The US Department of Justice announced that 2 more Category 2 banks, St. Galler Kantonalbank AG (SGKB) and E. Gutzwiller & Cie, Banquiers, have reached a solution under the US Tax Program. These banks have each signed a Non-Prosecution Agreement (NPA) will collectively pay penalties totaling more than $11m. According to the terms of the NPAs signed ‘each bank 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 penalties in return for the department’s agreement not to prosecute these banks for tax-related criminal offenses’.
In the SGKB’s NPA, we learn that the bank offered a variety of services that could assist US clients in hiding assets and income from the Internal Revenue Service (IRS). SGKB agreed to open accounts for at least 58 US taxpayers who had left other banks without ensuring that each such account was compliant with US tax law. Since August, 2008, SGKB held 41 entities or structured accounts.
SGKB had an exception for opening accounts without a W-9 under which 6 US-related accounts with c.a. $9.2m and at least 72 accounts from external manager were opened in Q4, 2008. Most of these accounts were transferred from UBS.
Since August, 2008, SGKB held a total of 626 US-related accounts with c.a. $303m in assets under management. SGKB will pay a penalty of $9.481m.
In the E. Gutzwiller & Cie’s NPA we learn that since the beginning of 2009, Gutzwiller began to push US clients to close the account. Over the following year, the US client began liquidating the account by withdrawing large amounts of cash and travelers checks. The DoJ adds that ‘in late 2010, Gutzwiller declined a request to liquidate remaining funds in the account in a similar manner and informed the US client that it would only close the account through a single payment in the form of a cash withdrawal, a single check or a wire transfer’. Since August, 2008, Gutzwiller held a total of 128 US-related accounts with a high value of c.a. $271m. Gutzwiller will pay a penalty of $1.556m.