JERUSALEM, Israel – Israel’s largest bank admitted to its role in a massive US tax evasion scandal and money laundering conspiracy that will cost it more than $904 million.
According to court documents released on Thursday, employees at Bank Hapoalim B.M. (BHBM) and its wholly-owned Swiss subsidiary Bank Hapoalim Switzerland (BHS) conspired with US taxpayers to hide more than $7.6 billion in more than 5,500 secret Swiss and Israeli bank accounts.
BHS pleaded guilty to tax evasion and BHBM agreed to a three-year deferred prosecution agreement in a New York federal court.
From 2002 to 2014 the bank helped US customers defraud the United States by hiding their money to escape taxation.
At least four senior members of the Israeli bank, including two members of BHS’s board of directors, were directly involved in the crime.
The bank will be forced to pay $874 million to the US Treasury, the Federal Reserve, and the New York State Department of Financial Services.
“Today’s resolutions and payment of $874 million make clear that tax evasion cannot be taken lightly,” said Deputy Attorney General Jeffrey A. Rosen. “A fair tax system requires even-handed compliance, and honest conduct by all participants in the system.”
“There is no excuse for a foreign financial institution to unlawfully assist wealthy Americans in flouting their responsibilities to pay their taxes,” said IRS Criminal Investigation Chief Don Fort. “With today’s guilty plea, Bank Hapoalim is taking responsibility for their role in deliberately breaking the law and undermining the integrity of this nation’s tax system.
The banks also admitted guilt in a separate money laundering case.
From 2010 to 2015, Bank Hapoalim and its Swiss subsidiary laundered more than $20 million in bribes and kickbacks to soccer officials with Fédération Internationale de Football Association (FIFA) and other soccer federations.
“For nearly five years, Bank Hapoalim employees used the U.S. financial system to launder tens of millions of dollars in bribe payments to corrupt soccer officials in multiple countries,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division. “Today’s announcement demonstrates the department’s commitment to holding financial institutions to account when they knowingly facilitate corruption and other criminal conduct.”
For their money laundering crimes, BHBM and BHS will jointly pay a criminal penalty of $9,329,995. The banks will additionally forfeit funds totaling $20,733,322.