December 14, 2009 / 3:07 PM / in 8 years

Canada tax-haven probe names RBC Dominion clients

TORONTO (Reuters) - Canada’s top taxman says he has a list of at least 106 names of people who allegedly used the trading arm of the nation’s top bank, Royal Bank of Canada, to set up offshore tax havens in the European principality of Liechtenstein.

Minister of National Revenue Jean-Pierre Blackburn also told Reuters in an interview on Monday that the government’s investigation of use of tax havens will spread across Canada and to other banks following a tip-off that produced the list of RBC Dominion Securities clients.

“We received some information from an informant who gave us a list of 106 names of people who have made investments in the LGT bank in Lichtenstein,” Blackburn told Reuters, adding that 46 files have been created from the list, with 10 of them already audited.

The investigation currently involves investors in and around Victoria, British Columbia, who allegedly used RBC Dominion and two RBC Dominion advisers as a conduit to park their money in foundations in Liechtenstein.

Specifically, the investors were said to be using a unit of Liechtenstein Bank, LGT Treuhand, to create entities and conceal their wealth abroad, and avoid paying taxes.

Blackburn said the government filed so-called “unnamed requirement” requests with Canadian courts in July to access information regarding the two RBC DS advisers’ clients across Canada, and expects new information to come to light.

OTHER BANKS, OTHER COUNTRIES

He said RBC Dominion Securities is cooperating fully with the investigation.

In a written statement sent to Reuters and other news agencies, David Agnew, chief executive and national director of RBC Dominion Securities Inc, said the firm had never encouraged Canadians to set up entities in Liechtenstein, and never instructed investment advisors to recommend the practice.

Other banks could soon face similar investigations.

“We don’t stop there,” Blackburn said. “After that we will start to see about all other banks in Canada.”

He said Canada has also been in talks with other countries to discuss the issue of tax havens and the impact on each nation’s tax revenue.

“We start with Liechtenstein, but there are many other countries that we could imagine where investments have been made and not declared,” Blackburn said, urging Canadians to come forward and disclose unpaid taxes before the government catches up to them.

It is not illegal for Canadians to invest abroad, but they must declare revenue from foreign sources.

“We have names, we’ll have other names and we tell those people, before we call you, or before we send you a letter you should make a voluntary disclosure,” Blackburn said.

Offenders who opt for voluntary disclosure will be forced to pay back taxes with interest, but will avoid court proceedings and legal penalties.

More than a dozen Canadians who have held the offshore accounts with LGT Group in Liechtenstein have made disclosures admitting to evading taxes, or are being audited by the agency for tax evasion, Canada’s Globe and Mail said.

Blackburn said that in the process of auditing 10 files so far, which each file potentially holding more than one name, authorities have discovered C$3 million ($2.8 million) in uncollected taxes.

“We expect up to now that when the 46 files are completed, we should have obtained around C$17 million in income tax,” he said.

($1=$1.06 Canadian)

Additional reporting by Scott Anderson; editing by Peter Galloway

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