The United States Justice Department says it has signed an agreement with Switzerland to allow some Swiss banks to avoid or defer prosecution stemming from a long-running probe of tax evasion by Americans using Swiss bank accounts.
In a first reaction, the Swiss Bankers Association (SBA) said the fines were «at the upper end of legally acceptable and economically bearable levels» but the accord was the «sole remaining solution for enabling the banks to resolve the legal problems with the US conclusively, and for creating legal certainty».
The Swiss government is expected to make a statement about the deal on Friday morning.
According to the the programme’s penalty provisions outlined by the US Justice Department, a Swiss bank seeking a nonprosecution agreement must agree to a penalty equal to 20 per cent of the total dollar amount of all hidden US customer accounts held by the bank on August 1, 2008.
That was roughly when the US started cracking down on tax avoidance by Americans with secret Swiss accounts.
The penalty amount increases to 30 per cent and then to 50 per cent, depending on how active a bank was in continuing to open secret accounts for Americans after the crackdown began.
Eligible banks
The settlement programme will apply to about 100 second-tier Swiss banks, provided they agree to disclose certain previous hidden assets of US customers. It will be open only to banks not already under criminal investigation.
Eligible banks would pay penalties and disclose account information about US customers in order to avoid prosecution, the department said in a statement.
«The program’s requirement that Swiss banks provide detailed account information will improve our ability to bring tax dollars back to the US Treasury from across the globe,» Attorney General Eric Holder said in a statement.
Fourteen Swiss banks already under investigation by US prosecutors are excluded from the accord, the Justice Department said. The programme is not available to individuals.
Some critics of the Justice Department’s previous tax crackdown efforts welcomed the deal.
«On the whole it’s a pretty strong agreement,» said Heather Lowe, director of government affairs at anti-graft watchdog Global Financial Integrity.
Still, the settlement program has «gaps,» specifically whether banks could settle without turning over US client names, Lowe said. «That is definitely one open question here.»
Banks under investigation
Though the Justice Department declined to identify the Swiss banks it is investigating, a number are known to be facing US probes. These include Credit Suisse, Julius Baer, the Swiss arm of Britain’s HSBC, privately held Pictet, and state-backed regional banks Zuercher Kantonalbank and Basler Kantonalbank.
Several of these banks have said they are preparing information on client withdrawals as demanded by US investigators, after the Swiss government said it would allow them to circumvent secrecy and privacy laws to do so.
Next steps
According to the SBA website, each bank will now have to «analyse its situation unconditionally within the very tight deadline, and then to take an according decision».
«With regards to certain ambiguities in the programme, the SBA expects the DoJ to enter into a constructive dialogue with the participating banks, in order to enable the banks to implement the programme.»
The SBA added that «a positive factor is that the protection of employees can ow be afforded to the best possible extent, as the agreement between the two social partners and the SBA will come into effect».
The five-year-long tax evasion dispute has already seen banking giant UBS pay a $780 million (CHF720 million) fine and hand over thousands of client names to the US and the collapse of Switzerland’s oldest private bank, Wegelin, under the weight of a US criminal investigation.