Neteller, the beleaguered Isle of Man financial intermediary firm whose two founders were arrested on money laundering charges in the United States, announced that they have come to an agreement with the US Attorney’s Office for the Southern District of New York (where the potential prosecution will take place). While it’s very unlikely the agreement with the DOJ will be made public, Neteller’s press release notes that:
- Within the next 75 days (by June 4th) they will announce a plan for the return of funds of their American customers;
- A consulting firm, Navigant Consulting, Inc., will, according to the press release, “…provide a report to the USAO on the Group’s current financial condition.”
- Neteller “is continuing to cooperate with the USAO’s investigation, under the advice of its legal advisers and in accordance with court orders in the Isle of Man”
So what does this mean for a Neteller customer?
1. Neteller is cooperating with the US Attorney’s Office (the Department of Justice). What is the DOJ interested in? Money laundering, of course. Large accounts with activity. Individuals (and entities) that haven’t reported their foreign bank accounts. Individuals and entities that haven’t filed tax returns on income earned overseas.
2. If you have a Neteller account, and you had $10,000 in it at any time during 2006, you should make sure that you mark the box on Schedule B of your tax return that indicates you have a foreign bank account. The IRS will likely, by year-end, have balance information on every Neteller account. You also need to file Form TD F 90-22.1 with the Department of the Treasury (not the IRS) by June 30, 2007.
3. If prior to 2006 you had $10,000 at Neteller and you didn’t file the TD F 90-22.1, you should consider filing it today, attaching a note that says you weren’t aware of the law requiring notification of a foreign bank account. The penalty for not filing the form is $10,000 (minimum), and it’s a felony—you can go to prison for this. Do realize you are likely going to have your tax return audited, but if you’re choosing between an audit and jail time, I know which one I’d choose.
4. A client asked me over the weekend when I thought he’d see his Neteller funds. I told him late Summer or Fall. I think a July to September time frame is a reasonable estimate.
So the Neteller saga continues, but the ending is clear. American customers will almost certainly see their funds this year, and the DOJ (and later, the Treasury Department and the IRS) will see Neteller’s records this Spring or Summer.
