Opening a new front in the U.S. crackdown on offshore tax evasion, federal investigators this week won court approval for a summons that will force a Caribbean bank to turn over account data for wealthy American clients.
Investigators planned to serve the summons on Wells Fargo, the San Francisco-based bank that maintains correspondent accounts for CIBC FirstCaribbean International Bank. FCIB is a Barbados-based bank with 18 branches in the Caribbean but no operations in the U.S.
The Justice Department said a federal court in San Francisco on Monday approved the summons, which requests account data for Americans who had FCIB accounts from 2004 through 2012.
"The IRS has launched a compliance initiative to investigate U.S. taxpayers" with FCIB accounts "who have not been or may not be complying with U.S. internal revenue laws requiring the reporting of foreign financial accounts and income earned on those accounts," wrote Justice Dept. attorney Jeremy Hendon in an Apr. 29 petition seeking the summons.
FCIB is the latest of several overseas banks served with similar information demands as part of the continuing Justice Dept. and IRS effort to identify federal tax dodgers who have assets and income hidden offshore. Swiss banking giant UBS and London-headquartered HSBC are among banks previously targeted.
"Our work here shows our resolve to pursue these cases in all parts of the world, regardless of whether the person hiding money overseas chooses a bank with no offices on U.S. soil," acting IRS Commissioner Steven Miller said of the latest petition.
FCIB spokeswoman Debra King said the bank is "committed to complying with all laws and regulatory requirements. We are working with Wells Fargo, our correspondent bank, to understand the nature of the order. It is our intention to cooperate with authorities in accordance with the respective laws of all jurisdictions involved."
The Caribbean bank was used by at least 129 Americans who voluntarily disclosed previously secret foreign accounts in response to IRS leniency programs, according to a federal court declaration IRS revenue agent Cheryl Kiger filed Apr. 29.
A review of the disclosures found that all involved "taxpayers failed to report income related to undisclosed accounts at FCIB and its predecessors," wrote Kiger.
Among them was the owner of a U.S.-based taxi company who controlled an FCIB account through a Cayman Islands shell corporation that concealed the identity of the true account owner. Kiger, who cited that example in her court declaration, also wrote that FCIB allegedly had been the offshore bank for several Americans suspected or accused of tax evasion or of hiding proceeds of other alleged crimes.