Liechtensteinische Landesbank, Liechtenstein’s oldest bank, has agreed to pay $23.8 million to the US tax authorities after admitting that it held undeclared bank accounts on behalf of US taxpayers.

The settlement between the countries follows a long-standing crusade on the part of the US government to pressurise other jurisdictions to help it solve the problem of untaxed funds and will halt any criminal prosecution that the Americans might otherwise have launched against the bank. As a result of the agreement, in other words, the Vaduz-based bank will not face legal action for opening and maintaining undeclared bank accounts for US taxpayers who tried to evade paying tax between 2001 and 2011, according to the US Department of Justice (DOJ). 

As part of the settlement, the bank will have to pay $16.3 million earned on transactions with undeclared assets held by US clients and will make an additional payment of $7.5 million for lost tax revenue. 

Liechtensteinische Landesbank admitted that it knew that certain US taxpayers were maintaining undeclared accounts in order to evade their US tax obligations in breach of US federal law, the Justice Department said. It added that the non-prosecution agreement took account of the bank’s decision in 2008 to stop helping US account holders evade taxes and the support it gave to changes in the law of Liechtenstein in 2012 that allowed the Americans to ask for and obtain the bank files of non-compliant US taxpayers, identifying them by name. 

According to the Justice Department, Liechtensteinische Landesbank held more than $340 million of undeclared assets on behalf of US taxpayers in more than 900 accounts at the end of 2006. In line with a request from the Justice Department, Liechtenstein transferred more than 200 files of US taxpayers who held undeclared accounts at Liechtensteinische Landesbank. 

Until recently, Liechtenstein was regarded as one of the most unco-operative and secretive tax havens in the world, but in recent years has become something of a paragon of co-operation. It agreed to end bank secrecy in 2009 and has signed a number of pacts with countries such as the UK under which it can disclose once-secret accounts in return for limited penalties.