Secret Swiss bank accounts just aren’t that secret anymore.
Centuries-old, Geneva-based financial institution Banque Pictet et Cie has reached a deal with the U.S. Department of Justice to settle a long-running probe into the bank’s role in helping American customers hide billions of dollars from the IRS.
Banque Pictet, a private bank run by a tight-knit group of eight partners known as the Salon, agreed to pay $122.9 million in penalties for helping deep-pocketed U.S. taxpayers squirrel away $5.6 billion in hundreds of secret accounts.
Federal prosecutors say the money, hidden in 1,637 accounts between 2008 and 2014, cost the Internal Revenue Service $50.6 million in taxes it would have been owed.
“This case should provide a clear message to others who try to hide their assets and income offshore. Our special agents are experts in following the money, and they are the best at uncovering schemes that try to defraud the U.S. tax system,” said IRS Criminal Investigation Chief Jim Lee.
As part of a deferred prosecution agreement, Banque Pictet will pay $52 million to the U.S. in lieu of the profits the bank made on managing those hidden accounts. The bank will also pay $32 million in restitution to the IRS and a $39 million penalty.
“Pictet is pleased to have resolved this matter and will continue to take steps to ensure its clients meet their tax obligations,” the bank said in a statement.
Banque Pictet, which also has offices in Luxembourg, Singapore and the Bahamas, specializes in managing the money of high-net-value customers. The bank had close to $700 billion in assets under management in 2022, according to Fitch.
Prosecutors say the bank’s private banking division managed around $168 billion in 2014, $20 billion of which came from customers in the U.S. Not all its American customers sought to evade paying U.S. taxes, prosecutors said.
According to investigators, Banque Pictet and its parent company, the Pictet Group, used a variety of methods to help American customers hide their money, including allowing offshore entities to open undeclared accounts and allowing clients to open life-insurance accounts in names other than their own.
They also provided customers with coded account numbers and held all correspondence and statements at the bank rather than mailing it to the customer themselves, prosecutors said.
U.S. authorities have sought for years to crack down on Swiss banks allowing American customers to hide money overseas. In 2016, the Department of Justice hit 80 Swiss banks with $1.3 billion in fines and penalties for allowing Americans to stash $48 billion overseas.
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