Despite pressure from the Treasury Department and governments around the world, many offshoring nations refused to cooperate with international efforts to track down tax evaders and money launderers during the late 1990s. Scrantom, who helped these nations write the privacy laws governing foreign-held assets, was not surprised that his former clients refused to bend to U.S. pressure. “For many of these places it’s their only industry. What else are they going to do to make money?”

Ultimately, though, the offshoring nations did back down. The United States, working in tandem with a coalition of European tax authorities, established several treaties with the governments of tax havens that soften privacy rules and force banks in these nations to give up tax evaders or freeze accounts when faced with a court order from the U.S. Justice Department. The IRS also signed qualified intermediary, or QI, agreements directly with banks doing business in offshore havens. In return for collecting and filing information on their U.S.-based customers with the IRS, QI banks gain several regulatory advantages in their dealings with the IRS and the Treasury Department. QI banks also have access to the U.S. financial markets.