We previously posted "Bank Leumi to Face $300 Million Settlement Option to Close an Investigation Regarding Their Aiding Americans to Evade Taxes:" now we know that Bank Leumi's non-prosecution deal with the US Department of Justice requires it to also disclose the identities of 1,500 American account holders to the Internal Revenue Service. US citizens with undisclosed accounts at the Israeli bank may now be at risk of civil penalties, prosecution and disqualification from the US' offshore voluntary disclosure program.
Leumi reported that it is the first Israeli bank to reach a settlement with U.S. authorities. The agreement with the DoJ requires the Bank Leumi Group to pay a fine of $270 million. The agreement with the DFS requires the Bank Leumi Group to pay a fine of $130 million. As part of the DoJ agreement, the Bank Leumi Group has provided to the Internal Revenue Service (IRS) the names of more than 1,500 U.S. account holders.
Now three former senior executives at Bank Leumi will return part of the bonuses they received after Israel's second largest bank agreed a $400 million settlement with U.S. tax authorities. An independent committee set up to examine the conduct of the bank's board and senior management recommended the three executives return 11 percent of the bonuses they received for the 2002-2010 period, a total of 5.1 million shekels ($1.3 million).In addition, the committee recommended that the bank recoup $92 million from insurance policies covering board actions. Leumi said its board has decided to accept all of the committee's recommendations and have submitted them to Tel Aviv District Court for approval.
“The insurance settlement payment will reduce the damage to Leumi from the fines paid and will positively impact its financial results,” Meir Slater, head of research at Bank of Jerusalem Ltd. in Tel Aviv, said by phone. “The panel’s message is that just that as executives get compensated for their good work, they have to take responsibility for the negative results of their actions.”
The three people are:
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Former chief executive Galia Maor,
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Former chairman Eitan Raff and
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Former head of its international private banking division Zvi Itskovich.
Maor will pay back the largest amount, 2.6 million shekels. The three former executives have informed the committee they agree to repay the amount requested in order to bring the matter to a close.
U.S. persons with undisclosed accounts at Bank Leumi (and others) face potentially stiff financial consequences and, in some cases, the risk of prison.
There are many unknowns in this new environment (e.g., which individuals are among the 1,500 disclosed accounts, who will be exposed to criminal prosecution, what the civil penalties will be in the civil examinations, will the streamlined programs be available, etc.). However, one thing is apparent: The U.S. government will likely be relentless in its pursuit of U.S. persons with undisclosed accounts, and those who defer disclosure may face ever-increasing adverse consequences.
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Source:
Read more at: Tax Times blog
