By Neil Maclucas
ZURICH--The U.S. and Switzerland have agreed to a plan that will
offer Swiss banks the chance to resolve issues related to possible
tax dodging by American citizens, potentially bringing a
long-running dispute between the two countries to an end.
The agreement, signed Thursday in Washington, provides for fines
for banks found to have facilitated tax evasion by Americans in
exchange for non-prosecution agreements in many cases. The deal
could generate more than $1 billion in penalties and force banks to
name account holders.
The agreement follows years of testy relations between the two
countries over how to handle the thorny issue of Swiss banking
involvement in tax evasion. Like other countries, the U.S. has
sought to find tax evaders in order to shore up its finances by
repatriating untaxed assets from citizens who stashed money in
secret Swiss bank accounts.
Switzerland's strict banking-privacy laws make sharing
information about accounts difficult and sometimes illegal. The new
agreement, however, will serve as a framework to allow Swiss banks
to share such data with the U.S. without violating Swiss law.
"This solution respects the Swiss legal system, doesn't create
any retroactive regulations, and doesn't involve emergency
legislation," the Swiss Department of Finance said in a statement
on Friday morning.
The U.S. campaign against offshore tax dodgers intensified after
Swiss banking giant UBS AG admitted to aiding U.S. taxpayers hiding
money abroad. The bank was required to pay $780 million in fines
and reveal the names of more than 4,000 U.S. taxpayers holding
secret accounts. The U.S. also indicted Switzerland's oldest bank,
Wegelin & Co., which led to it being shut down.
The settlement divides banks into four categories and covers the
period from 2008 to 2014. The first category contains 14 banks
thought to include Credit Suisse Group AG, Julius Baer Group AG and
state-backed regional banks Zuercher Kantonalbank and Basler
Kantonalbank, already under criminal investigation by the justice
department.
The second group includes banks that believe they have violated
U.S. tax law. They will be allowed to seek non-prosecution
agreements by the end of the year in exchange for information on
their cross-border business. They will face fines ranging between
20% and 50% of the amount of untaxed U.S. assets they hold.
The final two categories are for Swiss banks that believe they
haven't violated U.S. tax law and those whose business is local.
Banks in these categories can request a letter from the U.S.
stating that they aren't the target of an investigation.
In a statement, the Swiss Bankers' Association, an industry
lobby, said the agreement was painful but acceptable.
"The program brings with it painful consequences for Swiss
banks," the SBA said in its statement Friday. "The fines are at the
upper end of legally acceptable and economically bearable
levels."
The deal was signed Thursday by Manuel Sager, Switzerland's
ambassador to the U.S., and James Cole of the justice
department.
Write to neil.maclucas@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires