August 28, 2013 / 11:56 AM / in 4 years

UPDATE 3-U.S., some Swiss banks near tax probe deal -Justice Dept

* Justice Dept: Settlement deal expected within “days”

* Deal would exclude the 14 Swiss banks already under probe

* Long-running probe has targeted tax-dodging by Americans

By Patrick Temple-West and Martin de Sa‘Pinto

WASHINGTON/ZURICH, Aug 28 (Reuters) - The U.S. government expects to announce within days a program that would allow some Swiss banks to avoid or defer prosecution under a probe of offshore tax dodging by Americans, a senior Justice Department official said on Wednesday.

The program would exclude the 14 Swiss banks that are already under investigation, the Justice official told reporters on a conference call, which followed reports out of Switzerland that the government there was ready to end the long-running dispute.

Switzerland, which has a tradition of bank secrecy, and the United States have been at odds since 2010 over a U.S. tax evasion crackdown. The campaign has ensnared more than a dozen Swiss banks, threatened dozens of others, and earlier this year felled Wegelin, Switzerland’s oldest bank, following an indictment.

“We expect in the next several days to announce a program that would allow certain Swiss banks that want to obtain a resolution with the Department of Justice to come forward and do that,” said the Justice Department senior official, who requested anonymity because the deal has yet to be finalized.

The Swiss government said on Wednesday that the signing of a joint statement with the United States should enable Swiss banks to resolve the dispute while complying with existing Swiss laws. It gave no further details, and the Finance Ministry was absent at a weekly government press conference.


The Justice Department official would not name the 14 banks that will be ineligible for the settlement program. Excluding them, there are still roughly 100 Swiss banks that had U.S. clients but are not being investigated by U.S. authorities.

The deal being developed would offer several settlement categories for banks based on their culpability in sheltering Americans’ assets. Penalties would be applied based on past wrongdoing and could exceed a combined $1 billion, the official said.

Banks that meet settlement terms may be eligible for non-prosecution agreements. Other “particularly egregious” banks may require deferred prosecution settlements, the official said.

Others may be able to seek “non-target” letters if they can show no culpability in sheltering Americans customers’ assets from U.S. taxation. Still others may be “deemed compliant” based on earlier determinations in U.S.-Swiss tax deals pre-dating today’s announcement.

“We expect a fair amount of motivation for the banks to come forward,” the official said.


A Swiss newspaper reported that many banks not yet under formal U.S. investigation could face fines of as much as 50 percent of their American client assets.

Before the Justice official spoke to reporters, a Swiss bank lobbying group and a banking employees association applauded the step to resolve the dispute.

Though the Justice Department declined to identify the Swiss banks it is investigating, a number are known to be facing U.S. probes. These include Credit Suisse, Julius Baer , the Swiss arm of Britain’s HSBC, privately held Pictet, and state-backed regional banks Zuercher Kantonalbank and Basler Kantonalbank.

Several of these have said they are preparing information on client withdrawals as demanded by U.S. investigators, after the Swiss government said it would allow them to circumvent secrecy and privacy laws to do so.

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