• Switzerland edition
 
40 Swiss banks agree to reveal hidden accounts
In 2009 Washington fined Switzerland's biggest bank, UBS, $780 million for complicity in tax evasion.

40 Swiss banks agree to reveal hidden accounts

Published: 23 Dec 2013 09:01 GMT+01:00
Updated: 23 Dec 2013 09:01 GMT+01:00

Around 40 of Switzerland's some 300 banks have already said publicly they will take part in a US programme set up to allow Swiss financial institutions to avoid US prosecution in exchange for coming clean and possibly paying steep fines.

"What are the others going to do? That is the very big question," Swiss business lawyer Douglas Hornung told AFP.

Washington alleges that Swiss banks have helped US citizens hide billions of dollars in assets from tax authorities, in a row that has soured relations between the two in recent years.

The two countries reached a deal in August aimed at ending the dispute, piercing a significant hole in the tradition of secrecy upon which the Swiss banking industry was built.

The banks have until the end of the year to decide whether to fess up to potential wrong-doing and hand over their files to US authorities, and thereby shield themselves from legal action, or take their chances outside the programme.

Picking the wrong option could saddle a bank with crippling fines, fees or a US indictment.

Banks that opened undeclared accounts for US clients -- especially the ones that actively wooed such clients -- definitely should join the programme, experts say.

Washington in 2009 fined Switzerland's biggest bank, UBS, $780 million for complicity in tax evasion.

"If one of the 10 to 15 banks the US Department of Justice already has in its files does not show up..., you can be sure there will be a BOOM in January," Hornung said.

Switzerland's one-time oldest bank Wegelin & Co., founded in 1741, discovered earlier this year the price of not coming clean to US authorities when given the chance: it was pushed out of business after being slapped with a $74-million fine for helping wealthy clients avoid at least $20 million in taxes.

Fourteen banks, including Switzerland's second-biggest bank, Credit Suisse, are already officially under US investigation and will have no chance to skirt legal action.

The other banks can however opt in to the programme by determining which of the three remaining categories they belong in.

Most so far are signing up for category two and thereby acknowledging they may well have had US clients with undeclared accounts.

"More banks have said they will go for category two than would be expected," said Walter Boss, a tax lawyer with Poledna Boss Kurer AG in Zurich.

Category three, reserved for banks that aim to prove their innocence, "won't be crowded, it looks like," he said.

Especially surprising perhaps is that a large majority of the publicly backed cantonal banks, which are regionally based and have long insisted they never went after US clients, have opted for category two.

Small banks could be forced out of business

All the banks rushing to the confession booth have not necessarily committed any misdeeds though, experts say.

A number of banks insist they have only had a few US clients and have never done anything to encourage tax evasion, but have chosen to initially join category two for fear that a single tax-dodging American, even unbeknownst to them, could land them in legal qualms.

"I think the fears in Switzerland are too big when it comes to the United States," said Peter Viktor Kunz, a business law professor at Bern University.

"I really hope that common sense prevails in the end," he said.

Switzerland's third-largest bank, Reiffeisen, and private bank Vontobel have for instance said they will opt for category three or four, reserved for local banks with no US clients at all, which should show some of the smaller banks with few US clients that the self-flagellating is unnecessary, Kunz said.

Banks in category two will face penalties equivalent to between 20 and 50 percent of the value of undeclared accounts, depending on when they were opened, not to mention towering legal and translation fees.

"Many of the smaller banks simply will not be able to afford this," Hornung said, cautioning that a number of banks might go belly-up.

He urged banks that had done nothing wrong to opt out of the programme altogether, insisting that Washington was not interested in hunting down the minnows in the pond.

Regardless of how many banks decide to sign up by the December 31st deadline, observers warned that the programme was unlikely to provide much immediate relief to a Swiss banking sector desperate to shake off the uncertainty that has been dogging it throughout the dispute with Washington.

Confusion over how the US programme will be implemented means "the uncertainty is still there for many," Kunz said, adding: "So no happy new year for them."

AFP/The Local (news@thelocal.ch)

Don't miss...X
Left Right

Your comments about this article

Today's headlines
Japan Novartis unit failed to report 'drug deaths'
Photo: Sebastien Bozon/AFP

Japan Novartis unit failed to report 'drug deaths'

The Japanese unit of Swiss pharma giant Novartis has admitted it did not report more than 2,500 cases of serious side effects in patients using its leukaemia and other cancer drugs, reportedly including some fatalities. READ  

Swiss health insurance premiums 'set to jump'
Federal Health Minister Alain Berset: set to release official figures later this month. Photo: Federal Assembly

Swiss health insurance premiums 'set to jump'

Swiss health insurance premiums are set to rise steeply overall next year, according to figures revealed by a Sunday newspaper. READ  

Presented by St Bernard Assure Limited
Car insurance made easy online with St Bernard
Photo: St Bernard Assure Limited

