Bank of America Cited in US Senate Report on Tax Havens

Ian Allison

2 August 2006

Bank of America has become embroiled in a scheme to avoid taxes in offshore jurisdictions along with two other banks, according to a US Senate investigation. The Subcommittee on Investigations released a 401-page report detailing how the banks allowed offshore trusts designed to shield taxes to open accounts without providing information required by anti-money laundering laws. The panel plans to hold a hearing on its findings, calling on 14 witnesses, including a Bank of America private banking executive and a former broker who worked with a Texas family tied to the trusts. The report raises questions about money-laundering compliance surrounding offshore trusts, which opened brokerage accounts at Credit Suisse First Boston, Lehman Brothers and Bank of America. The subcommittee said the biggest tax dodgers were avoiding paying on capital gains and the exercising of stock options. The report calls for the tightening of laws and regulations related to offshore trusts. The report also accuses attorneys, accountants and bankers of promoting offshore jurisdictions as a way to evade US taxes. Americans have more than $1 trillion in assets offshore, helping them avoid as much as $70 billion in taxes, the subcommittee stated.