Will Miami bankers have to worry soon about their foreign clients’ tax bills abroad?
That certainly seemed to be the shared opinion of a panel of banking regulation experts, including two officials from the U.S. Securities and Exchange Commission, who spoke about tax compliance and money laundering at a conference Tuesday.
Speaking at a wealth management forum sponsored by the Florida International Bankers Association, banker John Ryan suggested attorneys and investment advisers involved in managing money for overseas clients should pay close attention to international guidelines adding criminal sanctions for institutions facilitating foreign tax evasion, according to an article published in the Daily Business Review.
In particular, Ryan said the banking world should take note of the Financial Action Task Force of the nongovernmental Organisation for Economic Cooperation and Development, which in February 2012 recommended “countries apply the crime of money laundering to all serious offenses, with a view to including the widest range of predicate offenses.”
In layman’s terms, the recommendations treat international tax evasion as money laundering, which financial institutions have a responsibility to prevent and report, says the Daily Business Review.
“The question really today is what this new OECD standard could be,” said Ryan, president of Geneva-based CISA Trust Co.
Lourdes Gonzalez, associate chief counsel in the SEC‘s division of market regulation, agreed with Ryan, saying that while the OECD recommendations have not been formally adopted, they “influence how U.S. law develops in the anti-money laundering area.”
Ryan reiterated the adoption of the recommendations would be a sea change for the way money managers deal with their foreign clients.
“Not so long ago when a client came to New York or Miami and created an account, very little was taken into account as to what their tax situation was back home,” he said. “If the OECD regulations are adopted here in the U.S., many of these assets will be visible to authorities back home.”
Enforcement of cross-border tax evasion has evolved rapidly in recent years. In the U.S., the Obama administration has pressed for disclosure of offshore tax havens and implementation of the Foreign Account Tax Compliance Law.
The 2010 law forces foreign banks to dig deeper into their records to report any U.S. beneficiaries who might be using foreign banks to shelter themselves from U.S. taxes. The law took effect earlier this year and has prompted other countries to demand “some reciprocity but certainly not symmetry,” Ryan said.
Also on the panel was Eric Bustillo, director of the SEC’s regional office in Miami. He said his agency is increasingly focused on stemming possible fraud in the EB-5 visas-for-bucks investment program.
Miami recently became a regional investment center that allows city government to facilitate investment initiatives under the program.
“The message that we want to get out there is that investors have to be very careful before investing in one of these,” Bustillo said.
This article has previously appeared on Funds Society.