I. EXECUTIVE SUMMARY
A. Subcommittee Investigation
The Subcommittee began this bipartisan investigation into tax haven banks in February 2008. Since then, the Subcommittee has issued more than 35 subpoenas and conducted numerous interviews and depositions with bankers, trust officers, taxpayers, tax and estate planning professionals, and others. The Subcommittee has consulted with experts in the areas of tax, trusts, estate planning, securities, anti-money laundering, and international law, and spoken with domestic and foreign government officials and international organizations involved with tax administration and enforcement. During the investigation, the Subcommittee reviewed hundreds of thousands of pages of documents, including bank account records, internal bank memoranda, trust agreements, incorporation papers, correspondence, and electronic communications, as well as materials in the public domain, such as legal pleadings, court rulings, SEC filings, and information on the Internet. In addition, the Subcommittee has consulted with the governments of Liechtenstein and Switzerland, and expresses appreciation for their cooperation with the Subcommittee.
B. Overview of Case Histories
This Report presents case histories, involving LGT Bank in Liechtenstein and UBS AG of Switzerland, that lend insight into how these banks work with U.S. clients and execute their U.S. tax compliance obligations.
(1) LGT Bank Case History
The LGT Group (LGT), which includes LGT Bank in Liechtenstein, LGT Treuhand, a trust company, and other subsidiaries and affiliates, is a leading Liechtenstein financial institution that is owned by and financially benefits the Liechtenstein royal family. From at least 1998 to 2007, LGT employed practices that could facilitate, and in some instances have resulted in, tax evasion by U.S. clients. These LGT practices have included maintaining U.S. client accounts which are not disclosed to U.S. tax authorities; advising U.S. clients to open accounts in the name of Liechtenstein foundations to hide their beneficial ownership of the account assets; advising clients on the use of complex offshore structures to hide ownership of assets outside of Liechtenstein; and establishing “transfer corporations” to disguise asset transfers to and from LGT accounts. It was also not unusual for LGT to assign its U.S. clients code words that they or LGT could invoke to confirm their respective identities. LGT also advised clients on how to 5structure their investments to avoid disclosure to the IRS under the QI Program. Of the accounts examined by the Subcommittee, none had been disclosed by LGT to the IRS. These and other LGT practices contributed to a culture of secrecy and deception that enabled LGT clients to use the bank’s services to evade U.S. taxes, dodge creditors, and ignore court orders. LGT’s trust office in Liechtenstein managed an estimated $7 billion in assets and more than 3,000 offshore entities for clients during the years 2001 to 2002; it is unclear what percentage was attributable to U.S. clients. Seven LGT accounts help illustrate LGT practices of concern to the Subcommittee.
Detailed report link: here