Tax
Swiss Banks Request US Changes Tax Deals - Report

Swiss banks in talks with the US authorities have asked the US Department of Justice to take out a number of demands.
Swiss banks in talks with the US authorities have asked the US
Department of Justice to take out a number of demands, according
to Bloomberg.
Over a 100 Swiss financial institutions out of Switzerland’s
total of over 300 such firms have so far signed up to a US-Swiss
pact – inked last August – to state whether they have reason to
believe, or not, that they held money that hadn’t been declared
to the US tax authorities. The disclosure programme is designed
to draw a line under a long-running wrangle between Switzerland
and the US over the use by Americans of offshore Swiss
accounts.
The news service said lawyers representing 73 Swiss banks wrote
on 21 October to object to terms of a proposed non-prosecution
agreement that spells out how banks can achieve amnesty. Their
letter says the agreement “presents substantial obstacles” and
suggests a wide range of changes to the model accord, including a
requirement that banks “cooperate fully” with “any other domestic
or foreign law enforcement agency” in any investigation.
“This requirement is not found in the program and, indeed, turns
a program specifically focused on US tax issues into a global
cooperation agreement without any safeguards or guarantees of
appropriate consideration of the banks’ cooperation,” according
to the letter from 18 law firms obtained by the news service.
The letter suggests that banks fear that any US-Swiss agreement
could be used by other countries to go after certain banks.
Already, countries such as France, Germany and the UK have
targeted Switzerland and sought to put pressure on its historic
bank secrecy regime, which in modern form dates to 1934.
The letter suggests the banks fear that the US programme, far
from being the final chapter in this story, could open up more
attacks.
“Our clients are participating in this program to obtain finality
as to their own exposure,” the law firms wrote. “We understand
that the NPA does not bind the IRS formally, but it is important
to our clients’ continuing participation through the conclusion
of the NPA that we receive some form of assurance that the IRS
will forebear from any further action,” the letter was quoted as
saying.
The report said the banks also object to requirements that they
disclose information on parent companies and that they share
material with governments other than the US. And they dispute the
scope of provisions on breaches of the agreement.
In 2009, UBS settled criminal and civil charges for aiding
Americans to evade tax by the use of offshore accounts; part of
that settlement, which involved a $780 million fine, also
involved the Swiss authorities agreeing to hand over thousands of
client account details. More recently, Switzerland’s oldest
private bank, Wegelin & Co, has ceased to exist in the US and has
been repackaged into a new entity in Switzerland after coming
under legal assault in the US. A number of banks, such as Julius
Baer, say they no longer offer offshore accounts to US
citizens.