Société Générale Private Banking Non-Prosecution Agreement

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On June 9, 2015, the Department of Justice announced that Société Générale Private Banking (Suisse) SA has reached a resolution under the DOJ’s Swiss Bank Program.

According to the terms of the non-prosecution agreement, Société Générale Private Banking agreed to cooperate in any related criminal or civil proceedings, demonstrate its implementation of controls to stop misconduct involving undeclared U.S. accounts and pay penalties in return for the department’s agreement not to prosecute these banks for tax-related criminal offenses.

Société Générale Private Banking has had a presence in Switzerland since 1926, and had a U.S.-licensed representative office in Miami from the early 1990s until it closed on August 26, 2013. Société Générale Private Banking opened and maintained accounts for accountholders who had U.S. tax reporting obligations, and was aware that U.S. taxpayers had a legal duty to report to the Internal Revenue Service (IRS) and pay taxes on all of their income, including income earned in Société Générale Private Banking accounts. Société Générale Private Banking knew that it was likely that certain U.S. taxpayers who maintained accounts at the bank were not complying with their U.S. income tax obligations.

Société Générale Private Banking’s U.S. cross-border banking business aided and assisted some U.S. clients in opening and maintaining undeclared accounts in Switzerland and concealing the assets and income the clients held in their accounts from the IRS. SGBP-Suisse used a variety of means to assist U.S. clients in hiding their assets and income, including opening and maintaining accounts for U.S. taxpayers in the name of non-U.S. entities, including sham entities, thereby assisting such U.S. taxpayers in concealing their beneficial ownership of the accounts. Such entities included Panama and British Virgin Island corporations, as well as Liechtenstein foundations. In two instances, an Société Générale Private Banking employee acted as a director of entities that had U.S. taxpayers as beneficial owners. In another instance, upon the death of the beneficial owner of an entity, the heirs opened accounts held by sham entities at Société Générale Private Banking to receive their shares of the assets from the entity account.

Société Générale Private Banking further provided numbered accounts, allowing the accountholder to replace his or her identity with a code name or number on documents sent to the client, and held statements and other mail at its offices in Switzerland, rather than sending them to the U.S. taxpayers in the United States. In addition to these services, Société Générale Private Banking:

Processed requests from U.S. taxpayers for cash or gold withdrawals so as not to trigger any transaction reporting requirements;

Processed requests from U.S. taxpayers to transfer funds from U.S.-related accounts at Société Générale Private Banking to accounts at subsidiaries in Lugano, Switzerland, and the Bahamas;

Opened accounts for U.S. taxpayers who had left UBS when the department was investigating that bank;

Processed requests from U.S. taxpayers to transfer assets from accounts being closed to other Société Générale Private Banking accounts held by non-U.S. relatives and/or friends; and

Followed instructions from U.S. beneficial owners to transfer assets to corprate and individual accounts at other banks in Switzerland, Hong Kong, Israel, Lebanon, Liechtenstein and Cyprus.

Throughout its participation in the Swiss Bank Program, Société Générale Private Banking committed to full cooperation with the U.S. government. For example, Société Générale Private Banking described in detail the structure of its U.S. cross-border business, including providing a list of the names and functions of individuals who structured, operated or supervised the cross-border business at Société Générale Private Banking; a summary of U.S.-related accounts by assets under management; written narrative summaries of 98 U.S.-related accounts; and the circumstances surrounding the closure of relevant accounts holding cash or gold. Société Générale Private Banking also provided information to make treaty requests to the Swiss competent authority for U.S. client account records.

Since August 1, 2008, Société Générale Private Banking held and managed approximately 375 U.S.-related accounts, which included both declared and undeclared accounts, with a peak of assets under management of approximately $660 million. Société Générale Private Banking will pay a penalty of $17.807 million.

US taxpayers who have not yet disclosed their Société Générale Private Banking accounts, but who wish to participate in the 2014 OVDP, are likely to face now a 50% OVDP penalty rate.

Credinvest Bank Signs Non-Prosecution Agreement

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On June 3, 2015, the US Department of Justice (“DOJ”) announced that Banca Credinvest SA (Credinvest Bank), together with Rothschild Bank, signed a Non-Prosecution Agreement that finalized Credinvest Bank’s participation in the DOJ Program for Swiss Banks.

