Banks now expect smaller fines under US tax deal

Zurich-based EFG International is one of the banks that signed up for category two of the US programme for Swiss banks Keystone

The Swiss banks in "category two" of the deal struck with American tax authorities  could face smaller fines than they had feared, but only if they cooperate more with the United States.

The Swiss publication Finanz und Wirtschaft reported on Saturday that those banks with some exposure to American clients evading taxes – about 80 of the 106 institutions signed up for the programme – could pay 20 to 50% lower fines than initially expected if they help U.S. prosecutors further. So far, those banks have sent US authorities information about how many clients they have served in recent months and clarified how much the penalties will be for stashing funds in offshore accounts.

Banks in the second category of the US tax evasion deal are those that suspect or know they have aided US tax evaders. They must pay fines but can escape US prosecution if they cooperate.

Under the deal, the banks are not required to hand over client names, but they have to hand over any information US authorities may require in setting up judicial requests to go after tax dodgers.

Each bank’s individual situation and fine will be assessed in September. In May, Credit Suisse – part of “category one” under the deal, as a bank previously under investigation – pled guilty to a U.S. criminal charge and was fined more than $2.5 billion (CHF2.2 billion) in penalties for aiding tax evaders.