Basler Kantonalbank entered into a deferred prosecution agreement and will pay $60.4 million in total penalties for conspiring with others to evade U.S. taxes, the Department of Justice announced.
In the DPA and related court documents, the Swiss Bank admits that between 2002 and 2012 it conspired with its employees, external asset managers, and clients to: (1) defraud the United States with respect to taxes; (2) commit tax evasion; and (3) file false federal tax returns.
At its peak in 2010, Basler Kantonalbank (BKB) held approximately 1,144 accounts for U.S. customers, with an aggregate value of approximately $813.2 million. Many, but not all, of these accounts were undeclared accounts that were part of the conspiracy, the Justice Department said.
“The era of hiding money overseas to evade U.S. tax obligations is over,” said Principal Deputy Assistant Attorney General Richard Zuckerman of the Justice Department’s Tax Division. “Financial institutions, professionals, and accountholders are on notice that the Department continues to aggressively pursue these offenses and will hold both individuals and entities accountable.”
The U.S. District Court for the Southern District of Florida approved the settlement on Aug. 28. According to the terms of the DPA, BKB will cooperate fully with the United States, the Internal Revenue Service, and other U.S. authorities.
The DPA also requires BKB to affirmatively disclose certain material information it may later uncover regarding U.S.-related accounts, as well as to disclose certain information consistent with the Department’s Swiss Bank Program with respect to accounts closed between Jan. 1, 2009, and Dec. 31, 2017.
Under the DPA, prosecution against the bank for conspiracy will be deferred for an initial period of three years to allow BKB to demonstrate good conduct, the Justice Department said.
The $60.4 million penalty against BKB is made up of the following three parts:
$17.2 million in restitution will go to the IRS, which represents the unpaid taxes resulting from BKB’s participation in the conspiracy;
$29.7 million will be forfeited to the United States, which represents gross fees (not profits) that the bank earned on its undeclared accounts between 2002 and 2012; and
$13.5 million is what BKB will pay as a fine.
“This penalty amount reflects BKB’s thorough internal investigation and cooperation with the United States, as well as the bank’s extensive efforts at remediation, and its waiver of any claim of foreign sovereign immunity,” the Department stated. “Among other remedial efforts, BKB implemented measures to require all U.S.-related accounts be tax compliant, closed a branch office responsible for much of the tax fraud and fired the employees involved in the offense, and conducted extensive outreach to former clients to encourage them to participate in IRS-sponsored voluntary disclosure programs.”
BKB’s DPA “reinforces that, while the deadline for the offshore voluntary disclosure program may be fast approaching, holding banks and individuals accountable will not stop,” said Chief Don Fort for IRS-Criminal Investigation.
“Those who think they have successfully avoided detection and prosecution for hiding or failing to report offshore holdings to date should know that our commitment in this area is only increasing through our international partnerships and the strategic use of sophisticated data analytic tools,” Fort added.