A major Swiss bank will pay $211 million in a deal to avoid prosecution on charges it secretly helped American clients evade U.S. taxes, the Department of Justice said Monday.
The agreement with BSI SA makes the private bank the first to come clean under a federal program that encourages overseas banks to disclose their role in suspected criminal offenses stemming from undeclared offshore accounts held by wealthy U.S. citizens.
Along with the financial penalty, BSI, one of Switzerland’s 10 largest banks, agreed to disclose
“detailed information on an account-by-account basis for every account it has in which a U.S. taxpayer has a direct or indirect interest,” said acting Associate Attorney General Stuart Delery.
Additionally, the Lugano-headquartered bank disclosed how its cross-border business for U.S.-related accounts operated, provided the name and function of those involved in the operation and turned over the total number of accounts and aggregate maximum value they held as of August 2008 and afterward.
BSI also agreed to ensure the closing within two years of all previously unreported accounts held by U.S. clients.
The deal marks the latest development in a multiyear federal crackdown on offshore tax evasion on income secretly held in offshore accounts by wealthy Americans.
Federal tax laws require taxpayers to disclose overseas accounts and the assets and income they contain to the IRS. Despite that mandate, a 2008 Senate report estimated that offshore tax evasion costs the U.S. Treasury at least $100 billion annually.
“BSI is the first bank to sign a non-prosecution agreement under the Swiss Bank Program, but it will not be the last,” said Delery.
By entering the non-prosecution agreement, “BSI resolves its liability with the DOJ arising from its legacy U.S. private banking cross-border business,” the bank said in a statement issued Monday.
BSI said the bank’s net profit “was significantly impacted by the penalty payment,” and stood at 2.2 million Swiss francs, or nearly $2.3 million.
The agreement facilitates the completion of BSI’s pending acquisition by Banco BTG Pactual SA, an investment bank and asset manager whose website describes it as having a dominant franchise in Latin America.
The Department of Justice program applied only to Swiss banks that weren’t already under investigation by federal prosecutors and the IRS. It was designed to encourage cooperation about which the DOJ “had little or no information,” operated overseas and acknowledged a role in concealing accounts involved in U.S. tax evasion, said acting Assistant Attorney General Caroline Ciraolo.
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