The U.S. Justice Department approved a deferred prosecution agreement (DPA) with Basler Kantonalbank (BKB) which is a bank headquartered in Basel, Switzerland.
At its peak in 2010, the BKB held approximately 1,144 accounts for U.S. customers, with an aggregate value of approximately $813.2 million. Many, but not all, of these accounts were undeclared and part of the conspiracy to defraud the United States. BKB assisted certain U.S. clients in concealing their offshore assets and income from U.S. taxing authorities. BKB became aware that UBS was considering closing its cross-border business servicing U.S. persons. In 2008, when UBS’s cross-border business was under criminal investigation by U.S. authorities, BKB’s Zurich branch seized this opportunity to attract clients leaving UBS. In one exposed email, BKB employees made clear that the funds to be transferred to the Bank “were never taxed in the U.S.A.”. To attract new clients, the Bank also signed up several new external asset managers and offered them finder’s fees.
As part of the agreement, BKB will pay $60.4 million in total penalties which contains three parts. First, BKB agreed to pay $17,200,000 in restitution to the IRS, which represents the unpaid taxes resulting from BKB’s participation in the conspiracy. Second, a civil forfeiture of $29,700,000 to the United States, which represents gross fees (not profits) that the bank earned on its undeclared accounts between 2002 and 2012. Finally, BKB agreed to pay a criminal fine of $13,500,000. “The era of hiding money overseas to evade U.S. tax obligations is over,” said Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division, “Financial institutions, professionals, and accountholders are on notice that the Department continues to aggressively pursue these offenses and will hold both individuals and entities accountable.”
Source: U.S Department of Justice
TPA Global provides solutions in the area of BEPS, Value Chain Analysis for multinationals along with variety of tax, business and educational technologies. Let us show you how to improve your operations and move from “staying out of trouble” to “being in control”.