Credinvest Bank History

Located in Lugano, Switzerland, Credinvest Bank started operations as a fully licensed bank in 2005. Credinvest Bank 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 Bank 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 Bank, 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 August 1, 2008, Credinvest Bank had 31 U.S.-related accounts with just over $24 million in assets.

Credinvest Bank Penalty and Disclosures

As other banks in the DOJ Program for Swiss Banks, Credinvest Bank mitigated some of its penalties, but it will still have to pay a penalty of $3.022 million.

In addition, as part of its participation in the DOJ Program for Swiss Banks, Credinvest Bank made a complete disclosure of its cross-border activities, provided detailed information on an account-by-account basis for accounts in which US taxpayers have a direct or indirect interest, and provided detailed information regarding transferred funds to other banks. It is not known at this point if the IRS made any treaty requests to Credinvest Bank.

The most immediate impact of Rothschild Bank Non-Prosecution Agreement will be felt by US accountholders who wish to enter OVDP after June 3, 2015 – their penalty rate will go up from 27.5 percent of the highest value of their foreign accounts and other assets included in the OVDP penalty base to a whopping 50 percent penalty rate.

What Credinvest Bank Non-Prosecution Agreement Means to US Taxpayers

Credinvest Bank Non-Prosecution Agreement is likely to have three important consequences for US taxpayers with undisclosed accounts. First, US taxpayers with undisclosed accounts at Credinvest Bank will now face the higher 50% penalty rate in the OVDP program, instead of the regular 27.5% penalty rate.

Second, US taxpayers who attempted to conceal their Credinvest Bank accounts by closing them and transferring them to other banks will now face an increased risk of IRS detection due to the fact that the IRS now has the transfer information from Credinvest Bank. It is also possible that they may have received this information as part of another Swiss bank’s disclosure under the DOJ Program for Swiss Banks.

Finally, Credinvest Bank participation in the DOJ Program for Swiss Banks is one more reminder that, in this FATCA world, US taxpayers with undisclosed foreign accounts are playing a Russian roulette with their future by persevering in their non-compliance. The IRS may receive information regarding their accounts from various sources – DOJ Program is just one of them.

US Taxpayers With Undisclosed Foreign Accounts Should Explore Voluntary Disclosure

At this point, if you are a US taxpayer with undisclosed foreign accounts, please consult the experienced international tax team of Sherayzen Law Office. Our professional legal team has helped hundreds of US taxpayers around the world and we can help you!

Contact US to Schedule Your Confidential Consultation Now!

Rothschild Bank AG Signs Non-Prosecution Agreement

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On June 3, 2015, the US Department of Justice (“DOJ”) announced that Rothschild Bank AG (Rothschild bank) have reached resolution under the department’s Swiss Bank Program.

Rothschild Bank Facts

Rothschild Bank was founded in 1968 and is headquartered in Zurich, Switzerland. Rothschild Bank 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 Bank would hold all mail correspondence for a particular client at the bank. These services allowed certain U.S. taxpayers to minimize the paper trail associated with the undeclared assets and income they held at Rothschild Bank in Switzerland.

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 Bank serviced certain U.S. customers without disclosing their identities to the IRS. Some of Rothschild Bank’s U.S. clients had accounts that were nominally structured in the names of non-U.S. entities. In some such cases, Rothschild Bank 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 August 1, 2008, Rothschild Bank had 66 U.S.-related accounts held by entities created in Panama, Liechtenstein, the British Virgin Islands, the Cayman Islands or other foreign countries with U.S. beneficial owners. At least 21 of these accounts had false IRS Forms W-8BEN in the file, which are used to identify the beneficial owner of an account. Rothschild Bank knew it was highly probable that such U.S. clients were engaging in this scheme to avoid U.S. taxes but permitted these accounts to trade in U.S. securities without reporting account earnings or transmitting any withholding taxes to the IRS, as Rothschild Bank was required to do.

Rothschild Bank also opened accounts for U.S. taxpayers who had left other Swiss banks that the Department of Justice was investigating, including UBS. Since August 1, 2008, Rothschild Bank 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 Bank Penalties and Disclosures

In accordance with the terms of the Swiss Bank Program, the Rothschild bank mitigated its penalty by encouraging U.S. accountholders to come into compliance with their U.S. tax and disclosure obligations. Nevertheless, Rothschild Bank will pay a penalty of $11.51 million.

Rothschild Bank also made numerous disclosures of various information regarding US-held accounts.

Consequences of Rothschild Bank Non-Prosecution Agreement for US Taxpayers

The most immediate impact of Rothschild Bank Non-Prosecution Agreement will be felt by US accountholders who wish to enter OVDP after June 3, 2015 – their penalty rate will go up from 27.5 percent of the highest value of their foreign accounts and other assets included in the OVDP penalty base to a whopping 50 percent penalty rate.

Furthermore, the US taxpayers with undisclosed accounts which were related in any way to Rothschild Bank face an increased risk of IRS detection due to transfer information turned over to the DOJ by Rothschild Bank. “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.”

Finally, the rest of the US taxpayers with undisclosed accounts must contemplate a potential future that their accounts maybe subject to IRS discovery if the Program for Swiss Banks is extended to other countries. This possibility is increasingly real when one takes into account the impact FATCA has had on the global international tax reporting landscape.

What Should US Taxpayers with Undisclosed Foreign Accounts Do?

If you have undisclosed foreign account and other foreign assets, you should immediately commence the review of your voluntary disclosure options. Since the introduction of the Streamlined Procedures, the IRS has opened up a world of reduced penalties to various non-willful taxpayers. Willful taxpayers should realize that, the longer they wait, the worse their tax position may become.

In order to do your voluntary disclosure properly, please consult Mr. Eugene Sherayzen, an experienced international tax lawyer of Sherayzen Law Office. We have helped hundreds of US taxpayers worldwide and we can help you.

Contact Us to Schedule Your Confidential Consultation Now!

Four Swiss Banks Sign Non-Prosecution Agreements

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On May 28, 2015, four Swiss Banks – Société Générale Private Banking (Lugano-Svizzera), MediBank AG, LBBW (Schweiz) AG and Scobag Privatbank AG – signed Non-Prosecution Agreements under the Department of Justice Swiss Bank Program. These four Swiss banks now increased the list of the Swiss Banks that reached the resolution under the Program to the total of seven as of May 31, 2015.

Four Swiss Banks and Swiss Bank Program

The Swiss Bank Program was announced on August 29, 2013. It offered a path to Swiss banks to resolve all of their potential criminal liabilities in the United States in exchange for voluntarily turning over information regarding certain activities and detailed information regarding US-help financial accounts. Category 2 banks were also supposed to pay certain penalty under the rules specified by the Program.

All of the four Swiss Banks entered the Program and signed the Non-Prosecution Agreements on May 28. Under the program, the banks made a complete disclose of their cross-border activities, provided detailed account-by-account information for US-held accounts (direct and indirect interest), promised to cooperated with any treaty requests regarding account information, provided detailed information as to other banks that transferred funds into secret accounts or that accepted funds when secret accounts were closed, agreed to close accounts of accountholders who fail to come into compliance with U.S. reporting obligations, and paid appropriate penalties.

Compliance History of the Four Swiss Banks

The DOJ gave a fairly detailed history of all four Swiss Banks.

The largest of the four Swiss Banks – Société Générale Private Banking (Lugano-Svizzera) SA (SGPB-Lugano) – was established in 1974 and is headquartered in Lugano, Switzerland. Through referrals and pre-existing relationships, SGPB-Lugano accepted, opened and maintained accounts for U.S. taxpayers, and knew that it was likely that certain U.S. taxpayers who maintained accounts there were not complying with their U.S. reporting obligations. Since Aug. 1, 2008, SGPB-Lugano held and managed approximately 109 U.S.-related accounts, with a peak of assets under management of approximately $139.6 million, and offered a variety of services that it knew assisted U.S. clients in the concealment of assets and income from the Internal Revenue Service (IRS), including “hold mail” services and numbered accounts. Some U.S. taxpayers expressly instructed SGPB-Lugano not to disclose their names to the IRS, to sell their U.S. securities and to not invest in U.S. securities, which would have required disclosure and withholding. In addition, certain relationship managers actively assisted or otherwise facilitated U.S. taxpayers in establishing and maintaining undeclared accounts in a manner designed to conceal the true ownership or beneficial interest in the accounts, including concealing undeclared accounts by opening and maintaining accounts in the name of non-U.S. entities, including sham entities, having an officer of SGPB-Lugano act as an officer of the sham entities, processing cash withdrawals from accounts being closed and then maintaining the funds in a safe deposit box at the bank and making “transitory” accounts available, thereby allowing multiple accountholders to transfer funds in such a way as to shield the identity and account number of the accountholder. SGPB-Lugano will pay a penalty of $1.363 million.

