By Hayden Boyce, Editor-in-Chief From T&C Sun

A revenue agent from the United States of America’s Internal Revenue Service (IRS) says she has uncovered evidence that the CIBC FCIB branch in the Turks and Caicos Islands was one of many in the Caribbean used by wealthy American citizens to hide money.

In documents filed in the United States District Court for the Northern District of California, San Francisco Division, Cheryl Kiger, said that during her investigation she interviewed a wealthy American taxpayer who controlled three different business accounts and one personal account at CIBC FCIB in the Turks and Caicos Islands.

She stated: “Some of those deposits to those accounts represented income earned for advisory services provided to third parties. He failed to report this income on his US income tax returns until he made his voluntary disclosure in 2009.”

In April this year, Senior District Judge Thelton E. Henderson authorized the IRS to serve a so-called “John Doe” summons on San Francisco-based financial services firm Wells Fargo & Co, according to the Justice Department. The summons enabled federal tax authorities to identify taxpayers who hold or held interests in financial accounts at Canadian Imperial Bank of Commerce FirstCaribbean International Bank (FCIB) and other financial institutions that used FCIB’s Wells Fargo correspondent account from January 1, 2004, through December 31, 2012. A John Doe summons is used by the IRS to obtain information about possible violations of Internal Revenue laws by individuals whose identities are unknown.

Kiger said the IRS has long been concerned with the problem of United States tax payers, whether involved in lawful or unlawful activities, evading their United States tax obligations by concealing unreported taxable income in accounts in offshore tax havens or financial secrecy jurisdictions.

The IRS agent said she also discovered information about a U.S 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. These FCIB accounts were used, among things, as conduits for the transfer of tens of millions of dollars in and out of the United States between various financial accounts he controlled.

Kiger said she also interviewed a US taxpayer who was the owner of a U.S taxicab company and was also beneficial owner of a Cayman Islands shell corporation formed on his behalf. This shell corporation was formed by an offshore service provider in the Cayman Islands to hold and invest for any portions of “premiums” paid for offshore insurance that were not used to pay his claims.

The normal owner of the company was another Cayman Islands corporation formed by the offshore service provider to serve in that capacity. The Cayman Islands shell company opened an account at Barclays Bank, which later became FCIB, to hold the funds. The person did not direct signature authority over the FCIB account, but exercised actual authority through the nominal owner of his shell company, which followed his instructions with regard to the account. Although he was the beneficial owner of the FCIB account, his name appeared nowhere on the documents related to the account, his shell company, or its nominal owner.

She also interviewed another American who has an active business in the British Virgin Islands (BVI). In addition to business bank accounts that had previously been opened at FCIB for his business by an agent, he and his wife opened personal accounts at FCIB in 2006, at which they maintained certificates of deposit. The certificates of deposit and their earnings were not reported on their U.S income tax returns until he made his voluntary disclosure in 2009.

The IRS also discovered a U.S permanent resident employed by a consulting firm in the United States, who, in 2006, used a Bahamian law firm to set up a Bahamian corporation to hold a bank account to receive commissions for consulting services performed for third parties without the knowledge if his employer. The law firm refereed him to FCIB to open the account. When he opened the account, he was told by an FCIB employee that no bank information would be given to the United States without a legal request. He used wire transfers to move funds in and out of the account. He failed to report any of the commissions that were deposited into the FCIB account on his U.S income tax returns until he made his voluntary disclosure in 2009.

Kiger said the experience of the IRS has shown that not only private banking relationships can be used to conceal ownership of funds from taxing authorities and others. Taxpayers making voluntary disclosures under the IRS’s recent offshore voluntary disclosure initiatives have reported the use of undisclosed bank accounts in over 600 banks or branches of banks in jurisdictions around the world. Many of these offshore accounts were held through shell companies and trusts that employed other practices to conceal beneficial ownership information.

The investigations are continuing.

For more on this story go to:

http://suntci.com/cibc-fcib-turks-and-caicos-islands-named-in-irs-investigation-p1049-108.htm