PKB Privatbank, Falcon Private Bank and Credito Privato Commerciale in liquidazione have signed non-prosecution agreements with US authorities for holding undeclared accounts.

Since 1 August 2008, PKB had 244 US-related accounts, both declared and undeclared, with an aggregate maximum balance of approximately $328.8 million. PKB will pay a penalty of $6.328 million. Also since that date, Falcon maintained a total of 84 US-related accounts with an aggregate value of approximately $134 million. Falcon will pay a penalty of $1.806 million. In the period between that date and CPC’s liquidation, CPC had 16 US-related accounts with an aggregate maximum balance of approximately $71 million. CPC will pay a penalty of $348,900.

These banks are the latest to be punished under the terms of a US-Swiss agreement signed in August 2013. This so-called 'programme' allows Swiss banks to avoid criminal charges in the US. The banks were told to own up to the Department of Justice by the end of December 2013 if they had reason to think that they had committed tax-related criminal offences. The agreement excluded banks that were already under criminal investigation at that time.

According to the terms of the non-prosecution agreements, each bank has agreed to co-operate in any related criminal or civil proceedings, demonstrate its new-found efficiency in stopping misconduct involving undeclared US accounts, and pay penalties. Lugano-headquartered PKB offered a variety of traditional Swiss banking services that it knew would, and in certain instances did, help US clients to conceal assets and income from the Internal Revenue Service. These services included code-named or numbered accounts and 'hold mail' services, through which PKB held all postal correspondence for this-or-that client.  

These services allowed US clients to conceal their identities and keep 'paper trails' to a minimum. In the case of Falcon, the US Department of Justice said in a press release: “Through its managers, employees and others, Falcon knew that some US taxpayers who had opened and maintained accounts at Falcon were not complying with their US income tax and reporting obligations. Falcon offered a variety of standard Swiss banking services, including hold mail and code name or numbered account services...”

Most of Falcon’s US-related accounts held since 1 August 2008 were held in the names of entities or structures.  Those accounts were almost entirely held by non-US structures, such as offshore corporations or trusts, according to the DOJ.

Veering alarmingly between plural and singular and back again, it wrote: “Typically, the beneficial owners of these structures created a legal entity, such as a Panamanian corporation, and paid third parties to act as the corporate “directors.” Those third parties would then open a bank account at Falcon in the name of the entity, allowing clients the ability to conceal their undeclared accounts from the IRS.”

The DOJ believes that CPC of Lugano went into voluntary liquidation in 2012 after its Italian parent decided to exit private banking for reasons unrelated to the US tax issue. After 13 March 2012, with the approaching US Foreign Account Tax Compliance Act in mind, CPC decided to discontinue all of its relationships with its American customers and closed its last US-related account in April 2013. Once again, it had been offering 'traditional' services such as numbered accounts and 'hold mail.' At one point it opened an account for two US taxpayers who had left a bank in Luxembourg because, according to their later voluntary disclosures, their external asset manager was concerned about bank secrecy in Luxembourg and indicated that it would be safer to maintain an undeclared account in Switzerland. It also provided a cash card linked to an undeclared account.