Liberty and justice for all United States persons abroad

The Isaac Brock Society

CIBC and Wells Fargo Banks investigation by US Department of Justice through “John Doe” Summons

Posted on by Posted in Issues regarding US persons abroad 10 Comments

US Department of Justice News Release, April 30, 2013

Also, Globe and Mail: Justice Dept. targets U.S. accounts at CIBC’s Caribbean wing

It looks like US folks were opening a Wells Fargo account that would then be directed to one of CIBC’s offshore affiliates.

Could be very reasonable reasons for doing this. Perhaps not. All will be mixed in the same pot.

The Justice Department announced that late yesterday a federal court in San Francisco entered an order authorizing the Internal Revenue Service (IRS) to serve a John Doe summons seeking information about U.S. taxpayers who may hold offshore accounts at Canadian Imperial Bank of Commerce FirstCaribbean International Bank (FCIB). The order was signed by Senior District Judge Thelton E. Henderson. The IRS summons seeks records of FCIB’s United States correspondent account at Wells Fargo N.A., which will allow the IRS to identify U.S. taxpayers who hold or held interests in financial accounts at FCIB and other financial institutions that used FCIB’s Wells Fargo correspondent account.

Pursuant to a petition filed by the United States, the Court granted the IRS permission to serve what is known as a “John Doe” summons on Wells Fargo. The IRS uses John Doe summonses to obtain information about possible violations of internal revenue laws by individuals whose identities are unknown. This John Doe summons directs Wells Fargo to produce records identifying U.S. taxpayers with accounts at FCIB and other banks that used FCIB’s correspondent account.

According to the declaration of IRS Revenue Agent Cheryl R. Kiger filed in support of the petition, FCIB is based in Barbados and has branches in 18 Caribbean countries. Although FCIB does not have U.S. branches, it maintains a correspondent account in the United States at Wells Fargo Bank N.A. As alleged in Agent Kiger’s declaration, the IRS learned that U.S. taxpayers were using FCIB to help them keep their offshore accounts undetected by the IRS and not to pay U.S. federal income tax on money placed in those offshore accounts. Kiger’s declaration describes her review of the information submitted by more than 120 FCIB customers who participated in the IRS’s Offshore Voluntary Disclosure Program. According to the Kiger declaration, many of the FCIB customers in the John Doe class may have been under-reporting income, evading income taxes, or otherwise violating the internal revenue laws of the United States.

CIBC Wells Fargo

CIBC First Caribbean Interntional Bank

CIBC FirstCaribbean is a major Caribbean bank offering a full range of market-leading financial services in Corporate Banking, Retail Banking, Wealth Management, Credit Cards, Treasury Sales and Trading, and Investment Banking. It is the largest, regionally-listed bank in the English-and Dutch speaking Caribbean. The bank has over 3,400 staff; 69 branches, 22 banking centres, and seven offices in 17 regional markets.
…
CIBC FirstCaribbean is the region’s leading provider of best-in-class banking solutions that can be tailored to the specific needs of our valued clients.

10 thoughts on “CIBC and Wells Fargo Banks investigation by US Department of Justice through “John Doe” Summons”

  1. The IRS is going to be looking for a needle in a haystack with the information they are going to receive. The fact they are bringing this case in this manner is a sign of weakness not strength. Almost impossible to detect US persons outside of the US through this manner of obtaining information. IRS also seems to be acknowledging unlike UBS or Wegelin CIBC in no way violated US law. Key difference.

  2. @Calgary411, Tim

    Do your remember about a year ago when US regulator accused the Royal Bank of Canada of engaging in hundreds of millions of dollars of illegal stock futures trades to gain Canadian tax credits?

    RBC said it will “rigorously defend” itself against the charges.

    Bloomberg found RBC guilty within days of the lawsuit news, but has the US regulator?

    http://www.bloomberg.com/news/2012-04-02/rbc-sued-by-u-s-regulators-over-wash-trades-seeking-tax-benefit.html

  3. Yes, now that you bring it up, I remember. This is the last I could find (November 2012): http://www.theglobeandmail.com/report-on-business/industry-news/the-law-page/court-rejects-rbcs-motion-concerning-wash-trades/article5258169/

    However, a judge overseeing the case refused to grant RBC its wish to remove the new allegations concerning the correspondence. The judge said the evidence, such as e-mails between bank officials, is relevant to the primary allegations in the wash-trading case and cannot be thrown out.

    RBC has decided not to settle with the CFTC over the allegations and is planning to take the matter to court, should the case proceed that far. The case is set for a status conference between the parties on Friday. No hearing date has been set.

