The list of Swiss institutions signing NPAs with the US over accounts held for wealthy Americans that fell foul of US laws continues to grow.

The number of Swiss banks resolving potential criminal liabilities in the US about offshore accounts grew late last week when Ersparniskasse Schaffhausen signed a non-prosecution agreement with the Department of Justice under the US-Swiss bank programme.

Swiss banks eligible for the programme were required to tell US authorities they had reason to think they had committed tax-related crimes in connection with undeclared US accounts.

EKS will pay a penalty of $2.066 million. Since 1 August 2008, EKS provided private banking services for 90 US-related accounts with around $65 million in assets.

Other Swiss financial institutions reaching non-prosecution agreements include Bank Linth, a subsidiary of Liechtensteinische Landesbank, and Switzerland-based Rothschild Bank and Banca Credinvest. The Swiss bank programme, first unveiled on 29 August 2013, enables Swiss banks to resolve potential criminal liabilities and is designed to draw a line under a long-running dispute between the countries over wealthy Americans stashing money in secret Swiss accounts. The process forms part of a larger theme of gradual erosion of Swiss bank secrecy.

The DoJ, in its detailed commentary on the EKS case, said: “According to the terms of the non-prosecution agreement signed today, EKS agrees to cooperate in any related criminal or civil proceedings, demonstrate its implementation of controls to stop misconduct involving undeclared US accounts and pay penalties in return for the department’s agreement not to prosecute EKS for tax-related criminal offences.”

EKS was founded in 1817 and is wholly owned by a Swiss charitable foundation. It is headquartered in the city and canton of Schaffhausen. EKS opened, maintained and serviced accounts for US persons that it knew or had reason to know had likely not declared their tax liability to the Internal Revenue Service or the US Department of the Treasury as required by US law, the statement continued.

The DoJ said EKS booked US clients at a time when the international screws were starting to tighten on the Swiss banking industry and its renowned bank secrecy laws.

“From 2004 through 2011, EKS accepted referrals of US persons as new clients from an external asset manager who, until 2009, resided in the United States and conducted some of his business through a corporation organised under the laws of the United States. The majority of the accounts that came to EKS as a result of these referrals were held in the names of non-US entities that were beneficially owned by US persons,” it said.

“In May 2008, with the knowledge and approval of EKS management, the external asset manager and an EKS relationship manager visited five US cities to meet with US clients and attorneys who had the potential to refer new clients. Topics discussed during their meetings included the 'crisis' involving Swiss bank UBS, client satisfaction with EKS, the performance of client accounts at EKS and the 'asset protection' benefits of EKS,” it continued.

Until 2009, EKS opened numbered accounts for US persons, including code-name or pseudonym accounts, upon request. Upon opening this type of account, an EKS employee would enter the accountholder’s name in a physical register rather than in the bank’s electronic records system. This action limited the number of EKS personnel who knew the client’s identity. Holders of these accounts could also provide documents to EKS using only their code names or numbers as their authorised signatures, the DoJ said.

“EKS provided all of its clients, including US persons, with the option to request that EKS retain all mail related to a client’s financial accounts in exchange for a standard service fee. EKS understood that providing such hold-mail agreements upon request could allow US persons to keep evidence of their EKS accounts outside of the United States and thus assist them in concealing assets and income from the IRS,” it said.

The department said EKS knew of the 2009 voluntary disclosure programme of the IRS for US persons and yet it made “no effort” to encourage its US clients to regularise their affairs.

“During 2009, consultants reported to EKS, among other things, that EKS had increased risks because of its relationship with the external asset manager; that it was only a matter of time until small banks came into contact with US authorities; and that there was a latent risk that previous revenues from EKS’s `US strategy’ could be seized or corresponding fines imposed,” it said.

In accordance with the terms of the Swiss bank programme, EKS mitigated its penalty by encouraging US accountholders to come into compliance with their US tax and disclosure obligations, the DoJ said.