(Bloomberg) Rothschild Bank AG, the Zurich-based private bank of the Rothschild financial dynasty, became the latest Swiss bank to be fined by the U.S. Justice Department for helping Americans conceal assets offshore.
The firm, overseen by Baron David de Rothschild, 72, and majority-owned by Paris Orleans, will pay a penalty of $11.5 million, according to a statement by the Justice Department on Wednesday. Banca Credinvest SA, with headquarters on Switzerland’s Lake Lugano, agreed to pay $3 million, it said.
Rothschild and Banca Credinvest join seven other Swiss firms that have settled with the U.S. in exchange for revealing how they used shell companies and banking secrecy to conceal undeclared assets. More than 100 entered the Justice Department program at the end of 2013.
“More and more information is flowing to the IRS agents and Justice Department prosecutors going after illegally concealed offshore accounts and the financial professionals who help U.S. taxpayers hide assets abroad,” Acting Assistant Attorney General Caroline Ciraolo of the Justice Department’s Tax Division said in the statement.
David de Rothschild, who was born in New York, and his brother Eric transformed Paris Orleans into a holding company providing wealth and asset management services, merger advice and merchant banking. It was originally founded as a French rail company in 1838.
Sham Entities
Rothschild Bank, which had U.S.-related accounts with an aggregate maximum balance of about $1.5 billion, knew it was “highly probable” that some Americans weren’t compliant with income tax and reporting obligations, and that some were hiding behind sham entities in Liechtenstein, Panama and the British Virgin Islands, the Justice Department said.
Edmond de Rothschild group is a separate asset manager and private bank led by Ariane de Rothschild and Benjamin de Rothschild.
The U.S. probe of the Swiss financial industry has already hit the country’s biggest banks, UBS Group AG and Credit Suisse Group AG, for more than $3 billion. About a dozen others, such as Julius Baer Group Ltd. and the Swiss unit of HSBC Holdings Plc, still face separate criminal investigations that may result in fines.
Rothschild closed about 296 U.S.-taxpayer accounts between Aug. 1, 2008 and Dec. 31, 2013 and encouraged customers to voluntarily disclose undeclared assets to the Internal Revenue Service. It also obtained waivers from some former U.S. clients in order to circumvent Swiss secrecy laws that normally prohibit banks from giving client names to foreign authorities, the Justice Department said.
“Rothschild Bank is pleased to reach this agreement with the U.S. DoJ because this brings this historical matter to a conclusion,” Kilian Borter, a company spokesman, said by telephone.
BSI SA, one of the largest private banks in the program, reached the first non-prosecution deal on March 30. It paid $211 million, admitting that it managed about 3,500 U.S. accounts with a peak value of $2.78 billion in 2008.
Lombard Odier, Geneva’s oldest bank, and the Swiss units of Deutsche Bank AG and Schroders Plc are among dozens of other companies waiting to conclude a deal.
