Rahn & Bodmer Co., the Swiss private bank established by silk traders in 1750, said it’s cooperating with a U.S. Department of Justice probe into cross-border accounts of American clients.
The bank was probably named by its own clients participating in a U.S. initiative for the voluntary disclosure of offshore assets, according to Christian Rahn, a partner at the closely held firm, which is based in Zurich.
“We are seeking a long-lasting solution,” Rahn said in a telephone interview today. “All our personal and financial resources are ready.”
Rahn & Bodmer is part of a category-one group of Swiss financial firms under investigation by the DoJ for allegedly helping U.S. clients hide money from the Internal Revenue Service. The group of 14 includes Credit Suisse (CSGN) Group AG, the nation’s second-biggest bank, wealth manager Julius Baer Group Ltd. (BAER) and the Swiss unit of HSBC Holdings Plc. (HSBA)
The private bank, which has about 12.4 billion Swiss francs ($13 billion) under management, decided five years ago to stop accepting undeclared U.S. assets and informed American customers to retain a tax adviser in their home country, Rahn said. He declined to provide details on U.S. client funds, saying the bank is still analyzing accounts.
“The U.S. makes a big difference between those banks that took on clients from mid-2008 and those that didn’t and we didn’t,” he said.
Credit Suisse and Julius Baer have said they expect to pay a fine and hand over client information to resolve the probes. Rahn said he has “no idea” what the size of his firm’s penalty might be, adding he was “certain” the investigation wouldn’t lead to the collapse of the bank.
UBS AG, Switzerland’s largest bank, avoided prosecution by paying $780 million in 2009, admitting it aided U.S. tax evasion and handing over data on 4,500 accounts. Wegelin & Co., the Swiss private bank established nine years before Rahn & Bodmer, pleaded guilty in January, paid $74 million and closed its doors.
The DoJ and IRS are pursuing taxpayers and bankers who set up secret accounts after the UBS deferred-prosecution deal was announced. Last month, the U.S. announced a program for the rest of Switzerland’s 300 banks which aren’t already being probed to come forward, disclose accounts and pay penalties to avoid prosecution.
Those firms are being sorted into three additional categories to determine whether they should seek a non-prosecution agreement or non-target letter from the DoJ. The new program, which was supported by the Swiss government, outlines escalating penalties for banks that seek to avoid prosecution depending on when they opened undeclared accounts.
Banks must pay 20 percent of the value of accounts not disclosed to the IRS on Aug. 1, 2008; 30 percent for such accounts opened between then and February 2009; and 50 percent for accounts opened after February 2009. Bank penalties to avoid prosecution could exceed $1 billion, according to the DoJ.
The probe of Rahn & Bodmer was first reported by Neue Zuercher Zeitung newspaper.
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