On July 30, Liechtensteinische Landesbank AG, a bank based in Vaduz, Liechtenstein, agreed to enter a Non-Prosecution Agreement (“NPA”) with the U.S. Attorney’s Office for the Southern District of New York and pay a fine of $23.8 million to resolve charges that it knew U.S. taxpayers were keeping undeclared accounts at the bank to avoid U.S. taxes.

The fine includes a forfeiture of the gross revenue received between 2001 and 2011 from the services provided to the U.S. taxpayers. As part of the NPA, the bank admitted that by the end of 2006 it had more than 900 accounts with more than $340 million of undeclared assets of U.S. taxpayers, that it knew some of these accounts were being used to illegally hide assets from the U.S. taxing authorities, and that there was a high probability that other accounts were being similarly illegally used. The NPA, which is limited to the bank and does not include any subsidiaries, requires the bank to cooperate with the government for three years. A breach of the NPA permits the U.S. government to criminally prosecute the bank.

In connection with the NPA, the U.S. Attorney’s Office noted the bank’s voluntary cooperation with the government’s investigation, implementation of remedial measures even before the government’s investigation began, and certain other steps the bank had taken to enable the U.S. authorities to identify additionally improperly hidden assets. For more information please click here.

Comment

The NPA with Liechtensteinische Landesbank AG is significant for several reasons:

  • it shows that U.S. authorities are continuing to look abroad for entities that directly violate, enable or assist in the violation of United States law.
  • it demonstrates that the penalties for violating U.S. law can be significant - here, the Bank was forced to turn over the total amount of subject revenue, not just the profit it obtained from the illegal accounts.
  • it indicates that the U.S. government continues to recognize and reward companies that take affirmative steps to identify violations of U.S. law, take responsibility for those violations, and assist with the prevention of further illegal activity.