Compliance
Swiss Banks Pay Fines To US Over Secret Accounts As Agreements Continue

Yet more Swiss banks have agreed to pay fines to the US, and resolved issues over secret bank accounts.
Switzerland’s Lombard Odier and DZ Privatbank (Schweiz) have reached resolutions with the US Department of Justice over tax evasion cases, together paying a total of more than $107 million in fines.
The banks are the latest institutions from Switzerland to settle matters with the DoJ under a programme originally signed between the US and the Alpine state in 2013. To date, more than 75 organisations have signed non-prosecution agreements and paid fines totalling more than $1 billion.
Swiss banks eligible to enter the programme were required to advise US authorities by 31 December 2013 that they had reason to believe that they had committed tax-related criminal offences in connection with undeclared US-related accounts. Banks already under criminal investigation related to their Swiss-banking activities and all individuals were expressly excluded from the programme.
Lombard Odier
The DoJ said in a statement that Lombard Odier opened and
serviced accounts for US persons that it knew or had reason to
know had likely not declared their Swiss accounts to the IRS
or the Treasury Department. The venerable banking firm maintained
at least 32 entity accounts that were operated without compliance
with the requisite corporate formalities. The non-US
jurisdictions in which the entities were incorporated or formed
included the British Virgin Islands, Liechtenstein and
Panama. In some instances, Lombard Odier referred clients to
its Swiss-based affiliate, Favona SA, which is also part of the
Lombard Odier Group, to set up entity structures. In
addition, Favona provided administrative services, including
accounting services and supplying corporate directors, the DoJ
continued.
A Zurich-based law firm and a Zurich-based lawyer referred US-related accounts to Lombard Odier with aggregate assets under management of over $63 million.
Since 1 August 2008, Lombard Odier had 1,121 US-related accounts, comprising maximum assets under management of approximately $4.45 billion, including assets of declared accounts. This bank will pay a penalty of $99.809 million.
DZ Privatbank
During much of the time after 1 August 2008, DZ Privatbank
conducted a cross-border banking business that aided and assisted
certain of its US clients in opening and maintaining undeclared
accounts in Switzerland and concealing the assets and income they
held in these accounts from the US government, the DoJ said. The
bank offered traditional Swiss banking services that it knew
could assist, and did in fact assist, US clients in the
concealment of assets and income from the IRS, the DoJ
continued. These services included numbered accounts, the
ability for customers to have their mail held at DZ Privatbank
and the use of a post office box held in the name of a DZ
Privatbank employee.
In 2008, DZ Privatbank decided to expand internationally, focusing on clients in countries including the UK, Hungary, Poland, Russia, Turkey and the US. DZ Privatbank opened 222 new US-related accounts with maximum aggregate assets under management of approximately $106 million between 1 January and 31 October 2009. Prior to that period, DZ Privatbank had approximately 110 US-related accounts with maximum aggregate assets under management of $133 million.
In May 2009, the bank began accepting customers from Credit Suisse who had either terminated their relationship with Credit Suisse or where Credit Suisse had terminated the relationship. Since 1 August 2008, DZ Privatbank accepted the transfer of more than two dozen US-related accounts from other Swiss banks under investigation by the department.
Since 1 August 2008, DZ Privatbank had a total of 691 US-related accounts with aggregated assets under management of approximately $498 million. DZ Privatbank will pay a penalty of $7.452 million.
The DoJ said both banks reduced the potential severity of punishments by encouraging US accountholders to comply with their US tax and disclosure obligations. While US accountholders at these banks who have not yet declared their accounts to the IRS may still be eligible to participate in the IRS Offshore Voluntary Disclosure Program, the price of such disclosure has increased.