A Liechtenstein bank has agreed to pay $23.8 million to the United States to avoid prosecution for helping Americans evade taxes, officials announced Tuesday.
Preet Bharara, the US Attorney for the Southern District of New York, said the Vaduz-based bank, Liechtensteinische Landesbank AG (LLB-Vaduz), had agreed the payment under a "Non-Prosecution Agreement."
The deal means the bank will not be criminally prosecuted for opening and maintaining undeclared bank accounts for US taxpayers from 2001 through 2011.
Bharara said LLB-Vaduz had assisted a significant number of US taxpayers in evading their tax obligations, filing false federal tax returns with the Internal Revenue Service (IRS), and otherwise hiding accounts from the IRS.
The total to be paid is made up of $16,316,000 that the US authorities believe the bank obtained in gross revenues by maintaining these undeclared accounts, and $7,525,542 to cover the taxes that should have been paid by the bank's clients.
Liechtenstein is a tiny landlocked principality that lies between Switzerland and Austria in the Alps.
Until recently it was regarded by the OECD as one of the most secretive and uncooperative tax havens in the world and its financial services sector was the subject of intense scrutiny by tax authorities in Germany and other western European countries, as well as by Canada and the United States.
Under pressure from countries like these, Liechtenstein ended banking secrecy in 2009. It concluded a tax cooperation agreement with Britain the same year and has since agreed to share information with more than 30 other countries.
The reforms have resulted in a fall in the value of assets held by the world's wealthy in the principality, usually in the form of trusts or holding companies which are subject to minimal taxes.
But its banks still had more than $125 billion of assets under management as of 2011, according to the Liechtenstein Bankers Association.
Under the Foreign Account Tax Compliance Act, legislation that came into force at the start of 2013, all overseas financial institutions can be prosecuted in the US if they fail to share information about income and interest payments to American clients.