Bank pays $5.6M in US non-prosecution deal
(CNS): Butterfield Bank has reached a non-prosecution financial deal with the United States Department of Justice to put to bed a long running criminal case regarding past allegations of facilitating tax evasion in the Cayman Islands. The bank has agreed to pay US$5.6 million in taxes and forfeiture to address the allegations relating to the bank’s US clients dating back to 2001 through to 2013, when the issues were reported.
In a press release from the US Attorney’s Office Southern District of New York, prosecutors said the non-prosecution agreement was as a result of the “extraordinary cooperation” from the bank, which had handed over 386 files relating to non-compliant US taxpayer-clients. Attorney Audrey Strauss said the bank had admitted helping its clients conceal their ownership of foreign bank accounts to avoid their US tax obligations.
“Butterfield allowed its US clients to use sham entities that assisted those US clients in funneling money between US- and Cayman Islands-based accounts,” the New York lawyer stated. “The resolution of this matter through a non-prosecution agreement, along with forfeiture and restitution, reflects Butterfield’s cooperation in our investigation and demonstrates that cooperation, including assistance in providing U.S. taxpayer client files, has tangible benefits. We will continue to pursue financial services firms around the world that help their clients evade U.S. taxes.”
Michael Collins, Chairman and Chief Executive Officer of Butterfield, said the bank, which is headquartered in Bermuda, was pleased to resolve what they called a legacy business matter which was reported in 2013, and that the payment had already been accounted for in the bank’s 2015 and 2016 reports.
“Since that time, we have enhanced our compliance controls for business with US clients and the total payment has been provisioned. Moving forward, we remain focused on delivering for our clients and our stakeholders,” he added.
As part of the deal the bank has admitted various facts concerning wrongful conduct and the remedial measures that it took. According to the DoJ, Butterfield admitted that it knew or should have known that taxpayers were using their accounts to evade their US tax obligations and had helped its US clients conceal beneficial ownership of undeclared assets from the IRS that were held by sham entities – structures that had no legitimate business purpose – to conceal the identities of the true account owners.
The agreement requires the bank to continue to cooperate with the United States for at least three years. But it also notes that after the issues came to light in 2013 the bank began implementing a series of remedial measures to stop assisting US taxpayers in evading federal income taxes. The $5.6 million deal represents almost $4.9 million in gross revenues from services that it provided to the US taxpayers with undeclared foreign bank accounts.
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Category: Banking & money, Business
Why does everyone deny the facts? The only reason people bank offshore is to evade taxes. Just because locals call it “tax avoidance” does not mean it is recognized as such overseas. Any tax avoidance that relies on secrecy is tax evasion.
What secrecy? What are you babbling about? Most of us bank offshore because we live offshore you halfwit.
Tax evaders make the cayman islands look bad and like Kevin hart said we are known for “tax evasion”…
They should have been fined by the local authorities as well for such a shameful act after Cayman has been trying so hard to get away from the negative sigma of money laundering and tax evasion. That Bank is very unethical in so many ways, including the way they treat their staff and customers! CIMA really needs to deal with them. They also charge the highest services fees and now their new online banking sucks too!
Yes, the “new” online banking from 2009. Still, name a better lock bank. I’ll wait…
Accountability is the word for 2021.
We need to properly police and hold all of these gamblers’ feet to the fire at full strength. Dubious foreign and local special interests need to be stopped and frisked on a regular basis to prevent all of this from happening in the first place.
Giving into their wishes of relaxing standards have only made existing problems more complex to solve, created additional novel ones to wrestle, and paved the path for their ulterior motives to thrive. Meanwhile, they wave magic wands of threats to leave, pushing their weight around, and using every financial overleveraging tactic in the book to do as they please. No one (including CIG or UK-ordained regulatory authorities) is even allowed to ask why, sufficiently investigate, or prosecute any bad actors hiding behind the same entities used to hold the people of this territory hostage to the demands of special interests and their slaves.
Dubious special interests have been excommunicated from and ostracised in their homelands for similar behaviour and attitudes. Why should we be the ones to give any one of them safe harbour to inflict the same or greater destruction on us?
Many of those special interests who have recently set up shop here have only become more sinister in their greed schemes, including strategically planted eyes and ears in the majority of the influential and decision-making organisations in Cayman, including the top levels of CIG!!!
Both locals who have treasonously sold out their country and indifferent foreigners chasing the illusions of endless riches promised for their time on the hamster wheel are incentivised to look the other way, live on Cloud 9, and carve paths for the dirty deeds and narcissistic rackeetering of their slavemasters, all unbeknowst to themselves.
The jig is up and the buck needs to stop here. Time for an active and retroactive cleanup. Not a single one shall be missed!
Distinguishing between dirty money, non-laundered funds, and honest riches will make all the difference on whether Cayman’s financial pillar stands or falls into the Caribbean Sea. AML and KYC global regulations now established by major nation consortiums will mean we will return to good company.