    And, Wells Fargo presence in Canada (also November 2012) for whatever that might mean — http://www.theglobeandmail.com/globe-investor/wells-fargo-bolsters-canadian-presence/article4959053/

    U.S. banking giant Wells Fargo & Co. is expanding in Canada, hoping to capitalize on what it sees as pent-up demand for borrowing among companies, particularly those with cross-border and overseas businesses.

    Even as Bank of Canada Governor Mark Carney has fretted in recent months about a so-called “dead money” problem in Canada, in which companies are sitting on massive stockpiles of cash and not investing due to concerns about the economy, Wells Fargo executives believe there is considerable business to be done here.

    The fourth-largest U.S. bank by assets formally announced its Canadian expansion on Tuesday, a move that was telegraphed a month ago when Wells Fargo was granted a licence from federal regulators to operate as a Schedule III bank in Canada. That designation allows Wells Fargo to take deposits and make loans.

  4. @Calgary411
    Thanks for the sleuth work. So RBC won’t settle, sounds like they’re pissed about what they consider to be trumped up charges, claiming earlier that all the trades were properly disclosed and documented and given that the regulator never raised any concerns at the time, “it is absurd to now claim these trades were either fictitious or wash sales.” I wouldn’t put it past our immoral friends to the south to make frivolous claims just to get the settlement money.

  6. @Just Me
    Crikey, does the US really want to send the message that doing business with them is fraught with danger?
    Even if investigations turn up nothing, they’ll be very costly and damaging to the US in terms of how these things are perceived. They seem to be oblivious to the possibility that they may actually scare away legitimate business for the sake of catching an indeterminate number of tax evaders. I guess you don’t really know how many fish you can catch unless you throw out the net, can you?

  7. Yes, and the fishing expeditions are mostly netting mid to low income Americans and extends to homeland Big DATA mining too…

    IRS Data Web Snares Mostly Low- and Middle-Income Taxpayers

    “tax experts who have worked closely with the IRS suggest that its intent seems to be a “gotcha” strategy aimed at trapping tax cheats rather than deterring bad behavior and encouraging compliance.”

    Starting this year, the IRS tools will be able to track all credit card transactions, for starters. The agency has also instructed agents on using online sources such as social media and e-commerce sites including eBay, as well as the rich data generated by mobile devices.

    ….it has told government and industry groups that its computers are capable of scanning multiple networks at the same time to collect “matching” comprehensive profiles for every taxpayer in America. Such profiles will likely include shopping records, travel, social interactions and information not available to the public, such as health records and files from other government investigators, according to IRS documents.”

    So the fishing expeditions extend way beyond these offshore John Doe summons!

  8. US Fed Warns Bank of Montreal on Anti-Money-Laundering Controls

    The Bank of Montreal and its U.S. subsidiary have agreed to beef up efforts to combat money laundering after American authorities found its operations in Chicago lacking.

    The Canadian bank, U.S. Federal Reserve and an Illinois state agency have signed an agreement that gives BMO until late July to submit an acceptable plan for resolving the short-comings.

    Among other things, the document says state and federal authorities identified problems when they examined the bank’s branch in Chicago, where its BMO Harris Bank is based. The Fed said Friday the bank “lacked effective systems of governance and internal controls to adequately oversee” compliance with anti-money laundering rules.

  9. And more rules are coming to heap on top of FATCA….

    EXCLUSIVE: Public face of controversial AML rule-making effort to leave U.S. Treasury Department

    Here comes the side-kick to FATCA , the beneficial ownership regulations… This is as big as FATCA, I would say…

    Once the proposal is published in the Federal Register, there will be another round of public comment to guide officials at Treasury, and its anti-money laundering unit the Financial Crimes Enforcement Network, as they decide whether to issue a final, binding rule, and if so, which requirements will be included.

    The financial services industry is nervously awaiting the release of the proposal, mainly because it is expected to include a provision requiring they determine the true, or “beneficial,” owners of accounts opened in the names of corporations and other legal entities. Many consider this an onerous measure due to the costs associated with time-consuming investigations capable of verifying such information.

    Poncy, who appeared at a series of public meetings Treasury held across the country last year to gather feedback on the issue and pitch its importance and viability to the financial services industry, is widely viewed as one of the government officials most responsible for the regulatory campaign.

    As recently as February, Poncy was still pitching the urgency of the proposal to the banking industry while appearing at an anti-money laundering conference in Miami.

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