Deutsche Bank admitted criminal wrongdoing for taking part in fraudulent tax shelters that let clients hide billions of dollars, and agreed to pay $US553.6 million to settle the case, US prosecutors said on Tuesday.
Deutsche Bank, Germany's flagship lender and a major international banking presence, said it had already set aside money to cover the fine and that it will not affect profits.
The settlement follows one prosecutors reached with Swiss bank UBS, which paid $780 million in fines for helping clients with roughly $US20 billion in assets hide their accounts from the U.S. Internal Revenue Service.
The US Attorney's Office in Manhattan said the Deutsche Bank fine represents the fees the bank earned setting up tax shelters, the taxes and interest the IRS could not collect because of the bank's conduct and a civil penalty of some $US149.8 million.
The shelters in question, with elaborate acronymic names like BLIPS, COBRA, HOMER and POPS LITE, were set up between 1996 and 2002. The government said they allowed high net worth individuals to avoid some $US5.9 billion in US income taxes.
More than 2,100 customers were involved, according to the non-prosecution agreement the bank signed. That deal includes the appointment of an independent monitor to oversee the bank's compliance with tax laws.
The US Attorney's Office said Bart Schwartz, chairman of private investigator Guidepost Solutions and former chief of the office's criminal division, would serve as the monitor.
The agreement will last at least two years.
Even as they settle with the banks that set up tax shelters, federal prosecutors remain in hot pursuit of the bankers that worked on them and the clients that used them.
Last week they charged a former UBS banker with encouraging American clients not to disclose their offshore accounts to tax authorities, and in November they extracted a guilty plea from a former UBS client in New Jersey who hid money from tax authorities in a Swiss account.
Reuters