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Schroder Bank pays US$10.4m to avoid US prosecution

[NEW YORK] Schroder & Co Bank AG will pay a US$10.4 million penalty to avoid prosecution under a US program that requires Swiss firms to say how they helped American clients avoid taxes.

Schroder's penalty is the fourth highest among 33 banks that have settled with the Justice Department this year after disclosing they had reason to believe they committed tax-related crimes related to US accounts. The banks have paid a combined US$308.9 million to receive non-prosecution agreements.

The bank, a unit of London-based Schroders Plc, had 243 US-related accounts totaling US$506 million in 2008, according to the Justice Department.

"Swiss banks continue to lift the veil of secrecy surrounding bank accounts opened and maintained for US individuals in the names of sham structures such as trusts, foundations and foreign corporations," Larry Wszalek, acting deputy attorney general in the Justice Department's tax division, said in a statement Thursday.

"We have invested and will continue to invest considerable resources in systems to support the increasing demands of enhanced international tax reporting," according to a bank spokeswoman.

BLOOMBERG