U.S. slaps USD1.3B in penalties on Swiss banks

Eighty Swiss banks have agreed to pay the US fines totaling $1.36 billion in order to avoid court prosecution, according to the US Justice Department.

After the investigation has been completed all the banks are required to cooperate in related criminal or civil proceedings, said the department.

The US Justice Department began its Swiss Bank Program in 2013. It provided a way for Swiss banks to admit tax-related criminal offenses in connection with the US.

Under the program, the banks were obliged to disclose cross-border activities and provide detailed information on accounts in which US taxpayers have interests. The financial institutions under investigation also had to close accounts of US tax evaders.

The banks have managed to avoid a trial, with those already facing criminal charges excluded from the program.

The US started its tax avoidance push in 2009 after UBS Group confirmed it held accounts of Americans evading tax. The US government managed to recover $13 billion in unreported wealth.

The settlements also require the banks to provide information about accounts in which U.S clients held any interest, cooperate in U.S. treaty requests for data from the accounts and close accounts whose owners failed to disclose the holdings to the IRS.

"Through this initiative, we have uncovered those who help facilitate evasion schemes and those who hide funds in secret offshore accounts," Attorney GeneralLoretta Lynch said in a statement announcing completion of the current phase of the continuing U.S. crackdown.

Using information from the settlements and other sources, investigators are pursuing potential criminal conduct by account holders and referring some matters to the IRS for civil enforcement. Overall, more than 54,000 taxpayers have come clean during the U.S. crackdown and paid more than $8 billion in taxes, interest and penalties, said David Horton, acting deputy commissioner of the IRS Large Business andInternational Division.

Other tax evaders should come forward, said Acting Assistant Attorney General Caroline Ciraolo, who heads DOJ's tax division. "The window to get to us before we get to you is rapidly closing," she said.

Separately, U.S. criminal investigations continue into financial institutions whose Swiss banking-related activity was already known to federal prosecutors before the settlement program began.

The crackdown started more than seven years ago, and made headlines in 2009 when UBS agreed to pay $780 million in penalties and turn over account information for thousands of Americans the Swiss banking giant helped duck the IRS. That case, along with the just-completed effort, shattered Switzerland's tradition of keeping account information private.

"To call Switzerland a wasteland of bank secrecy is probably an understatement at this point," said Jeffrey Neiman, a former federal prosecutor who had a lead role in the UBS case.

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