A collection of Swiss insurance companies is paying US$77 million in a deferred prosecution agreement with U.S. authorities to resolve offshore tax evasion allegations.
Various subsidiaries of Swiss Life Holding AG — including its units in Liechtenstein, Luxembourg and Singapore — faced allegations that they conspired with U.S. taxpayers to conceal approximately US$1.5 billion in offshore insurance policies from the Internal Revenue Service (IRS). That included more than 1,600 wrapper policies and related investment accounts in banks around the world.
According to the complaint against the companies, they launched their efforts to help U.S. taxpayers hide assets and income offshore after U.S. authorities stepped up their enforcement action against Swiss banks.
“Certain management and sales personnel within Swiss Life […] viewed these developments as a business opportunity […] by onboarding U.S. clients who were fleeing UBS and other Swiss banks,” the U.S Department of Justice (DoJ) noted.
The companies entered a DPA with the DoJ, which sees them accept responsibility for their conduct, agree to remedial measures, and pay US$77.3 million in penalties and restitution, including the forfeiture of US$35.8 million in fees, US$16.4 million in restitution to the IRS, and a US$25.3 million penalty.
“As they admit, Swiss Life and its subsidiaries sought out and offered their services to U.S. taxpayers to help them become U.S. tax evaders,” said Audrey Strauss, U.S. attorney for the Southern District of New York, in a statement.
“The Swiss Life entities offered private placement life insurance policies and related policy investment accounts to U.S. customers, and provided services that concealed the policies and other assets from the IRS,” she said. “Indeed, the Swiss Life entities saw U.S. authorities’ stepped-up offshore tax enforcement as an opportunity to pitch themselves to tax-evading U.S. customers as an alternative to Swiss banks.”
The DoJ said that the penalty takes into consideration the fact that Swiss Life assisted the investigation and conducted its own robust internal investigation. Remedial measures were also implemented to protect against future offshore tax evasion.