DOJ and Swiss Federal Department of Finance Reach Agreement
In late August 2013, as part of its continuing crackdown on U.S. tax evaders, the Department of Justice (“DOJ”) announced an agreement with the Swiss Federal Department of Finance. While the Swiss Department of Finance cannot force Swiss banks to participate in the new DOJ program, it will encourage them to do so.
“This program will significantly enhance the Justice Department’s ongoing efforts to aggressively pursue those who attempt to evade the law by hiding their assets outside of the United States,” said Attorney General Eric Holder. “In addition to strengthening our partnership with the Swiss government, the program’s requirement that Swiss banks provide detailed account information will improve our ability to bring tax dollars back to the U.S. treasury from across the globe.”
The program will only be available to banks that are not currently under criminal investigation by the DOJ.
The Program Participants
Those that choose to take part must:
Agree to pay substantial penalties;
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; and
Agree to close accounts of account holders who fail to come into compliance with U.S. reporting obligations.
Banks that join the program and agree to its conditions will be eligible for non-prosecution agreements. Those that are currently under criminal investigation are excluded from participation.
Participating banks must pay a penalty equal to 20 percent of the maximum aggregate dollar value of all non-disclosed U.S. accounts held by them on August 1, 2008. The penalty increases to 30 percent for secret accounts opened between that date and the end of February 2009, and to 50 percent for accounts opened after that date.
Banks not engaged in wrongful acts that can produce an internal investigation report prepared by an independent examiner, and banks that can show they meet criteria for deemed-compliance under the Foreign Account Tax Compliance Act (FATCA), will be eligible to receive non-target letters from the DOJ.
It will be interesting to see how many banks choose to provide the information required, and pay the stiff penalties imposed.
Everyone is familiar with secret Swiss bank accounts; they’ve been key plot elements in countless novels and films for many decades. Until recently, the Swiss government has fiercely protected bank secrecy. It appears that a change in attitude is signaled by this agreement.
Switzerland isn’t the only nation to take steps toward greater transparency. Central American countries have also been making more information available to U.S. authorities; a few months ago Panama passed a law that will require the holders of nominee accounts to identify themselves beginning in 2015.
It seems that would-be evaders will have to scramble to find new tax havens.
For further information about this securities law blog post, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202 N, Boca Raton, Florida, (561) 416-8956, by email at [email protected] or visit www.securitieslawyer101.com. This securities law blog post is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute, legal and compliance advice on any specific matter, nor does this message create an attorney-client relationship. Please note that the prior results discussed herein do not guarantee similar outcomes.
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