Global Financial Integrity

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Tax Havens, Evasion to be Target of Senate Hearings, Investigation

Monique Perry Danziger, +1 202 293 0740 ext. 222
Global Financial Integrity
Monique Perry Danziger, +1 202 293 0740 ext. 222

WASHINGTON, DC – Global Financial Integrity (GFI) applauds the Senate Permanent Subcommittee on Investigations’ exploration into the role of offshore banks in U.S. tax evasion. The Subcommittee will be holding a hearing on “Tax Haven Banks and U.S. Tax Compliance,” Thursday, July 17th to investigate if and how financial institutions located in offshore jurisdictions, including Liechtenstein and Switzerland, facilitate illicit financial practices such as tax evasion.

“Tax evasion deprives the U.S. of tens of millions of dollars in uncollected revenue every year,” said GFI director Raymond Baker. “Money that is needed to pay for things like healthcare, education, and infrastructure is flowing abroad to offshore secrecy jurisdictions. It is time to tackle this illegal and detrimental practice.”

The hearing will also examine how US domestic and international tax enforcement efforts could be strengthened.

“The robust interest and support for anti-tax evasion legislation is part of a coming sea change in how the world deals with illicit financial flows,” said Baker.  “Moving money surreptitiously across borders and into secret bank accounts fosters all kinds of illegal and dangerous activities.  Curtailing tax evasion has the potential to recover huge sums of national revenue while hindering illicit commerce around the world.”

Thursday’s hearing comes at a time when both the U.S. and Europe are ratcheting-up pressure on secrecy jurisdictions like Switzerland and Liechtenstein to increase transparency and cooperate with enforcement officials to curtail illicit financial practices such as tax evasion and money laundering.

Anti-Illicit Financial Practice Legislation to Watch:

  • S. 681, the Stop Tax Haven Abuse Act, would establish legal presumptions against the validity of transactions involving offshore secrecy jurisdictions, including foreign tax havens identified in the act, and by the Treasury Department.  The bill would also allow U.S. tax and securities law enforcement to presume that non-publicly traded offshore corporations and trusts are controlled by the U.S. taxpayers who formed them or sent them assets, unless the taxpayer proves otherwise.
  • S. 2956, the Incorporation Transparency and Law Enforcement Assistance Act would require all U.S. companies to provide state authorities with the names of the entity’s beneficial owners in order to assist law enforcement efforts to track sources of illicit cash.
  • S. 396, introduced by Sen. Byron Dorgan, D-N.D., would prevent American companies from deferring the imposition of a second layer of tax on their foreign-source income if they operate in selected low-tax nations. It would amend the Internal Revenue Code to treat certain controlled foreign corporations created or organized under the laws of a tax-haven country as domestic corporations for tax purposes.

“Thursday’s hearing builds upon the momentum established with the Subcommittee’s report released in 2006 “Tax Haven Abuses: The Enablers, Tools, and Secrecy,” said Baker.  “With Europe doing a full court press against banking secrecy and U.S. Presidential candidate Barack Obama stating his intent to close corporate tax loopholes and end tax haven abuse, the time for legislative action on the issue of tax haven abuse and tax evasion is now.”

“We are at a critical juncture with illicit financial practices,” said Baker.  “For the first time in memory this is emerging as a global political issue.  With billions of dollars and the integrity of the international financial system hanging in the balance, we cannot afford failure in combating this problem.”



  • Witnesses expected to testify include:

Panel 1
THE HONORABLE DOUGLAS H. SHULMAN , Commissioner , Internal Revenue Service , Washington, D.C.
THE HONORABLE KEVIN O’CONNOR , Associate Attorney General , U. S. Department of Justice , Washington, D.C.

Panel 2
MR. SHANNON MARSH , Ft. Lauderdale, Florida
MR. WILLIAM WU , Forest Hills, New York
MR. PETER S. LOWY , Beverly Hills, California

Panel 3
MR. MARTIN LIECHTI , Head, UBS Wealth Management Americas , Zurich, Switzerland

Panel 4
MR. MARK BRANSON , Chief Financial Officer , UBS Global Wealth Management and Business Banking , Zurich, Switzerland
REPRESENTATIVE , LGT Group , Vaduz, Liechtenstein