Bank Hapoalim, Israel's largest bank, was fined more than $900 million by U.S. prosecutors Thursday in separate settlements involving tax evasion and the bank's involvement in an international soccer bribery and money laundering scandal.
The Department of Justice (DOJ) said the bank and its Swiss subsidiary pled guilty to conspiring with U.S. taxpayers to hide more than $7.6 billion in more than 5,500 secret Swiss and Israeli bank accounts from the IRS.
- The bank also conspired with sports marketing executives to launder more than $20 million in bribes and kickbacks to officials in FIFA, the governing body of international soccer, the DOJ said. In exchange for those bribes and kickbacks, FIFA officials awarded or steered broadcasting rights for soccer matches and tournaments to sports marketing executives and their companies, the DOJ said in its statement.
Regulators hit banks with a near-record $10 billion in fines during a 15-month period through 2019, Fortune reported, citing data from European startup Fenergo. The company said it expects that figure to continue its uptick this year. By comparison, regulators fined banks $26 billion in the decade between 2008 and 2018, Fenergo said.
The company, which makes software to help banks detect illegal transactions, attributed the surge in fines to geopolitics, as regulators — especially those in the U.S. — came down harder on foreign banks than domestic ones.
The DOJ said Hapoalim will pay $874 million to settle the tax charges — the second-biggest settlement in federal prosecutors' decade-long crackdown on offshore tax evasion, according to The Washington Post.
The bank's activities involved at least four senior executives, including two former members of the Hapoalim's board of directors, prosecutors said.
Hapoalim operates primarily as a retail bank with about 250 branches throughout Israel and more than 2.5 million accounts.
The bank enabled U.S. customers to evade tax obligations by letting customers open and maintain accounts using pseudonyms and non-U.S. forms of identification, the Justice Department said. The bank also processed wire transfers or issued checks in amounts of less than $10,000 that were drawn on the accounts of U.S. taxpayers or entities to avoid triggering scrutiny, the DOJ said.
"The Department of Justice continues to aggressively prosecute banks and other financial institutions that help U.S. taxpayers conceal their income and assets in offshore bank accounts," Principal Deputy Assistant Attorney General Richard Zuckerman said in a statement Thursday. "Bank Hapoalim is being held accountable for its conduct — it has admitted to its crimes and will surrender all fees it earned, repay the United States for lost tax revenue, and pay a substantial fine."
For its part in the FIFA scandal, which came to light in 2015, the bank agreed to forfeit $20.7 million and pay a fine of $9.3 million to resolve the investigation.
"This announcement illustrates another aspect in the spider web of bribery, corruption and backroom deals going on behind the scenes as soccer games were played on the field," William Sweeney, assistant director in charge of the FBI’s New York Field Office, said in a statement Thursday.
The bank admitted its executives "looked the other way" and allowed illicit activity to continue even after employees discovered the scheme and reported it, Sweeney said.