Bank Leumi Signs Arrangement with U.S. Authorities Related to the Group's Activities with U.S. Customers
Leumi is the first Bank in Israel to reach a settlement with U.S. authorities
The Leumi Group today reached an arrangement with two U.S. authorities: The United States Department of Justice (DOJ) and the New York Department of financial services (DFS).
The arrangements bring to an end the investigations conducted by the aforementioned authorities into allegations that the Leumi Group assisted certain U.S. customers with tax evasion during the years 2002-2010.
Leumi is the first Bank in the Israeli banking system to reach a settlement with U.S. authorities.
Naturally, signing these arrangements remove a cloud of uncertainty that has weighed heavily on Leumi Group's business operations. The completion of the investigations by the aforementioned authorities, alongside implementation of global regulatory requirements, will enable Leumi to continue focusing on its business activities while strengthening the Group's core business and allocating maximum resources to achieve the Group's strategic goals.
According to the arrangement with the DOJ, the Leumi Group will pay a total amount of US $270 million to the U.S. government, with no criminal conviction being imposed on the Leumi Group or any restriction on the Group's activities in the United States.
As part of the arrangement, the Leumi Group is obligated to continue implementing a stringent compliance policy in order to confirm that the Group is acting in accordance with The Foreign Account Tax Compliance Act (FATCA). The arrangement mentions that the fine to be paid to the DOJ has been significantly reduced as a result of Leumi Group's cooperation with U.S. authorities throughout the investigation.
According to the arrangement with the DFS, the Leumi Group will pay a civil monetary fine in the amount of US $130 million to the DFS. As part of the arrangement, Bank Leumi USA (BLUSA) will appoint a monitor for a period of one year, who will be selected by the DFS and will be authorized to examine the Bank's compliance with U.S. laws and regulations.
Leumi has already made provisions in its previous Financial Statements that cover the fines to the aforementioned authorities, and therefore no additional provision is expected in respect of the arrangements with the DOJ and the DFS.
The arrangements relate to the responsibility of the Leumi Group only, in accordance with U.S. laws. The arrangements do not grant any exemption to officers or employees of the Group, nor do they bind officers or employees of the Group.
In the past two years, the Bank has adapted itself to vast changes that have taken place in the private banking world and is acting in accordance with new regulatory demands, both in Israel and abroad, including strict implementation of the "white money" policy, as is customary in today's banking world.
Within this framework, the Bank closed several overseas branches and representative office, sold its Swiss business operations and made organizational changes in its private banking operations.