Another Foreign Financial Institution Enters the Swiss Bank Program to Obtain a Non-Prosecution Agreement

For more than two years the U.S. Department of Justice’s Swiss Bank program has provided incentive for foreign financial institutions concerned about potential violations of U.S. law due to cross border banking activities. While the Swiss banks that enter into this program typically receive protections and assurances that they will not face further civil or criminal consequences provided the institution satisfies certain criteria, individuals who may have used the foreign bank do not. For U.S. citizens, taxpayers, and others who may have an obligation to disclose foreign financial accounts, the failure to make these mandatory disclosures can lead to significant offshore tax penalties or even criminal enforcement action if tax evasion is suspected.

Unfortunately for individuals who still have not complied with FBAR and FATCA obligations, the Swiss Bank program and other investments undertaken by the U.S. government means that the risk of detection has never been higher. Taxpayers who have failed to disclose their foreign accounts should immediately contact an experienced tax attorney for guidance as to how he or she can mitigate the penalties he or she faces. To schedule a reduced-rate consultation with an experienced tax professional call the Tax Law Offices of David W. Klasing today by calling 800-681-1295 today.

Maerki Baumann & Co. AG Enters Into Swiss Bank Program

According to allegations advanced by prosecutors with the Department of Justice (DOJ), “Maerki Baumann willfully and actively helped U.S. taxpayers evade their tax obligations and cheat the American public.” Maerki Baumann did not have an American desk until 2001, but the bank’s activities and practices grew quickly after a 2001 establishment of a “Swiss/U.S. Team” and the 2003 hiring of a particular relationship manager who worked with a second relationship manager who would eventually face federal tax charges in 2011.

Federal prosecutors allege that these individuals and others engaged in an array of behaviors in violation of U.S. laws and the U.S. Tax Code. These violations allegedly included:

  • On approximately 35 separate occasions relationship managers traveled to the United States to build or maintain relationships for cross-border banking activities.
  • The financial institution maintained accounts for U.S. individuals who were required to declare the account under U.S. law. The bank knew or had reasons to know that this obligation was not satisfied.
  • The bank would hold mail for U.S. customers to help them avoid detection.
  • The bank provided statements and other documents providing account information that included only the account number and no mention of the accountholder’s identity.
  • The bank allowed U.S. individuals to hold accounts in the name of non-operating foreign entities in Liechtenstein, Panama, the British Virgin Islands, and other jurisdictions.
  • The bank structured transactions to avoid cash reporting laws.
  • Relationship managers arranged communicate with clients through confidential means. One relationship manager arranged to have his client call him for urgent news if a greeting card phrased in a particular way was received.
  • The relationship managers were, in some cases, told by the accountholder that the account was undeclared.
  • The bank offered cash, pre-paid debit cards, and cash cards to clients to conceal transactions.

In all, the actions by the fincial institution involved nearly $800 million in assets.

What Consequences Does the Bank Face?

Per terms of its agreement with the U.S. government, Maerki Baumann has agreed to pay a $23.92 million fine.   Furthermore, and more concerning to those who have yet to make required offshore disclosures, the financial institution has agreed to cooperate with the U.S. government in its efforts to identify U.S. persons who engaged in tax evasion and/or fraud. The bank will comply with all tax treaty requests for information, provide a comprehensive disclosure of all cross-border activities, and report accountholders who refuse to achieve or maintain compliance with U.S. laws and regulations. Furthermore the bank will also provide information regarding all U.S. linked accounts and will disclose financial institutions that accepted or made secret transfers.

Maerki Bauman is the 66th bank to join the Swiss Bank program. The window to engage in OVDP to receive protections against future criminal enforcement is closing.

Rely on Our Experience When Entering OVDP to Address Undisclosed Foreign Accounts

If you have concerns regarding undisclosed foreign accounts, the window to address these problems without facing significant penalties will not remain open forever.  Furthermore, if you bank is identified as a facilitator before you enter into OVDP, an enhanced off shore penalty will apply. Even still, this penalty is preferable to facing potential criminal consequences for tax evasion through undisclosed foreign accounts. To schedule a reduced-rate consultation with an experienced professional from the Tax Law Offices of David W. Klasing, call 800-681-1295 or contact us online today.