Swiss Banks Encourage U.S. Account Holders to Come Clean to Beat Deadline

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A very interesting article in Politico re: Swiss banks encouraging clients to come in to the Offshore Voluntary Disclosure Program for FBAR violations.   These banks are afforded lower penalties if they can convince their clients to take part in the program.  See the article below:


Swiss banks are quietly warning wealthy U.S. clients with secret accounts to come clean with the tax man in the next two weeks — or risk jail time, according to several letters obtained by POLITICO.


The letters come ahead of a New Year’s Eve deadline the U.S. government set for about 300 Swiss banks to take deals protecting them from prosecution. In exchange for confessing and shelling out mountains of Americans’ account information, they’ll get immunity. It is a new twist to the traditional bank-client relationship.


“The banks have every incentive right now to shove their American clients into compliance in order to reduce the penalties,” said tax attorney Jeff Neiman, who prosecuted Swiss banking giant UBS for the U.S. government.


The effort is part of a U.S. crackdown on American tax evaders and the banks that help them, which ramped up when Swiss banking giant UBS admitted as much with a $780 million settlement in 2009. The Justice Department is currently probing 14 major Swiss financial institutions — including Credit Suisse, Julius Baer and the Swiss arm of HSBC — for shielding U.S. tax cheats.


The government gave a larger set of Swiss banks until Dec. 31 to sign up for non-prosecution deals, after paying a penalty of up to 50 percent of the secret assets.


POLITICO has seen three letters from Swiss banks to U.S. clients, two that were redacted, urging them to fess up.


“Your account information may be subject to a treaty request from the United States to the Swiss Federal Tax Administration, which may result in your account information being turned over to the DOJ or IRS,” warned one by Cornèr Bank, sent to an American client and obtained by POLITICO. “A disclosure … can be used by US authorities for law enforcement actions, including … criminal proceedings.”


Switzerland’s oldest private bank, Wegelin & Co., went belly up because of the Justice investigation.


Lawyers said they had seen as many as a dozen letters from a recent batch, including correspondence from Rahn & Bodmer Co. and Royal Bank of Canada (Suisse). Neither bank responded to requests for comment.


The pressure is leading Swiss banks not yet under investigation to consider the non-prosecution deals.


And many of their clients are heeding the banks’ warnings to turn themselves in, according to lawyers for these wealthy individuals.


“There is a new wave right now because of this program aimed at Swiss banks coming in and identifying clients and identifying accounts,” said Caplin & Drysdale’s Scott Michel, who is getting three to four such inquiries each day — about the same number he usually received every couple of weeks for the past year.


Another strand of the tax crackdown story is taking place in Florida, where a UBS executive sought by prosecutors for nearly five years — recently caught in Italy — came before a U.S. judge on Monday.


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