Created in 1979 and headquartered in Zug, Switzerland, MediBank AG (MediBank) provided private banking services to U.S. taxpayers and assisted in the evasion of U.S. tax obligations by opening and maintaining undeclared accounts. In furtherance of a scheme to help U.S. taxpayers hide assets from the IRS and evade taxes, MediBank failed to comply with its withholding and reporting obligations, providing “hold mail” services and offering numbered accounts, thus reducing the ability of U.S. authorities to learn the identity of the taxpayers. After it became public that the Department of Justice was investigating UBS, MediBank hired a relationship manager from UBS and permitted some of that person’s U.S. clients to open accounts at MediBank. Since Aug. 1, 2008, MediBank had 14 U.S. related accounts with assets under management of $8,620,675. MediBank opened, serviced and profited from accounts for U.S. clients with the knowledge that many likely were not complying with their U.S. tax obligations. MediBank will pay a penalty of $826,000.

Of the four Swiss banks, it appears that LBBW (Schweiz) AG (LBBW-Schweiz) had the largest average balances per US-help account. Since August 2008, LBBW-Schweiz held 35 U.S. related accounts with $128,664,130 in assets under management. After it became public that the department was investigating UBS, LBBW-Schweiz opened accounts from former clients at UBS and Credit Suisse. Despite its knowledge that U.S. taxpayers had a legal duty to report and pay tax on income earned on their accounts, LLBW-Schweiz permitted undeclared accounts to be opened and maintained, and offered a variety of services that would and did assist U.S. clients in the concealment of assets and income from the IRS. These services included following U.S. accountholders instructions not to invest in U.S. securities and not reporting the accounts to the IRS and agreeing to hold statements and other mail, causing documents regarding the accounts to remain outside the United States. LBBW-Schweiz will pay a penalty of $34,000.

Headquartered in Basel, Switzerland, Scobag Privatbank AG (Scobag) was founded in 1968 to provide financial and other services to its founders, and obtained its banking license in 1986. Since August 2008, Scobag had 13 U.S. related accounts, the maximum dollar value of which was $6,945,700. Scobag offered a variety of services that it knew could and did assist U.S. clients in the concealment of assets and income from the IRS, including “hold mail” services and numbered accounts. Scobag will pay a penalty of $9,090.

It is interesting to note that, out of the four Swiss Banks, LBBW-Schweiz and Scobag paid the least penalties. Undoubtedly, the reason lies in the mitigation of penalties due to accounts disclosed by US person as part of their OVDP compliance.

Non-Prosecution Agreements and Four Swiss Banks

According to the terms of the non-prosecution agreements signed today, each of the Four Swiss Banks agreed to cooperate in any related criminal or civil proceedings, demonstrate its implementation of controls to stop misconduct involving undeclared U.S. accounts and pay the penalties in return for the department’s agreement not to prosecute these banks for tax-related criminal offenses.

“[These Non-Prosecution] agreements reflect the Tax Division’s continued progress towards reaching appropriate resolutions with the banks that self-reported and voluntarily entered the Swiss Bank Program,” said Acting Assistant Attorney General Caroline D. Ciraolo of the Department of Justice’s Tax Division. “The department is currently investigating accountholders, bank employees, and other facilitators and institutions based on information supplied by various sources, including the banks participating in this Program. Our message is clear – there is no safe haven.”

Contact Sherayzen Law Office for Professional Help With Your Voluntary Disclosure

As Swiss Banks (in addition to the four Swiss Banks mentioned in this article) sign Non-Prosecution Agreements and turn over information to the DOJ, the US taxpayers with undisclosed accounts in Switzerland, Cayman Islands, Israel, Lebanon, Panama, Singapore and other related foreign jurisdictions are operating under the increased risk of the IRS detection. Moreover, the on-going FATCA compliance introduces a similarly insupportable risk to US taxpayers worldwide.

