And the #OVDP for Swiss banks news keeps coming

Another fascinating article from Geneva Launch includes:

Today is the deadline for the banks to join US Programme

Today is the deadline set by Finma for banks to announce they will take part in the DOJ’s voluntary disclosure programme. Finma has refused to comment on how many banks are expected to sign.

The “US programme” calls for the banks to sign a non-prosecution agreement by the end of 2013. The banks that sign will admit to breaking US tax laws and exchange some information on their clients, although precisely what information, how the requests from the US will be handled and what else this involves is unclear.

The US DOJ deal includes the possibility the American government would levy fines that could be as high as 50 percent of a bank’s previously undeclared assets held by “US persons”.

A US person is anyone considered by the IRS to have a legal obligation to file US taxes: US citizens who live in the States and hold offshore accounts, most US citizens living abroad and some Green card holders are part of the group.

US citizens in Switzerland caught up in banks’ paper scramble

Banks have been scrambling since August to uncover any US clients they may have and to ensure they provide evidence that US taxes have been filed and paid.

The rush by banks to meet the deadline has angered US citizens who reside in Switzerland, caught up in the sweep even though they do not hold offshore accounts. Ed. note: see GenevaLunch story, “Banks ending year with letters to US clients”.

Critics: US Programme is vague

Swiss critics say the US Programme on undeclared taxable assets in the past is vague, filled with holes and, despite nearly three years of negotiations, it offers little assurance that the US will consider the matter closed. RTS Monday morning quotes Henry Peter, professor bank law at the University of Geneva as saying the deadline is too short and Finma and the DOJ have exacerbated the complexity of the problem.

Bloomberg today quotes Alexander Notter at CFM Partners in Zurich, a merger advisory firm, as saying that “the programme itself hasn’t really been thought through. It’s a wishy-washy diktat.”

There are fears among politicians and bankers alike that one branch of the US government is offering a deal which will be ignored by others, including the IRS tax office. The fears have been fueled by remarks made by the US Department of Justice in November.

The government and Finma, the Swiss banking supervisory body, have been pushing banks to sign onto the programme, saying it is the only option open to banks.

A flashback and a thought for Swiss Banks on Deadlines

The climate reminds me of what was happening to individuals who were pressured to enter the 2011 OVDI program by the August 31, 2011 deadline (which was extended for 9 days because of the hurricane). People were not thinking clearly (or at all). They were living in a climate of terror. They were led into the program by third parties. They were told by the IRS that entering OVDI was their last, best chance for compliance. Although it is still too early to recognize the outcome. many people who entered OVDI felt it was a mistake.

Perhaps there is a lesson in this for the Swiss banks!


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