Today’s Resolution Is One of a Series of Cases by The Justice Department in Connection With its Investigations Since 2008 Into Facilitation of Offshore U.S. Tax Evasion by Foreign Banks.
The case has been assigned to U.S. District Judge Edgardo Ramos for the Southern District of New York.
“Today, Banque Pictet et Cie admitted
to actively helping U.S. taxpayers use coded accounts, foreign trusts and
entities, nominee beneficiaries and other deceits to conceal their income and
assets abroad,” said Acting Deputy Assistant Attorney General Stuart M.
Goldberg. “For this criminal conduct the bank will be paying nearly $122.9
million in restitution, disgorgement of fees and a financial penalty, and is
required to fully cooperate with investigations relating to these secret
accounts.”
“As it has admitted today, Banque
Pictet knowingly conspired to conceal from the IRS the income generated by
accounts which held more than $5.6 billion,” said U.S. Attorney Damian Williams. Rooting out financial malfeasance remains a
priority for this Office, and we encourage companies and financial institutions
to come to us to report wrongdoing before we come to you.”
“This Case Should Provide A Clear Message To Others Who Try To Hide Their Assets And Income Offshore."
Our special agents are experts in following the money, and they are the best at uncovering schemes that try to defraud the U.S. tax system,” said IRS Criminal Investigation Chief Jim Lee. “Offshore tax evasion is a priority for IRS Criminal Investigation, and today’s deferred prosecution agreement with Bank Pictet collects more than $120 million owed to the U.S. government.”
From 2008 to 2014, The Pictet Group provided offshore corporation and trust formation and administration services to certain U.S. taxpayers, first through the Estate Planning and Trust Services unit and later through a wholly owned subsidiary called Rhone Trust and Fiduciary Services SA (Rhone).
As of Dec. 31, 2014, the Pictet
Group’s private banking division managed or held custody of approximately $165
billion in assets under management (AUM). From 2008 to 2014, the Pictet Group
served approximately 3,736 private accounts that had U.S. taxpayers as
beneficial owners, whose aggregate maximum AUM, including declared assets, was
approximately $20 billion.
Though Pictet Group adopted early
measures to confirm that U.S. clients complied with U.S. law, from 2008 through
2014, the Pictet Group assisted certain U.S. taxpayer-clients with Pictet Group
accounts in evading their U.S. tax obligations and otherwise hiding undeclared
accounts[1] from the IRS.
In total, from 2008 through 2014, the
Pictet Group held 1,637 U.S. Penalty Accounts with aggregate maximum AUM of
approximately $5.6 billion in January 2008, on behalf of U.S. taxpayer-clients,
who collectively evaded approximately $50.6 million in U.S. taxes.
The Pictet Group assisted U.S. taxpayer-clients with evading their U.S. taxes by opening and maintaining undeclared accounts for U.S. taxpayer-clients at the Pictet Group, either directly or through external asset managers. The Pictet Group also maintained accounts of certain U.S. taxpayer-clients within the Pictet Group in a manner that allowed the U.S. taxpayer-clients to further conceal their undeclared accounts from the IRS. As further detailed below, the Pictet Group used a variety of means to assist U.S. taxpayer-clients in concealing their undeclared accounts, including by:
- forming or administering offshore entities in whose name the Pictet
Group opened and maintained accounts, some of which were undeclared, for
U.S. taxpayer-clients;
- opening and maintaining undeclared accounts in the names of offshore
entities formed by others for U.S. taxpayer-clients;
- opening and maintaining Private Placement Life Insurance policy
accounts, also called insurance wrappers, held in the name of insurance
companies but beneficially owned by U.S. taxpayers and improperly managed
or funded through undeclared accounts at the Pictet Group;
- transferring funds from undeclared U.S. taxpayer-client accounts to
accounts nominally held by non-U.S. clients but still controlled by U.S.
taxpayer-clients via fictitious donations, thus assisting U.S.
taxpayer-clients in continuing to maintain undeclared funds offshore;
- providing traditional Swiss banking products such as hold-mail
account services, where account-related mail is held at the bank rather
than sent to the client, and coded or numbered accounts and
- accepting IRS Forms W-8BEN[3] or Pictet
Group’s substitute forms that the group knew or should have known falsely
stated or implied under penalty of perjury that offshore entities
beneficially owned the assets in the undeclared accounts.
In addition to the payment, Banque Pictet also agrees under the deferred prosecution agreement to accept responsibility for its conduct by stipulating to the accuracy of an extensive statement of facts. Banque Pictet further agreed to refrain from all future criminal conduct, implement remedial measures and cooperate fully with further investigations into hidden bank accounts.
Specifically, The Bank Is Required To Cooperate Fully With Ongoing Investigations And Affirmatively Disclose Any Information It May Later Uncover Regarding U.S. Accounts.
The Bank is also required to disclose information consistent with the Justice Department’s Swiss Bank Program relating to accounts closed between Jan. 1, 2008, and Dec. 31, 2022. The agreements provide no protection from criminal or civil prosecution for any individuals.
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