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Digging deep

by Shawn Cumberbatch

irslogoThe United States government agency responsible for tax collection and related law enforcement thinks American citizens have millions of dollars stashed away in CIBC FirstCaribbean International Bank.

And the Internal Revenue Service, which has received permission from a California court to investigate FCIB via its American correspondent bank partner Wells Fargo plans to probe bank accounts dating back to the end of December eight years ago.

These details have emerged in a declaration from IRS Revenue Agent, Cheryl Kiger, which the IRS and US Justice Department used to get a “John Doe Summons” to probe the Barbados-based bank via Wells Fargo and within the provisions of the controversial Foreign Account Tax Compliance Act.

But an international business lawyer based in Barbados, saying it was clear the FATCA was here to stay, suggested the life of entities in Barbados would be made easier and the island would be on a more even footing with the American authorities if an inter governmental agreement facilitating the reciprocation of information from the US was forged between the US and Barbados.

Kiger, who is assigned as Technical Specialist in the Offshore Compliance Initiatives Programme, said the investigation would cover the period December 31, 2004 to December 31, 2012.

“During the course of my review of data received by the IRS relating to the clients of a large international trust and corporate provider, I discovered information about a US taxpayer, who had opened numerous bank accounts at FCIB and its predecessor Barclays Bank in a Caribbean jurisdiction in his own name and in the names of various shell companies he controlled,” she said in the declaration.

“These FCIB accounts were used, among other things, as conduits for the transfer of tens of millions of dollars in and out of the United States between various financial accounts controlled by (the taxpayer).”

She said this individual “did not report any income arising from the transactions involving these FCIB accounts”, adding that further investigations found at least 129 other individuals like this, and that she personally interviewed six of them.

“The fact that these US taxpayers chose to hold ‘undeclared’ account relationships with FCIB and other banks provides a reasonable basis to believe that the members of the ‘John Doe’ class have failed to comply with the internal revenue laws,” Kiger alleged.

In an analysis on the issue released this week, lawyer Dustin D.P. Delany, head of Barbados-based Delany & Associaties Attorneys at Law said the initiative the Central Bank of Barbados had taken on the matter was good for Barbados.

“The Central Bank is acutely aware of the importance†of ensuring Barbados’ FATCA compliance… Fortunately, Barbados†already has in place a platform for the exchange of tax information by virtue of the tax treaty between the two†nations,” he noted.

“Moreover, the Central Bank’s ardent approach to FATCA compliance is consistent with Barbados’†reputation as a transparent offshore jurisdiction. Be reminded that Barbados was the only English speaking†Caribbean country listed on the OECD’s original white list.”

FCIB in Barbados has already said it intended to cooperate with the investigations.

“We are committed to complying with all laws and regularly 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,” it said.

One Response to Digging deep

  1. Professor Gilbert NMO Morris May 17, 2013 at 8:50 am

    It is inconceivable that neither lawyers nor government has given consideration to the constitutional implications of FATCA. Talk of “compliance” of one constitutional democracy to the rules of another, means neither are democracies in spirit or operations. One needs not be naive: powerful nations will tend to have their way. But for a start, officials in small nations ought not go about talking about compliance with another country’s rules.

    Professor Gilbert NMO Morris


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