This post appeared on the RenounceUScitizenship blog.
DOJ announces new #OVDP program for Swiss banks that allowed US clients http://t.co/JM99xytMt7 – Banks pay fine based on % of deposits
— U.S. Citizen Abroad (@USCitizenAbroad) August 30, 2013
The title of article by Lynnley Browning is:
“Swiss on agree on penalties for banks that aided tax cheats”
A review of the article suggests that the U.S. government is attempting to impose on Swiss Banks a program that is like the “OVDI-OVDP” program.
The article begins with:
Switzerland and the United States reached a watershed deal on Thursday to punish Swiss banks that helped wealthy Americans stash money in hidden offshore accounts, closing the door on an era of bank secrecy and tax evasion.
The formal agreement, which was announced on Thursday by the Justice Department in Washington and will be presented by Swiss authorities on Friday, outlined formulas for Swiss banks to pay up to billions of dollars in fines and disclose information about American account holders, a joint statement said.
Features include:
– an agreement to NOT prosecute if the banks do a voluntary disclosure of balances of accounts held by U.S. persons in Switzerland;
The agreement said that Swiss banks that follow the program will be eligible to enter nonprosecution agreements that do not involve guilty pleas or criminal penalties.
– in return for non-prosecution the banks agree to pay a penalty based on the top dollar value of undisclosed accounts;
Banks that held accounts as of Aug. 1, 2008, will pay a fine equal to 20 percent of the top dollar value of all nondisclosed accounts. The fine increases to 30 percent for secret accounts opened after that date but before March 2009, and to 50 percent for accounts opened after that.
(Note that those who came into compliance earlier will pay less.)
– if a bank is already under investigation they are not eligible for the program;
Significantly, the deal does not cover 14 Swiss banks and Swiss branches of international banks that are under criminal investigation by the United States authorities, includingCredit Suisse, Julius Baer and several regional banks. Instead, it effectively covers the rest of the Swiss banking industry, home to a tradition of bank confidentiality and laws that have not considered tax evasion a crime. By some estimates, Switzerland is home to more than $2 trillion in overseas deposits
– as a condition of entering OVDP for banks, the participating bank agrees to provide information on other banks, U.S. person account holders and their advisors;
The deal calls for stiff measures that lift the veil of Swiss secrecy. Banks will be required to provide the details on accounts in which American taxpayers have an interest through treaty channels, inform on other banks that transferred money into secret accounts or that accepted money when secret accounts were closed, disclose all cross-border activities, and close the accounts of Americans who are evading taxes.
– this new OVDP program for the banks is to put further pressure on U.S. citizens to abroad to enter their own OVDP;
The agreement will also turn up the heat on American clients who have not already entered voluntary disclosure programs with the Internal Revenue Service.
(How many innocent U.S. citizens abroad that just happen to have a bank account in Switzerland will be terrorized into entering OVDP?)
– and finally in addition to recognizing Swiss Banks and U.S. citizens (including those living abroad) as their enemies, the Obama administration vilifies Senator Rand Paul (yes, he must be responsible for tax evasion);
A stumbling block may still exist. The deal calls for both sides to use information exchange channels outlined in existing treaties. But the United States has not yet ratified a 2009 treaty protocol that would ease that disclosure, with Senator Rand Paul, Republican of Kentucky, blocking approval, arguing that it would give the I.R.S. too much power and violate Americans’ right to privacy.
The possible next step …
The U.S. is clearly on a mission to confiscate assets throughout the world.
In the beginning, there was OVDP for individuals.
Now we have OVDP for banks.
Coming soon, OVDP for financial advisors.
Soon, we will all become Whistleblowers.
The solution to this is for the U.S. to simply absorb all the other sovereign nations of the world. Once we become one country, there will be no more “offshore accounts”. But, how would fines be imposed then?
Conclusion and message to U.S. citizens abroad …
You better enter OVDP before your bank does!
Translation:
Fact is: This programs causes administration costs in multiple 100 million Franks. Banks have to employ highly-paid experts of the four worldwide revision organizations to prove their dealings with US-persons. All of the documents have to be translated into English.
