that it does not assist clients in the commission of a crime. In contrast, UBS has admitted wrongdoing for assisting its clients in hiding assets from the IRS; as penance, the bank paid a hefty fine and agreed to turn over the account information for a number of its clients.

HSBC is headquartered in the UK. The UK was at the forefront of criticisms of Switzerland’s UBS and the Swiss banking secrecy laws. This could get interesting…

Last Updated on

Author

Kelly Erb is a tax attorney and tax writer.

Comments

  1. While some of their clients may be tax avoiders, my personal experience of this bank is that they screw up setting up new accounts all the time, and that they follow all rules and regulations like the retentive beta robots the IRS and the UK want them to be. The screw up they make – over and over – is to open up your new account in the branch you walked into. There’s a huge tax break in the UK if you, an American who just arrived onshore, open your account at a different branch that specialises in accounts for new arrivals to the UK. Doh! I assume that’s because they’ll lose the sales bonus for signing up a new client. But in every other way, the laws of the UK and the EU combined ate so draconian, the likelihood of the IRS finding failure to follow international regs is close to nil.

Write A Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.