Since the end of September, the number and size of non-prosecution agreements (NPAs) under the Justice Department's Swiss bank program have increased notably, the latest NPA announcement coming December 3.
After the DOJ Tax Division on March 30 announced its first category 2 bank NPA -- with BSI AG -- there were 37 NPAs over approximately six months ending September 24, and four of those carried penalties greater than $10 million. Since then, there have been 22 NPAs, including eight with penalties over $10 million. One of those 22 was with Finacor SA, which was not technically under the program because Finacor is not a bank, but the NPA followed the same model.
Until recently, the total amount of penalties under the Swiss bank program was dominated by BSI's $211 million penalty. On November 13 the total penalty amount passed $422 million, so BSI's penalty is now less than half the total. Further, recent large penalties for BNP Paribas (Suisse) SA ($59.78 million); Deutsche Bank (Suisse) SA ($31.03 million); EFG Bank European Financial Group SA, Geneva, and EFG Bank AG (collectively, EFG) ($29.99 million); and Maerki Baumann & Co. AG ($23.92 million) have driven the total penalty amount over $600 million.
The agreement the DOJ Tax Division announced December 3 was a joint NPA with the two EFG entities in response to a single, joint request.
While the Tax Division has not commented on the expected number of NPAs under the program, the IRS has predicted 80. Caroline Ciraolo, the Tax Division's acting assistant attorney general, has said she expects all category 2 NPAs to be completed by year's end.
With the 58th NPA (excluding Finacor) just announced, that means there could be more than 20 additional NPAs announced in December, a further acceleration from the similar amount in just over two months and just less than twice the number in the first six months.
Speaking November 3 at the American Institute of Certified Public Accountants' National Tax Conference in Washington, Ciraolo noted that completion of all of the category 2 bank NPAs will not be the end of the Swiss bank program. "There is much work to do," she said. "Each one of these institutions that has participated in the Swiss bank program is coming forward with a detailed explanation of their cross-border banking activities." This information includes account holders' names, when possible, and everything short of the name to assist a treaty request otherwise, she said.
"We are well beyond Switzerland, at this point," Ciraolo said. The DOJ has no more patience, and there are no more safe havens, she added.
Ciraolo said she expects that courts will begin to come down more harshly in sentences related to foreign bank accounts, especially when the account holders moved their accounts from institutions under investigation to other foreign financial institutions.
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