Swiss banks face fines for US tax dodgers

New York

Around a hundred Swiss banks could face significant penalties under a tax accord between the US and Swiss governments that will give lenders in Switzerland an opportunity to resolve an international dispute over tax evasion by rich Americans.

The deal, which applies to second-tier Swiss banks, marks significant progress for US authorities which have been pursuing Americans whom, they allege, sought to evade their tax liabilities by resorting to the services of lenders in the country known for the secrecy of its banking system.

Under the agreement, the banks will have the opportunity to pay fines or defer prosecution over allegations of tax evasion by their US clients.

By participating in the scheme, the banks will have to declare details of their cross-border businesses.

Switzerland will encourage lenders to participate in a bid to put the long-standing dispute to rest.

The programme will not be open to the big "category 1" banks that are currently under investigation said the US Department of Justice, which forced UBS to pay nearly $800m (£517) in fines connected to allegations of helping American clients evade tax in 2009.

More recently, Switzerland's oldest bank, Wegelin & Co, established in the 1700s, said in January that it was closing after pleading guilty to helping US citizens evade taxes.

"This programme 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 addition to strengthening our partnership with the Swiss government, the programme's requirement that Swiss banks provide detailed account information will improve our ability to bring tax dollars back to the US treasury from across the globe."

The programme also requires banks to provide information about "other banks that transferred funds in secret accounts or that accepted funds when secret accounts", which could lead to information about banks not in the scheme. Participating lenders would also have to agree to close the accounts of individuals who do not comply with US tax-reporting norms.

The potential penalties could be steep. The Justice Department said that banks seeing a non-prosecution agreement would have to cough up fines equal to 20 per cent of the "maximum aggregate dollar value of all non-disclosed US accounts" held at the bank at the beginning of August 2008. For accounts that were opened after that date but before the end of February 2009, the fine will rise to 30 per cent. Any accounts opened after February 2009 will attract penalties of 50 per cent.

USB whistleblower

Perhaps none of the recent wave of Swiss-banking secrecy deals would have happened without Bradley Birkenfeld. He was the UBS wealth manager who blew the whistle on how people like him helped clients evade US taxes by stuffing toothpaste tubes full of diamonds, buying and moving art and jewellery and generally breaking US laws with the encouragement of his seniors. He was jailed for two and a half years before being paid $104m (£67m) by the US Internal Revenue Service in recognition for his services.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
News
i100
Life and Style
food + drinkClue: You'll either love them or you'll hate them
News
Howard Marks has been diagnosed with inoperable cancer, he has announced
people
News
newsIf you're India's Narendra Modi, it seems the answer is a pinstripe suit emblazoned with your own name
News
peopleWarning - contains a lot of swearing
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Client Services Manager - Relationship Management - London

£30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...

Recruitment Genius: Credit Controller / Customer Service

£18000 - £20000 per annum: Recruitment Genius: This rapidly expanding business...

Guru Careers: In-House / Internal Recruiter

£25 - 28k + Bonus: Guru Careers: An In-house / Internal Recruiter is needed to...

Recruitment Genius: Tax Assistant

Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...

Day In a Page

Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

The enemy within

People who hear voices in their heads are being encouraged to talk back
'In Auschwitz you got used to anything'

'In Auschwitz you got used to anything'

Survivors of the Nazi concentration camp remember its horror, 70 years on
Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

Autumn/winter menswear 2015

The uniforms that make up modern life come to the fore
'I'm gay, and plan to fight military homophobia'

'I'm gay, and plan to fight military homophobia'

Army general planning to come out
Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea
America: Land of the free, home of the political dynasty

America: Land of the free, home of the political dynasty

These days in the US things are pretty much stuck where they are, both in politics and society at large, says Rupert Cornwell
A graphic history of US civil rights – in comic book form

A graphic history of US civil rights – in comic book form

A veteran of the Fifties campaigns is inspiring a new generation of activists
Winston Churchill: the enigma of a British hero

Winston Churchill: the enigma of a British hero

A C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
Growing mussels: Precious freshwater shellfish are thriving in a unique green project

Growing mussels

Precious freshwater shellfish are thriving in a unique green project