Car insurance made easy online with St Bernard

A new car insurance firm has ripped up the rule book when it comes to selling policies in Switzerland, by cutting out the middle-man and passing the savings onto their customers with its online only model. The Local finds out more. READ  

Bencic and Federer give Swiss double boost
Switzerland's Bencic celebrates at US Open. Photo: Mike Stobe/Getty Images North America/AFP

Bencic and Federer give Swiss double boost

Seventeen-year-old Belinda Bencic on Sunday became the youngest women's quarterfinalist at the US Open since 1997, giving Switzerland a double boost after Roger Federer moved into the last 16. READ  

Air show draws large crowds to Payerne
Patrouille Suisse in action. Photo: Matthias Kabel

Air show draws large crowds to Payerne

An estimated 160,000 people turned out for the opening weekend of Switzerland’s biggest air show at the Payerne military aerodrome in the canton of Vaud. READ  

Bolivian bus crash claims three Swiss lives
Route in the Uyuni region of Bolivia. Photo: Hermes Images/AFP

Bolivian bus crash claims three Swiss lives

A bus accident in Bolivia over the weekend claimed the lives of three Swiss citizens and at least six other people, according to press reports. READ  

Novartis heart drug billed 'blockbuster' after tests
Photo: Sebastien Bozon/AFP

Novartis heart drug billed 'blockbuster' after tests

An experimental drug from Swiss pharma giant Novartis reduced deaths from chronic heart failure by 20 percent compared with an existing treatment, according to the results of a vast new study. READ  

Kavcics's injury gives  Wawrinka US Open break
Wawrinka eases into fourth round. Photo: Don Emmert/AFP

Kavcics's injury gives Wawrinka US Open break

Switzerland's Stan Wawrinka reached the fourth round of the US Open tennis tournament by walkover on Saturday when Slovenian Blaz Kavcic withdrew from their third-round match with a right foot injury. READ  

Swiss baby dies after being left in parked car

Swiss baby dies after being left in parked car

A 16-month-old baby died in the canton of Neuchâtel after being forgotten by one of its parents who left the child behind in a company car park, a Swiss prosecutor said on Friday. READ  

Petkovic selects squad ahead of England game
Switzerland's Bosnian coach Vladimir Petkovic reveals his squad during a press conference. Photo: Fabrice Coffrini/AFP

Petkovic selects squad ahead of England game

Switzerland manager Vladimir Petkovic on Friday brought Olympiakos midfielder Pajtim Kasami back into the football team and called up three new faces for their opening Euro 2016 qualifier against England. READ  

RECEIVE OUR NEWSLETTER AND ALERTS
Sponsored Article
Car insurance made easy online with St Bernard
National
Zurich officials call project to move prostitutes to 'sex boxes' a success
National
Swiss gays recognized as parents of child born to surrogate mother
Health
Increase in mountain bike accidents keeps Swiss hospitals busy
National
Swiss policeman belatedly honoured for saving Jews from Holocaust
National
'Suicide tourists' to Switzerland double in three years: study
National
Swiss Post SMS scheme gets stamp of approval after pilot project
Business & Money
American tax evasion crackdown hits Swiss private banks' bottom line
Politics
Woman accuses Swiss politician in nude selfies scandal of lying
National
Villagers in Graubünden valley reject hydro plant to protect vultures
Business & Money
Court rules against appellation for absinthe from Neuchâtel valley
National
Two hundred passengers rescued after landslide derails Swiss train
Travel
Switzerland remains world champion for per capita train travel
Culture
Social media backlash forces Polanski to bow out of Locarno film festival
National
Two policemen identified among three Israelis killed in train crash
Features
Untouched Alps: The Local explores Switzerland's only national park
National
Swiss government secretary tweets nude ‘selfies’ taken at work
International
Swiss couples fined in Ibiza for making love in van without seatbelts
National
Schumacher medical record theft suspect hangs himself in Zurich cell
National
Thousands of motorists drive without permits in Switzerland: report
National
Switzerland celebrates the centennial of national park in Graubünden
National
Animal rights group protests over dead fish throwing at festival
National
Federer forced to tear down kids' play area at Graubünden holiday home
National
Zurich taxis charge world’s most expensive fares: new survey
Latest news from The Local in Austria

More news from Austria at thelocal.at

Latest news from The Local in Germany

More news from Germany at thelocal.de

Latest news from The Local in Denmark

More news from Denmark at thelocal.dk

Latest news from The Local in Spain

More news from Spain at thelocal.es

Latest news from The Local in France

More news from France at thelocal.fr

Latest news from The Local in Italy

More news from Italy at thelocal.it

Latest news from The Local in Norway

More news from Norway at thelocal.no

Latest news from The Local in Sweden

More news from Sweden at thelocal.se

1,985
jobs available