Insight / 25 June 2018

Foreign banks continue to feel the wrath of the U.S. government – Israel’s Hapoalim faces questions over its U.S. account holders

The U.S. government has taken aim at foreign banks in recent years over their failure to report U.S. held accounts. Israel’s biggest bank, Hapoalim, is bracing itself against the prospect of a large settlement with the U.S. authorities over tax evasion allegations.

Rumours have been swirling since 2012 that Hapoalim was at least one Israeli bank of interest to the U.S government with regards to their U.S. held bank accounts and it has been reported as under investigation since 2016. During the past two years the bank has been increasing the amount it has set aside – currently totalling $343 million – to cover potential fines.

A similar case in 2014 against Israel’s second largest bank, Leumi, resulted in a settlement of $400 million.

As a result of increased compliance risks, Israeli banks have been moving away from offering private banking in Europe and the U.S. in recent years. In October 2017, Hapoalim sold its private banking businesses in Switzerland and Luxembourg.

What these developments might mean for U.S. taxpayers with foreign accounts

In similar cases, banks have been forced to release the names of its U.S. account holders to the U.S. government.

If you have (or had) a bank account with Hapoalim and are a U.S. citizen / U.S. taxpayer

You may need advice or representation for:

  • Getting your account unfrozen
  • Communications with the bank or the U.S. government
  • Completing certain forms or obtaining certain information or documents from the bank
  • Becoming U.S. tax compliant / regularizing your tax situation

If you have bank accounts at foreign financial institutions (FFIs) and are a U.S. citizen / U.S. taxpayer

The rules, regulations and enforcement of reporting foreign bank accounts to the U.S. government have become stricter for foreign banks (and for U.S. taxpayers) since governments around the world began signing intergovernmental agreements with the U.S. to implement FATCA.

You may need guidance and representation for:

  • fulfilling your reporting obligations
  • becoming tax-compliant
  • representation in communicating with the U.S. Internal Revenue Service (IRS)

Read more about our FATCA-related services for:

Individuals

Fiduciaries

Family offices, hedge funds and private equity funds

Getting the help you need – tax advice and legal representation

If you think you might be affected by the Hapoalim developments or have questions about accounts you may have in non-US banks, Anaford Tax & Accounting Services (“ATAS”) is in a unique position, in conjunction with Anaford Attorneys, to assist you with both legal and tax advice.

We strongly recommend you first consult with one of our attorneys for legal advice to ensure the confidentiality of your information under the attorney-client privilege, which does not apply to non-attorneys. We would then work closely with them in providing you with the tax services you require. To contact Anaford Attorneys, please visit www.anaford.com/contact-us.

Taxes are what we do. Our accountants know the ins and outs of taxes for U.S. taxpayers residing in and outside the United States. The ATAS team can assess your tax liabilities and help you choose the best options. For all of your tax-related services, contact ATAS directly at info@atas.tax or call us at any of our offices.

References / For more information:

Reuters

CNBC