The United States Justice Department is investigating three of Israel's largest banks over suspicions that their branches in Switzerland may have helped US clients evade taxes, reported Reuters, citing unnamed sources.
The banks reportedly under investigation are Bank Hapoalim, Bank Leumi le-Israel BM and Mizrahi-Tefahot. According to a letter issued by US Deputy Attorney General James Cole, the three Israeli banks have until September 23 to produce broad statistical information on their Swiss operations with US clients. However, there was no indication on the possible consequences in the event that the banks fail to do so.
In response, a spokesman for Bank Leumi told Reuters via email that the company was cooperating fully with US authorities. On the other hand, spokespeople for Mizrahi Tefahot and Bank Hapoalim did not respond to requests for comment.
Bank Leumi’s representative Aviram Cohen wrote in an emailed statement: "the request was for general statistical data. It appears that this data was to serve as a basis for a comprehensive arrangement between the Swiss and American Authorities. Obviously, Bank Leumi Switzerland is cooperating fully with the Authorities, in accordance with Swiss Law and under legal advisement."
Along with the three Israeli banks, Deputy Attorney General James Cole also wrote to seven other Swiss banks requesting their information in regards to US tax evaders.
Last week, Swiss banking authorities agreed to hand over US citizens' bank information over to the US government after a prolonged period of pressure from Washington.
The shift to Israel from Switzerland could signal the broadening of a landmark probe by the US Justice Department that began in 2007 with UBS AG, Switzerland's largest bank.
Datan Dorot, a tax lawyer in Miami who represents US clients of Israeli banks, told Reuters that bankers from an Israeli branch of Bank Leumi had called his clients about six weeks ago, telling them to close their accounts because of the increased level of scrutiny.
Many of his clients, Dorot said, held dual citizenship in both the US and Israel and had thus opened their Israeli accounts with Israeli passports. However, their US citizenship meant that they had to pay taxes to the US government as well.
A spokesman for the Bank of Israel, the country's central bank, said on Thursday that the agency "cannot comment on questions that refer to specific banking corporations."
David Garvin, a tax lawyer in Miami representing American clients of offshore banks, added that, "Israel isn't really anxious to be viewed as turning people over."