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Come clean Two more Swiss banks reach US resolution

Société Générale Private Banking SA maintained undeclared accounts in the name of “sham entities” for US clients, the US Justice Department said


Swiss banks Société Générale Private Banking Switzerland and Berner Kantonalbank AG have agreed to pay the United States multimillion-dollar penalties under a tax evasion non-prosecution programme announced on Tuesday by the US Department of Justice (DoJ). 

Under its Swiss Bank Programexternal link, the Société Générale branch will pay a $17.81 million (CHF16.5 million) penalty and Berner Kantonalbank will pay a $4.62 million penalty, US Justice Department officials said in a statement. 

Société Générale Private Banking SA maintained undeclared accounts in the name of “sham entities” for US clients, the Justice Department said, and opened accounts for Americans who had left Zurich-based UBS AG after Switzerland’s biggest bank came under scrutiny for aiding tax evasion several years ago. 

Last month, Société Générale Private Banking Lugano (a separate legal structure under the group's umbrella) was fined $1.36 million under the same DoJ scheme.

Berner Kantonalbank AG also opened and maintained undeclared accounts for Americans, the DoJ said on Tuesday. Berner Kantonalbank had about 720 US accounts since August 2008, it added, with roughly $176.5 million in assets. 

The bank said in a statement the penalty will have no impact on its results for the current year and that it had already made appropriate provisions in 2013. 

The banks turned themselves in by joining the US programme in 2013, along with around 100 other Swiss-based institutions. The scheme allows banks to pay fines in return for the Department of Justice waiving criminal prosecutions. 

The latest announcement of deals comes almost two weeks after Jacques de Watteville, head of the State Secretariat for International Financial Matters (SIF) told journalists that more resolutions would be coming soon. “The faster it happens, the better it is for everyone,” he said. 

Not client identities

Under the Justice Department programme the banks must hand over information about their US accounts but not client identities, which are protected under Switzerland’s bank secrecy laws. The banks pay penalties based on the amount of undeclared US funds determined to be on their books minus amounts included in accounts that clients voluntarily disclose, with the bank’s encouragement. 

In exchange for completing the programme, the banks receive guarantees that they won’t be criminally prosecuted for aiding tax evasion. Eleven Swiss banks have so far completed the process. Separately, a handful of Swiss banks remain under Justice Department investigation for allegedly aiding US tax evasion.

International pressure since UBS was prosecuted in the US in 2009 has forced Switzerland to give up its tough banking secrecy laws. The alpine state has committed to adopting the automatic exchange of tax information by the start of 2018. with agencies

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