Wednesday, April 1, 2015

Swiss Asset Manager Pleads to One Conspiracy Charge (4/1/15)

A Swiss asset manager, Peter Amrein, had pled to one conspiracy charge.  See DOJ press release here.  Key excerpts are:
Amrein worked as a client advisor at a Swiss bank (Swiss Bank No. 3) and, later, as an asset manager at a Swiss asset management firm (the Swiss Asset Management Firm).  In those roles, between 1998 and 2012, Amrein helped U.S. taxpayers evade taxes and hide millions of dollars in undeclared accounts at various Swiss banks, including Wegelin & Co., which was charged and pleaded guilty in the Southern District of New York for its conduct in conspiring with U.S. taxpayers to evade taxes.  Amrein, among other things, worked with an attorney based in Zurich, to establish sham foundations, which were organized under the laws of non-U.S. countries such as Liechtenstein, so that the undeclared assets of certain of Amrein’s U.S. taxpayer-clients could be maintained in the names of these foreign foundations rather than in the clients’ own names.  Amrein did so in order to help his clients conceal their ownership of these undeclared accounts from the IRS.  
In 2008, it became publicly known that UBS AG (UBS) was being investigated by U.S. law enforcement for helping U.S. taxpayers maintain undeclared accounts in Switzerland.  Because of the investigation of UBS, one of the Swiss banks where Amrein had opened undeclared accounts for U.S. taxpayers (Swiss Bank No. 4) informed Amrein that it was going to close these undeclared accounts.  In order to assist his clients in continuing to maintain undeclared accounts, Amrein searched for other banks in Switzerland that, despite the public investigation of UBS, were still willing to open undeclared accounts for U.S. taxpayers.  Amrein found such a bank (Swiss Bank No. 1). 
 Thereafter, Amrein opened undeclared accounts for U.S. taxpayer-clients at Swiss Bank No. 1 in the name of sham foundations, and transferred the clients’ undeclared assets from Swiss Bank No. 4 to these accounts at Swiss Bank No. 1.    
For some of these clients, Amrein, with the assistance of others, helped send funds back to the United States and to other foreign jurisdictions in ways that were designed to ensure that U.S. authorities would not discover the existence of the clients’ undeclared accounts.  For instance, Amrein instructed a client advisor at Swiss Bank No. 1 (the Swiss Bank No. 1 Client Advisor) to empty one of the accounts by sending checks in amounts smaller than $9,900 to the beneficial owner of the account, i.e., the U.S. taxpayer.  On another occasion, Amrein instructed the Swiss Bank No. 1 Client Advisor to transfer the balance of one of the accounts, which was then valued at more than $2.4 million, to another account controlled by the U.S. taxpayer in Belize City, Belize.  Moreover, as late as 2011, Amrein continued to look for other Swiss banks that were still willing to open undeclared accounts for U.S. taxpayers.  For example, in June 2011, Amrein met with a client advisor at a Swiss bank (Swiss Bank No. 2), to discuss opening undeclared accounts for U.S. taxpayer-clients at Swiss Bank No. 2.    


  1. I suggest that the main reason that BSI had many accounts is that it is a large bank.

  2. If the agreements with UBS and other banks which have been made public are any indication, any treaty request would cover only larger accounts (over $1m high balance for individuals and $250K high balance for entities was the case with UBS if memory serves me correctly.) Also accounts of those who were Swiss residents during the entire period were excluded. So the smaller accounts will likely not be subject to treaty request.

    There are also the dormant accounts: people move without leaving a forwarding address, or die. Even if such accounts are disclosed, proving willfulness would be more difficult.

    Another issue is that BSI was sending out letters asking present/past account holders to provide [proof of compliance -- just to be nice to the bank. I wonder whether the bank could have reduced its fine by offering some sort of financial incentive for the information.

    Finally, as with other treaty requests I still believe the bank is violating Swiss law (and possibly US law) in giving information such as "account #12345 had a $2 million balance and was held by a US person" which then enables the US to proceed with a treaty request. Such an account may well have been disclosed through OVDI or been disclosed all along and the account holder would be subject to hassles from the US government when contacted.

  3. In addition to the $211m fine, BSI spent $36 million on lawyers and accountants. Source:

  4. freddy,

    I agree with all of your points except the last. If the Swiss government makes the disclosures pursuant to the treaty request, one would presume that they are doing so pursuant to the agreements as to how the treaty is interpreted and implemented. I think that would be legal, since the Swiss Government has been an active participant in providing this solution.

