U.S. authorities have imposed a massive fine on Israel’s largest bank, Bank Hapoalim, for conspiring with American clients to hide more than US$7.6 billion from the Internal Revenue Service (IRS) in thousands of secret Swiss and Israeli bank accounts.

As part of a deferred prosecution agreement with the U.S. Department of Justice (DOJ), the bank will pay US$874.3 million to the U.S. Treasury, the Federal Reserve Board, and the New York State Department of Financial Services (NYDFS).

The DOJ said the agreement represents the second-largest monetary sanction brought as part of its investigations into offshore tax evasion.

According to the agreement, the bank conspired with U.S. clients between 2002 and 2014 to evade taxes and file false tax returns by hiding assets and income in more than 5,500 offshore accounts.

To resolve the allegations, Bank Hapoalim agreed to pay more than US$216 million in restitution to the IRS, to forefeit US$160 million in gross fees that it generated from the secret accounts and to pay US$240 million in fines to the U.S. Treasury.

The bank will also pay a US$220 million penalty to the NYDFS, and US$37.35 million to the Fed.

“Bank Hapoalim and its Swiss subsidiary have admitted to not only failing to prevent but actively assisting U.S. customers to set up secret accounts, to shelter assets and income and to evade taxes,” said U.S. attorney Geoffrey Berman.

“The combined payment approaching $1 billion reflects the magnitude of the tax evasion by the bank’s U.S. customers, the size of the fees the bank collected to provide this illegal service, and the gravity of the illegal conduct,” Berman added.