U.S. Tax Enforcer: «These Are the Countries We Will Target Next»

Caroline Ciraolo, DoJ

Caroline Ciraolo, DoJ

The emotions probably weren't mutual: Caroline Ciraolo told her audience at the banking association of Panama that she was «pleased to be here». The principal deputy assistant attorney of the U.S. didn't mince her words in her address.

Ciraolo said that her top priority was the enforcement of U.S. tax law in offshore markets. To achieve that, she has 300 lawyers at her disposal.

Let Dogs Roam Free

Once the dogs have been unleashed, there's no means of stopping them. The U.S. approach to doing things has worked pretty well so far – as Ciraolo explained with Swiss banking as her example. She used the banks in the so-called category 2 as examples in case. The institutes, which pleaded guilty according to the program to end the tax dispute and delivered extensive documentation to the DoJ.

«Under the program, Swiss banks about which we had little or no information came forward and self-identified as having helped U.S. taxpayers to hide foreign accounts and evade their U.S. tax obligations,» Ciraolo said in her address in Panama.

Why Giving Up so Easily?

Swiss banks as submissive helpers to the U.S. enforcement agencies? It is not the first time that U.S. representatives showed their astonishment about how quickly the Swiss banks gave up. Jeff Rakov for instance, a U.S. judge in charge of the Wegelin case, once told «Neue Zürcher Zeitung»: «To this day I don't know why Bank Wegelin chose to give up.»

Submissive or not – Switzerland as the world's most powerful offshore banking place serves as the example for how the U.S. wants to proceed. And what's more, thanks to the deals, the investigators have vast amounts of documents to sift through.

Ciraolo has already said which countries she will target next, according to a report by «Global Compliance News»:

  • British Virgin Islands
  • Cayman Islands
  • Channel Islands
  • Hong Kong
  • Israel
  • Liechtenstein
  • Luxembourg
  • Panama
  • Singapore

«Investigations of both individuals and entities are well beyond Switzerland at this point, and no jurisdiction is off limits,» the attorney said at the time.

Boasting Success

In Panama, Ciraolo boasted about her recent successes against other offshore centers. An example she used was the pressure mounted on UBS in Singapore to had over information about Chinese-born U.S. citizens.

In spring, two companies on the Cayman Islands pleaded guilty to having assisted in the evasion of taxes. These were the first successful cases against non-Swiss institutes.

Cases With a Wider Reach

The DoJ is also an important player in cases that aren't merely beneficial to the U.S. taxpayer. It is for instance instrumental in the investigation of the corruption at Fifa, the world footballing body, and assisting in the cases of Brazil's petroleum company Petrobras and Malaysia's state fund 1MDB. The names of Swiss banks appear in all three cases.

Ciraolo's conclusion in Panama was clear enough: «We continue to use all tools at our disposal and work together to combat global tax evasion, even as it acquires new and more challenging forms.»


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