Will Swiss banks sink or swim without government help?

The government has been clear, Swiss banks are on their own navigating offshore account requirements.

Jeffrey S. Freeman, J.D., LL.M

shutterstock_97580711Swiss banks were hoping that their officials would aid them in navigating new territory with the U.S. Justice Department as they seek non-prosecution agreements in exchange for client information. This Voluntary Disclosure program would offer protection for the bank from legal action if all requirements are met. But the Swiss officials has been clear to Swiss banks – Swiss banks are on their own if they want to participate in the program or stand on their own to face legal action from the U.S. government.

The reputation of Swiss banks has been severely tarnished in the past several years, especially after the government bailout of UBS AG, the largest bank in Switzerland. Following a brutal series of U.S. criminal investigations and indictments for aiding in tax evasion, the once touted secrecy of Swiss Banks has been shattered.

Swiss officials have meet with the Justice Department officials, but are not providing recommendations to individual banks on participation in the program. The Swiss government was involved in the negotiating of the program, which was unveiled in 2013.

So what have the banks been asked to provide?

The U.S. Justice Department program requires that banks that choose to participate, must hand over data on hidden American accounts and in exchange they will receive a non-prosecution agreements. A draft of the non-prosecution agreement sent out by the Justice Department states that banks would also be required to open their books to other foreign authorities probing hidden accounts.

Which foreign authorities? You guess is as good as ours. This vagueness may be part of the reason why the Swiss Government is allowing the Swiss banks to determine their own path. Maybe they aren’t leaving them to sink, but giving them the opportunity to prove if they can swim.

The recent push from the U.S. government to gather information about U.S. account holders hiding money in off-shore accounts has caused waves around the world. Switzerland has been hit hard, but Americans are feeling the pains as well. With the U.S. Justice Department looking to reach further into the Swiss Bank books, Americans with unpaid taxes on foreign accounts should rush to come forward. As hard as they are pushing with the banks, one can be sure that they have a plan of attack with the client information they so desperately seek.

So don’t cry for the Swiss Banks, they may choose to follow the path of 106 Swiss Banks and sign up for the Voluntary Disclosure Program or they may not. One things is clear, the decision is all their own.

About Freeman Tax Law

Freeman Tax Law (FTL) is a boutique law firm consisting of a multi-disciplinary team of tax professionals including tax attorneys, CPAs and a professional staff that have vast experience with foreign tax compliance and regulatory matters for financial institutions. FTL consults with both FFIs and USFIs with regard to Foreign Account Tax Compliance Act (FATCA) and related regulatory matters and assists them developing procedures on how to comply with these laws.

Compliance with FATCA needs a distinctive approach. A simple change of processes or leveraging new IT infrastructure may not suffice. FTL has partnered with Newgen Software (Newgen) to offer a unique end to end solution for our clients to offer a comprehensive compliance strategy. Newgen buildings on two decades of domain expertise in Banking and Compliance along with its market leading BPM, Case Management, ECM and CCM applications. Utilizing Newgen’s FATCA Compliance Software along with the creation of proper procedures and training offered by FTL of the financial organization staff, allows for the creation of systematized approach to negotiating the finer aspects of FATCA.

With FATCA, the stakes of non-compliance are simply too high. Contact us today for a consultation to discuss how to further integrate your technology with the legal requirements of FATCA.

Freeman Tax Law

(855) 935-5945

[email protected]