In a shocking revelation, Banque Pictet, the private banking arm of the venerable Pictet Group, has confessed to conspiring with U.S. taxpayers to hide a staggering $5.6 billion from the Internal Revenue Service (IRS). The Department of Justice (DOJ) announced the agreement on Monday, shedding light on the Swiss bank’s extensive efforts to facilitate tax evasion between 2008 and 2014.
Details of the program:
During the six-year period, Banque Pictet managed 1,637 accounts for American customers, helping them avoid a total of about $50.6 million in U.S. taxes. These accounts, at over $5.6 billion, represented a significant portion of the total assets—approximately $20 billion—that the bank managed for U.S. taxpayers. Prosecutors revealed that the bank went to great lengths to hide these accounts and used various means to ensure that the funds remained beyond the reach of U.S. tax authorities.
Settlement conditions:
As part of the agreement with prosecutors, Banque Pictet has agreed to pay a significant sum of approximately $122.9 million in restitution and penalties. In an unusual twist, the Justice Department has offered to defer prosecution for three years provided the bank abides by the terms of the agreement. This also includes cooperation in ongoing investigations into hidden bank accounts.
Modus operandi:
The deferred prosecution agreement details the bank’s fraudulent tactics, including keeping customers’ account-related mail with the bank for safekeeping outside the United States. In addition, Banque Pictet has created offshore companies with no legitimate purpose, the sole purpose of which is to help US taxpayers hide their assets. The bank managed approximately 529 such offshore companies during the relevant period.
Reactions and statements:
U.S. Attorney for the Southern District of New York Damian Williams emphasized the continued commitment to combating financial crimes. In a statement, the Pictet Group said it was satisfied with the resolution of the matter, citing its extensive cooperation with US authorities in accordance with Swiss law. The bank committed to continuing to ensure that its customers comply with their tax obligations.
The Banque Pictet scandal opens a worrying chapter in international finance and highlights the lengths to which some institutions go to help clients evade taxes. As the bank grapples with the legal fallout, questions arise about the broader impact on financial institutions and the ongoing fight against financial misconduct.