However, that is a collective and unanimous choice that needs to be consistently made by all current and prospective beneficiaries, both from local and foreign origins.
We cannot have nice things if everyone involved is not committed to sustain and care to make them possible for living and future generations.
Craziest rant ever!!! WTF?!
These guys really ahve it figured out. create a company, commit crimes that net you hundreds of millions in profit, pay a 1% fine IF you get caught and the company foots the bill. you never see the inside of a jail cell. genius!
What a stupid comment
Yep, the Uber wealthy buy their way out of jail. Happens all the time in our awesome corporatocracy where politicians and their bureau chiefs are all paid for or otherwise compromised.
Meanwhile, try to take $1500 cash to the bank for a piece of crap car you just sold. They want a DNA sample.
“hundreds of millions”? It literally says right there in the article that they made 4.8 million in gross revenues. Was the article too long to read?
New York prosecutor looking to make a man for themselves. Nothing to see here.
What exactly “came to light in 2013” if “Butterfield admitted that it knew or should have known that taxpayers were using their accounts to evade their US tax obligations”?
What this story is missing is the name or names of the senior bank executives that have been held accountable for this fiasco.
What fiasco? The US have done this to all non US banks around the world where Americans bank. The only “crime” Butterfield is “guilty” of is opening accounts for Americans.
Name The Shell Company? The Shell Is The front Man
A local Cayman bank is no place to be hiding your money these days. You’d be at least as well off in London and the banks there are safer. The key is organizing the right entities in the right places.
Frankly, it should not have been during the date range at issue either. That ship had sailed years (a decade) earlier. Surprised there are no criminal charges yet laid on those senior bank employees who surely signed off on the accounts in that radioactive business line. Why weren’t there SARs, or whistleblowers collecting their 20% of $6mln? Having borne the headline damage, it should be up to Cayman and Bermuda governments to press for white collar criminal charges and sanctions against those individuals. That is, if we are to be taken seriously in this blacklist kabuki.
My guess would be that this involved dual citizens who historically opened accounts with their non-US ID. If I’m right I suspect very little if any tax was owed on most of those accounts either due to the 100k foreign earning exemption.
Passports are required. Passports state your place of birth. If your passport states your place of birth is the US, it is up to you to prove you are no longer a citizen. Butterfield screwed up – they are awful.
Yep I understand, just speculating. Incompetence is not the most glamorous defence but I guess it’s better than malice. Now their USDKYD rate… that is criminal!
Meanwhile the Federal Reserve which isn’t federal nor has any reserves prints billions monthly to keep their ponzi going.
Yeah OK
How could you down vote my comment when it’s a fact.
The Federal Reserve is a private company not pillbox that holds no assets of its own.
The gold is owned by the America people and the currency is just printed from nothing.
Because it’s irrelevant to the topic and little more than a historical hangover that only conspiracy whack jobs and the financially illiterate care about. It’s not like owning stock in any other private company; US commercial banks have to hold stock in their district reserve; the ‘owners’ have no controlling rights at all; any earnings are due only to the US treasury; and the board is entirely selected by congress and considered a Federal agency. Seriously, this has been true for over a hundred years. Just because you only just found it out doesn’t mean it’s some big secret millions of people in financial services have been keeping from you. The truth is out there! LOL
https://www.federalreserve.gov/faqs/about_14986.htm
All wrong. The federal reserve is a government agency. (The regional banks only are structured as corporations with some private features.) The Federal Reserve has a public balance sheet with trillions in assets.The gold is owned by the Treasury. The currency is printed by the Treasury and sold to the Federal Reserve. It is a tiny part of the “money supply” most of which is created by economic activity.
Everything in your comment is exactly wrong.
The USSA is one of only a couple of countries in the world that taxes its citizens globally. It doesn’t matter where you live or where you make your money you are taxed. You get an exemption on wages up to about 100k but then you are taxed on anything above that. You are also taxed on any and all other income as if you live in the U.S.. On top of that if you fail to file the right forms which have nothing to do with taxes owed you can incur fines in the tens of thousands of dollars for each form you didn’t file. Great system. Meanwhile roughly 50% of U.S. citizens don’t pay any federal income tax due to exemptions and various credits.
True.
You can also be a non-USA professional, living anywhere else, assisting a USA person in some professional capacity, and neglect ignorantly to file an IRS form and face five-figure fines, plus professional sanctions. Good times.
Expect continuous increase in bank fees to cover loss.
When will bank fees be regulated?
I had over $25 in fees on a personal account several k in the black. So much for encouraging a cashless (see: less work for the bank) system.
Absolute robbery. I know $25 isn’t a massive amount on its own, but multiply by 12, plus the government stamp duty and you’re looking at $600 a year coming out of your account.
*laughs in crypto*
Oh yeah. No fees there. LOL
$5m doesn’t sound very much at all in the context of US fines so I’m guessing this was very small scale stuff. A tax free dollar says it was Caymanians not declaring US citizenship despite being born there and little to no taxes were owed?
