In a significant development, Swiss private bank Banque Pictet has confessed to aiding U.S. taxpayers in concealing over $5.6 billion from the Internal Revenue Service (IRS), leading to a deferred prosecution agreement with the U.S. Justice Department, federal prosecutors revealed on Monday.
According to prosecutors, American taxpayers with accounts at Banque Pictet, both in Switzerland and elsewhere, managed to evade approximately $50.6 million in taxes during the period spanning 2008 to 2014. As part of the deferred prosecution agreement, Banque Pictet has committed to paying $122.9 million to the U.S. Treasury. Jim Lee, the chief of the IRS’ criminal investigation division, emphasized the significance of the case, stating, “This case should provide a clear message to others who try to hide their assets and income offshore.”
Under the terms of the agreement, Banque Pictet, overseeing an impressive 632 billion Swiss francs ($724 billion) in client assets, will implement remedial measures and actively cooperate with ongoing investigations. If the bank complies for three years, U.S. prosecutors have agreed to dismiss charges related to conspiring to defraud the IRS. In response, Banque Pictet issued a statement expressing satisfaction in resolving the matter and pledged ongoing efforts to ensure its clients fulfill their tax obligations.
This admission adds to the long-standing accusations against Swiss banks for aiding affluent Americans in evading taxes. Notably, Credit Suisse faced a $2.5 billion fine in 2014 for its involvement in a tax evasion conspiracy spanning decades, ultimately being acquired by former rival UBS. Additionally, in 2016, Julius Baer bankers pleaded guilty to aiding American clients in tax evasion, with the bank agreeing to pay $547 million to settle the criminal case.
While acknowledging that Banque Pictet had implemented some measures to ensure compliance with U.S. tax laws, prosecutors asserted that the bank still facilitated certain clients in hiding funds from the IRS through offshore accounts. The funds disgorged by Banque Pictet include $52 million in fees earned from undisclosed accounts, $32 million in unpaid taxes, and a $39 million penalty.
The timing of this agreement is noteworthy as Renaud de Planta, the senior partner at Banque Pictet since 2019, prepares to step down. Marc Pictet is set to succeed him from July 1, adding an additional layer of transition during this period of legal resolution for the bank. The fallout from this admission may have broader implications for the banking industry, emphasizing the continued efforts by authorities to curb offshore tax evasion.
(Source: Reuters | Bloomberg | Barron’s)
