Swiss bank to pay $211 million penalty

The Swiss bank BSI will pay a $211 million penalty for its role in aiding U.S. tax cheats, after becoming the first financial institution to sign up for a Justice Department program to combat offshore tax evasion. 

As part of its agreement, BSI agreed to lay out a detailed description of how it helped clients skirt U.S. taxes and to give federal investigators information on how other Swiss banks did the same. BSI has also agreed to cooperate in U.S. courts if need be.

{mosads}The Justice Department launched its Swiss Bank Program in August 2013, after years of fighting tax evaders who rely on accounts in Switzerland and other countries known for bank secrecy. Banks that come forward under the program are able to avoid prosecution.

Senior department officials said Monday that they expected BSI, one of Switzerland’s 10 largest banks, to be the first in a string of Swiss financial institutions to take part in the program.

Caroline Ciraolo, the acting assistant attorney general for tax, said the information the department receives from BSI would go a long way toward helping U.S. efforts to blunt offshore tax evasion.

“Our investigations go well beyond Switzerland and the department will continue to follow the evidence wherever it leads,” Ciraolo said. “Anyone contemplating the use of secret offshore accounts should think twice – we intend to identify, investigate and vigorously prosecute those individuals and entities that seek to evade our nation’s tax laws, and assist others in doing so.”  

BSI had more than 3,000 accounts with ties to the U.S., most of which it knew were hidden from the federal government, the Justice Department said Monday. The bank helped Americans hide from U.S. tax authorities by incorporating sham companies that shielded the identity of account holders to the point of issuing credit and debit cards without any names.

Bank officials and U.S. clients would also correspond in code – with account holders noting the “gas tank is running empty” when they needed more money – as part of the efforts to stay hidden from U.S. authorities.

With Monday’s announcement, BSI becomes just the latest Swiss banking giant to hand over a hefty penalty to the U.S. government. UBS paid $780 million as part of a 2009 agreement, and Credit Suisse was hit with a $2.6 billion penalty as part of a 2014 plea deal.

Justice officials added Monday that their efforts have helped force Switzerland and other countries to ease their policies on bank secrecy.

“Since it became public that the department was actively investigating offshore tax evasion in Switzerland, many financial institutions have adopted policies against setting up secret accounts and illegal tax avoidance schemes, and have put in place robust compliance programs to ensure that the policies are followed,” said Stuart Delery, the acting associate attorney general.