Swiss bank with CI link strikes US deal to reveal secret accounts
Harbour Centre, Grand Cayman
(CNS Business): The US Department of Justice has struck a non-prosecution deal with Schroder Bank AG that will see the Swiss-based bank and its Cayman subsidiary cooperate in any criminal or civil proceedings and pay a $10m penalty to avoid criminal charges relating to secret accounts. The DoJ also said that the Cayman arm and a Swiss subsidiary are in the process of being closed down. A release from the Washington-based law enforcement agency said that it and the bank reached a resolution Thursday about the bank’s secret accounts.
“As today’s agreement reflects, Swiss banks continue to lift the veil of secrecy surrounding bank accounts opened and maintained for US individuals in the names of sham structures such as trusts, foundations and foreign corporations,” said Acting Deputy Assistant Attorney General Larry J. Wszalek of the Department of Justice’s Tax Division. “The department’s prosecutors and the IRS are actively following these leads to criminally investigate and prosecute those individuals who willfully evaded or assisted in the evasion of US income tax obligations.”
Schroder Bank was founded in 1967 and has two wholly owned subsidiaries, Schroder Trust AG, in Geneva and Schroder Cayman Bank & Trust Company, in the Harbour Centre, George Town.
Schroder Cayman Bank & Trust Company provides services to clients such as the creation and support of trusts, foundations and other corporate bodies. Both subsidiaries also acted in some cases as an account signatory for entities holding an account with the bank. However, the release from the US DoJ indicates that Schroder Bank is in the process of closing the operations of Schroder Trust AG and Schroder Cayman Bank & Trust Company Ltd.
The deal has been struck under the Swiss Bank Program, which provides a path to resolve potential criminal liabilities for the banks in the United States. Under the programme, banks are required to make a complete disclosure of their cross-border activities and release among other details, information relating to the accounts in which US taxpayers have a direct or indirect interest, including transferred funds into secret accounts and pay penalties.
According to the DoJ, Schroder Bank opened accounts for trusts and companies owned by trusts, foundations and other corporate bodies established and incorporated under the laws of the British Virgin Islands, the Cayman Islands, Panama, Liechtenstein and other non-US jurisdictions, where the beneficiary or beneficial owner named on the Form A was a US citizen or resident.
It also claims that a small number of accounts were opened for US limited liability companies (LLCs) with US citizens or residents as members, as well as for US LLCs with non-US persons as members.
Between 2004 and 2008, four Schroder Bank employees traveled to the US in connection with the bank’s business with respect to US-related accounts. In 2008, Swiss bank UBS AG publicly announced that it was the target of a criminal investigation by the Internal Revenue Service (IRS) and the department, and that it would be exiting and no longer accepting certain US clients. But between 1 August 2008 and 30 June 2009, Schroder Bank opened eight US-related accounts with funds received from UBS while it was under investigation by the US government.
Since 1 August 2008, Schroder Bank had 243 US-related accounts with approximately $506 million in assets under management. Schroder Bank will pay a $10.354 million penalty, the release from the DoJ stated.
In accordance with the terms of the Swiss Bank Program, Schroder Bank mitigated its penalty by encouraging account holders to come into compliance with their tax and disclosure obligations.
“The cumulative penalties the Swiss Bank Program has generated to date are extraordinary,” said Chief Richard Weber of IRS-Criminal Investigation (CI). “However, a significant element of the program is the highly-detailed account and transactional data that has been provided to IRS specifically for law enforcement purposes. We will continue to use this information to vigorously pursue US taxpayers who may still be trying to illegally conceal offshore accounts, ensuring we are all playing by the same rules.”
Category: Finance, Financial Crime
Well, now we know the truth. The initial publication read like Schroder Bank were pulling their business out of the islands due to an executive decision, when they in fact had a matter before the US Courts that would eventually result in their demise. Well, there we have it!