With HSZH Verwaltungs AG (HSZH), the US Department of Justice (DoJ) announced today that it reached its final Non-Prosecution Agreement (NPA) under the Category 2 of the US Tax Program. HSZH will pay a penalty of $49.757m.
As a reminder HSZH was previously known as Hyposwiss Privatbank AG. In 2014, HSZH unwound its residual banking operations under the supervision of FINMA, the Swiss banking regulator. On January 6, 2014, and in connection with the wind-down, the bank changed its name to HSZH Verwaltungs AG. HSZH returned its banking license, and FINMA released HSZH from its supervision on November 27, 2014.
Until 2013, HSZH conducted a US cross-border banking business. According to the DoJ ‘the senior management of HSZH viewed the exit of US clients by the targeted Swiss banks as a business opportunity to be seized immediately rather than a warning to be heeded. In addition to 83 accounts opened through two pipelines of US clients transferred from UBS, HSZH opened at least 275 accounts for US clients after August 2008’. The first pipeline of undeclared US clients transferred from UBS was solicited by the CEO of HSZH (CEO #1) from a UBS private banker who was a former colleague of CEO #1. According to the DoJ ‘the second pipeline of undeclared US clients predominantly from UBS were all introduced and managed by an external asset management firm in Zurich whose head of private banking was formerly in charge of UBS’s North America International business (EAM #1). In June 2008, the head of HSZH’s EAM Desk provided EAM #1 with HSZH marketing materials, and the Executive Board of HSZH unanimously approved a new business relationship with EAM #1 on September 24, 2008. On August 18, 2009, HSZH opened the last EAM #1 pipeline account. On Aug. 20, 2009, the head of private banking for EAM #1 was indicted by the US Attorney’s Office of the Southern District of Florida’.
From the HSZH’s NPA we learn that during the period since August, 2008, the bank held a total of 605 US-related accounts, both declared and undeclared, with an aggregate maximum value of $1.12bn in assets under management. HSZH will pay a penalty of $49.757m.
The DoJ has executed NPAs with 80 banks since March 30, 2015, when it started the first NPA of the Category 2 banks with BSI SA. The penalties imposed reached a total of more than $1.36bn. Every bank in the US Tax Program is required to cooperate in any related criminal or civil proceedings, and that cooperation continues through 2016 and beyond.