Swiss Banks to Hand Over Names of U.S. Tax Evaders
Swiss banks will likely pay billions of dollars to the U.S. government and hand over the names of thousands of Americans keeping secret accounts in order to settle a sweeping probe into offshore tax evasion.
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According to inside sources, U.S. and Swiss officials are reportedly concluding negotiations on a civil settlement as the U.S. continues its criminal investigations into 11 financial institutions, including Credit Suisse (NYSE:CS), that are suspected of helping American clients hide money from the IRS. Switzerland wants to end the U.S. probes without sacrificing its tradition of bank secrecy. The U.S. is seeking information on Americans who have dodged paying taxes and a pledge by Swiss banks to no longer help such clients. Earlier this year, the Swiss reached accords with Germany and the U.K. on untaxed assets.
The Swiss government hopes to have an outline of a final accord for the Foreign Affairs Committee of its Parliament’s upper house by November 10, according to one insider. The number of banks paying to resolve the U.S. probe may extend beyond the 11 currently under criminal investigation. “We are aiming for an all-encompassing solution that will apply to all the banks,” said Finance Minister Eveline Widmer-Schlumpf in an October 4 interview in the Swiss capital Bern. “We don’t want to be confronted with the same issues time and again.”
Under the accords with Germany and the U.K., Swiss banks were able to keep the identities of their clients a secret, but the U.S. government is more concerned with making sure Americans are held accountable and wants more than a payoff from Swiss banks. The U.S. is insisting that the Swiss disclose client account data, and they may hand over data on 5,000 to 10,000 accounts.
The U.S. Department of Justice may still bring criminal charges or civil enforcement actions against any of the 11 financial institutions. They could avoid prosecution by separately paying fines, admitting wrongdoing, and disclosing the requested data.
The group of 11 includes HSBC Holdings (NYSE:HBC), Basler Kantonalbank, Wegelin & Co., Zuercher Kantonalbank, and Julius Baer Gruppe, as well as three Israeli banks — Bank Leumi Le-Israel BM, Bank Hapoalim BM, and Mizrahi-Tefahot Bank. Also on the list are Liechtensteinische Landesbank AG, asset manager NZB AG, and of course, Credit Suisse.