Liechtenstein bank turned 200 American clients in to US authorities

Thursday, 01 August 2013
Vaduz-based bank Liechtensteinische Landesbank (LLB) has agreed to pay the US government more than USD23.8 million in return for the dropping of charges of helping American clients evade tax between 2001 and 2011.

The forfeiture comprises USD16.3 million of revenues the bank earned from managing concealed bank accounts, plus USD7.5 million of taxes evaded by 200 US clients whose records were turned over to the US Department of Justice (USDoJ) by the bank. The USDoJ says that, by the end of 2006, LLB-Vaduz held more than USD340 million of undeclared assets on behalf of American taxpayers in more than 900 accounts.

The disclosure of the accountholder's records was made possible by changes to Liechtenstein secrecy law in 2008, though LLB had already begun requiring all its American clients to declare their income to the US Internal Revenue Service.

The US Assistant Attorney-General Kathryn Keneally congratulated LLB on its transition from past wrongful conduct to a position of energetic cooperation with the US authorities.

'As a result of the new Liechtenstein legislation, US taxpayers who thought that they had obtained the benefit of Liechtenstein's tax secrecy laws have learned that their bank files were turned over on the request of the USDoJ,’ said Keneally.

She also praised the bank's 'extraordinary efforts' in lobbying for further significant changes in Liechtenstein law last year. The new law allows the USDoJ to request and obtain the Liechtenstein bank files of non-compliant American taxpayers without having to identify the taxpayers by name ‒ so-called 'group requests' or 'John Doe notices'.

Following the 2012 amendment, the USDoJ has submitted a second request to the Liechtenstein government for records relating to various Liechtenstein firms that provided trust and company administration services that enabled US taxpayers to hold undeclared accounts at LLB-Vaduz, directly or through corporations, foundations or trusts.

The penalty paid by LLB is much less than that demanded by US prosecutors from Swiss banks, especially UBS which had to pay USD780 million. Nevertheless, the episode has landed LLB-Vaduz with other costs, for example those associated with the closure of its wholly-owned Swiss subsidiary and the enforced sale of another subsidiary, Jura Trust AG. It has said it has reserved SFR 31 million (USD33.3 million) to pay for the settlement.

Sources

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