IRS/DOJ Summons Seeks to Break Singapore Bank Secrecy on Non-Resident’s Account
In late February 2016, the Justice Department filed an action in federal court to compel UBS’s branch in Miami to produce bank records of a Singapore account purportedly owned by a taxpayer who lives in China and is under IRS audit. With a tactic not used in several years, this heralds the opening of a new front in the U.S. enforcement effort against unreported foreign assets. Much of the activity in the last eight years has been aimed at Switzerland, where the U.S. can declare victory.
The Miami summons action reflects that the government will pursue money transferred out of Switzerland, particularly into Singapore, and that the IRS and DOJ have additional ways to overcome foreign bank secrecy laws, whether or not the taxpayer under scrutiny lives in the U.S. The new case, United States v. UBS AG (S.D.Fla.), seeks to enforce a “Bank of Nova Scotia” summons, a summons type named after an important 1982 appellate decision, where a court compelled the Miami branch of Scotiabank to produce records from the Bank’s Cayman branch notwithstanding Cayman secrecy laws. The Bank complied; had it not, the court could have imposed substantial fines on the Miami bank until the Cayman records were delivered to the IRS.
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