U.S., Switzerland strike bank deal over tax evasion

Fri Aug 30, 2013 6:28am EDT
 
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By Patrick Temple-West and Katharina Bart

WASHINGTON/BERN (Reuters) - The United States and Switzerland have struck a deal to allow some Swiss banks to pay fines to avoid or defer prosecution over tax evasion by their U.S. customers, moving closer towards ending a long-running dispute.

The deal will apply to about 100 second-tier Swiss banks, which could have to disclose some previously hidden information and face penalties of up to 50 percent of assets they managed on behalf of wealthy Americans.

But it does not cover banks already under U.S. criminal investigation, which include some of Switzerland's biggest banks such as Credit Suisse and Julius Baer.

The deal is a step forward in a long-running U.S. drive to pierce the shroud of Swiss bank secrecy, though analysts said it was too early to say how much the Swiss banks would have to pay or how much extra revenue would flow to the United States.

"On the whole it's a pretty strong agreement," said Heather Lowe, director of government affairs at anti-graft watchdog Global Financial Integrity, though she said there were "gaps", such as whether banks could settle without turning over U.S. client names. "That is definitely one open question here."

Swiss privacy laws have helped to make the Alpine country the world's biggest offshore financial center. But a crackdown on tax evasion by U.S. authorities in particular had led it to the negotiating table in a bid to lift the uncertainty over potential fines and even indictments for its banks.

UBS, Switzerland's biggest bank, reached a landmark $780 million settlement with U.S. authorities in 2009 after admitting it sheltered U.S. tax cheats, providing information that has contributed to a criminal investigation currently focused on 14 other banks.

Switzerland's oldest bank, Wegelin & Co, was indicted earlier this year and announced its closure, underscoring the risks for Swiss financial institutions.   Continued...

 
Swiss Finance Minister Eveline Widmer-Schlumpf speaks to media next to Swiss Secretary of State and government negotiator Michael Ambuehl during a news conference in Bern August 30, 2013. REUTERS/Ruben Sprich