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Insurer to Pay $77M to Settle Criminal Tax Evasion Case

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What You Need to Know

  • The settlement involves about 1,608 private placement life policies.
  • The deal relates to an inquiry announced in September 2017.
  • Prosecutors said the company helped customers repatriate undeclared assets through a sham death payout.

Swiss Life Holding AG has agreed to pay about $77 million and help U.S. federal investigators identify U.S. tax evaders to resolve a criminal case involving use of private placement life insurance.

Officials at the U.S. Department of Justice announced the deferred prosecution agreement (DPA) with Swiss Life Friday.

Swiss Life confirmed, in a written comment on the announcement, that it has reached a resolution with the Justice Department concerning the inquiry.

The agreement involves an inquiry into prior business with U.S. clients that was announced in September 2017, and the $77 million payment is in line with an estimate Swiss Life put in a 2020 earnings release that was posted in March, the company said.

“Swiss Life is now focused on fulfilling the requirements under the resolution and successfully concluding the DPA,” the company stated.

The Allegations

Justice Department officials allege that Swiss Life presented use of private placement life insurance policy “wrappers,” or large life insurance policies custom-tailored to suit specific customers’ needs, as vehicles that wealthy people could use to hide stocks and other assets from the IRS.

Swiss Life began marketing private placement life insurance in that fashion around 2008, when changes in Swiss banking laws reduced Swiss banks’ ability to hide U.S. clients’ accounts from U.S. law enforcement authorities, officials said in the agreement announcement.

Taxpayers could use the private placement life wrappers to hide assets because Swiss Life would be identified as the owner of the assets.

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Swiss Life sold about 1,608 of the wrapper policies to U.S. taxpayers, and those policies held more than $1.45 billion in assets, according to the agreement announcement.

Swiss Life helped some U.S. customers hide policies from U.S. authorities by letting the customers’ offshore financial representatives receive the policy documents, and by using sham death benefit payments to help customers move assets back into the United States, officials allege.

The Agreement

Audrey Strauss, the U.S. attorney for the Southern District of New York, joined with other federal officials to file a criminal information concerning the allegations.

In the criminal information document, prosecutors charge Swiss Life Holding, and Swiss Life affiliates in Liechtenstein, Luxembourg and Singapore with conspiring with U.S. taxpayers and others to hide offshore assets from the IRS.

The terms of the agreement call for Swiss Life and the affiliates to “accept responsibility for their criminal conduct by stipulating to the accuracy of the Statement of Facts attached to the Agreement,” according to the agreement announcement.

“The Agreement requires the Swiss Life Entities to refrain from all future criminal conduct, enhance remedial measures, and continue to cooperate fully with further investigations into hidden insurance policies and related policy investment accounts,” it explained.

The government has agreed to dismiss the criminal charge after three years if Swiss Life makes the $77 million payment to the U.S. Treasury and abides by other deal terms.

(Image: Sergign/Stock.adobe.com)