For those residents who might have been keeping assets in the Cayman Islands comes some possibly unsettling news: the Department of Justice recently announced guilty pleas from Cayman National Securities Ltd. and Cayman National Trust Co. Ltd. The institutions supplied brokerage and trust management services to American taxpayers and companies.
The guilty plea acknowledges that the institutions conspired with U.S. clients to keep secret from the Internal Revenue Service more than $130 million deposited in offshore accounts. The pleas are packaged with agreements to turn over to the IRS the files of those American taxpayers and firms.
According to a recent Forbes report, the Cayman entities created accounts that were held in the name of fictitious Cayman trusts and companies, in order to hide real ownership of the stashed assets. The sham Cayman creations enabled clients to trade in U.S. securities without filing Forms W-9, the document identifying a person as a U.S. taxpayer.
The Cayman institutions are now going to rip away the very veil of secrecy they created in order to help Americans secret away assets. The two institutions are already producing documents and client files. They will turn over 90 percent to 95 percent of unredacted client files on American accountholders, Forbes reports, pay a fine, forfeit proceeds from the tax-sheltering services and pay restitution as well.
For those Cayman Islands accountholders who have not filed with the IRS a Report of Foreign Bank and Financial Accounts (FBAR), it might well make sense to speak with an experienced tax attorney who can help you get into compliance while taking advantage of options that can spare you the harshest penalties.