United States: US District Court Grants “John Doe” Summonses For Information Related To Off-Shore Accounts In Belize

On September 16, 2015, the United States District Court for the Southern District of Florida entered an order allowing the IRS to proceed with “John Doe” Summonses seeking information regarding US persons who hold offshore accounts at Belize Bank International Limited and Belize Bank Limited (the “Belize Banks”).1 These summonses permit the IRS to seek records of the Belize Banks’ correspondent accounts at Bank of America, N.A. and Citibank, N.A.

According to relevant court documents, the Belize Banks are known to “market their ability to provide secret banking services to foreign residents.”2 The US petition also discusses Belize Corporate Services (“Corporate Services,” and together with the Belize Banks, the “Belize Entities”), which has the same parent company as the Belize Banks and advertises its ability to create corporate entities, organized in Belize, that are used to hide the identity of account holders.3

A correspondent account is a bank account that one bank maintains for another bank. Typically, a foreign bank that does business in US dollars but does not have a US office will obtain a correspondent account in order to provide services to its US customers. Foreign correspondent banks, in this case the Belize Banks, and users of the correspondent accounts, such as Corporate Services, can potentially wire funds from the Belize Banks to their correspondent accounts at Bank of America and Citibank; or alternatively from the correspondent accounts at Citibank and Bank of America to the Belize Banks. The IRS believes that these John Doe Summonses will enable it to ascertain the identity of US taxpayers that it believes are using the Belize Entities and correspondent accounts to avoid their obligation to report and remit associated taxable income to the United States.

Pursuant to the Summonses, Bank of America and Citibank have been directed to produce records that identify US taxpayers with accounts at the Belize Banks. The Court also granted permission to the IRS to seek records of Corporate Service’s correspondent accounts at Bank of America and Citibank, as well as information related to Corporate Service’s deposit account at Bank of America. The “John Doe” class includes US taxpayers, who at any time from 2006 through 2014 had interests in, or authority with respect to, any financial accounts maintained at, monitored by or managed through the Belize Entities.