Thursday, July 19, 2018

NPB Neue Privat Bank Enters Nonprosecution Agreement (7/19/18)

As previously rumored, NPB Neue Privat Bank (NPB) entered a nonprosecution agreement (NPA) with DOJ Tax.  See DOJ Tax Press Release here.  (I previously reported that this NPA was expected.  NBP Neue Privat Bank (Category 1 Swiss Bank) Reported Ready to Settle with U.S. Prosecutors (Federal Tax Crimes Blog 7/14/18), here.

The press release summarizes the agreement and statement of facts and has links at the bottom to the following documents:

  • NPB Signed Statement of Facts
  • NPB Executed NPA
  • NPB Signed Resolution of Board of Directors

1.  NPB agrees to pay a $5,000,000 penalty.  The NPA does not describe the penalty.

2.  NPB sought to insulate itself generally by dealing with external asset managers rather than the U.S. taxpayers directly.

3.  NPB interpreted the QI Agreement with the IRS as permitting it to "continue to accept and service U.S. account holders, even if it knew or had reason to believe they were engaged in tax evasion, so long as it complied with the QI Agreement, which in NPB’s view did not apply to account holders who were not trading in U.S.-based securities or to accounts that were nominally structured in the name of a non-U.S.-based entity.  NPB formed this view without consulting legal counsel."

4.  NPB saw a business opportunity as U.S. taxpayers exited other Swiss banks feeling the heat from the IRS and DOJ.  As a result:
Prior to 2009, NPB had few U.S. clients. At the close of 2008, U.S. Related Accounts held approximately 8 million Swiss francs in assets.  By the end of 2009, NPB had approximately 450 million Swiss francs under management in accounts owned or beneficially owned by U.S. taxpayers, an influx of approximately 442 million Swiss Francs.  * * * 
NPB’s executives hoped that their U.S. customers would eventually fully declare their accounts and keep their money at the Bank after becoming compliant. However, NPB created no written or formal policies to encourage or mandate tax compliance and, in fact, continued to acquire and service non-compliant U.S. taxpayers. 
According to NPB executives, beginning in August 2010, NPB decided not to open any new accounts for U.S. customers who were not tax-compliant. NPB did not memorialize this decision in any written policy nor in any executive board or management board meeting minutes. NPB knew in August 2010 that some of its existing U.S. customers were not tax-compliant, but continued to service those accounts. 
5.  NPB taxpayers now have increased costs under the OVDP -- being a miscellaneous offshore penalty of 50%.

Here are the compiled results in my ongoing spreadsheet:

Financial Institution Summary
Treaty requests 15
John Doe Summonses 14
Criminal Matters
   Criminal (incl Investigations and Prosecutions) 24
   Guilty Plea 5
   Forfeiture 9
   Deferred Prosecution Agreement ("DPA") 6
   NonProsecution Agreement ("NPA") 84
IRS Financial Institution List (OVDP Offshore 50%) * 117
Total Costs (Fines, Restitution, Other Penalties, etc.) $5,658,009,532
US DOJ Swiss Bank Program Number Resolved Total Costs
   U.S. / Swiss Bank Initiative Category 1 (Criminal Inv.) * 17 6 $4,022,800,000
   U.S. / Swiss Bank Initiative Category 2  87 81 $1,363,683,990
   U.S. / Swiss Bank Initiative Category 3 13 $0
   U.S. / Swiss Bank Initiative Category 4 8 $0
Swiss Bank Program Results 125 $5,386,483,990
* Number and Number Resolved may not be same as DOJ and IRS numbers because of how related entities were counted; the Total Costs Column should be consistent.
Recoveries from Swiss Financial and Related Institutions (per above) $5,386,483,990
Recoveries from NonSwiss Offshore Financial and Related Institutions $271,525,542
Recoveries from All Offshore Financial and Related Institutions $5,658,009,532
Foreign Bank & Bank Related Other than Swiss
    Bank Leumi & Related $157,000,000
    Liechtensteinische Landesbank AG  $7,525,542
   Cayman National Securities Ltd. $3,000,000
   Cayman National Trust Co. Ltd. $3,000,000
Total $164,525,542
Sum of Swiss Bank Program and Other $5,551,009,532

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