The Department of Justice (DoJ) announced that two more banks of the Category 2, namely Rothschild Bank AG and Banca Credinvest SA, have reached an agreement under the US Tax Program and signed Non-Prosecution Agreements (NPA).
Rothschild offered services that it knew were assisting US taxpayers in concealing assets and income from the Internal Revenue Service (IRS), including code-named accounts, numbered accounts and hold mail service. ‘Since Aug. 1, 2008, Rothschild had 66 US-related accounts held by entities created in Panama, Liechtenstein, the British Virgin Islands, the Cayman Islands or other foreign countries with US beneficial owners. At least 21 of these accounts had false IRS Forms W-8BEN in the file, which are used to identify the beneficial owner of an account. Rothschild knew it was highly probable that such U.S. clients were engaging in this scheme to avoid U.S. taxes but permitted these accounts to trade in US securities without reporting account earnings or transmitting any withholding taxes to the IRS, as Rothschild was required to do’ reports the DoJ. Since Aug. 1, 2008, Rothschild had 332 US-related accounts with an aggregate maximum balance of approximately $1.5bn. Of these 332 accounts, 191 accounts had US beneficial owners and an aggregate maximum balance of approximately $836 million. Rothschild signed an NPA and will pay a penalty of $11.51m
The second instittution to reach an agreement is Banca Credinvest SA. It also offered services such as hold mail and numbered accounts. According to the DoJ investigation ‘in late 2008, an external asset manager referred 11 accounts to Credinvest, all of which were for US clients who had left UBS. The bank delegated to that external asset manager the primary management of those accounts and failed to ascertain the compliance of those clients with their US tax obligations. The bank thus aided and assisted those clients in concealing their accounts from US authorities’. Since August, 2008, Credinvest had 31 US-related accounts amounting to over $24m in assets. Credinvest signed an NPA and will pay a penalty of $3.022m.