Release of Names With Interests in Offshore Entities: Ramifications

by Goodwin

Recently, the International Consortium of Investigative Journalists (ICIJ) released the names of more than 37,000 people from China, Taiwan and Hong Kong who have set up offshore entities and trusts in 10 tax haven jurisdictions, including the British Virgin Islands, the Cayman Islands, Cook Islands and Singapore.

The information was compiled by ICIJ from leaked data it received originating from two offshore services firms, Singapore-based Porticullis TrustNet and British Virgin Islands based Commonwealth Trust.  This information is now available to the public in an interactive web database called ICIJ Offshore Leaks Database (

This database permits anyone to search for and find information on individuals associated with these offshore entities, including their addresses.  Moreover, the ICIJ has provided an interactive graphic tool that uses this data to illustrate the connections between individuals and offshore entities.

Simply by entering a person’s name and with the click of a mouse anyone may discover the offshore entity(ies) affiliated with a particular person as well as other offshore entities.  Similarly, the individuals behind an offshore entity may sometimes be found by tracking the name of the person who set it up.

Consequently, this database and interactive tool make it much easier for regulators, journalists, and the public to quickly understand the relationships between individuals and offshore entities in a way that was not previously available to all but the most sophisticated law enforcement agencies.

While the current focus is on offshore clients from China, Taiwan and Hong Kong, the database will likely continue to grow as ICIJ releases more names from other regions of the world.  In fact, the current database already covers nearly 30 years until 2010, and it allows one to search three categories—i.e., “Officers & Master Clients,” “Offshore Entities,” and “Listed Addresses”—by Countries that include the United States, UK, China, Hong Kong, and Taiwan.  Individuals with or officers of offshore entities who were not aware of ICIJ and its Offshore Leaks Database should take notice, and it would be prudent for them to be proactive and start thinking about how best to respond to the disclosure of their information.

Regulators (And Others) May Use The Disclosed Names And Relationship Tool To Look For Possible Non-Compliance With The Law

Establishing and maintaining offshore entities is not illegal.  Many major corporations as well as individuals throughout the United States maintain such entities for perfectly legitimate reasons and in full compliance with the law.  Certain other countries require prior notice or approval before setting up offshore entities.  For example, Chinese residents may be required to register any offshore entities with the State Administration of Foreign Exchange.

Regardless of their legality, offshore entities are facing increasing scrutiny from regulators worldwide, including from the United States.  This is because regulators often view the setting up of these entities and related offshore bank accounts as tools to thwart the payment of taxes, hide assets and promote money laundering.

For example, United States law requires U.S. taxpayers to pay taxes on all income earned worldwide and report foreign financial accounts if the total value of the accounts exceeds $10,000 at any time during the calendar year.  Since 2008, the Internal Revenue Service (“IRS”) and the United States Department of Justice (“DOJ”) have expended significant resources in an effort to investigate offshore accounts and prosecute people who violated these laws.

In particular, this has led the IRS and federal criminal prosecutors to investigate Swiss banks and persons holding offshore accounts in these banks.  The investigations have led to one bank admitting guilt on charges of conspiring to defraud the United States by impeding the IRS, hundreds of millions of dollars in fines, and the disclosure by banks to the IRS and DOJ of the names of U.S. taxpayers who maintain secret Swiss bank accounts.

Armed with this information, the IRS and DOJ initiated investigations into individual U.S. taxpayers, resulting in the criminal prosecution of numerous individuals in the United States who failed to pay taxes or failed to disclose the existence of offshore accounts.

These aggressive investigations continue, with the IRS recently obtaining, for example, a court order authorizing the IRS to obtain from U.S.-based banks American taxpayer records in connection with The Bank of N.T. Butterfield & Son Limited and its affiliates in the Bahamas, Barbados, Cayman Islands, Guernsey, Hong Kong, Malta, Switzerland, and the United Kingdom.  There is no evidence that this government activity will abate.

According to a recent statement by IRS Acting Commissioner Werfel, “International issues remain a major focus for the IRS, and we are continuing our efforts to fight tax evaders who use offshore accounts to skirt the law . . . .”  The IRS, as part of its efforts, also developed voluntary disclosure programs to provide incentives for U.S. taxpayers to resolve their tax liabilities and minimize their chances of criminal prosecution by voluntarily disclosing previously undisclosed foreign accounts and income.  According to the IRS, more than 38,000 taxpayers have taken advantage of these programs.

The leaking of previously confidential ownership information and identifying relationships between individuals and entities cannot be undone, and appears likely to continue.  Regulators in and out of the U.S. may examine this information and subsequent disclosures to determine whether any of the identified individuals are taxpayers and, if so, whether these taxpayers have complied with the law.  Similarly, journalists and others may use this information to further investigate and publicize the names of well-known people with offshore accounts.

What to do:

These disclosures impact not only those on the list, but potentially others who created or are officers of offshore entities.  For persons who are unsure whether their offshore entities and accounts are in compliance with the law, it is recommended they contact a legal professional to discuss their individual situation.

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this informational piece (including any attachments) is not intended or written to be used, and may not be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Goodwin | Attorney Advertising

Written by:


Goodwin on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.