• 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

Swiss banks are scrambling ahead of a December 31st deadline to decide whether to join a US programme aimed at zooming in on lenders that helped Americans dodge taxes.

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
Mega diamond to be auctioned in Geneva
A Sotheby's employee poses for pictures with the "Graff Vivid Yellow," at 100.09 carats one of the rarest yellow diamonds of its size. AFP Photo/Andrew Cowie

Mega diamond to be auctioned in Geneva

One of the world's largest yellow diamonds will go under the hammer in Geneva next month, with the Sotheby's auction house hoping to rake in up to $25 million for the gem. READ () »

Activist jailed for six years in Vasella case
Former Novartis chairman Daniel Vasella. Photo AFP/File

Activist jailed for six years in Vasella case

A British animal rights activist was jailed for six years on Thursday for her part in a Europe-wide campaign of intimidation targeting Huntington Life Sciences, an animal testing company linked to Swiss pharma giant Novartis. READ () »

Zoo faces cruelty charges over cub deaths
Kurt Nünlist was appalled by the deaths of two cubs at the Bern zoo (photo:zvg)

Zoo faces cruelty charges over cub deaths

A Swiss animal lover has filed a legal complaint against Bern zoo, accusing it of cruelty over the deaths of two bear cubs. Dählhölzli zoo could be fined under Switzerland’s tough animal protection laws. READ () »

Germans smuggle cash out of Switzerland
Customs officials found €573 million in illegal money in 2013. Photo: Emilian Robert Vicol

Germans smuggle cash out of Switzerland

The number of Germans smuggling money out of Switzerland rose dramatically last year. Customs officers on the German-Swiss border said on Thursday they made a find in almost every third car they checked. READ () »

Experts challenge e-cigarettes study
Photo: Denis Charlet / AFP

Experts challenge e-cigarettes study

Two Swiss medical organisations have rejected calls to overturn the ban on sales of electronic cigarettes in Switzerland. READ () »

Bern approves solution for Erasmus students
Students intending to go on an Erasmus exchange in 2014-15 will now be able to. Photo: Jirka Matousek

Bern approves solution for Erasmus students

Following the suspension of Switzerland's participation in the Erasmus student exchange programme, on Wednesday the federal government approved plans for a 23 million franc ($26 million) interim solution. READ () »

Kerry bound for Geneva talks on Ukraine crisis
US Secretary of State John Kerry in Geneva last year. Photo: Pool/AFP

Kerry bound for Geneva talks on Ukraine crisis

US Secretary of State John Kerry left on Wednesday for Geneva for high-stakes talks on Ukraine, armed with the threat of more sanctions against Moscow if diplomacy fails, as tensions on the ground escalated sharply. READ () »

Credit Suisse investment bank woes hurt profits
Credit Suisse offices in Zurich. Photo: Credit Suisse

Credit Suisse investment bank woes hurt profits

Swiss banking giant Credit Suisse said on Wednesday that its first quarter net profit took a heavy hit as its investment bank reeled from slumping trading in bonds. READ () »

Ski champion announces same-sex marriage
Sylviane Berthod (right in each of the photos) and her partner. Photos: Facebook

Ski champion announces same-sex marriage

Former Swiss alpine ski champion Sylviane Berthod has announced her engagement to marry another woman in a public way — on her Facebook page. READ () »

UK blocks Swiss deal with EU on Croatia
EU headquarters in Brussels. Photo: Dominique Faget/AFP

UK blocks Swiss deal with EU on Croatia

The UK has scuppered, at least temporarily, an agreement in principle between Bern and Brussels over the free movement of people between Switzerland and Croatia, the Swiss broadcaster RTS says. READ () »

RECEIVE OUR NEWSLETTER AND ALERTS
Features
Former industrial zone transforms into Zurich’s trendiest spot
Tech
Swiss Solar Impulse team shows off new fuel-free aircraft
International
Suspect in Liechtenstein bank CEO murder case 'likely dead'
Sponsored Article
Caveman comedy comes to Zurich in English
Society
Innovative building provides refuge for hypersensitive tenants
Tech
VIDEO: Teenage boy sends Swiss army knife into stratosphere
International
Switzerland ranks second in world for social progress: report
National
Pharrell Williams set to perform in first Montreux jazzfest concert
Sport
American wingsuit flyer dies after Bernese Oberland accident
Business & Money
H&M plans hefty Swiss minimum wage for employees by 2015
International
Caterpillar accused by US senator of dodging taxes through 'Swiss plan'
International
Geneva man in Facebook page fight with Italian carmaker Ferrari
Advertisement:
International
Schumacher’s wife pays for 'medical suite' at Swiss family mansion
International
Aborted Swiss airlines take-off injures four at London airport
International
Swiss refuse asylum request from topless protest group founder
Business & Money
British expat former banker to head Swiss finance regulator FINMA
National
Swiss honey contains harmful plastic: TV consumer affairs report
Business & Money
Luxury watchmaker Patek Philippe threatens Geneva exit over taxes
Business & Money
World's largest watch fair opens in Basel amid uncertain times
International
'Fergie' credits hikes around Verbier mountains for recent weight loss
Etoiles de Montagne
Sponsored Article
How to summer holiday up a Swiss mountain
Swissbenefits
Sponsored Article
How to avoid Switzerland’s tax haven trap
International
Switzerland's residents are the happiest in the OECD: report
International
Swiss voters support bid to establish lofty minimum wage: poll
National
Switzerland's largest cities set to back regulated 'cannabis clubs'
Business & Money
Franc surges against other currencies on rising Ukraine concerns
Latest news from The Local in Germany

More news from Germany at thelocal.de

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

2,092
jobs available