United States winds up ‘Swiss Bank Program’

US Attorney General Loretta Lynch led the charge against non-compliant Swiss banks Keystone

The last of the Swiss banks have met obligations imposed by the US Department of Justice (DoJ) to prove they did not indulge in abetting tax evasion or commit financial transaction offences. This brings the over three-year US scrutiny of Swiss banks to a close. 

“The completion of the resolutions with the banks that participated in the Swiss Bank Program is a landmark achievement in the Department’s ongoing efforts to combat offshore tax evasion,” said Caroline D. Ciraolo, Principal Deputy Assistant Attorney General, in a statementExternal link released by the DoJ on Thursday. 

Between July and December 2016, four Swiss banks and one bank cooperative met the requirements for Category 3 banks under the Swiss Bank ProgramExternal link. Banks under this category were those that had US customers but believed they were compliant with US law. They had to conduct an independent investigation into their cross-border transactions to prove it. Once proven, they were handed “non-target letters” – a sort of certificate of good housekeeping – by the DoJ.

Slap on the wrist

The Swiss Bank Program was agreed in August, 2013, following intense diplomatic negotiations between the Switzerland and the US. It was designed to allow those banks that were not already under active criminal investigation to own up to their offences and avoid potentially ruinous US courts cases. The scheme focused on US accounts held from August 1, 2008. 

In all, four categories of Swiss banks exist under the Swiss Bank Program. Category 1 includes banks ineligible for the Program as they were already under investigation before the scheme was launched in 2008. These include 14 banks such as Julius Bär, Pictet and the Zurich and Basel cantonal banks and some Swiss subsidiaries of foreign banks. 

Category 2 banks are those that violated US law but applied for non-prosecution agreements in return for cooperation and paying fines. This is where the bulk of the Swiss banks ended up. Between March 2015 and January 2016, the DoJ settled with 80 Swiss Category 2 banks collecting more than $1.36 billion (CHF1.39 billion) in penalties. 

Category 4 banks were those with a very limited exposure to US clients with less than 2% of their client base being non-local. No Swiss bank fell under this category. 

The Swiss Bank Program was spearheaded by US Attorney General Loretta E. Lynch. She acknowledged the cooperation received by Swiss authorities. 

“I want to thank the Swiss government for their cooperation in this effort, and I look forward to continuing our work together to eradicate fraud and corruption,” she said.