The Tax Times: 2 More Swiss Banks Cave and Turn Over Names to the DOJ!

We have previously posted on Friday, May 29, 2015 "4 More Swiss Banks Cave to IRS Pressure" where we discussed that the U.S. Department of Justice, in exchange for $2.2 million in payments, agreed not to press criminal charges on four (4) Swiss banks accused of hiding millions of dollars in U.S. taxpayer money from the Internal Revenue Service. Societe Generale Private Banking SA, MediBank AG, LBBW AG and Scobag Privatbank AG agreed to cooperate with the Justice Department in its ongoing probe of tax evasion in the Swiss banking industry in return for the nonprosecution agreements.

Now the Department of Justice announced on June 3, 2015 that two more Swiss Banks,
Rothschild Bank AG and Banca Credinvest SA, have reached resolutions under the DoJ's Program.

“The days of safely hiding behind shell corporations and numbered bank accounts

are over,”
said Acting Assistant Attorney General Caroline D. Ciraolo
of the Department of Justice’s Tax Division.

“As each additional bank signs up under the Swiss Bank Program, More and More Information Is Flowing to the IRS Agents and Justice Department Prosecutors going after Illegally Concealed Offshore Accounts and the Financial Professionals who help U.S. Taxpayers Hide Assets Abroad.”

In accordance with the terms of the Swiss Bank Program, each bank mitigated its penalty by encouraging U.S. accountholders to come into compliance with their U.S. tax and disclosure obligations. While U.S. accountholders at these banks who have not yet declared their accounts to the IRS may still be eligible to participate in the IRS Offshore Voluntary Disclosure Program, the price of such disclosure has increased.

Under the program, banks are 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 have a direct or indirect interest;

Cooperate in treaty requests for account information;

Provide detailed information as to other banks that transferred funds into secret accounts or that accepted funds when secret accounts were closed (a/k/a Levers List);

Agree to close accounts of account holders who fail to come into compliance with U.S. reporting obligations; and

Pay appropriate penalties.

Banks meeting all of the above requirements are eligible for a non-prosecution agreement.

“With each Additional Agreement,
the world where criminals can hide their money
is becoming smaller and smaller. Those who circumvent offshore disclosure laws have little room to hide.”said Chief Richard Weber of IRS-Criminal Investigation.

Rothschild Bank AG (Rothschild) was founded in 1968 and is headquartered in Zurich, Switzerland. Rothschild offered services that it knew could and did assist U.S. taxpayers in concealing assets and income from the Internal Revenue Service (IRS), including code-named accounts, numbered accounts and hold mail service, where Rothschild would hold all mail correspondence for a particular client at the bank.

For a number of years, including after Swiss bank UBS AG announced in 2008 that it was under criminal investigation, and following instructions from certain U.S. taxpayers, Rothschild serviced certain U.S. customers without disclosing their identities to the IRS. Some of Rothschild’s U.S. clients had accounts that were nominally structured in the names of non-U.S. entities. In some such cases, Rothschild knew that a U.S. client was the true beneficial owner of the account but nonetheless obtained a form or document that falsely declared that the beneficial owner was not a U.S. taxpayer.

Since Aug. 1, 2008, Rothschild had 332 U.S.-related accounts with an aggregate maximum balance of approximately $1.5 billion. Of these 332 accounts, 191 accounts had U.S. beneficial owners and an aggregate maximum balance of approximately $836 million. Rothschild will pay a penalty of $11.51 million.

Banca Credinvest SA (Credinvest), located in Lugano, Switzerland, started operations as a fully licensed bank in 2005. Credinvest offered a variety of services that it knew could assist, and that did assist, U.S. clients in concealing assets and income from the IRS, including hold mail service and numbered accounts. Credinvest did not set up any formalized internal reporting regarding U.S. clients and did not adopt any procedures to ascertain or monitor the compliance of its U.S. clients with their U.S. tax obligations.

In late 2008, an external asset manager referred 11 accounts to Credinvest, all of which were for U.S. clients who had left UBS. The bank delegated to that external asset manager the primary management of those accounts and failed to ascertain the compliance of those clients with their U.S. tax obligations. The bank thus aided and assisted those clients in concealing their accounts from U.S. authorities. Since Aug. 1, 2008, Credinvest had 31 U.S.-related accounts with just over $24 million in assets. Credinvest will pay a penalty of $3.022 million.

Do You Have Undeclared Income from One of these Banks

Who Are Handing Over Names to the IRS?