• A major Swiss bank admits it conspired with U.S. taxpayers and others to hide over $5.6 billion from the Internal Revenue Service.
• Banque Pictet, the private banking division of Pictet Group, has agreed to pay about $122.9 million in restitution and penalties, in an agreement with prosecutors.
• If the bank complies with the terms of its deal, the Justice Department will defer prosecution for three years and then dismiss a charge of criminal conspiracy to defraud the IRS.

A major Swiss bank admitted to conspiring with U.S. taxpayers and others to hide over $5.6 billion from the Internal Revenue Service, the Department of Justice announced Monday.

Banque Pictet, the private banking division of the 218-year-old Pictet Group, will pay about $122.9 million in restitution and penalties as part of an agreement with prosecutors.

Between 2008 and 2014, the bank had 1,637 accounts on behalf of American clients, who collectively evaded approximately $50.6 million in U.S. taxes, the DOJ said.

The accounts held more than $5.6 billion of the roughly $20 billion in total assets from U.S. taxpayers that the bank managed during the relevant period.

If the bank complies with the terms of its deal, the Justice Department has agreed to defer prosecution for three years and then dismiss a charge of criminal conspiracy to defraud the IRS.

As part of the deal, the bank also agreed to cooperate with ongoing investigations into hidden bank accounts.

"Rooting out financial malfeasance remains a priority for this Office," Damian Williams, U.S. Attorney for the Southern District of New York, said in a statement.

"We encourage companies and financial institutions to come to us to report wrongdoing before we come to you," he added.

The Pictet Group said in a statement that the deal follows its "extensive cooperation with the US authorities, in full compliance with Swiss law."

"Pictet is pleased to have resolved this matter and will continue to take steps to ensure its clients meet their tax obligations," the statement said.

The Pictet Group helped clients evade U.S. taxes by opening, maintaining and concealing undeclared accounts for them, prosecutors charged.

The bank used "a variety of means" to hide those accounts, according to the deferred prosecution agreement.

It held clients' account-related mail at the bank, rather than sending it to the clients in the U.S., in order to "help ensure that documents reflecting the existence of the accounts remained outside the United States and beyond the reach of U.S. tax authorities."

It also formed and handled offshore entities that had "no business purpose but existed solely to help the Pictet Group's U.S. taxpayer-clients hide their offshore accounts and assets from U.S. tax authorities."

The Pictet Group maintained about 529 offshore entities for the U.S. accounts in question during the relevant time frame.

The group also helped the U.S. tax-evading clients keep undeclared money offshore by transferring funds from undeclared accounts to accounts that appeared to be held by non-U.S. clients.

Those accounts were still effectively controlled by the U.S. taxpayer-clients through "fictitious donations," according to the DOJ.