Sunday, January 5, 2020

Union Bancaire Privée, UBP SA ("UBP") Enters an Addendum to its Swiss Bank Program Category 2 NPA (1/5/20)

I previously reported that Union Bancaire Privée, UBP SA ("UBP"), had entered a NonProsecution Agreement (“NPA”) with DOJ Tax under the DOJ Swiss Bank Program.  One More Swiss Bank Achieves NPA Under Swiss Bank Program (Federal Tax Crimes Blog 1/6/16), here.  Under the original NPA, UBP paid $74,5 million (rounded) in penalties.  DOJ Tax announced here that UBP has entered an addendum to the NPA after disclosing additional, previously undisclosed, accounts and agreeing to pay an additional $14 million, for a combined penalty amount of $201,767 million.

(Note:  I have added at the end of this blog entry a short discussion of a similar agreement reached with Banque Bonhôte & Cie SA that I missed earlier.)

The key excerpts for the UBP Addendum are (emphasis supplied):
The Department of Justice announced today that it has signed an addendum to a non-prosecution agreement with Union Bancaire Privée, UBP SA (UBP), a private bank headquartered in Geneva, Switzerland. The original non-prosecution agreement was signed on Jan. 6, 2016. At that time, UBP reported that it held and managed 2,919 U.S. Related Accounts, with assets under management of approximately $4.9 billion, and paid a penalty of $187,767,000. In reaching today’s agreement, UBP acknowledges it should have disclosed additional U.S.-related accounts to the department at the time of the signing of the non-prosecution agreement. 
“Foreign banks that participated in the Swiss Bank Program were obligated to identify all accounts in which U.S. taxpayers held an interest, directly or indirectly,” said Richard E. Zuckerman, Principal Deputy Assistant Attorney General for the Tax Division. “Today’s agreement reflects our continued commitment to ensuring that when entities cooperate and make disclosures to the Department, that they do so fully.” 
The Swiss Bank Program provided a path for Swiss banks to resolve potential criminal liabilities in the United States relating to offshore banking services provided to United States taxpayers. Banks eligible to enter the program were required to advise the department that they had reason to believe that they had committed tax-related criminal offenses in connection with undeclared U.S.-related accounts. As participants in the program, they were required to make a complete disclosure of their cross-border activities, provide detailed information on an account-by-account basis for accounts in which U.S. taxpayers had a direct or indirect interest, cooperate in treaty requests for account information, and provide detailed information about the transfer of funds into and out of U.S.-related accounts, including undeclared accounts. 
The department executed non-prosecution agreements with 80 banks between March 2015 and January 2016. The department imposed a total of more than $1.36 billion in Swiss Bank Program penalties. Pursuant to today’s agreement, UBP will pay an additional sum of $14,000,000 and will provide supplemental information regarding its U.S.-related account population, which now includes 97 additional accounts. 
Every bank that signed a non-prosecution agreement in the Swiss Bank Program had represented that it had disclosed all known U.S.-related accounts that were open at each bank between Aug. 1, 2008, and Dec. 31, 2014. Each bank also represented that it would, during the term of the non-prosecution agreement, continue to disclose all material information relating to its U.S.-related accounts. In reaching today’s agreement, UBP acknowledges that there were additional U.S.-related accounts that it knew about, or should have known about, but that were not disclosed to the Department at the time of the signing of the non-prosecution agreement. UBP has fully cooperated with the department with respect to the additional U.S.-related accounts. 
The Addendum to the NPA is linked on the announcement and is bare bones.

JAT Comments:

1. It is not clear to me whether UBP suffered any additional cost for failing to advise DOJ Tax of the previously unreported accounts that it knew or should have known about at the time of the original NPA.  And it is not clear whether UBP eventually self-reported the undisclosed accounts or DOJ Tax and/or the IRS discovered some unreported accounts that led to UBP's cooperation.

2.  In preparing this blog entry, I discovered that I had failed to report one Addendum for Banque Bonhôte & Cie SA.  The DOJ Tax Press Release, dated 7/1/2019 is here.  The same pattern exists - failure to include in initial agreement accounts that the bank knew or should have known abuot..  The initial cost was $624,000, the Addendum added $1,200,00.  The Total is $1,824,000.

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