GENEVA (AP) ― Switzerland said Wednesday it will allow its banks to skirt the country’s strict client secrecy laws in order to end a long-running dispute with the United States over tax evasion by American clients with hidden accounts.
Finance Minister Eveline Widmer-Schlumpf said the Swiss government is acting now because U.S. patience with those Swiss banks suspected of aiding American tax cheats is running out.
She said the aim of the government’s planned deal is to “restore stability” to the Swiss banking industry, but that it will be up to the banks themselves to decide if they want to negotiate with U.S. authorities to settle legal disputes over suspected American tax evaders.
Swiss Finance Minister Eveline Widmer-Schlumpf speaks during a press conference in Bern, Switzerland, Wednesday. (AP-Yonhap News)
The deal was agreed to by the Swiss Cabinet and will go to lawmakers in parliament for approval later this year.
“We are convinced it’s a good, pragmatic solution that really helps the banks resolve this issue,” Widmer-Schlumpf told a news conference in Bern, the Swiss capital.
She also acknowledged that the talks with U.S. negotiators have been difficult and that the United States would make a unilateral amnesty offer once Switzerland has passed legislation creating the legal basis for banks to hand over client names without violating Swiss law.
Though Switzerland has long been a center for finance, diplomacy and trade, it has been trying to shed its image as a haven for tax evasion and money laundering that has been carried out through the misuse of its famous banking secrecy.
The government has signed deals with other nations to provide greater assistance to foreign tax authorities seeking information on their citizens’ accounts.
Widmer-Schlumpf refused to say how much money Swiss banks will have to pay to avoid prosecution. However, she said there will be a distinction between what banks did prior to 2009, when the United States went after UBS AG, Switzerland’s biggest bank, and those that continued aiding tax cheats afterward.
UBS entered a deferred prosecution agreement with U.S. authorities in February 2009, and agreed to pay $780 million in fines, penalties, interest and restitution.
“It will be a certain number of banks that engaged in these practices after 2009 that, let’s say this honestly, they shouldn’t have done,” she said.
She declined to provide further details of the agreement, but dismissed reports that the Swiss government will pay billions of dollars upfront to cover fines the country’s banks can expect to receive from U.S. authorities.
“I can tell you that Switzerland will pay nothing,” she added. “We will ensure that banks can participate in this deal, but we won’t do more.”
In January, Switzerland’s oldest bank, Wegelin & Co., became the first foreign bank to plead guilty in the United States to tax charges when it admitted that it helped American clients hide more than $1.2 billion from the Internal Revenue Service.