Department of Justice Investigates Swiss Life for Tax Evasion

The Swiss insurance industry is now under close scrutiny by the United States Department of Justice (DOJ). One insurance provider in the nation, Swiss Life, recently announced that it is under investigation by the DOJ.

Why would the DOJ dig into insurance companies for wrongdoing? A recent publication on discusses the move. It notes that the federal agency found Swiss banks guilty of maintaining undeclared accounts for United States clients in the guise of insurance policies. Basically, the funds were hidden in something referred to as an insurance wrapper.

According to a report on the investigation by Reuters, an insurance wrapper basically allows an investor to purchase a life insurance policy that holds stocks and other assets in a manner that allows the owner to exploit tax benefits.

If banks were using insurance policies to hide assets, why wouldn’t insurance companies? This appears to be reasoning of the DOJ.

The agency is interested in this specific insurance provider due to the massive amounts of money it handled. At its peak it was responsible for over $1 billion in portfolios for U.S. clients.

Should clients with foreign insurance accounts worry? Any foreign asset that is not in compliance with United States tax laws is of concern. If you have foreign assets, or even just signature authority over such assets, it is wise to seek legal counsel. An experienced voluntary disclosure lawyer can review your assets and provide options to come into compliance.

These options will likely reduce the penalties that will apply if the Internal Revenue Service (IRS) discovers the assets before you come into compliance. In these situations, the IRS may attempt to prove that the lack of compliance was intentional. If successful, this could result in more than just monetary penalties — it could lead to prison time.

Tags: Blog, Tax Crimes