The announcement of the so-called Non-Prosecution Agreement between Liechtensteinische Landesbank (LLB) and the US Department of Justice came yesterday, and was the latest in a series of settlements between the US and various European banks that it said were helping Americans to avoid paying US tax.
In a statement on its website, the Liechtenstein government said it “supported the negotiations, and welcomes the agreed final solution”.
It went on to note that the agreement “settles profits earned from transactions with undeclared assets held by US clients, and compensates the United States for lost tax revenue”, in return for an assurance that the US will “not impose a fine or criminal penalty” on the bank.
Of the $23.8m, $400,000 will be paid back to Liechtenstein as reimbursement for costs in connection with US requests, the statement noted.
Procession of banks
The list of banks that have been targeted by the US for helping Americans avoid paying tax includes some of Europe’s largest and oldest institutions. Switzerland’s oldest bank, for example, Weglin & Co, pleaded guilty earlier this year to charges of assisting US citizens to avoid paying tax, and agreed to pay a $74m fine to the US authorities. The bank, which was founded in 1741, said it would close.
The landmark case, though, involved Zurich-based banking giant UBS, which in 2009 ended up agreeing to pay a $780m fine. That case was widely seen as setting the tone for the US authorities’ subsequent efforts to crack down on tax evasion by its citizens, which continues, through such efforts as the Foreign Account Tax Compliance Act, and growing scrutiny, it is said, of non-European jurisdictions, such as Hong Kong, Israel and Singapore.
John Cassidy, a partner in Crowe Clark Whitehill and an expert on Liechtenstein and its relationship with the UK, said that unlike the UK – which "has focused on jurisdictions” in its efforts to curtail tax evasion – “the US’s strategy has been to put pressure on the financial institutions that they perceive as having helped US taxpayers evade taxes".
"This led to FATCA – ie, ‘you banks have to tell us about your US depositors or suffer a big levy on US sourced investment income’," he added. "Hence [also] the settlement with UBS, and now with Landesbank.”
