Banks Take Bigger Role in Latin American Fight Against Tax Evasion

When Argentina launched a tax amnesty program last year to bring billions of dollars back into the country, it found support from an unlikely corner: the banks whose clients had stashed money abroad.

President Mauricio Macri had no shortage of motivation to initiate the amnesty plan. Some $400 billion in undeclared funds was being held outside Argentina, the economy was in recession and the government badly needed to boost revenues, Reuters reported.

He offered residents until the end of March to declare assets and pay a fine to avoid prosecution for tax evasion. But there was an added incentive—one that marked a break with the past and had nothing to do with how the policy was designed.

This time wealthy Argentines with offshore accounts at two of the world’s largest private wealth managers, JPMorgan Chase & Co. and UBS AG, began receiving letters from the banks asking for proof they had declared their assets to tax authorities, three people with knowledge of the situation said.

By year’s end, Argentines had declared $97.8 billion, and are expected to declare much more by the March deadline. That surpassed initial analyst estimates of $60 billion and dwarfed the $2.6 billion declared in the 2013-2015 amnesty program.

“You can only explain this with some help from banks,” said Buenos Aires tax lawyer Eduardo Aguilera of RCTZZ Abogados. He said he had clients who received letters from JPMorgan and UBS as well as other clients who had been encouraged to participate through more informal conversations with bankers at Citigroup Inc. and Wells Fargo & Co.

It is unclear how much of the tally can be attributed to the involvement of the banks. But more than  half a dozen people involved in amnesty programs, including lawyers and accountants, said the banks were instrumental in the effort. They described similar actions by the banks in recent amnesty programs run by Brazil and Chile.

Those efforts mark a turnaround from banks’ more passive approaches toward earlier tax amnesty programs, and reflect a growing sensitivity to stricter regulations and perceptions they could be abetting tax evasion.