The Swiss financial regulator FINMA has told banks to set aside funds for paying legal costs and fines associated with a Swiss-American deal on banking secrecy. The deal is intended to punish those who aided tax evasion while allowing Swiss banks to escape prosecution.
FINMA – the Swiss Financial Market Supervisory Authority – has «generally recommended» that banks allocate 2013 funds for covering costs associated with the deal. Swiss banks have until the end of 2013 to sign up for the programme, which requires banks to submit some client data and pay fines of up to half of all assets they managed for wealthy Americans.
Banks were asked to put themselves in one of four categories according to the exposure they had had to American clients. The first group consists of the 14 banks already under investigation, including UBS, Credit Suisse and the Zurich and Basel cantonal banks.
The second category is for banks that know or suspect that they have clients who have committed tax evasion offences in the US. Some banks, such as the Valiant group, have placed themselves in this category on the grounds that they cannot know if individual clients have failed to declare their assets.
The third group is for those who have US customers, but believe they are fully compliant with the tax regulations, and the fourth is for those whose non-local customers make up less than 2% of the total.
Banks in the first category must work out their fines individually with the US Justice Department, while a flat rate scheme applies for those in other categories. Members of the second category can expect fines of 20-50% of all assets they held for American tax dodgers.
FINMA recommended on Tuesday that banks in all categories set aside 2013 funds for legal costs and fines. It did not give details on how much should be budgeted but acknowledged that banks must estimate how much they may owe in penalties, since uncertainty remains as to the exact amount.
Last week, Basler Kantonalbank said it would set aside CHF100 million ($112 million) of its full-year earnings to cover fines, while Credit Suisse, one of the Category One banks already under investigation by US authorities, took a CHF295 million provision two years ago.