Published On: Tue, Dec 23rd, 2014

Leumi Agrees to $400 Million Settlement over US Tax Evasion

The fines imposed were for allegedly helping US customers evade taxes to the US tax authorities.

Leumi Switzerland

/Irit Avissar and Globes correspondent/

Bank Leumi (TASE: LUMI) has officially agreed to pay a $400 million settlement for helping its American customers evade taxes, the US authorities have officially reported. The terms of the arrangement include a $270 million fine to be paid to the federal authorities (US Department of Justice) and a further $130 million to the New York Department of Financial Services. Bank Leumi has also incurred nearly $50 million in legal costs over the affair. So far as is known, the bank has already set aside most of this amount in previous financial reports.

The settlement with the federal authorities includes $71 million in tax repayments, a $157 million fine for Leumi Switzerland calculated on the number of problematic accounts at that bank, and when they had been opened, and a general $41 million fine.

The arrangement also includes an understanding with the US Department of Justice over future supervision of the bank’s activities. On this point, it was agreed that Leumi will appoint an executive officer responsible for working with the US authorities and applying the FATCA regulations, through which the bank ensures that the assets of their US customers are duly reported to the US tax authorities.

Leumi has also agreed to appoint a FATCA officer in each branch or subsidiary who will report directly to the executive officer responsible for overall FATCA reporting.

Leumi also agreed not to open accounts for its US customers unless they commit to declaring the assets to the US tax authorities. Nor will the bank close accounts of US customers who have not declared their assets to the US authorities.

Leumi stresses that the settlement will in no way limit future operations in the US but nor does it grant any exemption to the bank’s executives or employees on the matter.

Thus ends this affair, which began three years ago over allegations that Leumi helped US customers evade taxes between 2002 and 2010, when the bank’s CEO was Galia Maor. Leumi was investigated along with many other banks including Israel’s Bank Hapoalim (TASE: POLI) and Mizrahi Tefahot Bank (TASE:MZTF). The problem against these two banks is still in an earlier stage and it remains unclear what size fine they will be required to pay in order to resolve the affair.

Published by Globes [online], Israel business news –

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