• Switzerland's news in English
 
app_header_v3

40 Swiss banks agree to reveal hidden accounts

AFP/The Local · 23 Dec 2013, 09:01

Published: 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.

Story continues below…

"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)

Your comments about this article

Today's headlines
Drone shocks nudists at Swiss waterpark
Photo: Marcel Chassot/Bernaqua

Clients at a Bern waterpark were horrified to spot a drone hovering over a nudist area.

Kidnapping of Swiss boy raises online gaming fears
File photo: Rachel Johnson

A 12-year-old Swiss boy was allegedly abused by a German man he first met online.

Study: Swiss among world’s most socially progressive
Photo: Janek Skarzynkski/AFP

Switzerland is one of the world’s most socially progressive countries, according to a new report.

Escaped Swiss cow loses holiday rights
Ilana the cow spent ten days on the loose before being recaptured. Photo: Graubünden police

There will be no summer holiday for Ilana the Highland cow.

Swiss giant Nestlé bucks history with new top dog
Schneider, 50, is a German-US national. Photo: Daniel Roland/AFP

The appointment of new CEO Ulf Mark Schneider marks a new, nutrition-focused era for Nestlé.

Signs lay down law and order for Basel prostitutes
Photo: Justice and Security Department, Basel

New signs in Basel’s red light district will show streetwalkers where they may legally tout for business.

Muslim school kids must swim to be Swiss
Swimming lessons are compulsory in Basel's education system. Photo: Daniel Orth

Two Muslim teenage girls were denied a Swiss passport because they refused to participate in school swimming lessons on religious grounds.

Opinion
Brexit voters ‘misinformed’ on Swiss relations with EU
The Swiss president meets with European leaders on the first Gotthard train. Photo: Ruben Sprich/AFP

Leave campaigners calling for Britain to be like Switzerland did not truly understand Switzerland’s relationship with the EU, one commentator tells The Local.

France demands Swiss bank UBS face fraud trial
File photo: Martin Abegglen

The bank is accused of orchestrating a vast system of tax fraud in France.

Wimbledon
Federer wins uninspired Wimbledon opener
File photo: Miguel Medina/AFP

Roger Federer was well short of his best as he advanced to the second round.

Sponsored Article
Education abroad: How to find an international school
File photo: Kochtopf
National
Anger as Swiss council plans non-pork school lunches
File photo: Jen/Flickr
Society
Geneva to get 'café fellatio' by end of year
Features
How Switzerland's scenery inspired some of the world's greatest authors
Sponsored Article
Why you should attend an international job fair
Photo: Fabrice Coffrini/AFP
National
A guaranteed basic income: why did the Swiss say no?
Photo: Andreas Gerth/Swiss-Image.ch
Features
Switzerland’s breathtaking Unesco World Heritage sites
Photo: Nestle
Culture
Nestlé celebrates 150 years with museum openings
Photo: Jan Geerk/Swiss-image.ch
National
Report: Swiss are officially ‘good’ for the planet
Sponsored Article
Why Swiss hospitality graduates are in demand
Photo: Fabrice Coffrini/AFP
National
World agog at bizarre Gotthard Base Tunnel opening
Photo: Coop
Swiss supermarkets look to scrap free plastic bags
Photo: IMD
Business & Money
Report: Swiss economy more competitive than US
Photo: Aargau police
National
Murderer escapes from Swiss psych hospital
Photo: Grande-Dixence SA/essencedesign.com
Features
8 fantastic reasons to visit French-speaking Switzerland
Photo: Terroir Fribourg
Lifestyle
Swiss village to make world’s biggest meringue
Sponsored Article
Avoid hidden fees when sending money overseas
Photo: Swiss Tourism
Features
10 unspoken rules for fitting in with the Swiss
Photo: Alp Transit Gotthard
National
Gotthard base tunnel: what you need to know
Photo: Caroline Bishop
Sport
Swiss cantons team up to vie for winter Olympic games
Photo: Broad Bean Media
National
Basel: Muslim schoolboys must shake hands or face fine
Photo: Emmanual Dunand/AFP
Sport
Brother of Belgian bomber wins gold in Switzerland
Photo: Gstaad Tourism
National
Snow puts end to hottest weekend of year so far
File photo: Abhishek Jacob
Lifestyle
Swiss court vetoes wedding of couple with 50-year age gap
Photo: Filippo Monteforte/AFP
Culture
Dog day afternoon: Swiss saint meets Pope in Rome
4,644
jobs available