Zurich Bank Settles With The US Over Legacy Account Issues

Tom Burroughes

15 August 2018

One of the final Swiss banks to settle terms with the US authorities over providing Americans, Zürcher Kantonalbank, is to pay $98.5 million to draw a line under the saga.

The cantonal bank has settled with the US Department of Justice “in connection with its legacy business with US clients”, it said in a statement earlier this week.

"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,” Dr Jörg Müller-Ganz, the bank’s chairman, said.

The bank joins the likes of UBS, Julius Baer and Credit Suisse in reaching settlements; more than about 80 Swiss financial institutions in total have signed non-prosecution agreements in exchange for paying fines totalling $1.36 billion. The bilateral pact covering financial organizations was signed by the US and the Alpine state's governments in 2013. The program provides institutions with the option to state if they think they were, or were not, at risk of breaking US laws.

ZKB said it expects that one current and one now retired employee, who were indicted in 2012 in connection with the US tax matter, will soon also be able to conclude their legal cases.

The payment to the US authorities will have “no negative impact on the bank’s 2018 financial results, its capital strength, or on the distribution of profits to the canton and municipalities”, ZKB said.

Internationally, Swiss bank secrecy laws, which in their modern guise date back to 1934, are moribund, although they have not yet been struck off the Swiss statute books and still operate inside the country.

The assault on the secrecy laws has seen the US – which contains relatively secretive jurisdictions such as Delaware – accused of double standards.

“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,” it said.