By John Letzing
ZURICH--A group of Swiss banks is lining up to deliver key
information to U.S. authorities investigating tax evasion,
potentially moving a long-running legal battle further toward a
close.
Last week, the Swiss cabinet unveiled a program that would allow
roughly a dozen Swiss banks that are being investigated by the
Justice Department to deliver data on Swiss bank accounts held by
U.S. clients that had been transferred to other institutions as
U.S. authorities began cracking down on overseas tax evasion.
Under the program, banks would deliver "leaver lists"--aggregate
data on bank accounts that can be used to identify tax
evaders--directly to U.S. authorities, a step that could further
chip away at Switzerland's historical banking privacy.
The program was developed after Switzerland's Parliament
rejected a broader proposal for cooperating with U.S. authorities.
It also allows banks to provide information on employees who
assisted U.S. clients in the past. Banks already being investigated
by the DOJ have previously handed over such information to the
U.S.
Some of the country's biggest banks, including Credit Suisse
Group AG (CS, CSGN.VX) and Julius Baer Group AG (JBAXY, BAER.VX),
are eligible to apply or already have applied for Swiss government
approval to participate, according to people familiar with the
situation. Agreements between the banks and U.S. authorities are
possible in the coming weeks, these people say.
The agreements could be similar to the 2009 deferred-prosecution
agreement struck between Swiss banking major UBS AG (UBS, UBSN.VX)
and the U.S., that resulted in a $780 million fine for the bank and
a trove of information for investigators about Americans holding
assets in Switzerland. Deferred-prosecution agreements would enable
banks to avoid criminal prosecution in exchange for admitting to
helping Americans evade taxes and most likely paying fines.
The U.S. has become increasingly aggressive in chasing tax
evaders abroad. The DOJ's prosecution of Wegelin & Co.,
Switzerland's oldest bank, contributed to it going defunct. Neue
Zurcher Bank, another bank that came under DOJ investigation, also
is defunct.
Credit Suisse, Julius Baer and other Swiss banks under
investigation by the Justice Department now may be closer to their
own settlements, the people familiar with the situation said.
Credit Suisse, the country's second-largest bank by assets, set
aside 295 million Swiss francs ($310 million) in 2011 to deal with
potential penalties resulting from its dealings with U.S. clients.
Julius Baer has said it wasn't able to determine the size of
penalties it may face.
In addition to Credit Suisse and Julius Baer, Pictet & Cie.,
Basler Kantonalbank (BSKP.EB), Zuercher Kantonalbank and the Swiss
unit of Israel's Bank Leumi (LUMI.TV) are among the roughly dozen
Swiss banks being investigated by the DOJ.
Representatives of those banks either declined to comment or
didn't return phone calls seeking comment.
The handover of information could help the DOJ assess how to
treat individual banks, and "whether or not a bank should be
granted a nonprosecution agreement or a deferred-prosecution
agreement and how to calibrate what penalty a bank should pay,"
said William Sharp, a tax attorney at Sharp + Kemm.
A nonprosecution agreement is similar to a deferred-prosecution
agreement but imposes fewer conditions.
The U.S. isn't alone in targeting taxpayers who use Swiss banks
to avoid obligations. The U.K., Germany and France also have
pressured Switzerland as they seek to shore up finances that have
been depleted by the financial crisis and ensuing economic
slowdown.
The U.S. has used the information gained through its probes of
Swiss banks to pursue a broader array of alleged tax evaders. The
DOJ also has gathered information on Swiss accounts held by
Americans from nearly 40,000 participants in voluntary
offshore-disclosure programs.
Some banks facing U.S. probes have simply stopped dealing with
American clients. Basler Kantonalbank, for example, stopped taking
American clients in early 2009.
Tobias Straumann, a lecturer in economic history at the
University of Zurich, said the new program could be a significant
step toward banks that have already been under investigation for
years reaching settlements with the DOJ within "weeks or
months."
Still, Mr. Straumann cautioned the banks could encounter
problems if institutions named on their leaver lists as taking in
U.S. accounts contest their inclusion in the material provided to
the Justice Department.
"That's the big unknown," Mr. Straumann said.
Leaver lists are expected to contain generalized data on the
number of undeclared U.S. accounts maintained at a bank, and the
amounts they held before being transferred out to other lenders.
The names of individual clients holding the accounts would remain
secret.
Bank employees also might contest the handover of their personal
data to U.S. authorities in Swiss courts.
In addition to the dozen banks under investigation, scores of
Switzerland's roughly 300 lenders still are evaluating the legal
risk they may be exposed to because of undeclared American assets
on their books.
Last week, the Swiss cabinet said "further talks" are being
conducted with the DOJ to hash out a program for those banks not
already faced with criminal proceedings to settle any outstanding
issues.
-Laura Saunders contributed to this article.
Write to John Letzing at john.letzing@wsj.com