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French prosecutors are calling for Royal Bank of Canada's wealth-management subsidiary in the Bahamas to be hit with the maximum fine allowed – €187,500 ($270,619 Canadian) – for its alleged role in a sophisticated tax fraud and money-laundering scheme involving billionaire international art dealer Guy Wildenstein and other family members.

Royal Bank of Canada Trust Company (Bahamas) Ltd. were active participants in helping the Wildensteins use an offshore trust system to stash thousands of valuable art works away, prosecutors Monica d'Onofrio and Mireille Venet alleged in a Paris courtroom on Thursday. The family was able to cheat the French government out of hundreds of millions of euros in inheritance taxes by hiding the assets in an elaborate offshore trust system that included the participation of a second tax haven, Northern Trust in the Guernsey Islands, the prosecutors allege.

The trusts were technically to be held at arm's length but were in fact used to provide funds for family members, they allege.

"We can't comment on details in the case as it is before the court, but can say we are confident that the facts presented through the legal process will reflect that there is no merit to the allegations being made against the RBC Bahamas trust company," RBC spokeswoman Tanis Feasby said in an email Friday.

Prosecutors are asking for the same maximum fine to be levied against Northern Trust. In the case of Mr. Wildenstein they are recommending a sentence of four years in prison, with two years suspended, and a financial penalty of about $250-million (U.S.).

Lawyers for RBC are expected to present their defense to the tribunal sometime next week.

The trial at the Palais de Justice began last month and is scheduled to continue through to next Thursday. A date for the final ruling has not been set.

Lawyers for France's tax-evasion watchdog – Parquet national financier – have alleged that RBC's Bahamas wealth-management unit held in trust part of the inheritance from the estate of Mr. Waldenstein's father Daniel, who died in 2001 at the age of 84. Also accused besides Guy Wildenstein, 70, are his brother Alec and other family members as well as two lawyers and a notary.

Lawyers for Mr. Wildenstein say he was advised by legal counsel that he was not obligated to disclose the trusts to French authorities since it was the trusts and not the family that technically owned the paintings.

In a first-quarter report last year, RBC mentioned the case and said it believes "its actions did not violate French law."

The Wildenstein family is known as one of the art world's leading dealers, going back to the Paris founding by Nathan Wildenstein in 1875.

Guy Wildenstein is a friend and financial backer of former French president Nicolas Sarkozy and his UMP party.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 08/11/24 1:33pm EST.

SymbolName% changeLast
RY-T
Royal Bank of Canada
-0.5%171.8
RY-N
Royal Bank of Canada
-1.09%123.19

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