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September 6, 2021

US drops criminal tax evasion case against Swiss bank ZKB

By Verdict Staff

The US government has decided to drop criminal charges against Swiss bank Zuercher Kantonalbank (ZKB) for helping wealthy US clients dodge tax obligations through undeclared bank accounts.

The government decided not to proceed with the prosecution of the Swiss lender after it paid $98.5m and complied with a three-year deferred prosecution agreement, Reuters reported.

ZKB agreed to pay $98.5m to the US Department of Justice (DOJ) in August 2018, settling a seven-year long investigation with regard to the charges.

DOJ found that the bank managed around 2,000 undeclared accounts between 2002 and 2013 for its US customers who evaded taxes amounting to more than $39m.

ZKB and two of its bankers have admitted to the charges.

In a filing with the US District Court in Manhattan, a federal prosecutor said that the US government is dropping the case against the bank because of its ‘full compliance with the August 2018 agreement’.

According to the court papers, the $98.5m payment included a $35.1m fine as well as restitution and forfeiture.

The ZKB case was part of the US government’s extensive crackdown on offshore tax evasion.

In May last year, Israel’s Bank Hapoalim agreed to pay a fine of nearly $875m to settle accusations that it helped wealthy American taxpayers hide money in secret offshore accounts.

The bank admitted that it colluded with US taxpayers to hide over $7.6bn in over 5,500 secret Swiss and Israeli bank accounts from the Internal Revenue Service.

In December 2019, HSBC Swiss private banking division agreed to pay $192.35m to the US authorities to resolve charges that helped affluent US clients dodge taxes.

Earlier that year, Swiss private bank Julius Baer closed a 2016 deferred prosecution agreement with DOJ over helping Americans evade taxes.

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