Banks facing increased scrutiny under crackdown on cross-border tax evasion

Sovos
February 10, 2015

This blog was last updated on June 26, 2021

In recent years, banks across the globe have been placed under a microscope as authorities seek to curb cross-border tax evasion. Many organizations have faced penalties, fines and reputational damage as a result of this crackdown.

In the latest case, one multinational bank’s operations in Switzerland helped numerous wealthy individuals evade taxes. This revelation came as a result of leaked documents obtained by the International Consortium of Investigative Journalists, The Guardian and other news outlets. Several governments have had access to these documents for at least four years, and now that the information is public, The Guardian reported it adds more fuel to the fire for the global effort to end cross-border tax evasion.

Shutting down illegal operations
Since the bank division’s underhanded dealings came to light, the parent company has seen its stock values decline and paid large sums in back taxes, according to The New York Times. Many other large banks have faced similar consequences in the past, indicating no institution is exempt from additional scrutiny.

In 2014, one major Swiss bank paid billions to the U.S. for helping American account holders evade taxes. The total $2.6 billion penalty included back taxes, settlements and a fine.

Another Swiss bank faced similar action from U.S. authorities in 2013. This bank helped at least 100 Americans avoid their tax compliance obligations, leading to $1.2 billion in unpaid taxes, according to BBC News. At the time, Preet Bharara, a U.S. attorney, said the result was a symbolic moment, indicating no individuals or financial institutions would get away with tax evasion.

The increased oversight not only applies to banks helping individuals avoid taxes, but also relates to cases where the financial institutions themselves are evading taxes. The Guardian reported one multinational bank came under fire after documents revealed it didn’t pay enough taxes for the amount of revenue it was pulling in.

Keeping up with the times
Global collaboration to enforce taxes is part of today’s financial climate. With the Foreign Account Tax Compliance Act (FATCA) and Organization for Economic Cooperation and Development’s (OECD) Common Reporting Standard (CRS) facilitating multilateral agreements to share tax information, banks should expect further scrutiny as more cases like the aforementioned examples support the need for additional legislation to curb cross-border tax evasion. Not only do they face the risk of extensive penalties and other legal action, but they also must sometimes contend with irreparable damage to their reputations.

Sign up for Email Updates

Stay up to date with the latest tax and compliance updates that may impact your business.

Author

Sovos

Sovos is a global provider of tax, compliance and trust solutions and services that enable businesses to navigate an increasingly regulated world with true confidence. Purpose-built for always-on compliance capabilities, our scalable IT-driven solutions meet the demands of an evolving and complex global regulatory landscape. Sovos’ cloud-based software platform provides an unparalleled level of integration with business applications and government compliance processes. More than 100,000 customers in 100+ countries – including half the Fortune 500 – trust Sovos for their compliance needs. Sovos annually processes more than three billion transactions across 19,000 global tax jurisdictions. Bolstered by a robust partner program more than 400 strong, Sovos brings to bear an unrivaled global network for companies across industries and geographies. Founded in 1979, Sovos has operations across the Americas and Europe, and is owned by Hg and TA Associates.
Share this post

dtc spirits new york
North America ShipCompliant
February 14, 2025
A New Era for DtC Spirits Shipping: How New York’s Market is Taking Shape

This blog was last updated on February 14, 2025 In the fall of 2024, New York became the latest state to open its doors to direct-to-consumer (DtC) spirits shipping, marking a significant milestone for the industry. As one of the most populous states with a thriving market for craft and high-end spirits, the shift was […]

North America Unclaimed Property
February 10, 2025
Delaware Announces 2025 VDA Invitation Dates

This blog was last updated on February 14, 2025 Mark your calendars – April 11, 2025 and August 15, 2025 are this year’s anticipated release dates for the Delaware’s Secretary of State (SOS) VDA program invitations. In the event that an organization receives an invitation to participate in the Voluntary Disclosure Agreement (VDA) program  , […]

North America Sales & Use Tax
February 6, 2025
The Tariff and Sales Tax Mishmash – Untying the Mess

This blog was last updated on February 14, 2025 Talk of tariffs dominates the current news cycle with some commentators suggesting that tariffs will spell disaster for our economy while others say the exact opposite. We’ve seen the stock market sometimes fluctuate as tariffs are announced but later suspended, leaving us to wonder whether an […]

retailer dtc wine shipping
North America ShipCompliant
February 6, 2025
Retailer DtC Wine Shipping: The Time Has Come

This blog was last updated on February 14, 2025 By Tom Wark, Executive Director, National Association of Wine Retailers We are often reminded by the media and those in the wine industry—as well as by wine enthusiasts—that the three-tier system of alcohol distribution in most states hinders consumer access to the expansive number of wines […]

Montana 1099-DA
North America Tax Information Reporting
February 5, 2025
State Filing Alert: Montana’s New 1099-DA Requirements for Crypto Brokers

This blog was last updated on February 5, 2025 Reporting digital asset transactions on Form 1099-DA just got a little more complicated. For 2025 transactions, crypto brokers that file Form 1099-DA with the IRS will be required to file the 1099-DA with the State of Montana. This makes Montana the first state to introduce a […]