Igor S. Drabkin, J.D., Former IRS Attorney

The U.S. government expects to investigate thousands more cases of wealthy individuals dodging taxes through offshore bank accounts, in addition to the high profile and highly publicized case against UBS AG. It appears that in addition to probing the Swiss and Caribbean bank accounts, the U.S. may be looking at the Asian banks as well.

“We expect over the next couple of years, in addition to the UBS cases, to have somewhere between 4,000 and 7,000 more cases coming to us.  These are from banks and governments cooperating,” said Kevin Downing, a senior tax attorney of the U.S. Department of Justice, in a lecture in Singapore.  Some private banking clients are choosing to take cash from Swiss accounts and carry it by hand back to the United States, to avoid an electronic trail, only to be caught by U.S. law enforcement officers and penalized for tax evasion and illegal smuggling of money into the country, Downing said. “When they go in and close their accounts, they are picking up brand new $100 bills … that are coming in $100,000 shrink-wrapped bundles. Guess what? We can trace that money,” he said, adding such cash would be forfeited.

Downing and a U.S. Justice Department team visited Singapore  in a tour of Asian cities, also including Hong Kong, Beijing and Shanghai.  The tour featured meetings with financial and tax regulatory bodies and bankers discussing cross-border tax prosecutions.  Downing said that since the start of the U.S. crackdown on tax evasion, money has moved from the Caribbean to Switzerland and Asia.  Downing declined to say whether the Justice Department was investigating any other foreign banks.  About 15,000 Americans with offshore accounts came clean under an amnesty program last year, giving them reduced penalties and a chance to avoid criminal prosecution while giving authorities a trove of information to assist their hunt. “We now have the ability to go back through with voluntary disclosures and really target the banks with witnesses and evidence that’s right in the United States,” Downing said.