On February 26, 2014, the United States Senate Permanent Subcommittee on Investigations released a report regarding offshore tax evasion and specifically the actions of Credit Suisse, Switzerland’s second largest bank. The report is the product of a two-year investigation initiated in 2011 after seven Credit Suisse bankers were indicted by the U.S. Department of Justice (DOJ) for aiding and abetting U.S. tax evasion.

The report is highly critical of Credit Suisse, accusing the bank of actively helping thousands of Americans conceal their wealth offshore. More specifically, it is alleged Credit Suisse opened undeclared Swiss bank accounts for individuals, opened accounts in the name of offshore shell entities to conceal U.S. ownership, sent Swiss bankers to the United States to recruit new U.S. customers and serviced existing Swiss accounts without creating a paper trail. Finally, the report faults Credit Suisse’s efforts following the UBS scandal to close Swiss accounts held by U.S. citizens as too slow and ineffective. However, at the end of 2013, Credit Suisse indicated it had accounts for about 3,500 U.S. customers, representing an 85% drop.

The report is critical of the DOJ as well, citing its failure to prosecute the dozen or so Swiss banks that facilitated U.S. tax evasion and the thousands of U.S. citizens whose names and hidden accounts were disclosed. Further, in its efforts to obtain the names of account holders, the DOJ relied solely on the restrictive U.S.-Swiss tax treaty, rather than using available remedies enforceable through the U.S. court system, and this, too, was the subject of criticism in the report.

The report concludes by making several recommendations to combat offshore tax evasion. First, the DOJ should use available U.S. legal means, such as grand jury subpoenas and John Doe summons, to obtain the names of U.S. taxpayers with undisclosed accounts. In addition, the U.S. Treasury should close loopholes in the FATCA regulations, such as provisions that allow financial institutions to ignore account information stored on paper and allowing foreign financial institutions to treat offshore shell entities as non-U.S. entities. Finally, the report recommends that the U.S. Senate promptly ratify the 2009 Protocol to the U.S. Switzerland tax-treaty, which includes improved disclosure standards.

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Barry S. Engel

Barry S. Engel is the founding principal (1984) of Engel & Reiman pc, a Denver, Colorado-based law firm having an international client base and an international reputation for excellence in asset protection planning and integrated estate planning.

Mr. Engel is one of three co-authors of the 1989 amendments to the Cook Islands International Trust Act (1984), as enacted by the Parliament of the Cook Islands. The first asset protection specific statutory trust law of its kind, this enactment has served as the model for similar trust law as subsequently adopted in more than 20 offshore financial centers and by more than a fifth of our country’s state legislatures.

Mr. Engel is the author of Asset Protection Planning Guide, now in it second edition, as published by CCH Incorporated, Chicago, Illinois. He has written extensively on all aspects of asset protection and on its relationship with estate planning. His writings have contributed in large part to the widespread acceptance of asset protection planning and to how it is undertaken today by the planning community on behalf of clients. Mr. Engel has also chaired or otherwise participated in hundreds of continuing education programs for lawyers, CPAs, financial planners and other professionals, both domestically and abroad.

Barry Engel has been written about or quoted by some of the business and professional world’s publications of highest regard, including The Economist, Business Week, American Bar Journal, National Bar Journal, Wall Street Journal, New York Times, and Forbes. He was designated a 2011 Colorado Super Lawyer, which is a peer-review distinction bestowed upon only 5% of the lawyers in his home state.

His past appointments include Presidency of the Isle of Man-based Offshore Institute (1992 – 1997), the Executive Committee of the Offshore Institute (1992 – 2003), the Editorial Board of UK-based Trusts & Trustees, Consulting Editor of the International Offshore and Financial Centres Handbook and of the Offshore Institute Membership Directory and Analysis (1996 – 2000). Mr. Engel founded and served as the Consulting Editor of Shore to Shore, an offshore industry magazine published calendar-quarterly by Highbury House Communications PLC, London.

Mr. Engel graduated with honors from the University of California, Hastings College of the Law in 1979. He is a member of the International, the American and the Colorado Bar Associations, and is admitted to practice before the Colorado State and District Courts and the U.S. Tax Court.

Website: www.engelreiman.com


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