Legal fees are exorbitant
On top of that are exorbitant payments to lawyers. This costed Credit Suisse alone more than 100 million Franks. Bank Julious Bär spent 54 million Franks in the first half of 2013 and 2012 on the US tax dispute.
Overall, lawyer salaries in Swiss banks may exceed have a billion dollars. On top of that comes fines in multiple billion Franks. How how high the total costs will be, won’t be known anytime soon.
My view: FATCA is big business for corrupt politicians and greedy lawyers.
Swiss Government Encourages Banks to Settle U.S. Tax Disputes
Does the Swiss Parliament have any say in this?
The Swiss government is urging banks to cooperate with a new program it has set up with U.S. authorities, even though it will require significant financial penalties and information sharing from banks that aided secret account holders.
No. When they threw the LEX law back to the Federal Council to sort out they said it was a decision the Council should be making, not Parliament. This is what they’ve come up with so it doesn’t have to go back.
http://www.swissinfo.ch/eng/business/Banks_back_plan_to_end_US_tax_evasion_row.html?cid=36766762
US DOJ and Swiss government announce new voluntary disclosure program for Swiss banks
http://www.lexology.com/library/detail.aspx?g=4a860558-5712-49b2-bd9b-0bd6807902ab
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Virginia La Torre Jeker believes that the US-Swiss Programme will serve as a template for banks in other countries:
http://taxconnections.com/taxblog/swiss-continue-to-cave-in/#.UufpvHmtuYU
@Swiss Pinoy
You said. “My view: FATCA is big business for corrupt politicians and greedy lawyers.”
I saw a great Documentary on HBO last night.. HERBLOCK: THE BLACK & THE WHITE
about the great political cartoonist
Herbert Block (Herblock)
I missed a lot but caught the end. He was a really True American. Like Pete Seeger..
I will give you a quote of his.
“The worst form off corruption is the accepting of corruption.”
Also his last words on the doc
POLITICIANS CAN SET THE TONE.
ANYTHING FOR A BUCK STOPS NOW.
I feel very vulnerable. What if the Progressive Conservatives put FATCA in the budget..They do have the majority
The Swiss-US Tax Program agreement (“FATCA looking backwards to 2008”), which has affected many USP emigrants residing in Switzerland, has has been evolving. A Reuters article, citing an article in the “Finanz und Wirtschaft” (FuW) business newspaper, gives an overview:
http://www.reuters.com/article/2014/07/26/us-taxswitzerland-idUSKBN0FV0D320140726
Some of the highlights in the printed FuW article are:
1) The DOJ penalty calculation is to be based on the highest overall balance of unreported USP accounts for the Category 2 bank rather than the highest balance for each individual unreported USP account. This should result in a somewhat lower penalty for many banks.
2) The US Program still does not differentiate between banks that actively pursued American customers through cross-border efforts and those that passively accepted accounts from Americans residing in Switzerland.
3) Around 26 of the original 106 Cat. 2 banks have dropped out of the US Program because it requires them to admit guilt to crimes activities that they did not commit. The banks that dropped out will not be eligible for a Non-Prosecution Agreement. (Comment: I suspect, but don’t know, that most of these are retail banks who were overly cautious and joined the US Program as Cat. 2 banks, also under pressure from FINMA, the Swiss bank regulators).
4) In exchange for the new penalty calculation method, the Cat. 2 banks are required to cooperate with DOJ for indefinitely and to supply enough customer master data details so that the name of the account holder can be determined through an official request.
5) Swiss banks continue to apply pressure to their USP customers to prove their US tax compliance or demonstrate that they have entered OVDP.
As an indication of how absurd the US Program can be, see message #171 by ssn605 at this thread. This poster demonstrated to the bank that FBARs were filed but did not report up to CHF 20 ($22) of interest income on Schedule B:
http://www.englishforum.ch/finance-banking-taxation/200706-postfinace-demands-past-fbars-9.html
Also, the poster’s bank, Valiant, is a mid-sized Swiss retail bank with a number of branches in the north and west of the country. It’s website is in German and French, meaning you had better be able to speak the local language if you are going to be a customer, i.e., they don’t cater to Americans in the US or temporary residents without knowledge of the local language.