    Jack Townsend

  5. Correct. They are an Italian company with banks/divisions all of the world.

    Pro Tip: BSI no longer accepts US citizens. Period.

  6. I think it would be helpful if you would site the readers to a BSI Bank link advising that it will not take U.S. citizens as depositors. I am pretty sure that they are becoming FATCA compliant, so accepting U.S. depositors would not seem to be that big a deal in terms of additional compliance costs or risks..

  7. This general topic has been discussed in the past on this blog.

    No bank is going to issue a press release stating they are not accepting US customers.

    I was in BSI offices as I live close by. Once it was determined I was a US citizen, the head of the bank told me there is nothing he could do. Conversation ended.

    I would be more than happen to provide the name and full contact information (outside of this forum) so you can drop an e-mail or phone call and discuss the situation.

  8. No need to send me the name of the banker. I know one of the U.S. lawyers who worked in one facet of the DOJ negotiations for the BSI. I will ask him. I can't be certain that he will respond, but I suspect he will know and probably will tell because it really should not be a secret.

  9. I would be interested to hear what the lawyer says.
    Many, if not most, smallish banks aren't taking US clients. They might make an exception if you will have a very large account. I hear the UBS is taking us clients - even small ones. There is nothing in Swiss law to compel a bank to open an account they don't want to open.
    The reason for not opening US accounts account is simply because they are considered too high of a risk. If the account holder is involved in any type of criminal behavior(tax related or otherwise), the banks fear that they may somehow be blamed. In addition to the risk is the added paperwork. The number of US accounts in most(maybe all) small banks is relatively few compared to their total client base. So, why risk the whole bank for a few accounts? It may seem odd given the latest news but most Swiss bankers are a fairly conservative and risk adverse group.
    The number of Swiss bankers involved in "shenanigans" is relatively few. Most of these cases are isolated to a few, mostly bigger banks. The average Swiss bank just happened to have a small percentage of US clients. Some of those clients probably didn't report their accounts. In the end the bank got burned even though all they did was open another account. It makes sense that they don't want to get burned a second time.
    There has been some discussion on this blog comparing sentences received by regular tax cheats versus offshore tax cheats. I think it would be interesting to compare sentences of Swiss bankers versus sentences received by mortgage securities fraud bankers(mostly located on Wall Street but also in some other parts of the world.) The mortgage securities problem threw the whole world into a very deep recession. Plus it caused harm to many homeowners and investors. This makes the damage caused by Swiss banks seem relatively insignificant which really only affected the US Treasury. How many of the mortgage securities banksters have been indicted? How do their sentences compare to those received by Swiss bankers? I would think that they(Wall Street bankers) should be treated much more harshly given the damage they caused.

  10. Your comments on the accounts are accurate and you clearly are on the ground as I am. Although I agree with your comments, you lost me when you stated, "The number of Swiss bankers involved in "shenanigans" is relatively few."

    Lets be real. The entire Swiss banking system was designed and implemented to enable activities that would be considered felonies in the client's home country.

    I don't mean to sound like Jack on this topic, but on this issue I agree him and I have witnessed it all first hand. From Geneva to Zurich to Ticino... Swiss Bankers, the whole lot, were enablers up to 2009.

    Jack and I will again depart ways on the 2009 date, but I can state with absolute certainty that it all ended for US citizens in 2009. This will be demonstrated in each NPA that will state, "We had no US persons after X date". The X date for account closures and forced liquidations was mid to late 2009. After this date is when the Category 1 banks kicked it into high gear and made the incorrect business decision to accept the fleeing customers from Cat2 banks. For this reason, I am not sure why most of the Cat2 did not try to "run the clock" and get to Q4 of 2015 and fight it on statute of limitations.

    I yield to Jack on this as he might have insight as to why running the SOL, as an unindicted enabler, might have not been possible.

  11. Thanks for your comments. The SOL question is an interesting one. I don't have an answer but maybe Jack will offer his opinion.

    Bank secrecy laws were enacted in many countries(including Switzerland) around 1934. It was a reaction to post depression economics and the political situation in Europe at the time. People had a valid fear that their assets could be seized. This was especially true of Jewish people in Nazi Germany but was a threat for people in other countries as well. So, I would argue that the intentions of the Swiss government in 1934 were more noble than enabling people to commit felonies in other countries. But, even if the intent of the Swiss government was to enable felonies, that was a decision made by the government not the bankers. The same secrecy applies to the Swiss government itself. So, if you follow your reasoning, the law also enabled felonies against the Swiss government.

