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Code words and guilty pleas: ZKB settles seven-year tax battle with DoJ

Code words and guilty pleas: ZKB settles seven-year tax battle with DoJ

After seven years, Zürcher Kantonalbank (ZKB) has settled a tax dispute with the US Department of Justice (DoJ) by signing a deferred prosecution agreement and committing to pay CHF 97.8 million.

In a statement released by ZKB, Chairman Jörg Müller-Ganz said: 'We are relieved that after seven years, we were able to conclude the investigation following an objective dialogue with the US authorities. The solution that has now been reached marks the end of this matter and removes any related uncertainties.' 

According to a statement released by the DoJ, ZKB was charged with 'conspiring to help US taxpayer clients evade their US tax obligations, file false federal tax returns and otherwise hide hundreds of millions of dollars in offshore bank accounts held at ZKB.'

The DoJ has alleged in documents that between 2002 and 2009 ZKB used code words to hide US client identities, opened and maintained accounts for US clients in non-US structures and solicited new business through swiss-bank-accounts.com, a third-party site that resulted in the opening of ZKB accounts.

The agreement came with guilty pleas from two ZKB bankers, who the DoJ said were charged with conspiring to assist US taxpayers in evading taxes and that 'ZKB dissuaded the two bankers from co-operating with US authorities.'

ZKB said that it expects those employees, one currently working and the other now retired, 'will soon be able to conclude their legal cases'.

The statement also noted: 'Zürcher Kantonalbank has successively adjusted its cross-border wealth management business since 2009. It is committed to a strict tax-compliant business policy and in terms of geographic coverage focuses on selected core markets with an emphasis on Europe.'

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