Money laundering happens in a variety of situations and in all different kinds of businesses. Basically, money laundering is the act of concealing illegally obtained money through actions designed to disguise the money’s origins by creating a false trail that seems to indicate it is the result of legitimate enterprise.

The Department of Justice Tax Division has been aggressively cracking down on those who evade their tax obligations. One of the DOJ's main focuses has revolved around identifying people who fail to declare offshore funds.  U.S. authorities have been making deals with banks to obtain information on accountholders and have created amnesty programs with the goal of getting certain violators to come forward and report previously undeclared offshore accounts in exchange for reduced penalties and avoiding criminal charges.

From 2005 to 2013, a company called Sovereign Management & Legal LTD (Sovereign) reportedly helped U.S. citizens perpetrate and carry out schemes to defraud the government of income tax revenue.  The Internal Revenue Service, as well as local prosecuting authorities, are trying very hard to find out exactly which U.S. taxpayers may have sought help from Sovereign and taken steps to hide assets and income. 

If you have an account offshore, the Report of Foreign Bank Account and Financial Accounts Report (FBAR) must be filed each year with the Internal Revenue Service to declare the account. If you have failed to file your FBAR and have not disclosed your foreign accounts, you could face penalties. You may be fined and even prosecuted for felony tax evasion and potentially sent to jail.

The IRS Offshore Voluntary Disclosure Program (OVDP) allows taxpayers the opportunity to come forward and disclose offshore accounts that they may not have previously reported to the Internal Revenue Service as required.  Those who come forward may avoid criminal prosecution and avoid the harsh penalties that they could otherwise face if the government discovers the account before a disclosure is made.