US seeks to comb accounts at large Caribbean bank in search for tax cheats

MIAMI – U.S. taxpayers who stashed money in one of the Caribbean’s largest banks without telling the Internal Revenue Service could be in trouble.

The U.S. government has obtained a court order to collect the names of taxpayers who had an account with CIBC FirstCaribbean International Bank over an eight-year period ending Dec. 31 without disclosing it to the IRS.

It is too soon to say how many U.S. citizens held undeclared accounts at FirstCaribbean or what penalties they may face, Justice Department spokeswoman Dena Iverson said Thursday.

The U.S. obtained the order from a judge Tuesday after an IRS revenue agent reviewed information from 129 people who voluntarily came forward to disclose offshore accounts and decided further scrutiny of FirstCaribbean was warranted.

U.S. authorities have issued such blanket subpoenas, known as a “John Doe summons,” to seek out tax cheats in the past, most notably in the case of UBS AG, the largest bank in Switzerland. Iverson said this was the first for a Caribbean bank.

The government’s action should prompt concern for any financial institution in the region with a “willingness to be dishonest,” said David Marchant, owner and editor of the influential OffshoreAlert newsletter based in Miami.

“The United States seems to be going from jurisdiction to jurisdiction with a big broom sweeping up and presumably they are working their way around the globe as it were,” Marchant said. “And it seems to be the Caribbean’s turn.”

CIBC FirstCaribbean, based in Barbados, has 100 branches in in 17 countries in the Caribbean, about 3,400 employees and more than $11.5 billion in assets, according to the company’s 2012 annual report.

A company spokesperson did not respond to requests for comment from The Associated Press. But a FirstCaribbean executive issued a statement to a local newspaper in Barbados, saying the bank was still studying the order but intended to co-operate with U.S. authorities.

FirstCaribbean does not have any branches in the United States but it has what’s known as a correspondent account with Wells Fargo that allowed U.S. citizens to do business with the bank.

In seeking the court order, the IRS revenue agent said in she interviewed six taxpayers, none of whom were identified, who held accounts with FirstCaribbean intended to avoid U.S. taxes.

Among them was the owner of a U.S. corporation with a contract to provide services to a large company in the Caribbean who set up a company in the Dutch Caribbean island of Curacao, which was in turn owned by a trust in which the company owner’s three children would be the beneficiaries. The goal was to avoid estate taxes.

Wells Fargo, based in San Francisco, said in a statement that “We will review the summons and respond as legally required.”