Each bank has agreed to cooperate with the DoJ and pay penalties in return for the department's agreement not to prosecute them over secret US accounts.

Luzerner Kantonalbank, Habib Bank AG Zurich (HBZ), Banque Heritage, and Hyposwiss Private Bank Genève (Hyposwiss Geneva) have signed non-prosecution agreements under the US Department of Justice’s Swiss Bank Program. They will collectively pay penalties of over $25 million.

The program was introduced in 2013 to give Swiss banks the opportunity to resolve potential criminal liabilities in the US by advising the DoJ by the end of 2013 that they had reason to believe that they had committed tax-related criminal offenses in connection with undeclared US-related accounts. The latest deals come shortly after Piguet Galland & Cie signed a similar agreement with the department to avoid prosecution.

Since August 2008, Luzerner, established in 1850 by the Canton of Lucerne, held a total of 595 US-related accounts, which amounted to around $300 million. Luzerner offered various traditional Swiss banking services that helped US taxpayers conceal their identity from the Internal Revenue Service by minimizing the paper trail associated with their undeclared assets and income. The bank will pay a penalty of $11.031 million. 

Luzerner held accounts held in the name of non-US entities, while knowing, or having reason to know, that a US taxpayer held an interest in these entities, which were set up in jurisdictions such as Panama, Seychelles and the British Virgin Islands. In an email sent to the head of the private banking department in 2007, the head of the external asset manager desk at Luzerner described an external asset manager, who managed nearly all of 115 US-related accounts for insurance carriers, as “[specializing] in aspects of legal asset protection as well as tax optimization and has approx. CHF 750 million [Swiss francs] in assets under management, in particular in life insurances. Its main clients include wealthy US nationals (doctors, lawyers, etc.).”

HBZ, part of Mumbai-established Habib Bank, primarily serves South Asian commercial businesses and entrepreneurs, and their families. Since August 2008, HBZ had 125 US-related accounts, comprising around $118.9 million in assets under management. HBZ Swiss Office helped create four Liechtenstein “Anstalts” or entities with US beneficial owners, while it knew or should have known that these carried an intention of masking US ownership. It also facilitated the transfer of the funds from these accounts to HBZ Finance Limited, Hong Kong. The bank will pay a penalty of $9.4 million.

Banque Heritage, a Geneva-headquartered private bank, offered hold mail and opened accounts in the names of offshore structures. Since August 2008, Banque Heritage had 131 US-related accounts worth a combined $198 million. During this period, the bank had 47 US-related accounts with US beneficial owners that were held by entities created in Panama, the British Virgin Islands, Hong Kong, Belize or other foreign countries. It established banking relationships with US taxpayers who were transferring funds from other Swiss financial institutions that were closing such accounts and in at least seven such cases, comprising at least $10 million, Banque Heritage knew, or had reason to know, that the accounts were or may have been undeclared. It will pay a $3.846 million penalty.

Lastly, Hyposwiss Geneva held at least 21 undeclared accounts in the names of structures that were beneficially owned by US taxpayers since August 2008. It held 91 US-related accounts with $74.9 million in assets under management during this time. The bank knew, or had reason to know, that these structures were used by US clients to help conceal their identities from the IRS. It processed large cash and gold withdrawals totaling around $3.4 million for at least nine US taxpayers at or around the time the clients’ accounts were closed. Hyposwiss Geneva will pay a penalty of $1.109 million.