DQ is continuing to see an increased use of undercover agents by
the IRS and other tax authorities in offshore jurisdictions.
The indictment in September 2014 of a Belize corporate service
provider (CSP) and investment management company in the US is
evidence of this trend. In the case US v. Robert Bandfield, et
al. a number of US citizens together with the offshore CSP and
investment company were accused of conspiring with numerous US
citizens to violate securities and tax laws, including evading
reporting obligations under FATCA. According to US prosecutors, the
defendants engaged in a US$500 million offshore securities fraud,
tax avoidance and money laundering scheme. For further information
on the Bandfield case, please click here to read the case summary prepared by our
friends and colleagues in Latham &
Watkins' Washington DC office.
This indictment follows on from the recent conviction and
sentencing of three investment managers (Joshua Vandyk, Eric St-Cyr
and Patrick Poulin) who were caught assisting undercover IRS agents
evade tax and launder the proceeds of supposed bank fraud via the
Turks & Caicos and the Cayman Islands.
Vandyk, St-Cyr and Poulin conspired to conceal and disguise the
nature, location, source, ownership and control of property
believed to be the proceeds of bank fraud, specifically $2 million.
Vandyk, St-Cyr and Poulin assisted undercover law enforcement
agents posing as U.S. clients in laundering purported criminal
proceeds through an offshore structure designed to conceal the true
identity of the proceeds' owners. Vandyk and St-Cyr invested
the laundered funds on the clients' behalf and represented that
the funds would not be reported to the U.S. government.
Vandyk and St-Cyr lived in the Cayman Islands and worked for an
investment firm based there. St-Cyr was the founder and head of the
investment firm, whose clientele included numerous U.S. citizens.
Vandyk, St-Cyr and Poulin solicited U.S. citizens to use their
services to hide assets from the U.S. government, including the
IRS. Vandyk and St-Cyr directed the undercover agents to create an
offshore corporation with the assistance of Poulin and others
because they and the investment firm did not want to appear to deal
with U.S. clients. Vandyk, St-Cyr and Poulin used the offshore
entity to move money into the Cayman Islands and used Poulin as a
nominee intermediary for the transactions.
Joshua Vandyk was sentenced to 30 months imprisonment on 5
September 2014. Click here to read the IRS' press release from
earlier this month on the Vandyk, St-Cyr and Poulin
case.
The message that DQ's specialist regulatory & compliance
team repeatedly passes on to clients is this: it is now absolutely
crucial for regulated businesses to ensure that they have
appropriate FATCA compliance procedures in place and, importantly,
that they properly risk assess all new business to ensure that only
legitimate and legal business is accepted.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
