Over 100 institutions sign up for US programme
The United States Justice Department has received 106 requests from Swiss entities to participate in a settlement programme aimed at ending a long-running probe of tax-dodging by Americans using Swiss bank accounts according to a senior US official.
Speaking at a legal conference in Phoenix, Arizona, on Saturday, assistant attorney general for the justice department’s Tax Division Kathryn Keneally said that not all the entities might be banks and would thus not be eligible.
Under the American programme the Swiss government signed last August, eligible Swiss banks will have to pay penalties and disclose account information about US customers to avoid or defer US prosecution.
The programme is open only to banks not already under criminal investigation.
Swiss banks had until the end of last year to submit a letter of intent to the American authorities to begin the settlement process. A number of Swiss banks have already announced they are participating in the programme.
“We do not expect 106 non-prosecution agreements or deferred prosecution agreements,” Keneally said. “With those caveats we’re still pretty gratified by the response that we’ve gotten to the programme.”
When the programme was launched, more than 300 banks were believed to be susceptible in taking part.
Under the programme’s penalty provisions, a Swiss bank seeking to avoid prosecution must agree to a penalty equal to 20% of the total dollar amount of all hidden U.S. customer accounts held by the bank on August. 1, 2008.
The penalty increases to 30% and then to 50%, depending on how active a bank was in continuing to open secret accounts for Americans after the crackdown began.
The deal for the second-tier, or midsize, banks is part of a US drive to lift the veil on Swiss bank secrecy following the 2009 deal that led UBS, Switzerland’s largest financial institution, to pay $780 million (CHF700 million) in a settlement and to agree to hand over American client names with secret Swiss accounts.
Under the terms of the Swiss-US tax deal signed in August, the banks in Switzerland could be placed into four categories.
Group 1: The 14 banks already under active investigation for suspected tax evasion offences. These include UBS, Credit Suisse, Julius Baer, Pictet and the Zurich and Basel cantonal banks.
Group 2: Those banks that know or suspect that they have committed tax evasion offences in the US. By coming clean, these banks avoid criminal prosecution but would be subject to big fines.
Group 3: Banks that have US customers but believe that they, and their clients, have complied fully with US tax regulations.
Group 4: Banks with very limited exposure to foreign clients – no more than 2% of total client base is non-local.
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