EFTA02348188.pdf

From: Kathy Ruemmler Sent: Monday, March 3 , To: Jeffrey E. Subject: Fwd: Forwarded message From:= <Kathryn.Ruemmler Date: Mar 30, 2015 12:23 PM Subject: To: Cc: Department of Justice Office of Public Affairs FOR IMMEDIATE RELEASE Monday, March 30, 2015 BSI SA of Lugano, Switzerland, is First Bank to Reach Resolution=Under Justice Department's Swiss Bank Program=/p> The Department of Justice announced today t=at BSI SA, one of the 10 largest private banks in Switzerland, is the first bank to reach a resolution under the Department of JusticeQ=804*s Swiss Bank Program chttp://www.justice.gov/tax/2013/txdv13975.htm> .<=span> "Because of the department'= continuing efforts to root out offshore tax evasion, Swiss banks are oper=ting much differently today than they did just a few years ago, and the departm=nes Swiss Banking Program is a big part of that change," =aid Acting Deputy Attorney General Sally Quillian Yates. "Wh=n we announced the program, we said that it would enhance our efforts to pursue those who help facilitate tax evasion and those who use secret offshore accounts to evade taxes. And it has done just that.=C24* We are using the information that we have learned from BSI and other=Swiss banks in the program to pursue additional investigations into both banks and individuals." The Swiss Bank Program, which was announced=on Aug. 29, 2013, provides a path for Swiss banks to resolve potential criminal liabilities in the United States. Swiss banks eli=ible to enter the program were required to advise the department by Dec. 3=, 2013, that they had reason to believe that they had committed tax-relate= criminal offenses in connection with undeclared United States-related accounts. Banks already under crimi=al investigation related to their Swiss-banking activities and all individ=als were expressly excluded from the program. Under the program, banks are required to: • Make a complete disclosure of their cross-border activi=ies; • Provide detailed information on an account-by-account b=sis for accounts in which U.S. taxpayers have a direct or indirect interes=; EFTA_R1_01321999 EFTA02348188 • Cooperate in treaty requests for account information; • Provide detailed information as to other banks that tra=sferred funds into secret accounts or that accepted funds when secret acco=nts were closed; • Agree to close accounts of account holders who fail to =ome into compliance with U.S. reporting obligations; and * Pay appropriate penalties. Banks meeting all of the above requirements=are eligible for a non-prosecution agreement. According to the terms of the non-prosecuti=n agreement signed today, BSI agrees to cooperate in any related criminal or civil proceedings, demonstrate its implementation of controls =o stop misconduct involving undeclared U.S. accounts, and pay a $211 milli=n penalty in return for the department's agreement not to prosecut= BSI for tax-related criminal offenses. "The department's Swiss Ban= Program is an innovative effort to get the financial institutions that fa=ilitated a massive fraud on the American tax system to come forward with informatio= about their wrongdoing — and to ensure that they are held respons=ble for it," said Acting Associate Attorney General Stuart F. Dele=y. "Today's resolution demonstrates that the program is working. BSI is paying an appropriate penalty for its misconduct =nd the information and continuing cooperation we have required the banks t= provide in order to participate in the program is allowing us to systemat=cally attack offshore tax avoidance schemes." BSI helped its U.S. clients create sham cor=orations and trusts that masked the true identity of its U.S. accountholders. Many of its U.S. clients also opened "number=d" Swiss bank accounts that shielded their identities, even from e=ployees within the Swiss bank. BSI acknowledged that in order to hel= keep identities secret, it issued credit or debit cards to many U.S. accountholders without names visible on the card itself...AO BSI not only helped U.S. clients shield the=r identity from the Internal Revenue Service (IRS). but helped them repatriate cash as well. BSI admitted that its relationship man=gers and their U.S. clients used code words in emails to gain access to fu=ds. BSI disclosed instances where its U.S. clients would use coded l=nguage, such as asking their private bankers, "can you download some tunes for us?" or note that their =E2..gas tank is running empty" when they required additional c=sh to be loaded to their cards. From the beginning of the Swiss Bank Progra=, the department has emphasized the importance of the banks' helping to identify individuals who facilitate U.S. tax evasion and U.S. a=countholders. BSI provided substantial assistance in this regard...AO "An