Last week, the Department of Justice (“DOJ”) announced the Swiss HSBC Private Bank agreed to pay $192 million to resolve allegations of the bank’s role in a tax evasion scheme involving U.S. citizens. HSBC has entered a deferred prosecution agreement with the DOJ.
According to the deferred prosecution agreement, HSBC Switzerland admits that between 2000 and 2010, it conspired with its employees, third-party and wholly-owned fiduciaries, and U.S. clients to: 1) defraud the United States concerning taxes; 2) commit tax evasion; and 3) file false federal tax returns.
In 2002, the bank had approximately 720 undeclared U.S. client relationships, with an aggregate value of more than $800 million. When the bank’s undeclared assets under management reached its peak in 2007, HSBC Switzerland held approximately $1.26 billion in undeclared assets for U.S. clients.
HSBC will pay $60,600,000 to the IRS. This amount represents the unpaid taxes as a result of the tax evasion scheme. HSBC will forfeit $71,850,000 to the United States government, representing gross fees (not profits) that the bank earned on its undeclared accounts between 2000 and 2010 and will also pay $59,900,000 in penalties.
The IRS Whistleblower Office offers rewards to informants who report tax evasion and tax fraud. Tax fraud whistleblowers can report their allegations confidentially to the IRS and have their identity protected. IRS whistleblowers are eligible to receive up to 30 percent of the monies recovered by the IRS if their allegations of tax fraud result in a successful prosecution.
Read the DOJ press release: Justice Department Announces Deferred Prosecution Agreement with HSBC Private Bank (Suisse) SA.