Financial Crime World

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Swiss Bank Agrees to Pay $122.9 Million for Aiding US Taxpayers in Hiding Undeclared Accounts

A major Swiss bank, Banque Pictet, has agreed to pay a whopping $122.9 million to the US Treasury to settle allegations that it helped hundreds of American taxpayers evade their tax obligations by hiding undeclared accounts.

Investigation Reveals Widespread Tax Evasion Scheme

According to court documents, between 2008 and 2014, Banque Pictet opened and maintained over 1,600 secret accounts for US clients, with assets totaling approximately $5.6 billion. The bank allegedly used various tactics to conceal the accounts from the Internal Revenue Service (IRS), including:

  • Forming offshore entities
  • Transferring funds through fictitious donations
  • Accepting false tax forms

Bank’s Employees Knew or Should Have Known of Tax Evasion

The investigation, led by the IRS’s Criminal Investigation (CI) division, revealed that Banque Pictet’s employees knew or should have known that some of their US clients were evading taxes. The bank’s managing partners approved new private client relationships and were informed when accounts were closed, including those with undeclared funds.

Settlement Terms

To settle the allegations, Banque Pictet has agreed to pay:

  • $52 million in gross fees earned on undeclared accounts between 2008 and 2014
  • $31.8 million in restitution to the IRS for unpaid taxes resulting from its participation in the conspiracy
  • A $38.9 million penalty

The bank has also agreed to:

  • Accept responsibility for its conduct
  • Refrain from future criminal activity
  • Implement remedial measures to prevent similar violations
  • Cooperate fully with ongoing investigations

Response from IRS-CI Chief

“This case highlights the importance of international cooperation in combating tax evasion,” said IRS-CI Chief Jim Lee. “We will continue to work with our foreign counterparts to hold accountable those who try to evade their tax obligations.”

Significance of the Case

The US Department of Justice’s Tax Division and the Complex Frauds and Cybercrime Unit of the U.S. Attorney’s Office for the Southern District of New York are handling the prosecution.

The case is a significant victory for the IRS-CI, which has obtained a 90% conviction rate in tax fraud cases involving foreign accounts. The agency has 20 field offices across the US and 12 attaché posts abroad, dedicated to investigating financial crimes, including:

  • Tax evasion
  • Money laundering
  • Identity theft