A Liechtenstein bank is paying a £15 million penalty to the US government after admitting helping American expats evade tax.
Liechtensteinische Landesbank AG will hand over the fees generated from aiding the tax fugitives as well as penalties and interest to the Internal Revenue Service (IRS), said a statement from US Attorney Preet Bharara.
The bank has avoided criminal prosecution by co-operating with the IRS.
“The agreement is a landmark for the bank and the IRS,” said the attorney. “This settlement also shows tax cheats that we are tirelessly tracking them and those who aid them down. It is a mistake to believe that if you have offshore accounts that the IRS cannot find out about them.
“These people can hide for a while, but not forever.”
Law change
Bharara also explained that Liechtenstein has now changed banking laws to make identifying accounts held by US taxpayers easier.
The small European nation is entering into a Foreign Account tax Compliance Act (FATCA) agreement with the US.
Any accounts worth at more than $50,000 held by US taxpayers by the country’s financial institutions will automatically be revealed to the IRS.
Switzerland has also signed a FATCA agreement with the US after the IRS and Treasury pursued several banks through the courts on charges of aiding Americans in tax evasion.
Recently, Switzerland’s oldest private bank closed after admitting tax evasion charges in New York.
Wegelin paid a £50 million fine and stopped trading after pleading guilty to all charges.
The bank was one of 12 under investigation by the US Department of Justice.
Tax investigations
The nation’s largest bank, UBS avoided prosecution by paying a £500 million penalty and handing over details of accounts held by more than 4,500 Americans.
Investigations are still underway against Credit Suisse and Julius Baer, among others.
US Attorneys explained that part of the deal with banks includes naming financial advisers, lawyers and financial firms recommending tax avoidance schemes to American expats and taxpayers.
They are also picking up details of accounts moved to other banks and transactions with other financial institutions that may be involved in tax evasion and money laundering as well.
The US expects Swiss banks to pay fines and penalties of at least £6.5 billion or face prosecution.
Switzerland has also negotiated penalty payments of several billion pounds with tax authorities in Britain and Germany over claims of aiding tax evasion.
