The US Department of Justice (DoJ) announced that they reached an agreement with a further two Category 2 Swiss banks. SB Saanen Bank AG and Privatbank Bellerive AG agreed to cooperate in any related criminal or civil proceedings, signed a Non-Prosecution Agreement (NPA), and pay a fine.
In the SB Saanen Bank AG NPA we learn that since August 2008, the bank continued to accept undeclared accounts and held a total of 110 US-related accounts with a maximum aggregate value of $62m. The bank will pay a penalty of $$1.365m.
In the case of Privatbank Bellerive AG, despite understanding that US taxpayers had a legal duty to report to the IRS and to pay taxes on income earned in accounts maintained in Switzerland, the bank opened and maintained undeclared accounts for US taxpayers.
According to the DoJ ‘prior to November 1, 2000, Bellerive required individuals subject to federal income tax under the U.S. Internal Revenue Code and who were beneficial owners of accounts to sign a “Form 1,” titled “W-9 Custodian Waiver.” The “Form 1” contained two statements from which the beneficial owner could choose one option. The first of the two options stated: “I would like to avoid disclosure of my identity to the US tax authorities under the new tax regulations. To this end, I declare that I expressly agree that my account shall be frozen for all new investments in US securities as from November 1, 2000’. Moreover an internal Bellerive memorandum dated September 16, 2008, from the then-head of Legal Compliance and Risk, stated that “all Swiss banks have set up the following rules for dealing with U.S. clients:
- Absolutely no contact as long as the client is on U.S. territory, even if the contact has been initiated by the client, including phone calls, e-mails, etc.;
- The client may only take up contact with the bank, if he is not in the United States;
- Assets may only be managed via a discretionary mandate, or not at all (cash on current account); and
- No mail correspondence allowed, hold mail agreements however are permitted.”
During the Applicable Period, Bellerive held a total of 20 US-related accounts with a peak value of assets under management of c.a. $68.9m. The bank will pay a penalty of $57,000.