The US Department of Justice ( DoJ) announced that Privatbank IHAG Zürich AG (IHAG) reached a solution in the tax dispute with the US under the so-called US Tax Program. IHAG signed a Non-Prosecution Agreement and will pay a penalty of more than $7m.
‘Through the information provided by IHAG and other Swiss banks in the Program, the department has unraveled the various schemes and identified the foreign jurisdictions used by US taxpayers to conceal their foreign accounts’, said Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division in the DoJ statement.
IHAG intentionally opened and maintained accounts that were undeclared with the knowledge that, by doing so, IHAG was helping these U.S. taxpayers violate their legal duties.
As a misconduct example the DoJ mentioned that in order to assist its US clients in concealing their assets from the IRS and evading US taxes ‘IHAG personnel – with the assistance of an unaffiliated fiduciary services firm in Zurich and with the knowledge and approval of bank management – moved assets from the two foundation accounts to an unaffiliated bank in Hong Kong. The funds then returned to IHAG under the name of a Singapore entity wholly owned by IHAG’s parent company, IHAG Holding, so that the accounts would bear no trace of the US persons’ beneficial interest in the assets held in the accounts. The multi-step scheme also involved an entity in Hong Kong in which IHAG Holding owned a minority interest’. This scheme enabled the assets to be stripped of any indicia of US ownership.
IHAG also assisted clients in establishing foundations. In this case, the US persons who were the beneficial owners of the foundation accounts were properly identified as beneficial owners of the foundations on certain forms pursuant to Swiss know-your-customer rules. However, the foundations were identified as the beneficial owner on IRS Forms W-8BEN.
In IHAG’s NPA we learn that since August, 2008, the bank held a total of 182 US-related accounts with a high value of approximately $791m. IHAG will pay a penalty of $7.453m.