A $5 million fine and a closure of the criminal proceedings: thus ended the US tax case against the Zurich private bank, which fell into the Category 1 of banks. What finews.com reported exclusively last week has now been confirmed in a U.S. Department of Justice statement.

With the closure of the proceedings, Neue Privat Bank has agreed to cooperate in any future criminal or civil proceedings. The relatively mild fine of $5 million reflects the bank’s comparatively minor offense.

$400 Million Client Monies

The bank continued to attract U.S. clients after 2009, especially those from UBS. «NPB viewed the taking of clients from other banks that were exiting U.S. taxpayers as a business opportunity», U.S. prosecutors said in a statement. 

This was done through ties to independent assets managers, whom U.S. clients used to open accounts with the Zurich bank. NPB generally only offered custody services, as well as other banking services. In all, NPB advised some 353 clients with U.S. connections and assets worth at most $400 million up to 2015.

Series of Errors

The NBP made several mistakes: it continued to receive U.S. clients thereafter although it had grounds to believe they were tax evaders. NPB assumed these clients were legal in terms of the qualified intermediary agreements since they had no U.S. investments in their portfolios. The NPB came to this conclusion without taking legal advice.

From 2010 the bank didn’t accept any U.S. clients with undeclared assets, and at the same time began regulated the tax status of its existing U.S. client assets.

Hopeful Thinking

Apparently the NPB leadership were guilty of hopeful thinking. It failed to establish any legal framework for ensuring its U.S. clients had complied with U.S. tax regulations. It thus continued to cling onto clients with undeclared assets.

In 2013 the U.S. began proceedings against the bank, which cooperated in the probe. The fine is easily digestible for the well capitalized institute.