Lugano-based BSI SA on Monday became the first bank to use a DOJ amnesty program to resolve potential criminal offenses for helping U.S. taxpayers use secret accounts and offshore shell companies to evade taxes.
BSI SA is one of the 10 biggest private banks in Switzerland.
The DOJ’s Swiss Bank Program provides a path for Swiss banks to resolve potential criminal liabilities in the United States through non-prosecution agreements.
BSI and the DOJ signed a non-prosecution agreement Monday. BSI agreed to cooperate in any related criminal or civil proceedings, put in tougher controls to stop undeclared U.S. accounts, and pay a $211 million penalty.
BSI is the first bank to conclude a deal with the DOJ under the Swiss Bank Program since it started in August 2013.
“Swiss banks eligible to enter the program were required to advise the [DOJ] by December 31, 2013 that they had reason to believe that they had committed tax-related criminal offenses in connection with undeclared United States-related accounts,” the DOJ said Monday.
Banks already under criminal investigation for their Swiss-banking activities and all individuals were excluded from the program.
The DOJ’s Sally Quillian Yates said “Swiss banks are operating much differently today than they did just a few years ago, and the department’s Swiss Banking Program is a big part of that change.”
“We are using the information that we have learned from BSI and other Swiss banks in the program to pursue additional investigations into both banks and individuals,” she said.
BSI helped U.S. clients create sham companies and trusts that hid the identity of U.S. accountholders.
The DOJ said,
Many U.S. clients also opened “numbered” Swiss bank accounts that shielded their identities, even from employees within the Swiss bank. BSI acknowledged that in order to help keep identities secret, it issued credit or debit cards to many U.S. accountholders without names visible on the card itself.
The DOJ’s Swiss Bank Program requires banks to disclose all of their cross-border activities, turn over detailed information about accounts in which U.S. taxpayers have an interest, cooperate in treaty requests for account information, tell the DOJ about other banks that transferred funds into secret accounts or accepted funds when secret accounts were closed, close accounts of holders who aren’t complying with IRS reporting rules, and pay appropriate penalties.
“Banks meeting all of the above requirements are eligible for a non-prosecution agreement,” the DOJ said.
BSI had more than 3,000 active United States-related accounts after 2008. The bank knew many of the accounts weren’t disclosed to the IRS, the DOJ said.
“In resolving its criminal liabilities under the program, BSI provided extensive cooperation and encouraged hundreds of U.S. accountholders to come into compliance,” the DOJ said.
The DOJ’s August 29, 2013 release with details about the Swiss Bank Program is here.
Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.