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Switzerland proposes deal for banks to resolve U.S. tax dispute

The bill authorizes Swiss banks to cooperate with U.S. authorities and transfer information while safeguarding the banks' interests, the government said.

May 30, 2013|Bloomberg News

Switzerland has proposed a bill that it says paves the way for the country's banks, including Credit Suisse Group and Julius Baer Group, to resolve a tax-evasion dispute with the U.S.

The bill authorizes Swiss banks to cooperate with U.S. authorities and transfer information while safeguarding the banks' interests, the government said in a statement Wednesday. The Swiss Parliament will consider the bill as soon as next week and it could take effect July 1.

"The sense of urgency is because preparations were being made for more banks to be made responsible," Swiss Finance Minister Eveline Widmer-Schlumpf told reporters in Bern, Switzerland.

Switzerland has been in talks with the U.S. for more than two years to resolve a Justice Department investigation of at least 14 financial firms that allegedly helped Americans hide money from the Internal Revenue Service. The Swiss bank Wegelin & Co. pleaded guilty in a Manhattan federal court in January to conspiring to help conceal more than $1.2 billion from the IRS.

The bill will enable banks to pass on information on employees and third parties who worked with American clients, the Swiss government said.

"Switzerland appears to be appeasing the U.S. authorities to prevent further indictments," said Jeffrey Morse, a private client attorney with Withers in Geneva. "The U.S. may use the information to widen its probe to lawyers, trust companies, advisers and other middlemen who helped create the offshore structures used for tax evasion."

The bill doesn't allow for banks to transfer client data, which can only be passed on through administrative assistance procedures under a tax agreement with the U.S.

Julius Baer, Switzerland's third-largest wealth manager, informed some American clients this month that their accounts meet the criteria of a U.S. request for data, the Zurich bank wrote in a letter obtained by Bloomberg News.

Raymond Baer, honorary chairman of Julius Baer, said in a presentation to the British-Swiss Chamber of Commerce in Geneva that the government's proposal needs to be analyzed before making any comment.

"We welcome that there's a solution on the table," Andres Luther, a spokesman for Credit Suisse, said by telephone from Zurich.

Zuercher Kantonalbank, a Swiss bank that expects to pay a fine to U.S. authorities as part of a deferred prosecution agreement for its alleged role in helping Americans evade taxes, said it welcomed the legal framework proposed by the government.

David Bruegger, a Zurich-based spokesman for HSBC Holdings' Swiss private bank, said the proposal could help resolve the U.S. matter.

The size of the fine will be important for Switzerland's financial centers, said the Swiss Bankers Assn., which represents more than 300 banks. The association said it was "astonished that no information was given on the program the U.S. will offer to Swiss banks."

The Swiss Parliament's economics committee will discuss the proposal on the first day of the summer session, which runs from June 3 to June 21, and again three days later. The full lower house will vote on the matter on June 18.

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