    My reasoning for saying that relatively few Swiss bankers were involved in shenanigans is as follows. Of the thousands of Swiss bankers only 30 have been indicted. There are probably more who should be indicted but there have also been not guilty findings in a couple of cases. Thirty out of a total of thousands is relatively few in my opinion.

    Of the thousands of banker relatively few went to the US to attract business. Only a few Swiss banks have branches in the US. So, most Swiss bankers are not subject to US law. Even if they were, no US law required the reporting of foreign accounts by banks until recently. In fact, Swiss law prohibited(until recently) bankers from disclosing account information. In some respects it still does prohibit the disclosure of information. Therefore, most Swiss bankers diligently followed the law. The few who travelled back and forth to the US with cash, etc are the exception.

    How can you blame or punish the Swiss bankers who followed the laws of their country? You could say that the blame lies on the Swiss secrecy laws. But is it Switzerland's responsibility to enforce US law? I think not.

    The problem with the Bank Program that the DOJ offered is that it a type of extortion. The banks can either pay a fine or be prosecuted into bankruptcy. It is like a mafia guy say "pay some protection money or I'll burn down your building." The category 2 banks have some US clients but they can't be sure they are all clean. If there was any evidence against the bank it would have been put into category 1. The DOJ has had 6 years to make that decision. Since the bank isn't 100% sure all of their clients are "clean" they are forced to be in category 2. This, in spite of the fact that they followed the law. It is no wonder they don't want any more US clients.

  12. I speak from personal experience with multiple banks. Years ago, when it was possible for US persons to have Swiss accounts, if you walked into a bank they would not discriminate against you based on your US citizenship. In my case I walked in and opened the account. Nobody solicited my business, nobody ever met with me in the US, or even offered to do so. Of course it's possible that my account was too small (over $1 million) to generate an offer of meeting in the US; maybe that was offered if your balance was $5m or $10m, but my guess is that most banks and bankers did not engage in such shenanigans, No different than a bar in the US asking whether you're violating the laws of the Islamic country of which your are also a citizen by buying alcohol, or a driving school inquiring whether you are getting a license in order to drive an ambulance or a getaway car.

    As to banks opening accounts to US persons (not just in Switzerland but other European countries) the easy low-risk way for a bank to comply with FATCA is to have no US clients, so there is nothing to report. I have heard that UBS, CS, Pictet and Vontobel will still open accounts for US persons but typically with $1 million minimum, and these are managed accounts with minimum fees of about 1.5% (works out to $15K/yr on a $1 million account.) What another poster mentioned about UBS opening small accounts may be correct, but only for US persons who are Swiss residents. I have heard of other banks opening accounts for Swis residents but these are noninterst bearing transaction accounts for direct deposit of wages and paying expenses (no stocks or mutual funds allowed.) This is generally known as a "salaerkonto" or "compte salaire" i.e. salary account.

  13. I am not familiar with Swiss law, but I would expect that there would be a prohibition on ex post facto laws. this is a basic tenet of justice: otherwise, if a law can be created tomorrow, which retroactively punishes someone for doing something today while it was still legal, there is no justice and no law,

    The treaty is a treaty, not a law, but I would expect the same principle to apply. Yet the treaty covers disclosure of accounts that existed on or after Aug 1, 2008 yet the treaty was signed in 2013.

    The bank secrecy law is still in place (which explains why banks sent out letters asking clients to waive their rights under secrecy laws, and why banks will not allow an account to be opened, or an existing account to remain open, unless such a waiver is signed.)

    I view the cooperation between Category 2 banks and the DOJ/IRS (in which the bank gives account data but not the account holder's identifying details, and then the US uses that data to formulate a group request, as a sham way to get around the law using a technicality.

    I also think that group requests are improper in that they are based on factors such as account size, and this is not probable cause that the account is unreported.

    Of course the matter would need to be litigated ina Swiss court and the best plaintiff would be someone whose account was declared all along, at least since 2003.

  14. Jack, did you see that IRS added BSI SA to list of FFI Facilitators effective March 30, 2015?

  15. Thanks. I just added the information on the blog post.

    Jack Townsend


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