Swiss Banks Reveal Their Secrets to Helping Wealthy Americans Evade Taxes
Over 40 Swiss Banks have signed amnesty agreements this year with the U.S. Justice Department that required disclosing the tricks they used to help customers hide assets, as well as provide the names of any bankers and middlemen who aided them with the flow of untaxed money. The banks have also persuaded thousands of Americans to disclose accounts hidden from the Internal Revenue Service. The information gathered is now provided U.S.investigators with intelligence to build cases against individuals and corporations in other countries. Potential targets identified so far are financial institutions in Singapore and Israel.
Under the program, banks are required to:
- Make a complete disclosure of their cross-border activities;
- Provide detailed information on an account-by-account basis for accounts in which U.S. taxpayers have a direct or indirect interest;
- Cooperate in treaty requests for account information;
- Provide detailed information as to other banks that transferred funds into secret
accounts or that accepted funds when secret accounts were closed; - Agree to close accounts of accountholders who fail to come into compliance with
U.S. reporting obligations; and - Pay appropriate penalties.
The Swiss amnesty program began as part of a severe measure to discourage tax evasion following Switzerland’s largest bank, UBS Group AG, paying $780 million in 2009 to avoid prosecution. The United States also began conducting criminal investigations of other Swiss banks at that time. To strengthen its approach, the U.S. offered in 2013 that it would not prosecute any Swiss bank that come forward on tax-evasion tactics. So far, over 40 banks have paid combined penalties of more than $355 million. The amounts per bank vary greatly, depending on the number of U.S. accounts held at each financial institution. Another factor impacting the amount of the penalty is whether the bank has been successful in getting its clients to reveal other secret accounts and which firms helped them with the accounts. The more people come forward, the less the bank has to pay in penalty fines.
The idea for identifying other jurisdictions for participating in non-prosecution agreements came from direct communications with the Swiss banks, some of which admitted to transferring assets of U.S. customers to Hong Kong, Israel, Lebanon and Cyprus in an attempt to further escape detection.
For a list of all Swiss banks who have thus come forward, visit the United States Department of Justice web page.