Switzerland’s Federal Council on August 28 directed the Department of Finance to finalize a joint statement with the United States Department of Justice that would acknowledge that some Swiss banks can agree to be a party to a settlement program with the Department of Justice. The joint statement is anticipated to be released shortly.
Currently, there are 14 financial institutions in Switzerland that are under investigation by the DOJ. The DOJ wants these institutions to produce information concerning which U.S. individuals maintain undisclosed financial or bank accounts at such institutions. The DOJ wants the Swiss institutions to pay a set penalty to resolve their criminal liability through either a deferred prosecution agreement or a non-prosecution agreement. Some banks may take the position, however, that they are not criminally responsible for unreported account information and unreported income of U.S. account holders and may proffer evidence to avoid the penalty. The penalty to be imposed on the Swiss financial institutions would range from 20% (for pre-UBS deferred prosecution agreement (DPA) years) to 30% for accounts opened after February 18, 2009 (which was the date when UBS entered into the DPA with the Department of Justice. The penalty would increase to 50% for accounts that were opened after the June 17, 2010, the date that the Swiss parliament ratified the 2009 protocol to the Switzerland-U.S. tax treaty.
The Department of Justice is not just seeking names of U.S. account holders, and account information for the years involved. It wants specifics of the financial institutions services that were rendered with respect to its U.S. clients and whether any other third party lawyers, financial advisors or accountants were involved in assisting such U.S. persons from being discovered. The information being sought to be produced will be on an “account-by-account” basis, including the account dollar values, the extent to which the account was related to a U.S. individual, either directly or indirectly, and detailed information on transfers both into and out of the accounts, the official said. Swiss financial institutions and banks will also be required to cooperate with information requests under the tax treaty and that such requests for information be expedited.