HOW A LEADING SWISS BANK COMPROMISED ITS CLIENT

It was designed to allow those banks that were not already under active criminal investigation to own up to their offences and avoid potentially ruinous US courts cases. In essence, it was a diplomatic plea bargain compromise to stave off the threat of another Wegelin. The scheme focused on US accounts held from August 1, After this date, banks would reasonably be expected to know the US stance on tax evasion following the criminal action begun against UBS.

Any bank that retained US tax dodgers after this date, or worse still, poached accounts from other banks, could expect the DoJ to take action. Category 1 banks were those under active prosecution before the deal was signed more on that later.

Category 3 banks declared that while they held US accounts, they were satisfied that they were tax compliant. Category 4 was reserved for Swiss banks with no US involvement. It depends on how you look at it. The DoJ has certainly trumpeted the result as a resounding success. The following content is sourced from external partners. We cannot guarantee that it is suitable for the visually or hearing impaired.

How Switzerland sells itself

The penalties equate to 2. There may be people on the US side who see that as a poor return. In addition, banks have had to pay millions to lawyers and accountants to comply with the programme. But numbers alone do not tell the whole story. The DoJ also published lurid details of banking activities with each agreement. These included the opening of sham companies and trusts to hide identities and bank staff secretly handing over cash and gold bullion to clients.

This is bound to have an adverse impact on the reputation of these institutions. Swiss banks are engaging in a game of cat-and-mouse by positioning themselves to the best advantage in a United States tax evasion scheme that Finally, the Swiss Bank Program played a part in dismantling Swiss banking secrecy.

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From July 1, , Swiss banks have been forced to tell the US authorities about every US citizen that opens an account with them. We still have to deal with categories 1, 3 and 4. By definition, those 26 banks enrolled in the latter two categories have done nothing wrong. But several of the banks that initially registered in the Swiss Bank Program by the end of later changed their status.

That means that some banks changed their status from Category 2 to the less onerous 3 or 4. But there could potentially be trouble for any bank that wrongly registered as 3 or 4, according to the DoJ definition of guilt.

In Switzerland is due to start swapping information with 38 foreign tax authorities, including all European Union countries, and with a further 41 from The proposed clause would apply to the batch of countries, among which are several emerging markets such as Brazil, Mexico and Russia.

The Swiss government will send to parliament a dispatch, which contains its proposals on the exchange of information with these 41 countries, by July 5. Parliament will then be asked to decide on the implementation of these plans. Mirabaud expressed confidence the government supports the clause, despite lobbyists for transparency saying it is a back-door attempt to continue bank secrecy rather than a genuine move to prevent criminality or persecution.

A spokeswoman for the State Secretariat for International Financial Matters, an arm of the finance ministry, signaled the government would consider halting transfers of information. Campaigners against secrecy are crying foul, however, and accuse the Swiss of trying to allow the wealthy to keep cash hidden. Pressure on Switzerland built after a U.

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Data from the Swiss National Bank shows a sharp decline in U. In the meantime, the size of deposits from many emerging market countries has gradually increased. Mark Herkenrath of Alliance Sud, a group that campaigns for transparency, is skeptical about the true motivation.