When banks are suspected of wrongdoing, it is common for the financial institutions to settle the case with the Department of Justice by paying fines and entering into deferred prosecution agreements.  Commerzbank AG recently became one of the latest banks to settle a criminal case.  Between fines and the money the bank agreed to forfeit, the bank ended up paying a total of $1.45 billion to resolve its criminal allegations.  

Reporting money in offshore accounts is required. Investors must file a Foreign Bank Account Report (FBAR) with the Treasury Department each year. Failure to file reports and pay income taxes on offshore investments can lead to financial penalties. It can also lead to criminal penal-ties. Just recently, the CEO of Circlenet LLC was sentenced to four months in a federal prison for not filing his reports and concealing income. 

On February 18, federal prosecutors filed a superseding indictment against three former employees of Wegelin & Co, alleging that the employees participated in a conspiracy to help customers evade taxes and conceal assets.  This action is far from the first that has been taken in connection with tax evasion involving Wegelin & Co.  In fact, prior legal sanctions imposed by U.S. authorities actually caused Wegelin & Co. to close in 2013.

Many investors are not 100 percent forthcoming with the Internal Revenue Service. However, the IRS is aiming to change this through a number of measures. While individuals are required to file annual reports on their offshore accounts using Form 8938, banks are also required to turn over investor information to comply with Foreign Account Tax Compliance Act (FATCA) regulations.

The crackdown on banks continues, as UBS AG once again faces legal questions from the IRS and the Justice Department.  Federal authorities are not only going after banks that helped clients hide cash in offshore accounts, but they are now looking at whether UBS AG facilitated the purchase of investments that are banned in the United States. The new DOJ and IRS probe is focused on whether UBS allowed the purchase of bearer securities as part of efforts to help clients evade US tax obligations.