U.S. in Settlement Talks with Swiss Banks Holding Offshore Bank Accounts for U.S. Persons

Swiss Banks holding offshore bank accounts for U.S. residents may have a settlement deal in the works to avoid prosecution, according to Thompson Reuters. Under the terms of the reported deal, Swiss and European banks would avoid prosecution in exchange for paying a fine, exiting their undeclared offshore banking businesses for Americans, and turning over a list of client names to the Internal Revenue Service (IRS). According to Reuters, the U.S. Justice Department criminal tax investigation of Swiss Banks currently includes, but is not limited to, Credit Suisse, HSBC, Julius Baer, and Basler Kantonalbank. Of course once client names are turned over to the IRS it will be too late to make a voluntary disclosure.

The U.S. Justice Department has been conducting a criminal probe aided by information gathered from U.S. residents maintaining offshore bank accounts at foreign banks. U.S. residents who maintain offshore bank accounts are required to file foreign bank account reports TDF 90-22.1 (FBAR). Willful failure to file an FBAR is a criminal offense and can also result in civil penalties which can exceed 6 times the balance of the foreign account. Thousands of Americans, however, have come forward to reveal their previously undisclosed offshore bank accounts under two voluntary programs offered by the IRS called the Offshore Voluntary Disclosure Initiative (OVDI) and the Offshore Voluntary Disclosure Program (OVDP). As a result of the information gathered under these programs, the IRS has put together a “roadmap” to both Swiss bankers and their intermediaries working with U.S. account holders. In turn this will lead to the IRS discovering more foreign bank account holders who have failed to come forward.

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