Blog

Sat Sep 10, 2011 12:50am BST
(Reuters) - The United States is drafting legal documents that seek to force nearly a dozen Swiss banks and international banks with Swiss branches to disclose the identities of American clients evading billions of dollars in taxes, sources briefed on the matter said. The drafting of the documents -- grand jury subpoenas and broad requests known as John Doe summonses -- is a fresh U.S. shot across the bow at Switzerland and its battered tradition of bank secrecy.

The Alpine country, a noted tax haven that is the global capital of offshore private banking, has been under attack from U.S. Justice Department and Internal Revenue Service officials conducting a broad criminal investigation into private banking services that U.S. authorities say enabled wealthy Americans to evade billions of dollars in taxes.

The documents could be served within a month or so on 10 banks, including some with headquarters outside Switzerland, these persons said.

The legal pressure signals a new front in Washington's fight against Swiss bank secrecy, a battle that in recent years has resulted in scores of Swiss bankers and advisers being charged, dozens of American clients indicted and several large banks investigated.

The Justice Department served a target letter in July on Credit Suisse AG (CSGN.VX), Switzerland's second-largest bank, notifying it that it was the focus of a criminal investigation. American authorities also are probing HSBC (HSBA.L) and smaller Swiss private banks and cantonal banks, including Basler Kantonalbank, Wegelin and Julius Baer (BAER.VX).

Talks between the Swiss and U.S. governments to resolve the broad investigation broke down in June. Switzerland wants its banks to pay a multi-billion dollar fine, but the U.S. side wants client names as well.

For more information go to http://uk.reuters.com/article/2011/09/09/uk-usa-swissbank-subpoenas-idUKTRE7887BH20110909 

On August 28, 2011, the Supervisor of Banks at the Bank of Israel and the supervisory authorities in the US––the Board of Governors of the Federal Reserve System and the Federal Deposit Insurance Corporation––signed a Statement of Cooperation. The Governor of the Bank of Israel, Prof. Stanley Fischer, confirmed the signing of the document.

Swiss banks are urging their government and the United States to reach a negotiated solution to their dispute over U.S. funds hidden away in Swiss banks, amid reports the U.S. Department of Justice has issued an “ultimatum” on the handover of information on undeclared accounts of U.S. taxpayers with Swiss banks.

According to Swiss media, over the weekend of Sept. 3, U.S. Deputy Attorney General James Cole wrote a letter Aug. 31 to the Swiss government insisting that Swiss authorities hand over information on hidden U.S. funds in the country by Sept. 6. The letter specifically targeted Credit Suisse, the country’s second largest bank, as well as nine other private and regional banks, according to the reports.

Swiss media also that the Swiss financial industry regulator, was collecting information from the banks on all deposits by U.S. taxpayers of $50,000 or more between 2002 and July 2010.

Now that the implementation of FATCA has been postponed to the middle or end of 2013, the DOJ is reverting back to the process of requesting/summonsing information from other Swiss Banks; similar to its 2009 program which they successfully used against UBS; where the Swiss government was forced to eventually hand over detailed information on the accounts of U.S. taxpayers with the country’s largest bank.