Schaffhauser Kantonalbank (SHKB)
Here are key excerpts.
SHKB is a regional Swiss bank that was founded in 1883 and operates out of its headquarters in Schaffhausen, Switzerland. All seven of SHKB’s locations are within the Canton of Schaffhausen, and all branches are within a radius of 10 miles of its headquarters. As a cantonal bank, SHKB is obliged to service primarily the residents of the Canton of Schaffhausen and the surrounding areas.
Through its managers, employees and others, SHKB knew or had reason to know that some U.S. taxpayers who had opened and maintained accounts at SHKB were not complying with their U.S. income tax and reporting obligations. SHKB offered a variety of traditional Swiss banking services that it knew could assist, and that did in fact assist, U.S. clients in the concealment of assets and income from the Internal Revenue Service (IRS). One such service was hold mail, through which SHKB would hold all mail correspondence for a particular client at SHKB. It also offered code name or numbered account services, where SHKB would allow the accountholder to replace his or her identity with a code name or number on bank statements and other documentation sent to the client. These services helped U.S. clients to eliminate the paper trail associated with the undeclared assets and income they held at SHKB in Switzerland. By accepting and maintaining such accounts, SHKB assisted some U.S. taxpayers in evading their U.S. tax obligations.
SHKB opened and maintained accounts for U.S. taxpayers who had left other banks being investigated by the department without ensuring that each such account was compliant with U.S. tax law from the account’s inception at SHKB. SHKB also arranged for the issuance of credit, debit or travel cards to the beneficial owners of some U.S.-related accounts, and offered travel cash cards, on which a client could load up to 10,000 Swiss francs, U.S. dollars or euros from his or her SHKB bank account by instructing SHKB by telephone, mail or e-mail. The client could then use the card for purchases or remit unused balances back to the SHKB account. Use of these cards by U.S. persons facilitated their access to or use of undeclared funds on deposit at SHKB.
SHKB issued checks, including series of checks, in amounts of less than $10,000 that were drawn on accounts of U.S. taxpayers, even though SHKB knew, or had reason to know, that the withdrawals were made to avoid triggering scrutiny under the U.S. currency transaction reporting requirements. Furthermore, since Aug. 1, 2008, SHKB processed significant cash withdrawals for at least 15 U.S. taxpayers at or around the time the clients’ accounts were closed, even though SHKB knew, or had reason to know, the accounts contained undeclared assets. For example, in November 2009, SHKB processed a U.S. taxpayer’s cash withdrawal of more than 400,000 euros when SHKB closed the account.
In the period since Aug. 1, 2008, SHKB held one structured account that was a U.S.-related account with maximum assets under management of approximately $11.5 million. The nominal accountholder was a foundation in Liechtenstein, but the true owner was a U.S. person, which aided and abetted the client’s ability to conceal an undeclared account from the IRS.
In 2001, SHKB entered into a Qualified Intermediary Agreement (QI Agreement) with the IRS. The QI Agreement was designed to help ensure that, with respect to U.S. securities held in an account at SHKB, non-U.S. persons were subject to the proper U.S. withholding tax rates and that U.S. persons holding U.S. securities were properly paying U.S. tax. In general, if an accountholder wanted to trade in U.S. securities and avoid mandatory U.S. tax withholding, the QI Agreement required SHKB to obtain the consent of the accountholder to disclose the client’s identity to the IRS. The QI Agreement required SHKB to obtain IRS Forms W-9 and to undertake IRS Form 1099 reporting for new and existing U.S. clients engaged in U.S. securities transactions.