IRS Offshore Credit Card Move Slammed In Bermuda

by Mike Godfrey, Tax-News.com, Washington

17 January 2003

Tax and legal experts from within Bermuda's finance centre this week condemned the US Internal Revenue Service's latest offshore credit card initiative, but suggested that it is likely to have little effect on the jurisdiction's banks.

Following the IRS announcement on Tuesday that US citizens who have used offshore credit cards and bank accounts to conceal assets for the purposes of tax evasion can avoid criminal charges if they come forward before April 15, Bob Stewart, former Chief Executive of Shell Bermuda and prominent advocate of individual freedoms, told the Bermuda Royal Gazette that:

'There could be a million and one legitimate reasons for a US resident have a personal Bermuda credit card,' and dubbed the IRS initiative the latest in a series of US misunderstandings of the role of offshore finance centres.

Also speaking to the Royal Gazette, representatives from the jurisdiction's two main banks, the Bank of Butterfield and the Bank of Bermuda, announced that the US 'amnesty' is unlikely to affect their customers.

Speaking on behalf of the Bank of Butterfield, Chief Financial Officer, Richard Ferret revealed that:

'When opening an account, we establish the identity of the account holder and the reason for wanting an account. If there are no valid reasons for having an account then we will reject the application. Where we do open an account, all customers are asked to confirm that they will comply with all tax reporting requirements imposed upon them in any jurisdiction.'

Bank of Bermuda's Head of Compliance, Ifor Hughes echoed this, explaining to the Royal Gazette that:

'When we do our Know Your Customer and due diligence reviews, those are to establish identity but also background particulars. We also have a suspicious transaction reporting regime, within that regime in which fiscal offences are included.'

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