December 20, 2013
Increasing Number of Swiss Cantonal Banks Voluntarily Join U.S. Disclosure Program
Since UBS agreed to a $780 million penalty by U.S. authorities, the United States has been attempting to convince other Swiss banks to voluntarily aid the American government in finding its tax evaders. By using UBS as an example, the help of an agreement with the Swiss government, and a disclosure program, it seems that the United States is well on its way into cracking the armor that is the legendary Swiss bank secrecy laws.
On Monday, 12 cantonal banks agreed to join the disclosure program. Swiss cantons are similar to U.S. States, and each canton has at least one publicly backed bank associated with it. These additions are on top of those cantonal banks that have already acceded to disclose financial data via the program. The disclosure program requires that the banks hand over information regarding American clients except for their names. In return, banks may be able to avoid prosecution, which could lead to massive fines. However, banks would still be subject to fines as high as 50% of the total assets held by Americans in their banks so there is no escaping some punitive sanctions. Banks are further required to indicate what category (1 to 4) they are volunteering information under, with 1 being certain that American clients have evaded U.S. taxes and 4 being little to no American clientele and no knowledge of tax evasion.
Eight of the cantonal banks that stated they would participate in the disclosure program indicated that they would fall under category 2. This means they may be able to avoid prosecution if any of their clients do end up being charged with tax evasion. Switzerland is divided on whether this is a necessary aspect of globalization or whether this is a breach of their sovereignty by a foreign nation. Either way, it seems that the United States is beginning to gain traction in its attempts to reign in the infamous bank secrecy laws of the Swiss Confederation.