Liechtensteinische Landesbank AG, a bank based in Vaduz, Liechtenstein, has agreed to pay more than $23.8 million to the United States and entered into a non-prosecution agreement with the U.S. Attorney’s Office for the Southern District of New York under which it produced account files of more than 200 noncompliant U.S. taxpayers.
The agreement provides that the bank, also known as LLB-Vaduz, will not be criminally prosecuted for opening and maintaining undeclared bank accounts for U.S. taxpayers from 2001 through 2011, when it helped a number of U.S. taxpayers file false federal tax returns with the IRS and hide accounts at the bank from the IRS.
Under the agreement, LLB-Vaduz will forfeit $16,316,000, representing the total gross revenues that it earned in maintaining the undeclared accounts, and pay $7,525,542 in restitution to the IRS, representing the approximate total in unpaid taxes arising from the tax evasion by LLB-Vaduz’s clients. The NPA requires LLB-Vaduz to continue to cooperate with the United States for at least three years from the date of the agreement.
The agreement applies only to LLB-Vaduz and not to any of its subsidiaries or any individuals. LLB-Vaduz has decided to close its wholly-owned Swiss subsidiary, Liechtensteinische Landesbank (Switzerland) Ltd., and has also decided to sell another wholly owned subsidiary, Jura Trust AG. In the event that LLB-Vaduz violates the NPA, the U.S. Attorney’s Office may prosecute LLB-Vaduz.
The non-prosecution agreement recognizes that, in 2008, before the IRS and the U.S. Attorney’s Office began the investigation, LLB-Vaduz voluntarily implemented a series of remedial measures to stop assisting undeclared U.S. taxpayers in evading federal income taxes. The deal further recognizes LLB-Vaduz’s cooperation in the form of its support and assistance in 2012 to obtain a change in law by the Liechtenstein Parliament that permitted the Justice Department to request and obtain the bank files of non-compliant U.S. taxpayers from Liechtenstein without having to identify the taxpayers by name.
“In 2008, Liechtensteinische Landesbank AG began requiring all U.S. taxpayers with accounts at LLB-Vaduz to declare their income,” said IRS Criminal Investigation chief Richard Weber in a statement Tuesday. “In addition, Liechtenstein’s Parliament amended their national law on tax matters to make easier the identification to the United States of noncompliant taxpayers. Today’s action sends a strong message to those Americans who hide their true income from the IRS. It's time to come clean and pay your fair share of taxes like law-abiding citizens do every day.”
Pursuant to the Justice Department request, Liechtenstein transferred more than 200 files of U.S. taxpayers who held undeclared accounts at LLB-Vaduz, directly or through sham corporations, foundations or trusts. In addition, under the 2012 law, the Justice Department has submitted a second request to the Liechtenstein government for records relating to various Liechtenstein firms that provided trust administration and other fiduciary services that enabled U.S. taxpayers to hold undeclared accounts through structures at banks in Liechtenstein, Switzerland and elsewhere.
As part of the agreement, LLB-Vaduz admitted various facts concerning its wrongful conduct and the remedial measures that it took to cease that conduct. Specifically, LLB-Vaduz admitted that it knew certain U.S. taxpayers were maintaining undeclared accounts at LLB-Vaduz in order to evade their U.S. tax obligations, in violation of U.S. law. In addition, LLB-Vaduz admitted that it knew of the high probability that other U.S. taxpayers who held undeclared accounts did so for the same unlawful purpose because significant numbers of U.S. taxpayers employed structures to hold their accounts, instructed LLB-Vaduz to use code names or numbers to refer to them on account statements and other bank documents, instructed LLB-Vaduz not to mail such documents to them in the United States, and instructed LLB-Vaduz not to disclose their identity to the IRS, among other things. At the end of 2006, LLB-Vaduz held more than $340 million of undeclared assets on behalf of U.S. taxpayers in more than 900 accounts.
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