The Tax Times: More & More Swiss Banks Are Striking Deals With the DoJ!

On April 9, 2015, we posted More Swiss Banks Are Striking Deals With the DoJ Including Providing Your Tax Information! where we discussed that during the week of March 30, 2015, Swiss bank BSI SA became the first bank to reach a resolution under a voluntary disclosure program for tax-related offenses run by the Justice Department. BSI agreed to pay a $211 million penalty after admitting it had for decades assisted thousands of U.S. clients in opening accounts in Switzerland and hiding assets from tax authorities.

"I would stay tuned," Acting Assistant Attorney General Caroline Ciraolo of the Justice Department's Tax Division said in an interview late on Tuesday, adding that a number of non-prosecution agreements will be signed in the "very near future."

On Friday, May 8, 2015 the The Department of Justice (DoJ ) announced that Vadian Bank AG (Vadian), located in St. Gallen, Switzerland, reached a resolution under the DOJ's Swiss Bank Program.

“The department continues to work with Swiss banks to reach final resolutions in accordance with the terms of the program, and is focused on its goal of completing this process expeditiously,” said Acting Assistant Attorney General Caroline D. Ciraolo, of the Department of Justice’s Tax Division.

“Simultaneously, the department has opened investigations of culpable individuals and entities based on information obtained from the Swiss banks in the program, and will pursue and prosecute those engaged or assisting others in evading U.S. tax obligations.”

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 (a/k/a Levers List);
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 its non-prosecution agreement, Vadian 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 $4.253 million penalty in return for the department’s agreement not to prosecute Vadian for tax-related criminal offenses.

In 2008, after it became publicly known that UBS was a target of a criminal investigation, Vadian accepted accounts from U.S. persons who were forced out of other Swiss banks. At this time, Vadian’s management was aware that the U.S. authorities were pursuing Swiss banks that facilitated tax evasion for U.S. accountholders in Switzerland, but was not deterred because Vadian had no U.S. presence. As a result of its efforts, after August 2008, Vadian attracted cross-border private banking business and increased its U.S. related accounts from two to more than 70, with $76 million in assets under management.

In resolving its criminal liabilities under the program, Vadian provided extensive cooperation and encouraged U.S. accountholders to come into compliance.

As a result of leads from banks involved in the voluntary disclosure program, Ciraolo said, the Justice Department is going after individual account holders as well as bankers and other professionals who helped conceal offshore accounts.

While Vadian’s U.S. accountholders who have not yet declared their accounts to the IRS may still be eligible to participate in the IRS’s offshore voluntary disclosure programs, the price of such disclosure has increased.

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