Insurance firm Swiss Life has announced that it has been approached by the US Department of Justice (DOJ) regarding its cross-border business with US clients.
After going after Swiss banks with a vengeance for abetting tax evasion, it appears that it is now the turn of the Swiss insurance industry to attract unfavourable attention from the DOJ. Products called “insurance wrappers” – offered by Swiss Life affiliates – could potentially have aroused suspicion. These are life insurance policies which are “wrapped” around an investment portfolio selected by a client. The portfolio is thus not tied to the client but to the policy and accumulates income at a favourable or even zero tax rate until payout time.
“All insurance contracts have been categorized and been reported pursuant to the FATCA [Foreign Account Tax Compliance Act] legislation,” said Swiss Life in a statement released on Thursday.
Currently, the portfolio of US clients of Swiss Life Liechtenstein and Swiss Life Singapore amounts to around CHF 250 million ($259 million). At its peak, the company’s US portfolio amounted to CHF1 billion.
In 2016, the DOJ found Swiss bank Union Bancaire Privée guilty of maintaining undeclared bank accounts for US clients by using insurance wrappers provided by non-US insurance firms. It was made to pay a fine of over $187 million for this and other tax evasion abetting offences.