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By Karen Freifeld
NEW YORK, May 8 (Reuters) - Vadian Bank AG has become thesecond of what are expected to be dozens of Switzerland-basedprivate banks to reach a deal with the U.S. Department ofJustice under a voluntary disclosure program for assistingAmericans in evading taxes.
The program, launched in 2013, allows Swiss banks to avoidprosecution by disclosing cross-border activities that helpedU.S. account holders conceal assets and income. Banks alreadyunder criminal investigation are excluded from the program.
BSI became the first Swiss bank to settle under the programin March.
Vadian, a small bank which has one office in St. Gallen, innortheast Switzerland, accepted accounts that were forced out ofother Swiss banks in 2008 after it became public that UBS AG was the target of a criminal investigation overfacilitating tax evasion, the Justice Department said in astatement.
Vadian, which was undeterred because it had no U.S.presence, increased its U.S.-related accounts from two to morethan 70, with $76 million in assets under management afterAugust 2008, the Justice Department said.
Under a non-prosecution agreement, Vadian will pay a $4.25million penalty, demonstrate that it put in controls to stopmisconduct in undeclared U.S. accounts and cooperate in relatedlegal proceedings.
A U.S. lawyer for Vadian did not immediately return a callfor comment.
Zurich-based UBS paid $780 million and admitted wrongdoingin a 2009 deal for helping thousands of Americans evade taxes,and Credit Suisse last May pleaded guilty to a U.S.criminal charge and agreed to pay more than $2.5 billion inpenalties.
Criminal investigations also have been opened against otherbanks, including Julius Baer and HSBC's Swissprivate bank.
The Justice Department is working toward resolutions withthe banks in the voluntary program, and at the same time hasopened investigations of individuals and entities based oninformation from banks in the program, Caroline Ciraolo, actingassistant attorney general, said in a statement Friday.
Under the program, banks must provide detailed informationon accounts in which U.S. taxpayers have an interest and agreeto close accounts that do not meet U.S. obligations.
Swiss banks, which have come under intense pressure to giveup their traditional secrecy, also must cooperate in treatyrequests for account information.
Vadian, founded in 1811, was historically known asErsparnisanstalt der Stadt St. Gallen, which loosely translatesinto St. Gallen Community Savings Bank, according to thenon-prosecution agreement. It was acquired by St. GallerKantonalbank in August. (Reporting by Karen Freifeld; Editing by Paul Simao and LeslieAdler)
