Financial Crime World

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Swiss Life Agrees to Pay $77 Million Fine for Helping US Clients Hide Undeclared Assets

In a significant blow to Swiss banking secrecy, Swiss Life Holding has agreed to pay a total of $77 million to settle allegations that it helped thousands of US clients hide undeclared assets and evade taxes.

The Investigation

The settlement stems from an investigation into Swiss Life’s participation in a conspiracy to help US taxpayers conceal their offshore accounts and avoid paying millions in taxes. The scheme involved the use of complex insurance policies, known as Private Placement Life Insurance (PPLI), which allowed clients to hide their assets and income without reporting them to the IRS.

The Scheme

According to court documents, Swiss Life personnel knowingly assisted US clients in establishing and maintaining PPLI policies, even when they had no intention of declaring the income or assets used to fund the policies. The company also provided false documentation and helped clients launder money through shell companies and offshore accounts.

  • The investigation found that Swiss Life’s PPLI business was a major conduit for US taxpayers seeking to hide their wealth from tax authorities.
  • The company earned millions in fees on these policies, which were often used to conceal income from illegal activities such as drug trafficking and money laundering.

The Settlement

As part of the settlement, Swiss Life Holding has agreed to:

  • Pay $16 million in restitution to the IRS, representing the unpaid taxes resulting from its participation in the conspiracy.
  • Forfeit $35 million, representing the gross fees it earned on the penalized insurance policies and related accounts between 2005 and 2014.
  • Pay a penalty of $26 million, which takes into account the company’s cooperation with the investigation and its efforts to implement remedial measures to prevent similar schemes in the future.

The Latest Development

This settlement is the latest development in the US government’s crackdown on offshore tax evasion. It follows recent agreements with other Swiss banks, including UBS and Credit Suisse, which have also paid significant fines for their role in helping US clients hide undeclared assets.

The Investigation Team

The investigation was conducted by the IRS Criminal Investigation division, in conjunction with the Department of Justice’s Tax Division and the Complex Frauds and Cybercrime Unit of the US Attorney’s Office for the Southern District of New York. The case is being prosecuted by:

  • Senior Litigation Counsel Nanette Davis
  • Trial Attorney Jack Morgan of the Tax Division
  • Assistant US Attorneys Nicholas Folly and Olga I. Zverovich of the U.S. Attorney’s Office

Ongoing Cooperation

Swiss Life Holding has agreed to continue cooperating with ongoing investigations and to disclose any information it may later uncover regarding US-related insurance policies and related accounts. The company is also required to provide information consistent with the Department of Justice’s Swiss Bank Program relating to accounts closed between January 1, 2008, and December 31, 2019.

A Significant Victory

The settlement is a significant victory for the IRS and the US government in its efforts to combat offshore tax evasion and bring justice to individuals who have hidden their wealth from tax authorities.