BERN, May 29 (RAPSI), Ingrid Burke –  Swiss government officials approved a bill Wednesday that would allow banks to resolve their disputes with US authorities by authorizing cooperation between the banks and authorities in certain capacities, according to a statement released by the Swiss Federal Council.

The “Federal Act on Measures to Facilitate the Resolution of the Tax Dispute between Swiss Banks and the United States” was inspired by the Federal Council’s desire to create a legal basis for the resolution of Switzerland’s tax dispute with the US.

According to the statement, the bill will be dealt with by both chambers of parliament this summer in a special proceeding, and will enter into force afterward. The Federal Council urged the imperative of rapidly pushing the bill through, stating: “[t]he urgency is due to the fact that the United States is unprepared to wait any longer with the arrangement for the past for Swiss banks. The implementation of the legal provisions is to be restricted to one year.”

Toward this end, the bill will allow all banks wishing to do so to resolve their relationships with US authorities by way of a framework specified by the US Department of Justice (DOJ).

The bill will authorize Swiss banks to disclose certain information to US authorities, including information on business relationships concerning Americans and information on people who have been involved in the banks’ US business.

Notably, the authorization does not extend to client data, such as account information.

Authorized disclosures will be narrowly tailored. As explained by the statement, “[t]he disclosure thereof will occur exclusively within the scope of administrative assistance procedures based on a valid double taxation agreement.”

The bill further stipulates that banks opting to cooperate with US authorities will be legally obligated to protect their employees by virtue of a number of safeguards. 
The Swiss Bankers Association (SBA), which bills itself as the Swiss financial center’s leading professional organization, issued its own statement Wednesday, lauding the creation under federal law of an opportunity for banks to settle their tax issues with US authorities.

The professional organization voiced concern, however, with the fact that the no information has yet been made available on scheme offered by the US, as well as with a lack of information on the size of stipulated fines, stating: “[t]he size of the fine is an important criteria for the Swiss financial centre. We firmly repeat our demand that the Swiss Federal Council must continue to make every effort to find a solution that stands in proportion to the transgressions being alleged.”

US authorities have long grappled with tax evasion by US taxpayers through the use of offshore bank accounts. The DOJ Tax Division’s Offshore Compliance Initiative states on its website that: “Increased technical sophistication of financial instruments and the widespread use of the internet have made it easy to move money around the world. According to a 2008 Senate report, the use of secret offshore accounts to evade U.S. taxes costs the Treasury at least $100 billion annually.”

Switzerland has featured heavily in recent US efforts to curb the problem. According to the Initiative website, teamwork between the DOJ Tax Division and federal prosecutors has been extraordinarily fruitful in recent years. A 2008 DOJ probe of Switzerland’s largest bank, UBS AG, resulted in a 2009 deferred prosecution agreement and the bank’s admission of guilt on a variety of hefty charges, including conspiracy to defraud the US by impeding the work of its tax authorities. 

Then in 2009 the US and Switzerland entered into an agreement providing for the transfer of specific account information deemed to be of interest in light of the UBS probe. According to the Initiative’s website: “As part of the Deferred Prosecution Agreement and a 2009 agreement negotiated among the US, UBS, and the Swiss government to settle a civil summons enforcement proceeding brought by the Tax Division, the IRS has received account information about thousands of the most significant tax cheats among the U.S. taxpayers who maintain secret Swiss bank accounts.”

Then in January 2013, US prosecutors in New York secured a guilty plea on felony tax charges against Switzerland’s oldest private bank, Wegelin Bank. A statement issued by the US Attorney’s office stated that the bank specifically pleaded guilty to “conspiring with U.S. taxpayers and others to hide more than $1.2 billion in secret Swiss bank accounts and the income generated in these accounts from the Internal Revenue Service.”

At the time, Manhattan US Attorney Preet Bharara praised the outcome of what was described in the statement as the first case where a foreign bank was indicted for facilitating tax evasion by US taxpayers, as well as the first case where a foreign bank pleaded guilty to tax charges, saying: “Wegelin became a haven for U.S. taxpayers seeking to circumvent the tax code by hiding their money in secret off-shore accounts…  Today’s guilty plea is a watershed moment in our efforts to hold to account both the individuals and the banks – wherever they may be in the world – who are engaging in unlawful conduct that deprives the U.S. Treasury of billions of dollars of tax revenue.”