U.S. Continues to Turn Up the Heat on Offshore Tax Evaders


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Senate Votes to Include Offshore Transfers to Avoid Tax in Money Laundering Criminal Statute

On Tuesday the Senate passed the Fraud Enforcement and Recovery Act of 2009 (S. 386). The bill makes several amendments to the International Money Laudering Statute, including one which places steep criminal penalties on transfers of money offshore for the purpose of evading federal income tax or committing tax fraud.

Violators of the criminal statute would face a fine of up to $500,000 or twice the value of the funds transferred (whichever is greater), or imprisonment for up to twenty years, or both. The Internal Revenue Code already provides for criminal penalties for tax evasion but the penalties are much lower (a maximum fine of $100,000 and imprisonment for up to five years).

The House has its own version of the money laundering legislation, the Fight Fraud Act of 2009 (H.R. 1748), which has been approved by the House Judiciary Committee. It does not contain the tax provision.

DOJ and IRS Get First Conviction in UBS Investigation

On April 14, the Department of Justice and the Internal Revenue Service made a joint announcement that a Florida yacht broker has pled guilty to tax charges related to the UBS scandal. The Swiss banking giant agreed in February to provide the names of several hundred U.S. clients and pay $780 million in penalties as part of a deferred prosecution agreement with the federal government. The yacht broker, Robert Moran, used a Panamanian corporation to open secret UBS accounts and conceal more than $3 million in assets. Under the plea agreement, Moran pled guilty to one count of filing a false return and the court may impose a maximum three-year prision term and a fine of up to $250,000.

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