By NEIL HARTNELL
Tribune Business Editor
US client disclosures by CIBC Trust Company (Bahamas) and its Cayman affiliate equal just 12 per cent of the number who have voluntarily disclosed accounts with their regional parent to the Internal Revenue Service (IRS), it has been alleged.
Court documents supporting the IRS serving of a ‘John Doe’ summons on CIBC FirstCaribbean International Bank’s US correspondent, Wells Fargo, claimed that the maximum number of client disclosures made under the Qualified Intermediary (QI) programme by the bank’s two offshore subsidiaries never totalled more than 15 in one year.
Yet IRS agent Cheryl Kiger alleged in her declaration that under the IRS’s Offshore Voluntary Disclosure Programme, set up to encourage taxpayers to come forward and reveal bank accounts/assets held outside the US, some 129 disclosures relating to CIBC FirstCaribbean International Bank had been made.
Noting that CIBC FirstCaribbean International Bank had not been a QI intermediary, Ms Kiger’s declaration noted that it acquired CIBC Trust Company (Bahamas) and its Cayman affiliate from their Canadian parent, CIBC, in 2011.
“IRS records show that together, these banks filed only six Forms 1099 with respect to US clients in 2009, nine in 2010 and 15 in 2011, and some of those forms may have been filed for the same individuals who received more than one type of reportable income,” the Kiger declaration alleged.
But it noted that “at least 129 voluntary disclosures have been made by US taxpayers holding undisclosed accounts at CIBC FirstCaribbean International Bank and its predecessors in the Caribbean”.
It is this discrepancy, the number of voluntary disclosures by US clients and interviews with some of those ‘volunteers’ that appear to have attracted the IRS’s attention to CIBC FirstCaribbean International Bank.
There is nothing to suggest CIBC Trust Company (Bahamas), its Cayman affiliate or their Barbados-based parent have done anything wrong, but all this was enough motivation for the IRS to serve Wells Fargo with a summons seeking information on US taxpayers it believes hold offshore accounts with the Canadian-owned bank.
And several episodes centred on the Bahamas, including the FBI ‘sting’ that resulted in charges against Bahamian attorney, Sidney Cambridge, also figure in the equation.
Referring to the 2005 investigation into alleged public corruption in Florida, the Kiger affidavit noted this resulted in an indictment against Mr Cambridge in 2009, and subsequent request for his extradition.
“An FBI special agent states that Mr Cambridge assisted him in setting up an International Business Company in Nassau and, after the paperwork was completed to set up the IBC, took the undercover agent to CIBC FirstCaribbean International Bank, where he introduced the undercover agent to an international corporate manager in the international wealth management office,” the IRS court filing alleges.
“According to the complaint, the manager assisted the undercover agent in setting up an account in the name of the IBC, which the agent then proceeded to use as a repository for funds that were allegedly the proceeds of the investment scheme.”
Kiger then referred to a US permanent resident, employed by a consulting firm, who had voluntarily come forward to disclose his CIBC FirstCaribbean International Bank account.
“In 2006, he used a Bahamian law firm to set up a Bahamian corporation to hold a bank account to receive commissions for consulting services he performed for third parties without the knowledge of his employer,” Kiger alleged.
“The law firm referred him to CIBC FirstCaribbean International Bank to open the account. When he opened the account, he was told by an CIBC FirstCaribbean International Bank employee that no bank information would be given to the United States without a legal request.”
That refers to the Tax Information Exchange Agreement (TIEA) between the Bahamas and the US. The law firm and bank employee are not identified.
The IRS declaration also referred to a guilty plea to money laundering and defrauding the IRS by US citizen Howell Woltz in 2007. He agreed to forfeit a CIBC FirstCaribbean International Bank account held by Sterling ACS, a Bahamian company he controlled.