The Tax Times: DOJ Swiss Bank Program is Over After Netting $1.36 Billion!

The Department of Justice announced today January 27, 2016 that it reached its final non-prosecution agreement under Category 2 of the Swiss Bank Program, with HSZH Verwaltungs AG (HSZH).

The department has executed agreements with 80 banks, since March 30, 2015, when it announced the first Swiss Bank Program non-prosecution agreement with BSI SA. By our count it is 94 banks - see our post 93 Swiss Banks Are Turning Over Your Names To The IRS - What Are Your Waiting For?, plus HSZH, but who's counting (See Below)?

The department has imposed a total of more than $1.36 billion in Swiss Bank penalties, including more than $49 million in penalties from HSZH. Every bank in the program, including HSZH, is required to cooperate in any related criminal or civil proceedings, and that cooperation continues through 2016 and beyond.

"Through this initiative, we have Uncovered Those who Help Facilitate Evasion Schemes and those who Hide Funds in Secret Offshore Accounts" said Attorney General Loretta E. Lynch.

HSZH, the final bank to reach a non-prosecution agreement under Category 2 of the Swiss Bank Program. Until 2013, HSZH conducted a U.S. cross-border banking business that aided and assisted certain of its U.S. clients in opening and maintaining undeclared accounts in Switzerland and concealing the assets and income they held in these accounts from the U.S. government. Through its managers, employees and/or others, HSZH knew or had reason to know that some U.S. taxpayers who opened and maintained accounts at HSZH were not complying with their U.S. income tax and reporting obligations.

Meetings between HSZH private bankers and U.S. clients took place in multiple locations within the United States, including in Florida, New York, Pennsylvania, Virginia and Washington, D.C. Some U.S. clients asked for cash on a regular basis, so at times, the HSZH private banker for such clients would personally deliver cash to the clients in the United States in amounts below $10,000 to avoid the reporting requirements.

During the period since Aug. 1, 2008, HSZH held a total of 605 U.S.-related accounts, both declared and undeclared, with an aggregate peak of approximately $1.12 billion in assets under management. HSZH will pay a penalty of $49.757 million.

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

The complete list of Swiss Banks which are turning over the names of their US Account Holders, who are now subject to a 50% (rather than 27.5%) penalty in the IRS’s Offshore Voluntary Disclosure Program (OVDP)is as of 1/25/16:

UBS AG

Credit Suisse AG, Credit Suisse Fides, and Clariden Leu Ltd.

Wegelin & Co.

Liechtensteinische Landesbank AG

Zurcher Kantonalbank

swisspartners Investment Network AG, swisspartners Wealth Management AG, swisspartners Insurance Company SPC Ltd., and swisspartners Versicherung AG

CIBC FirstCaribbean International Bank Limited, its predecessors, subsidiaries, and affiliates

Stanford International Bank, Ltd., Stanford Group Company, and Stanford Trust Company, Ltd.

The Hong Kong and Shanghai Banking Corporation Limited in India (HSBC India)

The Bank of N.T. Butterfield & Son Limited (also known as Butterfield Bank and Bank of Butterfield), its predecessors, subsidiaries, and affiliates

Sovereign Management & Legal, Ltd., its predecessors, subsidiaries, and affiliates (effective 12/19/14)

Bank Leumi le-Israel B.M., The Bank Leumi le-Israel Trust Company Ltd, Bank Leumi (Luxembourg) S.A., Leumi Private Bank S.A., and Bank Leumi USA (effective 12/22/14)

BSI SA (effective 3/30/15)

Vadian Bank AG (effective 5/8/15)

Finter Bank Zurich AG (effective 5/15/15)

Societe Generale Private Banking (Lugano-Svizzera) SA (effective 5/28/15)

MediBank AG (effective 5/28/15)

LBBW (Schweiz) AG (effective 5/28/15)

Scobag Privatbank AG (effective 5/28/15)

Rothschild Bank AG (effective 6/3/15)

Banca Credinvest SA (effective 6/3/15)

Societe Generale Private Banking (Suisse) SA (effective 6/9/15)

Berner Kantonalbank AG (effective 6/9/15)

Bank Linth LLB AG (effective 6/19/15)

Bank Sparhafen Zurich AG (effective 6/19/15)

Ersparniskasse Schaffhausen AG (effective 6/26/15)

Privatbank Von Graffenried AG (effective 7/2/15)

Banque Pasche SA (effective 7/9/15)

ARVEST Privatbank AG (effective 7/9/15)

Mercantil Bank (Schweiz) AG (effective 7/16/15)

Banque Cantonale Neuchateloise (effective 7/16/15)

Nidwaldner Kantonalbank (effective 7/16/15)

SB Saanen Bank AG (effective 7/23/15)

Privatbank Bellerive AG (effective 7/23/15)

PKB Privatbank AG (effective 7/30/15)

Falcon Private Bank AG (effective 7/30/15)

Credito Privato Commerciale in liquidazione SA (effective 7/30/15)

Bank EKI Genossenschaft (effective 8/3/15)

Privatbank Reichmuth & Co. (effective 8/6/15)

