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article imageUS Government and Swiss Bank Program

By Keegan Valladares     Dec 23, 2013 in Business
Swiss banks are continuing to decide whether to join the US program which aims to expose American citizens who have avoided tax implications.
Washington alleges that Swiss banks have allowed wealthy US citizens to evade billions in tax obligations. Switzerland is the world’s largest offshore finance center holding over $2 trillion in assets.
In 2008 a criminal investigation against Swiss banking giant UBS resulted in the bank paying $780 million and disclosing the previously secret information of roughly 4500 US account holders. This was the beginning of a five year crackdown by the US government on Swiss banks and wealthy Americans to claim withheld tax.
The program involves banks either nominating themselves into one of four categories or the US mandating a category for a given bank. Switzerland’s largest banks, such as Credit Suisse, Julius Baer and Pictet & Cie have been nominated as Category 1 banks. This means they are excluded from the program and will be prosecuted by the US Department of Justice, tax division. Fourteen banks fall under this category. However most of the other 300 plus Swiss banks have been given the option of volunteering themselves as a Category 2, 3 or 4 banks.
Banks in Category 2 have cause to believe they have committed tax offences. By nominating themselves in this category and essentially coming clean they will receive a non-prosecution agreement, however will still be faced with fines.
Category 3 and 4 banks have deemed themselves not to have engaged in criminal conduct and have abided by US tax laws. Thus they will not face any fines.
If banks do not sign up to the program they potentially face financial penalties as well as criminal prosecution of the firm itself and senior staff.
Switzerland’s financial regulator has encouraged banks under investigation by the US to set aside hundreds of millions of dollars to account for the potential penalties. The deadline for banks to decide on joining the program is December 31.
More about Swiss bank accounts, Swiss banks, us tax program, us tax deal, Us government
 
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