Bermuda Bank Settles Tax Evasion Case for $5.6 Million

Background

A Bermudian bank has agreed to pay a significant fine to the United States government after being accused of assisting American taxpayers in evading taxes through undeclared foreign bank accounts.

The Case Against Butterfield Bank

The Bank of N.T. Butterfield & Son Limited, a Bermudian bank, entered into a non-prosecution agreement with the US Attorney’s Office for Southern District of New York after cooperating fully with an investigation into its role in tax evasion.

Terms of the Agreement

As part of the agreement, the bank will:

• Forfeit $4.896 million to the United States, representing fees earned by assisting US taxpayer-clients in opening and maintaining undeclared accounts
• Pay $704,000 in restitution to the IRS for unpaid taxes arising from the tax evasion

Background of the Case

The case dates back 20 years, with Butterfield’s cooperation including the provision of 386 client files for non-compliant US taxpayers. The bank has since enhanced its compliance controls for business with US clients and has set aside funds to cover the payment.

Response from Bank and Authorities

Michael Collins, Chairman and CEO of Butterfield Bank, welcomed the resolution of the matter, saying “We are pleased to resolve this matter which dates back to late 2013. Since that time, we have enhanced our compliance controls for business with US clients and the total payment has been provisioned.”

US Attorney Audrey Strauss added that the resolution reflected Butterfield’s cooperation in the investigation and demonstrated that such assistance had tangible benefits.

Conclusion

The case highlights the importance of tax compliance and the consequences of failing to meet tax obligations.