WASHINGTON (Reuters) - U.S. federal prosecutors and Liechtenstein’s oldest bank, Liechtensteinische Landesbank AG, announced a $23.8 million settlement on Tuesday that halts any criminal prosecution of the bank, which admitted to helping U.S. clients evade taxes.
The Vaduz, Liechtenstein-based bank, which had been under investigation since at least 2011, will face no criminal charges for opening and maintaining undeclared bank accounts for Americans who tried to dodge U.S. tax obligations from 2001 through 2011, both parties said in the 13-page settlement released on Tuesday.
The settlement emerged from the latest U.S. effort to root out offshore individual tax evasion. Unlike most other countries, the United States taxes its citizens’ worldwide income.
Swiss banks under U.S. investigation have hoped to cooperate to avoid criminal prosecutions, but they have been prevented from doing so in full by strict secrecy laws, which have helped make Switzerland the world’s biggest offshore financial center.
The tiny European principality of Liechtenstein has been quicker than Switzerland to yield to pressure on its banking secrecy laws.
“This solution marks a definitive end to the U.S. taxation issue for LLB Vaduz,” the bank said in a statement on Tuesday.
As part of its agreement, Liechtensteinische Landesbank (LLB) admitted it helped some of its U.S. clients with undeclared accounts evade U.S. taxes, the settlement said.
Earlier this month, the bank said it had reserved 31 million Swiss francs ($33.3 million) to pay for a tax evasion settlement.
The agreement “reflects the unprecedented nature of the bank’s cooperation,” said Preet Bharara, U.S. attorney for Manhattan, who coordinated the settlement with the U.S. Justice Department and the Internal Revenue Service.
Liechtensteinische Landesbank’s non-prosecution agreement is a better deal than what U.S. prosecutors have offered in previous bank secrecy settlements, U.S. tax lawyers said on Tuesday.
In its historic 2009 U.S. anti-tax evasion settlement, Swiss bank UBS AG agreed to a deferred prosecution agreement. In such deals, prosecutors can reopen litigation if certain settlement terms are not met.
Liechtenstein financial advisers are starting to send U.S. authorities names and account information of U.S. clients, said Scott Michel, a lawyer with clients trying to resolve tax issues with U.S. authorities.
For U.S. taxpayers who have not voluntarily disclosed offshore assets to the IRS, “time is truly running out,” Michel said.
Reporting by Patrick Temple-West; Editing by Howard Goller and Leslie Adler