The Swiss government has agreed to create a legal basis that will enable its banks to settle investigations by US authorities into their role in assisting wealthy Americans in evading taxes, which may require lenders to pay up to billions of dollars in fines to the US authorities.
After a cabinet meeting earlier in the day, the Swiss finance department said the government was proposing legislation to be rushed through parliament in the summer session in June, according to Reuters.
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The new agreement is expected to give dozens of Swiss banks permission to reach settlements. However, the Swiss government has said no changes will be made to rules protecting clients’ identities.
Special permission will, reportedly, be granted to banks, to give them a chance to turn over new information about the behaviour of their staff and clients.
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By GlobalDataThe Swiss finance department was quoted saying, "If banks were not authorised to cooperate with the US authorities, the initiation of further criminal investigations or charges concerning banking institutions could not be ruled out."
Switzerland’s long tradition of bank secrecy, which protects the identity of its clients, has led to the country becoming a haven for untaxed funds and the world’s biggest offshore centre, with US$2 trillion in assets.
The long-running tax dispute between the Switzerland and the US is on its way to being settled.
Ball rolling
On 28 May, Julius Baer was ordered by the Swiss government to hand over data on US clients that will be passed on to US tax authorities, and the lender is working on providing the data that will be handed over under the terms of an existing Swiss-US double taxation treaty.
The chairman of Credit Suisse, Urs Rohner, also warned on 28 May that a long-running tax dispute over hidden Swiss bank accounts with the US could "easily escalate and spill over to rivals" if matters are not settled.
US authorities have been targeting a dozen Swiss banks for assisting Americans in evading taxes, following a US$780 million settlement with UBS in 2009. At the end of 2012, the number of Swiss banks under investigation by the US Department of Justice (DoJ) increased to 13, including Credit Suisse, Geneva private bank Pictet and Bank Frey.
