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Friday
Jun122015

SocGen Private Bank (Switzerland) pays $17 million penalty for hiding U.S. taxpayer accounts

The DOJ said this week that Société Générale Private Banking Suisse and another bank, Berner Kantonalbank AG, reached resolutions under the DOJ's Swiss Bank Program.

SocGen will pay a $17.8 million penalty and Berner Kantonalbank will pay $4.6 million, the DOJ said

The DOJ's Swiss Bank Program provides a path for Swiss banks to resolve potential criminal liabilities in the United States through non-prosecution agreements.

Banks could enter the program before the end of 2013 by telling the DOJ they might have committed tax-related criminal offenses in connection with undeclared U.S.-related accounts. 

Banks already under criminal investigation for their Swiss-banking activities and all individuals were barred from the program.

Participating banks have to disclose all of their cross-border activities, turn over detailed information about accounts in which U.S. taxpayers have an interest, cooperate in treaty requests for account information, tell the DOJ about other banks that transferred funds into secret accounts or accepted funds when secret accounts were closed, close accounts of holders who aren't complying with IRS reporting rules, and pay appropriate penalties.

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

The NPA's require banks to cooperate in any related criminal or civil proceedings, demonstrate controls to stop the use of undeclared U.S. accounts, and pay penalties.

The DOJ said Tuesday that since August 2008, SocGen Private Bank Suisse held and managed about 375 U.S.-related accounts with a peak of assets under management of about $660 million. Some of the accounts were undeclared.

Berner Kantonalbank was founded in 1834 as Kantonalbank von Bern, the first Swiss cantonal bank. The bank is based in the Canton of Bern and has 73 branches in Switzerland.

Since August 2008, the DOJ said, Berner Kantonalbank held about 720 U.S.-related accounts, including some that were undeclared, with total assets of about $176.5 million.

Both banks "mitigated" their penalties by encouraging U.S. accountholders to comply with U.S. tax and disclosure obligations.

U.S. accountholders at the banks who haven't yet declared their accounts to the IRS can still make a voluntary disclosure under the IRS Offshore Voluntary Disclosure Program and pay a 50 percent penalty, the DOJ said.

In March, Lugano-based BSI SA, one of the ten biggest private banks in Switzerland, paid a $211 million penalty under the DOJ's Swiss bank program. 

In May, Finter Bank Zurich AG paid a $5.4 million penalty under the program.

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Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.