Use of foreign banks to hide assets is a well-known tactic for avoiding tax obligations. We know that individuals who attempt to avoid their taxes can face criminal charges that lead to high financial penalties and potential imprisonment, but what happens to a bank if it is complicit in the crime?
DOJ cracks down on Swiss bank for helping criminal actors
The government has options to hold financial institutions accountable for their wrongdoing.
For example, the Department of Justice (DOJ) recently announced a settlement agreement involving a Swiss bank that was accused of failing to follow United States tax law. The DOJ accused the bank of using illegal tax havens to aid in hiding assets for US taxpayers. The agency stated it had evidence bank employees, some of whom were managers at the facility, conspired with United States clients to hide assets from the Internal Revenue Service (IRS).
In this case, the bank chose to agree to a settlement as opposed to move forward with prosecution. The settlement involved a $10.7 million financial penalty as well as an agreement to cooperate in future investigations. The DOJ stated the facility’s termination of various employees and shutting down of branches that were implicated in the evasion efforts were taken into consideration during the settlement discussions.
If it had not agreed to a settlement, it is possible individual actors could have faced imprisonment.
Lessons for United States taxpayers
The case provides another example of the governments crack down on the use of foreign accounts to avoid tax obligations. Anyone that has yet to report foreign accounts is wise to review their options and determine the best course of action to come into compliance, if needed.