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Swiss private banker admits US tax evasion scam

Dollar bills drying on clothes pegs
Despite a huge crackdown on Swiss banks in recent years, the US still suspects Swiss banks of tax evasion offences. Keystone / Royal Thai Police / Handout

A Swiss banking executive has owned up to his role in a $60 million (CHF66 million) tax evasion racket that laundered money through Switzerland, Hong Kong and Singapore.

The executive of a holding company that owns IHAG private bank is one of six people charged by the United States Department of Justice (DoJ) in 2021.

+ How dirty money thrives without banking secrecy

The indictment alleges that the untaxed funds of US citizens started off in undeclared IHAG accounts before being round-tripped through Asia and back into the same bank.

The complex tax evasion scam was code-named the ‘Singapore Solution’.

According to a DoJ statement, the executive “will not dispute that the tax loss [to the US] was $531,524 and he agrees that a sentencing enhancement for ‘sophisticated means’ is appropriate.”

He now faces a maximum five-year prison sentence and financial penalties that will be determined at a later sentencing court hearing.

The ongoing investigation shows that Switzerland is still in the crosshairs of US tax evasion prosecutors.

Dozens of Swiss banks come clean about their tax evasion practices and collectively paid fines of over CHF1 billion during a deferred prosecution scheme between 2013 and 2016.

Doubts remain

The scandal saw Switzerland amend its bank secrecy laws and join a global scheme for banks to automatically declare overseas clients to tax authorities around the world.

But despite these measures, a black cloud continues to hang over Swiss banks.

A $2.6 billion fine in 2014 has failed to dispel US doubts about Credit Suisse’s involvement in tax evasion.

On Thursday, the US Senate Committee on Finance completed a two-year probe into whether Credit Suisse has since complied with its sentencing obligations.

“The committee’s investigation uncovered major violations of that plea agreement, including a previously unknown, ongoing and potentially criminal conspiracy involving the failure to disclose nearly $100 million in secret offshore accounts belonging to a single family of American taxpayers,” the Senate committee statedExternal link.

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