Canadian bank indicates commitment to comply with IRS request

June 04, 2013 2:14 PM
TORONTO - A leading Canadian bank says it is committed to complying with the United States Internal Revenue Service’s (IRS) request for information about US taxpayers who may hold offshore accounts at a Caribbean bank.
 
Last month, the IRS filed a “John Doe” summons  requesting information on an unknown number of unnamed people against US taxpayers with offshore accounts at the Barbados-based FirstCaribbean International Bank (FCIB), who it suspects of having used accounts with the bank as parts of efforts to illegally evade US tax. FCIB has branches in 18 Caribbean countries.
 
The Toronto-headquartered Canadian Imperial Bank of Commerce (CIBC) has a majority stake in FCIB.
 
“We are committed to complying with all laws and regulatory requirements,” said CIBC in a statement.
 
“We are working with Wells Fargo, our correspondent bank, to understand the nature of the order. It is our intention to co-operate with authorities in accordance with the respective laws of all jurisdictions involved,” the statement added.
 
FCIB was formed in 2002 from the merger of Barclays' banking operations in the Caribbean and those of CIBC.
 
Barclays said it maintained a large shareholding in the resultant company of more than 40 per cent until December 2006, when it sold the stake.
 
The IRS request for information extends back to 2004, during the period of Barclays' co-ownership of FCIB, and also details some activity directly involving Barclays branches in the Caribbean before the formation of FCIB.
 
A witness statement filed in support of the summons by IRS agent Cheryl Kiger details how, during her investigation into a leak of offshore data, she came across information suggesting FCIB and Barclays accounts may have been used by tax evaders.
 
“I discovered information about a US taxpayer (Taxpayer 1) 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,” Kiger wrote.
 
The summons uses the fact that the US bank, Wells Fargo, maintained “correspondent” accounts to access its offshore accounts from within the United States as part of the basis for its claim.
 
The summons is seeking information on customers of FCIB or its predecessors who may have avoided US tax.
 
It makes no application for information on the activities of the banks themselves, and nor does it suggest the banks had any intention of supporting, or direct knowledge of, such activities by their customers.
 
However, the summons detail how such private banking arrangements, and the use of  “correspondent” accounts to allow easy access to such funds, help facilitate such potential tax evasion.
 
Steven T. Miller, the IRS Acting Commissioner, said the summons “mark another milestone in international tax enforcement.
 
“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 US soil,” he said.
 
(Caribbean News)
 
FirstCaribbean International Bank also has branch offices on Curacao and Sint Maarten.

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