Offshore tax evasion has been and continues to be a top enforcement priority for the U.S. federal government. On August 19, 2013 the United States Department of Justice (DOJ) and the Swiss Federal Government announced the creation of the Swiss Bank Program. This program, which is limited to Swiss banks not already under criminal investigation by the DOJ, provides a strong incentive for Swiss banks to cooperate with the DOJ’s efforts to combat tax evasion associated with the use of secret foreign bank accounts. Under this program, Swiss banks that meet the eligibility criteria have the opportunity to come forward and report activities they engaged in to help U.S. account holders evade their tax obligations. When an eligible Swiss bank voluntarily comes forward and fulfills the program’s conditions, including providing information on U.S. account holders, the bank will be able to avoid criminal prosecution through the execution of a non-prosecution agreement with the DOJ.
BSI SA (BSI), one of the 10 largest private banks in Switzerland, was the first bank to reach a resolution with the DOJ under the Swiss Bank Program. On March 13, 2015 BSI entered into a non-prosecution agreement (NPA) with the DOJ requiring BSI to pay a $211 million penalty in exchange for the department’s agreement not to criminally prosecute the bank for its conduct. In addition to paying the monetary penalty, BSI was also required to fulfill certain criteria under the NPA, including cooperating with the DOJ in any related criminal or civil proceedings and putting into place controls to stop misconduct involving unreported U.S. accounts.
Penalties Imposed Under the Program Surpass $600 Million
Since the execution of the BSI non-prosecution agreement in March 2015, the DOJ has reached resolutions with 60 additional banks, with the penalties imposed under the program now surpassing $600 million. While BSI’s $211 million penalty is by far the largest monetary penalty to date, four other NPAs involve penalties in excess of $20 million:
- BNP Paribas (Suisse) SA ($59,783,000);
- Deutsche Bank (Suisse) SA ($31,026,000);
- EFG Bank European Financial Group SA, Geneva;
- EFG Bank AG ($29,988,000); and
- Maerki Baumann & Co. AG ($23,920,000).
The two most recent resolutions, which were both entered into on December 10, 2015, require Cornèr Banca SA (Cornèr) to pay the sum of $5,068,000 to the DOJ and Bank Coop AG (Bank Coop) to pay the sum of $3,223,000.
Swiss financial institutions have increasingly been voluntarily coming forward to take advantage of the Swiss Bank Program, at the expense of their foreign account holders. As a condition of participation in this program, these institutions are required to cooperate with the U.S. federal government’s investigations into tax evasion, including turning over detailed information about their account holders.
If you have concerns about an undisclosed foreign financial account or have questions about how the Swiss Bank Program may impact your offshore activities, contact a Virginia tax attorney at Thorn Law Group as soon as possible.
