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Swiss private bank Pictet has agreed to pay $123mn to US authorities after admitting to helping clients illegally shield more than $5.6bn of assets from tax in secret accounts from 2008 to 2014.
The Geneva-based bank, Switzerland’s oldest and most prestigious private money manager, on Monday entered into a deferred prosecution agreement with the Department of Justice. It has agreed to co-operate fully with ongoing investigations into the clients in question and their accounts.
“Today [Pictet] admitted to actively helping US taxpayers use coded accounts, foreign trusts and entities, nominee beneficiaries and other deceits to conceal their income and assets abroad,” said acting deputy assistant attorney-general Stuart M. Goldberg. “For this criminal conduct the bank will be paying nearly $122.9mn in restitution, disgorgement of fees and a financial penalty.”
Taxes worth over $50mn were avoided in 1,637 accounts as a result of the bank’s efforts, the DOJ said.
A range of measures was used by the Swiss bank to help its clients avoid detection by US authorities, including pseudonyms, anonymous numbered accounts and accounts held in the name of “sham” corporate entities set up as fronts.
According to the DoJ, Pictet also provided services to divert and hold mail, to avoid account information being sent to the US, and offered clients preloaded credit cards issued by a third-party so the origin of funds could be hidden.
The DOJ said members of Pictet’s management — the bank’s secretive circle of eight partners, known as “the salon” — approved the client-relationships concerned and were aware of undeclared accounts.
In a statement on Monday, Pictet said that it was “pleased to have resolved this matter and will continue to take steps to ensure its clients meet their tax obligations.”
Pictet currently manages assets of SFr638bn ($713bn) for wealthy clients and large institutions.
The bank said it had begun tackling tax evasion by its clients before US authorities publicly launched a crackdown on abuses in 2008 — with a particular focus on Switzerland — after leaked documents revealed UBS, the country’s largest bank, was shielding thousands of clients from paying their taxes.
UBS admitted guilt and paid $780mn to US authorities in a deferred prosecution agreement in 2009. Other Swiss banks have followed suit over the years.
“The agreement acknowledges Pictet began evaluating and enhancing its policies and practices for conducting business with US taxpayer clients in 2008 . . . It also recognises that the Group then took additional steps, beyond those required by US law, to promote the tax compliance of its US taxpayer clients,” Pictet said.
The settlement will not materially impact the bank’s capital position, it added.