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Bank Aided Tax Evasion
Bank of N.T. Butterfield & Son Limited (“BUTTERFIELD”) a Bermudian bank, has been caught aiding U.S. taxpayers in evading their federal income taxes. According to a non-prosecution agreement (“NPA”) reached with the U.S. Attorney’s Office for the Southern District of New York, BUTTERFIELD assisted U.S. taxpayer-clients in opening and maintaining undeclared foreign bank accounts from 2001 through 2013.
As part of the agreement, BUTTERFIELD will pay $5.6 million to the United States for its role in the tax evasion scheme. The NPA was based on BUTTERFIELD’s cooperation, including its efforts in providing 386 client files for non-compliant U.S. taxpayer-clients, and provides that BUTTERFIELD will not be criminally prosecuted. The NPA requires BUTTERFIELD to forfeit $4.896 million to the United States, representing certain fees that it earned by assisting its U.S. taxpayer-clients in opening and maintaining these undeclared accounts, and to pay $704,000 in restitution to the IRS, representing the approximate unpaid taxes arising from the tax evasion by BUTTERFIELD’s U.S. taxpayer-clients.
According to Manhattan U.S. Attorney Audrey Strauss, BUTTERFIELD admits to helping its clients conceal their ownership of foreign bank accounts to avoid their U.S. tax obligations. The bank allowed its U.S. clients to use sham entities that assisted those U.S. clients in funneling money between U.S.- and Cayman Islands-based accounts.
Acting Deputy Assistant Attorney General Stuart M. Goldberg stated that as part of the resolution announced today, BUTTERFIELD has facilitated the production of approximately 386 unredacted client files. Taxpayers contemplating hiding money offshore and those who would facilitate their fraud should take note – nothing remains hidden forever.
IRS-CI Chief James C. Lee said: “As a result of the successful resolution of this investigation, BUTTERFIELD has agreed to turn over account files relating to U.S. taxpayer-clients who maintained undeclared assets overseas. This agreement marks yet another significant step forward in combating offshore tax evasion. Anyone who is hiding money or assets offshore with the intent of committing tax evasion will be found and prosecuted. It’s not a matter of ‘if,’ it’s a matter of ‘when.’”
The NPA recognizes that, in 2013, BUTTERFIELD implemented a series of remedial measures to stop assisting U.S. taxpayers evading federal income taxes. The NPA further recognizes BUTTERFIELD’s cooperation in the investigation and provides that the bank will not be criminally prosecuted.
The resolution of this matter through a non-prosecution agreement, along with forfeiture and restitution, reflects BUTTERFIELD’s cooperation in our investigation and demonstrates that cooperation, including assistance in providing U.S. taxpayer client files, has tangible benefits. We will continue to pursue financial services firms around the world that help their clients evade U.S. taxes, said Audrey Strauss, Manhattan U.S. Attorney.
Key Facts
- State: New York
- Category: Fraud & Financial Crimes
- Source: DOJ Press Release â†â€â€
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