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Swiss Reportedly Propose Multi-Billion Dollar Deal With US Over Tax Claims

Tom Burroughes

4 November 2011

The Swiss government proposes a multi-billion-dollar settlement with US authorities over allegations that its financial system helped US citizens dodge US taxes, in a move aimed at covering all banks in the Alpine state, Reuters reported.

The proposed civil settlement, if agreed, would cover around 355 banks in Switzerland, the news service said, citing “sources briefed on the matter”. It could reach $10 billion or more.

Such a deal would include 11 banks now under investigation, including Credit Suisse and HSBC, by the US Justice Department.

Switzerland, it is argued, has a strong interest in drawing a line under recent controversies about its historic bank secrecy laws because banking accounts for a large chunk of the country’s gross domestic product – about 13 per cent.

A number of countries, such as the UK and Germany, have signed tax disclosure deals with the Swiss authorities to flush out citizens with undeclared accounts. The US, meanwhile, has locked horns with Swiss authorities over a number of years, with the most high-profile case concerning UBS. In 2009, the Swiss and US governments agreed that UBS should transfer thousands of client details to the US authorities. A number of Swiss banks no longer provide offshore banking services to US clients.

The news service’s report said the US/Swiss settlement proposal has been met with skepticism from the US Justice Department, which wants to exclude those 11 or so banks from a civil settlement.

Instead, the agency wants to negotiate separate deals with these banks, possibly deferred-prosecution or non-prosecution agreements.

Michael Ambuehl, Switzerland's state secretary for the Finance Ministry and the country's chief negotiator on international tax matters, was due to leave Washington yesterday after days of talks with Internal Revenue Service officials on the matter.

The IRS declined to comment, the report said.

WealthBriefing was unable to reach the IRS and Justice Department at the time of going to press; it is contacting the Swiss government for possible comment.

A proposed US-Swiss deal comes with conditions, the report said. The Swiss want to pay a large monetary fine without being required to turn over any client names or client data, a move that would breach a Swiss tradition of bank secrecy stemming from the Middle Ages. But the Justice Department is opposed to any deal that involves only money and does not include a handover of client names and data. It also wants a deal in which by 2013 no Swiss banks hold undeclared offshore accounts for US citizens, though it is unclear how such a watershed in Swiss financial secrecy would be achieved or monitored.

Switzerland holds around $2 trillion of the world's offshore wealth, according to a 2010 study by the Boston Consulting Group.

Switzerland has been ranked the world’s most secretive financial location, according to the left-leaning campaign organisation, the Tax Justice Network. Ironically, its rankings put the US in fifth place in terms of secrecy, a fact that has raised eyebrows in the financial community about the index.