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from Financial Regulatory Forum:

Some U.S. banks awash in ID theft tax-fraud proceeds as IRS cracks down

By Brett Wolf

NEW YORK, Feb. 3 (Thomson Reuters Accelus) - Despite a new federal crackdown announced this week aimed at combating tax refund fraud involving the use of stolen identities, current law enforcement efforts are not enough and fraudsters are still pumping massive sums of tax fraud proceeds through U.S. banks, sources told Thomson Reuters.

"IRS and Justice should have been doing this three years ago. This widespread criminal activity is more profitable than drug dealing," said regulatory consultant and investigator Jim Dowling, a former Internal Revenue Service criminal investigator special agent who also acted as an anti-money laundering (AML) advisor to the Office of National Drug Control Policy. The Internal Revenue Service this week said that in late January it worked with the Justice Department's Tax Division and U.S. Attorneys' offices across the country to target more than 100 people in 23 states suspected of involvement in the theft of thousands of identities and taxpayer refunds. The resulting indictments, arrests and raids were reportedly the result of investigations that had been underway for months or years.

Identity-theft tax fraud schemes typically involve using an unwitting victim's name, social security number and date of birth to file an online tax return in his or her name and routing the resulting IRS refund payment to an untraceable bank account. The IRS says it has stepped-up its internal reviews, including by designing new identity-theft-screening filters, to spot such scams before refunds are issued.

IRS Bank Secrecy Act compliance examiners and criminal investigators have also reportedly paid hundreds of visits to check-cashing businesses of late "to help ensure these check-cashing facilities aren't facilitating refund fraud and identity theft." The visits took place in nine "high-risk" areas in and around Atlanta, Chicago, Los Angeles, Miami, New York, Phoenix, Tampa, Washington, D.C., and Birmingham, Alabama, according to the IRS.

"This unprecedented effort against identity theft sends a strong, unmistakable message to anyone considering participating in a refund fraud scheme this tax season,” said IRS Commissioner Doug Shulman. "We are aggressively pursuing cases … and people will be going to jail."

"Too little, too late"

from India Insight:

India can now follow the black money

Indians love many things about Switzerland: chocolates, watches, Bollywood movie locales and secret bank accounts.

Until now.

India and Switzerland on Monday signed a pact amending the existing double taxation avoidance agreement, that will make it easier for New Delhi to gain access to information on suspect bank accounts, possibly paving the way to recovering billions of dollars in undeclared wealth.

It is anyone's guess just how much money is stashed away in secure vaults in the scenic Alps.

The main opposition Bharatiya Janata Party, which made repatriating "black money" one of its election promises last year, estimates there may be some 25,000 trillion rupees, or roughly half India's GDP of $1 trillion, in secret Swiss accounts.

Other estimates are even higher.

A report from Global Financial Integrity last year said $23-$27 billion in illicit money left India every year in the period 2002-06; some of it to offshore financial centres, and the rest to tax havens and traditional banks including big Swiss banks.

from Financial Regulatory Forum:

UBS won’t sue its former executives on subprime, U.S. tax

By Emma Thomasson

ZURICH, Dec 15 (Reuters) - UBS AG will not sue its former bosses after risky bets on subprime mortgages and a strategy of helping U.S. clients dodge taxes by hiding money in secret accounts brought the Swiss bank to its knees.

Zurich state prosecutors also said they would not open criminal proceedings against UBS employees as there was no evidence of a breach of Swiss law.

UBS said bringing charges would only draw negative attention as the wealth management group seeks a fresh start to win back trust after massive withdrawals by rich clients.

"The board has decided that years of uncertainty about these matters due to litigation ... and related negative attention from such action is not in the interest of UBS, its employees, clients and shareholders," the group said in a statement.

UBS said the board had decided not to take action after a thorough review, including consultation with external legal experts. It said its new management led by banking veteran Oswald Gruebel had taken "comprehensive and profound measures to ensure that nothing like this should ever happen again."

UBS shares were up 1.33 percent at 16.04 Swiss francs at 1401 GMT, against a 1.3 percent weaker DJ Stoxx European banks index.

from Financial Regulatory Forum:

Swiss authorities investigate bribery accusation in UBS tax case

By Oliver Hirt and Sven Egenter ZURICH, July 29 (Reuters) - Swiss prosecutors said on Wednesday they are investigating allegations that an unnamed high-ranking Swiss official took a bribe from a U.S. client of UBS to help cover up tax fraud.

Federal prosecutors said in a statement the tax authority had filed charges against unknown persons which it was now investigating, without giving further details.

A U.S. client of the Swiss bank, which is at the centre of a U.S. tax fraud case, pleaded guilty on Tuesday to using Swiss bank accounts to hide money from the U.S. taxman and said he paid a Swiss official $45,000 to help cover up the fraud.

Swiss Finance Minister Hans-Rudolf Merz, who also holds the country's rotating presidency, said the investigation should help clear up whether the allegations were "rumour or reality".

"We don't believe that this has happened but the testimony is so serious that we immediately got the law involved and we will let this be cleared up by the judiciary," Merz told Swiss television.

Corruption is virtually unheard of in Switzerland, which is ranked as one of the five least corrupt countries in the world by Transparency International.