March 2016: Industry-Leading Settlement for EFG Bank in DOJ Program for Swiss Banks
On December 3, 2015, the Department of Justice announced it had concluded a non-prosecution agreement and final settlement with our client EFG Bank, one of the largest Swiss private banks. The settlement amount of $29.9 million, was a small fraction of the Bank’s U.S. business and one of the best settlements reached to date by that measure.
EFG entered the DOJ program in the beginning of 2014 facing a potential penalty of hundreds of millions of dollars. At that time, the size of the penalty and the work required by the DOJ program were daunting. Over the next 12 months, Quinn Emanuel (1) conducted an extensive review of the Bank’s accounts to identify those held on behalf of U.S. persons, including a manual review of hundreds of paper files; (2) reviewed tens of thousands of emails and documents to identify employees with exposure and get a grasp of the evolution of the Bank’s policies towards U.S. persons; (3) coordinated with an Independent Examiner to demonstrate the robustness of the Bank’s compliance with the DOJ program; and (4) contacted hundreds of U.S. clients and convinced them to declare their accounts through the Offshore Voluntary Disclosure Program.
Along the way, Quinn Emanuel conducted interviews with employees, made presentations to DOJ regarding the Bank’s findings, reassured current and former employees, and was often the first source of information for U.S. clients with undeclared accounts who were looking to come clean. This is in addition to managing Deloitte AG, Swiss counsel, and the Independent Examiner.
One of the most difficult parts of the case was explaining Swiss banking secrecy and Swiss data protection laws to a skeptical DOJ. These laws make it a criminal offense for the Bank—or its attorneys—to transmit client information to foreign authorities without a waiver from the client or a formal treaty request to the Swiss government by DOJ. This was a point of contention throughout the program, as DOJ was obviously interested in the names of clients with undeclared accounts. Ultimately, Quinn Emanuel was able to work with the Bank, DOJ, Swiss counsel, and the clients to provide useful information to DOJ. The lead DOJ lawyer who handled EFG's case told us that a key distinguishing factor was the quality and thoroughness of the investigation, and the cooperation provided by the Quinn Emanuel team.
The final penalty amount of $29.9 million was particularly notable when compared to the penalty other large Swiss banks have paid to date. The Bank’s penalty represented only 1.9% of the peak value of its problematic United States’ assets under management of roughly $1.6 billion. The average penalty for the other banks with comparable exposure was twice as much, or 4% of United States’ assets under management. In comparison to the other banks with large numbers of U.S. accounts, EFG has obtained the lowest penalty as measured against exposure.