* FINMA head appeals to banks in newspaper
* Deadline for second-tier banks lapses year-end
* Uncooperative banks may face criminal charges
ZURICH, Nov 29 (Reuters) - Switzerland's financial regulator warned the country's banks on Friday to come clean to U.S. tax officials by an end of the year deadline and face penalties, or risk prosecution later.
Both the U.S. and Switzerland are eager to draw a line under a probe into undeclared money wealthy Americans have stowed in tax havens.
A government-brokered program which is open to a host of second-tier Swiss banks lapses next month. Under the deal, banks are expected to disclose some previously hidden information and face penalties of up to 50 percent of the value of assets they managed on behalf of Americans.
"Further sanctions by U.S. authorities must be feared," for banks which choose to shirk the U.S. program," wrote Patrick Raaflaub, the head of regulator FINMA, in an article published by Neue Zuercher Zeitung on Friday.
"This would be more expensive in the long run and would provide considerably less certainty to the firms, their employees, and clients than the option of a rapid conclusion to this legal dispute."
The matter remains a priority for U.S. officials, who continue to investigate Swiss banks with a view to seeking criminal charges for those which don't come clean, according to the head of the U.S. Justice Department's tax division.
The timing of FINMA's comments shortly before the deadline raises the question of whether fewer banks than expected are preparing to come clean. FINMA hasn't disclosed the number of banks to come forward so far, or the status of ongoing discussions.
This week, the former head of private banking at UBS , which paid $780 million in 2009 and handed over thousands of files on clients to settle its probe, agreed to be extradited to the U.S. to face tax charges.
The Swiss-U.S. deal does not cover banks already under U.S. criminal investigation, which include some of Switzerland's biggest private banks such as Credit Suisse and Julius Baer. (Reporting By Katharina Bart; Editing by Elaine Hardcastle)