Wegelin and Co., the oldest bank in Switzerland, will soon shut its doors following a guilty admission for helping American clients evade U.S. tax law by hiding more than a billion dollars in income from the Internal Revenue Service.
Otto Bruderer, an official at the 270-year-old Swiss institution, entered the guilty plea on the bank's behalf in a federal courtroom in Manhattan, New York. The bank was the first Swiss institution to be charged amid federal officials' extensive investigations into offshore banking and tax law violations. The bank was found guilty of one count of conspiracy in which it helped more than 100 Americans hide more than $1.2 billion from the IRS. The bank entered into a plea agreement with U.S. federal officials which will require them to pay $20 million in restitution, $15.8 million for fees on undeclared accounts and $22 million in fines. The agreement between officials and the bank is pending court approval and sentencing is expected to take place on March 4.
Following the agreement, the financial institution said it "will cease to operate as a bank," according to BBC News. The decision to close its doors and sell off assets was largely due to the criminal accusations and the bank's desire to protect its non-U.S. clients.
In addition to pleading guilty to tax evasion, Bruderer allegedly admitted that while the practice of helping clients evade taxes was "wrong," he noted that it's a common practice in Switzerland, the BBC reports. In response, the Swiss banking community has expressed concern over the possibility that heavier investigations and penalties may be imposed on Swiss banks as the U.S. cracks down on tax evasion and offshore accounts.
"Some Swiss financial analysts are already speculating that Wegelin's $58 million fine, which many had expected to be higher, was kept low by the U.S. authorities in return for Wegelin clearly implicating the rest of the Swiss banking community in tax evasion," said BBC correspondent Imogen Foulkes.