64 Swiss banks pay $742m penalties to US taxman

Dreyfus Sons & Co has operated for two centuries as a private Swiss bank and recently it helped US clients hide assets from the US taxman — the Internal Revenue Service —by concealing their true ownership with offshore entities and by storing gold and cash in a segregated area of its vaults.

That’s according to a non-prosecution agreement, released on Tuesday, that the bank reached with the Justice Department in the US. Dreyfus avoided US prosecution by agreeing to pay $24.2m (€22m) and admitting it “did not implement strict enough controls” to ensure its American clients paid their taxes, the agreement says.

George Clarke, a lawyer for Dreyfus, declined to comment.

The US announced two other pacts on Tuesday, with Credit Agricole’s Swiss unit, which agreed to pay $99.2m — the second-largest payment of the year, after BSI’s, at $211m — and Baumann, which is to pay $7.7m.

Alexandre Barat, a spokesman for Credit Agricole, declined to comment. Keith Krakaur, a lawyer for Baumann, didn’t return a call.

In all, 64 Swiss banks have agreed to pay almost $742m in penalties this year, as part of a Justice Department programme that spares them criminal liability in the US if they disclose their wrongdoing.

To reduce their penalties, they have prodded thousands of their US clients to reveal hidden accounts to the IRS.

While all the accords spell out classic Swiss tactics, such as numbered accounts and off-the-shelf corporations to help clients cheat the IRS, none detail the use of gold storage like the Dreyfus pact.

Two decades ago, Dreyfus agreed to serve as a custodian for gold and cash held by a Swiss-based British Virgin Islands entity — 315 accounts valued at $440m, in all.

Some of those accounts should have been disclosed to the IRS and weren’t, until clients came forward to tell the tax agency about them to avoid prosecution, according to the bank’s statement of facts in the agreement.

“Although some of the gold and cash client base maintained their accounts because of fears related to the collapse of the banking system,” others “show strong indicia of the concealment of assets,” the agreement says.

Bloomberg