By John Letzing
ZURICH--The U.S. Justice Department said on Monday that BSI SA
is the first Swiss bank to successfully navigate a self-reporting
program for hidden American accounts.
Acting Associate Attorney General Stuart Delery said during a
media briefing that Lugano-based BSI will pay a $211 million
penalty, an amount based on the undeclared U.S. assets harbored by
the bank. According to the rules of the voluntary program, BSI has
won assurances that it won't be prosecuted in the U.S. for
allegedly aiding tax evasion, in exchange for opening up its books
and acknowledging past misconduct.
A spokeswoman for BSI declined to comment.
The Justice Department unveiled its self-reporting program for
Swiss banks in 2013, and it is widely seen as an effort to bring
the U.S.'s long-running legal clampdown on tax evasion aided by
lenders in the Alpine country to a close. The legal effort began in
earnest with the Justice Department's 2009 deferred prosecution
agreement with Zurich-based UBS AG. UBS acknowledged helping
American clients evade taxes, and agreed to pay $780 million.
The program has been controversial in Switzerland because of the
way that it asks banks to expose themselves to potentially
significant penalties even for passively taking in undeclared
funds. Lenders can be required to pay the equivalent to half of the
amount of undeclared money they have harbored, depending on when
the accounts were opened.
On Monday, Caroline Ciraolo, the acting head of the Justice
Department's tax division, said she hoped the agency could complete
agreements with all of the banks who entered the self-reporting
program by the end of the year.
More than 100 Swiss banks initially signaled they would
participate in the program, though that number has fallen in recent
months as some banks have dropped out.
"The program will continue to assist the department's efforts to
investigate and prosecute U.S. taxpayers who, when faced with the
risk of detection, chose to move funds away from banks under
investigation to banks that they believed might be better havens
for tax secrecy," Mr. Delery said.
Separate from the program, about one dozen Swiss banks remain
under Justice Department investigation for allegedly aiding U.S.
tax evasion with accounts concealed behind Switzerland's bank
secrecy laws.
Ms. Ciraolo declined to comment on those investigations, saying
only that the agency was pursuing all leads in connection with the
probes.
The Justice Department said BSI has managed about 3,500 U.S.
accounts. Those accounts contained as much as nearly $2.8 billion
in assets under management after August 2008. According to a
statement of facts filed by Justice Department on Monday, BSI
helped American clients hide money by using "sham entities" and
"bogus financial insurance products," and helped clients transfer
funds from undeclared Swiss accounts to the U.S.
It also admitted to allowing account holders to replace their
identities with a code name or number on documentation they
received, or hold all of their mail correspondence for a quarterly
fee. Before 2009 the bank also issued travel cash cards for at
least 32 U.S. clients which didn't have the client's name on the
card, but allowed them to withdraw funds remotely without a paper
trail linking them to the account, the Justice Department said.
BSI is located in the Italian-speaking region of
Switzerland.
Last year Italian insurer Assicurazioni Generali SpA agreed to
sell the bank to Brazilian lender BTG Pactual for 1.5 billion Swiss
francs ($1.55 billion).
On Monday, Generali said in a statement that BSI's resolution
with the Justice Department is "a further major step" toward
completing the sale.
Giovanni Legorano contributed to this article.
Write to John Letzing at john.letzing@wsj.com
Write to Aruna Viswanatha at aruna.viswanatha@wsj.com
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