BSI SA Reaches Resolution Under Swiss Bank Program

Posted in Offshore Account Update on July 24, 2015 | Share

Swiss banks have long provided a haven for people who want to keep money offshore and take advantage of Switzerland’s strict privacy laws. The U.S. government, however, has been cracking down on investors and financial institutions involved with hiding offshore funds for purposes of tax avoidance.

Amnesty programs have been created to allow individual investors to come forward, and a Washington DC tax attorney can provide assistance to investors who wish to take advantage of these programs to avoid criminal prosecution. A Swiss Bank Program was also created to allow banks to resolve their criminal liabilities within the United States.

The Department of Justice announced in March of 2015 that BSI SA of Lugano, Switzerland was the first bank to reach a resolution under the Swiss Bank Program the DOJ created. The DOJ is using the information obtained as part of the resolution agreement to pursue further investigations into both individuals and banks.

Resolutions Under the Swiss Bank Program

The Swiss Bank Program was announced on August 29, 2013. Swiss banks that were eligible to take part in the program were required to take action by December 31, 2013. More specifically, the banks were required to inform the Department of Justice that they had reason to believe they had committed criminal violations of U.S. tax law in connection with reporting requirements for offshore accounts owned by U.S. citizens.

Banks that were already under investigation related to potential tax violations were not permitted to participate in the Swiss Bank program, nor were individuals permitted to participate. However, other banks that wished to take part would be able to resolve their criminal liabilities and enter into a non-prosecution agreement provided they met the requirements. The DOJ mandates that participating banks:

• Fully disclose all cross-border activities.
• Provide detailed information on all accounts that U.S. taxpayers have either a direct or an indirect interest in. This information must be provided on an account-by-account basis.
• Cooperate with any treaty requests for customer account information.
• Provide the DOJ with details about any other banks that either accepted funds when secret accounts were closed or that transferred funds into undeclared secret offshore accounts.
• Agree to close all of the accounts of any U.S. taxpayers who do not come fully into compliance with all of their tax obligations.
• Pay appropriate fines and penalties.

BSI SA agreed to pay a penalty of $211 million and comply with all other requirements, including cooperating in both civil and criminal proceedings. As part of its participation in the Swiss Bank Program, BSI SA also promised to demonstrate that it was implementing controls necessary to stop misconduct in regard to undeclared U.S. offshore accounts.

The bank will now be able to avoid criminal penalties for helping U.S. customers set up trusts and sham corporations used to mask their identities and for providing U.S. customers numbered Swiss bank accounts. The bank also violated U.S. laws by helping United States citizens repatriate their funds.

While BSI SA has solved its legal problems, legal troubles for its investors are likely just beginning as the IRS and DOJ now have information about their accounts. It is important to note that individuals must come forward and report their offshore accounts before they are under investigation if they wish to take advantage of amnesty programs. Kevin Thorn, a tax attorney in Washington, DC, can provide assistance if you want to explore your options for trying to head off criminal prosecution.

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