29 Apr 2019
Zurich Life Insurance Company and its Isle of Man-based affiliate will pay the US Justice Department $5.1 million for failing to stop clients from evading American tax obligations through their services.
From January 2008 through June 2014, the companies maintained approximately 420 US-linked policies, worth an aggregate $102 million, for clients who did not provide evidence that they had filed Foreign Bank Account Reports (FBARs) to the IRS, the Justice Department said Thursday.
The Isle of Man company, Zurich International Life, sold policies that gave US taxpayers and other clients a “suite of specialized investment options” with “minimal-to-no risk mitigation function,” according to a department statement, which announced a non-prosecution agreement with the insurer.
On at least one occasion, a Zurich policyholder who was convicted of a federal fraud offense used his policy to “hide substantial assets, despite owing approximately $900,000 in restitution to his victims,” according to the statement.
Zurich Life Insurance self-reported the violations to the Justice Department following a global review prompted by the launch of the department’s “Swiss Bank Program” in August 2013. Since the disclosure, Zurich has provided US officials dozens of account summaries and worked with Swiss officials to waive statutes barring sharing such data.
Under the Justice Department program, over 80 Swiss banks have resolved potential criminal liabilities related to client tax evasion by agreeing to fully disclose their cross-border activities, provide detailed account data, cooperate with treaty requests and pay appropriate penalties.
Zurich Life Insurance Company and Zurich International Life, both indirectly owned subsidiaries of Zurich Life Insurance Group Ltd, have an aggregate $32 billion in assets under management and 600,000 policies in force.
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