The United States Department of Justice Tax Division (DOJ) has announced they are open to talk with any foreign financial institution that would like to resolve potential U.S. tax exposure.
Acting Assistant Attorney General, Caroline Ciraolo, stated that institutions outside of the formal Swiss Bank Program should consider meeting with the DOJ to attempt to reach similar non-prosecution agreements. To date, over 40 banks have reached agreements to make certain disclosures and, in turn, have received non-prosecution agreements under this program.
Through these efforts, the DOJ has received information from banks and other financial institutions resulting in enforcements efforts expanding outside of Switzerland. Ciraolo informed foreign financial institutions not to wait for new programs to be announced as the Swiss-type non-prosecution agreements will not be available if the U.S. has discovered the information first.
Additionally, these agreements can be applicable to institutions other than banks. For example, Swiss asset manager Finacor SA has reached a non-prosecution agreement after providing similar information to the DOJ.
History of the Swiss Bank Program
The “Swiss Bank Program” was created for Switzerland financial institutions to resolve potential criminal liabilities in the U.S. through a non-prosecution agreement. The program was announced on August 29, 2013 and required eligible banks to advise the DOJ by December 31, 2013, that they had reason to believe tax-related criminal offenses in connection with undeclared U.S.-related accounts had been committed. Banks already under criminal investigation related to their Swiss-banking activities and all individuals were expressly excluded from the program.
To be eligible for these non-prosecution agreements, banks had to make complete disclosures of their cross-border activities; provide detailed information on an account-by-account basis for accounts that U.S. taxpayers had a direct or indirect interest; cooperate in treaty requests for account information; provide detailed information as to other banks that transferred funds into secret accounts or that accepted funds when secret accounts were closed; agree to close accounts of accountholders who fail to come into compliance with U.S. reporting obligations; and pay appropriate penalties.
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