Joint DOJ-IRS Investigation Leads To Non-Prosecution Agreement For Swiss Bank AKB
By: John A. Schwab
On Tuesday, the U.S. Department of Justice announced a resolution with Aargauische Kantonalbank (“AKB”) allowing the Swiss bank to avoid prosecution for tax-related criminal offenses in exchange for payment of a $1.983 million penalty and implementation of controls concerning U.S. taxpayer ownership of AKB accounts. It was alleged that AKB assisted American taxpayers in concealing their identity from the IRS by minimizing the “paper trail” associated with undeclared assets and income.
AKB allegedly identified bank accounts only by their account number – not by the name of the account owner – making it easier for the account owners to evade detection. DOJ also claimed that AKB agreed to not to send mail to U.S. residents knowing it was likely that the accounts would not be declared to the IRS or Department of Treasury as required under U.S. law. DOJ provided one example where an AKB client engaged in a series of large cash withdrawals including over 100,000 Swiss Francs (approximately $100,000) in 2009 and over 180,000 Swiss Francs (approximately $180,000) in 2010. DOJ also alleged that AKB allowed clients to send money from themselves by issuing bank checks drawn on an AKB bank account, which listed only AKB as the account holder, thus allowing U.S. clients to conceal their ownership in the AKB account. There were a total of 454 U.S.-related accounts maintained and serviced by AKB from 2008 to 2014, comprising over $639 million.
The AKB agreement is the most recent resolution under the Swiss Bank Program since the November 2015 agreement between DOJ and BNP Paribas covered by White-Collared here. Under the Swiss Bank Program, Swiss banks may resolve potential criminal charges if they disclose the commission of tax-related criminal offenses in connection with undeclared bank accounts. However, Swiss banks already under criminal investigation related to undeclared accounts are excluded from the program. DOJ examines a Swiss bank’s disclosure of its involvement in tax-related offense before it is permitted to enter into a non-prosecution agreement. The bank is required to disclose cross-border activities, provide detailed information for accounts in which U.S. taxpayers have an interest, provide detailed information as to other banks to which funds were transferred, and pay penalties. A total of 55 Swiss banks entered into the program and have collectively paid $532 million.
The AKB non-prosecution agreement can be found here.