"Swiss Banks Accused Of Aiding U.S. Tax Evasion Will Begin Cooperating"
Swiss authorities have cleared the way for the country’s notoriously secretive banks to cooperate with U.S. tax evasion investigations.
The banks still cannot provide client names under a government program that seeks to balance strict bank secrecy laws in Switzerland with U.S. interests. Instead, they may share other information on account activity that the investigators can use to track down tax cheats. Doing so will help the banks avoid criminal prosecution in the U.S. and help American efforts to claw back some of the trillions of dollars the country has lost to tax evasion since 2001.
From 2001-2010, over $3 trillion that should have gone to the U.S. treasury was lost to tax evasion. Eighty-five percent of tax evaders are individuals, according to a Demos report, and most of those individuals evade income taxes by underreporting business income. Not all of the money is simply sitting in vaults in Geneva, but offshore bank accounts are a key component of many common tax evasion schemes. “Swiss secrecy laws have helped to make the country the world’s biggest offshore finance centre,” according to Reuters.
To understand Switzerland’s motivations in cooperating, it helps to recall the case of the country’s oldest bank, Wegelin & Co. The Justice Department indicted the bank in February of 2012 on tax evasion charges involving $1.2 billion in bank holdings. Eventually the bank plead guilty and was forced to close its doors after 250 years in business. Contrast that with the 2009 case of UBS, which eventually cooperated with DOJ and paid a $780 million fine to settle allegations it helped American clients hide $18 billion from U.S. taxes. UBS is still in business.