The IRS discovery of your undisclosed foreign accounts may result in potentially catastrophic consequences, including criminal penalties and incarceration.

This is why, if you have undisclosed foreign financial accounts and any other foreign assets, contact Sherayzen Law Office professional help. Our experienced legal team will thoroughly analyze your case, determine your existing penalty exposure, analyze your voluntary disclosure options and implement the entire voluntary disclosure plan (including preparation of tax forms and legal documents).

Contact Us Today to Schedule Your Confidential Consultation!

Finter Bank Zurich AG Reaches Resolution with US DOJ

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On May 15, 2015, Finter Bank Zurich AG (Finter Bank) became the third Swiss bank to sign a Non-Prosecution Agreement with US DOJ according to the terms of the DOJ Program for Swiss Banks.

DOJ Program for Swiss Banks

On August 29, 2013, the DOJ announced the creation of the “The Program for Non-Prosecution Agreements or Non-Target Letters for Swiss Banks (Program)” with the goal or creating a voluntary disclosure program for Swiss banks. Under the Program, the Swiss banks would prove DOJ with detailed description of specified activities with respect to US-owned accounts as well as the identification of all accounts held by US persons at any point since August of 2008. In exchange, the Program promised Swiss banks an opportunity to forever resolve their past US non-compliance issues (including criminal illegal activities) with respect to US-held accounts. For Category 2 banks, the Program also imposed various penalty requirements. The banks already under criminal investigation related to their Swiss-banking activities and all individuals were expressly excluded from the program.

Finter Bank timely entered the Program and payed the required penalties. This is why it became the third Swiss bank to resolve its issues under the Program.

Finter Bank Background

Finter Bank was founded in 1958 in Chiasso, Switzerland, and has a branch office in Lugano, Switzerland. Since August 1, 2008, Finter Bank has maintained 283 U.S.-related accounts with an aggregate maximum balance of approximately $235 million.

Since its establishment and continuing through at least October 2011, Finter Bank, through its managers, employees and others, aided and assisted U.S. clients in opening and maintaining undeclared accounts in Switzerland and concealing the assets and income they held in these accounts from the Internal Revenue Service (IRS). After August 2008, when Swiss bank UBS AG publicly announced that it was the target of a criminal investigation by U.S. tax authorities, Finter Bank accepted accounts from U.S. persons exiting other Swiss banks.

Finter Bank provided services that allowed U.S. clients to eliminate the paper trail associated with the undeclared assets and income, including “hold mail” services and numbered and coded accounts. In addition, Finter Bank assisted clients in using sham entities as nominee beneficial owners of undeclared accounts, solicited Forms W-8BEN that falsely stated under penalties of perjury that the sham entities beneficially owned the assets in the undeclared accounts, and provided cash cards and credits cards linked to the undeclared accounts.

Finter Bank Non-Prosecution Agreement

According to the terms of the non-prosecution agreement signed on May 15, Finter Bank agreed to cooperate in any related criminal or civil proceedings, demonstrate its implementation of controls to stop misconduct involving undeclared U.S. accounts and pay a $5.414 million penalty in return for the department’s agreement not to prosecute Finter Bank for tax-related criminal offenses.

Consequences of Finter Bank Non-Prosecution Agreement for US Taxpayers

In resolving its criminal liabilities under the program, Finter Bank encouraged U.S. accountholders to come into tax compliance and participate in the IRS Offshore Voluntary Disclosure Program. However, the taxpayers who did not listen to Finter Bank’s pleas and have not disclosed their secret Swiss accounts now face an importance consequence as a result of Finter Bank Non-Prosecution Agreement – if these taxpayers wish to enter the OVDP now, the penalty percentage has increased from 27.5 percent to 50% of the highest balance of their accounts for the past eight years.

Contact Sherayzen Law Office for Help With Disclosure of Your Foreign Bank Accounts

If you have undisclosed foreign bank accounts and any other assets, you should contact Sherayzen Law Office for professional help as soon as possible. Our legal team consists of tax professionals who specialize in offshore voluntary disclosures and have helped hundreds of US taxpayers around the world.

We can help You! Contact Us to Schedule Your Confidential Consultation Now!