Israel’s Bank Hapoalim pleaded guilty to conspiring with US taxpayers to hide assets and income in offshore accounts and entered into Deferred Prosecution Agreement (DPA) for criminal misconduct and agreed to pay nearly $875 million.
The plea states that from 2002 to 2014, Bank Hapoalim hid $7.6 billion in more than 5,500 secret Swiss and Israeli bank accounts and the income generated in these accounts from the US’ Internal Revenue Service.
As part of Friday’s resolutions, Bank Hapoalim and its Swiss subsidiary agreed to pay approximately $874.27 million to the US Treasury, the Federal Reserve, and the New York State Department of Financial Services.
The resolution is the second-largest recovery by the Department of Justice in connection with its investigations since 2008 into the facilitation of offshore US tax evasion by foreign banks.
US Attorney Geoffrey Berman, of the Southern District of New York, stated that “the combined payment approaching $1 billion reflects the magnitude of the tax evasion by the Bank’s US customers, the size of the fees the Bank collected to provide this illegal service, and the gravity of the illegal conduct.”
Bank Hapoalim is Israel’s largest bank and operates primarily as a retail bank with approximately 250 branches throughout Israel and more than 2.5 million accounts. The bank offers private banking services for onshore and offshore customers through its retail branches and its Global Private Banking Center.
At least four senior executives of the Bank, including two former members of the Swiss branch’s board of directors, were directly involved in aiding and abetting tax evasion of US taxpayers.
The Bank is required to cooperate with ongoing investigations and disclose any information it may later uncover regarding US-related accounts. The agreements provide no protection from criminal or civil prosecution for any individuals.
The Bank further implemented remedial measures to protect against the use of its services for tax evasion in the future.
This agreement marks the third time an Israeli bank has admitted to similar criminal conduct. The Bank Leumi Group in December 2014, and Mizrahi-Tefahot Bank Ltd. in March 2019 entered into DPAs with the Department of Justice admitting that they conspired with US taxpayers to prepare and present false tax returns to the IRS by hiding income and assets in offshore bank accounts in Israel and elsewhere around the world.