Some Americans, worried about greater US scrutiny of Swiss banks, are using bank accounts in Asia to hide their money from tax authorities, a former prosecutor involved in the US government's crackdown on Swiss bank UBS said on Monday.
Earlier this month in a US court filing, the Department of Justice said HSBC in India helped potentially thousands of Americans dodge taxes, signaling the government may now be taking a closer look at Asia's role in American tax evasion.
Jeffrey Neiman, a lawyer who recently moved into private practice after leading several high-profile government cases against UBS clients and bankers, said there were signs money from some tax-evading Americans has moved into Asia.
"The government crackdown has pushed some of these individuals to have to go beyond Switzerland," he said in an interview.
"You've seen money that's gone to India, money that's gone to Singapore, to Hong Kong."
Neiman did not say if Americans were using international or regional banks in Asia, where lawyers say some private banking units have likely gone on guard for potential US investigations into their businesses.
The United States is probing other banks and their involvement in offshore tax services after UBS paid USD 780 million two years ago and admitted to helping Americans stash assets overseas tax-free.
Among those facing increased scrutiny is Europe's largest bank, HSBC, as well as Credit Suisse and smaller Swiss banks, analysts and lawyers say.
In a sign the probe is also expanding beyond Switzerland, the government recently asked a San Francisco federal court to grant it authority to serve HSBC India with a "John Doe" summons forcing the bank to hand over the identities of an unnamed number of people, many of them believed to be wealthy Indian-Americans who may have engaged in tax fraud.
US prosecutors used the same strategy in its case against UBS, and some attorneys say the government may now be seeking a similar summons for Credit Suisse.
HSBC and Credit Suisse have said they abide by all tax laws.
Following the money trail
Large volumes of capital have flowed into Asia in recent years, turning the region into an enticing destination for many investors put off by low interest rates in Western markets and the crackdown on banking secrecy in Switzerland.
Neiman said some recent US legal cases involving Swiss bankers also highlighted how money has moved from bigger banks in Switzerland to smaller, cantonal ones with fewer ties to the United States.
"From a cantonal bank perspective, they look at it as there is less of a chance of being on the US government's radar," he said.
But Neiman said authorities were following up on information gleaned in criminal investigations and from Americans who have come forward to declare their assets with the Internal Revenue Service (IRS) under a voluntary disclosure program aimed at getting tax dodgers to pay up.
"The barriers are coming down because when taxpayers who made their voluntary disclosures did so. They said Bank A in this country, wherever in the world it may be, not just Switzerland, helped me do this," he said.
He also said American tax authorities were closely tracking the movement of money from possible tax evaders.
"They are following the money," he said. "The one thing that the IRS is really, really good at is tracing the money and seeing flows of money, whether its from a big bank to small bank in Switzerland or big bank to a small bank outside of Switzerland."