Wednesday, June 3, 2015

Two More Banks Obtain NPAs Under DOJ Swiss Bank Program (6/3/15)

DOJ Tax announces here that two more banks have obtained NPAs under the program.  The banks are Rothschild Bank AG and Banca Credinvest SA. The press releases have links to the NPAs and Statements of Facts.  The key excerpts from the press release are (emphasis supplied by JAT):
Rothschild Bank AG (Rothschild) was founded in 1968 and is headquartered in Zurich, Switzerland.  Rothschild offered services that it knew could and did assist U.S. taxpayers in concealing assets and income from the Internal Revenue Service (IRS), including code-named accounts, numbered accounts and hold mail service, where Rothschild would hold all mail correspondence for a particular client at the bank.  These services allowed certain U.S. taxpayers to minimize the paper trail associated with the undeclared assets and income they held at Rothschild in Switzerland.  For a number of years, including after Swiss bank UBS AG announced in 2008 that it was under criminal investigation, and following instructions from certain U.S. taxpayers, Rothschild serviced certain U.S. customers without disclosing their identities to the IRS.  Some of Rothschild’s U.S. clients had accounts that were nominally structured in the names of non-U.S. entities.  In some such cases, Rothschild knew that a U.S. client was the true beneficial owner of the account but nonetheless obtained a form or document that falsely declared that the beneficial owner was not a U.S. taxpayer.  Since Aug. 1, 2008, Rothschild had 66 U.S.-related accounts held by entities created in Panama, Liechtenstein, the British Virgin Islands, the Cayman Islands or other foreign countries with U.S. 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 U.S. securities without reporting account earnings or transmitting any withholding taxes to the IRS, as Rothschild was required to do.  Rothschild also opened accounts for U.S. taxpayers who had left other Swiss banks that the Department of Justice was investigating, including UBS.  Since Aug. 1, 2008, Rothschild had 332 U.S.-related accounts with an aggregate maximum balance of approximately $1.5 billion.  Of these 332 accounts, 191 accounts had U.S. beneficial owners and an aggregate maximum balance of approximately $836 million.  Rothschild will pay a penalty of $11.51 million. 
Located in Lugano, Switzerland, Banca Credinvest SA (Credinvest) started operations as a fully licensed bank in 2005.  Credinvest offered a variety of services that it knew could assist, and that did assist, U.S. clients in concealing assets and income from the IRS, including hold mail service and numbered accounts.  Credinvest did not set up any formalized internal reporting regarding U.S. clients and did not adopt any procedures to ascertain or monitor the compliance of its U.S. clients with their U.S. tax obligations.  In late 2008, an external asset manager referred 11 accounts to Credinvest, all of which were for U.S. 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 U.S. tax obligations.  The bank thus aided and assisted those clients in concealing their accounts from U.S. authorities.  Since Aug. 1, 2008, Credinvest had 31 U.S.-related accounts with just over $24 million in assets.  Credinvest will pay a penalty of $3.022 million.
These two banks will be added to the IRS List of Foreign Financial Institutions or Facilitators, here, which will up the offshore penalty cost in OVDP.

I gather, particularly in the case of Rothschild that most of the U.S. beneficial owners had become tax compliant and gave Rothschild appropriate proof so as to mitigate the penalty down to $11.51.

Finally, my tally of penalties paid under the DOJ Swiss Bank Program is $237,411,000 (subject to errors in rounding) for 9 banks.  Not bad.  And, there will be perhaps 70 more (based on a recent estimate of 80 to obtain NPAs.

1 comment:

  1. Jack,

    It is agreed that 237M is a good recovery (ignoring all other related costs incurred by the banks and the DOJ). Long term, it is the forward compliance that is supposed to really add to the coffers of the treasury.

    What we are not seeing is:

    1) Large amounts of US related accounts. Even the DOJ has stated in these NPAs that the connections are often times tenuous. EU/Swiss citizens who took residence in the USA, USA corporations with no US persons as owners (Delaware most likely), US citizens who lived outside the USA, etc. etc. To this point, UBS, CS, and BSI were the top dogs... all of these others are small potatoes.

    2) $100B to $300B in (yearly) tax losses. (i.e.

    I bring up these 2 points as these were the claims made by Carl Levin, McCain, IRS, etc. The whole (stated) reason for all of this.

    I have assembled the data from the NPAs and I am hoping you can share the data as an XLS spreadsheet like you currently link/share the Offshore Charges / Convictions Spreadsheet (11/7/14)? I believe this data is historically important and should be shared via this website.

    Bank Name - Penalty - Total US Accounts listed in NPA - Value of US accounts listed in NPA

    BancaCredinvest SA

    Rotshchild Bank AG

    Société Générale(Lugano-Svizzera)

    MediBank AG

    LBBW (Schweiz) AG

    Scobag Privatbank AG

    Finter Bank Zurich AG

    Vadian Bank




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