Many foreign banks have been fined in the billions for infractions, this is a drop in the Caribbean.
HSBC hiding money for cartels some years ago, then Butterfield takes over accounts from the closed bank. Meanwhile they were hiding money for US Citizens here in Cayman. Who knew? Karma really is a biatch!
You have a problem with US tax.. give up your citizenship, we won’t miss you.. believe that!
Easier said than done!
Firstly renouncing citizenship doesn’t make your US tax problems go away and in most cases is likely to produce more problems, so that is really stupid advice. Secondly, the egregious amount ‘you’ tax to renounce citizenship would suggest you really do miss them. A lot.
3:59 Once you renounce you’ll pay tax on your worldwide income for that year including whatever gains you have unloading assets. How could you be taxed moving forward on income earned outside the us? Only if you’re dumb enough to meet the “substantial presents” test. You’re a stupid islander so that’s very likely.
1. They didn’t say you would be taxed “moving forward”. They said trying to renounce citizenship to make problems with US taxes go away is likely to create more problems; it will because you will then have to pay the exit tax that for most wealthy people will dwarf their income tax. Try reading what is actually written.
2. “Substantial presents” test? Is that like when someone gives you a car, or did you mean presence?
So what have we learned? That you can’t read very well, that you can’t write very well, that you know very little about taxes and that we’re stupid islanders. Well done.
9:58 – Is that how pathetic your life is? You write a paragraph because you caught a typo that someone made while typing on a mobile phone. Tell us a little more about yourself. You flipping moron!
Dumb, stupid and now moron… aren’t you a pleasant little individual. Yet all along they have been right and you wrong. Time to crawl back under your little bridge, fool.
7:04 Go chase iguanas and make some coconut leaf hats for those American tourists that will be arriving soon. Make sure it’s all clean!
wtf are you talking about? You and the other fools are the lost ones. Make sure that uk territory is clean and hospitable for us Americans!
Presence. Fool.
You must have perfect autocorrect and a big screen with no glare. These comments about people’s’ thumb typing errors are tiresome.
It comes as no surprise that you blame autocorrect for your own incompetence. Maybe next time you call people you don’t know dumb and stupid, you should stop and think before making a fool out of yourself again.
Weird reply. I didn’t call anyone anything. It seems to be your thing.
1:56 I’m loving your victory lap on discovering a little typo. Way to take it and run. You don’t win much in your life, eh? HAHAHAHA
It takes 10 years. You declare and then continue filing and paying for 10 years before you are no longer liable.
This law was put in place because of Kenneth Dart.
Don’t believe me? Google it. This is a fact.
Yeah. Ole Ken is a real tax-evasion stalwart.
Actually, no. If you are tax compliant when you renounce, you are off the hook. Now you do pay a 25% exit tax when you leave – based on your total net worth at the time. BUT there is a big exemption that most Caymanians can use to escape that. So all you pay is the $2400 filing fee…
KNOW YOUR FACTS.
25% tax on your total financial assets is not nothing. Better to just die and give your heirs a stepped up basis.
Duh. You can avoid the 25% if smart…
That was the old method. It’s now changed. An assessment over whether are doing it for tax reasons or not based on a net worth and average tax liability over the last 5 years. If you meet one of those thresholds, you’re deemed to be doing it for tax reasons which will have ramifications if you have US citizen relatives who may end up receiving your assets when you pass – ie taxed at the great of gift or estate tax. Ouch. Also there is a one time tax based on the unrealized gains (above a certain amount) of your assets on the date of exit. Once done, you thankfully don’t have to look back and have no ongoing filings.
But you can avoid the one time exit tax under very protected (by them) conditions…. Saved me loads…. And now I look back and they cannot touch me…
You aid and abet wrongdoing on the USA and you will pay the price! How many times will it take before the financial services tax scam industry will learn? Scammers have to be lucky everyday, but when that luck slips… they will pay dearly..
5 million is hardly paying the price. Lol
2:02 Then keep it going so the next penalty hits the billions like it did with HSBC. The US will bankrupt you. Go ahead and kick the sleeping lion… watch what happens.
Dude, can you read what is being relayed with the date range, dollar value, compliance changes, and cooperation agreement. This is historical peanuts. Even CNB’s was bigger. The only part of this that is remarkable is how it’s taken so long to reach settlement.
Small potatoes on back burner.
OH – is this what that irritating $2 charge on all current and savings accounts EVERY month, is for?
They call it a compliance fee lmfao
No this is likely what caused it. Now all the ongoing compliance caused a fee.
goons
The fine is pocket change when you consider how much the bank has raked in from charging it’s customers monitoring fees on every account. Monitoring for illegal activity, isn’t that CIMA’s job? The customers need not be subjected to this extortion to.
so butterfield’s bank fees will be going up again….???
welcome to wonderland.
They booked this charge years ago. If they raise fees, it’ll be for other reasons.
it was only ‘finacial services’!!!!