individual is not culpable simp=y because he or she is identified by a bank within the program," s=id Acting Assistant Attorney General Caroline D. Ciraolo of the department40.804>s Tax Division. "With that said, the department strongl= encourages those individuals and entities currently under indictment, und=r investigation, or who have concerns regarding their potential criminal liability to contact and fully cooperate with the depar=ment to reach a final resolution." Since 2009, the department has charged more=than 100 offshore bank accountholders, dozens of facilitators, and financial institutions. The department's offshore enforc=ment efforts have reached far beyond Switzerland, as evidenced by publicly=announced actions involving banking activities in India, Luxembourg, Liech=enstein, Israel and the Caribbean. BSI had more than 3,000 active United State=-related accounts after 2008, many of which it knew were not disclosed in the United States. In resolving its criminal liabilitie= under the program, BSI provided extensive cooperation 2 EFTA_R1_01322000 EFTA02348189 and encouraged hund=eds of U.S. accountholders to come into compliance. BSI is also assi=ting with ongoing treaty requests. "This action under the Swiss Bank P=ogram shows just how far we've come in our efforts to stop offshor= tax avoidance," said Deputy Commissioner Douglas O'Donnell=of IRS's Large Business and International Division (LB & l).=C24> "The IRS and DOJ remain committed to aggressively enforce ou= nation's tax laws regardless of how sophisticated or complicated the =chemes may be." While BSI's U.S. accountholders who=have not yet declared their accounts to the IRS may still be eligible to participate in the IRS's offshore voluntary disclosure programs= the price of such disclosure has increased. Most U.S. taxpayers who enter the IRS offsh=re voluntary disclosure program to resolve undeclared offshore accounts will pay a penalty equal to 27.5 percent of the high value of the=accounts. On Aug. 4, 2014, the IRS increased the penalty to 50 perce=t if, at the time the taxpayer initiated their disclosure, either a foreig= financial institution at which the taxpayer had an account or a facilitator who helped the taxpayer establish=or maintain an offshore arrangement had been publicly identified as being =nder investigation, the recipient of a John Doe summons or cooperating wit= a government investigation, including the execution of a deferred prosecution agreement or non- prosecution agree=ent. With today's announcement of BSI's non-prosecut=on agreement, its noncompliant U.S. accountholders must now pay that 50 pe=cent penalty to the IRS if they wish to enter the IRS' program. BSI and other banks in the Swiss Bank Progr=m are also providing detailed information to the department about transfers of money from Switzerland to other countries. The Ta= Division and the IRS intend to follow that money to uncover additional ta= evasion schemes. The department has emphasized the importanc= of identifying U.S. accountholders who have undeclared foreign bank accounts, and BSI has provided assistance in that task. Because=of the information provided to the department under the program, the Tax D=vision has already begun the process of identifying noncompliant U.S. acco=ntholders who have maintained accounts at many Swiss banks participating in the Swiss Bank Program. <=> "Today's action sends a cle=r message to anyone thinking about keeping money offshore in order to evad= tax laws," said Chief Richard Weber of IRS-Criminal Investigation =CI). "Fighting offshore tax evasion continues to be a top pr=ority for IRS-CI and we will trace unreported funds anywhere in the world.=C24, IRS-CI special agents are our nation's best financial investigators, trained to follow the money and enforce our country..99s tax laws to ensure fairness for all." Acting Assistant Attorney General Ciraolo t=anked the IRS and in particular, IRS-CI and LB & I for their substantial assistance, as well as Trial Attorney Kevin F. Sweeney of the =ax Division, who served as lead counsel on this matter, and Senior Counsel=for International Tax Matters and Coordinator of the Swiss Bank Program Th=mas J. Sawyer of the Tax Division. Additional information about the Tax Divisi=n and its enforcement efforts may be found on the division's website <http://www.justice.gov/tax> . This email may contain mat=rial that is confidential, privileged and/or attorney work product for the=sole use of the intended recipient. Any review, reliance or distribu=ion by others or forwarding without express permission is strictly prohibi=ed. If you are not the intended recipient, please contact the sender=and delete all copies. Latham & Watkins LLP 3 EFTA_R1_01322001 EFTA02348190 4 EFTA_R1_01322002 EFTA02348191