The Swiss private bank was accused of setting up 1,637 secret bank accounts in Switzerland on behalf of US taxpayer clients, which enabled them to evade $50.6m in taxes between 2008 and 2014, the US Department of Justice said in a statement on 4 December.
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As part of the resolution, Banque Pictet entered into a deferred prosecution agreement to pay approximately $122.9m to the US Treasury.
Acting deputy assistant attorney general Stuart Goldberg said: “Today, Banque Pictet et Cie admitted to actively helping US taxpayers use coded accounts, foreign trusts and entities, nominee beneficiaries and other deceits to conceal their income and assets abroad.
“For this criminal conduct the bank will be paying nearly $122.9m in restitution, disgorgement of fees and a financial penalty, and is required to fully cooperate with investigations relating to these secret accounts.”
US attorney for the Southern District of New York Damian Williams added : “As it has admitted today, Banque Pictet knowingly conspired to conceal from the IRS the income generated by accounts which held more than $5.6bn.
“Thanks to the hard work of the career prosecutors of this office and our law enforcement partners, Banque Pictet has agreed to pay more than $122.9m and will continue to cooperate with the Department of Justice. Rooting out financial malfeasance remains a priority for this office, and we encourage companies and financial institutions to come to us to report wrongdoing before we come to you.”
IRS criminal investigation chief Jim Lee said: “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 US tax system.
“Offshore tax evasion is a priority for IRS criminal investigation, and today’s deferred prosecution agreement with Bank Pictet collects more than $120m owed to the US government.”
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Pictet said in a separate statement that it had “concluded a final settlement agreement with the US Department of Justice (DOJ) to resolve a legacy investigation relating to services provided by its private banking business to US taxpayer clients between 2008 and 2014.
“Under a three-year deferred prosecution agreement, Pictet will pay a total sum of $122.9m (CHF 106.8m), of which $38.9m (CHF 33.8m) is a fine. The sum payable will be absorbed by general provisions and profits of its Swiss bank.
“This resolution follows Pictet’s extensive cooperation with the US authorities, in full compliance with Swiss law. The DOJ recognises this substantial assistance in the resolution agreement.”
Pictet’s statement continued: “The agreement acknowledges that Pictet began evaluating and enhancing its policies and practices for conducting business with US taxpayer clients in 2008, before it became public that the DOJ was investigating similar issues at another Swiss bank. It also recognises that the group then took additional steps, beyond those required by US law, to promote the tax compliance of its US taxpayer clients.
“Pictet is pleased to have resolved this matter and will continue to take steps to ensure its clients meet their tax obligations.”