• 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
Neuchâtel votes no to foreigners running for office
Photo: kuhnmi/Flickr

Neuchâtel voted on Sunday against an initiative that would have made it the first Swiss canton to allow foreigners stand in cantonal elections.

Swiss voters say no to higher pensions
Photo: AFP

Swiss voters on Sunday rejected a plan to increase pension payments by ten percent.

Italians enraged by Ticino foreign worker vote
File picture of Lega Nord leader Roberto Maroni. Photo: AFP

The leader of Italy's Lega Nord is plotting "adequate counter-measures".

EU warns Swiss over vote to curb cross-border workers
Swiss President Johann Schneider-Ammann (R) and EC President Jean-Claude Juncker met in Zurich on September 19th to talk about the implementation of Swiss immigration restrictions. Photo: AFP

The EU warned Switzerland on Monday over a vote by one of its cantons backing curbs on migrants, an issue being closely watched in London as a possible template for Brexit negotiations.

Some deodorants could cause breast cancer: Swiss study
Twelve thousand women participated in a race against breast cancer in Le Mans, France, October 2014. Photo: AFP

The study suggests a link between aluminium salts and breast cancer.

Ticino votes to favour local workers over foreigners
Airolo in the Gotthard Pass. Photo: Dmitry A. Mottl

Voters in Ticino on Sunday strongly backed an initiative giving preference to local workers over foreigners.

France demands 45,000 Swiss accounts in tax hunt
Photo: AFP

France is tracking down UBS account holders.

Swiss back new law to allow phone and email tapping
A security camera keeps watch over proceedings in Davos: Photo: Johannes Eisele/AFP

Swiss voters approved a new surveillance law on Sunday, in a victory for the government.

Swiss politician argues against hijab in ID photos
The official guidelines should what ID photos allow. Photo: FedPol

Should the Islamic headscarf be banned in photographs for official Swiss documents?

Swiss driverless bus trial suspended after crash
Photo: PostBus

The pioneering self-driving bus was involved in a minor collision with a van.

Sponsored Article
7 tips for learning Swiss French
Photo: AFP
National
Geneva airport bomb hoaxer faces 90,000-franc bill
Photo: Schaffhausen police
National
Mother leaves toddler son alone in car to go clubbing
Photo: Fabrice Coffrini/AFP
Swiss populist attacked by knife-wielding pensioner
Sponsored Article
Why Jordan is the ‘Different’ East
Photo: File
Politics
Bern argues over passports for 3rd generation foreigners
Photo: Broad Bean Media
Education
Muslim pupils must shake hands – ‘no ifs and buts’
Photo: AFP
Society
Swiss ‘slave children’ to finally get compensation
Photo: Jan Geerk/Swiss-image.ch
Lifestyle
Zurich named ‘greenest’ city on the planet
Photo: Swiss
National
Brawl over seats forces Swiss to abort flight
Photo: Daniel Stockhammer
Culture
Research shows typical Swiss chalets ‘not actually Swiss’
Photo: AFP
National
Switzerland to get nationwide disaster alert system
Photo: S3
National
Swiss space firm boss left badly injured in violent attack
Photo: ETH Zurich
Education
ETH Zurich crowned best uni in continental Europe – again
File photo: Martin Abegglen
National
Report: Swiss citizenship rules leave some stateless
Photo: Fabrice Coffrini/AFP
National
Fatal crash: pilot told to fly below safe altitude
Photo: Peter Linke
Business & Money
Elderly Italian on benefits stashed €1m in Swiss bank
Photo: Stuart Richards
Society
Court sides with chickens in dispute over noisy henhouse
Photo: SAC
Lifestyle
Hiking: 7 incredible Swiss Alpine Club cabins
Photo: David Abercrombie
National
Swiss politician arrested over illegal entry of migrants
Photo: Coiffure X
National
Chewbacca stolen in ‘terrorist attack’ on Swiss hair salon
Photo: AFP
National
Foreigners in Switzerland surpass 2 million mark
Photo: AFP
National
Expert predicts major quake for Switzerland by 2040
Photo: The Local
National
Geneva runs out of permits for non-EU workers
Photo:C Carlstead
National
Geneva advises teachers on religion in school
4,287
jobs available