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First Swiss bank resolution through voluntary disclosure program

In April, the Department of Justice reached a non-prosecution agreement with Swiss bank BSI SA. This was the first resolution through a 2013 program that offered banks an avenue to resolve criminal offenses related to undeclared U.S. accounts.

Other similar agreements are expected in the near future. We will continue to follow developments as we have over the last couple of years.

BSI will pay $211 million as a penalty for its role in helping U.S. clients conceal assets from tax authorities. An internal investigation by the Justice Department found that the bank managed about 3,500 U.S. client accounts with a value of $2.78 billion since 2008. It was unclear just how many of the accounts were undeclared.

While this case is the first, it will also likely be one of the largest resolved through the program according to the Department of Justice.

Previous settlements include UBS who agreed to pay a $780 million dollar fine after accepting a guilty plea in 2009. Wegelin & Co., the oldest Swiss bank, also pleaded guilty to violating U.S. tax laws and was ordered to pay $74 million. Last year, Credit Suisse pleaded guilty to helping Americans hide funds in offshore account and paid a $2.5 billion fine.

Cooperation and voluntary participation

BSI fully disclosed all illegal conduct, which included details on:

  • How the bank handled accounts and cross-border business
  • The names and functions of employees involved in the operations
  • How in-person presentation were used to attract account holders

The bank completed its own internal investigation and shared the results with the U.S. government. It had also approached the U.S. government to resolve possible exposure before the announcement of Swiss Bank Program.

Continued Enforcement

The Justice Department will use leads from the voluntary disclosure program to go after individual account holders and professionals who helped hide funds in offshore accounts. Approximately 100 banks signed up for the voluntary program and most should reach deals this year.

Source: Reuters, “‘Stay tuned’ for more Swiss bank deals over tax evasion: U.S. official.” Karen Freifeld, Apr. 8, 2015.

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