Credit Suisse may settle with US as 100 Swiss banks sign for amnesty

Monday, 27 January 2014
More than a hundred Swiss financial institutions have now applied for the US Department of Justice's (USDoJ) offer of immunity from prosecution in return for heavy financial penalties and full disclosure of their dealings with US clients.

Kathryn Keneally, a senior official of the USDoJ's tax division, said the department was 'gratified' by the response to the offer, although it does not expect that all the applicants will be granted non-prosecution. The programme is open only to banks, who will have to pay between 20 and 50 per cent of the value of undeclared US-owned accounts as at 1 August 2008.

Reports are also appearing that Credit Suisse, Switzerland's second largest bank, is close to reaching its own settlement with the USDoJ. Credit Suisse is one of the 13 banks excluded from the USDoJ amnesty because it was already being investigated when he programme was announced, but it is still free to negotiate its own non-prosecution deal.

According to The Wall Street Journal, Credit Suisse is preparing for penalties as high as USD800 million – even more than that paid by UBS in 2009.

Moreover, the bank will have to disclose a great deal of information about its American clients, even including some of their names. Thus US taxpayers who have used Credit Suisse accounts may now want to consider applying for the US Offshore Voluntary Disclosure Program (OVDP), which sets a limit to the penalties imposed on them by the Internal Revenue Service (IRS) for failing to declare foreign assets and earnings.

However, once Credit Suisse has disclosed an accountholder's name to the IRS, OVDP election is no longer available to that accountholder. ‘Taxpayers who wish to take advantage of the OVDP must act quickly,' says Matthew Lee, a former USDoJ prosecutor who now works at Philadelphia law firm Blank Rome.


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