By MARTELLA MATTHEWS Guardian Staff Reporter
Effective today, all Mastercards issued by Leadenhall Bank and Trust are cancelled under pressure from the United States Internal Revenue Service, a move that will affect thousands of people.
Bank president William Jennings on Monday confirmed cancellation of the licence to provide offshore Mastercards.
Leadenhall, which was established in 1975, marketed offshore credit cards to expatriates as a means of accessing personal funds outside The Bahamas.
"Leadenhall was able to attract millions of dollars in deposits as a result of this business which was a very sophisticated operation," sources said.
The IRS views this and similar offshore credit-card operations as tax-avoidance schemes. According to the IRS, "credit cards provide easy access to offshore funds and accounts in tax haven countries that allow income to be hidden. U.S. citizens must pay tax on their worldwide income."
Mr. Jennings said the bank "has assembled a team of customer-service specialists to work with cardholders and card-related matters as a result of this decision. Cardholders will be contacted directly by the bank with account closing details."
Cardholders with immediate concerns should contact customer service at (242) 502-5550 or (242) 393-6431.
"This is a very sophisticated operation that is IT-oriented
and good for The
Bahamas, but you don't go around rubbing it in Uncle Sam's
eye. They should
have been more discreet," according to one financial analyst.
Beginning three years ago, the IRS began pressuring on major credit-card companies such as Visa, Mastercard and American Express to make client records available. The issuance of offshore credit cards is a common practice by banks in approximately 30 tax-haven countries.
The IRS was able to develop hundreds of cases for civil audits and criminal investigations as a result of information gathered from the credit card companies.
The cancellation of Leadenhall's license to issue Mastercard is a part of an initiative by the IRS that aims at bringing U.S. taxpayers who used offshore payment cards or other financial arrangements to hide income into compliance with U.S. tax laws. The IRS website maintains that: "The average person doesn't need an offshore credit card, but many people are getting them to help evade taxes."
Leadenhall's credit card operation was managed by Axxess International, which provided the electronic facilities for the bank's credit card operation.
"Leadenhall apologises in advance to all its valid customers for the short notice regarding this development and the inconvenience that is bound to arise as a result of Mastercard's decision," Mr. Jennings said. "Unfortunately, this decision is the result of circumstances beyond Leadenhall's control.
Caption:William Jennings
Posted Tuesday 29 July, 2003