Banque Cantonale du Jura SA (effective 8/6/15)

Banca Intermobiliare di Investimenti e Gestioni (Suisse) SA (effective 8/6/15)

bank zweiplus ag (effective 8/20/15)

Banca dello Stato del Cantone Ticino (effective 8/20/15)

Hypothekarbank Lenzburg AG (effective 8/27/15)

Schroder & Co. Bank AG (effective 9/3/15)

Valiant Bank AG (effective 9/10/15)

Bank La Roche & Co AG (effective 9/15/15)

Belize Bank International Limited, Belize Bank Limited, Belize Corporate Services Limited, their predecessors, subsidiaries, and affiliates (effective 9/16/15)

St. Galler Kantonalbank AG (effective 9/17/15)

E. Gutzwiller & Cie, Banquiers (effective 9/17/15)

Migros Bank AG (effective 9/25/15)

Graubundner Katonalbank (effective 9/25/15)

BHF-Bank (Schweiz) AG (effective 10/1/15)

Finacor SA (effective 10/6/15)

Schaffhauser Kantonalbank (effective 10/8/15)

BBVA Suiza S.A. (effective 10/16/15)

Piguet Galland & Cie SA (effective 10/23/15)

Luzerner Kantonalbank AG (effective 10/29/15)

Habib Bank AG Zurich (effective 10/29/15)

Banque Heritage SA (effective 10/29/15)

Hyposwiss Private Bank Genève S.A. (effective 10/29/15)

Banque Bonhôte & Cie SA (effective 11/3/15)

Banque Internationale a Luxembourg (Suisse) SA (effective 11/12/15)

Zuger Kantonalbank (effective 11/12/15)

Standard Chartered Bank (Switzerland) SA, en liquidation (effective 11/13/15)

Maerki Baumann & Co. AG (effective 11/17/15)

BNP Paribas (Suisse) SA (effective 11/19/15)

KBL (Switzerland) Ltd. (effective 11/19/15)

Bank CIC (Switzerland) Ltd. (effective 11/19/15)

Privatbank IHAG Zürich AG (effective 11/24/15)

Deutsche Bank (Suisse) SA (effective 11/24/15)

EFG Bank AG (effective 12/3/15)

EFG Bank European Financial Group SA, Geneva (effective 12/3/15)

Aargauische Kantonalbank (effective 12/8/15)

Cornèr Banca SA (effective 12/10/15)

Bank Coop AG (effective 12/10/15)

Crédit Agricole (Suisse) SA (effective 12/15/15)

Dreyfus Sons & Co Ltd, Banquiers (effective 12/15/15)

Baumann & Cie, Banquiers (effective 12/15/15)

Bordier & Cie Switzerland (effective 12/17/15)

PBZ Verwaltungs AG (effective 12/17/15)

PostFinance AG (effective 12/17/15)

Edmond de Rothschild (Suisse) SA (effective 12/18/15)

Edmond de Rothschild (Lugano) SA (effective 12/18/15)

Bank J. Safra Sarasin AG (effective 12/23/15)

Coutts & Co Ltd (effective 12/23/15)

Gonet & Cie (effective 12/23/15)

Banque Cantonal du Valais (effective 12/23/15)

Banque Cantonale Vaudoise (effective 12/23/15)

Bank Lombard Odier & Co Ltd (effective 12/31/15)

DZ Privatbank (Schweiz) AG (effective 12/31/15)

Union Bancaire Privée , USP SA (effective 1/6/16)

PHZ Privat - und Handelsbank Zürich AG reorganized as Leodan Privatbank AG (effective 1/25/16)

HSZH Verwaltungs AG (effective 1/28/16).

Outside of these banks, the norm within the OVDP remains 27.5%. That is far better than prosecution or much bigger civil penalties. Some taxpayers, including taxpayers with accounts at one of the 93 Swiss Banks listed abover can opt for the easier and less costly Streamlined program. This list does not impact the Streamlined programs because you must be non-willful to qualify. All of this is part of the June 2014 improvements to the OVDP, which sparked new interest in cleaning up offshore accounts.

With 94 Swiss banks taking the DOJ deal and

FATCA requiring the entire world to report to the IRS

it is inevitable that this increased disclosure, will result in Every American eventually being discovered. Banks worldwide want to know if there US clients are compliant with the IRS.

Within the OVDP, people who pre-cleared before the various effective dates are generally safe from the higher 50% penalty. As additional banks are added to the list, only those American taxpayers that request pre-clearance before their bank is listed, will get the 27 1/2% OVDP penalty. The 50% penalty now applies to all taxpayers with accounts at financial institutions or with facilitators which are named, are cooperating or are identified in a court filing such as a John Doe summons.

Although the 50% penalty is high, willful civil violations can result in tax, penalties and interest totaling 325% of the highest balance in the account for the most recent six years period. Recent guidance suggests that the IRS could be more lenient in the future, but the IRS’s definition of leniency can still make the OVDP a very good deal that provides certainty.

Do You Have Undeclared Income from one of

These Swiss Banks or

Swiss Asset Management Company?