Following a recent settlement with Commerzbank AG in which the bank paid more than a billion dollars in penalties and fines, the Assistant Attorney General stated: “Financial institutions must heed this message:  banks that operate in the United States must comply with our laws, and banks that ignore the warnings of those charged with compliance will pay a very steep price.”

U.S. citizens must report all income to the United States, even if that income is kept in accounts outside of the country. Anyone who has an offshore account is required to file an annual Foreign Bank Account Report (FBAR) to alert the treasury department to the fact that the account exists at a foreign bank.  If income is earned on offshore investments, taxes must be paid on it. 

The IRS rewards whistleblowers who come forward and report attempts to evade taxes.  One whistleblower received a record amount of money for reporting on the activities of UBS AG in facilitating tax evasion. That whistleblower is now assisting France with its own investigation into UBS and the testimony he provides is expected to significantly increase pressure on the bank.

Wegelin & Co. was indicted in 2012, along with three of its client advisors, Urs Frei, Michael Berlinka, and Roger Keller. Recently, in February of 2015, the U.S. government filed a superseding indictment. Wegelin & Co. was removed from the indictment because the bank has pled guilty, paid $74 million in fines and ceased operations.  Additionally, charges were limited against Keller, who has been arrested in Germany and is awaiting extradition. No change was made to the charges against the other two client advisors.

Authorities are already convinced of the need to aggressively go after investors who may be hiding money offshore in order to avoid full compliance with tax obligations.  Estimates indicate that around $7.6 trillion in wealth is held in offshore accounts, depriving governments worldwide of around $200 billion in unpaid income tax revenue.