Swiss Bank Pays $211 Million to Avoid Prosecution for Aiding Tax Evasion

by Bruce Givner on April 14, 2015

On March 30, the US Department of Justice (DOJ) announced that the Swiss bank BSI SA had agreed to pay $211 million to the US in order to avoid prosecution for helping Americans evade taxes. The bank is the first Swiss financial institution to reach such a deal, which also requires it to disclose how it helped taxpayers hide assets from the Internal Revenue Service (IRS).

Begun in August 2013, the American disclosure program includes dozens of institutions and is designed to allow banks to escape criminal charges if they pay penalties and detail how they helped their American account holders. To qualify, banks must provide data on every US account and close those that are not in compliance with tax laws.

In addition to the fine, acting Associate Attorney General Stuart F. Delery said that BSI had also agreed to provide a “robust statement of facts” detailing sham entities, bogus financial insurance products, and other methods of hiding funds that the bank provided its clients. According to the DOJ, BSI helped its US clients create sham corporations and trusts which masked the true identity of US account holders. In other cases, clients opened “numbered” bank accounts that helped conceal their identity even from bank employees.

The DOJ also said the bank admitted that its clients used coded language in e-mails in order to gain access to funds. For example, a client could e-mail their private banker, “Can you download some tunes for us?” when they needed more cash loaded onto their cards.

Acting Assistant Attorney General Caroline D. Ciraolo clarified that individuals aren’t culpable simply because they are identified by a bank as part of a non-prosecution agreement. However, individuals and entities under indictment, under investigation, or with concerns about potential criminal liability should “contact and fully cooperate” with the DOJ.

Ciraolo stressed that those individuals who have yet to disclose their offshore accounts may still be eligible for voluntary disclosure. But the longer those individuals wait, the higher the costs. For example, if an American with an unreported account at BSI had gone into the offshore voluntary disclosure program last Friday, the penalty would have been 27.5% of their highest balance. For Americans entering the program starting Monday, the penalty is now 50%.

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