ZURICH BANK REACHES AGREEMENT WITH U.S. DOJ UNDER SWISS BANK PROGRAM

FROM:  U.S. JUSTICE DEPARTMENT
Friday, May 15, 2015
Finter Bank Zurich AG Reaches Resolution under Department of Justice Swiss Bank Program

The Department of Justice announced today that Finter Bank Zurich AG (Finter), located in Zurich, Switzerland, reached a resolution under the department’s Swiss Bank Program.

The Swiss Bank Program, which was announced on Aug. 29, 2013, provides a path for Swiss banks to resolve potential criminal liabilities in the United States.  Swiss banks eligible to enter the program were required to advise the department by Dec. 31, 2013, that they had reason to believe that they had committed tax-related criminal offenses in connection with undeclared U.S.-related accounts.  Banks already under criminal investigation related to their Swiss-banking activities and all individuals were expressly excluded from the program.

Under the program, banks are required to:

Make a complete disclosure of their cross-border activities;

Provide detailed information on an account-by-account basis for accounts in which U.S. taxpayers have a direct or indirect interest;

Cooperate in treaty requests for account information;

Provide detailed information as to other banks that transferred funds into secret accounts or that accepted funds when secret accounts were closed;

Agree to close accounts of account holders who fail to come into compliance with U.S. reporting obligations; and

Pay appropriate penalties.

Banks meeting all of the above requirements are eligible for a non-prosecution agreement.

According to the terms of the non-prosecution agreement signed today, Finter agrees to cooperate in any related criminal or civil proceedings, demonstrate its implementation of controls to stop misconduct involving undeclared U.S. accounts and pay a $5.414 million penalty in return for the department’s agreement not to prosecute Finter for tax-related criminal offenses.

Finter was founded in 1958 in Chiasso, Switzerland, and has a branch office in Lugano, Switzerland.  Since Aug. 1, 2008, Finter has maintained 283 U.S.-related accounts with an aggregate maximum balance of approximately $235 million.

Since its establishment and continuing through at least October 2011, Finter, through its managers, employees and others, aided and assisted U.S. clients in opening and maintaining undeclared accounts in Switzerland and concealing the assets and income they held in these accounts from the Internal Revenue Service (IRS).  After August 2008, when Swiss bank UBS AG publicly announced that it was the target of a criminal investigation by U.S. tax authorities, Finter accepted accounts from U.S. persons exiting other Swiss banks.

Finter provided services that allowed U.S. clients to eliminate the paper trail associated with the undeclared assets and income, including “hold mail” services and numbered and coded accounts.  In addition, Finter assisted clients in using sham entities as nominee beneficial owners of undeclared accounts, solicited Forms W-8BEN that falsely stated under penalties of perjury that the sham entities beneficially owned the assets in the undeclared accounts, and provided cash cards and credits cards linked to the undeclared accounts.

In resolving its criminal liabilities under the program, Finter encouraged U.S. accountholders to come into tax compliance and participate in the IRS Offshore Voluntary Disclosure Program.  While Finter’s U.S. accountholders who have not yet declared their accounts to the IRS may still be eligible to participate in the IRS Offshore Voluntary Disclosure Program, the price of such disclosure has increased.

Most U.S. taxpayers who enter the IRS Offshore Voluntary Disclosure Program to resolve undeclared offshore accounts will pay a penalty equal to 27.5 percent of the high value of the accounts.  On Aug. 4, 2014, the IRS increased the penalty to 50 percent if, at the time the taxpayer initiated their disclosure, either a foreign financial institution at which the taxpayer had an account or a facilitator who helped the taxpayer establish or maintain an offshore arrangement had been publicly identified as being under investigation, the recipient of a John Doe summons or cooperating with a government investigation, including the execution of a deferred prosecution agreement or non-prosecution agreement.  With today’s announcement of Finter’s non-prosecution agreement, its noncompliant U.S. accountholders must now pay that 50 percent penalty to the IRS if they wish to enter the IRS Offshore Voluntary Disclosure Program.

Acting Assistant Attorney General Caroline D. Ciraolo of the Tax Division thanked the IRS and in particular, IRS-Criminal Investigation and IRS’s Large Business and International Division for their substantial assistance, as well as Senior Litigation Counsel John E.  Sullivan and Trial Attorney Mark Kotila of the Tax Division, who served as counsel on this matter, and Senior Counsel for International Tax Matters and Coordinator of the Swiss Bank Program Thomas J. Sawyer of the Tax Division.

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.