American and Swiss banks Above the law

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For centuries, Swiss banks have been presented to the world as a lucrative luxury place where the rich or even the Nazis can store their wealth. The reason why Swiss banks are so attractive is their low financial risk and high level of privacy (the 1934 Swiss Banking Act made it illegal for Swiss banks to disclose the name of an account holder unless there is suspicion of serious criminal activity ) and a low financial risk due to the relative stability of the Swiss economy.

However, for the past seven years, Americans have largely been unable to open a Swiss bank account, and as a result have not been able to reap its benefits. According to the Swiss Foreign Account Tax Complaint Act (FATCA), which came into force on June 30, 2014, Swiss financial institutions must provide the US tax authorities (IRS) directly with the account information that must be reported with the consent of customers. If the customer does not agree, the IRS can still request disclosure of a particular customer’s account information. As a result of the Swiss FATCA, one of the greatest advantages of a Swiss bank account, confidentiality, is no longer available to Americans.

In response to the Swiss FATCA, many Swiss banks have decided not to allow Americans to open bank accounts at all, instead of agreeing to share the American client’s information with the IRS. The implicit justification is that Swiss bank accounts would rather not have to deal with the American formalities and instead do business as usual.

Since then, the relationship between Americans and Swiss banks has been largely calm, and most Americans accept that they have no access to the elusive Swiss banking system.

A whistleblower who previously worked at Credit Suisse, one of Switzerland’s largest banks, recently came forward claiming that Credit Suisse has continued to help rich Americans hide their assets from the IRS, leading to potentially heavy fines and one Reassessment of whether the protection established by the Swiss FATCA is sufficient. This is particularly detrimental given the $ 2.6 billion fine Credit Suisse paid after it lied to federal prosecutors, the IRS, and members of Congress to help Americans, the U.S. government in May 2014 to cheat. Credit Suisse was partially spared a larger fine when it promised the Justice Department and Senate Committee that they had ceased the practice and would disclose any uncooperative American account holders.

The future of the American and Swiss banks hangs in the balance until a decision or agreement is reached on the new allegations by Credit Suisse. Will the US seek harsher penalties for Americans who do not share their Swiss bank accounts with the IRS? Will Americans ultimately be officially banned from having Swiss bank accounts? Will Switzerland stop working with the US entirely to preserve its integrity?

Unfortunately, none of these questions have concrete answers. Americans who still have Swiss bank accounts should consider themselves lucky for the time being and hold on.

Maya Cohen is an associate at Balestriere Fariello and has a background
in international law and in arbitration. She focuses her practice on
complex litigation from investigations to legal proceedings and appeals. You can
You can reach them by email at [email protected].