The process has begun with customers at Leumi Private Bank in Switzerland.
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Having been burned by the US Internal Revenue Service (IRS), Bank Leumi (TASE: LUMI) is taking extreme caution with European tax authorities. Sources inform ”Globes” that the bank is sending letters to its European customers telling them to present documentation from the local tax authorities that the money deposited in their accounts has been properly reported. If no documentation is provided within the next few months, the bank threatens to close the accounts.
Bank Leumi has started the process with customers at Leumi Private Bank in Switzerland, where the presentation of such documents has become widespread lately. Bank Leumi is joining other banks which require this documentation.
Bank Leumi has begun demanding that its foreign customers in Israel submit such documentation. Given the sensitivity of the issue, the bank is instituting the requirement very gradually, but it will ultimately ask all foreign customers to submit appropriate documents.
Bank Leumi said, “We do not comment about our customer relations in the media.”
Bank Leumi is focusing its efforts at this stage on its French and German customers, because both France and Germany have cracked down on tax evasion. The German Federal Central Tax Office will pay informers for information about tax evaders.
Bank Leumi has decided to ask for the documentation about customers’ tax filings even though it is not required to do so; it is acting out of caution, after getting into trouble with the IRS. For the past three years, IRS investigators have been investing several banks, Bank Leumi included, on suspicion of helping US citizens avoid taxes. Bank Leumi is in advanced talks on a settlement with the IRS, but it is expected to face a large fine.
Bank Leumi has already made a NIS 530 million provision for a possible IRS fine and its high legal costs in the case.
The media reports that the German Federal Central Tax Office raided the homes of 50 German Bank Leumi customers in two cities in the country on suspicion of tax evasion. The bank itself is reportedly not under investigation, but the raids are a sign of the crackdown on tax evasion in Germany.
Published by Globes [online], Israel business news – www.globes-online.com