Citigroup set to pay $6,00,000 in fine to FINRA : report

Citigroup set to pay $6,00,000 in fine to FINRA : report
PTI
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First Published: Mon, Oct 12 2009. 02 38 PM IST
Updated: Mon, Oct 12 2009. 02 38 PM IST
London: Citigroup will have to pay $6,00,000 in fine to an US regulator for providing derivative transactions as that helped foreign clients avoid paying billions of dollars in taxes on dividends, a media report says.
“Citigroup is to be fined over derivatives transactions that were partly designed to help foreign clients avoid taxes on dividends,” British daily the Financial Times has reported.
The $6,00,000 fine by Financial Industry Regulatory Authority (FINRA), which oversees broker dealers, comes after the US authorities hardened their stance on offshore tax operations with a series of actions in the past few months.
According to the publication, FINRA’s fine against Citigroup Global Markets is expected to be announced later on Tuesday and partly involves the bank’s failure to control trading related to strategies including so-called “total return swaps”.
Such swaps helped Citi’s foreign clients receive the full value of dividends from US securities without paying the withholding tax.
As part of their campaign, regulators have targeted the complex derivatives deals used by banks that they allege help offshore bank clients avoid billions of dollars in US taxes.
In US, dividends on stock paid to foreign investors is subject to withholding taxes, depending on applicable treaty between America and the foreign investor’s home country.
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First Published: Mon, Oct 12 2009. 02 38 PM IST