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Morgan Stanley, Goldman Sachs Reportedly Help Authorities With US-Swiss Tax Probe
Eliane Chavagnon
29 April 2014
The Swiss units of Goldman Sachs and Morgan Stanley have reportedly come forward as “category 2” banks under the US-Swiss agreement over tax, which means they have reasons to believe that they may have violated US tax law, the Wall Street Journal reported, citing unnamed sources.
While the two banks will not face prosecution in the US, they could face financial penalties equal to as much as 50 per cent of the value of the undeclared US accounts in question, according to the report today.
Both firms declined to comment when contacted by WealthBriefing.
Switzerland and the US agreed in August last year a deal - including fines on certain categories of bank - designed to draw a line under a prolonged tax dispute between Swiss banks and US authorities. Some Swiss banks are still deciding how they will sign up to the pact, as there are a number of different categories that banks can state they fall into, depending on whether they think they have violated laws about helping US tax evaders or not. It is estimated that up to a third of Switzerland’s total of around 300 banks have already signed up to the accord.
Category 1 banks are already the target of criminal investigations by the Department of Justice. Banks which believe that they have not violated US tax law (category 3) and those whose business is local in nature (category 4) can report to the US authorities between 1 July, 2014, and 31 October, 2014, at the latest to request a non-target letter.
According to the Justice Department, some 106 Swiss banks have already committed to category 2, the WSJ said.
“Attorneys and other experts say many banks have opted for category 2 as a precautionary move, because discovering all client ties to the US - including through a second passport or US residence permit, for example - can be difficult,” it added.
Many banks are opting for a “better safe than sorry” approach, Martin Naville, chief executive of the Swiss American Chamber of Commerce in Zurich, reportedly said.