PKB Privatbank AG was founded in 1958 and has its head office in Lugano, Switzerland. It also maintained offices in Bellinzona, Zurich, Geneva and Lausanne, Switzerland. PKB was aware that some U.S. taxpayers who had opened and maintained accounts at PKB were not complying with their U.S. income tax and reporting obligations. PKB offered a variety of traditional Swiss banking services that it knew would, and in certain instances did, assist U.S. clients in concealing assets and income from the Internal Revenue Service (IRS). These services included code name or numbered accounts and hold mail services, pursuant to which PKB would hold all mail correspondence for a particular client. These services allowed U.S. clients to conceal their identities and minimize the paper trail associated with the undeclared assets and income they held at PKB in Switzerland.
PKB also employed a variety of other means or conduct that it knew or should have known would assist U.S. taxpayers in concealing their PKB accounts, including:
referring U.S. taxpayers to an outside service provider to establish an offshore structure for purposes of holding an undeclared account at PKB;
- assisting U.S. taxpayers in transferring assets from accounts being closed at PKB to other PKB accounts held by a non-U.S. relative or other non-U.S. parties;
- assisting U.S. beneficial owners in transferring assets from accounts being closed at PKB to accounts at other banks in Switzerland;
- opening accounts for U.S. taxpayers who had left other banks being investigated by the department, including UBS; and
- providing credit cards or debit cards linked to undeclared accounts held in the name of an offshore trust, foundation or company that was beneficially owned by one or more U.S. taxpayers.
In certain cases, U.S. clients of PKB, with the assistance of their advisors, would create an entity, such as a Liechtenstein foundation, a Panamanian corporation or a British Virgin Islands corporation, and pay a fee to third parties to act as corporate directors. Those third parties, at the direction of the U.S. client, would then open a bank account at PKB in the name of the entity or transfer assets from an account at another Swiss or other foreign bank. In such cases involving a non-U.S. entity, PKB was aware that a U.S. client was the true beneficial owner of the account. Despite this, PKB would obtain from the entity’s directors an IRS Form W-8BEN or equivalent bank document that falsely declared that the beneficial owner of the PKB account was not a U.S. taxpayer. In some cases, the U.S. client or a related party also held a power of attorney or other signature authority with respect to the PKB account, thereby permitting the U.S. client to act directly with respect to the account and assets held therein, notwithstanding the corporate form of the accountholder. Ultimately, the use of such offshore structures by U.S. taxpayer clients provided an additional layer of confidentiality and further assisted them in concealing their beneficial ownership of their PKB accounts and evading their U.S. tax and information reporting obligations.
Since Aug. 1, 2008, PKB had 244 U.S.-related accounts, both declared and undeclared, with an aggregate maximum balance of approximately $328.8 million. PKB will pay a penalty of $6.328 million.