The U.S. Department of Justice has finalized its so-called Swiss bank program, which was set up to deal with legacy claims of helping clients evade U.S. taxes.
The program offered banks the opportunity to resolve potential criminal liabilities, as well as providing a way for other Swiss banks that had not engaged in wrongful acts to resolve their status. The Justice Department said it has now completed the review of banks that declared themselves to be in categories 3 and 4, reserved respectively for those that believed that they had committed no wrongful act and those that were able to demonstrate their compliance under the U.S. Foreign Tax Compliance Act, or FATCA.
Category 3 banks were required to provide independent reports on witnesses interviewed, files reviewed, factual findings and conclusions, as well as appear before the Justice Department to answer any questions and close any accounts held by those who failed to come into compliance with U.S. reporting obligations. Completion of those obligations enabled banks to receive a "nontarget" letter.
The Justice Department also executed nonprosecution agreements between March 2015 and January 2016 with 80 banks in Category 2, which required the institutions to advise the Department by the end of 2013 that they believed that they had committed tax-related criminal offenses in relation to undeclared U.S. accounts. Those banks paid more than $1.36 billion in penalties.
Category 1 was reserved for those institutions that had already been under U.S. investigation over tax-related criminal activity.
"Working with the Swiss government, we have made financial institutions reform the way they do business," said Bill Baer, principal deputy associate attorney general. "We are moving toward an era of global financial transparency."
The program now moves into a "legacy phase," in which banks participating in the program will continue to cooperate in all related civil and criminal proceedings and investigations.
Separately on Dec. 29, a senior official in the Swiss capital, Bern, told the Financial Times that Switzerland was seeking a new tax deal with the U.S. that would enable a two-way exchange of bank information. Under the existing framework, U.S. officials receive information on Swiss bank accounts, but the Swiss government wants information to flow in the other direction as well.