UPDATE 1-Swiss banks Raiffeisen and PostFinance join U.S. tax deal
* Seven banks have said they will join U.S. scheme
* Deadline to take up U.S. offer is Dec 31
* About 100 Swiss banks expected to participate
ZURICH, Dec 13 (Reuters) - Raiffeisen and PostFinance on Friday became the latest banks to say they would work with U.S. officials to avoid prosecution in a crackdown on Swiss banks suspected of helping wealthy Americans to evade taxes through offshore accounts
Switzerland's third-biggest bank Raiffeisen and PostFinance, the banking arm of the country's state-owned postal services company, said they had decided to take part in the programme brokered by the Swiss and U.S. governments to allow banks to avoid U.S. prosecution for aiding tax evasion.
A total of seven banks have now come forward to say that they are participating in the scheme that constitutes another severe blow to Switzerland's cherished banking secrecy.
PostFinance said it had decided to join the scheme to minimise the risk of coming into conflict with foreign authorities. It said it would register in category 2 of the programme, meaning it cannot totally rule out that some U.S. citizens stashed untaxed money in PostFinance accounts.
Raiffeisen said it is likely to list in category 3 for institutions that have not committed U.S. tax-related offences and are therefore exempt from penalty payments - the same stance adopted by private bank Vontobel this week.
About 100 banks are expected to take part in the scheme by the end of the year.
The number of banks participating in the programme is important for another group of Swiss banks already under formal criminal investigation in the United States, including Credit Suisse and Julius Baer, whose cases have been frozen pending a solution for the wider banking sector.
If the United States deems its deal with Switzerland a failure because too few banks come forward, it is likely to hold up settlements for the other banks.
A statement from the U.S. Departement of Justice on Thursday said that it "strongly encouraged" Swiss banks to participate.
"The programme offers Swiss banks a unique opportunity to resolve criminal issues relating to their offshore banking activities that will not be available after the deadline," Assistant Attorney General Kathryn Keneally said in the statement.
"Banks that facilitated U.S. tax evasion but do not come forward by the Dec. 31 deadline bear significant risks that information provided by others may cause the bank to be targeted and prosecuted."
The DOJ said that category 2 banks had to disclose all their cross-border activities and provide detailed information on accounts in which U.S. taxpayers have a direct or indirect interest.
These banks face penalties of up to 50 percent of untaxed assets they managed on behalf of U.S. clients.