Swiss banks operating secret accounts for US persons continue to sign deals with the US to draw a line under the saga.

Another three Swiss banks have entered non-prosecution agreements with US authorities for holding undeclared accounts. The banks are PKB Privatbank, Falcon Private Bank and Credito Privato Commerciale in liquidazione.

Since August 1, 2008, PKB had 244 US-related accounts, both declared and undeclared, with an aggregate maximum balance of approximately $328.8 million. PKB will pay a penalty of $6.328 million.

Since August 1, 2008, Falcon maintained a total of 84 US-related accounts with an aggregate value of approximately $134 million. Falcon will pay a penalty of $1.806 million. In the period between August 1, 2008, and CPC’s liquidation, CPC had 16 US-related accounts with an aggregate maximum balance of approximately $71 million. CPC will pay a penalty of $348,900, the US Department of Justice said in a statement yesterday.

These banks are the latest to reach agreements under the terms of a US-Swiss program signed in August 2013.

The program allows Swiss banks to resolve potential criminal liabilities in the US and banks were told to advise the Department of Justice by the end of December 2013 if they had reason to think they had committed tax-related criminal offences. The program also gave banks the option of stating if they had no reason to believe they had broken any US laws.

Banks already under criminal investigation related to their Swiss-banking activities and all individuals were expressly excluded from the program.

To see the previous story about such NPAs, click here.

“Swiss banks continue to lift the veil of secrecy that for decades has assisted US individuals in willfully evading their US tax obligations, often through the use of sham structures and trusts established in foreign jurisdictions,” said acting assistant attorney general, Caroline Ciraolo, of the US Department of Justice’s tax division.

According to the terms of the NPAs, each bank agreed to cooperate in any related criminal or civil proceedings, demonstrate its implementation of controls to stop misconduct involving undeclared US accounts and pay penalties in return for the department’s agreement not to prosecute these banks for tax-related criminal offenses.

Lugano-headquartered PKB offered a variety of traditional Swiss banking services that it knew would, and in certain instances did, assist US clients in concealing assets and income from the Internal Revenue Service, the statement said. These services included code name or numbered accounts and hold mail services, through which PKB would hold all mail correspondence for a particular client. These services allowed US clients to conceal their identities and minimize the paper trail associated with the undeclared assets and income they held at PKB in Switzerland, the DoJ continued.

In the case of Falcon, the DoJ said: “Through its managers, employees and others, Falcon knew that some US taxpayers who had opened and maintained accounts at Falcon were not complying with their US income tax and reporting obligations.  Falcon offered a variety of standard Swiss banking services, including hold mail and code name or numbered account services, which it knew could assist, and did assist, its US clients in the concealment of assets and income from the IRS.”

Most of Falcon’s US-related accounts held since August 1, 2008, were held in the names of entities or structures. Those accounts were almost entirely held by non-US structures, such as offshore corporations or trusts, the DoJ said.

“Typically, the beneficial owners of these structures created a legal entity, such as a Panamanian corporation, and paid third parties to act as the corporate 'directors.'  Those third parties would then open a bank account at Falcon in the name of the entity, allowing clients the ability to conceal their undeclared accounts from the IRS,” it continued.

As far as CPC was concerned, this Lugano-based bank went into voluntary liquidation in 2012 after its Italian parent decided to exit private banking for reasons unrelated to the US tax issue, the DoJ said. “CPC offered a variety of traditional Swiss banking services, including numbered accounts and hold mail service.”

The firm also employed other means to assist US taxpayers in concealing their undeclared accounts, including:

-- opening an account for a US taxpayer who had left UBS, which was being investigated by the department;
-- opening an account for two US taxpayers who had left a bank in Luxembourg because, according to their later voluntary disclosures, their external asset manager was concerned about bank secrecy in Luxembourg and indicated it would be safer to maintain an undeclared account in Switzerland; and
-- providing a cash card linked to an undeclared account.

After March 13, 2012, and considering the implementation of the US Foreign Account Tax Compliance Act (FATCA), CPC decided to discontinue all of its relationships with its US customers and closed its last US-related account in April 2013.