Wednesday, November 25, 2015

One More Bank Obtains NPA under DOJ Swiss Bank Program (11/25/15)

On November 24, 2015, DOJ announced here that the following Swiss banks have entered NPAs under the DOJ program for Swiss banks, here.

$7.453 million

One interesting excerpt from the press release:
In a few instances, IHAG assisted certain recalcitrant U.S. persons in further concealing undisclosed accounts by moving the funds to another jurisdiction and returning the funds to IHAG in a different name in order to conceal the U.S. persons’ ownership of the assets and enable the recalcitrant accountholders to continue to maintain undeclared accounts at IHAG.  For example, a family of U.S. persons held assets at IHAG in the name of a Liechtenstein foundation, and another unrelated U.S. person held funds in the name of a Panama foundation.  These foundation structures were designed to conceal the true beneficial ownership of the assets.  In the case of the Panama foundation, IHAG assisted the U.S. person in creating the foundation.  The value of the assets in the two accounts together totaled approximately $63 million. 
To assist these U.S. clients in further concealing their assets and evading U.S. taxes, in order to maintain these recalcitrant individuals as IHAG clients, IHAG personnel – with the assistance of an unaffiliated fiduciary services firm in Zurich and with the knowledge and approval of bank management – moved assets from the two foundation accounts to an unaffiliated bank in Hong Kong. The funds then returned to IHAG under the name of a Singapore entity wholly owned by IHAG’s parent company, IHAG Holding, so that the accounts would bear no trace of the U.S. persons’ beneficial interest in the assets held in the accounts.  The multi-step scheme also involved an entity in Hong Kong in which IHAG Holding owned a minority interest. 
This scheme enabled the assets to be stripped of any indicia of U.S. ownership.  In effectuating this scheme, IHAG took advantage of Swiss law, which allowed IHAG in these circumstances to treat the accounts as if know-your-customer review of the accounts had occurred in Singapore.  Accordingly, IHAG did not apply Swiss know-your-customer requirements when the accounts returned to IHAG under a different name.  IHAG’s files for the accounts deliberately did not contain any documentation of the U.S. persons’ interest in the assets in the accounts.  IHAG knowingly and willfully committed tax fraud with respect to those accounts.  
In a few other instances, IHAG assisted clients in establishing foundations used to hold their assets at IHAG.  The U.S. persons who were the beneficial owners of the foundation accounts were properly identified as beneficial owners of the foundations on certain forms pursuant to Swiss know-your-customer rules.  However, the foundations were identified as the beneficial owner on IRS Forms W-8BEN, thereby masking the true beneficial ownership of the accounts by U.S. persons. 
Here are the updated statistics for the Swiss Bank Program:

US DOJ Swiss Bank Program
Number Resolved
Total Costs
   U.S. / Swiss Bank Initiative Category 1 (Criminal Inv.) *
   U.S. / Swiss Bank Initiative Category 2 **
   U.S. / Swiss Bank Initiative Category 3

   U.S. / Swiss Bank Initiative Category 4

Swiss Bank Program Results


* Includes subsidiary or related entities counted as separate entities, so the numbers may exceed the numbers the IRS and DOJ posted numbers which combine some of the entities.

** DOJ says original total was 106 but that it expects about 80 to complete the process.

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