Swiss Government Agrees to Landmark Deal to Punish Banks that Help American Tax Evaders

Saturday, August 31, 2013

The government of Switzerland has agreed to work with the United States in its efforts to crackdown on American tax cheats using overseas accounts to hide their money.

 

Under an agreement announced by the U.S. Department of Justice, Swiss banks will be encouraged to cooperate with investigations of Americans who have avoided paying taxes on income stashed in foreign institutions.

 

“This program will significantly enhance the Justice Department's ongoing efforts to aggressively pursue those who attempt to evade the law by hiding their assets outside of the United States,” Attorney General Eric Holder said in a prepared statement. “In addition to strengthening our partnership with the Swiss government, the program’s requirement that Swiss banks provide detailed account information will improve our ability to bring tax dollars back to the U.S. treasury from across the globe.”

 

Only Swiss banks not currently under criminal investigation by the Justice Department will be eligible to participate in the program.

 

Currently, 14 Swiss banks and Swiss branches of international banks, including Credit Suisse and Julius Bär, are being investigated by U.S. prosecutors for aiding American tax cheats.

 

The rest of the Swiss banking industry can avoid being probed by the Justice Department if they agree to pay substantial penalties; disclose all of their cross-border activities; provide detailed information on an account-by-account basis for accounts in which U.S. taxpayers have a direct or indirect interest; cooperate in treaty requests for account information; provide detailed information as to other banks that transferred funds into secret accounts or that accepted funds when secret accounts were closed; and agree to close accounts of account holders who fail to come into compliance with U.S. reporting obligations.

 

The New York Times reported that the Obama administration was upset that some Swiss banks accepted clients who were fleeing UBS, the largest Swiss bank, back in 2009, when it avoided indictment by reaching a $780 million deferred prosecution agreement.

-Noel Brinkerhoff

 

To Learn More:

United States and Switzerland Issue Joint Statement Regarding Tax Evasion    Investigations (U.S. Department of Justice)

Swiss Agree on Penalties for Banks That Aided Tax Cheats (by Lynnley Browning, New York Times)

U.S. Charges Swiss Bank with Tax Fraud for First Time (by Noel Brinkerhoff and David Wallechinsky. AllGov)

UBS Still Popular with Both Obama and Republicans after Paying More Than $1 Billion in Fines (by Noel Brinkerhoff, AllGov)

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