PKB Privatbank AG, Falcon Private Bank AG and Credito Privato Commerciale in liquidazione SA (CPC) have reached a solution with the US Department of Justice (DoJ) under the US Tax Program for Category 2 banks. The institutions will continue to cooperate in any related criminal or civil proceedings with the DoJ, demonstrate its implementation of controls to stop misconduct involving undeclared U.S. accounts, and pay each a fine. In return the DoJ offer them a Non-Prosecution Agreement (NPA) for tax-related criminal offense.
In the PKB Privatbank AG’s NPA we learn that the institution assisted US clients in concealing assets and income from the Internal Revenue Service (IRS). These means included code name or numbered accounts and hold mail services. PKB also used a variety of other services that it knew assisted US tax payers in concealing their PKB accounts. According to the DoJ, it included:
- referring US taxpayers to an outside service provider to establish an offshore structure for purposes of holding an undeclared account at PKB;
- assisting US taxpayers in transferring assets from accounts being closed at PKB to other PKB accounts held by a non-US relative or other non-US parties;
- assisting US beneficial owners in transferring assets from accounts being closed at PKB to accounts at other banks in Switzerland;
- opening accounts for US taxpayers who had left other banks being investigated by the department, including UBS; and
- providing credit cards or debit cards linked to undeclared accounts held in the name of an offshore trust, foundation or company that was beneficially owned by one or more US taxpayers.
Since August 1, 2008, PKB had 244 US-related accounts, both declared and undeclared, with an aggregate maximum balance of c.a. $328.8m. PKB will pay a penalty of $6.328m.
In the Falcon’s NPA we learn that through its managers, employees, and third parties, Falcon knew that some US-related accounts they maintained were not complying with US income tax and reporting. The majority of Falcon’s US-related accounts were held in the names of entities or structures or even insurance segregated accounts. According to the DoJ, Falcon also:
- accepted instructions in connection with one U.S.-related account not to invest in U.S. securities and not to disclose the names of U.S. taxpayer-clients to U.S. tax authorities, including the IRS;
- issued checks, including series of checks, in amounts of less than $10,000, in seven cases, that were drawn on accounts of U.S. taxpayers or structures even though Falcon knew or had reason to know that the withdrawals were made to avoid triggering scrutiny; and
- provided cash (310,000 Swiss francs and $250,000) at account closure in July 2011 to a U.S. citizen with signatory authority over an account held in the name of a British Virgin Island nominee company.
Since August 1, 2008, Falcon maintained a total of 84 US-related accounts with an aggregate value of approximately $134m. Falcon will pay a penalty of $1.806m.
CPC cannot be found on our list of banks because it went into volontary liquidation in June 2012 while it only received its Swiss banking license in 2004. Ernst & Young AG, Zurich (EY) was appointed as liquidator. CPC offered a variety of traditional Swiss banking services, including numbered accounts and hold mail service. CPC also employed other means to assist U.S. taxpayers in concealing their undeclared accounts.
In the CPC’s NPA we learn that after March 13, 2012, CPC decided to discontinue its services to US customers and closed its last US-related account in April 2013 according to the DoJ. In the period between August 1, 2008, and CPC’s liquidation, CPC had 16 US-related accounts with an aggregate maximum balance of c.a. $71m and will pay a penalty of $348,900.