EFG Bank European Financial Group (EFG Group) and EFG Bank have reached resolution with the US Department of Justice (DoJ) over the tax evasion cases under the department’s Swiss bank programme.
Both the banks have agreed to pay a combined penalty of more than $29m to avoid prosecution over allegations that it helped wealthy Americans evade taxes.
Under the terms of the non-prosecution deal, EFG agreed to cooperate in any related criminal or civil proceedings, demonstrate its implementation of controls to prevent misconduct involving undeclared US accounts and pay penalties.
The US DoJ in a statement said that EFG held a total of 919 US related accounts with approximately $1.58bn in assets under management since 1 August 2008.
The bank carried out a US cross-border banking business until 2013 that helped certain of its US clients in maintaining undeclared accounts in Switzerland and hiding the assets from the US government.
Seven EFG bankers have collectively made at least 72 business trips to the US between 2005 and 2013, the Justice Department added.
Also, one of the EFG banker had set up a client referral system for US clients that included two US-based lawyers, an accountant, and a Swiss fiduciary company. One of the US lawyer asked the EFG private banker not to travel into the US with a computer and requested that they communicate about US taxpayer clients through faxes rather than email.
The department said that some EFG private bankers and members of EFG’s management suggested the use of structures for EFG’s US clients and provided referrals to third-party service providers.
The bank also serviced US clients with undeclared accounts held in the names of insurance companies and not the actual beneficial owner of the funds, known as an insurance wrapper.