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News & Events

Israel Bank Faces Tax Evasion Prosecution

Posted in News, Offshore Account Update on December 12, 2014

A bank in Israel, Bank Leumi, is being targeted by the New York Department of Financial Services, which regulates banks in the state of New York. Why? New York regulators believe Bank Leumi helped facilitate tax evasion among U.S. citizens with offshore investments. 

The Israeli bank is not the only one facing large fines and other penalties by U.S. authorities arising from tax evasion schemes. Many banks and bankers are disclosing client names when faced with fines and prosecution, which could also lead to individuals being prosecuted for tax evasion. If you have money offshore that you have not declared to the U.S. government, you need to speak with a Washington DC international tax attorney.

Banks Under Investigation for Facilitating Tax Evasion

Bank Leumi is the second largest bank in Israel.  It has been under investigation by both the New York Department of Financial Services and federal authorities. The New York regulators are seeking more than $300 million in fines and penalties. This is separate from any penalties that may be imposed by the federal government.

According to Reuters, the bank allegedly used sham loan arrangements that would make it possible for clients to avoid paying income taxes but still have access to their funds. New York regulators determined that the structures the bank set up for their investors were “egregious” violations, which is why such a large amount of money is sought as a penalty.

Federal authorities have also been working to negotiate a deal with Bank Leumi, this time with respect to its Swiss unit.  In June, the bank was close to an agreement with the U.S. Justice Department to pay almost $238 million.

Bank Leumi is not the only one that has paid millions to authorities in the United States as a result of making it easier for investors to hide money offshore. In May, Credit Suisse agreed to pay $715 million to the New York Department of Financial Services. This was part of a larger settlement in which the bank paid more than $2.5 billion in total penalties to the government for helping Americans evade taxes.

Credit Suisse is the second largest bank in Switzerland. When the bank pled guilty to resolve the long-running dispute with the U.S. government over its part in tax evasion schemes, it was considered a rare criminal indictment for such a large institution. However, as part of the plea deal, Credit Suisse got to keep its license to operate in New York.

The crackdown on these banks is part of a dedicated effort to stop global tax evasion. Unfortunately, banks frequently turn over client names as part of deals, which puts investors at risk. As the government continues to levy millions in fines, investors need to talk to a Washington DC international tax attorney to learn about any options they have for voluntarily disclosing offshore accounts in order to limit their penalties and avoid facing criminal prosecution. 


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