Banca della Svizzera Italiana – BSI for short – is one of the oldest banks in Switzerland. Founded in 1873, the bank has approximately $25.7 billion (USD) in assets and 2000 employees. Today, however, the bank’s balance sheet is a little short… about $211 million less. That’s because yesterday, BSI agreed to an amnesty deal with the U.S. Department of Justice.
BSI is the first Swiss bank to successfully complete a banking amnesty plan that allows banks to pay a penalty in return for avoiding prosecution. Since 2009, the Justice Department has prosecuted Swiss banks Wegelin, UBS and most recently, Credit Suisse. Wegelin, Switzerland’s oldest bank, closed its doors after admitting guilt and paying a fine.
The amnesty program has become quite controversial since the penalty is based on the dollar value of the undeclared accounts held by the bank. There doesn’t need to be a finding that the bank actively helped U.S. taxpayers evade taxes or hide money from the IRS.
According to published reports, there was ample evidence in this case that BSI was actively helping wealthy Americans evade taxes. A statement filed by the Justice Department yesterday said BSI helped clients hide money by the use of sham or nominee entities and “bogus financial products.” Until 2009, BSI also issued debit cards that didn’t have a name on the card but nonetheless allowed customers to withdraw money from ATMs. The advantage of the card, of course, was no paperwork linking the foreign account to an American.
The bank would also allow clients to have their statements held or delivered outside the United States. Typically taxpayers that do this hope to avoid tipping off the IRS about their offshore account.
In announcing the settlement, Acting Associate Attorney General Stuart Delery said, “The program will continue to assist the department’s efforts to investigate and prosecute U.S. taxpayers who, when faced with the risk of detection, chose to move funds away from banks under investigation to banks that they believed might be better havens for tax secrecy”.
As of this writing, we are aware of no statement by the bank.
There are billions of dollars that remain hidden in unreported offshore accounts. In most cases, the account holders simply don’t understand their reporting obligations.
To avoid expensive and time consuming criminal investigations and IRS audits, most Swiss banks are taking advantage of the amnesty deal and simply buying their freedom.
If you have an unreported offshore account, time is quickly running out. The IRS has an amnesty program for taxpayers (called the Offshore Voluntary Disclosure Program or OVDP), a streamlined reporting program and other options. Amnesty is only available, however, if the IRS doesn’t get your name from a cooperating bank first. With the FATCA bank reporting law now in full swing, the ability to avoid the worst of the penalties is quickly disappearing.
Have an unreported offshore account? Give us a call immediately. Most IRS offshore reporting can be handled for a flat fee and our services are available worldwide. For more information, contact attorney Bethany Canfield at or by telephone at (414) 223-0464. All inquiries are protected by the attorney – client privilege.
Mahany & Ertl – America’s Tax Lawyers