Banque Pictet’s Settlement with the DOJ Presents Serious Risks for Its U.S. Clients with Offshore Accounts

Posted in Offshore Account Update on December 29, 2023 | Share

On December 4, 2023, the U.S. Department of Justice (DOJ) announced that it had entered into a $122.9 million settlement with Swiss private bank Banque Pictet et Cie SA (Banque Pictet). According to the DOJ’s press release, the settlement comes after Banque Pictet admitted to “conspiring with U.S. taxpayers and others to hide more than $5.6 billion in 1,637 secret bank accounts in Switzerland and elsewhere and to conceal the income generated in those accounts from the IRS.”

Crucially, as part of the settlement, Banque Pictet has also agreed to cooperate with the DOJ’s ongoing investigation for the next three years. As Washington D.C. tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, explains, this means that the bank’s U.S. clients could be at risk of facing audits, investigations, and potentially even criminal prosecution.

Banque Pictet Admits to Engaging in Multiple Practices Designed to Conceal Offshore Income from the IRS

In its press release, the DOJ details several practices that Banque Pictet admitted to using to help its U.S. clients conceal their offshore income from the IRS. According to the DOJ, Banque Pictet has admitted to helping its U.S. clients avoid federal income tax liability in relation to their offshore accounts through means including (but not limited to):

  • Opening and maintaining undeclared offshore accounts in the names of foreign offshore entities formed by or on behalf of U.S. taxpayers;
  • Opening and maintaining Private Placement Life Insurance policy accounts (or “insurance wrappers”) beneficially owned by U.S. taxpayers and either managed or funded through these taxpayers’ undeclared offshore accounts;
  • Assisting U.S. taxpayers with maintaining undeclared funds offshore through fictitious donations from U.S. taxpayer-owned accounts to accounts controlled by these taxpayers but nominally held by others;
  • Providing coded accounts to U.S. taxpayers and holding their account-related mail instead of sending it to the taxpayers in the United States; and,
  • Accepting forms from U.S. taxpayers that the bank “knew or should have known falsely stated or implied under penalty of perjury that offshore entities beneficially owned the assets in the [taxpayers’] undeclared accounts.”

Now that Banque Pictet has agreed to cooperate with the DOJ to avoid prosecution, its U.S. clients are likely to be next on the Department’s radar. As the DOJ’s press release makes clear, while Banque Pictet’s deferred prosecution agreement protects the bank, it “provide[s] no protection from criminal or civil prosecution for any individuals,” and, going forward, the bank is required to disclose any information it uncovers “regarding U.S.-related accounts.”

Request a Confidential Consultation with Washington D.C. Tax Lawyer Kevin E. Thorn

If you need to know more about Banque Pictet’s deferred prosecution agreement with the DOJ, or if you have any other concerns related to your offshore accounts or other foreign financial assets, we invite you to get in touch. To request a confidential consultation with Washington D.C. tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, please call 202-349-4033 or tell us how we can reach you online today.

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