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Thursday, April 2, 2015

ACTING AG DELERY'S REMARKS ON FIRST RESOLUTION IN SWISS BANK PROGRAM

FROM:  U.S. JUSTICE DEPARTMENT 
Acting Associate Attorney General Stuart F. Delery Delivers Remarks at Pen and Pad Announcing First Resolution in Swiss Bank Program
Washington, DCUnited States ~ Monday, March 30, 2015

Good morning and thank you for joining us.  I am here with Caroline Ciraolo, the Acting Assistant Attorney General for the Tax Division, to announce a major step in the Justice Department’s ongoing efforts to prevent offshore tax evasion.

According to a 2008 Senate report, the use of secret offshore accounts to evade U.S. taxes costs the Treasury at least $100 billion each year.  In 2013, the Attorney General created the Swiss Bank Program as an innovative way to get the financial institutions that facilitated this massive fraud on the American tax system to come forward with information about their wrongdoing – and to ensure that they are held responsible for it.

To participate in the program, a bank cannot already be under investigation for its tax-related conduct.  It must make a complete and accurate disclosure of its cross-border activities, and provide 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.  It must assist the department in its continuing work to identify and respond to offshore tax evasion, by providing detailed information as to other banks that transferred funds into secret accounts or that accepted funds when the secret accounts were closed, and by cooperating in treaty requests.  And it must pay a meaningful penalty for its wrongdoing.

Today, I am proud to announce a resolution between the department and BSI SA that makes clear that the Swiss Bank Program is working.  BSI, one of the 10 largest banks in Switzerland, has agreed to pay a $211 million penalty for its actions that helped facilitate tax evasion.  It has agreed to a robust statement of facts that describes the sham entities, bogus financial insurance products and other methods of concealing funds that BSI provided for its clients.  It has agreed to provide information and cooperate in any related criminal or civil proceedings.  And it has agreed to implement controls to stop misconduct involving undeclared U.S. accounts.

Before I turn things over to Caroline, who can provide more detail about this resolution, I want to highlight three key features of the department's efforts in the fight against offshore tax crime.

First, BSI is the first bank to sign a non-prosecution agreement under the Swiss Bank Program, but it will not be the last.  The success of this effort to get financial institutions to come in on their own and admit to their wrongdoing is a reflection on our commitment over the past six years to aggressively and systematically attack offshore tax avoidance schemes.  Since 2009, the department has charged numerous financial institutions, facilitators and more than 100 offshore bank account holders.  Our enforcement efforts have reached far beyond Switzerland, as evidenced by actions involving banking activities in India, Luxembourg, Liechtenstein, Israel and the Caribbean.  And as we look forward, the program will continue to assist the department’s efforts to investigate and prosecute U.S. taxpayers who, when faced with the risk of detection, chose to move funds away from banks under investigation to banks that they believed might be better havens for tax secrecy.

Second, as we have seen for some time now, the Swiss Bank Program, along with our aggressive investigations, has changed the way Swiss banks do business.  Due to the increased technical sophistication of financial instruments and the widespread use of the Internet, it is now easier than ever to move money around the world.  But we have made sure that those trends won’t make it easier for wealthy Americans to avoid paying their fair share of taxes.  Since it became public that the department was actively investigating offshore tax evasion in Switzerland, many financial institutions have adopted policies against setting up secret accounts and illegal tax avoidance schemes, and have put in place robust compliance programs to ensure that the policies are followed.  This is an example of the department’s actions having a real deterrent effect.    

Third, we’re grateful for the positive working relationship we have had with the Swiss government.  They have encouraged their banks to participate in the program and accommodated our legitimate needs for information relevant to violations of American law.  I thank them and look forward to a continued strong partnership.

With that, I’d like to welcome Caroline Ciraolo, the Acting Assistant Attorney General for the Tax Division.  Thank you.