@Innocente
As far as I have heard- quite a few people have gone the legal path and have gotten court orders ( by the swiss courts) that protect them from having their identity given to the USA. I have even heard the rumour that not expats but people in NYC have taken the bank to court in Switzerland and prohibited them from disclosing their info to America.
@Polly, I think that’s what they are – just rumours. I can’t see any Swiss court allowing them not to be identified without a VERY, VERY good reason – and I can’t think of one which would be acceptable. Maybe some bigwig in NYC has tried, but I really don’t think a court here will go against FATCA/IGA and bring the Americans down on yet another Swiss bank if they don’t need to. Basically there’s no acceptable reason why an identity shouldn’t be disclosed, apart from the one that they’re trying to evade paying their US taxes.
@Polly:
My opinion is that the DOJ wants the Swiss banks to deliver enough information on their USP customers to allow the DOJ to make an official request to the Swiss government under the Swiss-American tax treaty. This information would need to be sufficient to demonstrate that there is a reasonable suspicion of tax fraud (or tax evasion) by the USP. It must also be sufficient to identify the account and/or account holder to allow an official request to be accepted by the Swiss government without the official request being classified as a “fishing expedition”, which I understand is not permitted.
One part I am not clear on regards the 2009 tax treaty. This new treaty, which the US Senate has not ratified, allows official assistance to supply information on bank customers who are suspected of passive tax evasion, e.g., omission, while the older treaty allows assistance only for active tax fraud, e.g., document falsification, possibly setting up structures to conceal ownership.
Caveat: I have not been following this closely and the above may not be accurate or up-to-date.
The DOJ Program would probably snare by-catch like the message board poster who did not report $22 of annual interest. Unless the DOJ has fully lost its sense, I cannot imagine that it would prosecute an overseas USP for tax evasion for omitting $22. (It appears that the poster is planning to submit amended returns so probably won’t actually become by-catch).
Another highlight from the Finanz und Wirtschaft (FuW) article mentioned above:
6) “All of the around 100 (Category 2) banks have appeared at least once in Washington, according to FuW information. There they presented a numerical overview of their cases, according to attorneys.”
Some of the Cat. 2 banks are small and, as retail banks focusing on their town or region, would be relatively unsophisticated, e.g., Saanen Bank with 33 employees, AEK Bank with 130. Some of the mid-sized retail banks on the list would simply be unsophisticated since they only serve customers in their region or canton and some customers who subsequently moved abroad. Among various issues, these banks may or may not have anyone who would even speak English well enough to give a presentation and answer questions. Of course, that’s why there are expensive law firms available for hire.
The DOJ Program may not be as ridiculous as it appears but it just might be.
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73% of Swiss Banks Want Changes To Terms of Anti-Tax Evasion Agreement – Non-Prosecution Agreements!
“Lawyers representing 73 of the banks have sent a letter to the USDoJ complaining that the latest version of the amnesty terms, circulated on 22 September, includes new demands that were not in the original agreement.
Participating banks are now required to ‘cooperate fully with any other domestic or foreign law enforcement agency in any investigation, and to ‘share material with governments other than the US.
It also insists that banks must disclose information about their parent companies.
The banks’ letter of protest says these terms go beyond what they anticipated when signing up, and urges that they are withdrawn. The requirement to cooperate with foreign governments ‘turns a programme specifically focused on US tax issues into a global cooperation agreement without any safeguards or guarantees of appropriate consideration of the banks’ cooperation’, according to the 11-page letter, which is signed by 18 law firms representing the banks.”
http://taxconnections.com/taxblog/73-of-swiss-banks-want-changes-to-terms-of-anti-tax-evasion-agreement-non-prosecution-agreements/#.VFuhe2K9KSM
@Bubblebustin, maybe this is their way of taking part in GATCA without actually participating in it.