Secrecy of Swiss Bank Accounts to be Lifted

Last updated on May 20, 2022

With the governments of many countries aiming to clamp down on tax evasion, Swiss banks have little choice but to yield to the pressure. Switzerland is about to enter into a deal with U.S. authorities over Swiss banks accused of helping Americans hide billions of dollars of unaccounted money.

To stop further this type of assistance, Swiss banks will pay heavy fines if found helping Americans hide unaccounted money from the Treasury, as well as transfer the details of these clients to the U.S. authorities.

The Chicago Tribune elaborates, “The Swiss government has been in protracted talks to end U.S. investigations into Swiss banks, including Credit Suisse and Julius Baer, in return for expected heavy fines and a transfer of client names.

Bern said last month it was considering a possible solution to the U.S. probes, but declined to give further details as negotiations were still continuing.

A source familiar with the negotiations told Reuters that the two sides had agreed on an outline for a deal that would divide more than 300 Swiss banks according to the extent they had helped U.S. clients hide money, to determine how they are dealt with.

Under the outlined deal, banks already under investigation would settle with individual deferred prosecution agreements, the source said. Credit Suisse has already made a 295 million Swiss franc ($303 million) provision towards a settlement.

A second group of banks, which had U.S. clients but have yet to been targeted by investigators, would have to agree to pay fines and hand over requested data on their customers, the source said.

The country’s biggest bank, UBS was forced in 2009 to pay a fine of $780 million and hand over the names of more than 4,000 clients, delivering the U.S. authorities information that allowed them to pursue other Swiss banks.

Switzerland’s oldest private bank, Wegelin & Co, said in January it was closing down after pleading guilty to helping Americans evade taxes, paying a fine of nearly $58 million.”

The deal will result in recovering billions of dollars in taxes. After the banks surrender the data to the U.S. authorities, they will take appropriate action to punish the evaders. Under the law, punishment for tax evasion is heavy penalties and/or imprisonment. Finance Minister Widmer-Schlumpf said that “the automatic exchange of information can’t be stopped.”

The wealthy that had been evading taxes for years will not only be forced to comply with the country’s tax laws, but will also be paying a heavy penalty for tax evasion. This step by the U.S. authorities is another major initiative along with Foreign Account Tax Compliance Act (FATCA) to bring down tax evasion.